Legal Do's and Don'ts 4-20-2010

LEGAL DO’S AND DON’TS
Presented by
Yu-feng (Frances) Chou
Y.F. Chou, Prof. Corp.
For
County of San Bernardino Economic Development Agency
Center for International Trade Development
April 20, 2010
© 2010 Yu-feng (Frances) Chou. All Rights Reserved. 1

INTRODUCTION

• Regulations
– US Regulations
g
– Foreign Regulations
•AAgreements t


US REGULATIONS

• Export Administration Act of 1979
• Arms Export Control Act
• International Emergency Economic
Powers Act
• Trading with Enemy Act


US REGULATIONS - CONTINUES

• Office of Foreign Assets Control
• Nuclear Regulatory Department of
Energy
• Multilateral Export Control Regimes
• Antiboycott Laws
• Foreign Corrupt Practices Act


FOREIGN REGULATIONS

• Customs Regulations
• Import Regulations
• Licenses, Registrations and Permits
, g
• Technology Transfer Laws
• Antitrust or Unfair Competition Laws
• Limitations on Inbound Investment
• Foreign Agency and Distribution Laws
• United Nations Convention for the
International Sale of Goods


TYPES OF AGREEMENTS

• Sales Representative Agreement
• Distribution Agreement
• Sales Agreement


SCOPE OF AGREEMENTS

• Parties
• Type of Agreement
• Products
• Territory
y
• Exclusivity


RELATIONSHIP OF THE
PARTIES

• Independent Contractor
• Exclusivity
• Most Favorable Term


DUTIES AND OBLIGATIONS OF
THE PARTIES

• Clearly Set Forth Duties and
Obligations
• Only List Important Issues
• Not an Inclusive List


DUTIES AND OBLIGATIONS OF THE
PARTIES - Continues

• Sales Representative/Distributor’s Duties and Obligations
p g
– Marketing Responsibilities
– Customer Services
– Logistical and Support Services
– Advice to Manufacturer
– Registrations, Licenses and Permits Requirements
– Report to Manufacturer
– Limitations of Authorities
– No Sales Outside the Territory
y
– Expenses
– Minimum Sales/Purchase Requirements


PARTIES - Continues

• Additional Duties and Obligations of Distributor
– Maintaining Tech and Customer Support
and Minimum Inventory On Hand
– Providing Sales, Advertising and
Promotional Materials to Manufacturer
– Providing Access to Distributor’s Facilities


PARTIES - Continues

• Manufacturer
– Providing Marketing Materials
– Providing Technical Supports and
Customer Services
– Providing Repair and Replacement
– No Obligation to Continue Production
of the Same Model or Products


PRICING

• Who Sets the Pricing
• Initial Pricing v. Future Pricing
• Discounts, Promotions, Credits, Returns
and Refunds
• Determination on Pricing for Products to
be Sold by Distributor
y


ORDER

• Procedures
• Shipment Date
• Acceptance v. Rejection
• Cancellation


PAYMENT

• Procedures
• How
– Cash, L/C, D/P, D/A
– Selection of Banks
• When


PAYMENT - CONTINUES

• Sales Representative – Commissions
– Net Sale Price
– How Much
– When to Pay Commissions
– How to Make Payments on Commissions
y
– How Often
– US or Foreign Currency


PAYMENT AFTER
TERMINATION

• Order Placed and Approved But Not
Shipped Prior to Termination
• Order Placed But Not Approved Prior
to Termination
• Time Limit to Pay After Termination
• Check Local Laws and Regulations


SHIPMENT

• How
• Who Pays for Shipment
• Insurance
• Destination
• Delivery Site
• Passing of Title and Risk of Loss
• Replacement of Damaged Goods
p g

INSPECTION

• When
• Where
• By Whom
• Notification of Any Problems
• Independent Merchandise Surveyor


AUDIT RIGHTS

• Mutual or Unilateral
• Frequency
• Written Request
• During Business Hours


COMPLIANCE WITH LAW

• Complying with US and Foreign
Laws and Regulations
• Manufacturer May Release
Information to US or Foreign
g
Government Upon Proper Request


TERM

• Length
• Automatic Renewal
• Quota


TERMINATION

• Without Cause
• With Cause
– Default
– Discontinue of Primary Business
– Insolvency
– Change of Laws or Regulations
– Change of Currency Exchange
• If Prefers, List All Causes for Termination
• Cure Period
• Amount of Notice
• Check Local Rules and Regulations

REPRESENTATIONS AND
WARRANTIES

• Authority to Enter Into Agreement
• No Agreement or Law to Prevent
Performance Under the Agreement
• Right to Execute the Agreement
• Rights Title and Interests in the Intellectual
Rights,
Property Rights in the Products
• Foreign Corrupt Practices Act
• Keep Books and Records


INDEMNIFICATION

• Mutual v Unilateral
v.
• Acts or Failure to Act
• Damages and Defense


LIMITATION OF LIABLITY AND
DISCLAIMERS

• Mutual v Unilateral
v.
• Amount of Recovery
• Types of Contractual or Tort Liabilities
• Types of Damages
• Merchantability
M h bili
• Disclaimers of All Other Warranties or
Conditions
C diti


INTELLECTUAL PROPERTY

• Patent
• Trademark/Service Mark
• Copyright
• Trade Secret
• Trade Dress
• Other Proprietary Rights


INTELLECTUAL PROPERTY

• Covers Any Rights Title and Interest
Rights,
• Owner
• Limited License Granted
• Buyer s
Buyer’s Design


CONFIDENTIALITY

• Definition
• Mutual or Unilateral
• Non-Disclosure
• Notice of Disclosure
• Effect on Termination
• Injunctive Relief


NO UNFAIR COMPETITION

• General
– Limitations on Trade, Profession and Business Is
Unenforceable
– Entity v. Individual
– Independent Contractor v. Employee
– Confidential Information
– Restriction on Time Period
– Restriction on Geographic Area
– Restriction on Scope


NO UNFAIR COMPETITION
- CONTINUES

– Types of Limitations
• No Representation of Competitor
• No Unfair Competition
• Non-Interference with Business
• N S li it ti of E l
Non-Solicitation f Employees
• Non-Solicitation of Customers
• Non-Circumvention


GOVERNING LAW AND JURISDICTION

• US v Foreign Law/Jurisdiction
v.
• United Nations Convention for
International Sale of Goods
I t ti lS l fG d
• Practicability
• Enforcement


ARBITRATION V. LITIGATION

• Advantages and Disadvantages
• Arbitration
– Providers
• International Chambers of Commerce
•A American A bit ti A
i Arbitration Association
i ti
• London Court of International Arbitration
• China International Economic Trade
Arbitration Committee


ARBITRATION V. LITIATION -
CONTINUES

• Scope
• Governing Rules
• Location
• Language
g g
• Procedure
• Award
• Enforcement

GENERAL PROVISIONS

• Amendment
• Notice
• Severability
• Dollar Amount
• Attorney’s Fees
• Survival


CONCLUSIONS

• Each agreement is different
• A short agreement is not necessary a
good agreement
• Seek legal advice
• Do your own due diligence
• Comply with all US and foreign laws
• A good agreement can only get you so
d t l t
far

CONTACT INFORMATION

• Yu-feng (Frances) Chou Esq
Chou, Esq.
• Add: Y.F. Chou, Prof. Corp.
10960 Wilshire Boulevard Suite 1225
Boulevard,
Los Angeles, California 90024
• T l 310-479-8600
Tel: 310 4 9 8600
• Fax: 310-479-0699
• Email: frances@yfchou.com


Legal Do's and Don'ts 4-20-2010

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