Commercial Contracts: Agency, Franchise, and Patent Agreements

Posted on Dec 8, 2024 in Law & Jurisprudence

Contract Agency

A contract agency is where a natural or legal person, called the agent, undertakes against another, called the employer or principal, on a continuous basis for remuneration to promote trade acts or transactions. The agent acts as an independent broker without assuming the risk, unless otherwise agreed in the contract.

Features of a Contract Agency

  • Consensual, bilateral, commercial contract.
  • The agent is autonomous and independent, being free in the organization of their work and professional activity.
  • Services provided are for promotion, marketing, and concluding sales contracts on behalf of the employer.
  • Services are provided on an ongoing and lasting basis.
  • Consideration for brokerage is generally paid as a commission.
  • The agent does not respond, unless otherwise agreed, to the risk and responsibility of the operations of sale or purchase effected on behalf of others.

Main Duties of the Agent

  • Transfer any market information to the principal.
  • Report any reclamation.
  • Comply with the instructions of the superior.
  • An agent can work for different employers, but if the activity is the same for all of them, the agent needs to ask permission from the first client. To sell in a specific area and to a specific type of client, a written authorization clause is necessary.
  • Concurrency treatment once the contract is finalized.

Main Duties of the Employer

  • Provide any information that might affect the activity of the agent (new products, prices).
  • Accept transactions undertaken by the agent within the instructions.
  • Pay the agent through a commission, which varies depending on the volume of operations, or by setting a fixed amount. In this case, the agent bears the cost of their activities.

How and When to Pay

  • If there is an agreement on the terms of payment, it is paid quarterly.
  • In case of default, the employer may request the review of accounting.
  • The right to remuneration arises when the operation is completed after the delivery and payment of goods.

Length and Termination of the Contract

  • May be agreed upon for a fixed or indefinite period.
  • Can be extinguished by:
    • Compliance with the agreed period.
    • One-sided complaints, by written notice agreed upon between the parties (except failure of the agent, who is entitled to receive compensation from customers, for damages, taking the same year to pay).
    • Full and partial failure.
    • Death of the agent.

Franchise Agreement

A franchise agreement grants rights to the utilization of industrial property rights and the use of technology required for the sale of certain products in a designated territory. The franchisee is an independent dealer of the franchisor. This contract does not give rise to any form of association between the parties. The franchisee must pay the franchisor an agreed-upon consideration and apply due diligence in carrying out this activity. Upon expiry of the contract, the franchisee has an obligation to cease the activity altogether.

Patent

Patent Assignment Agreement

A patent assignment agreement refers to the transfer of ownership of the patent. It is usually done through a sale.

  • Parties: Supplier and purchaser.
  • Object: Patent or patent application.
  • Formalities: Writing, plus inscription published in patenting.
  • Content: Ownership and transmission of knowledge, responsibility.

The maximum term of a patent is 20 years, and its scope is variable (national, international).

Patent License

A patent license refers to the authorization for the operation of the invention protected through the granting of a patent.

License to L/P: Contract/mandatory.

Through this contract, the subject of a patent owner authorizes another person to use or exploit this, usually for a fee or remuneration.

  • Parties: Licensor/licensee.
  • Objective: Patented invention or the application for a grant of a patent.

Obligations of the Licensor

  • Granting a right of use or exploitation of the object in favor of the licensee.
  • Recline what is necessary to allow the licensee to acquire and possess the right of use.
  • Bounds of the contract.
  • Responsibility.

Obligations of the Licensee

  • Payment.
  • Exploit the patent.
  • Respect limits on the right of the competencies.
  • Respect the contract limits.
  • Respect the control by the licensor.
  • Cannot assign the license or sublicense to a third party without authorization from the licensor.

Extinguishing

  • General causes of extinction of contracts: During the period specified in the contract, unilateral denunciation by any of the contractors, revocation of the patent, or the patent being invalid.
  • Indemnities, liquidation, and other duties.