legal do's and don'ts 4-20-2010

LEGAL DO’S AND DON’TSLEGAL DO’S AND DON’TS

Presented byYu-feng (Frances) Chou

Y.F. Chou, Prof. Corp.For

County of San Bernardino Economic Development AgencyCounty of San Bernardino Economic Development AgencyCenter for International Trade Development

April 20, 2010

© 2010 Yu-feng (Frances) Chou. All Rights Reserved. 1

April 20, 2010

INTRODUCTION

• Regulations• Regulations– US Regulationsg– Foreign RegulationsA t• Agreements


US REGULATIONS

• Export Administration Act of 1979• 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• Office of Foreign Assets Control• Nuclear Regulatory Department of

EEnergy• Multilateral Export Control Regimes• Antiboycott Laws• Foreign Corrupt Practices ActForeign Corrupt Practices Act


FOREIGN REGULATIONS

• Customs RegulationsCustoms 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• Sales Representative Agreement• Distribution Agreement• Sales Agreement


SCOPE OF AGREEMENTS

• Parties• Parties• Type of Agreement• Products• Territoryy• Exclusivity


RELATIONSHIP OF THE PARTIESPARTIES

• Independent Contractor• Independent Contractor• Exclusivity• Most Favorable Term


DUTIES AND OBLIGATIONS OF THE PARTIES

• Clearly Set Forth Duties and• Clearly Set Forth Duties and Obligations

• Only List Important Issues • Not an Inclusive ListNot an Inclusive List


DUTIES AND OBLIGATIONS OF THE PARTIES - Continues

• Sales Representative/Distributor’s Duties and Obligationsp g– Marketing Responsibilities– Customer Services

Logistical and Support Services– Logistical and Support Services– Advice to Manufacturer– Registrations, Licenses and Permits Requirements– Report to Manufacturer– Limitations of Authorities– No Sales Outside the Territoryy– Expenses– Minimum Sales/Purchase Requirements



• Additional Duties and Obligations of Distributor• Additional Duties and Obligations of Distributor– Maintaining Tech and Customer Support

and Minimum Inventory On Handand Minimum Inventory On Hand– Providing Sales, Advertising and

Promotional Materials to ManufacturerPromotional Materials to Manufacturer– Providing Access to Distributor’s Facilities



• Manufacturer• Manufacturer– Providing Marketing Materials– Providing Technical Supports and

Customer Services– Providing Repair and Replacement– No Obligation to Continue ProductionNo Obligation to Continue Production

of the Same Model or Products


PRICING

• Who Sets the 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 Distributory


ORDER

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


PAYMENT

• Procedures• Procedures• How

– Cash, L/C, D/P, D/A– Selection of Banks

• When


PAYMENT - CONTINUES

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


PAYMENT AFTER TERMINATIONTERMINATION

• Order Placed and Approved But Not• 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• Check Local Laws and Regulations


SHIPMENT

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


p g

INSPECTION

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


AUDIT RIGHTS

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


COMPLIANCE WITH LAW

• Complying with US and Foreign• Complying with US and Foreign Laws and Regulations

• Manufacturer May Release Information to US or Foreign gGovernment Upon Proper Request


TERM

• Length• Length• Automatic Renewal• Quota


TERMINATION

• Without CauseWithout Cause• With Cause

– Default– Discontinue of Primary Business– Insolvency– Change of Laws or RegulationsChange 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


• Check Local Rules and Regulations

REPRESENTATIONS AND WARRANTIES

• Authority to Enter Into Agreement• Authority to Enter Into Agreement• No Agreement or Law to Prevent

Performance Under the AgreementPerformance Under the Agreement• Right to Execute the Agreement• Rights Title and Interests in the Intellectual• Rights, Title and Interests in the Intellectual

Property Rights in the Products• Foreign Corrupt Practices Act• Foreign Corrupt Practices Act• Keep Books and Records


INDEMNIFICATION

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


LIMITATION OF LIABLITY AND DISCLAIMERS

• Mutual v Unilateral• Mutual v. Unilateral• Amount of Recovery

Types of Contractual or Tort Liabilities• Types of Contractual or Tort Liabilities• Types of Damages

M h bili• Merchantability• Disclaimers of All Other Warranties or

C ditiConditions


INTELLECTUAL PROPERTY

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


INTELLECTUAL PROPERTY

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


CONFIDENTIALITY

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


NO UNFAIR COMPETITION

• GeneralGeneral– 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– Types of Limitations• No Representation of Competitor• No Unfair Competition• No Unfair Competition• Non-Interference with Business

N S li it ti f E l• Non-Solicitation of Employees• Non-Solicitation of Customers• Non-Circumvention


GOVERNING LAW AND JURISDICTION

• US v Foreign Law/Jurisdiction• US v. Foreign Law/Jurisdiction• United Nations Convention for

I t ti l S l f G dInternational Sale of Goods• Practicability• Enforcement


ARBITRATION V. LITIGATION

• Advantages and Disadvantages• Advantages and Disadvantages• Arbitration

Providers– Providers• International Chambers of Commerce

A i A bit ti A i ti• American Arbitration Association• London Court of International Arbitration• China International Economic Trade

Arbitration Committee


ARBITRATION V. LITIATION -CONTINUES

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


GENERAL PROVISIONS

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


CONCLUSIONS

• Each agreement is differentEach agreement is different• A short agreement is not necessary a

good agreementgood agreement• Seek legal advice• Do your own due diligence• Do your own due diligence• Comply with all US and foreign laws

A d t l t• A good agreement can only get you so far


CONTACT INFORMATION

• Yu-feng (Frances) Chou Esq• Yu-feng (Frances) Chou, Esq.• Add: Y.F. Chou, Prof. Corp.

10960 Wilshire Boulevard Suite 122510960 Wilshire Boulevard, Suite 1225Los Angeles, California 90024

T l 310 4 9 8600• Tel: 310-479-8600• Fax: 310-479-0699• Email: [email protected]
