Written By PLF Law Firm

In addition to direct transaction with customers, enterprises should consider other intermediate forms of trade to save time and cost and to increase their business presence in the market.

There are 4 commercial intermediary activities, including: Representation for traders; Commercial brokerage; Goods sale or purchase entrustment; and Commercial agency.

Representation for traders

Representation for traders is deemed the most common commercial intermediary activity in the world. According to Commercial Law (2005): “Representation of traders means an activity whereby a trader (referred to as the representative) is authorized by another trader (referred to as the nominator) to conduct commercial activities in the name and under the instructions of the latter for remuneration.”

Characteristics:

  • Subjects: The nominator and the representative.
  • Conditions: Both parties must be traders.
  • In a representative relation, the representative must transact with third parties in the name and under the instructions of the nominator.
  • Scope of representation: The parties may agree on the scope of representation, the representative may conduct part or all of commercial activities within the nominator’s business scope..
  • Legal form: Contracts for representation of traders. Such contracts must be made in writing or in other forms of equivalent legal validity.

Commercial brokerage

Based on the provisions of Commercial Law (2005): “Commercial brokerage means a commercial activity whereby a trader acts as an intermediary (referred to as the broker) between parties selling and purchasing goods or providing commercial services (referred to as the principals) in the course of negotiations and entering into contracts for sale and purchase of goods or provision of services and shall be entitled to a remuneration under a brokerage contract.”

Characteristics:

  • Subjects: The broker and the principal(s).
  • Conditions: In accordance with Commercial Law (2005), a commercial broker must be a trader and registered for business sector of commercial brokerage.
  • Scope of brokerage: The scope of commercial brokerage is quite large, including all goods and services permitted by law.
  • Legal form: Brokerage contracts.

Purchase and sale of goods by mandated dealers

Vietnamese Commercial Law (2005) stipulates: “Purchase and sale of goods entrustment is a commercial activity, whereby the mandatory conducts the purchase and sale of goods in his/her/its own name under the terms agreed upon with the mandator and is entitled to receive mandate commission.”

Characteristics:

  • Subjects: The mandator and the mandatory.
  • Conditions: While the mandator may or may not be a trader, the mandatory is required to be one.The mandatory uses his/her/its own name to purchase or sell goods on behalf of the mandator. In addition, the mandatory is not permitted to sub-mandate a third party to perform the signed mandate contract for purchase and sale of goods without a written approval from the mandator.
  • Scope of mandate: The mandatory conducts the purchase and sale of goods within the scope of mandate set by the mandator.
  • Legal form: Mandate contracts for purchase and sale of goods must be made in writing or in other forms of equivalent legal validity.

Commercial agency

According to Commercial Law (2005): “Commercial agency means a commercial activity whereby the principal and the agent agree that the agent, in its own name, sells or purchases goods for the principal or provides services of the principal to customers for remuneration.”

Characteristics:

  • Subjects: The principal and the agent.
  • Conditions: Both parties must be traders.
  • In this commercial relation, the agent shall transact with customers in its own name.
  • Scope: Following the agreement, the agent shall make sales or purchase goods for the principal, or accept the principal’s authorization to provide services to clients.
  • Legal form: Agency contracts must be made in writing or in other forms of equivalent legal validity.

We'd love to meet you and let you the perfect solution