2 Answers
Dear Client,
If your firm introduces a buyer to a manufacturer or fabricator and provides the commercial representation necessary for bidding, negotiation, ordering and payment, the relationship should ideally be documented through a written commercial agreement before or at the time of introduction.
The agreement can clearly identify your firm's role, the buyers introduced by you, the scope of your commercial services, the applicable commission or service fee, and the circumstances in which the buyer or vendor must continue dealing through your firm.
An unrestricted prohibition preventing a party from doing business independently in the future may not necessarily be enforceable merely because it appears in a contract due to Section 27 of the Indian Contract Act.
However, your agreement should clearly document the nature of the commercial relationship and the consideration due to your company in exchange for the services rendered by it. Confidentiality, protection of commercially sensitive data, introduction and payment schedules may also be covered.
Documentation proving that your company did make the introduction and carried out the commercial functions should be maintained as well. Criteria of qualification of the purchaser need to be evaluated separately, ensuring that the contract structure does not confuse the entity that is actually doing the bidding or supplying.
The final agreement needs to be vetted by an attorney experienced in commercial agreements prior to signing it.
I hope this answer helps. If you have any further query kindly do not hesitate to contact us. Thank you.
Dear Client,
Execute a binding Non-Circumvention and Exclusive Commercial Agreement (NCNDA) with every vendor before introducing them to buyers. This contract must strictly prohibit the vendor from directly quoting or dealing with your introduced clients for 3 to 5 years. Include a severe liquidated damages clause such as penalization of some percentage of project value along with an attached, signed list of all introduced buyers.
Secondly, since buyers require the vendor’s credentials, legally position yourself as their Exclusive Commercial Representative then get a formal Exclusive Agency Mandate from the vendor, and ensure buyer purchase orders explicitly state that all commercial negotiations, invoicing, and contract management must route through you.
Thirdly, protect your revenue using an irrevocable payment mandate or escrow account so buyer funds are split automatically, ensuring your margin is retained before the vendor receives payment. Additionally, collect financial security such as post-dated cheques or a bank guarantee from the vendor before releasing buyer details. Lastly, to maintain your role, bid as a Consortium or Joint Venture where allowed, naming your firm as the Lead Commercial Partner. On single party tenders, use branded commercial documents explicitly identifying you as the managing commercial division.
I hope this answer helps, if you have any other query kindly do not hesitate to contact us. Thank you.