Just select a reasonably reliable and clearly applicable index. If you don't want to be going through a price reset every year, you might consider setting a "floor" which the rate of change must hit. Be sure to set the *time* when you are going to measure the difference. If you are using an index like US Govt numbers on BLS.gov, be sure to specify which of the published figures governs.
I don't know what information exists for Kuwait and I imagine that Iraq is far too unstable to have reliable figures.
In any situation where you are not paying in a local currency, consider using an index from the source country of the contract currency.
A commercial representative is a Kuwaiti individual or entity engaged by a foreign company pursuant to a Commercial Representation Agreement to represent its business interests in Kuwait. The scope of authority of a commercial representative is usually more limited than the authority granted to an agent. A commercial representative may be paid a set fee on a regular basis or a commission or percentage of profits. A foreign company is liable for all of the commercial representative's actions and liabilities, so long as they are conducted or incurred within the scope of representation.
Unlike an agency agreement, a commercial representation agreement cannot be registered with the Ministry of Commerce and Industry.
Agency agreements in Kuwait are governed by rules similar to other GCC countries. Only Kuwaiti individuals or firms are eligible to act as commercial agents in Kuwait.
Key issues for investigation will be whether the proposed agent has the requisite market knowledge, influence and connectivity and whether it will be in a position to provide the necessary local support services required by the foreign investor.
Our experience of acting for clients seeking entry to various GCC countries to participate in the procurement process for public sector contracts is that a registered agency will often be a minimum requirement for eligibility to participate. An agency agreement will generally carry much more weight in the context of the tendering process, than the looser arrangements contained in a commercial representation agreement.
Key features of Kuwaiti agencies are as follows:
Agencies must be registered in order to be enforceable;
The principal may not terminate the agreement without proving breach of contract by the agent; otherwise, the principal is liable to pay compensation to the agent;
The principal may not refuse to renew the agency agreement when it expires without paying the agent compensation for non-renewal, provided that the agent proves that he committed no breach and that his activities led to the successful promotion of the principal's products.
• ICT Contracts Ltd
Many thanks for the response. The compensation on termination for the agent is a charactoristic found in other GCC countries including the lead Saudi Arabia.
• KUWAIT OIL COMPANY
You may visit the following Kuwait Government website link for more details.
When you say 'reseller payments', I assume you are meaning the level of discount applied by the product manufacturer / provider (since obviously a reseller sells under thier own terms)? And I am also assuming you mean through a structured reseller program, rather than someone who approaches you with a one-off or occasional opportunity?
So, given these assumptions, my experience is that the discount varies based on the nature of the reseller (eg distributor, value-add reseller, remarketer), the tasks they perform and of course the volumes they are taking. For example, are they fully responsible for marketing and support, or will your organization be doing much of the promotion? Will you require minimum sales volumes? etc. The answer may also vary between geographies, especially if you are trying to use reseller channels to expand your markets.
All this means that the answer can vary from as low as 10% to as high as 50%, but the range 25 - 40% is more typical. To help you further, I would need to have more detail about the specific type of relationship.
I have seen agreements that typically range from 25% to 50%. Part of the royalty has to do with how critical it is to performance of the services. For example, if the services cannot be performed without using the IP, then it should get a higher percentage. Also, you should think about a royalty floor, e.g. minimum guaranteed payment
I have seen this clause come up several times in the last couple of months both on the Prime and Sub side. As a "seller" of an existing product I would attempt to do one of the following two things:
1. Have an open and honest discussion with the buyer explaining your position and the critically of having the clause removed to protect the future of your business. Hopefully they are reasonable and will understand. If they take a hard stance then;
2. Limit the clause only to efforts develop under the contract. Therefore you protect your existing product but if anything new is developed, which in your case it sounds like it would not, they buyer would get some rights.