For some companies wishing to establish business with Korea, the use of a commercial agency relationship may be an ideal way to establish your business presence in Korea.
An agent relationship is often ideal when a company seeks to sell its products in Korea, but wishes to first evaluate and familiarize itself with the Korean market prior to establishing a distributorship relationship or establishing a legal presence in Korea via a subsidiary.
In Korea, there is no one piece of enacted legislation dedicated solely to agency law. Rather, provisions pertaining to agency are found interspersed in various pieces of legislation, mostly within the Korean Commercial Code ("KCC") (also known as the Korean Commercial Act) and Civil Act (often referred to as the Civil Code).
The Korean Commercial Code sets out certain provisions that apply to the relationship between a commercial agent and principal. The KCC defines a “commercial agent” as “a person who acts on behalf of a particular merchant not as an employee, but as representative or intermediary in transactions falling within the class of business carried on by the principal.”
The agent may be appointed as exclusive and or non-exclusive agent. A commercial agency agreement should be handled with care, and as such, it is advisable for a company to seek local legal counsel for the drafting of such an agreement. In drafting, consideration ought to be given to important aspects including authorization, scope, territory, termination, and dispute resolution mechanism. We shall be drafting additional materials on these issues over the next couple of weeks.
Furthermore, a company entering into a commercial agency agreement in Korea ought to be protecting its intellectual property by application to the Korean Intellectual Property Office (KIPO), and local legal counsel can assist with this. For an article on enforcing your trademarks please see: Enforcing your Trademarks Rights in Korea. For an article on IP in general please see: Protecting your Intellectual Property in Korea.
More articles on agency and distribution law may be found at: