ISRAEL-INDIA Business Guide | Medical Technology, Pharma & Biotech

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34 Israel-India Business Guide - MedTech, Pharma & Biotech
The Israeli Agency
Contract Law
Legal Aspects
A fter many years duringwhich the status commercial
agents and their rights as such were not specifically
defined in the Israeli legislation, Israel enacted
in 2012 the Agency Contract Law (Commercial Agent
and Supplier), which regulates certain aspects of the
relationship between a supplier and a commercial agent.
The law imposes significant liabilities on suppliers and
accordingly should be observed by Israeli and foreign
companies having agents in Israel.
The purpose of the Agency Contract Law is to protect
certain rights of commercial agents and regulate certain
aspects of agency contracts under which there are no
employment relationship between the supplier and the
agent. The law includes provisions regarding a mutual duty
of trust between the supplier and the agent, provisions
regarding the termination of commercial agency contracts
and provisions regarding compensation to the agent upon
termination of the commercial agency contracts.
The law defines a commercial agent as a person whose
practice is locating clients or activity in which the goal is to
promote contractual engagements between a client and a
supplier regarding the purchase of goods supplied by the
supplier.
It defines a supplier as the manufacturer of goods or a
person having the right to use reputation and trademarks
(either registered or unregistered) related to the goods,
who sells such goods.
An agency contract is defined as a contract for
remuneration between a supplier and a commercial
agent, according to which the supplier empowers the
commercial agent to continuously locate new clients or
to engage for additional contracts with existing clients,
for the purpose of purchasing goods that are sold by
the supplier, where there are no employer-employee
relations or partnership between the parties.
While the rights and obligations of commercial agents and
suppliers are in general set out in the contract between
them and they are free to agree on the conditions of the
contract, the Agency Contract Law set minimal rights of
the commercial agent that cannot be derogated from (i.e.
are cogent).
With respect to the term and termination of the agency
contract, while the parties are generally free to agree upon
the term of the contract, the law provides that a party to a
commercial agency contract for an undetermined period
of time is entitled to terminate it by giving the other party
a prior written notice reasonable time in advance. Such
advance notice period shall not be shorter than the notice
periods set out in the law, which depend on the length of
the agency period.
The law further provides that in case that the parties
agreed on a notice period which is longer than those set
out in the law, the advance notice period which applies to
the termination of the contract by the supplier shall not be
shorter than the advance notice period required in case of
termination by the agent.
The Agency Contract Law also provides that upon
termination of the commercial agency contract by either
party, the agent is entitled to compensation from the
supplier, subject to the conditions and at least in the
amount set out in the law.
In addition to the Agency Contract Law, the principles
of Israeli general contracts law apply to contractual
relationship with agents.
To summarize, the Agency Contract Law set out new
standards for the protection of commercial agents that
were not part of the Israeli legislation so far. It is still to be
examined how the Israeli courts will interpret this new law.
The Authors are attorneys in Weiss, Porat & Co., an
internationally oriented Israeli law firm with a long
experience of working in India and with India.
* Please note that the above information is general and
non-exhaustive. Advice of an experienced attorney should
be obtained regarding any particular factual situation or
legal issue.
The Agency Contract Law regulates certain
aspects of the relationship between a
supplier and a commercial agent and
set new standards for the protection of
commercial agents
Zeev Weiss and Eylam Weiss
MedTech