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How effective is the NCND Agreement?
Post 1 of 5
to Tekle,
i am new to the world of import/export and i have started of as an agent,my question to you is how effective is an NCND agreement,what course of action can i take against a buyer or seller who reneges on the agreement.
What advice would you give me about the import/export business as i really want to build a thriving business.
thank you for your time
[em1]
Award 10 MVPs ( What's this? )for the best answer.
26 Feb 2008 01:03
Post 2 of 5
Replying to [wambo]: It means Non-disclosure non-circumvention agreement. For more information of NCND Agreement You see this link:
www.export-forum.com/documentation/NCND.htm
26 Feb 2008 02:20
Post 3 of 5
Replying to [wambo]: First off the NCND agreement is of little use to new agent or broker and especially one that does not have a significant financial backing as the costs to arbitrate under ICC jurisdiction are extremely high. For example abitration under the auspices of the ICC will cost the claimaint and advance filing fee of 2500.00 - 5000.00 USD to arbitrate a deal that may have brought you only a $10,000.00 commission. If you go to this website:

http://www.iccwbo.org/court/arbitration/id4097/index.html

Here you will find a calculator that designates the amount of advance fee's based on your claim. Remember these fee's are only the advance fee and does not take into consideration your personal legal fee's associated with the arbitration. If you loose in arbitration you loose this advance fee and according to most NCND's you will also be subject to payment of the fee's paid by the respondent plus the costs of their legal representation. If you proceed with an NCND at any rate you also need to have the person or entity that will be paying your fee sign a MFPA (Master Fee Protection Agreement). with the MFPA you must also spell out in which country yours or the parties country you are representing. This then becomes a legal contract that can be adjudicated in the named country under civil torts. But, even so under this agreement if you choose to pursue a breach of contract you will have advance fee's for legal representation and filing fees in the appropriate civil court.

Because of everything I stated above my oppinion is that the NCND is useless to a new broker and agent, because they do not have the financial backing to pursue the breach of contract under either agreement. These agreements are great for large brokers dealing in millions of dollars who have the money to pursue these cases and can also afford the financial loss that can be associated with the arbitration.

You being a new broker or agent I would suggest an advance fee payment designed for compensating you for the work in finding a party to fulfill the needs of your client. Also if you are going to go this route I suggest that you get a good amount of product liability insurance. This amount should be in excess of 2 1/2 times the amount of the largest deal you will be considering.

Vijay presented you with a site to an example of the wording of an NCND but it is just that a sample, and you should retain legal representation of an international trade lawyer to draw up any documents between you and any other party. When dealing with clients from countries not your own, the wording of these documents and contracts have to be such that they are enforceable in those jurisdictions and spell out the where the adjudication will proceed the amounts and the penalties that may be sought for the breach. some countries have limits and you must know the limits before you proceed.

If your going to simply IMEX there is no need for these types of contracts.

best regards,

Ranger
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26 Feb 2008 08:45
Post 4 of 5
Replying to [Ranger]:

Well done. Superb and pragmatic explanation[em17]
26 Feb 2008 19:52
Post 5 of 5
steveice6ft7
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Quoting from [wambo]:


to Tekle,

i am new to the world of import/export and i have started of as an agent,my question to you is how effective is an NCND agreement,what course of action can i take against a buyer or seller who reneges on the agreement.

What advice would you give me about the import/export business as i really want to build a thriving business.

thank you for your time

[em1]

21 Jul 2008 08:22
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