Commercial Agency System

• In the Kingdom of Saudi Arabia

  issued by Royal Decree No. (11) dated 20/2/1382 AH, corresponding to 21/7/1962 AD, aims to regulate the practice of commercial agency activities. This system includes the rules and regulations that both the agent and the principal must adhere to.
  
  In the Kingdom of Saudi Arabia, a commercial agency is defined as follows: "Anyone who contracts with a producer or their representative in their country to engage in commercial activities, whether as an agent or a distributor, in any form of agency or distribution, in exchange for profit, commission, or facilitation, regardless of its nature. This includes maritime, air, or land transportation agencies, as well as any agencies for which a decision is issued by the Minister of Commerce."
  
  The agent or distributor may contract with sub-distributors within the agency's territory, provided that the original agent or distributor remains responsible for the obligations stipulated by law towards the consumer. Regarding service agencies covered by the relationship between foreign contractors and their Saudi agents, all the provisions of the aforementioned system, issued by Royal Decree No. (M/2) on 20/1/1398 AH, are applicable.
  
  Under the agency contract, the commercial agent has the legal right to conduct the agreed-upon commercial activities. The commercial agent is also obligated to comply with the contract terms and fulfill their obligations towards the producer or their representative in the country.
  
  Commercial agencies in the Kingdom of Saudi Arabia include several types, including a commercial agent who sells a service or commodity on behalf of the producer, a distribution agency, internal distribution, and service contracts. These types vary in terms of the conditions and details that the parties must comply with.
  
  For more information on types of commercial agencies and all the details, you can visit the Ministry of Commerce's website and download the Commercial Agency System file in the Kingdom or download it here