Quick Answer
What people call a “trade agent” can correspond to four different legal relationships under Taiwan’s Civil Code: (1) agency (Art. 103: acting in the principal’s name, with effects falling directly on the principal), (2) commercial agent (Art. 558: entrusted by a business to handle its affairs in its name within a set place or territory), (3) brokerage (Art. 565: reporting opportunities to contract or mediating contracts for a fee), and (4) commission agency (Art. 576: trading in its own name for another’s account for a fee). They differ in whose name the deal is made in, who is liable to the counterparty and how fees are earned, so confirm which one applies before signing.
Four Legal Relationships Compared
| Type | Civil Code | In whose name | Toward the counterparty | Fee |
|---|---|---|---|---|
| Agency | Art. 103 | The principal | Effects fall directly on the principal | As agreed |
| Commercial agent | Arts. 558–564 | The entrusting business | Deemed authorized to do everything necessary for the entrusted affairs | Per contract; otherwise by custom or the importance of the work (Art. 560) |
| Brokerage | Arts. 565–575 | Does not trade; only reports opportunities or mediates | Not a party to the deal | Payable only if the contract is concluded through the broker’s report or mediation (Art. 568) |
| Commission agency | Arts. 576–588 | The commission agent itself | Acquires rights and bears obligations itself (Art. 578) | A business conducted for a fee |
Key Points of Each Type
Agency (Art. 103)
A declaration made by an agent in the principal’s name within its authority takes effect directly on the principal. For example, if an agent signs with a buyer in the brand’s name, the brand is the party to the sales contract.
Commercial agent (Art. 558)
A commercial agent is “a person who, not being a manager, is entrusted by a business to handle all or part of its affairs in its name within a certain place or territory”. The Code also provides that:
- Toward third parties, the commercial agent is deemed authorized to do everything necessary for the entrusted affairs.
- Without written authorization, it may not assume obligations on negotiable instruments, borrow money or bring lawsuits.
- It must keep the business informed of market conditions in its territory and promptly report transactions (Art. 559).
This is closest to what is usually called a “regional agent”.
Brokerage (Art. 565)
Brokerage is “a contract under which one party reports to the other opportunities to enter into a contract or acts as an intermediary in concluding a contract, and the other party pays remuneration”. The broker is not a party to the deal; a professional broker has a duty to investigate the matters of the contract and the parties’ ability to perform (Art. 567). In triangular trade, when a trader books the margin as commission and bears no warranty liability, Taiwan’s Ministry of Finance also treats it as brokerage.
Commission agency (Art. 576)
Commission agency is “a business of buying or selling movables or carrying out other commercial transactions in one’s own name for the account of another, for remuneration”. The commission agent acquires rights and bears obligations itself toward the counterparty (Art. 578), and if the counterparty fails to perform, the agent is in principle directly liable to its principal (Art. 579). Purchasing on a client’s behalf in your own name is close to commission agency; see Procurement Agency Models and Contract Essentials.
6 Things to Confirm Before Signing an Agency Contract
- Legal relationship: agency, commercial agent, brokerage or commission agency? In whose name are deals made?
- Territory and exclusivity: the territory, whether it is exclusive and whether cross-territory sales are allowed.
- Fees: commission rate, calculation base and when it becomes payable.
- Targets and minimums: any minimum purchase volume or sales targets.
- Authority: whether the agent may sign contracts, collect payment or adjust prices.
- Term and termination: contract term, renewal, termination conditions and post-termination arrangements.
How Tang Sugar Works with Partners
Tang Sugar’s authorized distributor program combines regional distribution with brand usage rights. We also offer international sourcing agent and triangular and multilateral trade services under full international service contracts that set out responsibilities and processes clearly. Contact us.
FAQ
What is a trade agent legally in Taiwan?
It may be an agent, commercial agent, broker or commission agent, depending on the contract: in whose name deals are made, who is liable to the counterparty and how fees are earned.
What is the difference between a broker and a commission agent?
A broker only reports opportunities or mediates contracts and is not a party to the deal; a commission agent trades in its own name for another’s account and acquires rights and bears obligations toward the counterparty.
What is a commercial agent under Taiwan’s Civil Code?
Under Article 558, a commercial agent is a person who, not being a manager, is entrusted by a business to handle all or part of its affairs in its name within a certain place or territory.
When is a broker entitled to a fee?
Under Article 568 of Taiwan’s Civil Code, only when the contract is concluded as a result of the broker’s report or mediation.
Further Reading
- Trader vs Agent vs Distributor: What’s the Difference?
- Procurement Agency Models and Contract Essentials
- Triangular Trade and Taiwan Business Tax
- How to Choose a Taiwan Trading Company
- What Is the Export Zero Tax Rate in Taiwan?
Sources
- Laws & Regulations Database of Taiwan: Civil Code (Arts. 103, 558–560, 565–568, 576–579)
- MOF eTax portal: Triangular trade zero rate (Q&A 9216) (in Chinese)
