Foreign businesses planning on establishing their brand in the UAE are to partner with a local sponsor or local service agent to meet regulatory requirements and obtain representation with the local authorities. The local sponsor or local service agent may be a corporate structure or individual. The agreement for appointment of a local service agent in UAE is used in various industries, including accounting services, real estate, financial advising, and sports representation. As with all corporate documents, it has to undergo the process of notarization with a licensed and certified notary public in Dubai, UAE.
The agreement of local service agent appointment in UAE creates a contract that’s legal binding and confers authority onto a party. Certain duties are also imposed on both parties to an agreement. While every local service agent agreement is slightly different to another due to the unique needs and requirements of concerned parties in a transaction.
Basic principles that apply to all agreements for appointment of a local sponsor in UAE:
The contract or agreement for local service agent appointment should have a list of the basic information, including commencement date of the appointment agreement, and each party’s contract information. In order to provide sufficient protection to all sides of the agreement from negligent acts, an indemnification clause should be included. Also include mediation or arbitration clauses in the event that disputes arise over terms and conditions in the agreement. Lastly, list a range of dates for service and when each engagement will start. Offer a way wherein each contractual party may terminate the contract if it’s not limited to one specific time period.
The parties to the local service agent agreement in UAE should be defined within then contract and referred to as the agent and the principal. The latter, which is the principal, is the one hiring the services of a local service agent. The agreement will also designate a local sponsor as the agent of the principal. A contract can be negated, which means the agreement can cover the local sponsor’s employees if the local service agent is a corporate entity.
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Limitation of the authority
The appointment agreement will give a local sponsor the authority in taking actions that are necessary in carrying out the business relationship desired by all of the contractual parties. If you, as the principal, wants to restrict or limit the scope of power or authority of the agent, then you need to include some explicit limitations within the agreement. The actions of the local sponsor have to be considered by all parties as reasonable for the kind of business relationship that is entered into. For instance, the local sponsor has the authority in representing the interests of a business with the local authorities, but not have the power in closing the business checking account. Providing access to the agent to crucial business information can be considered as an implicit conferring of authority.
The local service agent appointment agreement in UAE will create a fiduciary relationship, in accordance to the UAE legislation, between the parties involved. A fiduciary is required legally in acting on the behalf of a different party. An agent will take a principal’s place effectively in a transaction. It will save time as the agent can negotiate with third parties without having to wait for the approval of the principal.
You need to make sure that the local sponsor appointment agreement has a detailed breakdown for the fees of the local service agent in UAE. The individual or corporate entity can charge a specific amount or have a certain number of shares of a company. If the fees will be tied to the performance of a company, the contract has to have a list of the method for calculating the fee and verifying the company’s performance. A long term agreement for a local sponsor appointment usually also includes a schedule for an expected fee increase with certain conditions approved by all parties involved.
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When will the contract signing occur?
When all the parties to the agreement agree on the contractual terms, then they can sign in the presence of a notary public in Dubai and two witnesses. You would not want the agreement signed without a witness as this can make the contract null and void should there be disputes that arise down the line.
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Should the agreement be in Arabic or English?
It is important for all contractual parties to understand the terms and conditions that are set forth in the contract. Should a party only understand one language, either English or Arabic, there must be a need for official translation.
For more information regarding notarization in UAE and corporate documents, call us here in Notary Public Dubai today!