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What to Include in a Service Contract with Bangladeshi Agents
When working with local agents in Bangladesh—whether for sourcing, logistics, trade facilitation, or market entry—having a well-drafted service contract is essential. This contract not only protects your business interests but also clarifies mutual responsibilities and reduces the likelihood of disputes.
In this article, we’ll explore the essential components of a service contract with Bangladeshi agents, the local legal context, and best practices for enforceability—making it easier for foreign companies and investors to do business in Bangladesh.
🔗 Related: Legal Considerations When Contracting Agents in Bangladesh
Why a Service Contract Is Crucial in Bangladesh
Bangladesh is a rapidly growing economy, offering numerous opportunities in manufacturing, apparel, leather goods, electronics assembly, and logistics. Local agents are often the key to navigating customs, sourcing from rural factories, or dealing with government approvals.
However, verbal agreements or informal emails can lead to major legal complications. A formal contract ensures:
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Clarity of services and expectations
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Payment protection
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Confidentiality
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Legal recourse
1. Clearly Defined Scope of Services
The contract should begin by specifically outlining the nature of services the agent will provide. This may include:
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Product sourcing and vetting of suppliers
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Quality control inspections
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Logistics coordination
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Customs brokerage
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Sales or distribution representation
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Documentation handling
Specify whether the agent is acting in a representative capacity (non-binding) or as a binding agent (authorized to enter contracts on your behalf).
🔗 Related: Key Metrics to Measure Agent Performance in Bangladesh
2. Duration and Termination Clauses
Your contract should clearly mention:
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Start and end date
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Whether the agreement is renewable
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Notice period required for termination
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Termination for breach, non-performance, or force majeure
Tip: Include an initial trial period (e.g., 3-6 months) before long-term commitments.
3. Commission or Payment Structure
Be transparent and detailed about how the agent is compensated:
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Fixed monthly retainer?
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Commission-based (percentage of deal size)?
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Reimbursements for expenses?
Specify payment timelines, currency, and whether VAT or local taxes apply (currently 15% VAT in Bangladesh for services in many sectors).
🔗 Related: The Cost-Benefit Analysis of Using Agents for Export Sourcing
4. Confidentiality and Non-Disclosure Clauses
To protect your business data, include clauses that:
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Prevent agents from sharing supplier or client information
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Restrict use of your IP, designs, or brand names
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Prohibit solicitation of your clients or partners
Bangladesh has limited IP enforcement at lower levels, so tight NDAs within your contract are your first line of defense.
5. Exclusivity (or Non-Exclusivity)
Clarify whether your agent:
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Has exclusive rights in a particular territory or product line
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Can work with your competitors
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Can appoint sub-agents
Many foreign firms mistakenly assume exclusivity, which leads to conflicts when agents work with competitors.
6. Performance Metrics and Reporting
Define KPIs or benchmarks that the agent must meet, such as:
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Number of leads/suppliers qualified per month
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Time taken for sourcing or delivery coordination
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Weekly or monthly reporting formats
Tie performance metrics to incentives or penalties to ensure accountability.
🔗 Related: Top Services Every Global Brand Needs When Entering the Bangladeshi Market
7. Legal Jurisdiction and Dispute Resolution
Choose your legal jurisdiction carefully. Options include:
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Bangladesh courts (faster for local enforcement, but slow for resolution)
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Your home country (harder to enforce locally)
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International arbitration (ideal for large deals)
Also include:
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Mediation clause (try resolving disputes amicably first)
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Arbitration clause (preferably under ICC, SIAC, or LCIA)
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Language of the contract (ensure English is legally binding)
🔗 Related: How Bangladesh’s Legal Environment Affects Foreign Investors
8. Compliance with Local Regulations
Ensure the contract aligns with Bangladesh’s legal system, such as:
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The Contract Act 1872
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Income Tax Ordinance 1984 (for withholding tax implications)
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VAT & SD Act 2012 (for service VAT)
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Foreign Exchange Regulation Act 1947 (for payment remittance)
Note: Some contracts may require registration with regulatory bodies if involving large-scale procurement or foreign funds.
9. Force Majeure and Unexpected Risks
This clause protects both parties from uncontrollable events like:
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Natural disasters
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Political unrest
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Customs strikes
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Global pandemics
Make sure you define the scope of force majeure, and require the affected party to notify the other in writing.
10. Signatures, Stamping, and Witnesses
In Bangladesh, some contracts are subject to stamp duties (usually for property or financial transactions), but it’s always good practice to:
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Have the contract signed and sealed by both parties
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Include witness signatures
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Notarize the contract for extra authenticity
Final Thoughts
A strong agent service contract can protect your brand, speed up your supply chain, and build long-term trust with Bangladeshi partners. In a market as promising yet complex as Bangladesh, clarity on paper leads to better performance on the ground.
Whether you’re sourcing textiles, electronics, agricultural products, or entering Bangladesh’s digital ecosystem, don’t underestimate the power of a well-structured legal agreement.