Understanding Agency Relationships under Lebanese Law

Commercial agencies are regulated in Lebanon by the Commercial Code (Articles 624–667) and Decree‑Law 34/67, which recognize an intermediary empowered to promote or conclude transactions on behalf of a principal for remuneration. The regime applies to the sale of goods, supply of services, franchising models, and even some distribution structures if the intermediary has authority to bind the principal. A written contract is strongly recommended—though not always compulsory—because registration before the Ministry of Economy and Trade (MOET) requires a signed document detailing scope, territory, duration, and commission. Jurisprudence from the Courts of Cassation stresses that the agent acts independently, not as an employee, and may represent several principals unless the contract grants exclusivity. By grasping these statutory cornerstones, businesses can respect Agency Law Beirut Lebanon, and avoid void agreements that later jeopardise enforceability.

Appointment of Commercial Agents: Mandatory Formalities

To appoint a resident or foreign intermediary as a commercial agent, the parties must observe two essential steps. First, the signed agency agreement must carry legal stamps, be notarized, and—in the case of foreign principals—legalized through the Lebanese embassy and the Ministry of Foreign Affairs. Second, the agreement must be registered in the Commercial Agents Register kept by the MOET within three months of execution; otherwise, the agent forfeits statutory protections such as indemnity on termination.

Core Duties and Protections for Principals and Agents

Once the agency commences, Lebanese law imposes reciprocal obligations. The agent must:

1. Promote the principal’s products with reasonable diligence;
2. Keep the principal informed of market conditions;
3. Maintain separate accounting records and transmit orders promptly; and
4. Refrain from misusing trademarks or confidential data.

Conversely, the principal must:

1. Supply up‑to‑date price lists and technical documents in Arabic where feasible;
2. Honor commissions on all sales concluded within the agreed territory, even if the customer ordered directly from headquarters;
3. Reimburse reasonable marketing expenses previously authorised; and
4. Give advance notice of delays, stock shortages, or quality issues that could expose the agent to liability.

A unique Lebanese protection is the termination indemnity owed to an agent who has contributed to increasing clientele unless the agent is in fundamental breach. Courts calculate compensation by looking at average annual commissions multiplied by the estimated number of years the agent would have profitably continued absent termination. The regime applies to the sale of goods, supply of services, franchising models, and even some distribution structures if the intermediary has authority to bind the principal. A written contract is strongly recommended—though not always compulsory—because registration before the Ministry of Economy and Trade (MOET) requires a signed document detailing scope, territory, duration, and commission. Jurisprudence from the Courts of Cassation stresses that the agent acts independently, not as an employee, and may represent several principals unless the contract grants exclusivity. While parties may stipulate a predetermin­ed formula, any clause that suppresses indemnity entirely could be struck out as contrary to public order. Therefore, principals wishing to retain flexibility should design performance thresholds that, if unmet, constitute a breach and justify non‑payment.

Drafting Effective Agency Contracts

Because the statutory framework is pro‑agent, careful drafting helps principals control exposure without infringing mandatory rules. Consider the following clauses:

• Term and renewal: Opt for an initial fixed term (e.g., three years) with express non‑automatic renewal, coupled with performance criteria for any extension.
• Territory and product scope: Define geography precisely—Beirut Metropolitan Area, Mount Lebanon, the whole country—or even restrict to specific customer segments. A broad clause like “Middle East” invites future disputes.
• Exclusivity: If exclusivity is granted, stipulate minimum annual purchase targets; falling short triggers loss of exclusivity without default termination.
• Pricing and discount authority: Clarify whether the agent can grant discounts beyond a stated range. This prevents margin erosion and pricing claims.
• Intellectual property: Provide a limited, non‑transferable licence to use trademarks solely for promotion.
• Termination: Align notice periods with the Commercial Code (usually one month per year of service after the first year) and include just‑cause events—fraud, insolvency, sanctions breaches—that allow immediate termination without indemnity.
• Governing law and dispute resolution: Lebanese law is mandatory, but parties may select arbitration under ICC or BCDR‑AAA rules seated in Beirut or a neutral venue. Arbitration awards are enforceable under the New York Convention (Lebanon is a signatory).

By recording these terms with clarity, both sides gain predictable rights and can evidence compliance before regulators and courts.

Conclusion

Commercial agencies continue to power cross‑border trade into Lebanon, but the protectionist features of the legal regime mean foreign manufacturers and local intermediaries must pay close attention to statutory obligations. Drafting precise contracts, completing timely registration, and implementing transparent governance are essential steps toward a profitable partnership compliant with the Agency Law Beirut Lebanon. By investing up front in meticulous structuring and by managing the relationship actively throughout its life‑cycle, principals and agents alike can minimise litigation risk and secure long‑term, mutually beneficial growth in one of the region’s most promising markets.