ICC Model Consulting Services Contract: Expanding into a New Market

What are the main features of this model? 

An international business transaction requires a precise and detailed underlying contract. However, it can be expensive and time-consuming to draft such a contract oneself. The ICC Model Consulting Services Contract – Expanding into a New Market responds to the market’s need for a reliable and equitable template, providing a set of clear and concise standard provisions regarding hiring a local expert to inform a company’s foreign expansion that will save parties time and money in the negotiation process. 

Companies looking to expand their operations to a new, foreign market increasingly engage a domestic entity or person familiar with the new market through cultural and business experience to provide guidance on a range of issues related to the new market,  

such as brand promotion where brand ambassadors are engaged, market research before making franchising contracts abroad, or obtaining information on local incentive regimes prior to entering a new market. 

The ICC consulting services model deals with independent consultants, not with commercial agents, occasional intermediaries or distributors. While the distributor acts in its own name and for its own account as buyer-reseller, both the occasional intermediary and the commercial agent act as a middle person, i.e. they promote the conclusion of contracts between a principal and a third party.  

Different from all these types of relationships, a consultant neither acts as an intermediary or broker nor conducts any commercial sale activity in its own name and on its own behalf. This consultancy model only deals with services related to promoting and presenting a client, without the involvement of any sale of goods. 

For users deciding between this model and the ICC Occasional Intermediary Contract (NCND) , it is important to be clear about the services expected from the consultant / occasional intermediary, keeping in mind: 

• The work of an occasional intermediary, on the one hand, generally consists of supplying information about one or more specific deals and names of possible customers or contacts, as well as putting the counterpart in contact with a third party and negotiating a contract for the counterpart with such third party, which means that an occasional intermediary specifically targets conclusion of contracts between its principal and a third party. As concerns the remuneration, in this case, typically the intermediary is paid only where its activity has led to the conclusion and performance of a contract with a third party depending on the intermediary’s scope of work. Although it is also possible for the parties to agree on  lump sum remuneration, payment of commission on the value of the business (contract) entered into through the intermediary’s intervention is the most common solution for such agreements. 

• On the other hand, a consultant’s main duty is to introduce the local market and the newcomers to each other: evaluating business and growth opportunities; informing its client of regulatory, legal and economic developments as well as the practices of public authorities; strategies and investment environment; advising on hiring local talent; promoting and presenting the client through participation in or organization of special events; coordinating and supervising filings and actions of its client before public authorities; and assisting/advising its client in day-to-day management of its business. In this case, the remuneration will be due regardless of whether or not any contracts have been concluded with third parties, provided the consultant has fulfilled its obligations under the agreement.