An Agent in Israel
The commercial agency may take on different characteristics, arising from
the agency agreement between the agent and manufacturer. When an agent
operates as a “legal agent,” the provisions of the Agency Law 1965 apply.
Israel Agency Law
Israel’s Agency law is contained in the Agency Act 1965 and legal agency
is defined as the granting of power to an agent to undertake, on behalf of
the manufacturer, a legal act with respect to a third party. A manufacturer
could decide to vest an Israeli representative or employee with authority to
act in its name with binding force, thus making the representative an agent.
The granting of such authority is recommended only if the foreign entity
either trusts the agent to make the right decisions or can exercise
significant control over the agent’s actions. This would be the case where
the agent is an employee or a wholly-owned subsidiary of the manufacturer.
The acts performed by the agent bind the manufacturer and it would
therefore be wise for the manufacturer (the foreign entity) to agree on the
extent of the agent’s authority and his power to bind him.
According to the Agency Law 1965, a manufacturer shall not be bound by
the agent’s acts which are outside the scope of his powers. A third party
unaware of the lack of authority may either regard the agent as a party to
the act or withdraw from the transaction and claim damages from the agent.
The Agency Act 1965 lists the basic obligations of the agent to include
loyalty, promotion of the manufacturer’s interests and a prohibition to
represent different manufacturers regarding the same issue (unless so agreed
by the parties). The manufacturer is obliged under the Agency Act 1965 to
indemnify the agent for reasonable expenditure and liabilities incurred as a
result of the agency.
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