Includes typical use of agents and distributors and how to find a good partner, e.g., whether use of an agent or distributor is legally required.

Generally, the most efficient and effective means through which U.S. exporters conduct business in the DR is through the appointment of an agent or distributor.  However, this is not an absolute requirement.  The Commercial Service of the U.S. Embassy in Santo Domingo offers several cost-effective programs to help identify an appropriate trading partner in the country.

U.S. exporters should be aware of a provision in DR Law, the Dominican Agent/Distributor Law (Law 173, implemented in April 1966), which was designed to protect Dominican citizens who work as agents or distributors for foreign companies.

Under Law 173, agents and distributors are able to claim the right to compensation based on a multiple of annual sales if the U.S. exporter decides to terminate the relationship.  With the DR’s entry into CAFTA-DR, U.S. exporters are able to avoid being subject to Law 173.  However, the process can be complicated and U.S. firms are advised to seek legal counsel before appointing an agent or distributor in the Dominican Republic.  Foreign Investment Law No. 16-95 allows foreign firms to assume direct representation of their products manufactured abroad or in the Dominican Republic without Law 173's lengthy residency requirements and without the requirement of two-thirds Dominican ownership of distribution companies.

For agency/distributorship contracts signed after the entry into effect of CAFTA-DR on March 1, 2007, Law 173 applies unless there is a clause clearly stating that it does not apply.

The most significant changes to Law 173 post CAFTA-DR include the following:

  • Apply principles of general contract law to the covered contract.
  • Treat the covered contract in a manner consistent with the obligations of the Agreement and principle of freedom of contract.
  • A contract may terminate on its termination date, earlier for just cause by the supplier of the goods or services or be allowed to expire without renewal.
  • If the covered contract has no termination date, it can be terminated by any of the parties with six months advance termination notice.
  • Allow disputes arising from the contract to be resolved through binding arbitration.
  • Allow the parties to establish in the contract the mechanisms and forums that will be available in the case of disputes.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.