Different classifications of agency relations corresponding to different legal systems may have a huge impact on the content of the agreement which, in some cases, leads to the invalidation of its certain provisions. E.g., the risk that an open-ended agreement may be terminated by the parties to the agency relations unilaterally that arises due to the fact that agency agreements are trust-based is often ignored. The consequences of such termination will vary from country to country since the laws of each country require different notice periods for terminating relations.
Moreover, when formalizing international agency relations, it is desirable to know which country’s law may apply to a particular transaction, whether it recognizes the autonomy of the parties' will and whether certain types of agreements are allowed in accordance with the national legislation.
E.g., some countries prohibit using the services of representatives who are not their citizens or legal entities.
Despite the fact that the subject of agency agreements is not strictly limited by statutory rules, when managing tax risks arising from agency relations with non-resident companies, it is critical to carefully coordinate the elements of the document management process: communication between the agent and the principal, formats of reports to be provided, proof of expenses, etc. To draw up agency agreements exposed to minimal risks it is also desirable to have an expert assessment of the future auditors of the corporate parties to the agreement.