A Practical Guide for Korean Companies Expanding Abroad and Foreign Businesses Partnering in Korea
Attorney Kyusung Lee | International Contracts · Startup Law · Cross-Border Business Counsel
About Attorney Kyusung Lee
| Education | Brown University – B.A. Economics, with honors / The Hotchkiss School |
| Credentials | Korean Bar Certified Startup-Specialized Attorney / CAMS |
| Experience | Former Legal Counsel, Samsung C&T Construction / Former Equity Research Analyst, BofA Merrill Lynch |
| Contact | +82-2-6264-7604 | kyusungii@gmail.com | http://www.kyusunglee.com |
I assist Korean companies expanding overseas and foreign businesses operating in Korea with English contract drafting, review, and dispute resolution. One-on-one consultations available — feel free to reach out.
Introduction — A Translated Template Is Not Enough
One of the first legal challenges Korean companies face when expanding their business internationally is the English Agency Agreement. The same applies to foreign companies appointing Korean agents or distributors.
| International transactions involve differences in language, culture, and legal systems. Simply signing a translated document or adapting a generic template is not sufficient to create a safe and enforceable business relationship. |
Ambiguous contract terms lead to disputes over commissions, territorial rights, or liability — which quickly translate into financial losses and reputational damage. A thorough legal review and strategic drafting process are essential from the outset.
Here is what you need to check before signing any English agency agreement.
Clause-by-Clause Checklist
| Clause | What to Verify |
| ① Scope of Agent’s Authority | Define permitted activities, exclusivity, and covered territory or market segment |
| ② Commission & Compensation | Specify payment timing, calculation method, sales linkage, and exchange-rate handling |
| ③ Term & Termination | Set out duration, auto-renewal, termination grounds, procedures, and post-termination settlement |
| ④ Confidentiality & Non-Compete | Include post-termination restrictions to prevent agents from moving to competitors |
| ⑤ Governing Law & Dispute Resolution | Name the applicable law, choose arbitration or litigation, and specify venue and language |
| ⑥ Liability & Tax Compliance | Allocate liability for agent’s actions; address tax obligations and export/import regulations |
① What Is an Agency Agreement?
An agency agreement allows an agent to promote or sell products and services on behalf of a principal company, in exchange for a commission or fee. Understanding the basic structure, however, is only the starting point.
| The contract must explicitly define: the scope of the agent’s permitted activities / whether exclusivity is granted / the territory or market segment the agent is responsible for. |
Ambiguity in these clauses allows agents to act outside their intended authority — creating serious and costly legal disputes. Precision at the drafting stage is far cheaper than litigation later.
② Commission and Compensation Structure — Precision Matters
Commission and compensation structures are the most frequent source of disputes in agency relationships. The contract must address each of the following:
- When and how commissions are paid
- How commissions are calculated, and whether they are linked to sales performance
- How exchange-rate fluctuations between currencies are handled
| If a performance-based commission structure is not clearly defined — with actual numbers and formulas — it will almost certainly become a point of dispute at settlement time. |
③ Contract Term and Termination Conditions
The contract duration, automatic renewal provisions, and grounds and procedures for termination must all be carefully defined. Failing to do so leads to unnecessary legal conflict whenever one party seeks to end the relationship.
Confidentiality and post-termination non-competition clauses are equally important. Without them, the agent may move to a competitor after termination, leaving the principal with limited legal recourse.
Post-termination settlement must also be addressed clearly:
- How unpaid commissions will be handled
- How inventory and outstanding receivables will be settled
- Obligations to return business materials and customer data
| Agency agreements must be tailored to the practical realities of your specific business relationship and industry — not assembled from a generic template. |
④ Governing Law and Dispute Resolution
In any cross-border agreement, one of the most critical issues is which country’s law applies and how disputes will be resolved.
| Recommended governing law clause: “This Agreement shall be governed by and construed in accordance with the laws of the Republic of Korea.” |
That said, potential conflicts with the laws of the agent’s home jurisdiction must also be assessed — what Korean law permits may not align with mandatory provisions of another legal system.
For dispute resolution, international contracts frequently rely on arbitration. The following must be clearly specified:
- The arbitration institution (e.g., ICC, KCAB, SIAC)
- The seat of arbitration and the language of proceedings
- The binding nature of the arbitral award
If litigation is preferred over arbitration, the contract should expressly identify the jurisdiction and venue of the court.
| These provisions are not formalities. They are the critical safeguards that minimize loss and uncertainty when a real dispute arises. Leaving them vague is one of the most common — and most expensive — mistakes in cross-border contracting. |
⑤ Common Oversights in English Agency Agreements
| What Gets Missed | The Risk It Creates |
| No bilingual version | Translation-only reliance leads to meaning gaps and unintended legal consequences |
| Vague commission formula | Performance-linked compensation without precise metrics invites settlement disputes |
| No post-termination settlement clause | Unpaid commissions, inventory, and receivables become contested at termination |
| Unclear liability allocation | Agent’s actions causing third-party claims leave liability ownership ambiguous |
| No tax or export-compliance clause | Unaddressed tax obligations and regulatory duties create legal and financial exposure |
Including clauses that address tax responsibilities, export restrictions, and local regulatory compliance significantly reduces legal risk and makes international operations more secure.
Final Advice from Attorney Kyusung Lee
An English agency agreement is not just a piece of paperwork — it is a core legal instrument protecting your business in every overseas transaction. Signing without legal review exposes your company to unnecessary and avoidable risk.
Before execution, you should:
- Assess your potential legal liabilities under the agreement
- Ensure the foreign jurisdiction’s laws are properly accounted for
- Confirm that termination, indemnification, and dispute-resolution clauses make the contract practically enforceable
| The key to a solid English agency agreement is clarity — clear rights, clear obligations, and a clear path to resolution when things go wrong. One review by a qualified attorney can prevent a dispute that costs far more. |
Whether you need a contract reviewed, a new agreement drafted, or representation in a cross-border dispute, Attorney Kyusung Lee is ready to assist.
Tel: +82-2-6264-7604 | kyusungii@gmail.com | http://www.kyusunglee.com
Attorney Kyusung Lee | International Contracts · Cross-Border Business · Startup Law
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Kyusung Lee Attorney at Law 
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