Agency & Representation in Bangladesh — A Practical Guide by TRW Law Firm

1) Why agency law matters (and why now)

Commerce in Bangladesh runs through agents—sales representatives, clearing & forwarding (C\&F) agents, indenting agents, franchise managers, real-estate brokers, procurement intermediaries, and attorneys-in-fact executing transactions onshore for principals based abroad. Getting agency structures wrong triggers void contracts, uncollectable commissions, tax exposure, personal liability for agents, and enforcement headaches when a deal goes sideways. Getting them right allows you to scale distribution, contain risk, and enforce rights efficiently in Bangladeshi courts and arbitral forums.

As a global law firm with teams in Dhaka and international hubs, TRW coordinates local agency design with enforceability-first structures for Germany/EU, the UK, Middle East, and the U.S.—so your Bangladeshi agency dovetails with foreign POA, notarisation/legalisation, sanctions/AML, competition compliance, and tax rules abroad.

2) Core legal sources at a glance

■ Contract Act, 1872 (Sections 182–238) — definitions, creation of agency, authority (actual/apparent), sub-agents vs substituted agents, ratification, duties/rights, personal liability, and termination.
■ Powers-of-Attorney Act, 1913 — formalities, execution by attorney, proof of authority.
■ Notaries Ordinance, 1961 & Rules — notarisation practice for instruments, affidavits, and attestations.
■ Registration Act, 1908 & Stamp Act, 1899 — registration/stamping of instruments (including certain POAs, especially relating to immovable property or where an attorney can sell/transfer).
■ Companies Act, 1994 — board authority and corporate representation; foreign companies’ authorised representatives if carrying on business in Bangladesh.
■ Partnership Act, 1932 (ss. 18–19) — every partner is the agent of the firm for acts of the business; scope and limits.
■ Civil Procedure Code, 1908 (Order III) — recognized agents and pleaders (vakalatnama) for court representation.
■ Sectoral regulations — e.g., customs/C\&F licensing, insurance agency, brokerage regimes, telecom distribution, etc.
■ Tax/VAT instruments — withholding on commission/brokerage and VAT on services (rates/thresholds/zero-rating depend on current SROs and status of principal/agent).

3) What is an “agent”? Who can be a principal?

Principal is the person for whom an act is done. Agent is the person who acts for the principal or represents the principal in dealings with third parties. Under the Contract Act:

■ Capacity. Any person can be an agent; however, to incur personal liability an agent should be competent to contract. A principal must be competent (major, sound mind).
■ Corporate capacity. Companies act through organs (board, MD/CEO) and agents (officers, attorneys-in-fact, or external representatives) authorised by board resolution, AoA, or a POA.
■ Imputation. Knowledge acquired by an agent within the scope of authority is imputed to the principal; notice to the agent is notice to the principal (subject to exceptions for fraud).

Practical tip (TRW): Corporate principals should issue clear written authority (board resolution + POA), define scope & limits, and maintain a delegation matrix to avoid ostensible-authority blow-ups.

4) Creating an agency: express, implied, apparent, and by necessity

4.1 Express authority

Granted by written or oral appointment—most commonly by a Power of Attorney (POA) for significant acts (signing contracts, handling banking, registering deeds). For real estate or dispositions of immovable property, POAs often require registration and stamping; foreign-executed POAs may need consular legalisation (or apostille if applicable) plus notarised translations into Bangla/English as needed.

4.2 Implied authority

Arises from conduct, course of dealing, or circumstances (e.g., appointing a “branch manager” implies authority to hire staff, order supplies, and sign routine contracts).

4.3 Apparent (ostensible) authority

Where a principal represents (by words or conduct) that the agent has authority, and a third party reasonably relies on it, the principal may be estopped from denying authority—even if internal limits existed. This is common with sales teams bearing company cards, email IDs, and titles.

4.4 Agency by necessity

In emergencies, an agent may exceed strict instructions if reasonably necessary to protect the principal’s interests (e.g., perishable goods stranded at port).

4.5 Agency by ratification

An unauthorised act can be ratified by the principal with full knowledge of material facts; ratification relates back to the date of act, but cannot injure third-party rights already accrued.

TRW checklist for creation
■ Board resolution + POA template (with specimen signatures).
■ Scope: specific acts vs general business management.
■ Duration, territory, and product/channel restrictions.
■ Fees/commission, tax gross-up, and invoicing mechanics.
■ Compliance undertakings (anti-bribery, AML/KYC, sanctions, data).
■ Termination triggers + post-termination restraints and handover.

5) Scope of authority: actual, apparent, emergency

Actual authority (express/implied) governs the internal principal-agent relationship; apparent authority governs third-party reliance. Bangladesh courts typically honour third-party protections where the principal’s own representations created the appearance of authority. Emergency authority permits protective acts, but not speculative commitments.

Do/don’t (green squares denote action points)
■ ■ Do issue a one-page Authority Certificate to present to banks, regulators, and counterparties.
■ ■ Do limit signing thresholds (e.g., BDT caps, dual signatures).
■ ■ Do require counter-signature or email confirmation for non-routine commitments.
■ ■ Don’t let job titles imply authority beyond scope.
■ ■ Don’t recycle old POAs without reviewing scope, tax, and registration.

6) Sub-agents vs substituted agents

Under the Contract Act:

Sub-agent is employed by the agent and acts under the agent’s control. Appointment is allowed only if expressly authorised, by necessity, or by custom. If properly appointed, the principal is represented vis-à-vis third parties, but the agent remains primarily responsible for the sub-agent’s conduct. If improperly appointed, the principal is not bound, and the agent answers to principal and third parties.

Substituted agent is a specialist whom the agent properly nominates for the principal’s approval; after approval, the substituted agent becomes the principal’s agent directly (e.g., appointing a surveyor, customs broker, or law firm on behalf of the principal).

Practical drafting (TRW):
■ Allow sub-agents only for enumerated tasks, require due-diligence and indemnity from the appointing agent.
■ Use a panel of substituted agents (auditors, customs brokers, shipping agents) expressly approved by the principal.

7) Duties of agents and principals (the fiduciary spine)

7.1 Agent’s duties

■ Obedience & scope: follow instructions; act within authority.
■ Skill & diligence: apply reasonable care and industry standards.
■ Loyalty & no-conflict: no secret profits; don’t deal on own account in the subject matter without informed consent; disclose material facts.
■ Segregate funds & account: keep proper books; remit promptly.
■ Confidentiality & data: protect trade secrets, personal data, and security credentials.
■ Handover: deliver property/documents on termination.

7.2 Agent’s rights

■ Remuneration/commission (subject to performance or milestones).
■ Indemnity & lien for acts done within authority and expenses incurred.
■ Retention of sums received on principal’s account to the extent of due remuneration/expenses.

7.3 Principal’s duties

■ Pay agreed remuneration; reimburse expenses incurred within authority.
■ Indemnify for lawful acts and consequences of ratified acts.
■ Good faith dealing; supply information and documents needed to perform.

TRW remedial clause: Liquidated-damage-style penalties for secret commissions are risky—draft proportionate contractual damages and fee forfeiture provisions with audit rights rather than punitive sums.

8) When agents become personally liable

An agent is generally not personally liable if acting within authority and discloses the principal. Liability can arise when:

■ Undisclosed principal: agent signs without disclosing principal; third party may elect to sue agent or principal.
■ Foreign principal: trade usage or contract can make agent personally liable (common with indenting).
■ Incompetent/fictional principal: if principal cannot be bound (e.g., minor, dissolved entity), agent may be liable.
■ Exceeding authority: agent binds themselves if acting beyond authority without ratification.
■ Warrant of authority: misrepresenting that authority exists creates tortious liability.

TRW drafting moves
■ Put the legal name, address, BIN/TIN, and capacity of the principal on every invoice, PO, and contract; stamp “Acting as Agent for [Principal]”.
■ Add a no personal liability clause for the agent, except for fraud, gross negligence, or acting outside authority.
■ Insert an election bar: third parties waive recourse against the agent once they have exercised recourse against the disclosed principal.

9) Ending agency: revocation, renunciation, and “agency coupled with interest”

Agency ends by revocation (principal), renunciation (agent), completion, expiry, death/insanity of principal or agent, insolvency of principal, or destruction of subject matter. But an agency coupled with interest (e.g., a financing agent with a security interest) cannot be revoked to the prejudice of that interest. Revocation after authority has been partly exercised may be ineffective as to past acts. Give reasonable notice to avoid damages for premature termination.

TRW termination kit
■ Notice & publication: circular to counterparties + public notice (where relevant) to cut off apparent authority.
■ Document return: physical and electronic handover with deletion certifications.
■ Accounts closure: settle commissions, claw back unearned advances, release liens.
■ Regulatory filings: where an authorised representative is registered, file change notices promptly.

10) Corporate and courtroom representation

10.1 Corporate acts

Companies act via board/authorized officers and attorneys-in-fact. Board resolutions should specify the exact acts (open/operate bank accounts, sign leases, litigate, acquire land) and monetary limits. When executing deeds and registrable instruments, ensure proper stamping and registration; a POA authorising sale/transfer of immovable property typically requires registration.

10.2 Court representation (Order III CPC)

■ Recognized agents & pleaders: Parties appear through authorized officers or advocates furnished with vakalatnama.
■ Vakalatnama practice: Companies issue board resolution + vakalatnama; individuals sign personally (or via valid POA).
■ Affidavits & evidence: Where agency is disputed, courts scrutinize the authority chain (board minutes, POA, specimen signatures, seal, and notarisation).
TRW practice: We build a litigation authority bundle (resolution, POA, specimen signature, seal samples, counsel appointment) so objections to authority do not derail interim relief.

11) Partnerships, branches, and foreign companies

■ Partners as agents: Every partner is the agent of the firm for the business of the firm; acts in usual course bind the firm unless the partner lacks authority and the third party knows it. Restrict by partnership deed and public notice for retirements.
■ Foreign company presence: A foreign company carrying on business in Bangladesh typically appoints an authorised representative and makes prescribed filings with the Registrar. Boards abroad grant POA; documents usually require legalisation and translations.
■ Branches & liaison offices: Bangladesh Bank permissions often condition the scope of activities; the local chief signs contracts only within approved scope.

12) Sector snapshots (how agency roles differ)

12.1 Indenting & distribution

Agents introduce buyers/sellers and take a commission on concluded sales; ensure clear trigger (PO acceptance? LC establishment? shipment? payment?), exclusivity scope, non-circumvention, and post-termination trailing commission for pipeline deals.

12.2 Clearing & forwarding (C\&F) / logistics

C\&F agents handle customs clearance, port operations, and delivery—authority must expressly cover customs declarations, duty payments from advances, document signing, and e-filings. Build bond & indemnity mechanics and AML checks for cash handling.

12.3 Real estate brokers

Define listing, sole/sole-agency/exclusive arrangements, earnest money handling, and disclosure of conflicts. For conveyances, ensure the selling authority (POA/ownership chain) is valid and registered where required.

12.4 Franchise & brand representation

The “agent” label may be inaccurate—franchisees are independent contractors. Still, brand owners sometimes confer limited agency for consumer refunds or IP enforcement; draft no-authority clauses to avoid ostensible authority for unwanted obligations.

12.5 Technology & SaaS

Resellers vs commission agents vs referrers—each carries different tax/VAT and liability results. If the agent collects money, add trust account provisions, PCI-DSS obligations (if cards involved), and data-processing allocations.

12.6 Insurance & financial distribution

Heavily regulated; corporate agency and bancassurance models require licensing/approval. Agents’ advertising and advice often bind the principal under consumer-protection concepts—train and script.

13) Tax & VAT touchpoints (what finance teams ask)

Note: rates and thresholds change via SROs. Treat the below as a framework and confirm current numbers before signing.

■ Withholding (TDS) on commission/brokerage: Typically deducted at source when commissions are paid to resident agents; for non-resident agents, separate non-resident withholding may apply depending on source rules and double tax treaties.
■ VAT on agency services: Agents providing services in Bangladesh generally charge VAT on commission; registration and e-Mushak invoicing obligations apply above the threshold. Place-of-supply rules determine VAT on cross-border services.
■ Expense deductibility: Principals should condition payment on compliant invoices, TIN/BIN info, and tax challans to support expense deductions.
TRW design: We build gross-up and tax-compliance clauses, and pin payment milestones to receipt of compliant tax docs.

14) Anti-bribery, AML, sanctions & competition

Agency channels are classic vectors for improper payments and sanctions evasion. Bangladesh also sees procurement-related scrutiny.

TRW compliance spine (embed these in the agency contract)
■ ■ Anti-bribery: Explicit prohibition on facilitation payments and political contributions; training & certification obligations.
■ ■ AML/KYC: Identify beneficial owners, keep KYC files, and maintain suspicious activity reporting pathways.
■ ■ Sanctions/export controls: Warranties regarding restricted parties, end-use, and destination; termination for sanctions breach.
■ ■ Competition: If you rely on agency to set resale prices or territorial exclusivity, ensure the model truly qualifies as genuine agency; otherwise, vertical restraints analysis applies.
■ ■ Audit & access: Principal audit rights, data room access, and termination for audit obstruction.

15) Cross-border POAs and documents (how to make them stick)

When a Bangladeshi agent needs to act abroad—or a foreign principal needs a Bangladeshi agent to act onshore—align form and proof with the target forum:

■ Execution: Sign before notary; include photo ID and specimen signatures.
■ Legalisation/apostille: Use the correct chain (consular/legalisation or apostille, as applicable at the time) and certified translations.
■ Scope in plain language: Foreign banks/registries often reject vague POAs.
■ Expiry & revocation: State a term and a revocation mechanism; circulate revocation notices widely.

TRW’s cross-border teams prepare dual-language, forum-compliant POAs (e.g., English/German or English/Arabic) and handle chancery runs for notarisation and legalisation to avoid surprises at banks, registries, or courts.

16) Templates that actually work (anatomy of a robust agency agreement)

1. Parties, capacity & recitals — verify TIN/BIN, corporate docs.
2. Appointment & territory — exclusive/non-exclusive; key accounts carve-outs.
3. Scope & authority — what the agent may and may not do (no binding without countersignature; no credit terms beyond X days; no warranty extensions).
4. Compliance & conduct — ABAC/AML/sanctions, marketing content approvals.
5. Commission & expenses — trigger, rate grid, charge-backs for returns/bad debt; FX rules for cross-border payments.
6. Taxes & VAT — withholding mechanics, gross-up, proof documents.
7. Information & audit — CRM access, reporting cadence, right to inspect books.
8. IP & confidentiality — brand use, domain handles, social media; post-term takedown.
9. Liability & indemnities — carve-outs for fraud, gross negligence; caps for ordinary negligence.
10. Sub-agents & substituted agents — approval protocol and cascading obligations.
11. Term & termination — notice, immediate termination for cause, wind-down.
12. Post-termination — return of material, non-solicit, pipeline commissions.
13. Governing law & forum — Bangladesh courts or arbitration (seat, rules); coordinate with cross-border enforcement strategy.
14. Notices & language — clear service of notices; binding language version.

17) Enforcement, litigation & arbitration in Bangladesh

Court path: You’ll need (i) a valid title—contract, POA, board resolution—and (ii) proof of authority. Bangladesh has no U.S.-style discovery; documentary evidence, witness testimony, and expert evidence are led under the CPC/Evidence Act. Loser pays portions of costs. Interim relief (injunctions, receivers) can be obtained where urgency and a strong prima facie case exist—authority challenges are common, so file the authority bundle upfront.

Arbitration: Bangladesh is pro-arbitration; agency contracts frequently select institutional or ad hoc arbitration with seat in Dhaka, Singapore, or London. We align arbitration clauses with enforcement routes and interim-relief availability in the chosen seat.

Execution: After judgment/award, use attachment of bank accounts/receivables, garnishee, or sale of property routes. Where a notarial deed + submission to execution exists (used in some jurisdictions), TRW coordinates recognition/finality to accelerate execution in Bangladesh (and vice-versa abroad).

18) Ten pitfalls we fix most often

■ Agent signs beyond authority; principal is dragged into an unwanted credit term or warranty—solve by dual-signature rules and system blocks.
■ Undisclosed principal—counterparty sues agent personally; fix with disclosure discipline on every document.
■ Improper sub-agent appointment—principal isn’t bound; losses cascade; plug with approval + substituted agent model.
■ Secret commissions and side letters—deploy audit rights, fee forfeiture, and supplier onboarding diligence.
■ Loose tax handling—no TDS/VAT compliance means commissions are non-deductible; build documentation conditions precedent to commission payout.
■ Expired or unregistered POAs for real estate—transactions challenged—plan registration and stamping at inception.
■ Vague termination—no handover; data/clients walk—use handover protocols, device wipe, account transfers.
■ Poor IP control—agent sits on domains/pages—use IP ownership, co-admin access, and post-term takedown SLAs.
■ Competition exposure—“agent” structure hides a de facto resale price maintenance model—re-architect or risk scrutiny.
■ Cross-border mis-fit—foreign bank rejects Bangladesh-format POA—issue forum-compliant dual-language instruments.

19) Quick FAQs (Bangladesh context)

Q1. Can an oral agency bind the principal?
Yes—if authority can be proved and the third party reasonably relied on it. Written instruments are strongly recommended for material acts.

Q2. Do agency agreements need registration?
Generally no. But POAs authorising sale/transfer of immovable property or other registrable acts often require registration and proper stamping.

Q3. Is an agent’s knowledge imputed to the principal?
Yes—knowledge within scope is typically imputed; exceptions apply where the agent is acting fraudulently against the principal.

Q4. Can a principal be bound by an agent’s unauthorised act?
Only if the principal ratifies (with knowledge) or if apparent authority existed due to the principal’s representations.

Q5. What’s the difference between sub-agent and substituted agent?
A sub-agent acts under the agent’s control; the agent remains responsible. A substituted agent—once approved—acts as agent directly for the principal.

Q6. How do commissions get taxed?
Expect withholding (TDS) on commission and VAT on services where applicable; details turn on residence, place-of-supply, and current SROs—structure gross-up and documentation in the contract.

20) Model clauses (short-form drafting starters)

Authority & Scope
“The Agent shall solicit orders for the Products in Bangladesh, present the Principal’s standard terms only, and shall not vary price, payment terms, warranties, or delivery dates without prior written approval. The Agent has no authority to accept orders or bind the Principal unless countersigned by an authorised signatory of the Principal.”

Disclosure / No Personal Liability
“In all dealings the Agent shall disclose that it acts solely as agent for [Full Legal Name of Principal, BIN/TIN]. No personal liability shall attach to the Agent for acts within authority, save for fraud, wilful misconduct, or acts outside authority.”

Sub-Agents & Substituted Agents
“The Agent shall not appoint sub-agents without prior written consent. Where specialist services are needed, the Agent may nominate a substituted agent for the Principal’s approval, who upon approval shall act as the Principal’s agent.”

Compliance
“The Agent shall comply with all applicable anti-bribery, AML, sanctions, export control, and competition laws, maintain books and records for seven (7) years, and certify compliance annually. The Principal may audit upon ten (10) business days’ notice.”

Commission & Taxes
“Commission is earned upon [trigger]. Commissions are payable net of any legally required withholding taxes. If withholding applies, the Principal shall remit the withheld amount to the tax authority and provide certificates. The Agent shall issue VAT-compliant e-invoices where applicable.”

Termination & Handover
“Upon termination, the Agent shall promptly return all property, transfer control of accounts and numbers, deliver an updated pipeline list, and assist in transition for ninety (90) days. Outstanding orders accepted before termination shall be fulfilled in the ordinary course.”

Governing Law & Dispute Resolution
“This Agreement is governed by the laws of Bangladesh. Any dispute shall be finally resolved by arbitration under [Rules], seat Dhaka/[Singapore], language English. Interim relief may be sought from competent courts.”

21) How TRW executes agency projects (Bangladesh × global)

Scoping in two time zones: We map business outcomes (coverage, exclusivity, key accounts) and compliance (ABAC/AML, data) with your regional leadership.
Authority engineering: Board papers, POAs, and delegation matrices aligned to bank/regulator requirements—domestic and overseas.
Tax-ready payouts: Commission triggers synced to tax/VAT documents, FX rules, and treaty relief where available.
Enforcement-first drafting: Apparent-authority control, evidentiary bundles, audit rights, and arbitration clauses calibrated for enforcement in Bangladesh and abroad.
Operational playbooks: Onboarding, training, marketing approvals, domain control, and exit handover checklists.

If you’re rolling out a national distributor program, appointing C\&F agents at ports, or restructuring legacy indenting relationships with overseas principals, TRW can blueprint, paper, and operationalise end-to-end.

For deeper reading on Bangladesh commercial law and cross-border execution, see TRW’s insights.

22) Summary table — Agency & Representation in Bangladesh

References

1. Contract Act, 1872 (Bangladesh) — ss. 182–238 on agency (definitions, creation, authority, ratification, sub-agents, duties, termination).
2. Powers-of-Attorney Act, 1913; Registration Act, 1908; Stamp Act, 1899 — execution, stamping, registration of POAs and instruments.
3. Civil Procedure Code, 1908 (Order III); Partnership Act, 1932 (ss. 18–19); Companies Act, 1994 — representation before courts; partners as agents; corporate authority.

TRW Law Firm — Contact

Numbers: +8801708000660 · +8801847220062 · +8801708080817
Emails: info@trfirm.com · info@trwbd.com · info@tahmidur.com
Global Law Firm Locations:

• Dhaka: House 410, Road 29, Mohakhali DOHS
• Dubai: Rolex Building, L-12 Sheikh Zayed Road

This article is an overview and not legal advice. For specific mandates—especially involving cross-border POAs, tax/VAT on commissions, or agency termination and enforcement—engage TRW’s specialist teams in Dhaka and our international desks.