In selecting an appropriate system of distribution in Israel, a foreign business entity must take into account the size of the country, its market conditions, financing requirements, brand recognition, and different legal regulations as well as profit margins on the product, retailing sophistication, and the need for post-sales service.
Israel passed the Agency Contract (Commercial Agent and Supplier) Act (hereinafter “The Agency Contract Act” or “the Act”) in 2012. The Act draws its inspiration from the Council Directive 86/653/EEC of December 18, 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents.
Prior to the passage of the Act, Israel had no law dealing specifically with commercial agents and distributors and differed in this respect from many European countries, where specific statutory regulations govern commercial agency and distribution. However, other Israeli legislation was responsible for governing several aspects of these transactions, such as the form of the contract, rights, and duties of the principal and the commercial agent, and termination and compensation conditions, similar to that of European countries.