Irrevocable Master Fee Protection Agreement

An IMFPA is a legal contract that involves three parties: the buyer, the seller, and an intermediary (often a broker or agent). Its primary purpose is to protect the intermediaries who facilitate transactions, particularly those related to the purchase of commodities or bulk merchandise. Here are the essential points to understand about the IMFPA:

1. Parties Involved:
   • Seller: The party selling the commodity or merchandise.
   • Buyer: The party purchasing the commodity or merchandise.
   • Intermediary: The broker or agent who assists in finalizing the transaction.
2. Fee Protection:
   • The IMFPA ensures that intermediaries receive their commission or fees for their services during the transaction.
   • It stipulates that the fees due to the intermediary are protected, and neither the buyer nor the seller can refuse to pay.
3. Payment Mechanism:
   • The agreement specifies how and when the intermediary’s fees will be paid.
   • Typically, the intermediary’s commission is paid simultaneously with the seller’s payment for each transaction under the contract.
   • The buyer commits to ordering and directing their bank to endorse automatic payment orders to the beneficiaries (intermediaries).
4. Timing of Payment:
   • The intermediary’s fees are disbursed within a specified timeframe (usually within 7 working days) after the completion of each shipment.
   • Completion occurs when the financial instrument issued by the buyer is drawn down at the issuing bank.
5. Beneficiaries and Agents:
   • Beneficiaries on both the seller’s and buyer’s sides act as agents or intermediaries.
   • They have no direct liability toward the seller or buyer for any default under the contract.
   • Their role is strictly as agents or mandates.
6. Liability and Damages:
   • Agents or intermediaries are not liable for any loss or damage incurred by the buyer or seller during contract performance.
   • This includes special, incidental, or consequential damages (e.g., loss of profit, business opportunities).
7. Integration with the Contract:
   • The IMFPA is an integral part of the overall contract between the buyer and seller.
   • It aligns with the terms of purchase and sale of the commodity specified in the main contract.

There are special agreements within the Irrevocable Master Fee Protection Agreement (IMFPA):

• Dealing and Disclosure:

8. The IMFPA outlines how intermediaries (brokers) should conduct themselves during the transaction.
9. It may specify confidentiality requirements, ethical behaviour, and transparency in dealings.
10. Intermediaries must disclose relevant information to both the buyer and seller.
11. Honouring of Commission:
    • The agreement ensures that the intermediary’s commission is honoured promptly.
    • When the transaction is completed, the fee is automatically transferred from the buyer’s or seller’s bank account to the broker’s account.
    • The commission is usually a percentage of the value of the purchased merchandise.
12. Informing Beneficiaries:
    • The buyer commits to ordering and directing their bank to endorse automatic payment orders to the beneficiaries (intermediaries).
    • Beneficiaries receive written evidence of payment orders and acknowledgments of acceptance.
    • The bank provides duly signed and stamped acknowledgments as part of the agreement.
13. Term of the Agreement:
    • The contract specifies the duration of the IMFPA.
    • It outlines the validity time of the contract, including any extensions or rollovers.
    • Completion of each shipment triggers the payment process.

The IMFPA safeguards the interests of intermediaries by ensuring timely payment of their fees. It plays a crucial role in international trade, especially when dealing with bulk commodities or merchandise. Remember that specific details may vary based on individual agreements, but these fundamental principles apply across most IMFPA contracts.The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this article are for general informational purposes only. Readers of this article should contact us or any other attorney to obtain advice with respect to any particular legal matter.  No reader, user, or browser of this article should act or refrain from acting on the basis of information on this article without first seeking legal advice.  Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.  The content on this posting is provided “as is;” no representations are made that the content is error-free.