Stage 05 Β· Pitfalls

Vicarious Liability for Distributors

The principal is responsible for its agents

Chinese anti-bribery enforcement increasingly treats the principal as responsible for its distributors' and agents' conduct.

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Vicarious Liability for Distributors

The principal is responsible for its agents

The wrong assumption: β€œThe distributor's actions are their own problem.”

A distributor that pays a kickback to win a tender can expose the foreign principal to liability and reputational damage β€” and to parallel liability under the FCPA or UK Bribery Act.

The right approach: Build compliance into the distribution relationship: due diligence on distributors, anti-bribery contract terms, audit rights, and training β€” and exercise those audit rights, not just retain them.

What we cover
  • Distributor due diligence
  • Anti-bribery contract terms
  • Audit rights that are actually exercised
  • Training and monitoring
Typical deliverables
  • Distributor compliance program
  • Contract-term drafting
  • Audit and remediation support
Anti-BriberyDistributorFCPA

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