--- title: "Buying House Contract Terms in Bangladesh — Key Clauses" description: "Key contract terms with a Bangladesh buying house: commission, QC liability, exclusivity, IP protection, termination, and disputes." canonical: "https://taeen.com.bd/blog/buying-house-contract-terms-bangladesh" breadcrumb: ["Home", "Blog", "Buying House Contract Terms in Bangladesh — Key Clauses"] author: "Tanvir Ahmed Khan" published: "July 14, 2026" updated: "July 14, 2026" tags: ["Buying House", "buying house Bangladesh", "apparel sourcing"] --- Buying House # Buying House Contract Terms in Bangladesh — Key Clauses By TAEEN TeamJuly 14, 202610 min read ![Buying House Contract Terms in Bangladesh — Key Clauses](https://taeen.com.bd/_next/image?url=%2Fimages%2Fblog%2Fbuying-house-contract-terms-bangladesh.webp&w=3840&q=75) **Quick Answer:** The six most critical buying house contract terms to negotiate are: commission structure and payment timing, QC liability clauses, IP and design confidentiality, factory exclusivity, termination notice period, and dispute resolution jurisdiction. Most buying house agreements favour the buying house by default — review them carefully before signing. For a comprehensive overview, see our [buying house in Bangladesh — complete guide](https://taeen.com.bd/) guide. ## Why Contract Terms Matter The relationship between an international apparel brand and a **buying house in Bangladesh** involves significant financial exposure: purchase orders of $50,000–$500,000+, production timelines of 60–120 days, and supply chain complexity that creates many points of potential dispute. Most buying house agreements are written by the buying house's lawyers and favour the buying house on ambiguous points. Understanding what to negotiate — and why — protects your brand without damaging the relationship. ## 1\. Commission Structure and Payment Timing The commission clause should specify: - **Rate:** Exact percentage on FOB value (not CIF, not ex-works) - **Basis:** Commission on actual shipped quantity at actual FOB price, not on ordered quantity or estimated price - **Payment timing:** Commission payable after goods are shipped and buyer has received the commercial invoice — not on order placement - **Currency:** USD is standard for Bangladesh garment transactions - **Commission on cancellations:** If you cancel an order after production has started, what commission (if any) applies? Negotiate a sliding scale based on production completion percentage. See also: [Buying house fee structure in Bangladesh — what you actually pay](https://taeen.com.bd/blog/buying-house-fee-structure-bangladesh). ## 2\. QC Liability Clauses This is the most commercially significant clause and the most frequently disputed. The buying house conducts quality inspections on your behalf — what happens when goods pass inspection but are rejected by your customer or fail at retail? **What most buying house contracts say:** "QC inspections are conducted on a best-efforts basis. The buying house is not liable for defects not identified during inspection." **What you should negotiate:** - AQL standards to be applied (AQL 1.5 for major, 2.5 for minor defects minimum) - Inspection methodology to be documented (photos, measurements against spec sheet) - Remediation process: if a passed shipment has defect rates above agreed thresholds at destination, what is the buying house's contribution to remediation cost? - Cap on liability: most buying houses cap QC liability at the commission earned on that order — this is reasonable; unlimited liability is unrealistic See also: [AQL quality control guide for Bangladesh apparel](https://taeen.com.bd/blog/aql-quality-control-guide). ## 3\. IP and Design Confidentiality When you share tech packs, design files, fabric specifications, and customer information with a buying house, you are sharing commercially sensitive IP. The contract must protect it explicitly. **Key clauses to include:** - **Confidentiality:** All designs, specs, customer names, and pricing shared with the buying house are confidential and may not be shared with any third party (including other buying house clients) without written consent - **Factory restriction:** Factories introduced through your buying house relationship may not be used to produce similar products for direct competitors without your consent for a defined period (typically 12 months after order completion) - **Tech pack restriction:** Your tech packs, BOM, and grading specifications remain your IP and may not be used by the factory for any other client's production - **Survival clause:** Confidentiality obligations survive contract termination for 2–3 years ## 4\. Factory Relationship Ownership A subtle but commercially important point: who "owns" the factory relationship? If you develop a strong relationship with a specific factory through your buying house — investing in sampling, compliance upgrades, and production development — what happens when you change buying houses? **Negotiate clearly:** - You retain the right to contact any factory you have placed orders with directly, after the buying house relationship ends - The buying house cannot restrict your access to factories you have actively used and paid for production at - Exclusive factory introductions (where the buying house has a formal exclusivity arrangement with a factory) should be disclosed in advance ## 5\. Termination Notice and Transition Termination notice periods determine how easily you can exit a buying house relationship without disrupting active orders. Standard contract terms often have 90-day notice periods — meaning you cannot exit without finishing 90 days of pending production. **Negotiate:** - 30-day termination notice for relationships under 12 months - 60-day notice for established relationships — enough to wind down active orders - Immediate termination rights for cause: failure to conduct agreed inspections, material misrepresentation of compliance status, or breach of confidentiality - Transition cooperation: buying house agrees to cooperate in handover of active order files, compliance certificates, and factory contacts to a successor partner ## 6\. Dispute Resolution and Jurisdiction Disputes between international brands and Bangladesh buying houses cross jurisdictions. The contract must specify how disputes are resolved to avoid expensive cross-border litigation. **Recommended approach:** - **Governing law:** Negotiate for your home country's law (UK, EU member state, or US state) — Bangladesh law is less familiar to your legal team and enforcement is more complex - **Dispute mechanism:** Staged process: first negotiation (30 days), then mediation (30 days), then arbitration — not litigation. International arbitration (ICC or LCIA rules) is standard for garment industry disputes - **Arbitration seat:** Singapore or London are common neutral seats for Bangladesh-international disputes - **Language:** English as the language of contract and arbitration ## 7\. Performance Standards and KPIs Consider adding a performance schedule as an annex to the main contract. This sets measurable standards the buying house commits to: - Email response time: within 24 business hours - Weekly WIP report delivery: every Friday by 5 PM Dhaka time - Inspection report delivery: within 24 hours of inspection completion - On-time delivery rate target: 95%+ - AQL pass rate target: 98%+ on Final Random Inspection Performance schedules are unusual in early-stage buying house agreements but become standard as relationships mature and order volumes grow. TAEEN supports adding performance KPIs to our agreements — we are confident in our delivery standards. ## TAEEN's Contract Approach TAEEN provides a standard service agreement that is balanced and transparent. We are open to negotiating all the terms above — our goal is a long-term partnership, not a contractual advantage. Clients are welcome to have their legal counsel review our agreement before signing. [Request our service agreement template →](https://taeen.com.bd/contact) ## Related Guides - [Garment buying house in Bangladesh — complete guide](https://taeen.com.bd/) - [How to choose a buying house in Bangladesh — 8-point checklist](https://taeen.com.bd/blog/how-to-choose-buying-house-bangladesh) - [Buying house fee structure — what you actually pay](https://taeen.com.bd/blog/buying-house-fee-structure-bangladesh) - [Buying agent vs buying house — key differences](https://taeen.com.bd/blog/buying-agent-vs-buying-house-difference) - [The buying house process — step by step](https://taeen.com.bd/blog/buying-house-process-guide) [All articles](https://taeen.com.bd/blog)[Get a sourcing quote](https://taeen.com.bd/contact) ## Related articles [ ![FOB vs CIF for Bangladesh Shipments — Which Is Better?](https://taeen.com.bd/_next/image?url=%2Fimages%2Fblog%2Ffob-vs-cif-bangladesh-shipping-explained.webp&w=1920&q=75)Logistics & Pricing July 16, 202612 min read ### FOB vs CIF for Bangladesh Shipments — Which Is Better? 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[Get a Free Consultation](https://taeen.com.bd/contact) [Call +880 1805 205 716](tel:+880****5716) Or email [info@taeen.com.bd](mailto:info@taeen.com.bd) — we respond within 24 hours.