Commission Payment Under a Marketing Agreement
You own an engineering firm. Mitchell, an engineer, has been
engaged extensively in engineering activities in the
international market. Mitchell approaches you with the prospect
of expanding the services of your engineering firm into
marketing consulting. He explains to you that he can draw on
his knowledge of the special requirements of engineering work
in other countries to better serve the interests of the
engineering profession. He says he can draw upon his experience
and personal contacts in the international arena to offer to
represent firms that want to work overseas but lack the special
background knowledge required or that do not have the resources
to develop the necessary skills to successfully enter the
field. Mitchell explains that your firm can take advantage of
the fact that US engineering firms can't raise enough capital
needed to develop potential in the international market.
Mitchell drafts a marketing agreement that proposes to
develop contacts within stated geographical areas, evaluate
potential projects, coordinate project development, and work
out the terms of contracts between new clients and the
represented firm. For these services, your firm will be paid a
basic fee plus a retainer. Both fees will be negotiated
individually, case by case. Mitchell also suggests that your
firm receive a marketing fee, which is a negotiated percentage
of the fees actually collected by the firm you will represent,
for the projects he helps market.
Discussion Questions:
- How would you respond to Mitchell's suggestion? Does the
fact that Mitchell is an engineer make a difference
here?
Current NSPE Code of Ethics
An earlier version may have been used in this case.
Original Case and BER Judgement
Cite this page:
"Commission Payment Under a Marketing Agreement"
Online Ethics Center for Engineering
6/10/2006 9:23:06 PM
National Academy of Engineering
Accessed: Friday, November 21, 2008
<www.onlineethics.org/CMS/profpractice/ppcases/NSPEcases/ec78-7.aspx>