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8.2(3)
The case of Bermuda has the particular interest that,
although the latest contracts have been with US companies, they have been for one year only, with no further commitment beyond an undertaking to invite Franklin to submit new proposals should the Monetary Authority decide to issue further coins within three years from the termination
of the 1975 contract.
Repurchase of redemptions
8.3
There is only one example of a formal contractual guarantee by a promotional company to repurchase from the issuing authority any
coins which may be handed in for redemption by holders. In Bermuda's
agreement with Italcambio "THE COMPANY commits itself to promptly refund at face value any coin previously sold by THE COMPANY and
presented to THE AUTHORITY for redemption". As sales within Bermuda
are handled exclusively by the Monetary Authority this undertaking does not, presumably, apply to local sales. In the Cayman Islands, World Coin has undertaken to repurchase, at face value, any of the 1977 and 1978 coins that may be redeemed although the Currency Board
reports that the offer is limited to coins still in their presentation cases. It is understood that a similar arrangement was under
discussion between the Turks and Caicos Government and Paramount.
With the exception of the Italcambio commitment, these arrangements are informal and probably rely upon the companies' being able to re-use the coins in their "after-market" sales programmes. Their undertakings
would be of little or no value if the secondary market should substantially weaken or dry up.
Royalties
8.4(1) The value of royalty payments to individual territories is
discussed in a later section.
In this section the concern is with
the contractual arrangements. Here again it is possible to draw a
clear distinction between the practices of the US and UK promotional
companies.
8.4(2) The system preferred by the US companies is to pay royalties as a fixed percentage of the face value of the coins sold. This
percentage varies according to the quality and type of coin. In
recent contracts of which we are aware the figure for individual coins
has consistently been in the region of 15% for proof gold and 7% for
specimen gold. For silver and base metal coins (the latter being
limited almost entirely to inclusion in proof sets) the figure is more
varied and tends to be in inverse proportion to the face value. The