Business agent contracts

An agency agreement is a legal contract that establishes a relationship between two parties: the principal and the agent. The principal authorises the agent to act on their behalf, granting them the power to enter into contracts and make decisions that legally bind the principal.

The main benefit of an agency agreement is that it allows the principal to expand into new markets without having to employ their own sales staff and with the benefit of relying on the agent's local knowledge and connections.

How we can help

If you need a solicitor to draft a contract for a business agent, or are an agent offered a contract and would like to have it reviewed, please do get in contact. We also advise on legal issues and disputes relating to business agent dealings.

What to include in a Business Agent Agreement

The key features of an agency agreement include:

• Length of agreement and notice period - also including any conditions for renewal or termination.

• Territory - often an important requirement for the agent is to have exclusive rights to sell the product in a clearly defined geographical territory.

• Control - the principal will generally want to retain a high degree of control over the agent's authority and transactions and  so it’s important to specify the specific tasks or activities that the agent is authorised to perform on behalf of the principal and also generally the geographical area or market in which the agent can operate on behalf of the principal.

• Payment - typically commission for selling the principal's products or services but can also include other methods to remunerate the agent for their services, including retainer fees, or performance-based bonuses.

• Risk - the usual starting point is that the principal bears the commercial risk and ultimate legal responsibility for transactions with customers.

• Sales and marketing - clearly outline the principal's marketing guidelines, potentially also allowing the agent some leeway with marketing materials and permitted activities to reflect local preferences and market conditions.

• Regular communication - communication and reporting obligations between the principal and agent should be established to discuss marketing strategies, identify local trends, and address any concerns.

• Good faith - including a clear contractual obligation on both principal and agent to act in good faith.

• Information - the agent should be required to formally report on prospects, sales, and other relevant feedback, and the principal should provide the agent with the necessary information and assets to generate sales.

• Confidentiality - establish clear obligations for the agent to protect the principal's confidential information and trade secrets.

• Non-competition - to prohibit the agent from engaging in similar activities for competing businesses during and after the termination of the agreement.

• Intellectual Property infringement - the agent may inadvertently infringe on the principal's intellectual property rights, leading to legal disputes and financial repercussions.

• Financial losses - an agent's negligence or mismanagement could result in financial losses for the principal, such as lost sales or damaged reputation. An indemnity may be something the principal demands is included.

• Dispute resolution - a clear mechanism for resolving disputes, such as mediation, arbitration, or litigation.

Enhanced Rights of Agents under the Commercial Agents Regulations

In the UK, the Commercial Agents (Council Directive) Regulations 1993 provide specific protections for commercial agents. These protections can include notice periods for termination, compensation payable following termination, and restrictions on the agent's ability to compete with the principal.

Solicitors for agency agreements

We are experienced, practical and cost effective in drafting, reviewing and advising on contracts for business agents,whether sole agency or not and whether based in the UK or internationally (where English Law is expressly stated as the Governing law)

We can advise on the implications of these protections and help you resolve disputes arising from termination.If you are an agent,or a principal, we can help you navigate the complexities of agency law and protect your business interests.