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Agency Agreement

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I. Principal name, having address at Principal address (“Principal”); and

II. Agent name, having address at Agent address (“Agent”)

(Individually a “Party” and collectively the “Parties”)

The above Parties have entered into this Agency Agreement (“the Agreement”) on Start date (“Effective Date”).

A. WHEREAS, the Principal is a describe business;

B. WHEREAS, the Agent is a describe business;

C. WHEREAS, the Principal has decided to appoint the Agent to act as an agent for describe the purpose (the “Purpose”), as per the terms contained in this Agreement.

1. APPOINTMENT OF AGENTS

1.1. The Principal hereby appoints the Agent as its agent for the Purpose during the Term to provide describe the services (the “Services”) to the Principal.

1.2. The Agent is obligated to perform the following duties as a part of its Services: describe the duties

1.3. The Principal may add to or change the duties of the Agent, or the Services, at its discretion from time to time.

2. AGENT’S FEES AND EXPENSES

2.1. The Principal agrees to pay describe the fees to the Agent, on the Fee payment date of each Fee payment frequency (“Fees”).

2.2. The Fees includes an entitlement on the part of the Agent to receive commissions, overrides, which is Commission percentage/amount, in respect of the provision of the Services. The Principal undertakes to the Agents to pay such commissions and overrides, on the Commission payment date of each Commission payment frequency .

2.3. The Agent must bear and be responsible for all usual and normal operating expenses involved in providing the Services. Without limiting the generality of what are usual and normal operating expenses, the Agent acknowledges that these include:

2.3.1. the administration and management costs of operating the Agents’ business including the provision of the Services and all wages, salaries and bonuses, superannuation and other expenses of its employees and staff;

2.3.2. all computer equipment, motor vehicles, travel expenses, and accommodation expenses alike;

2.3.3. all costs, premiums and other payments in any way related to any insurances that are in any way associated with the Agent’s business;

2.3.4. all entertainment costs associated with the Agent’s business in providing the Services;

2.3.5. all taxes in any way relating to the revenue earned by the Agent, the Agent’s staff including all income taxes, payroll taxes, and benefit taxes; and

2.3.6. all training costs and expenses associated with the provision of the Services by the Agents.

2.4. The Principal may at any time ratify in writing any action, conduct or activity by the Agents, which if not ratified would constitute a breach for the purposes of this section.

3. AGENT’S RIGHTS

3.1. The Agent shall have the authority to act on behalf of the Principal within the scope of the agency relationship established by this Agreement. This includes the power to negotiate, enter into contracts, and make decisions in accordance with the instructions and objectives provided by the Principal.

3.2. The Principal shall provide the Agent with necessary information, resources, and support to enable the Agent to fulfill their duties effectively. This includes access to relevant documents, training, and assistance as required.

3.3. The Principal shall not unreasonably withhold approval of the Agent’s actions or unduly interfere with the Agent’s performance of their duties under this Agreement. The Principal shall provide reasonable guidance and support to assist the Agent in meeting performance standards and achieving the objectives set forth in this Agreement.

3.4. Subject to prior written approval by the Principal taken Subcontractor approval notice in advance, the Agent reserves the right to appoint third-party agents for assistance with any portion of the Services outlined in this Agreement, provided that such sub-agents are bound by Sections 4, 6, and 7 of this Agreement. The Agent shall remain fully responsible for the performance and quality of work delivered by the sub-agents, and shall ensure that they adhere to the terms and conditions of this Agreement.

3.5. insert specific rights

4. RELATIONSHIP BETWEEN PRINCIPAL AND AGENT

4.1. This appointment does not create any relationship between the Principal and the Agent other than the agency relationship as created by this Agreement. In particular there is no joint venture, partnership, or employment relationship, or any retainership agreement between the Principal and the Agents.

4.2. Where the Services involve the promotion of, marketing of, introduction of or Sale to potential customers of the Principal, or of any of the Principal’s goods, products or services, the Agents will in all those activities be acting as agent of the Principal, and not as a principal in their own right.

4.3. The Agents acknowledge that they owe a duty to promote the interests of the Principal and to avoid conflicts between their own interests and the interest of the Principal. The Agents further acknowledge that out of the provision of the Services, they will not without the express knowledge and consent of the Principal make any profit, receive any sum or commission from any other person out of, or as a consequence of performing the Services.

4.4. The Agents must follow all reasonable and lawful directions given by the Principal relating to the Services.

4.5. The Agents acknowledge that they stand in a fiduciary relationship with the Principal and will not conduct their business in such a way as to breach any of the Agents’ fiduciary duties owed to the Principal.

4.6. The Agents must not at any time disparage or bring into disrepute the Principal or the Services.

5. REPRESENTATIONS BY THE PARTIES

5.1. The Principal represents to the Agents that:

5.1.1. they have the authority and legal capacity to enter into this Agreement;

5.1.2. the commissions and overrides will be paid to the Agents as per Section 2 of this Agreement; and

5.1.3. the Agents will have all rights as per Section 3 of this Agreement.

5.2. The Agent represents to the Principal that:

5.2.1. they have the authority and legal capacity to enter into this Agreement;

5.2.2. they are lawfully permitted to perform the Services;

5.2.3. they are not under any disability, restriction or prohibition, legal obligation, which prevents them from performing or adhering to any of their professional obligations under this Agreement;

5.2.4. they are competent, experienced, and will properly, lawfully and efficiently provide all the Services as and when required during the Term;

5.2.5. the rights under Section 3 of this Agreement are sufficient to enable the Agent to perform the Services and thereby achieve the Purpose; and

5.2.6. they are not currently acting for or in any way involved contractually or otherwise with any competitor of the Principal.

6. CONFIDENTIALITY

6.1. Each Party undertakes to the other to keep strictly confidential all information which either Party discloses to the other about the other’s business, its strategies, services and/or products and which is expressed to be confidential or is by its nature confidential. Each Party further undertakes and promises to the other that it will only use such information in good faith and for the proper and lawful performance of its obligations under this Agreement.

6.2. Neither Party may permit or give access to any confidential information to any third Party without the express prior written consent of the Party disclosing such confidential information.

6.3. Each Party acknowledges that damages alone would not be a sufficient remedy for a breach of this clause or a threatened breach of this clause, and that any breach or threatened breach entitles the Party whose confidential information is disclosed or threatened to be disclosed in breach of this clause to seek injunctions, damages, and such other orders as maybe necessary to protect its confidential information.

7. INTELLECTUAL PROPERTY

7.1. Nothing in this Agreement gives either Party any interest or right in the intellectual property of the other Party.

7.2. During the Term, the Agents may use under license hereby granted the logos, designs, brochures and marketing materials associated with the Services that the Principal provides to it. Subject to any limitations imposed by the Principal in respect of such intellectual property, the Agent may reproduce the same, provided that such use or reproduction is strictly and exclusively for the purpose of providing the Services during the Term, and is done in good faith and for the dominant purpose of the benefit to the Principal.

7.3. The Principal may give such directions, impose such limitations as it thinks fit and require such undertakings as it deems necessary or reasonable in order to protect its intellectual property, and the Agents must strictly comply with all those directions, limitations and give such undertakings in respect of such use of the Principal’s intellectual property.

7.4. If there is a breach of this clause, the Party in breach must indemnify and keep indemnified the other against all losses, liabilities, costs and expenses which the Party not in breach thereby directly or indirectly sustains as a consequence of that breach.

8. NON-COMPETITION

8.1. During the Term of this Agreement and Non-compete duration after the Term (“Restricted Period”), the Agent agrees:

8.1.1. not to work for any entity or business that is in competition with the Principal;

8.1.2. not directly or indirectly engage or participate in any business activity that competes with the business of the Principal;

8.1.3. not to use or deal in any confidential information and intellectual property of the Principal in anyway; and

8.1.4. that the restrictions stated in this Section shall apply in Geographical area.

8.2. The Parties agree that the intent of the provisions of this Section 8 is to allow the Principal to protect its legitimate business interests and future business opportunities. The Agent agrees that the terms of this Section are fair and reasonable.

9. TERM AND TERMINATION

9.1. The Term of the Agreement shall be insert duration.

9.2. This Agreement may be terminated by either Party at any time, by giving the other Party a prior written notice to that effect.

9.3. Either Party may terminate this Agreement if the other Party commits a breach of any term, by giving written notice at any time, to the other Party setting out the term that has been breached and the details of that breach. The Party receiving the written notice must remedy the breach within Notice period of the receipt of the notice (the “Notice Period”). In case the breach cannot be remedied, this Agreement will be terminated at the end of the Notice Period.

9.4. On termination each Party must promptly return all property in its possession that is owned by the other Party. In the case of the Services, brochures and/or marketing materials containing the logos of either Party, those documents must be returned to the other Party or, if the other Party requests, such documents must be destroyed and evidence thereof provided.

9.5. After the termination of this Agreement, the Agent will not be liable to receive any commissions or overrides from the Principal. However, in case there are any unpaid commissions or overrides that are owed to the Agents during the term of this Agreement, all such dues must be cleared by the Principal at the end of the Notice Period. Any commissions or overrides accrued by the Agents during the Notice Period, should also be cleared by the Principal at the end of the Notice Period.

10. MISCELLANEOUS

10.1. Notices:

Any notice required or permitted by this Agreement shall be sent electronically to the following addresses:

Lender email address

Borrower email address

10.8. Assignment:

Neither Party shall assign or transfer any of its rights or obligations hereunder without the prior written consent of the other Party, except to a successor in ownership of all or substantially all of the assets of the assigning Party, if the successor in ownership expressly assumes in writing the terms and conditions of this Agreement. Any such attempted assignment without written consent will be void.

10.11. Amendments:

This Agreement may be amended or modified from time to time by mutual written agreement of the Parties hereto, by the authorized representatives of the Parties in writing. Any such amendment or modification has to be in writing to be effective, and must be executed by both Parties, and shall become effective as of the date specified therein.

10.14. Severability:Should any provisions of this Agreement be held by a court of law to be illegal, invalid, or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. Each of the provisions of this Agreement shall be deemed to be an independent covenant. Any provision determined to be invalid or unenforceable shall be given such construction and meaning as to make the provision valid and enforceable, while preserving as much of the effect of that provision as legally permissible.

10.15. Default:In the event that either Party to this Agreement shall default in their respective obligations hereunder, or in the event of any action to enforce the provisions of this Agreement, the prevailing Party shall be entitled to reimbursement for all reasonable and documented out-of-pocket expenses incurred – appellate fees and costs; the determination of “prevailing Party” to be made on an issue-by-issue basis.

10.16. Waiver:The waiver by either Party of a breach of any provision of this Agreement by the other Party shall not operate or be construed as a waiver of any other or subsequent breach by such other Party.

10.17. Governing Law and Dispute Resolution:This Agreement shall be governed in all respects by the laws of Jurisdiction.The Parties agree that any dispute or difference whatsoever arising out of or in connection with this Agreement, shall be settled by Dispute method in Dispute location.

10.18. Entire Agreement:This Agreement constitutes the entire agreement between the Parties relating to this subject matter and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The terms of this Agreement will govern the Project entirely.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants and commitments set forth herein, the Parties hereto agree as follows:

The Parties hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated by their signatures below:

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What is an agency agreement?

An agency agreement is like a job contract where someone, the agent, does specific tasks for another person, the principal. This legal arrangement happens when the principal permits the agent to act on their behalf.

Businesses, especially small businesses, must understand how vital agency agreements are. You'll likely encounter them when you ask vendors, accountants, lawyers, or other third parties to help with your business.

Now, let's talk about the actual purpose of the agency agreement or agency contract. An agency agreement is a detailed document that spells out the rules of the agent-principal relationship.

This includes saying what the agent can do and how much they'll get paid. The contract also hands the agent the authority the principal decides on, like the exclusive right to act on the principal's behalf. Understanding these terms is super important for making sure the agency relationship runs smoothly.

An example is when hiring a real estate company to sell your home, where you decide whether they have the exclusive right to sell or if multiple companies can sell the property.

Look through the free template above to see what the agreement includes and how it protects your business.

Is an agency agreement legally binding?

Like most contracts, agency agreements are legally binding, whether it's a non-exclusive or exclusive arrangement. These contracts hold legal weight, and unless terminated, the agent gains the authorized rights to act on behalf of the principal and make agreements on their behalf.

To ensure the validity of an agency agreement, it typically involves a signed contract with a "cooling-off" period.

This period, usually around 24 hours after signing the contract, allows the parties to reconsider the conditions and decide whether to proceed with the relationship. The agent must be notified if the contract is terminated during this period.

Typically, a notice of rescission is utilized for this purpose. This provision adds a layer of protection, allowing parties to review and back out if necessary before the agreement takes full effect. Because after that, it’s officially official.

When should you use an agency agreement?

You should use an agency agreement when you need someone to represent you. Similar to having someone with power of attorney, an agent enters into a unique relationship with you, the principal, as they are obligated to act in your best interests.

Similar to a power of attorney relationship, the foundation of the principal-agent relationship in an agency agreement is also built on trust, creating what is known as a fiduciary relationship. In this type of relationship, the agent is bound to act in good faith and prioritize the principal's best interests to achieve the desired goals.

An important aspect of agency agreements is that the agent has the legal authority to bind the principal for their actions. For instance, hiring an accountant means giving them the right to act on your behalf for an agreed-upon fee.

What is an example of agency in a contract?

All of this talk of agencies… but how do you know if you are one?

Let's look at it like this. Imagine you own a small company manufacturing one-of-a-kind paper airplanes. Why paper airplanes? Have you ever flown one — they’re incredible. Back to the example.

Now, imagine that your small company wants to expand its market reach. To achieve this, you decide to bring in a sales agent. In this scenario, you initiate an agency agreement with an individual who will take on the role of your sales agent.

The beauty of agency agreements is that they can be utilized for various purposes (even if you don’t sell paper airplanes).

Here are some common examples of situations where you might hire someone to act as your agent:

Accountant
Stockbroker
Financial planner
Real estate agent
Attorney
Business agent
Advertising agent
Insurance agent
Vendors of all types

An agency agreement can also be entered between 2 private individuals, too. That means you, as the principal, could hire someone to act as your agent.

Need someone to finesse that business deal? Or snag some auction treasures. Maybe even handle your weekly shopping spree? The possibilities are endless.

But, while you could seal the agreement with a simple handshake and a nod, it's better to have the whole story written down. That’s where the power of a written agency agreement comes in. Using our free agency agreement template above gives you the security of knowing that you (and your agent) are contractually safe.

What makes up an agency agreement

Besides the free template we’ve added, you’ll need other information when creating an agency agreement.

Name of the principal and agent: Clearly state who is in this partnership.
Purpose of the agency: Define the specific goals and tasks the agent will undertake on behalf of the principal.
Exclusive or nonexclusive agreement status: Specify whether the agency is exclusive (sole representation) or nonexclusive (allowing multiple agents).
Duration of the agency: Outline how long the agency relationship will last.
Scope of Agent's Authority: Clearly articulate what the agent is empowered to do on behalf of the principal.
Geographic limitations: Define the area where the agent is authorized to act.
Agent's compensation: Detail the agreed-upon compensation for the agent's services.
Binding acts: Confirm that the agent's acts bind the principal as long as they are conducted in good faith.
Independent agent status: Specify that the agent is not an employee but an independent agent.
Entire agreement clause: State that the agency agreement represents the complete understanding between the parties, and any oral agreements are invalid.
Termination procedures: Clearly outline the procedures for terminating the agency agreement.

What do we mean by agency contract?

You’ve read this far down the page and might wonder if an agency contract is the same as an agency agreement. It’s a good question. Glad you asked! Spoiler alert: They can be used interchangeably.

An agency contract refers to a situation where one person engages another to perform a task on their behalf or to act as their representative in dealings with third parties. This arrangement is also called a 'Contract of Agency.'

In this dynamic, the person being represented is the 'principal,' while the individual employed to act on their behalf is called the 'agent'.

The agent's primary duty is establishing legal relationships with third parties on the principal's behalf. However, it's important to note that despite facilitating these connections, the agent doesn't become a direct party to the contract or assume any liability under that contract. The principal holds responsibility for all the agent's actions as long as those actions fall within the scope of the agent's authority. This underscores the distinct roles of the principal and the agent in an agency contract, with the agent serving as a representative without assuming direct contractual obligations or liabilities.

What are the advantages of an agency agreement?

Is an agency agreement starting to sound like exactly what your business needs? Agency agreements can have many benefits for the principal, especially if that principal happens to be a small business owner.

Specialized skills: An agency agreement allows the principal to tap into specialized skills and expertise they may not have.
Time efficiency: Hiring an agent under an agency agreement saves the principal valuable time. Instead of managing every detail, the principal can delegate specific tasks to the agent, allowing them to focus on core business activities. You'll save even more time with Contractbook’s free agency agreement template.
Efficient business operations: With an agency agreement, business operations can run more smoothly and efficiently.
Convenience: Having someone act on your behalf adds a layer of convenience. Whether managing advertising campaigns or handling legal matters, the agent takes care of tasks, freeing up the principal's time.
Necessity in legal matters: In certain situations, like legal matters, having an agency agreement is beneficial and often necessary. For instance, hiring an attorney constitutes an agency agreement, granting the attorney the authority to represent the principal in legal proceedings.

What are the disadvantages of an agency agreement?

While agency agreements offer many advantages, they also come with potential disadvantages and risks, particularly in the legal relationship between the principal and the agent:

Liability for agent's actions: One significant risk is that the principal can be held liable for any misconduct or mistakes the agent makes. If the agent engages in illegal activities or makes errors while representing the principal, the principal may be deemed responsible for those actions.
Legal consequences: In situations where the agent commits a mistake or carries out an illegal act on behalf of the principal, the principal may be held legally accountable as if they committed the act. This places the onus on the principal to thoroughly vet and trust their agents.
Ultimate responsibility: By authorizing the agent's actions, the principal bears ultimate responsibility for the consequences. Even if the principal needs to review a contract thoroughly, they may still be held accountable for its terms and conditions if the agent signed it on their behalf.
Need for clear terms in writing: To mitigate these risks, the agency agreement must be in writing with transparent terms and conditions. Explicit language should limit the principal's liability if the agent engages in unauthorized activities. This documentation is vital for protecting both personal and professional interests.

Types of agency agreements: Exclusive, Sole, and Non-Exclusive

Entering into an agency contract is like choosing the flavor of your favorite ice cream – exclusive, sole, non-exclusive, and even undisclosed principal. Each comes with advantages and potential risks, making it a sweet dilemma.

Before you dive in, take a moment to understand the unique flavors of these agreements, making sure your choices create the perfect blend before you take that first tasty bite into commitment.

Exclusive agency agreements

Exclusive agency agreements are like giving one agent VIP treatment in a designated area — no other agents allowed.

This means one agent has the entire stage to themselves, giving them focused control to sell services or products from that supplier without interfering with other dealers or reps.

Sure, it's a win for the agent, providing assurance and control over their business. While it's a blockbuster deal for the agent, the manufacturer or supplier might miss out on potential sales from diverse agencies and lose the chance to spread their deals across different markets with multiple distributors. It's the classic exclusive vs. inclusive showdown in the business world.

Sole Agency Agreements

The selected agent is granted exclusive rights to market and sell the supplier's products within a specific area in a sole agency agreement. It’s similar to an exclusive agency agreement. Still, while it gives the supplier control over product distribution in the designated region, it may limit their ability to expand the network within that area.

Essentially, it designates the chosen agent as the exclusive entity responsible for marketing and selling products under the defined terms set by the affiliated company.

Non-Exclusive Agency Agreements

In a non-exclusive agency agreement, the principal business owner can employ agents and direct sales of products and services in the same market or region. This arrangement allows the supplier to involve multiple representatives within their territory, expanding their customer base accordingly.

However, with other agents in the mix, the supplier may need more control over product distribution than an exclusive model.

It's a trade-off between a broader reach and less direct control over how the products are distributed in the market.

Undisclosed principal agency agreement

In an undisclosed principal agency agreement, you allow the agent to work on your behalf without revealing your identity. It's like being the secret puppet master behind the scenes.

In this setup, the agent can negotiate deals for you without disclosing who they're working for, and in many states, any resulting sale is legally binding on you. However, it's important to check with a business attorney to ensure the legality of undisclosed principals in your country and region.

A famous example of this type of agency agreement is found in Disney’s history. In the 1960s, Disney wanted to acquire land in Orlando, Florida, for Walt Disney World. The agents' mission was to persuade landowners to sell without revealing Disney's involvement.

After the transactions, the landowners discovered that Disney was the undisclosed principal.

If they had known, they might have demanded more money or even refused to sell until they received additional compensation. It seems that the happiest place on earth was also pretty shrewd.

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