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Commercial Agency
An agent acts on behalf of its principal to either introduce customers to the principal or create a contract between a customer and the principal. The agent generally receives a commission based on the customers introduced to the principal. The customers sourced by the agent become customers of the principal, unlike a distribution arrangement where the customers become customers of the distributor.
Agency Agreements
Establishing a formal and robust agency agreement is a necessary part of the commercial agency relationship. The agreement will set out when a customer has been introduced to the principal, when commission is due and how it is calculated. Importantly, it also sets limits on what the agent can do on behalf of its principal, the territory that the agent can act in and the length of the agreement. The agreement sets the expectations for both parties and is a useful tool to refer back to should disagreements occur. We recommend agency agreements are regularly reviewed to reflect any changes in the relationship.
A commercial agency agreement should be created in-line with the Commercial Agents (Council Directive) Regulations 1993 (the “Commercial Agents Regulations”) and thought should be given to how the agreement is terminated and whether compensation will be due to the agent as a result of this.
Our team is experienced in acting for both principals and agents in negotiating and drafting commercial agency contracts and aim to balance the objectives of both parties. We also have experience in supporting clients when a disagreement or a dispute arises from the very early stages. Our aim to assist clients by explaining the rights of both parties and recommending remedies to, where possible, avoid going through the court process.
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