Agency agreements are one of the two most frequently found arrangements when a business is looking to trade without having a retail or customer facing presence.
A commercial agent negotiates and concludes (although not in every arrangement) contracts with customers on the principal’s (the business that has appointed the agent) behalf and is remunerated by fixed or variable commission (usually a percentage) on sales concluded through the agent’s efforts. The agent never owns the products but has authority to directly enter into contracts between the principal and the customer.
However, careful consideration needs to be taken to ensure that an agency agreement is right for your business. Agency agreements are subject to commercial agency regulations and therefore the structure and legal effects differ to that of most other contracts. We recommend that you take legal advice to ensure that you are entering into a genuine agency agreement of your choice.
Some key considerations in respect of agency arrangements are:
• Agency arrangements are useful if you wish to retain control of the channel to market (e.g. you have a strong brand marketing strategy that you wish to protect)
• Agency arrangements retain control of a customer relationship
• Agency arrangements typically are more likely to avoid competition considerations
• Commission paid on termination – when an agent is terminated by the principal, commission has to be paid under The Commercial Agents (Council Directive) Regulations 1993, in the vast majority of circumstances. This can be quite costly and advice should always be sought in respect of commission payments before the arrangement is terminated.
This is by no means an exhaustive list. Our team will guide you through the process of appointing or becoming an agent in both international and domestic agency agreements and ensure you are well protected from any breakdown in the contractual relationship. We can also assist when things go wrong on advising in respect of competition issues and compensation issues, as well as successfully ending an agency agreement.
Our expertise in Agency Agreements
Here are a small selection of the types of clients we have acted for and the work we have done in this area:
• We advised a furniture producer on the appointment of a commercial agent in Poland.
• We advised a manufacturer of agricultural equipment on various overseas agency and distribution arrangements
Should you have any queries regarding an agency arrangement, please get in contact with Robert Capper, head of the Commercial Department, for an initial and no obligation discussion either by phone on +44 (0) 1905 744814 / +44 (0) 7909 970323 or by e-mail at email@example.com. Our Commercial team are available for appointments in all of our offices, located in Worcester, Cheltenham, Thames Valley, Birmingham, Hereford and Ross. We also have a serviced office in London.