An agency agreement is reached when a person, known as an “agent,” is authorized by another person, the so-called client, to act on behalf of the client. A principle that assigns an agency to an agent establishes a legal relationship with the agent. Agency agreements are important to businesses because you can meet with them if you ask a seller, accountant, lawyer or other third party to make transactions on your behalf. Many companies use agents to introduce new customers or enter into contracts. We can develop an agency or distribution agreement to manage this relationship. Agency contracts are governed by the Commercial Agents and Sellers Act. The Act contains a number of mandatory provisions that the parties cannot deviate from. By law, a sales representative is a contractor who has entered into an agreement to continuously promote the sale or purchase of goods on behalf of the client, by receiving offers for the client or by entering into sales or sales contracts on behalf of the client. On the other hand, sellers are employees who have reached an agreement with staff for the sale of products through customer visits, without having with them the products to sell with them. Indirect representation when the agent enters into contracts in his own name does not enter the scope of the law, since these representatives are considered to be dealers from a legal point of view. Exclusive rights prevent the supplier from appointing other representatives/resellers in the territory, but do not prevent the supplier from seeking sales on its own.
The trade agency system under Articles L. 134-1 and following of the EC Treaty implements the provisions of Directive 86/653/EEC of 18 December 1986 relating to the coordination of Member States` laws relating to independent trade agents. Article 17, paragraph 3, of the directive, (…) European law aims to regulate the law of trade agents throughout Europe. The 1993 trade agents transposed EU law into UK law and have certain rights for trade agents. These include the right to a written agreement governing the relationship between the client and the agent. A sales agent also has the right to collect commissions for his services and, if no commission is stipulated in the agency agreement, they are entitled to a “reasonable commission. Minimum termination times must be indicated by a client and the duration of the termination depends on the length of the relationship between the parties. The most important thing is that the legislation grants commercial agents the right to obtain payment at the end of the agency agreement, either on the basis of “compensation” or “compensation”. Each gives the commercial agent the right to pay on a different basis. In order for the compensation option (which is generally preferable to a capped principle), it is necessary to expressly state it in the agency contract. The compensation option automatically applies if the compensation option is not accepted. Caution should be exercised in the development or negotiation of an agency contract to which the 1993 commercial agent regulations apply, as termination of the agency agreement could be very costly for a client.
Within the European Union, there is legislation to provide some protection to agents, in particular the right to compensation in certain circumstances when an agency is dismissed. The same is true in other parts of the world, and in some countries it is necessary for a foreign manufacturer to designate as an agent a person or company that is a national of the country in which the Agency will operate.