Agency Agreement Solicitors

Contracts with business agents

We draft, negotiate and amend commercial agents contracts and also advise in situations where disputes arise. Our lawyers can help whether you are the Principal or Agent.

Business Agent agreements are complicated by the rules imposed by the Commercial Agent Regulations 1993 and the risk that whatever the agreement contains the agent may be able to claim that he or she is in fact an employee.

Businesses often use sales agents in order to:

• set up/represent their business in a different country.
• keep fixed costs down by utilising an agent on a commission basis and not as an employee.

The difference between the relationship of employer and employee and principal and agent is quite fluid under English law, and generally each case is considered on it’s own merits by the courts in the event of dispute. A relationship which may have started with the intention of being agency can change over time, and be found by the courts to have become an employment relationship. This can result in:

• The agent gaining significant employment law rights
•  Taxation implications for both parties.

Agency law is highly regulated, particularly by EU law. The regulations give sales agents rights, amongst other things, to minimum notice periods and potentially significant compensation on termination.

These rights cannot be varied even with both parties consent, so it is highly advisable to take advice on whether what is intended as an agency contract is likely to be classified legally as employment, sales agency, marketing agency or distribution agreement. Marketing and/or distribution agreements are not subject to the agency regulations, making them potentially attractive for the above reasons.

Key terms in a contract for a business agent

It is highly advisable to have a professionally drafted agency agreement which will make detailed provision, amongst many other things, for:

• Position on expenses incurred
• What will constitute breach of the agreement
• Termination of agreement
• Territory
• Exclusivity
• Commission levels
• Clear restrictions on the agent’s authority to agree things on behalf of the principal with customers.
• Limits of agents authority – make it very clear what authority the agent has to negotiate and enter into contracts on your behalf. This also may mean communicating limits ton 3rd parties the agent deals with and consequently means considering the degree you may need to have access to what the agent is doing, who he/she is seeing and so on in terms of records and monitoring to protect your interests.
• exclusive or non-exclusive agency? – be very clear on this to avoid a dispute with the agent or finding out that he or she has the right to prevent you from expanding your business by using other agents due to exclusivity which may include a time or geographical element.
• confidentiality – the agent will be likely to have access to confidential information, customer lists and know how, which you ought to protect carefully and potentially to consider non-competition restrictive covenants.

If you are a business considering an agency arrangement or an agent offered an agreement, please contact our solicitors for a fixed fee quote for a professionally drafted, tailored agreement to maximise your position and minimise your risks under the European Regulations. If you have a dispute, whether as agent or principal, we can help.