An agency agreement may be appropriate if you need the help of an intermediary to secure the sale of goods or services which are high-value, bespoke or particularly complex and which you personally will be responsible for providing or delivering. They are ideal where you need to retain a high-degree of control over the sales process.
An agent will typically:
- seek out, negotiate and conclude contracts on your behalf;
- not become a party to any of the contracts they secure; and
- have no rights, responsibilities or obligations under the concluded contracts (although they will have various responsibilities towards you).
An agent who has been well-briefed and asked to sign an agency agreement, which clearly sets out what is expected of them and what they can and cannot do, should be a valuable addition to your team. However, it is important to appreciate the need to keep a close eye on the agent’s activities as it is possible for them to deviate from your instructions and create legally enforceable rights and responsibilities between you and the end customer for which authority may not have been given.
You also need to bear in mind that, when appointing a commercial agent, you will have various legal responsibilities towards them. This may include the need to pay them compensation if you decide to terminate the agency agreement and the agent is caught by the Commercial Agents (Council Directive) Regulations 1993. This is likely to be the case if they are self-employed and authorised to sell goods (as opposed to services) on your behalf.
Further information about commercial agents can be found in our commercial agents factsheet here.
It may be that, depending on your circumstances, a distribution agreement might be better suited to your needs. This will only become clear by discussing your requirements with a solicitor experienced in agency and distribution agreements who will be able to guide you through the things you need to consider and ensure that a suitable contract is drawn up which embodies not only the terms you have agreed but also any additional terms needed to protect your position.
The commercial law solicitors at Myers & Co in Stoke-on-Trent, Staffordshire, have a wealth of experience in agency and distribution agreements and would be happy to help you ensure appropriate arrangements are put in place. For further advice, please contact Dermot Callinan, director of business services at Myers & Co Solicitors, on 01782 577000.