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Commercial Contract Law Agency Agreements

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Appointing a Sales Agent and the law

If you are looking for someone to sell on your goods and services without giving them an exclusive territory or the right to set their own pricing, then appointing a Sales Agent might be the best way forward.

What is agency?

Agency is simply a relationship where one person (the Agent) sells goods or services on behalf of another (the Principal).

The key factor distinguishing agency from other contractual relationships is that the sales agent does not buy stock from the Principal to sell on but rather concludes sales on behalf of a Principal directly with a customer.

Because a Sales Agent ties his Principal to a contract without the Principal’s specific agreement, the relationship between the two parties needs to be one of trust and goodwill.

Free Guide answering “What do I need to know about agency law?”

We have prepared a comprehensive guide to the legal framework within which Sales Agents and Principals operate. If you would like to read it, please click here for our Advice Guide on Appointing a Sales Agent.

Whilst it is difficult to summarise the most important elements of the relationship between Sales Agent and Principal, perhaps the one overwhelmingly important issue is what happens when an agency relationship comes to an end.

Provided that the Sales Agent is a “commercial” agent, (broadly speaking, one that sells goods rather than services) then the Sales Agent is likely to be entitled to a compensation payment.  If the sales agency has been a successful one, this could be a considerable sum and it applies even if the contract has simply come to the end of its term.

It is important that Sales Agents understand that they have this right to compensation, especially as they only have one year from the end of the contract in which they can bring a claim for it.

Principals need to be aware of this right so they think carefully before terminating a sales agency and work to mitigate the cost (where they can) and budget for it during the course of the agreement.

Have you a question about appointing a Sales Agent?

Then give me a call on 01332 340 211 or 07813 203 658.

Or ff it is easier, click here to email me directly

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