Agency Agreement – sale of goods or services

What’s an agency agreement, and when do you need it?

If you are looking to give a third party authorisation to sell your goods or services, or otherwise act on your behalf, you may want to consider an Agency Agreement.

Agency agreements are a great way to expand your business, without having to set up additional operations to do so.

Agents act on behalf of your business to sell your products or services for you.

They are mostly treated as an extension of your business, not as a separate business partner, like a distributor.

The role of sales agents varies greatly.

At their most basic, sales agency agreements cover commission payments on sales generated by the agent.

More complex arrangements may include the agent marketing the product or service, warehousing and distribution and payment collection.

When you use an agent, you’re still very much in control of what that agent does, including how it prices, markets and otherwise sells your goods or services, and all of that detail needs to be clearly captured in an agreement, so that both you and the agent are clear on what’s expected and any targets and obligations you want to impose on the agent.

This Agency Agreement template has been drafted to help protect your business, provide an administrative framework for your arrangements with agents, assist you in complying with the regulations and be totally fair to your agents.

Like all PLUGGED documents, it is intended to be practical and useful as well as giving legal protection.

The document is suitable for any person setting up one or more commission agents to sell services in the Republic and Ireland and the EU.

It covers the usual agency situation where the agent has responsibility for selling the goods, marketing and maintaining customer goodwill.

You can use this agreement either as the basis for individual discussion or to treat it as your standard agent’s terms and serve it up to new agents with no options for change.

Either way, you will have a comprehensive agreement, drafted to be practical and useful.

This is important because with the freedom to dictate how the agent acts also comes the responsibility for what happens to your goods and services while the agent is selling them, meaning that you continue to carry the risk in those goods and services as if you were selling and delivering them yourself.

In fact, the agent will enter into contracts in your name, not theirs so you’ll definitely want to be clear on the rights you’re giving them and what you want them to do.

A commission will normally be payable by you to the agent, and you may want to set minimum sales or performance targets and other conditions for the agent to meet before that commission is payable; again, this is the sort of detail that your agency agreement should record, as well as how long you want this arrangement to last.

What else might you need?

Our guide to agency and distribution will help you work out whether agency is the right approach for you.

There are others that you could consider if you want to expand your business in this way, such as distribution and franchising.

You could even consider licensing and joint ventures.

If it’s agency you want and you’re selling goods, not services, you should also take a look at our guide to the Commercial Agents Regulations, as these can affect the way that you set up and operate your agency relationship and particularly how you may draft your agreement, because some of the regulatory requirements cannot be avoided, the most important of which is the obligation on you to pay the agent compensation if you terminate your agency agreement or it expires in certain circumstances.