Agency Agreement

Agency relationships in the UK are governed by the Commercial Agents Regulations, which give the agent statutory rights, including a right to compensation or indemnity on termination, that cannot be contracted out of. Many businesses sign agency agreements without appreciating this, and then discover upon termination that the agent is entitled to a payment they did not budget for.

Why agency agreements need careful drafting

A commercial agency agreement governs the relationship between a principal and an agent who sells the principal's goods on the principal's behalf. In the UK, these arrangements are subject to the Commercial Agents (Council Directive) Regulations 1993, which impose obligations on both parties that apply regardless of what the contract says.

Getting the agreement right from the start is critical. The drafting needs to address territory and exclusivity; the scope of the agent's authority (can they bind the principal, or only solicit orders); commission structure and when commission is earned; minimum performance and what happens if it is missed; and termination, including notice and the post-termination payment calculation.

Whether you are the principal or the agent, the agreement is doing real work. It should not be a template.

Example: a typical scope and fixed fee

For a two-party agency arrangement covering the sale of goods within a defined territory, the typical scope is as follows.

What's included

• A consultation to understand the agency relationship, products, and territory
• Drafting of an agency agreement covering appointment, territory, exclusivity, agent's duties, principal's obligations, commission structure, reporting, duration, termination (including compensation or indemnity on termination under the Regulations), and governing law
• One round of revisions based on your feedback
• Final version ready for execution

What's outside this scope

• Multi-territory or multi-agent arrangements
• Agency arrangements for services (the Commercial Agents Regulations apply only to the sale of goods)
• Distribution agreements (see Distribution Agreement)
• Negotiation with the other party beyond the scope described above
• Tax advice

Fixed fee: £850, no VAT.

How I will approach your matter

Once you have instructed me, I will arrange a consultation to understand the agency relationship, products, and territory before drafting. The agreement will be drafted to comply with the Commercial Agents Regulations and to protect the commercial interests of whichever side you are on.

Common questions

What are the Commercial Agents Regulations?

These Regulations give commercial agents significant rights on termination, including potential compensation or an indemnity payment. These rights cannot be contracted out of. The agreement must be drafted with the Regulations in mind.