Agreements
Commercial Agency Agreement
An exclusive agency agreement involves the appointment by the principal of the agent for a period, for the sale of the principal’s products in a specific territory. A non-exclusive agency agreement does not provide exclusive rights for the agent within the territory concerned.
Targets and Term
There may be provisions for a minimum target number of sales which must be achieved by the agent. They may be set out in a schedule showing the targets to be achieved in successive periods.
Principal’s Duties
The principal may confirm that it will act in good faith in its financial dealings with the agent. It may undertake further obligations consistent with the nature of the commercial arrangements.
Calculating and Vouching Commission
Many of the principal’s duties will relate to the mechanisms for recording sales and the accrual of commission.
Duties of the Agent
The agent is subject to a duty of good faith. He must diligently and faithfully serve the principal.
Status as Common Law Agent
Despite the designation as an agent, the exclusive agent may have no authority to bind the principal as such to any contract. It may be provided that no order is binding on the principal unless accepted specifically by it.
Commission
The agent’s commission may be specified as a percentage of the net sale price of the products sold through transactions concluded during the term as a result of the agent’s action.
The agent may be entitled to commission where the transaction is mainly attributable to the efforts of the agent and has entered within a reasonable period after the termination of the agreement.
Termination
Apart from the provisions of the agreement in relation to the term (duration), either party may have a right to terminate the agreement by reason of the breach on the part of the other. Sometimes the principal may have the main or exclusive right to terminate for breach.
Intellectual Property and Goodwill
The exclusive agent may be given rights to use the principal’s intellectual property comprising trademarks, trade names, copyright and designs relating to the principal’s products.