Commercial agents agreement

If you’re looking to expand your business you may be thinking of appointing agents rather than taking on additional staff. Use our form of agreement to ensure that all angles are covered.

Be careful

Gone are the days when agents could be hired and fired without any real financial cost to your business. Since the introduction of the Commercial Agents Regulations (“the Regulations”) if an agency contract is ended, you’re now required to give notice depending on the length of the term. In addition, the agent is likely to be entitled to receive compensation.

Tip

Under the Regulations there are different ways of calculating the agents “pay off” when the contract ends - an indemnity basis or compensation. If you don’t specify in the contract which option is to be used, any payment to the agent will be on the compensation basis and is likely to be the more expensive option. Therefore, ensure your agreement specifies that any pay off is to be on an indemnity basis.

Remember

The Regulations only apply to agents who sell goods and not services. They can also apply to limited companies and unlike contracts of employment, there’s no recognised retirement age.

Territory

Don’t forget to stipulate the area in which your agent is to operate in.

Tip

It’s always a good idea to have regular meetings to discuss sales and target figures so that there’s no nasty surprises waiting just round the corner. Our agreement provides for these.

Payment

Always specify the rate of commission on any sales generated which your agent will receive. Make sure too that your contract covers the position if sales are not translated into cash, i.e. bad debts.