Agency Agreement

What is an agency agreement?

An agency agreement is a legally binding contract between a client and an agent, under which the client authorizes the agent to act on its behalf in specific business matters. The main purpose of this document is to establish a solid legal basis for agency relations between the two parties involved. A simple agency agreement template usually includes:

• identification details of both parties involved;
• scope of provided agency services and limitations;
• rights and obligations of both parties;
• fees and payment schedule;
• termination and renewal of the contract;
• limitation of parties’ liabilities; and
• governing law.

The present contract could be of two different types—a non-exclusive or exclusive agency agreement. Under a non-exclusive agreement, either party can enter into similar agency agreement templates with third parties without any limitation. While under an exclusive agreement, a client undertakes to not engage any other third-party agents for the provision of similar services defined under the present Agreement.

The parties involved in an agency agreement template are a client and an agent. A client is usually an individual or business who wants to hire a professional agent for the provision of a specific service for a defined period of time. On another side of a contract is an agent who is a professional and provides certain legal, accounting, brokerage, marketing, advertising, or other agency services in exchange for remuneration.

How to write an agency agreement?

Drafting even a simple agency agreement template could be a challenging task. Despite a document’s simple structure, inclusion of certain key elements is essential to make sure the document is complete and legally valid.

Details of Parties

The first and the most important section of every agency agreement sample is to define the parties involved in the agreement. Therefore, the text of a contract shall include:

• full name and business address of each party;
• contact email and phone number;
• full name of a contact manager or representative for each party; and
• detailed description of a client’s business.

The parties whose names are listed in the preamble of the contract must sign it. Failure to include either party’s signature results in a contract not being valid.

Scope of Services

Another essential pillar for every agent agreement template is defining the scope of services to be provided by an agent. Having a clear definition of the scope of services reduces disputes along the road and helps to avoid scope creep.

It is also common to include in this clause a contractual limitation or list of actions an agent must not do. The list of limitations could be the following:

• an agent cannot enter and sign legally binding contracts on behalf of a client;
• an agent cannot discuss or agree upon a certain sum, payments, or reimbursement on behalf of a client;
• an agent cannot give any discounts or price reductions to third parties, etc.

Payment Provisions

A payment structure under an agency agreement sample could be of two main types—a fixed regular fee or payment of a commission.

In the case of a fixed regular fee, a client undertakes to pay regular weekly, monthly, or annual fees for the provision of agency services. This type of payment model is being frequently used in advertising agency agreement templates, for instance.

If a commission model is chosen, a client must have a fixed percentage from a contract or transaction amount concluded between a client and a third party. For example, in the case of a buyer agency agreement form, a client undertakes to pay a fixed percentage from the total amount of a sale-purchase transaction.

Terms and Conditions of Services

A well-drafted agency agreement sample shall also define the terms and conditions for provision of services, including:

• Territory. This is a specific location, like a city, town, state, or country, where the agent undertakes to provide services. In the case of an exclusive agency agreement, it also means that a client cannot engage any other agent for the provision of services similar to those defined in the text of the present agreement.
• Subcontractors. The agent may wish to engage additional subcontractors for the provision of requested services, especially when the deadlines are tight. Therefore, parties must agree in a sample agency agreement template if engagement of subcontractors is allowed or not.
• Duration. Every agent agreement template shall also define the period of time within which agency services shall be provided. This period of time must include the commencement date and total duration. Parties could also consider inclusion of a renewal contract clause. If an automatic renewal is possible, the contract renews automatically on its expiration date again for the same period of time. It is also possible, however, to enter an agency agreement for an indefinite period of time.

Termination

A solid and well-drafted agent contract agreement template shall provide a detailed procedure for the termination of a contract. As a rule of thumb, either party must have the right to end the contract at any time by sending a prior written notice to the other party.

A notice period is different and largely depends on the type of contract and its duration. For instance, in advertising agency agreement templates, it is common to have a short notice period like 3 days or 1 week. This is because the advertising industry involves a lot of creativity and usually works under short deadlines.

How to customize an agency agreement at FasterDraft?

To get a fully customized legal document, follow the instructions given below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format—agency agreement PDF or Word.
4. Make a payment.
5. Download, print, sign, and use the document.