What is an agent?

An agent is a person involved in making a contract between his principal and the principal’s customer.

Commercial agents

The label “commercial agent” covers a broad spectrum of arrangements, some examples below:

• a self-employed salesman operating on commission for a single principal within part of a single country (almost an employee)
• a sales agent appointed for an overseas territory with local knowledge and connections and with several different principals, over whom each principal has very little effective control.

The legal framework is similar in both cases but the issues arising can vary considerably and legal advice should always be sought at the start of these relationships so agreements can fully reflect the terms.

The power of an agent

As the agent is only an intermediary, he is generally not a party to the contract between the principal and the principal’s customer and will not have rights or obligations under it. For most purposes, the agent’s acts are treated as those of his principal. Future Law can advise on the best agreement to have with your commercial agents to limit the risks to your business. Call us on 0844 209 8500 for a no obligation chat about how we can help you.

Distributors

A distributor buys goods from a supplier and sells them on to his own customers.

The differences between an agent and a distributor:

• In contrast to an agent, a distributor usually has no authority to create a contract between the supplier and customer.
• The supplier has no contract with the customer of the distributor, although he may have liability under general legal principles or under product liability legislation.
• A distributor takes more financial risk than an agent but this should be reflected in the margins on resale of the product(s).

How this affects you and your business.

The relationships between your business and its agents and distributors need to be clearly outlined in an agreement. That way your business has less risks, everyone is clear on their roles and responsibilities and payment arrangements are clearly laid out. This reduces expensive disputes as the relationships develop.

Talk to us on 0844 209 8500 about how we can help you.