Sales Agency Agreement
In the event that you and another party will have to discuss the terms and conditions regarding a particular matter before any business can be done, then you’ll need to prepare an agreement document. The kind of agreement document will depend entirely on the situation such as when you have to use one of the many commercial agreement examples in the event that you need to discuss any commercial-related matters between certain parties.
Agency Agreement Template
Sales Agency Agreement Example
Or when you have to create management agreements so that the parties involved may come to an understanding as to how a particular establishment is going to be managed. So in the event that you need to make an agreement document to discuss the terms between an agent and a distributor, then you’ll need to be able to make a sales agency agreement and this article will teach you how to make one.
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What Should be in a Sales Agency Agreement?
Much like a lease agreement or a transfer agreement, a sales agency agreement will require particular pieces of information to ensure that the parties involved are fully able to grasp the terms and conditions that have to be agreed to before any kind of business can even take place. An agency agreement sets out the terms whereby one party (the Agent) sells products or services on behalf of another (the Principal) in return for commission. So obviously the pieces of information will have everything to do with the business that’s to be done by both parties.
A well-drafted agency agreement will include clauses covering the following:
1. The Agent’s Responsibilities
Let’s say that you were making a stock agreement which will talk about how a stock is to be transferred from one party to another. That document will details the responsiblity of the stock owner to transfer the stock that he or she owns to the party that’s willing to purchase it. In that sense, you will also need to document the agent’s responsibility to provide for the other party. The Agent is, typically, be required to: market the Principal’s goods/services, act in good faith, to protect the supplier’s intellectual property, to not sell the products or services that’s outside the agent’s territory, etc.
2. The Principal’s Responsibility
If the agent has responsibilities, then so should the principal. The most common responsibilities that a principal would have are supporting the agents in terms of promoting the products or services, provide up-to-date information about the products, supply the agent with the products or services that he or she needs, inform the Agent of any refused orders, to act in good faith with the law and much more. Just be sure to outline all of these along with the agent’s responsibility to ensure that both parties know what they should do for the other.You may also see maintenance agreement
3. Products
The agreement document has to specify which of the Principal’s products that the agent will be appointed with to sell to the public. If the Principal has a wide and/or diversified range then an Agent might be appointed to sell only part of the Principal’s product range. Although, it all depends on the principal on what he or she wants the agent to sell, so that means that the principal can appoint the agent to sell all the products should the principal wish it.
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4. The Agent’s Territory
This will talk about the geographic area in which the Agent is appointed to sell and whether or not the Agent is an ‘exclusive’ agent needs to be unambiguously specified. You’re basically limiting the agent to do business on a particular area in which he or she can claim as territory, but that would mean that the the agent may sell the products that he or she has been appointed with in any way within that area so long as it does not break the agreement. The agreement may be drafted such that the Agent can ‘earn’ further territory by achieving certain sales targets, meaning that the agent may expand even further to gain more revenue should he or she earn it.You may also see assignment agreement
5. The Distribution Channels
Much like a Maintenance Agreement or a payment agreement, this particular document will have a section which talks about distribution. However, a sales agency agreement talks about the distribution channels that the agent is allowed to use, including whether or not the Agent can sell to customers in their territory via the internet.
6. Commission
This basically talks about the commission rate (a percentage of each sale) that the agent gains. The amount of commission that the agent receives has to be clearly specified as well as how the method of calculation for the commission. If the Principal does not accept the sale then the Agent will usually not earn any commission.You may also check out our other examples such as direct deposit agreement that can teach you about how commission works.
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7. The Term of the Agreement
When you make a assignment agreement or a services agreement, there’s always going to be a section which talks about the duration of the agreement. This is also something that your sales agency agreement should have as you’ll want it to specify just how long the agent and the principal will be working together. An agent will typically be appointed for a number of months or years. The Agency Agreement may provide for the right to renew the agreement in the event that the agent manages to hit a specified sales target.
8. The Termination
Typically, an agency agreement will run for a minimum period, after which either party may terminate it while giving notice. Provision is usually made for either party to terminate if the other party breaches the agreement or is unable to fulfill anything that’s expected out of him or her that was discussed in the document.You may also see license agreement
9. The Sales Target
Exclusive agents can be given sales targets by the principal in the event that they would like to continue doing business together or to ensure that they are able to retain their “exclusive” status with the principal. It’s kind of like a security measure for the principal in the event that the agent isn’t able to successfully selling the products that he or she was appointed with to the masses. It definitely helps avoid continuing a relationship with another business that’s failing.You may also see personal care agreements
10. Confidentiality
When appointing another person or company products, the principal will have to guarantee that the agent does not share any information that may be considered as a trade secret. Which is why a confidentiality section is needed within the agreement document. While the agent will be able to access commercially sensitive information about the supplier, then at least the principal will have control over what the agent may be able to share with others. Be sure that the agreement document is able to specify what information is considered as confidential and what can be shared or is already public knowledge.You may also see confidentiality agreement
11. Signatures
Be sure that both parties sign the document once everything is all said and done. If there aren’t any problems and that both parties have agreed to the terms and conditions, then the signatures will prove that the two have concluded to do official business together. Also, include the date as to when the document was signed in the event that any legal disputes regarding the matter is brought up in court.You may also see reseller agreement
If you would like to learn how to create other types of agreements (promotion agreement, conveyance agreement, confidentiality agreements, etc.), then all you have to do is go through our site. We have all the articles you need to be able to help you and your business out. Just make sure that you’re able to go through them properly so that you can utilize them effectively.
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