Agency Agreement

Create an Agency Agreement Online - Complete Guide

An Agency Agreement is a contract between a business (the “principal”) and an individual or company (the “agent”) who is authorised to promote, introduce, negotiate or sell goods or services on the principal’s behalf. It sets out authority, commission terms, duties, territory, confidentiality and compliance requirements.

This guide explains everything you need to know about Agency Agreements - how agency relationships work, the legal principles involved, how commissions operate and how to create a clear, balanced agreement that protects both parties while supporting commercial growth. It also covers how to create an Agency Agreement online quickly and professionally.

CONTENTS

What is an Agency Agreement?

An Agency Agreement formally appoints an agent to act on behalf of a business (the principal) to promote, introduce, negotiate or sell its products or services. It defines the authority given to the agent, the scope of their role and the commercial relationship between the parties.

It typically includes:

• The territory, sector or market the agent is responsible for.
• The commission structure, payment triggers and reporting requirements.
• The agent’s authority - whether they can negotiate or conclude contracts, or only introduce clients.
• The obligations and responsibilities of both parties, including confidentiality and compliance.
• The duration of the relationship, renewal terms and termination rights.

An Agency Agreement is essential whenever one party represents another in commercial dealings, ensuring expectations are clear, responsibilities are defined and the principal–agent relationship is legally enforceable and commercially balanced.

Who Needs an Agency Agreement?

An Agency Agreement is suitable for any situation where one party represents another in commercial activity.

Common examples include:

• Manufacturers or suppliers using third-party sales agents or representatives.
• Exporters or importers expanding into new regions or appointing local agents.
• Service providers working with introducers, lead-generation partners or business development agents.
• Consultancies or marketing firms earning commission on client introductions.
• Freelancers, contractors or companies representing multiple brands or product lines.
• Businesses using commission-only agents or recruitment-style intermediaries.

In every case, an Agency Agreement clarifies roles, authority and commission arrangements - ensuring both parties understand who does what, how they are paid and how risks and responsibilities are managed.

Benefits of an Agency Agreement

A well-structured Agency Agreement keeps business relationships transparent, commercially aligned and legally protected from the start.

Key advantages include:

Defines authority - prevents unauthorised commitments, pricing promises or contract negotiations.

Clarifies commission - avoids payment disputes by setting clear rates, triggers and reporting requirements.

Protects confidential information - including client lists, pricing data and marketing materials.

Sets performance expectations - outlining duties, targets and communication standards for the agent.

Supports compliance with agency law - most jurisdictions recognise core principles governing principal–agent relationships, helping reduce the risk of future claims or misunderstandings.

When to Use an Agency Agreement

An Agency Agreement should be used whenever one party is appointed to act on behalf of a business in a sales, marketing, or introduction role.

Typical situations include:

• Appointing a sales or marketing agent to promote your products or services.
• Paying someone commission for introductions, referrals or completed sales.
• Expanding into new regions through a local representative or territory agent.
• Engaging a lead-generation partner, introducer or business development agent.
• Protecting your brand, client relationships and commercial information while outsourcing sales activity.

An Agency Agreement should always be signed before the agent begins work, ensuring legal clarity, defined authority and agreed commission terms from day one.

Types of Agency Agreement

Agency Agreements come in several forms, depending on how authority, commission and responsibilities are structured.

The most common types include:

Sole Agency Agreement
The agent has exclusive rights to act for the principal within a defined area or market. The principal cannot appoint other agents during this period, but may still secure customers directly.

Exclusive Agency Agreement
Stronger than sole agency. The agent is the only party allowed to act for the principal and typically earns commission even if the principal secures the customer independently.

Non-Exclusive Agency Agreement
The principal may appoint multiple agents. Each agent only earns commission on the customers they introduce or sales they generate.

Commercial Sales Agency Agreement
Used when an agent sells products or services on behalf of a business. Covers pricing authority, commission structures, territory and performance expectations.

Marketing or Lead-Generation Agency Agreement
Applies where the agent’s role is to introduce potential clients rather than close sales. Typically focuses on qualification criteria, deliverables, referral processes and fee structures.

Commission-Only Agency Agreement
The agent is paid solely through commission. These agreements clearly define rates, payment triggers, reporting requirements and any minimum activity expectations.

Employment-Linked or Hybrid Agency Agreement
Used when agents operate like independent contractors but follow some employer-style requirements (e.g., reporting routines, set hours, branded representation or exclusivity obligations).

Key Clauses to Include in an Agency Agreement

A strong Agency Agreement balances commercial flexibility with clear boundaries.

The following clauses appear in most types of agency arrangements:

Appointment and Authority

• Whether the arrangement is exclusive, sole or non-exclusive.
• The specific territory, sector or client base assigned to the agent.
• The agent’s level of authority - whether they can negotiate or conclude contracts, or only make introductions.

Commission and Payment Terms

• Commission percentage, structure and payment triggers (e.g., order placed, invoice paid).
• When and how commissions are paid.
• Any deductions, refunds, clawbacks or adjustments if orders are cancelled or disputed.

Duties of the Agent

• Actively and ethically promote the products or services.
• Follow brand, pricing and compliance policies.
• Report regularly on leads, introductions, sales activity and performance.

Duties of the Principal

• Provide accurate product information, marketing materials and pricing.
• Pay commission promptly and transparently.
• Notify the agent of changes to territory, products or commercial strategy.

Confidentiality and Intellectual Property

• Use of marketing materials, branding and trade marks.
• Protection of client data, pricing information and commercially sensitive material.

Duration and Termination

• Whether the agreement is fixed-term or ongoing.
• Notice periods, renewal arrangements and early termination rights.
• Post-termination matters such as unpaid commission, return of materials and client ownership.

Post-Termination Rights and Legal Considerations

• Any rights that continue after termination.
• Where relevant, compliance with legislation governing agency relationships, including potential entitlement to compensation or indemnity.

Legal Requirements

The legal framework for agency relationships varies by country, but most jurisdictions follow similar principles around authority, duties, commission and termination. In general, agents are entitled to act within the authority granted to them, perform their duties with reasonable care, and receive the commission they have earned under the agreement.

Many regions also have legislation that protects agents in commercial agency arrangements. For example, in the UK, the Commercial Agents (Council Directive) Regulations 1993 apply when a self-employed agent has ongoing authority to negotiate or conclude sales of goods on behalf of a principal. Where this type of legislation applies, agents may have statutory rights such as:

• Minimum notice periods for termination.
• Commission entitlements for transactions completed or substantially generated before termination.
• A possible right to compensation or indemnity when the agency ends.

Even where specific regulations do not apply - such as arrangements involving services only - similar principles of fairness, reasonable notice and transparent commission practices are generally expected in commercial agency relationships worldwide.

Note: Legal protections for agents differ between jurisdictions. Always check the laws and regulations that apply in your region or industry before finalising an agreement.

How to Create an Agency Agreement

Creating an Agency Agreement involves two key parts: understanding the steps involved and choosing the method that works best for your commercial relationship.

The Steps to Create an Agency Agreement

Creating an Agency Agreement is a straightforward process, but each stage must be handled carefully to ensure the relationship is clear, balanced and legally enforceable.

While requirements vary by jurisdiction, the typical process looks like this:

Define the parties and the scope
Identify the principal and agent, outline the products or services involved, and specify the territory, sector or market.

Set authority and exclusivity
Decide whether the agent has exclusive, sole or non-exclusive rights, and clarify whether they may introduce clients, negotiate terms or conclude contracts.

Agree commission rates and payment rules
Define commission percentages, when commission is earned, how it is calculated, payment triggers (e.g., invoice paid or order placed) and any deductions or clawbacks.

Define responsibilities and performance expectations
Outline duties for both sides - such as reporting, brand compliance, marketing activities, support from the principal and required conduct from the agent.

Include confidentiality and IP protections
Confirm how client data, pricing, trade marks and marketing materials can be used and protected.

Set duration, notice periods and termination rights
Decide whether the agreement is fixed-term or ongoing, state notice periods, renewal rules and what happens when the agreement ends (including unpaid commission and return of materials).

Review, sign and store the agreement
Both parties should sign the contract before work begins and retain copies in an accessible, secure location.

These steps ensure your Agency Agreement is clear, complete and tailored to the commercial relationship you intend to create.

Different Ways to Create an Agency Agreement

There are several approaches you can take to create an Agency Agreement. The right option depends on your budget, commercial complexity and the level of legal certainty you require.

1. DIY Agency Agreements

• Suitable for very simple, low-risk arrangements
• Free or low-cost
• Higher risk of unclear terms or missing clauses (authority, commission, IP, termination)

2. Online Agency Agreement Tools

• Guided questionnaires and professional documents
• Fastest and most convenient option
• Ideal for straightforward and moderately complex commercial relationships
• Ensures clear structure, defined clauses and consistent wording

3. Business or Contract-Writing Services

• Mid-range cost
• Staff may not always be legally qualified
• Suitable for simple to mid-complexity arrangements
• Better clarity than DIY, but oversight varies

4. Solicitor-Drafted Agency Agreements

• Highest level of legal precision and customisation
• Recommended for complex relationships, cross-border agency, large commissions or exclusivity concerns
• Most expensive option

5. Template Packs / Contract Kits

• Low-cost structured templates
• Provide a basic framework
• Still require careful drafting and correct completion of all terms

Each method can produce a valid Agency Agreement as long as the commercial terms are clear and both parties understand their rights, duties and payment arrangements. The best option is the one that offers the right balance of clarity, ease and legal certainty for your situation.

Cost to Create an Agency Agreement

The cost of creating an Agency Agreement depends on the method you choose and the complexity of the commercial relationship. Simple commission-only or introducer arrangements may be inexpensive, while exclusive or cross-border agreements often require more specialist drafting.

Below are the typical price ranges for the most common ways to create an Agency Agreement:

DIY Agency Agreements (Self-Drafted)

• Cost: Free
• Suitable for very simple, low-risk arrangements
• Highest risk of unclear terms, missing clauses or disputes over commission, authority or termination

Online Agency Agreement Tools

• Cost: £20–£100 for professional or solicitor-verified documents
• Guided questionnaires help avoid common drafting errors
• Ideal for most straightforward or moderately complex agency relationships
• Ensures structure, clarity and consistency

Business / Contract-Writing Services

• Cost: £50–£250
• Useful for simple to mid-complexity agreements
• Quality varies depending on provider and legal expertise

Solicitor-Drafted Agency Agreements

• Cost: £350–£900+ (depending on complexity and negotiation)
• Recommended for exclusive agencies, high commission structures, cross-border arrangements or complex commercial terms
• Provides the highest level of legal accuracy and customisation

Template Packs / Contract Kits

• Cost: £10–£40
• Offer a basic structure you complete yourself
• Still require careful drafting to ensure clarity around authority, commission, duties and termination

These ranges cover the main routes businesses use to create an Agency Agreement, from free DIY options to fully customised legal support.

Agency Agreement Template

The example below provides a simple overview of how an Agency Agreement is typically structured and the type of information it usually includes. Actual content may vary depending on your business, industry and commercial requirements.

This Agreement is made on: [date]

Between: [Principal Name] (“the Principal”) and [Agent Name] (“the Agent”).

The Principal appoints the Agent to promote, introduce or secure sales of [products/services] within the territory of [region].

The Agent will receive a commission of [percentage]% on all qualifying sales, calculated in accordance with the agreed commission structure.

Either party may terminate this Agreement by giving [number] months’ written notice.

{Principal}
Signature: ____________________
Date: ____________________

{Agent}
Signature: ____________________
Date: ____________________

Robot Lawyer provides a solicitor-verified Agency Agreement document that clearly defines authority, commission terms, duties and rights for both parties - helping you build a transparent, well-structured and legally reliable commercial relationship.

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Agency Agreement FAQs

Is an agency the same as a distributorship?

No. An agent sells or introduces customers on behalf of the principal, while a distributor buys goods to resell in their own name.

Can an agent act for multiple principals?

Yes, unless the agreement grants exclusivity or creates a conflict of interest. Exclusive and sole agency terms should always be stated clearly.

Do agency regulations apply to services?

In many jurisdictions, commercial agency legislation applies mainly to the sale of goods. Service-based agencies may not fall under the same rules, but similar principles of fairness and reasonable notice are often expected.

Does an agent need to be self-employed?

Most commercial agency laws apply to self-employed intermediaries, not employees. However, hybrid or contractor-style agency arrangements are common and can still be governed by contract.

Can an agent bind the principal to a contract?

Only if the Agency Agreement gives them authority to negotiate or conclude contracts. Without this authority, an agent can typically only introduce clients.

What happens when the agreement ends?

The agent may be entitled to outstanding commission or, in some jurisdictions, compensation or indemnity. This depends on the agreement and any applicable commercial agency laws.

When does an agent earn commission?

This depends on the payment trigger in the contract — for example, when an order is placed, when an invoice is paid, or when a customer is introduced. Clear definition prevents disputes.

Is a written Agency Agreement required?

A written contract is strongly recommended. It reduces ambiguity around authority, commission, duties, termination and confidential information, even if not legally mandatory in all regions.

Create an Agency Agreement Online

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1. Select Create Document → below to begin.
2. Answer a few questions about the relationship and commercial terms.
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✔ Suitable for commercial agency arrangements
✔ Covers commissions, territories and obligations
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