FAQs about Business Audits

Agency Law FAQs

Why do I need to draft an agency agreement?

Under the Commercial Agents (Council Directive) Regulation 1993, agents and principals are entitled to receive an agency agreement setting out the main terms of the agency relationship.

What is the agent’s entitlement to commission ?

Agents are entitled to “customary” or “reasonable” remuneration under the  Commercial Agents (Council Directive) Regulation 1993.

Specifically, agents are entitled to compensation for:

  • Transactions that have been concluded as a result of the agent’s own efforts.
  • Transactions concluded with a third party customer  that was previously acquired by the agent as a customer for “transactions of the same kind”.
  • Transactions for customers within an exclusive geographical area as defined in the original agency agreement.
  • Transactions concluded after the end of the agreement where the agent was primarily responsible for winning the business.

What are an agent’s statutory duties ?

If the type of agency agreement you are dealing with is covered by the Commercial Agents (Council Directive) Regulation 1993, the agent is under a duty to:

  • Keep secret any confidential information regarding the principal.
  • Follow any reasonable instructions of the principal.
  • Make reasonable efforts to negotiate and conclude transactions he is responsible for under the agreement.
  • Act in good faith.
  • Protect the interests of the principal.
  • Communicate essential information to the principal.

What are the principal’s statutory duties ?

Under the Commercial Agents (Council Directive) Regulation 1993, principals are required to:

  • Act in good faith when dealing with the agent.
  • To provide essential documents for any goods the agent is dealing with.
  • Pay the agent as agreed to in the original agreement.
  • Provide information to the agent that is essential for the contract to be carried out.
  • Provide the agent with enough information to check that commission has been paid per the original agency agreement.
  • Communicate to the agent that the number of transactions will be below expected where appropriate.
  • Within a reasonable period of time, the principal must communicate to the agent whether they will accept or refuse a particular transaction.

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