Introduction to Agency Agreement
An Agency Agreement establishes a formal relationship between
a principal and an agent, where the principal appoints the agent to act on
their behalf to promote, sell, or represent specific goods or services within a
designated area. This Agreement outlines the rights, duties, and
responsibilities of both parties, defining the agent’s role in representing the
principal’s interests while adhering to specified terms and conditions.
The agreement serves as a framework for managing commercial
relationships, specifying essential aspects such as commission structure, sales
practices, confidentiality, and limitations on authority. Additionally, it
protects both parties by setting clear boundaries on the agent’s actions,
safeguarding the principal’s reputation and brand integrity, and establishing
provisions for resolving disputes and terminating the relationship. This
structured approach ensures that the agent can effectively represent the
principal while maintaining transparent and accountable business operations.
Agency Agreement
This
Agreement is made on this __________ day of __________ between __________
(hereinafter referred to as “the Principal”) of the first part and __________
(hereinafter referred to as “the Agent”) of the second part.
The
parties agree as follows:
1. Appointment of Agent: The Agent is appointed as the sole
agent for the Principal in the town of __________ (in the district of
__________), referred to hereafter as "the Agency Town," for the
purpose of selling the Principal's goods for a term of __________ years
beginning from the date of this Agreement, subject to the terms and conditions
outlined below.
2. Representations and Warranties: The Agent shall not make any
representation or give warranties beyond those stated in the Principal’s
printed price list while selling the Principal’s goods.
3. Commission and Remittance: The Agent is entitled to deduct a
commission of __________% from the list price of all goods sold on behalf of
the Principal. A record of all sales shall be maintained, and every Saturday,
the Agent shall remit all sums received, minus their commission, to the
Principal. All sales must be conducted on a cash basis unless the Principal
consents in writing to provide credit for specific sales. For such credit
sales, the Principal may adjust the goods' price as deemed necessary.
4. Credit and Purchases: The Agent shall not purchase goods
on the Principal’s behalf nor pledge the Principal’s credit without written
consent.
5. Premises and Insurance: With the Principal's prior
approval, the Agent shall secure and maintain suitable premises for the agency,
with all related expenses borne by the Principal. The Agent is responsible for
insuring all goods entrusted by the Principal for their full value against all
available risks and shall furnish evidence of such payments and insurance when
requested.
6. Sales Restrictions: When selling to trade customers,
the Agent shall obtain a signed agreement from purchasers stating:
o The goods shall not be resold
outside the Agency Town.
o Goods shall not be resold below the
current list price.
7. Identification as Agent: In all business dealings,
including documentation and signage, the Agent shall identify as a selling
agent for the Principal.
8. Breach of Sales Restrictions: Any breach of clause 6 entitles
the Principal to terminate this Agreement immediately and recover damages of
Rs. __________ for each article sold in breach. The Agent shall ensure all
purchasers comply with the agreement terms.
9. Stock Provision and Maintenance: The Principal shall provide the
Agent with a stock valued at Rs. __________ per the Principal’s current price
list. The Principal will replenish stock monthly as needed. The Principal
reserves the right to audit stock without notice, and the Agent must compensate
for any shortage or deficiency.
10. Sales Prices and Discounts: The Agent must sell goods at the
Principal’s current price list, with permission to offer a discount or rebate
of __________%.
11. Dispute Notification: In case of any dispute with a
purchaser, the Agent must inform the Principal immediately and refrain from
legal action or settlement without the Principal’s written consent.
12. Termination of Agreement: Either party may terminate this
Agreement anytime after __________ years by providing one month's written
notice.
13. Non-Assignability: Benefits under this Agreement
cannot be assigned to others.
14. Dedication to Principal’s Business: The Agent shall devote full
business time and effort to promoting the Principal’s goods and follow all
orders and instructions. The Agent shall not engage in other business without
the Principal’s written consent.
15. Non-Solicitation Post-Termination: For one year following the
termination of this Agreement, the Agent shall not solicit trade from past
customers of the Principal nor engage in a competing business.
16. Delivery of Goods: Goods are to be sold from the
Agent’s place of business; however, the Agent may deliver goods to customers at
their business locations at the Agent's expense.
17. Immediate Termination by Principal: The Principal may terminate this
Agreement without notice if:
18. Dispute Resolution: Any dispute arising from this
Agreement shall be resolved by arbitration in accordance with the Arbitration
and Conciliation Act.
19. Termination Due to Business
Cessation: The
Principal may terminate this Agreement with one month’s notice if they cease
conducting the specified business.
20. Return of Stock on Termination: Upon termination, the Agent must
immediately return all unsold stock to the Principal and compensate for any
shortage.
IN WITNESS WHEREOF, the parties hereto have signed
this Agreement on the date mentioned above.
