This agency agreement is between
The Principal is in the business of
The Agent has performed the same or similar activities for others.
The parties therefore agree as follows:
1. ENGAGEMENT; SERVICES.
The Principal retains the Agent to provide, and the Agent shall provide, the services described in Exhibit A (the "Services") as the
2. TERM AND TERMINATION.
- (a) Term. This agreement will become effective as described in section
. Unless it is terminated earlier in accordance with subsection 2(b), this agreement will continue until the Services have been satisfactorily completed and the Agent has been paid in full for those Services (the "Term"). However, this agreement may not remain effective for more than years. - (b) Termination. This agreement may be terminated:
- (i) by either party on provision of
days' written notice to the other party, with or without cause; - (ii) by the Principal at any time and by either party for a material breach of any provision of this agreement by the other party, if the other party's material breach is not cured within
days of receipt of written notice of the breach; or - (iii) without prior notice, if the Agent
is convicted of any crime or offense, fails or refuses to comply with the written policies or reasonable directives of the Principal, or is guilty of serious misconduct in connection with performance under this agreement. ; or (iv) automatically, on the death of the Agent.
- (i) by either party on provision of
- (c) Effect of Termination. After the termination of this agreement for any reason, the Principal shall promptly pay the Agent for Services rendered before the effective date of the termination. No other compensation, of any nature or type, will be payable after the termination of this agreement.
(d) Failure to Have or Maintain License. If at any time during the Term, the Agent does not have, or fails to maintain, a license required to perform services or receive compensation under this agreement (including if the Agent's license is revoked by a licensing or regulatory agency but not including a temporary suspension of the Agent's license), it will be considered a material breach of this agreement by the Agent and this agreement will terminate as of the date that the Agent first lost, or failed to maintain, the license, without regard to when the Principal learns of the loss of, or failure to maintain, the license or when the Principal notifies the Agent that this agreement has been terminated. The Principal may recover any compensation paid to the Agent after the Agent loses or fails to maintain any such license.
3. CONFIDENTIAL INFORMATION.
- (a) Confidentiality. During the Term, the Agent may have access to or receive certain information of or about the Principal that the Principal designates as confidential or that, under the circumstances surrounding disclosure, ought to be treated as confidential by the Agent ("Confidential Information"). Confidential Information includes information relating to the Principal or its current or proposed business, financial statements, budgets and projections, customer identifying information, potential and intended customers, employers, products, computer programs, specifications, manuals, software, analyses, strategies, marketing plans, business plans, and other confidential information, provided orally, in writing, by drawings, or by any other media. The Agent will treat the Confidential Information as confidential and will not disclose it to any third party or use it for any purpose but to fulfill its obligations in this agreement. In addition, the Agent shall use due care and diligence to prevent the unauthorized use or disclosure of such information.
- (b) Exceptions. The obligations and restrictions in subsection (a) do not apply to that part of the Confidential Information:
- (i) was or becomes publically available other than as a result of a disclosure by the Agent in violation of this agreement;
- (ii) was or becomes available to the Agent on a nonconfidential basis before its disclosure to the Agent by the Principal, but only if:
- A. the source of such information is not bound by a confidentiality agreement with the Principal or
- is not otherwise prohibited from transmitting the information to the Agent by a contractual, legal,
- fiduciary, or other obligation; and
- B. the Agent provides the Principal with written notice of its prior possession either (I) before the
- effective date of this agreement or (II) if the Agent later becomes aware (through disclosure to the
- Agent) of any aspect of the Confidential Information as to which the Agent had prior possession,
- promptly on the Agent so becoming aware;
- (iii) requested or legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar processes), or is required by a regulatory body, to be disclosed. However, the Agent shall:
- A. provide the Principal with prompt notice of these requests or requirements before making a
- disclosure so that the Principal may seek an appropriate protective order or other appropriate
- remedy; and
- B. provide reasonable assistance to the Principal in obtaining any protective order. If a protective
- order or other remedy is not obtained or the Principal grants a waiver under this agreement, the
- Agent may furnish that portion (and only that portion) of the Confidential Information that, in the
- written opinion of counsel reasonably acceptable to the Principal, the Agent is legally compelled or
- otherwise required to disclose. However, the Agent shall make reasonable efforts to obtain reliable
- assurance that confidential treatment will be accorded any part of the Confidential Information
- disclosed in this way; or
- (iv) was developed by the Agent independently without breach of this agreement.
- (c) Obligation to Maintain Confidentiality.
- (i) Confidentiality. At all times during its work with the Principal, the Agent shall hold in strictest confidence, and not use, except for the benefit of the Principal, or to disclose to any person, firm, or corporation without the prior written authorization of the Principal, any of the Principal's Confidential Information.
- (ii) Term. The Agent shall maintain the confidentiality and security of the Confidential Information until the earlier of:
- A. such time as all Confidential Information disclosed under this agreement becomes publicly known
- and is made generally available through no action or inaction of the Agent; or
- B. the third anniversary of the termination of the Agent's work Agent the Principal. However, to the
- extent that the Principal has disclosed information to the Agent that constitutes a trade secret under
- law, the Agent shall protect that trade secret for as long as the information qualifies as a trade secret.
- (d) Remedy. Money damages may not be a sufficient remedy for any breach of this section by the Agent and, in addition to all other remedies, the Principal may seek (and may be entitled to) as a result of such breach, specific performance and injunctive or other equitable relief as a remedy.
4. RESPONSIBILITIES; SCOPE OF AUTHORITY.
The Agent may not represent itself as having any powers except those specified in this agreement. Without limiting the foregoing, the Agent does not have authority to
5. TERRITORY
6. COMPENSATION.
7. TAXES.
- (a) Agent solely responsible for taxes. The Agent acknowledges that the Agent is not the Principal's employee and that the Agent is solely responsible for reporting and paying any tax or other cost assessed on the basis of the Principal's payment of compensation to the Agent under this agreement.
- (b) Principal will not withhold taxes. The Principal will not withhold any amount of compensation for the Agent's taxes, including income tax, social security and Medicare tax, workers' compensation taxes or costs, unemployment compensation taxes or costs, or any other tax, cost, fee, or charge related to the Agent's compensation for services under this agreement.
8. EXPENSES.
Subject to the Principal's prior written approval, the Principal shall reimburse the Agent for unusual or extraordinary expenses incurred by the Agent.
(a) ; and (b) ; and (c)
9. RECORDS.
During the Term
10. INSURANCE.
The Agent must maintain
11. USE OF TRADEMARKS.
The Agent may use, reproduce, and distribute the Principal's service marks, trademarks, and trade names (if any) (collectively, the "Principal Marks") in connection with the performance of the Services. Any goodwill received from this use will accrue to the Principal, which will remain the sole owner of the Principal Marks. The Agent may not engage in activities or commit acts, directly or indirectly, that may contest, dispute, or otherwise impair the Principal's interest in the Principal Marks. The Agent may not cause diminishment of value of the Principal Marks through any act or representation. The Agent may not apply for, acquire, or claim any interest in any Principal Marks, or others that may be confusingly similar to any of them, through advertising or otherwise. At the expiration or earlier termination of this agreement, the Agent will have no further right to use the Principal Marks, unless the Principal provides written approval of each use.
12. INDEMNIFICATION.
- (a) Of Principal by Agent. At all times after the effective date of this agreement, the Agent shall indemnify the Principal against all damages, liabilities, expenses, claims, or judgments (including interest, penalties, reasonable attorneys' fees, accounting fees, and expert witness fees) (collectively, the "Claims") that the Principal may incur and that arise from:
- (i) the Agent's negligence or willful misconduct arising from the Agent's carrying out of its obligations under this agreement;
- (ii) the Agent's breach of any of its obligations or representations under this agreement; or
- (iii) the Agent's breach of its express representation that it is an independent contractor and in compliance with all applicable laws related to work as an independent contractor. If a regulatory body or court of competent jurisdiction finds that the Agent is not an independent contractor or is not in compliance with applicable laws related to work as an independent contractor, based on the Agent's own actions, the Agent will assume full responsibility and liability for all taxes, assessments, and penalties imposed against the Agent or the Principal resulting from that contrary interpretation, including taxes, assessments, and penalties that would have been deducted from the Agent's earnings if the Agent had been on the Principal's payroll and employed as a Principal employee.
- (b) Of Agent by Principal. At all times after the effective date of this agreement, the Principal shall indemnify the Agent from all Claims that the Agent may incur arising from:
- (i) the Principal's operation of its business;
- (ii) the Principal's breach or alleged breach of, or its failure or alleged failure to perform under, any agreement to which it is a party; or
- (iii) the Principal's breach of any of its obligations or representations under this agreement. However, the Principal is not obligated to indemnify the Agent if any of these Claims result from the Agent's own actions or inactions.
13. FORCE MAJEURE.
A party will not be considered in breach of or in default because of, and will not be liable to the other party for, any delay or failure to perform its obligations under this agreement by reason of fire, earthquake, flood, explosion, strike, riot, war, terrorism, or similar event beyond that party's reasonable control (each a "Force Majeure Event"). However, if a Force Majeure Event occurs, the affected party shall, as soon as practicable:
- (a) notify the other party of the Force Majeure Event and its impact on performance under this agreement; and
- (b) use reasonable efforts to resolve any issues resulting from the Force Majeure Event and perform its obligations under this agreement.
14. GOVERNING LAW.
- (a) Choice of Law. The laws of the state of
govern this agreement (without giving effect to its conflicts of law principles). - (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
County, .
15. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.
16. ASSIGNMENT AND DELEGATION.
- (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
- (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.
17. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
18. SEVERABILITY.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
19. NOTICES.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Principal:
- If to the Principal:
- (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
20. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
21. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
22. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
23. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
24. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
Date: _________________ |
By:__________________________________________ |
| Name: |
|
Date: _________________ |
By:__________________________________________ |
| Name: |
[PAGE BREAK HERE]
EXHIBIT A
SERVICES
1.
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Agency agreement: How-to guide
Hiring an agent or agency to represent your company is an easy and cost-effective way to grow your business without hiring additional employees. In addition to the obvious expenses of salaries, bonuses, and other compensation, employees can cost a company in more subtle ways, requiring further investment in benefits, payroll taxes, insurance premiums, office space, and equipment. Such additional costs aren’t required for agents.
Companies can use such resources for specific tasks according to business needs and can avoid the legal minefields of hiring and firing staff according to the ebb and flow of the market. Organizations can select experts to perform work when needed and can avoid the cost and hassle of providing additional education or training to current employees.
Key points to note while creating agency agreements
Legal relationship between the parties
An agency agreement is a contract that creates a “fiduciary” relationship between two parties. In an agency contract, party A (sometimes called the “principal”) agrees that the actions of party B (sometimes called the “agent”) can bind party A to an agreement with a third party. In other words, the principal authorizes the agent to act on the principal’s behalf through an agency agreement.
Agency agreements: Why it’s required
An agency agreement is designed to protect the parties’ rights during the contract term. It strengthens the agency partnership by clearly outlining the terms and conditions that the parties involved should follow during the course of the arrangement.
Principal and agent’s responsibilities
In the agreement, you must include a description of the agent’s obligations, the amount to be paid, the terms of payment, deadlines for completion, and the specific end products expected (if any). Clarify the terms and conditions the principal has to follow from the arrangement.
Time to review the agency agreement
After the parties agree with the terms, draft the agreement and provide copies to the principal and the agent for review. Once they review and clarify their doubts only then proceed to the next steps.
Signing and post-signing requirements
A written agreement is only the first step in establishing an individual’s or company’s agency status. Once signed, both parties must follow its terms exactly to make sure that status is maintained.
The involved parties should sign two copies of the agreement. One copy is for the principal, and the other is for the agent.
At the end of the agreement’s term, you and the other party can revisit its provisions and consider whether to renew.
Depending on the nature of its terms, you may decide to have your agreement witnessed or notarized. This will limit later challenges to the validity of a party’s signature.
If you feel your agreement is complex, always seek the help of an attorney to draft your document.
Important elements of an agency agreement
The following instructions will help you understand the terms of your agreement.
Introduction of parties
Start the agreement by identifying the parties and, if applicable, what type of organization(s) they are. Throughout the agreement, the company hiring the agent or agency is called the “principal,” and the agent is called the “agent.”
In this section, you must provide the effective date on which the agreement will become valid (the effective date is often the date on which it is signed).
Recitals
The “whereas” clauses, referred to as recitals, define the world of the agreement and offer key background information about the parties. Provide a brief description of the principal’s business and the general reason the agent is being retained.
If your agency agreement has the word “exclusive” in the clause, it means that the parties agree not to appoint other agents. If it’s a non-exclusive agency agreement, then the company will be able to appoint and use other agents.
Purpose; appointment
This part clarifies that the agent is appointed as the principal’s representative.
Term
It indicates how long the initial agreement term will last. The parties can choose from the two provisions under this. In the first, the term will continue until all work under the agreement has been performed. It can be opted when the services provided by the agent have a clear finish date (e.g., selling 100 widgets. The contract term ends once the agent is able to sell 100 widgets).
The second option is when the principal and the agent can continue their relationship by renewing the agreement at agreed-upon dates. It can be one-year renewals, or if you want longer terms, you can do so accordingly.
Having a term allows the parties to set a deadline by which all services must be finished or all extensions must end.
Responsibilities; scope of authority
It allows the parties to limit the extent to which the agent can bind the principal. If there are areas in which you don’t want the agent to act, or if there are specific services you don’t want the agent to perform, list those restrictions here.
Territory
This section delimits the geographical area where the agent’s efforts should be focused. If there are no geographical restrictions on the agent’s activities, you need to mention that here.
If there are limitations, describe in detail what those limitations will be. Give the agent exclusivity within a specific geographic area. If you want the agent to be the sole representative of the company in the area described, mention those details as well.
Compensation
This part provides the details about the agreed-upon compensation. It outlines:
- The payment terms
- The amount received by the agent for the services performed
- Payout method and a clear payment schedule
List down the compensation provisions (e.g., with some options below):
- The compensation can be paid in connection with the agent’s earnings. When the agent’s efforts bring in money, the agent will receive a percentage of that money. Give the exact percentage the agent will receive.
- The agent receives a flat fee for its services, unrelated to any sales or purchases that it makes. Provide the amount the agent will be paid (as a total sum, a monthly rate, or otherwise) and explain how these payments will be made (e.g., weekly, monthly, according to milestones met, etc.).
Taxes
This section clarifies that the agent is not an employee of the principal and will be responsible for paying its own taxes. Add relevant subsections like:
(a) The agent will be solely responsible for any taxes that may arise due to its payment under the agreement.
(b) The principal will not be responsible for deducting any taxes from the payments made to the agent.
Together, these subsections reiterate the status of the parties.
Expenses
This part allows for reimbursement of any unusual expenses that the agent incurs in performing its duties under the agreement.
Note that this doesn’t include ordinary business expenses. If the principal begins reimbursing the agent for such everyday costs, it becomes an employer-employee relationship.
There is an optional clause here that allows the parties to designate specific additional expenses that will not be reimbursed.
Records
An optional section allows the principal the opportunity to review the agent’s records about its performance under the agreement. Essentially, this paragraph gives the principal audit rights, the right to question any invoice or claim made by the agent about its work.
Insurance
This section requires the agent to maintain insurance. You can determine what types of insurance will be required, which will be based on your industry, the agent, and your specific needs.
Termination
The termination clause explains that certain actions or events, including written notice or material breach, will cause an early termination of the agreement (i.e., before the services are completed or the end of the term, if any). Write in the notice period a party must give of its intent to terminate or to notify the other of a breach.
There is an additional provision that allows you to identify the agent’s failure to maintain its licenses as a material breach of the agreement.
Amendments
It indicates that all changes to the agreement must be in writing and signed by the parties.
Parties’ representations and warranties
In this section, each party enters into the agreement based on the other party’s statement that the items in this part are true. The listed representations are that each can enter into the agreement and will follow all applicable laws. If there are additional representations and warranties that you want to add, you can also do that.
Indemnification
This provision allocates responsibilities between the parties if problems arise in the future and protects each party from the financial consequences of the other’s illegal or harmful conduct.
Use of trademarks
It states the agent will not inappropriately use the principal’s trademark, intellectual property, or confidential information or acquire a trademark of its own that is similar to the principal’s. For example, an agent for XYZ company can’t apply for a trademark on XYZ. This section also states that the agent may not continue to use the principal’s proprietary information after the agreement terminates.
Relationship of the parties
This section clarifies that the agent is only an independent contractor and not an employee or partner of the principal. As noted above, this distinction is important for legal reasons, including insurance coverage requirements, liability, and taxes. The agreement seeks to emphasize this divide, but both parties should take care not to blur the line between an independent contractor and an employee in the performance of their duties.
Assignment
Explains that each party must obtain the other’s written permission before assigning its obligations and interests.
Successors and assigns
States that the parties’ rights and obligations will be passed on to heirs or, in the case of companies, successor organizations or organizations to which rights and obligations have been permissibly assigned.
No implied waiver
This explains that if either party allows the other to ignore or break an obligation under the agreement, it does not mean that the party waives any future rights and obligations.
Notice
It lists the addresses to which all official or legal correspondence should be delivered. Give the mailing address for both the principal and the agent.
Governing law
This section allows the parties to choose the state laws that will be used to interpret the document.
Counterparts; electronic signatures
This provision says that even if the parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement.
Severability
It protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting any of the clauses mentioned in the agreement, it will not undo the entire agreement. Instead, only the section dealing with the clause would be invalidated, leaving the remainder of the contract enforceable.
Entire agreement
The parties’ agreement that the document they’re signing is “the agreement” about the issues involved.
Headings
This segment explains that the headings at the beginning of each section are meant to organize the document and should not be considered operational parts of the agreement.
Create a professional agreement with an agency agreement template
There are risks, of course, for businesses using agents or agencies, the most dangerous of which is that individual representatives will be reclassified as employees. If this happens, the company using the agents will be required to reimburse the IRS or state tax authority for delinquent employment taxes, interest, and penalties.
Although a business cannot insulate itself absolutely from reclassifications or contract audits, a written agency agreement can offer a certain amount of protection from such charges.
An agency agreement template can provide a good starting point for your agency arrangement. With LegalZoom, you would get a comprehensive template that you can use from anywhere on any device. Fill out the required answers for the questions provided, complete the form, and download the agency agreement for free.
You and the agent or agency must continue to discuss the terms of your agreement and settle questions about work parameters, payment, and responsibilities. Once you have agreed on contract terms and have signed the agency contract, each party can focus on its area of expertise. The company on the development of its business and the agent on proper representation of the company.
Frequently asked questions
What’s an agency agreement?
If your business needs more staff, you can hire or go through an agency to grow your team without hiring directly. Employees can cost in more ways than salary and benefits, requiring higher insurance premiums, additional workspace, and more. Using an agency agreement, an agency or agent can provide the talent you need without the extra expenses.
What key details would you need to fill out agency partnership agreements?
Here's the information you'll need to have handy to complete your agency agreement:
- Who the principal is: Keep the name and contact information of the principal ready
- Who the agent is: Have the name and contact details of the agent
- How the agent will be paid: Know if it's a flat fee or a percentage of the principal's revenue
Free Agency Agreement Template
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