Sales Agency Agreement

This document can be used to create a sales agency relationship between two businesses in the United Kingdom. This will allow an agent to earn commission on sales of the principal's goods. The agreement should be used in relation to the sale of goods only and is not applicable to the provision of services.

The document can be adjusted to reflect the appropriate commission rates, rights and duties. The document can also be used to create:

• exclusive agency (meaning that no other person/organisation can be appointed as an agent for the sale of the specified goods within the territory)
• non-exclusive agency (meaning that other persons/organisations can also be appointed as agents for the sale of the specified goods within the territory)
• defined territories and customer groups in which the Agent will operate
• exclusion of customers or customer types
• a right of first refusal on new products
• responsibility for sales and marketing
• agent expenses
• minimum annual sales targets

The legal framework for agency agreements in relation to goods impose requirements upon the contents of the agreement, which are included within the agreement. For example, such details include the relevant notice periods and the requirements for the prompt payment of commission.

It is important to note, that there is a distinction between an agency relationship, contractor relationship and employment. Typically:

• An agent will drive business to their principal and are paid commission for any completed sales.
• Contractors are paid a set figure for the provision of a service under a contractual agreement.
• Employees are employed by contract to work for their employer and are paid a wage.

However, the distinction can often be blurred and a court will determine whether a relationship falls into either an employment, contractor or agency relationship based on the reality of the situation, notwithstanding any documents that may describe the relationship otherwise. This may take into account factors including but not limited to the degree to which the principal can order the agent to undertake any action or work set hours and any regular payments which may fall outside the category of commission and may be considered a retainer or wage.

There parties may also wish to negotiate and agree terms to limit and/or prohibit the parties from competing with each other. Basic terms to address this may be included in this agreement. However, where the parties wish to deal with in depth and comprehensive non-compete terms, this can be dealt with through a separate non-compete agreement.

How to use this document

Both parties should read the document. Any schedules requesting further details (for instance defining Products, Territories, Customer Group, Excluded Customers or Minimum Sales) should be completed if applicable. Any agreed marketing plan should also be attached.

If the parties understand and accept the terms of the document they should each sign it and retain a copy, in order to reach a binding contract. For companies and limited liability partnerships, a contract can be entered into by the use of the company common seal, partnership common seal, or by the signature of a representative who is authorised to enter into the contract by the company or limited liability partnership. In some circumstances, it will be necessary for the signature to be witnessed, which should be checked against the LLP agreement of Company's articles of association.

Relevant law

The key legal provisions applicable to this document are:

• The Commercial Agents Regulations 1993 SI 1993/3053. Although derived from EU legislation, the regulations continue to apply in the United Kingdom after December 2020 as retained EU law
• The retained EU General Data Protection Regulation 2016/679 (UK GDPR)
• The Data Protection Act 2018
• The Bribery Act 2010

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.