An Agency Agreement, also sometimes called an Agent Agreement, is a document between two parties, a principal, and an agent. The principal is the person who is essentially "hiring" or engaging the agent (although an employment relationship is usually not created between the two). The agent is the person that will be acting on behalf of the principal. In an Agency Agreement, the agent agrees to take on, and the principal agrees to give the agent, certain responsibilities so that the agent may act for the principal in the specific situations described in the agreement.
An agency agreement can be used for any type of agent-principal relationship, such as those for bigger businesses (where an agent might be acting for the principal among the public or signing agreements on behalf of the principal) to those for smaller business or individuals (where an agent might be doing one individual task for the principal).
Within these agreements, the principal and agent outline their expectations for the agency behavior and agree to the bounds of the relationship between them.
An Agency Agreement is different than an Employment Agreement because, with an Agency Agreement, no full employment relationship is created. An employment relationship comes with additional benefits: things such as workers' compensation for some positions, or paid time off, or even health care benefits. An agency relationship will contain none of these benefits and will usually only last for a short time, as opposed to an indefinite or longer contractual period for an employment relationship.
In an Agency Agreement, the form-filled will be able to enter the most important details of the parties' relationship: things such as a description of the services that the agent will be performing, as well as the general business of the principal, and how the principal is expected to pay. A good Agency Agreement will also have both the principal and agent covered in case anything goes wrong: things such as dispute resolution and governing law should be included.
How to use this document
This document can be used for a principal looking to bring on an agent to take care of certain services or for an agent that is about to begin services for a principal. In this document, the form-filler will be able to enter pertinent identifying details about the agent and principal and a general description of the type of business that the principal normally engages in.
The form-filler will also input the most important characteristics of the agreement between the parties, like duration for the agency (if it should continue indefinitely until the services are complete or otherwise or end at a date certain), fee information, and of course, what exactly the agency is for.
After inputting the required information, the Agreement should be printed out and signed by both parties, as well as then kept on file for both parties, for the entire duration of the Agreement as well as for a reasonable period of time thereafter.
This Agency Agreement will help outline the expectations of both parties before the agency relationship actually begins.
Agency agreements in the United States are subject to both Federal laws and specific state laws, which cover general contract principles like formation and mutual understanding. Federal laws may restrict what services can be contracted for (for example, a principal may not contract for an agent to do anything illegal) and certain broad categories, like contracting for something that looks more like an employment relationship, but individual state laws may govern the interpretation of the contract in case of a dispute. State-specific laws generally cover the intricacies of principal/agent relationships.
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