Expanding your business’s reach often involves working with sales representatives, brokers, or marketing agencies. By establishing clear expectations and responsibilities between your business and these external partners you can ensure that you set the tone and strategy for all sales.

This article explains agency agreements, their benefits, how you can easily create one with Bind, and includes a free sample agreement template.

What is an Agency Agreement?

An Agency Agreement is a legally binding contract establishing the relationship between a company (the principal) and an agent, such as a sales representative. This agreement specifies the agent’s duties, responsibilities, and how they will represent and promote the company’s products or services within defined territories or markets.

The purpose is to clearly outline both parties’ obligations, rights, and expectations, to minimise the potential of future disputes.

Benefits of an Agency Agreement

Creating an agency agreement provides substantial advantages as it:

• Clarifies exactly what the agent can and cannot do on behalf of the company.
• Legally safeguards both parties against potential disputes over duties, commissions, and performance.
• Enable agents to perform efficiently as it provides clearly defined responsibilities 
• Provides a clear basis for resolving conflicts if disputes arise.

Common situations when an Agency Agreement is needed

Agency agreements are generally used when a business wants to grow its reach without hiring full-time staff. For example, a company might appoint a local sales agent to represent its products in a new country or region. It’s also useful when outsourcing marketing to a specialised agency that promotes products on the company’s behalf. Businesses often use agency agreements when working with brokers who help sell high-value items, like real estate or industrial equipment, or when partnering with independent sales representatives or distributors who earn commissions for driving sales.

How to create an Agency Agreement easily with Bind

Bind simplifies creating clear, professional agency agreements:

1. Select Agency Agreement in Bind.
2. Answer straightforward questions about your specific arrangement.
3. Bind automatically generates a customised agreement tailored to your requirements.
4. Review, refine, and digitally sign the document quickly, with or without AI assistance.
5. Securely store or share the agreement directly through Bind.

Create your Agency Agreement in minutes with Bind

What should an Agency Agreement include?

An effective agency agreement typically contains:

• Details of the principal (company) and agent, including names and addresses
• Explicit description of the agent’s appointed role, products or services to be sold, and territories covered.
• Specific obligations the agent must fulfil, clearly defining permitted and prohibited activities.
• Commission rates, payment frequency, calculation methods, and conditions for adjustments.
• Clarification of which party covers sales and operational costs.
• Confidentiality and protection of sensitive information exchanged between parties.
• Term and Termination of the agreement and renewal conditions
• Dispute Resolution
• Governing Law and Jurisdiction

Common questions about Agency Agreements

Can agency agreements be exclusive?

Yes, they can be exclusive or non-exclusive, clearly defining whether the company may appoint other agents within the territory.

Is an agent considered an employee?

Generally, no. An agent typically acts independently and is compensated via commissions rather than a salary, clarifying that no employment relationship exists.

What happens if an agent breaches the agreement?

The agreement typically includes remedies such as immediate termination, withholding commissions, or legal action.

What happens without an Agency Agreement?

Without a clearly defined agency agreement, misunderstandings regarding roles, responsibilities, commission payments, and expectations can easily arise, potentially leading to disputes and legal issues.

Agency Agreement – free template

Use this professional, clear template as a starting point:

---

This Agency Agreement ("Agreement") is entered into by and between:

Company:
Company Name, incorporated in Country, with Company Number [xxx]
Address
Contact information

Agent:
Agent’s Name
Address
Contact Information

Appointment

The Company appoints the Agent as its exclusive sales representative to promote and sell [specify specific products/services] within [Territory]. The Agent accepts this appointment and agrees to use commercially reasonable efforts to secure sales.

Duties of the Agent

The Agent agrees to promote, market, and sell products actively, provide regular market feedback, and comply with all applicable laws. The Agent shall not misrepresent authority, engage in deceptive practices, or sell competing products without written consent.

Commission and Payment

The Agent earns a commission of [xx]% of net revenue from sales directly attributable to their efforts. Commissions are paid monthly via bank transfer, and commission terms may be revised by mutual written consent.

Expenses

Unless otherwise agreed in writing, the Agent bears all sales, marketing, travel, and operational expenses.

Confidentiality

Both parties agree to keep confidential information private, only using it for fulfilling this Agreement. Confidentiality survives termination for 5 years.

Term and Termination

The Agreement begins on the Effective Date and continues for [duration] unless terminated earlier with 30 days’ written notice. Immediate termination may occur due to breach or insolvency.

Dispute Resolution

Disputes are initially addressed via negotiation; unresolved disputes proceed to arbitration through a mutually agreed international arbitration body.

General Provisions

• This Agreement constitutes the entire understanding between parties, superseding prior arrangements. 
• Notices must be in writing and any amendment require mutual consent. 
• Severability ensures unenforceable terms don’t invalidate remaining clauses.

Governing Law and Jurisdiction

This Agreement is governed by the laws of Dubai, United Arab Emirates, with exclusive jurisdiction in Dubai courts.

Signatures
This Agreement has been signed digitally by both parties.

---

Easily create your Agency Agreement with Bind

Bind allows businesses to quickly and professionally draft clear, accurate, and customised Agency Agreements, ensuring successful, compliant, and efficient partnerships.

Create your Agency Agreement now with Bind