Agency Agreement (Drafting)
A commercial representative also known as an agent, acts on behalf of and in the name of the principal, and either conveys orders to the principal, or concludes transactions which become binding on the principal. The final transaction is concluded between the customer and the principal, i.e. the agent does not become a party to the contract. The main task of an agent is to actas binding force in bringing together the parties of a transaction.
An agency agreement is a legal contract creating fiduciary relation under which the first party ("the principal ") agrees that the actions of a second party ("the agent ") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements.
FEATURES OF AGENCY AGREEMENT:
The agency agreement sets out the appointment of the Representative. It is not stated to be an exclusive arrangement.
2. COMMENCEMENT AND DURATION
The agency agreement contains commencement date and initial duration. Either party has the right to terminate on giving notice – initially to expire at the end of the first year and thereafter on 3 month’s notice or whatever period is agreed between the parties. Unless terminated, the agreement will continue from year to year.
3. DUTIES OF REPRESENTATIVE
Agency agreement contains the obligations of the Representative which includes registering the Client with relevant government and other departments that issue tender invitations and forwarding tender documents to the Client, plus such other services as the Client may reasonably request. Times of inspections and good faith shall also be included under this clause.
4. REPRESENTATIVE’S FEES AND EXPENSES
This Clause contemplates that the Client will pay a fixed fee for the Representative’s services as well as reimbursing expenditure which is incurred. That expenditure must have the Client’s prior written authority. Tender documents can be expensive and the Client will only want to pay for them if he has expressed an interest in the tender and authorised the Representative to obtain them.
5. RELATIONSHIP OF PARTIES
This clarifies the relationship, in particular, making it clear that the Representative has no authority to enter into commitments without the Client’s prior written consent.
The nature of the Agency Agreement is such that confidentiality is clearly required and this is specified here.
“The Representative acknowledges that it has been supplied with a copy of the Client’s Code of Conduct and undertakes with the Client to abide by its terms and not to act or permit any of its personnel to act in any manner that is in contravention of the Code of Conduct.”