An agency relationship exists where one person, the principal, gives another, the agent, the authority to create a legal relationship between the principal and a third party. Appointing a local sales or marketing agent is a very common and cost effective method for a business in one country to achieve sales in a different country without significant investment or risk and without the need for establishing a permanent place of business, provided the appropriate Agency agreements are in place.
Within the European Union, sales agencies are subject to the Commercial Agency Council Directive, which imposes certain terms on the relationship between agent and principal, many of which cannot be contractually varied by the parties. The terms include:
- Level of the agent's remuneration
- Minimum notice period for termination
- Payment of compensation to the agent on termination (which can be very significant amounts).
However, although these rules apply throughout the EU, different member states interpret and enforce them differently.
It is particularly important to have an agency agreement in writing between the parties when they are from different countries, because in the absence of a clear contract, language and cultural differences can lead to misunderstandings.
Healys has extensive experience and expertise in negotiating and drafting international agency agreements. We are also very experienced in dealing with disputes arising out of agency agreements and their termination. We also work closely with foreign lawyers and can introduce clients to them where necessary. We take a realistic and commercial approach to a client's needs, always ensuring that we understand the purpose behind the agency relationship, in order to tailor the agency agreement to best fit the client's requirements.
