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Agencies are businesses that provide administrative services to other organizations. Some of the renowned types of agencies include those that offer advertising, travel, commercial, as well as recruitment or staffing services. For an organization to get an exclusive contract with such a firm, one of them has to create a legal document that describes their settlement, joint venture, or partnership first. This process document is commonly known as an agency agreement. If you wish to know more about the document, don’t waste time and browse our various examples below! You can also proceed with reading our highly relevant article!
An agency agreement is a document that binds an agency and a hiring organization into a business arrangement. This type of agreement is useful in various situations. These situations include partnering with vendors, realtors, accountants, legal representation, investment brokers, and other service agents. It is also useful when an organization needs a workforce for marketing and when entrepreneurs appoint certain organizations to make decisions for their businesses. Many would think of it as an employment agreement. However, the website Wonder.Legal pointed out that unlike the latter, agency agreements do not include specifications on employee compensation plans and incentives. This is because agencies do not cater to full employment but rather work on-demand.
Having an agency agreement is highly beneficial, most especially for the hiring party. To name one, a startup business that lacks the manpower to perform the responsibilities of a certain business department can hire an agency’s service and let it perform the said responsibilities on the startup’s behalf. Besides getting a part of your responsibilities taken care of, you can rest assured of their outcome because each professional of the agency specializes in a specific business line. Another benefit that the agreement provides is its very nature of protecting all of its participants’ rights. So, any dispute will always have a resolution.
Typical business documents follow formats. And an agency agreement is not an exception to this practice. If you’re looking for the format that perfectly suits your planned agency agreement, take heed on our standardized outline below! It also comes with insights to guide you through to convenient completion of your document thoroughly.
In writing contracts or agreements, the first thing you have to do is present your document’s purpose and the people involved in it. The purpose should mention the short-term and long-term goals that the parties are trying to achieve. There should only be two participants in this kind of agreement, namely the principal and the agent. The principal is the person or organization hiring the other party for its service. On the other hand, the agent refers to the party that will deliver the tasks to the principal. Another thing that you have to include in this section is the effectivity date.
Once you have successfully introduced the purpose and the agreement participants, specify which of your service offers the principal party really wants to procure. To do so, you have to give off the product description and elaborate its scope of work, activity schedules, as well as the overall work timeline.
After specifying the procured service, give out the obligations of both the principal and the agent. In a nutshell, these obligations refer to fiduciary responsibilities. By definition, fiduciary responsibilities refer to the principal’s tasks, which should be performed by the agent according to the former’s best interest. In this section, the agent must understand and accept the reliance of the principal to it in terms of expertise and skills.
Never forget to expound the payment terms of the business transaction. Provide the exact amounts of services together with their payment schedule and payment methods. Usually, agency agreements prefer utilizing the recurring payment agreement and commission plan that are set on a monthly basis.
There are many reasons why you have to terminate you and your client’s agreement eventually. Some are good, and others are not. These reasons include the expiration of the agreement, the completion of the main task; both parties decide to terminate the agreement, and due to unforeseen circumstances. Terminations whose reasons are not mentioned earlier may be subject to wrongful termination. When such cases happen, either party can sue the other under breach of contract or employment law.
The greatest risk there is in agency agreement is the liability that the principal holds for every agent’s action. For example, if an agent performs illegal activities to fulfill his or her agreement obligations, the principal will be held accountable. This is in consideration that the agent performs on behalf of the principal.
There are five types of agent. They include the general agents, special agents, agencies coupled with an interest, subagents, and servants.
There are four types of agent authority, including the express authority, apparent authority, implied authority, and inherent authority.
Express Authority – the authority given by the principal as stated in an agreement or contract
Apparent Authority – authority is given by the client verbally
Implied Authority – authority required to practice express and apparent authorities
Inherent Authority – authority formed when an agent exceeds his or her express authority
A company has things that it can do. At the same time, there are things it cannot do. And because of that, agencies have become a crucial part of the world of business. Through them, companies that are incapable of controlling a certain area of their businesses will now be able to do so by offering their services. When engaging in such a business venture, agencies have to produce an agency agreement. This will not just ensure the compliance of the agreement participants to the requirements, but also make sure the fulfillment of every business aspect’s functions.