Agency agreement without remuneration: sample download

Agency agreements

Type

Name

Instructions for preparing an agency agreement

An agent or intermediary is a person who acts for the benefit of and on behalf of another person. Most often, agency agreements are used in wholesale or network trade. Two other types of intermediary agreements are similar to an agency agreement: commissions and assignments , and each of them has its own section in the Civil Code. Below we will compare their similarities and differences, but in this article we will talk about the agency agreement , as the most popular among intermediaries.

Under an agency agreement, one party (agent) undertakes, for a fee, to perform legal and other actions on behalf of the other party (principal) on its own behalf, but at the expense of the principal or on behalf and at the expense of the principal. If the agent acts on his own behalf, then the agency agreement will be executed according to the model of a commission agreement, and if on behalf of the principal, then according to the model of a commission agreement.

Which contract to choose when working through an intermediary

Before deciding on the type of intermediary agreement (agency, commission, assignment), you need to get answers to a number of questions:

1. What actions should and may the intermediary take? If a one-time transaction is made through an intermediary, then it is best to conclude a commission or commission agreement. Moreover, if it is assumed that the intermediary will have to perform, in addition to the transaction, some legal actions (collect a debt, represent the client in court, etc.), then the commission agreement will not be suitable, because The commission agent has the right to make only transactions. An agency agreement allows the agent to perform a wide range of actions in the interests of the client. It is recommended to conclude such an agreement when, in addition to the transaction itself, the agent has other responsibilities (for example, conducting marketing research, organizing advertising, finding a buyer).
2. What rights and obligations do parties to transactions have? The intermediary can act on his own behalf (a commission agreement or an agency agreement concluded under the commission agreement model) or on behalf of the client (a commission agreement or an agency agreement concluded under the agency agreement model). Here is an example of a situation that often arises: a manufacturer sells its goods through an intermediary. Suppose that the goods turned out to be of poor quality or for some reason were not delivered to the buyer after receiving the advance payment, then the buyer will file a claim with the intermediary. Please note that if the intermediary acted under a commission agreement, then he, and not the manufacturer, is responsible to the buyer. Thus, if the intermediary does not want to bear such responsibility, then he should not enter into a commission agreement.
3. What is the responsibility of the intermediary to the client? If we talk about the interests of the intermediary, then it is more profitable for him to conclude an agency agreement using the assignment model, because then he will be responsible only for the performance of his duties and will not be liable for failure to fulfill the transaction by a third party. But for the client, an agreement based on the commission model is beneficial, because In this case, the agent must also exercise caution when choosing a counterparty. Additionally, under such an agreement, the parties can indicate a condition on del credere (Article 993 of the Civil Code of the Russian Federation). In this case, the agent is responsible not only for his actions, but also for the execution of the transaction by a third party, and in case of non-fulfillment, the client has the right to make a claim to the agent for compensation for losses.
4. Possibility of additional benefits for the agent. We are talking about a situation where the agent concluded a deal on more favorable terms. Suppose a client instructed an agent to enter into a contract for the supply of materials at agreed prices, and the agent was able to do this at a lower price. Can the agent receive this difference in price as an additional benefit for himself? Yes, it can, if the agency agreement is concluded on a commission model. Moreover, as a general rule, this benefit should be divided equally between the agent and the client, but the parties can agree on a different proportion of distribution.
5. In what cases can an intermediary refuse to fulfill a contract? The possibility of unilateral refusal of the intermediary from the agreement is possible under a contract of agency, as well as under a commission agreement or an agency agreement, which does not indicate its validity period. At the same time, the parties cannot agree to prohibit unilateral refusal, because this norm is imperative. An intermediary cannot unilaterally renounce his duties if a commission agreement or agency agreement is concluded for a certain period and the text does not contain conditions on such a right.
6. In what cases can a client cancel his order to an intermediary? Let’s assume that the client entered into an agreement with an intermediary to search for buyers, but found a profitable option on his own, so he no longer needs intermediary services. If the intermediary does not want to terminate the contract by agreement of the parties, then the client can do this unilaterally. By law, the client is obliged to inform the intermediary about his unilateral refusal of the contract in advance (no later than 30 days) only in two cases: when canceling the agency agreement concluded with a commercial representative, and if an open-ended commission agreement was concluded. In this case, the client must:

• reimburse the intermediary for the expenses incurred in the transaction and pay remuneration for the work already done (if an open-ended commission agreement or an agency agreement on the commission model or an agency agreement on the commission model were concluded, under which the intermediary does not act as a commercial representative);
• compensate the intermediary for all losses, including lost profits, resulting from the cancellation of the order (if it is a fixed-term commission or commission agreement or an agency agreement based on the order model, under which the intermediary is a commercial representative).

Features of the commission agreement

1. For the contract to come into force, the parties must conclude it in writing.
2. Unless otherwise provided by the parties, the commission agent may enter into a subcommission agreement.
3. Property purchased by a commission agent at the expense of the principal is the property of the principal. After concluding a transaction, the commission agent is obliged to submit a report and transfer the items and funds received.
4. The commission agent is not responsible for the failure of a third party to fulfill a transaction, unless he has accepted a guarantee. The commission agent is also responsible for the actions of the sub-commissioner.
5. From a legal point of view, the commission agent's remuneration is not an essential condition; it is determined by the rules of the Civil Code of the Russian Federation.

Essential terms of the agency agreement

First of all, it is necessary to agree on the condition of the subject , i.e. what actions the agent should take. In this case, the principal can require the agent to perform only such actions that can be called legal, feasible and specific.

If the client’s instructions violate mandatory norms established by law, the agent may demand that the agency agreement be invalidated. Disputes with third parties who made transactions through an agent on behalf of the principal are also possible. Further, if the agent acted on his own behalf and was liable to third parties, then he can demand compensation from the client for these losses if he proves that this is the client’s fault.

Specificity in specifying the agent's actions is needed for a number of reasons:

• in the event of litigation, an agency agreement with unclear wording may be recognized as not concluded or reclassified into another type (for example, supplies);
• the agent may exceed his authority, i.e. perform those actions that the principal did not entrust to him;
• it will be difficult for the agent to prove that he has fulfilled all of his obligations under the contract.

In addition to the list of actions of the agent, the principal is recommended to indicate on what conditions the agent must make a transaction with third parties, and under what type of agreement to execute the transaction (for example, a purchase and sale agreement, a supply agreement, a leasing agreement with the purchase of property, etc.). The Civil Code does not name other essential conditions for an agency agreement, but given their importance for the principal and agent, they should definitely be agreed upon. Here are a few examples of such important conditions.

The condition on the deadline for the execution of the order by the agent must be specified so that disputes do not arise between the parties: the principal will believe that the agent has not fulfilled his duties, and the agent will insist that he still needs time to conclude a transaction with a third party. The easiest way is to specify a specific date before which the agent must execute the order. It is also worth agreeing on the terms within which the agent must, for example, transfer property purchased from third parties to the principal.

The agent's remuneration can be agreed upon as a flat amount or as a percentage of the transaction amount. It is worth paying attention to the fact that the interests of the parties when specifying payment in the form of interest may not coincide. For example, it is beneficial for the principal to purchase a product at the lowest price (which is natural), but the agent, who receives a percentage of the transaction amount, will be interested in a higher cost of the product, because then his reward will be greater.

Funds received to the agent’s account from third parties in connection with the fulfillment of his obligations under the agency agreement are not taken into account in income (Article 251 of the Tax Code of the Russian Federation). An agent's income for tax purposes is recognized only as the amount of agency remuneration received by him.

It is important for the parties to establish the settlement procedure. This may be an advance payment for the agent's services (full or partial advance); payment after the agent’s transaction with a third party; payment after the principal accepts the report from the agent; payment after the principal receives the goods from a third party; independent deduction by the agent of his remuneration from the amount of the transaction with a third party and other conditions. Here it is also necessary to provide for a condition on the distribution of additional benefits in case they arise (as we have already discussed above).

Another condition that will allow the principal to control the activities of the agent is the procedure for submitting reports to him both during the execution of the agency agreement and at the end of its validity. Here you can also indicate the agent’s obligation to transfer to the principal copies or copies of agreements concluded with third parties.

Similarities and differences between an agency agreement and other types of agreements

We have already considered that an agency agreement is not only similar to commission and commission agreements, but can also be drawn up according to their model (commission if the agent acts on his own behalf, and commissions if he acts on behalf of the client). But besides these intermediary agreements, the agency agreement has something in common with other agreements:

• with a service agreement;
• with a transport expedition agreement;
• with a property trust management agreement;
• with an agreement between a contractor and a subcontractor, when the general contractor acts as an intermediary between the customer and the subcontractor.

Considering that intermediary agreements are varied in design, may contain many dispositive conditions negotiated by the parties, and have elements of other types of agreements, we recommend that when developing a specific agency agreement, you contact legal experts.

Differences in intermediary agreements

• Executor. One of the most significant differences is the personality of the attorney. He performs his duties personally and cannot transfer his own rights. However, the terms of the agreement may allow the execution to be delegated to another person who will act as a substitute. In this case, the deputy can be indicated in the text of the agency agreement. However, the powers of the deputy can be formalized in a separate act. Of course, for this purpose the principal agrees with the presented candidacy. Another thing is a commission agreement and an agency agreement. In this type of legal relationship, the identity of the performer does not play a significant role, so it is possible to delegate responsibilities.
• Agreement form. All three types of contracts are concluded in writing. But at the same time, the agency agreement has one distinctive feature: a power of attorney is sufficient for the agreement to enter into force. That is, in this case there is no need to draw up a written contract.