Nature and types of agency
Nature and types of agency

The following Commercial guidance note provides comprehensive and up to date legal information covering:

  • Nature and types of agency
  • Nature of agency
  • Types of agency
  • Capacity
  • Creation of agency
  • Duties and effect of agency
  • Commercial agency
  • Competition law and tax

Nature of agency

Agency is a relationship under which a principal appoints an agent to act under their direction and on their behalf for specified purposes. In business, such purposes are commonly the introduction or conclusion of contracts between the principal and customers or other third parties. The term ‘agent’ is sometimes used loosely in business and may refer to those, eg distributors, whose activities are similar to those of agents but who are not agents in law.

In commercial matters, the parties will normally have a written agreement that sets out:

  1. the scope of the agent's authority

  2. the parties' rights and duties

  3. under what circumstances and with what consequences the agency can be terminated

  4. general commercial provisions, and

  5. where relevant, provisions required by or relevant to the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (the Commercial Agents Regulations); see Practice Note: Commercial agency

For a Precedent that can be adapted as necessary, see Precedent: Sales and marketing agency agreement for goods—non-exclusive—pro-principal or Sales and marketing agency agreement for goods—exclusive—pro-principal.

Types of agency

An agent's authority may be general or specific (see Practice Note: Scope and authority of the agent).

An agent may be:

  1. a del credere agent—for additional remuneration the agent guarantees the payment of the price of the goods sold to the principal

  2. a confirming agent—this type of