Nature and types of agency

The following Commercial practice 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
  • Requirement of deed
  • Duties and effect of agency
  • Commercial agency
  • Competition law and tax

Nature and types of agency

This Practice Note is an introduction to agency. It describes the essentials of the agency relationship between the principal and the agent including the ways in which an agent is appointed to act on behalf of a principal, the different types of agency appointments and the authority that an agent has to act on behalf of a principal.

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

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