Relationship of principal and agent

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

  • Relationship of principal and agent
  • General
  • Status of appointment
  • Duties of agent to principal
  • Duties under contract
  • Fiduciary duties
  • Implied by law
  • Non-delegation
  • Avoidance of conflicts of interest
  • Prohibition on accepting improper payments
  • More...

Relationship of principal and agent

General

In business matters, the rights and duties of principal and agent are normally set out in a written agency agreement. Additional rights and duties may be implied by law if not contained within the agency agreement. In particular, the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 impose specific provisions in respect of commercial agents, which in most cases cannot be excluded by contract. Where commercial agents are concerned see also: Commercial agency and Termination of commercial agency arrangements.

An agency relationship is one of trust. The agent thus owes the principal fiduciary as well as contractual duties (established in Parker v McKenna[1874-80] All ER Rep 443).

Status of appointment

An agent's appointment may be:

  1. exclusive—only the agent may sell or supply the designated products or services in the specified territory and the principal may not do so or appoint others to do so; exclusive agents will normally wish to ensure that this prohibition extends to other types of representative such as distributors

  2. sole—the principal may sell or supply the products or services in the territory but may not appoint other agents to do so; sole agents, too, will wish to ensure that the prohibition extends to distributors and other representatives, or

  3. non-exclusive—the principal may sell or supply the contract goods or services in the territory and may appoint others to do so

These

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