Analysis of the agency agreement

Basically, the agency contract in civil law is considered as a document that regulates the relationship between two partners – the customer (principal) and the executor (agent). At the request of the customer, the agent proceeds to actions of a legal or other nature, at the expense of the principal, it can be either on behalf of the customer himself, or on behalf of the agent.

It is necessary to take into account the peculiarity of such a contract – when the agent needs to conclude an agreement with third parties on his own behalf on behalf of the customer, the rights and obligations are received by the agent himself, not the customer. If the latter under the terms of the transaction after its implementation has relations with these third parties. But if the agent has concluded the contract on behalf of the principal, then all the rights (and duties, respectively, too) arise for the principal.

Forms of activity

The agency contract takes into account the choice of one of two options of interaction:

Commission, in which the executor performs legally significant actions on behalf of the principal (customer), with all rights and obligations transferred immediately to the customer.

Commission, when the executor (commissioner) performs a transaction (or several transactions) in his own name, but on behalf and for a fee from the customer (commissioner).

Thus, the agency agreement will be drawn up according to the same norms that regulate the contracts of commission and surety – in accordance with the chosen method of activity.

In the law enforcement practice of Russia the system of agency contracts is a new phenomenon. The purpose is the legal regulation and consolidation of relations, in which the representative transferred the authority to legally carry out transactions of a legal and factual nature on behalf of the guarantor.

In the current situation, if the agent enters into a contract personally on his own behalf (but the customer pays for it necessarily), then after the legal fact of the transaction and obtaining all the rights and obligations under it, the agent performs to the actions agreed with the customer, it is the person who entered into an agency contract with him. This is the second feature of this type of contract – the principal does not have any rights and obligations under the concluded transaction (on his own behalf) before the assignment of rights from the agent.

The situation is quite opposite when the agent acts on behalf of the borrower. Here, all of the customer’s rights and obligations arise immediately.

If to approach the agency contract from the point of view of its legal nature, it can be considered as compensatory, bilateral and consensual.

Compared with the contract of agency, the agency contract must be left between professionals, which means that there is no place for personal relationships. Moreover, under the contract, the principal must pay a commission to the agent, necessarily, without this there is no way around that is the contract is always onerous. Periodicity, terms and amounts of payment are prescribed in the document itself.

Peculiarities of the contract

You may encounter a situation where the contract does not stipulate the amount of payment, which means that the payment will be equal to that which would be taken for similar work in similar conditions. The principal has a week to pay for the work, the period begins when the agent submits a report on the work.

The third feature of the contract is the limitation of any action on the part of either the doer or the customer, such as:

  1. The agent must provide services or engage in the sale of goods only in the assigned territory or to specific customers, and to no one else;
  2. The agent may not proceed to the conclusion of a transaction of similar content with the customers whose transactions will take place in the same territory as the principal or overlap partially territorially;
  3. The principal may not conclude similar contracts with agents on any territory;
  4. The principal does not have the authority to perform actions on the transaction, which he entrusted to the agent and which are considered the subject of the contract.

Reporting under an agent’s contract

One of the most important duties of the agent is to report to the client on the results of the work done within a certain period and in the manner specified in the contract. For the reliability of information about the costs, the agent can support the report with materials such as receipts or any other settlement documents.If there are any questions, detection of inaccuracies in the report provided to the principal, there is an opportunity to specify them to the executor within 30 days from the date of receiving materials. This document must comply with the norms of law and has a primary character.

Subagent agreement

This concept refers to the conclusion of an agreement between third parties, when the agent bears all responsibility. The contract allows for the possibility of the agent’s own signing of a sub-agency agreement to fulfill the terms of the agency. In this situation, the executor is authorized for the acts of the subagent, is responsible to the principal. It is important to emphasize, the subagent has no authority to sign contracts on behalf of the principal.

Termination of a contract

A signing may be terminated under the following circumstances:

  1. One person who previously signed the consent advances a waiver of the contract if there is no definite termination date.
  2. Admission by the court of the agent incapacitated, limited capacity, absence for unknown reasons, death of the executor.
  3. Recognition of private entrepreneur, executor of the contract, insolvent – bankrupt.

Thus, the contract of agency refers to the most common in the field of assignment of powers and duties to another person in entrepreneurial activities. The flexible design of the contract makes it possible to provide for the obligation to perform certain actions in the interests, at the expense of the customer, in other words by the principal. This method provides maximum efficiency, the success of the implementation of the delegation of certain actions to third parties, while the risks are minimal.

The analysis of the contract is an obligatory part of effective functioning of business in the modern world. Such a check will avoid unpleasant consequences due to fraud or other schemes to deceive the customer and embezzle money.

Unfortunately, many companies and citizens skip this action, do not take into account the legal regulation of relations in the contract. Because of this, a number of risks arise during the transaction: the contract may not be valid in this territory, become invalid in the future, have no legal effect due to incorrect drafting of the text of the document. A professional takes upon himself to check the documents, eliminate mistakes and inaccuracies. During the analysis of the contract the most dangerous and widespread risks are revealed:

  1. The absence in the contract of essential conditions, because of which it is considered not concluded, that is, it is simply not valid.
  2. In the content of the contract there are actions or conditions that contradict the legislation, infringing the rights, interests of the customer.
  3. The document includes controversial, inaccurate information, leading to the court and other problems in business activities.

That is, a correctly drafted contract from a legal point of view will allow you to achieve your objectives quite easily, without unnecessary problems associated with documents. It can also provide protection in case of false accusations in the direction of the performer, the customer. Let’s consider elements of professional analysis of the contract:

  1. The document is checked for compliance with the established templates, samples existing in the legislation of the Russian Federation.
  2. An analysis of contemporary court practice on the issues relating to these legal relations. 
  3. Parsing the meaning of the concepts and terms of the agreement in legal terms. Contradictory information regarding all interested parties is revealed, it is found out whether the rights or interests of the parties are infringed, the participants are negatively influenced, and so on.

These actions allow quite a clear analysis of the agency agreement and protect the company, citizens in court proceedings, other conditions if necessary. But even with these recommendations to do the analysis is difficult, this requires a specialist versed in civil law (who has a legal education). Only then the company, individual entrepreneur and other organizations will be protected at the proper level.

Advantages of Analysis

The analysis of the agency agreement is the most effective, professional and proven way to get favorable cooperation, agreements and favorable work of the organization, individual entrepreneurs. Such a check will help to avoid unnecessary financial expenses, invalid, false documents, court disputes, damage to property, reputation in general and other problems with papers, money.

Reporting documentation of contracts 

An important condition of the agent for the period of his business duties is to prepare and send reports on the finished results of the work performed on the dates that have been agreed upon between the partners. The reports submitted are supported by practical evidence:

  • payment documents;
  • cheques.

What requirements are often approved by the parties in the contract 

The contract should have mandatory clauses:

  • the period of performance of the contractual authority;
  • the amount of the agent’s remuneration;
  • terms and form of acceptance of performance by the principal.

In case the persons do not agree on the term of validity, it is valid until one of the parties refuses to perform. 

The most important tasks of legal evaluation of a contract are:

  1. To check the contract for compliance with the law of the Russian Federation.
  2. Analysis of court practice, in case of disputes.

Explanation and clarification of various points.

Legal assessment is the main point in signing an agreement which must always be remembered as it allows you to cover risks of negative consequences which can occur after signing the agreement. 

Difference in contracts

If the agent is the first person, but solely at the expense of the principal, the agent transfers to the second person, which is the principal its rights and obligations. The important specifics of signing this contract, when the agent acts in favor of the second person, but no relationship in the role of responsibility arises, which is the essence of the assignment. 

The bottom line may be that if it appears from the contract that the agent acts for the second person, in such cases, and the principal is added duties and rights to third parties. 

If there is no clause in the contract regarding the amount of the agent’s remuneration, the amount of the remuneration is payable at the price that is charged for performing the work. The remuneration is payable within seven days from the date of submission of the second person’s report on the work performed.

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