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The benefits and risks of using an agency agreement

There are typically two parties involved in making an agency agreement: the agent and the principal. A legal relationship is created between these two parties when the principal assigns the representation to the agent.

Agency agreements describe the relationship between a principal and an agent. They can be used when you hire someone to make decisions on your behalf. Agency agreements are typically used with agents such as lawyers, accountants, and vendors.

The benefits

Agency agreement templates have a lot of advantages, especially if you’re a small business owner. If you’re not a skilled businessman , it can be very useful to have a professional represent your business.

Having an agent can make things easier for the principal as this is a convenient way to handle certain business affairs. However, situations may arise when it becomes necessary to have an agency agreement.

If an agent is faced with a legal problem, they’ll need the help of a lawyer who’s also covered by the agreement. This gives the lawyer the authority to act on their client’s behalf.

The risks

Having an agent to represent you in business dealings has its own pitfalls. Since the agent is the legal representative of the principal, any misconduct that the agent gets involved in will reflect on the principal.

Let’s take an example to make this point clearer. By simply giving the agent the authority, he holds the ultimate responsibility for all of the contract’s terms and conditions.

While drafting an agency agreement, the principal should list limitations of liabilities that are clearly written using straightforward language. That protects the principal if the agent performs an illegal or unauthorized act.

Agency Agreement Templates

How to utilize an agency agreement?

An agency agreement template is intended for individuals who engage in business and would like to find an agent to handle specific services for them.

Agency agreement templates are also known as agency agreement forms, and they include information like fee structure, service type, duration, and sub-agency terms.

The duration of the agency refers to the length of time that the principal needs the agent. The duration may even refer to the agent being allowed to continue and complete the services or the service ending at a specified date.

When you’ve filled out all the relevant information supplied by both parties, the agreement is printed out, and both the parties sign it. Keep copies of the agreement on file for the duration of your agency relationship including a reasonable time period thereafter.

Buying Agency Agreements

Factors to consider in agency agreements

An agency can be created as a result of a written agreement between the principal and the agent, from the consent of the parties, from an act of law or by operation of law.  Generally, an agency comes into existence in the following ways:

  • through an agreement;
  • through operations of law; or
  • through ratification

Because of the number of different types of agencies, there are also a huge number of types of agency agreements. These agreements are usually created by the owners of these agencies. These owners are often blinded to the corruption in their agreements.

Exclusive Agency Agreements

Agreements with agents can be very important, but be careful to avoid potential problems with them:


Businesses should send their payments within thirty days of when you receive them. It’s important that your clients pay you on time, even if the bank might charge for doing so.

Again, as a standard practice, agents aren’t supposed to charge any additional costs. But many of these agents still include fees for certain activities like purchasing extra copies, photocopying for submission, etc.

Agents shouldn’t make deductions for postage costs now that emails are the norm and huge postage charges aren’t as common as they once were. It’s important to clarify how much of a commission an agent will take in an exclusive agency agreement.

Terms vary based on the source of income. The typical rule is that marketers take 15% of all income or a different percentage for each type of income.


For each submission, the principal should be notified. Although he may not have an approval for the submission, it is usually customary to consult him about it. Any agreement made with the publisher must be subjected to the author’s approval since he is the signatory of each agreement unless he agrees otherwise.

It’s never a good idea to grant an agent power of attorney

Agents and managers will always want you to give them a power of attorney and it’s important to understand why this is a bad idea.

When hiring a literary agent, ensure that the agent does not get the rights to your book. In case you leave your literary agent’s firm, it is always a challenge to regain control over your book.

The author should also ensure that the agency doesn’t get any part of the rights to books that aren’t sold. It’s better to prevent than to regret.


Because there are many instances where the relationship between the author and agent do not work out, a termination clause should be in the agency agreement. This clause carries with it a time frame notice which is generally one to three months.

The termination clause is a standard part that you should never take lightly. It is important to remember that no agreement can get altered without the agent’s agreement.


If you think about it, your agency is also a business. The assets it owns include the contract, the financial security of its employees, and the goodwill it has built up in its industry. All of these could be sold to another business.

Non-assignment clause: To make sure that this does not happen, include a non-assignment clause in your agency agreement. This means that if the agency get sold, it cannot assign your rights to the contract to the third party. The more agencies that are getting bought or merging, the more helpful it is to you to understand what kind of contract is best for your own agency.


When you are choosing an agent, have the time to personally meet your agent and ask him any questions you wish even if they border on the inane.

Are you rushed into making a decision? Do you feel like you don’t have enough time? It’s important to take as much time as you need until you’re sure. Taking your time now could help eliminate the need for later corrections.

Free Agency Agreements


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