A Guide to Our Marketing Agency Agreement

by Kate Mccormick - Solicitor

Use this guide to our marketing agency agreement to help you understand the agreement and complete it to match your requirements.

A Guide to Our Marketing Agency Agreement

This Marketing Agency Agreement enables a business to appoint a marketing agent to market its products or services but not to enter into or conclude contracts of sales. It sets out the rights and duties of the marketing agent and the principle business. As the Marketing Agent is not entitled to conclude sales on behalf of the Principal, the Commercial Agents (Council Directive) Regulations of 1993 do not apply to this Agreement.

Clauses in this Marketing Agency Agreement

Cover page - you will need to insert the names of party 1 (the Principal) and party 2 (the Agent).

Between – you need to insert the details of both parties to the Agreement here including their business/company name and registered number (if either party is a registered company) and registered office or trading address.

Background – this clause sets the scene for the Agreement. You need to set out which of the Principal’s products the Agent is being appointed to market. An exclusive agency will prevent the Principal from marketing the Products itself or through another agent in the Territory. A non-exclusive agency will permit the Principal and its other agents to market the Products in the Territory, alongside the Agent. You need to decide which of these options is appropriate and delete the square brackets or the word ‘non’ accordingly.

Interpretation – you will need to decide whether you want to impose a Minimum Leads Target on the Agent and delete or retain this provision accordingly. You will also need to define the Territory in which the Agent is appointed to market the Products.

Appointment – this clause sets out what the Agent is appointed to do. Clause 2.2 is appropriate where the Principal only wants the Agent to market the products and refer any requests for orders to the Principal without negotiating any terms for the orders itself. Clause 2.3 is only applicable where you are granting an exclusive agency and should be deleted if not.

Restrictions on Agent – this clause is designed to ensure that the Agent does not work for any competitor of the Principal in the Territory and does not make any binding statement or contract in relation to the Products without such statement being approved and authorised by the Principal in advance.

Agent Obligations – this clause sets out the obligations of the Agent in relation to the Products. Clause 4.7 may or may not be necessary depending on the nature of the Products. You can add to or amend these obligations as required.

Marketing of Products – this clause sets out how the Agent is to market the Products, i.e. in accordance with the Principal’s terms and conditions and list prices. This will only be possible if the Principal keeps the Agent well informed of any changes to such terms and to the Products, in advance. The Agent must only draw to the attention of potential customers the terms and conditions and prices and not enter into any contracts with them.

Communication and Reporting – you need to decide what information the Agent is to provide to the Principal about its activities and how often and set out the details here. Clause 6.5 will not usually be necessary in a solely marketing agency agreement but has been included in case the Principal asks the Agent to collect any monies on its behalf. The information in clause 6.6 will be used to calculate the commission payable to the Agent, under clause 8.

Principal’s Undertakings – the Principal is obliged to reimburse the Agent in full for losses incurred in carrying out its duties that are not the Agent’s fault.

Commission and Payments – the Agent will receive commission on all leads that it generates which are converted into sales. You should insert details of the rate of the commission and how it is to be calculated. This should tie in with other relevant clauses in the agreement such as clause 15.4 dealing with sales concluded after the Agreement has terminated. Clause 8.4 provides for commission to be paid on a monthly basis. Clause 8.5 can be amended to make the commission inclusive or exclusive of VAT and other sales taxes. Normally any amounts are stated as being exclusive of VAT and taxes and then VAT and taxes are added on top of any such sums as stated. Clause 8.6 is discretionary and would make it easier for the Agent to collect any amounts owed to it by the Principal if the Principal became insolvent.

Advertising and Promotion – you may wish to supplement this clause particularly where the Products have particular trademarks or branding on them that the Principal will want to protect.

Support in Legal Proceedings – this clause is designed to ensure that the Agent assist the Principal in defending its legal rights.

Laws and Regulations – the Principal will want to ensure that itself and the Agent comply with all laws in the Territory in relation to the marketing and sale of the Products. The Agent may be best placed to deal with any compliance matters or the Principal may wish to retain control over these and to oblige the Agent to take such actions as the Principal deems necessary. You should decide which option is more appropriate and delete the other.

Intellectual Property – this clause is designed to assist the Principal in protecting and maintaining its intellectual property rights and goodwill in relation to its business and the Products. You can insert additional protection and control provisions if you feel that this is necessary.

Product Liability and Insurance – as the Agent may be liable for any products under its control, it will require the Principal to maintain adequate product liability insurance and to reimburse it for any such liability.

Duration and Termination – you need to insert the number of years for which the Agency is to last. You can amend the notice periods within reason however the periods stated are usual and reflect the requirements of the Commercial Agents Regulations, just in case they are found to apply to the particular arrangements of your agency.

Effects of Termination – upon termination, the Agent should return all Products and materials to the Principal. If there is any risk of the Commercial Agents Regulations applying, for example if the Agent is to do more than simply market the Products, then you should provide for indemnity or compensation to be paid to the Agent upon termination. Clause 15.2 envisages that indemnity would be payable in such circumstances.

Confidentiality - this clause protects information relating to and contained in the Agreement from being disclosed by either party to anyone else apart from their professional advisors, unless they are obliged to do so by law or unless the information is already public knowledge and so not confidential. If the information is particularly sensitive, it may be necessary to have the Agent sign a separate and more comprehensive, non-disclosure agreement.

Force Majeure Event – this clause excludes either party from liability where they cannot perform their obligations under the Agreement because of a ‘force majeure’ event that is outside of their control.

Entire Agreement - this clause prevents either party from being held liable for statements or agreements that are not contained in the Marketing Agency Agreement itself. It is a standard clause that does not need to be amended.

Amendments - this clause ensures that the Agreement is not varied unintentionally or otherwise by informal or oral statements or acts. It provides certainty and ensures that the provisions can be relied on exactly as they are set out in the Agreement, unless the correct procedure has been followed for amending them.

Assignment - this clause prevents the Agent from assigning their rights under the Agreement to a third party, without the consent of the Principal. This is a standard provision.

Waiver - this clause protects the legal rights of the parties by ensuring that they are not compromised by delay or failure to take action to enforce them. This is a standard clause.

Severability – if any of the clauses of the Agreement are found to be invalid and/or unenforceable, this clause seeks to ensure that they can be ignored and that the rest of the Agreement can continue to take effect without them.

Third Party Rights - this clause excludes the Contracts (Rights of Third Parties) Act 1999 from applying to the Agreement so that only the parties to the Agreement can enforce it.

Notices – this clause explains how notices should be sent to or from the parties. You should remove the square brackets if you are happy for such notices to be sent by email and/or fax.

Governing Law and Jurisdiction - if either party is based abroad, you may wish to change the jurisdiction clause to reflect this and/or make it non-exclusive. Where the parties based in the UK, the jurisdiction should be exclusively that of England and Wales.

Schedule 1
The Products – you should set out details of the products of the Principal that the Marketing Agency will have authority to market under the Agreement. You may need to amend this list from time to time with the agreement of the Agent.

Schedule 2
Minimum Lead Targets – you should provide details here of the minimum lead targets required to be generated by the Agent per year or other relevant period. You should define what a lead is and when it will be considered within the targets.

Signature Clause - this clause makes the Agreement enforceable. You need to insert the names of both parties and the officers signing on their behalf. Both parties need to sign the Agreement next to their names. Once both parties have signed the Agreement, it should be dated on the Cover Page and also at the top of Page 1. This is the date that the Agreement will commence. Both parties should keep a copy of the signed Agreement.