The agency contract

Through the agency contract, the agent promotes the conclusion of contracts in the interest of the principal.

The legislator gives the possibility to the members to regulate their own interests through the stipulation of contracts. The contract becomes, thus, an expression of the will and autonomy recognized to every citizen.

Each individual contract, whether typical or atypical, pursues a specific economic-social function.

This post aims to analyze what is meant by agency contract, in which cases it is useful, and what are its essential elements and the differences with mediation.

If you are interested in the topic, you just have to continue reading this post.

What is the agency contract?

According to the provisions of art. 1742 of the Civil Code , when the contracting parties decide to enter into an agency contract, one party accepts, on an ongoing basis over time, the commitment to promote the conclusion of contracts in the interest of the other.

The stipulation of contracts is considered to be in a specific reference area. This assignment is remunerated with a commission on each contract concluded positively by the agent.

At this point, we can define the agency contract as a task carried out on a stable basis by a subject who goes by the name of agent , whose activity is focused on encouraging the conclusion of contracts on behalf of another party, called principal .

Through the agency contract, both parties pursue a specific interest, that is, the agent carries out his activity in the interest of obtaining a remuneration and the principal, of concluding a considerable number of contracts, usually of a commercial nature.

The principal's participation, therefore, does not take place in person but through a third party, namely the agent. The latter plans his own activity in a completely autonomous manner and at his own risk.

The parties to the contract are mutually bound by a exclusivity bond (art. 1743 of the civil code). The principal, in fact, cannot resort to or use, simultaneously, more than one agent for the same area and for the same sector of activity. At the same time, the agent cannot carry out his task for more than one company in competition with each other, located in the same area and for the same sector of interest.

The agent will then have to work on a single territory exclusively in relation to a commercial sector.

The duration of the agency contract

The agency contract can be either fixed-term or indefinite. In the first case, the parties decide to terminate the contract on a certain and future date, with the possibility of renewing it. In the second case, that is, with the indefinite-term contract, an expiry date or a constraint on the duration of the contract is not included or applied. For the latter case, each party can decide to withdraw from the contract, communicating the withdrawal to the other party with adequate notice within the terms established by law.

According to Article 1750 of the Civil Code , the warning for early termination of the agency contract cannot be less than one month for the first year of employment, two months for the second year of employment and so on for subsequent years.

Must the agency contract be in writing?

The agency contract must be concluded in writing. Each contractor is entitled to obtain the same contract signed by the respective counterpart. The contract must represent a faithful reproduction of the content and/or agreements or additional clauses between the parties.

The aforementioned contract has a consensual nature with binding effects and is clearly onerous and must therefore be proven in writing.

Agency contract: the essential elements

The fundamental elements of the contract are: the attribution of a stable assignment , the pursuit by the agent of an autonomous activity with the right to commission for each contractual conclusion, and exclusivity of the assignment in a given territory for business involving several companies in commercial competition with each other.

The assignment can be carried out by either a natural person or a legal person.

The principal may decide to assign powers of representation to the agent. In this case, the usual rules regarding mandate and power of attorney will apply.

The agent's work position cannot be classified as a dependent or subordinate relationship, but as autonomous, in coordination with the objectives and purposes set by the company.

The agent, in fact, on the basis of an autonomous initiative, pursues the objectives suggested by the entrepreneur, also knowing how to promote and represent the services offered by the company to all potential customers.

The differences between agency and mediation contracts

The agency contract should not be confused with mediation. Both activities, although presenting similarities, differ from each other.

The mediator concludes his business without any relationship of collaboration, representation and dependence and carries out his activity occasionally without the character of the stability of the agent (art. 1754 of the civil code). Each mediator, moreover, in order to regularly carry out his activity, must be registered in a specific professional register (for example, this applies to real estate agents); penalty: the payment of administrative sanctions and the obligation to return the commission received.

As for the agent, also for the mediator, upon conclusion of the agreement between the parties, a commission will be paid.

The essential criterion of the mediator figure is impartiality, which must be used towards both parties. The mediator cannot perform his service by virtue of any business collaboration relationship.

The agency contract will be advantageous, above all, for the promotion of company services.

Practical advice

It may be useful for the purposes of concluding a contract to know whether the other party has always behaved positively with respect to the payment of installments of a bank loan or mortgage or alternatively has been in default.

Make a protests report It certainly helps us understand if the contractor is a good or bad payer and we can obtain the necessary documentation in a very short time and conclude our business in complete safety.

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