Agency Agreement

What Does 'Agency Agreement' Mean?

Civil law contract among the person approving the order - the agent and principal. Both parties to agency contract must be entrepreneurs who run a business. Across the agency contract, the person receiving the order undertakes, in scope of his business, to behave as intermediary in concluding contracts for or on behalf of principal. A typical example of an activity conducted on basis of an agency contract are activities performed by an insurance agent. The subject of agency contract is only permanent and recurring activities. The agent receives suitable remuneration for these activities. Unless on the another hand agreed in contract, the wage is a commission depending on number of contracts concluded or amounts for which they were concluded. The agency contract may be concluded in any form, though the most suitable form is in writing. Conserving the written form may be important to accomplish a special effect, such as introducing a reservation about the agent's liability for performance of contract by the client. The agency contract may be concluded for a definite or indefinite period. A contract concluded for a definite duration of time and performed by the parties after that duration is considered concluded for an indefinite period. Despite the fact that the agency contract is a civil law contract, the procedure of its termination is similar to that in case of termination of employment relationship. The agency contract may be concluded for a definite or indefinite period. A contract concluded for a definite duration of time and performed by the parties after that duration is considered concluded for an indefinite period. Despite the fact that the agency contract is a civil law contract, the procedure of its termination is similar to that in case of termination of employment relationship. The agency contract may be concluded for a definite or indefinite period. A contract concluded for a definite duration of time and performed by the parties after that duration is considered concluded for an indefinite period. Despite the fact that the agency contract is a civil law contract, the procedure of its termination is similar to that in case of termination of employment relationship.
The notice periods depend on period of contract and are as follows:

- month in first year of contract,
- two months in second year of contract,
- three months in third and subsequent years of contract.

The agency contract can be terminated without notice. The reason may be the non-performance of obligations by one of parties in whole or in a large part, plus the occurrence of another extraordinary circumstances.

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See also: Glossary [ A ]