Custom Agency Agreement

The law of agency allows one person to employ another to do his/her/its work. This work may entail the letting or selling goods, the rendering of services, or acquisition of property on the principle’s behalf as if the principle were present and acting in person.

The principal may authorise the agent to perform a variety of tasks or may restrict the agent to specific functions. Regardless of the amount or scope of authority granted to the agent, the agent represents the principal and is subject to the principal’s control. In this regard, the principal is liable for the consequences of acts that the agent has been directed to perform.

The most important distinction between an Agency Agreement, and an Independent Contractor Agreement is the concept of control: the agent agrees to act under the control or direction of the principal.

The extent of the principal’s control over the agent distinguishes an agent from an independent contractor, over whom control and supervision by the principal may be relatively remote. An independent contractor is subject to the control of an employer only to the extent that he/she must produce the final work product that she or he has agreed to provide.

Independent contractors have the freedom to use whatever means they choose to achieve that final product. When the employer provides more specific directions, or exerts more control, as to the means and methods of doing the job—by providing specific instructions as to how goods are to be sold or marketed, for example—then an agency relationship may exist.

An agent is generally distinguished from a distributor in that a distributor will buy stock from the supplier or principal and then sell it on to his customers at a mark-up, whereas an agent will find customers for the principal who then sells direct to the customers and pays commission to the agent.