Defining the Nature of Representation, Products and Territory
The agreement must specify, whether the agent is only authorized to forward orders to the principal, or also entitled to conclude contracts that become binding on the principal.
The products to be sold are defined either in the agreement itself or in an appendix. If the agent is at a later stage granted the right to sell additional products, the agreement must be amended accordingly.
The agent’s territory of operation must be defined and limited as clearly as possible, for example by listing the countries that are within the scope of the agreement. It is possible to assign several agents to the same territory, unless an agent is granted exclusive rights.
It is common to grant an agent exclusive rights for an agreed territory. In such cases, the principal cannot conclude deals directly within the said territory without being obligated to pay commission to the agent. The exclusivity can, however, be limited – for example if the principal has been reserved the right of direct sales of certain products, or if the exclusivity applies only to certain products.