What law governs agency agreements in the US?

Common law principles codified in the Restatement (Third) of Agency. No federal statute specifically governs commercial agents, unlike the EU.

What fiduciary duties does an agent owe?

Duty of loyalty (§8.01), duty of care and competence (§8.08), duty to provide information (§8.11), duty to account (§8.12), and duty to obey instructions (§8.09).

Is there mandatory termination compensation?

No. Unlike EU countries, the US does not require mandatory compensation upon termination of an agency. Termination rights should be clearly contractual.

How to distinguish agent from employee?

The IRS uses the degree-of-control test. Key factors include behavioral control, financial control, and the type of relationship. Misclassification carries penalties.

Are non-compete clauses enforceable?

Varies by state. California generally prohibits them. Most states enforce reasonable restrictions in scope, duration (typically 1-2 years), and geographic area.

What is apparent authority?

When a principal's conduct leads third parties to reasonably believe the agent has authority, the principal may be bound even without actual authority (Restatement §2.03).

Can this document be signed electronically in the United States?

Yes, electronic signatures are legally valid under the E-SIGN Act (15 U.S.C. 7001) and the Uniform Electronic Transactions Act (UETA) adopted by most states.

What happens if this document is breached in the United States?

The non-breaching party may seek remedies including compensatory damages, specific performance, injunctive relief, or termination. Remedies vary by state law.

Does this document need to be notarized in the United States?

Notarization requirements depend on the document type and state law. While not always required, notarization adds authentication and may be necessary for government filing.

Agency Agreement

Date: [Effective Date]

This Agency Agreement (the "Agreement") is entered into as of [Effective Date] (the "Effective Date") by and between:

[Principal Name], [Principal Entity Type] organized under the laws of the [Governing Law], with its principal place of business at [Principal Address] (the "Principal");

and

[Agent Name], a [Agent Entity Type] with its principal place of business at [Agent Address](the "Agent").

This Agreement is governed by the common law of agency as articulated in the Restatement (Third) of Agency (2006), the applicable provisions of the Uniform Commercial Code (UCC) as adopted by the governing state, and the laws of the [Governing Law]. The Agent is an independent contractor and not an employee under the Internal Revenue Code Section 3508 or any applicable state employment law.

RECITALS

WHEREAS, the Principal is engaged in the business of providing or selling: [Products Services];

WHEREAS, the Principal desires to appoint the Agent to solicit orders and promote the Products/Services within the Territory on terms set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1 — APPOINTMENT AND SCOPE OF AUTHORITY

1.1

The Principal hereby appoints the Agent as its [Exclusivity] sales agent for the solicitation of orders for the Products/Services within the Territory, and the Agent accepts such appointment.

1.2

The Agent is an independent contractor. Nothing in this Agreement shall create or be deemed to create an employer-employee, partnership, joint venture, or franchise relationship. The Agent shall be solely responsible for its own tax obligations, including federal, state, and local income taxes, self-employment taxes, and FICA contributions.

1.3

The Agent shall have no actual or apparent authority to bind the Principal to any contract, agreement, or obligation without the Principal's express prior written authorization. Any contracts procured by the Agent shall be subject to acceptance by the Principal at its sole discretion.

1.4

The Principal shall issue to the Agent an IRS Form 1099-NEC for all commission payments exceeding $600 in any calendar year, in compliance with 26 U.S.C. Section 6041A.

ARTICLE 2 — PRODUCTS/SERVICES AND TERRITORY

2.1

Products/Services: [Products Services].

2.2

Territory: [Territory]. The Agent shall not solicit orders outside the Territory without prior written consent.

ARTICLE 3 — AGENT DUTIES

3.1

The Agent shall use commercially reasonable best efforts to promote and solicit orders within the Territory, consistent with the duty of loyalty and duty of care owed to the Principal under the Restatement (Third) of Agency.

3.2

The Agent shall comply with all applicable federal, state, and local laws, including antitrust laws (Sherman Act, 15 U.S.C. Sections 1-7; Clayton Act, 15 U.S.C. Sections 12-27), consumer protection statutes (FTC Act, 15 U.S.C. Section 45), and any industry-specific regulations.

3.3

The Agent shall maintain accurate books and records and provide the Principal with monthly sales reports.

3.4

The Agent shall not make any unauthorized representations, warranties, or price concessions on behalf of the Principal.

ARTICLE 4 — PRINCIPAL DUTIES

4.1

The Principal shall provide product information, marketing materials, price lists, and training as reasonably necessary.

4.2

The Principal shall process and fulfill orders procured by the Agent in a timely manner.

4.3

The Principal shall notify the Agent promptly of any material changes to pricing, availability, or product specifications.

ARTICLE 5 — COMMISSION AND PAYMENT

5.1

Commission Rate: [Commission Rate] of the net invoice value of orders procured by the Agent and accepted and paid by customers.

5.2

Commissions shall be payable within thirty (30) days following the end of the calendar month in which payment is received from the customer. Payment terms: [Payment Terms].

5.3

No commission shall be payable on cancelled, returned, or uncollected orders, unless non-collection is attributable to the Principal.

5.4

The Principal shall provide monthly commission statements with sufficient detail for verification. The Agent shall have the right to audit the Principal's records pertaining to commissions once per calendar year upon reasonable notice.

ARTICLE 6 — TERM AND TERMINATION

6.1

This Agreement shall commence on the Effective Date and continue for [Term], unless earlier terminated.

6.2

Either Party may terminate upon thirty (30) days' written notice.

6.3

Either Party may terminate immediately for cause, including material breach (uncured after 15 days' notice), insolvency, or bankruptcy filing under 11 U.S.C. (Bankruptcy Code).

6.4

Upon termination: (a) the Agent shall cease all activities; (b) return all Principal materials; (c) the Principal shall pay earned commissions; (d) accrued rights survive. The Agent shall have no claim for compensation, goodwill, or damages for termination except as expressly provided herein.

ARTICLE 7 — CONFIDENTIALITY AND TRADE SECRETS

7.1

The Agent shall maintain in strict confidence all Confidential Information, including trade secrets as defined under the Defend Trade Secrets Act of 2016 (18 U.S.C. Sections 1831-1839) and applicable state trade secret laws (e.g., Uniform Trade Secrets Act).

7.2

Confidentiality obligations survive termination for three (3) years; trade secret obligations survive indefinitely.

ARTICLE 8 — NON-COMPETITION

8.1

During the term, the Agent shall not represent competing principals within the Territory without written consent.

8.2

Post-termination non-compete restrictions shall be limited to twelve (12) months and the Territory, subject to the enforceability standards of the governing state (note: some states, including California, substantially limit non-compete enforceability under Cal. Bus. & Prof. Code Section 16600).

ARTICLE 9 — INDEMNIFICATION

9.1

Each Party shall indemnify, defend, and hold harmless the other Party from all claims, damages, losses, and expenses (including reasonable attorneys' fees) arising from its negligence, willful misconduct, or breach of this Agreement.

9.2

NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES.

ARTICLE 10 — GENERAL PROVISIONS

10.1

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the [Governing Law], without regard to its conflict of laws principles.

10.2

Dispute Resolution: Disputes shall be resolved by binding arbitration under the rules of the American Arbitration Association (AAA), or by the courts of the [Governing Law].

10.3

Entire Agreement. Amendment. Severability. Assignment. Notices. Force Majeure — standard provisions apply as customary.

IN WITNESS WHEREOF, the Parties have executed this Agency Agreement as of the date first written above.

Party 1

________________

Signature

Date: ________________

Party 2

________________

Signature

Date: ________________

Maintained by Vladislav Sergienko, Founder·Template last modified: 2026-06-23·Report an error

What Is a Agency Agreement?

An Agency Agreement in the United States governs the relationship between the parties by fixing what each must do.

The agency relationship creates specific legal obligations. The agent owes fiduciary duties to the principal, including the duty of loyalty (avoiding conflicts of interest), the duty of care (acting with reasonable skill and diligence), the duty to account (maintaining accurate records of all transactions), and the duty of obedience (following the principal's lawful instructions). The principal, in turn, has obligations to compensate the agent as agreed, reimburse authorized expenses, and not unreasonably interfere with the agent's performance.

Agency agreements are pervasive in commercial practice. Real estate brokers operate under agency agreements governed by state licensing laws. Talent agents in entertainment are regulated by state labor codes, such as California's Talent Agencies Act (Labor Code Sections 1700-1700.47). Sales representatives work under agency agreements subject to state commercial agent statutes that provide protections including minimum termination notice periods and post-termination commission rights, as found in statutes like the New York Commercial Agents Act.

When Do You Need a Agency Agreement?

A business owner appoints a sales representative to solicit orders, negotiate deals, and close transactions with customers in a defined territory on the company's behalf. A property owner engages a real estate broker under an exclusive listing agreement to market, show, and negotiate the sale of residential or commercial property.

A company entering a foreign market retains a local agent to represent its interests, distribute products, and manage regulatory compliance in that jurisdiction. An entertainer, athlete, or public figure hires a talent or booking agent to negotiate performance contracts, endorsement deals, and media appearances.

A manufacturer needs a purchasing agent to source raw materials, negotiate supplier contracts, and manage procurement operations within specified authority limits. An individual grants authority to a trusted person to handle specific financial or legal transactions on their behalf when they cannot be personally present, distinct from a power of attorney which covers broader authority.

A startup engages a business development agent to identify partnership opportunities, negotiate term sheets, and represent the company in industry events and investor meetings.

What to Include in Your Agency Agreement

The scope of authority must be precisely defined, specifying whether the agent has general authority (broad powers to act in all matters) or special authority (limited to specific transactions or tasks). The agreement should list the specific acts the agent is authorized to perform and expressly exclude acts requiring the principal's prior approval.

Compensation terms must detail the payment structure, whether commission-based (specifying the percentage and calculation basis), flat fee, retainer, or a combination. Commission structures should address when commissions are earned, when they become payable, whether they survive termination for deals in progress, and the treatment of house accounts or excluded transactions.

The term and termination provisions must specify the agreement's duration (fixed term or at-will), renewal conditions, and termination rights. Many state statutes require minimum notice periods for termination, typically 30 to 90 days. The agreement should address post-termination obligations including the return of confidential information, customer lists, and materials, as well as tail commissions on pending deals.

Exclusivity provisions must clarify whether the agency is exclusive (the principal cannot engage other agents or act independently in the territory) or nonexclusive. The geographic territory or market scope must be defined. Confidentiality and non-compete clauses should protect the principal's trade secrets and customer relationships.

The agreement must specify the governing law, dispute resolution mechanism (arbitration, mediation, or litigation), and indemnification obligations. Insurance requirements, including errors and omissions coverage for the agent, should be addressed. The independent contractor status of the agent versus employee classification must be clearly stated to avoid misclassification liability under the IRS common law test and state employment laws.

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APA

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@misc{formslegal-agency-agreement,
  author       = {{Forms Legal}},
  title        = {Agency Agreement (United States)},
  year         = {2026},
  howpublished = {\url{https://forms-legal.com/usa/business/contracts/agency-agreement}},
  note         = {Free legal document template. Based on Uniform Commercial Code (UCC)}
}

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Frequently Asked Questions

Based on Uniform Commercial Code (UCC) — Template last modified June 2026

This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer

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