The role of the commercial agent, given its various legal and commercial interpretations, can lead to confusion. Therefore, it is essential to know what the term commercial agent means and deeply understand the agent’s role in exports.
What is a commercial agent?
A commercial agent is a professional permanently responsible for promoting, negotiating or settling commercial operations on behalf of or in the name of one or several companies, in a determined area (in the same country and internationally), and in exchange for payment.
In the performance of his or her functions, the commercial agent can bind the company on whose behalf he or she acts, in which case it is the company and not the agent who is in charge of the success of the operations.
Therefore, commercial agents are not employees, but independent professionals with self-employed status, linked to the employer through a mandate. Thus, the clientele is considered to belong to the agent and not to the company. In no case, the agent does not acquire ownership of the merchandise unless the agent becomes a customer or, as a last resort, a distributor of the company’s main product.
In Spain, the legal regulation on commercial agents is established in Law 12/1992 of 27 May 1992 on the Agency Agreement, inspired by Directive 86/653 / EEC of 18 December 1986 on the coordination of the rights of Member States relating to independent commercial agents. Nonetheless, the Directive leaves ample freedom in certain aspects of an agency contract, which allows important legislative differences in the role of the commercial agent to exist within the European Community.
An agency agreement is the way by which a natural or legal person assumes a permanent and stable position of commercial agent linked to a company. Internationally, there is no legal uniformity regulating agency contracts, making it necessary in the contract to specify the law that shall govern and be used to construe the contract.
The agency contract should specify:
- A description of the power and authority of the commercial agent
- All the activities related to the agent’s functions
- The duration of the contract
- The particular area in which the agent develops his or her activity
- Pursuant to the Spanish Commercial Code, the agency agreement should be registered in the commercial register to be effective against third parties
In the agent’s professional activity, the commercial agent shall act in the interests of the company or companies whose he or she represents, generally performing the following functions:
- Inform the company about the situation in the target market:
- statistical and marketing on the solvency of third parties with whom exists operations pending conclusion or execution
- receive on behalf of the company of any type of third party claim on the promoted operations, even if they have not been concluded
- lead an independent accounting of the company on whose behalf the agent is working
- promote the company’s products
- develop his or her activity in accordance with the reasonable instructions received from the company, provided they do not affect the agent’s independence
- Negotiate sales transactions with customers
- Concluding commercial operations, leaving the company responsible
The licensing of the commercial agents is mandatory in some countries, such as Spain and France. In Spain, a commercial agent will not be able to practice his or her functions until he or she registers with the chartered institute of the province where he or she lives.
The registration in the professional association is mandatory for those who perform their functions in Spain, independent from their nationality, when acting on behalf of foreign companies, as well as Spanish nationals conducting business abroad on behalf of Spanish companies.
Royal Decree 330/1999 of 26 February 1999 establishes the professional certificate of occupancy of the commercial agent
The role of the commercial agent represents one of the most economical, rapid and effective formula when exporting a business into a new market, especially if the features and operation of the chosen market are unknown.
Marina Arancón & Karl H. Lincke
This article is not considered as legal advice