Sales Agent Agreement Template for England and Wales

A sales agent agreement appoints an individual or company to negotiate or conclude sales on behalf of a principal, typically on a commission basis. In England and Wales, if the agent qualifies as a commercial agent under the 1993 Regulations, they receive mandatory statutory rights to commission, a minimum notice period, and compensation or indemnity on termination that cannot be excluded by contract.

The Commercial Agents (Council Directive) Regulations 1993 apply to self-employed intermediaries who negotiate or conclude the sale or purchase of goods on behalf of a principal on an ongoing basis. Agents dealing in services, agents employed directly, and those who make occasional one-off transactions are generally excluded. The distinction matters because qualifying agents receive significant mandatory protections.

Under the 1993 Regulations, a commercial agent is entitled to commission on every transaction concluded during the agency that resulted from their efforts or with a customer they previously introduced. They are also entitled to commission on transactions with customers in their exclusive territory, even if they played no active role. Commission becomes due when the principal has executed the transaction or should have done so.

The 1993 Regulations set minimum notice periods: one month for the first year, two months for the second year, and three months from the third year onwards. These cannot be reduced by contract. The parties may agree longer notice periods. Immediate termination is only justified where the other party commits a fundamental breach, such as fraud or serious misconduct.

On termination of a qualifying agency, the agent is entitled to either an indemnity (a lump sum not exceeding one year's average annual commission) or compensation (the market value of the agency business lost). The default under English law, if the agreement is silent, is compensation. The parties may agree in writing to apply indemnity instead. Compensation can often exceed indemnity for a successful established agency.

Yes, with limitations. Under the 1993 Regulations, a post-termination restraint on a commercial agent is only valid if it is in writing, covers the geographic area and type of goods dealt with, and lasts no more than two years after termination. Restraints must also be reasonable in scope under common law restraint of trade principles to be enforceable.

Yes. Under section 7 of the Bribery Act 2010, a principal commits a strict liability offence if a person associated with it (including a commercial agent) bribes a third party to obtain or retain business, unless the principal can show it had adequate anti-bribery procedures in place. The sales agent agreement should include express anti-bribery obligations and compliance with the principal's Bribery Act policies.

Yes. An exclusive territory prevents the principal from appointing competing agents or making direct sales in that territory. Exclusive arrangements must be considered carefully under the Competition Act 1998: territorial exclusivity can restrict competition and may require analysis under the vertical agreements block exemption. Legal advice is advisable before granting wide exclusive territories.