Commercial agency contract
In this type of contract a natural or legal person (Agent) represents, acts on behalf of, and binds another natural or legal person (Principal), on a continuing basis, in return for remuneration, to further trade activities or operations on behalf of others, as an independent intermediary, without assuming, unless otherwise agreed, the risks entailed in the operations. The agent’s remuneration is commonly established through sales commissions, albeit, in some cases, certain expenses may be agreed for travel or promotional activities. Customarily, commissions consist of a percentage of the amount of sales actually made, in which the agent has mediated. Said percentage commonly depends on the industry practices of the sector in which the company operates; and as a general rule, to the extent that the sales are small amount sales, the percentage will be higher, to compensate the agent for all the management and expenses necessary for the purposes of obtaining the sales. The commissions shall be paid to the Agent no later than the last day of the month following the natural quarter in which the right of commission would have stemmed therefrom, unless a shorter period has been stipulated in the contract. Unlike the Exclusive Distribution Contract, if the contract is signed in a European Union country, the agent is entitled to compensation for customers upon conclusion of the contract, if his/her activity during same can continue to produce benefits for the company. This compensation likewise exists in the event that the contract is extinguished due to the death of the agent. The compensation is calculated on the average annual amount of the commissions received by the agent during the last five years, or during the entire term of the contract, if the latter is lower. This right to claim the compensation prescribes the year of the extinguishment of the contract. Model of Commercial Agency Contract.