How to Review a Agency Agreement (2026 Checklist)

What an agency agreement review needs to catch In an agency agreement, one party (the agent) is appointed to act for another (the principal), usually to find customers, solicit orders, or negotiate and sometimes conclude sales on the principal's behalf. The risk in these contracts sits in three places: how much authority the agent really has, how commission is earned and paid, and what the principal owes the agent when the relationship ends. Review in a fixed order so none of these slip through. This is general guidance, not legal advice. Agency is heavily regulated in some places, so confirm the local position for high-value or cross-border appointments. ## A fast first pass Before reading clause by clause, settle four things: - Is it really agency? An agent acts for the principal and can often create legal relations with third parties. A distributor buys and resells on its own account. Mislabelling changes the whole risk profile.

• Right parties and authority. Correct legal entities, and a signatory with authority to bind each side.
• Whose paper is it? An agent-drafted agreement will tilt commission and termination toward the agent.
• What is the deal worth and how long does it run? Value and term decide how hard you review. ## The clause-by-clause checklist ### 1. Appointment and scope What the agent is appointed to do, for which products or services, and in what markets. Red flag: a scope so wide it covers products you have not agreed, or so vague it invites disputes about what the agent may sell. ### 2. Authority The single most important clause. Can the agent only introduce and solicit orders, or can it negotiate terms and bind the principal to contracts? Most principals want a marketing or canvassing agent who cannot sign on their behalf. Red flag: authority to conclude contracts, vary prices, or make representations and warranties about the product. ### 3. Exclusivity and territory Whether the agent is sole, exclusive, or non-exclusive, and in which territory or customer segment. Exclusive means even the principal cannot sell directly in that territory. Red flag: broad exclusivity with no minimum performance target, which locks you in while the agent underperforms. ### 4. Commission How commission is calculated, on which orders, when it is earned (on order, on delivery, or on payment by the customer), and when it is paid. Check treatment of repeat orders, orders from the territory placed directly with the principal, and orders still open at termination. Red flag: commission earned on order rather than on customer payment, leaving you paying on sales that are never collected. ### 5. Obligations of each side The agent's duties (best efforts, reporting, not taking competing lines, following instructions) and the principal's duties (supplying samples, honouring orders, paying on time). Red flag: hard obligations on the principal with only soft best-efforts duties on the agent. ### 6. Non-compete and confidentiality Whether the agent may represent competing principals during the term, and any restriction after termination. Post-termination restraints must be reasonable in scope, time and territory to be enforceable. Red flag: an unlimited or very long restraint that a court may strike down, leaving you with no protection at all. ### 7. Term and termination Fixed term or rolling, notice periods, and termination rights for cause and convenience. Red flag: an auto-renewing term with a long notice window, or the agent can exit on short notice while the principal is locked in. ### 8. Post-termination compensation or indemnity This is where principals get caught. In the UK, EU and several other markets, commercial agents selling goods have a statutory right to compensation or an indemnity when the agency ends, which cannot be excluded by contract. Confirm which regime applies and how the clause deals with it. Red flag: a clause that assumes no payment is due when local law in fact requires it. ### 9. Liability and indemnities The liability cap and any indemnities, for example if the agent makes unauthorised promises to customers. Red flag: an uncapped indemnity from the principal, or no cap at all. ### 10. Governing law, disputes and competition law Which law governs, where disputes are heard, and whether the exclusivity or restraint clauses raise competition-law issues. Red flag: a governing law that does not match where the agent operates, or territory and pricing restrictions that could breach competition rules. ### 11. Signing Correct signatories and any execution formalities, including stamping where it applies. ## Red flags to escalate - Authority to bind the principal when you expected a canvassing agent only.
• Commission earned before the customer has paid.
• Exclusivity with no minimum sales target.
• Silence on statutory agent compensation where that regime applies.
• A post-termination restraint so wide it is likely unenforceable. ## A note on jurisdiction Agency law differs sharply across borders. The UK Commercial Agents Regulations and the equivalent EU rules give selling agents strong, non-excludable termination rights; many other markets do not. Exclusivity and pricing terms can also engage competition law. Adira is India-first today, with the Indian Contract Act principles of agency built in, and UK, Ireland, Singapore and Australia support on the roadmap, so confirm the local agency regime before you rely on any single rule. This is not legal advice. ## Where a contract workspace helps The checklist is enough to review one agency agreement well. The slow part is doing it the same way every time: finding each clause, comparing authority and commission to your standard position, and remembering the termination-payment trap on the next deal. That consistency can live in one AI workspace tuned to your company rather than in your head. A tool like Adira opens the document, marks each position as favourable, neutral or unfavourable to your side, flags missing clauses against your own standards, and lets you edit terms in plain language with a clean diff. The checklist does the thinking; the workspace keeps every review consistent as the volume grows.