Agency Agreement in Kenya: What You Need to Know
When engaging in business transactions, it is crucial to have a clear and concise agreement that outlines the terms and conditions of the relationship between parties. This is where an agency agreement comes in. In Kenya, an agency agreement is a legal document that formalizes the relationship between a principal and an agent.
What is an Agency Agreement?
An agency agreement is a contract between two parties where one party (the principal) hires the other party (the agent) to act on their behalf in business transactions. The agent is given the authority to represent and make decisions on behalf of the principal, but always with the principal’s best interests in mind.
This agreement is essential when a principal wants to expand their business operations or reach out to customers in areas where they don’t have a physical presence. It allows them to appoint an agent who is authorized to act on their behalf in specific transactions.
What Should Be Included in an Agency Agreement?
An agency agreement should be drafted carefully and include relevant terms and conditions. It should clearly outline the responsibilities of both parties, including the duties of the agent and the obligations of the principal. The following points should be included in an agency agreement:
1. Scope of Authority: This specifies the scope of the agent’s authority to act on behalf of the principal. It details the types of transactions that the agent is authorized to carry out and the limitations of their authority.
2. Term of Agreement: This specifies the duration of the agency agreement. The term could be a fixed period or open-ended, depending on the agreement between the parties.
3. Compensation: This outlines the compensation that the agent will receive for their services. It could be a commission based on sales or a fixed fee.
4. Termination: This specifies the circumstances under which the agreement can be terminated by either party. It could be due to breach of contract, expiry of the term, or mutual agreement.
5. Confidentiality: This ensures that the parties agree to keep any confidential information they gain access to during the course of the agency agreement confidential.
6. Governing Law: This specifies the law that will govern the agency agreement.
Why Do You Need an Agency Agreement in Kenya?
An agency agreement is essential in Kenya as it provides a legal framework for business transactions. It ensures that all parties are aware of their responsibilities and obligations, thus minimizing the possibility of disputes. It also ensures that both parties are legally protected in case of breaches or misunderstandings.
Conclusion
An agency agreement is a crucial document that provides a legal framework for business transactions between a principal and an agent. It outlines the responsibilities and obligations of both parties and ensures legal protection in case of disputes. As such, it is essential to have a well-drafted agency agreement when engaging in business transactions in Kenya.