A commission agreement is an agreement by which one party (commission agent) undertakes, on behalf of the other party (commissioning party) for a fee, to make one or more transactions for the principal on its own behalf, but at the expense of the principal. The commission agent performs legal actions, realizes or acquires property for another person (principal), but unlike the contract of commission, he performs legal actions on his behalf, but at the expense and in favor of the principal.
The commission agreement must be concluded in writing.
The commission agreement is widely used in civil circulation. On a commission basis, inventory items that are not used by enterprises are sold, as well as products that are not sold in market conditions. The commission agreement is used in foreign trade.
In a transaction made by a commission agent with a third party, it acquires rights and the commission agent becomes obligated, even if the principal was named in the transaction or entered into a direct relationship with the third party under the transaction.
The commission agent is obliged to notify the principal on the conclusion of a transaction with a third party.
At the request of the principal, the commission agent is obliged to transfer to him the rights under such a transaction, notifying the transfer to the third party with whom the transaction was concluded. The latter is not entitled to raise objections against the requirements of the principal, based on its requirements to the commission agent, not arising from this transaction.
It is allowed to conclude a subcommission agreement with another person, while the commission agent remains responsible for the actions of the subcommissioner to the principal. Under a subcommission agreement, the commission agent acquires the rights and obligations of the principal in relation to the subcommissioner.
The commission agreement is also used for the sale of shares.
In this section you can familiarize yourself with a sample commission agreement.