Growing Your Sales Through Agents? Here’s the Contract You Need

You have a product or service that sells well in your own market.

You know it could sell in other cities, other industries, or other channels — but you cannot be everywhere at once.

The solution: appoint agents who sell on your behalf, earning commission on every deal they bring in.

It is an efficient way to grow without building a large sales team.

But an agent arrangement that is not properly documented creates two problems: you are exposed if the agent underdelivers, and the agent may legally be treated as your employee.

An Agency Agreement solves both.

What Is an Agency Agreement?

An Agency Agreement is a contract between a principal (the business with the product or service) and an agent (the person or business appointed to find customers and close sales on the principal’s behalf).

The agent earns commission; they do not buy and resell the product themselves.

This is different from a distribution agreement, where the distributor buys stock and resells it in their own name.

Understanding which model fits your situation matters — because the contracts look very different.

The Employment Risk You Need to Know About

South African labour law contains a presumption of employment under the Labour Relations Act: if an agent works primarily for one principal and meets certain criteria, they may be presumed to be an employee — entitled to UIF, leave, CCMA protection, and all the benefits of employment.

The main protection against this?

A well-drafted Agency Agreement that documents the nature of the independent contractor relationship, gives the agent the right to work for other principals, and does not treat them as part of your permanent team.

What Does an Agency Agreement Cover?

Scope of appointment — the territory, market, or product category the agent is responsible for

Exclusivity — whether the agent is exclusive to you in their territory, or whether you can appoint others

Commission structure — how commission is calculated, when it is earned, and when it is paid

The agent’s authority — what the agent can agree to on your behalf, and what requires your sign-off

The agent’s obligations — activity targets, reporting, and conduct standards

Intellectual property and confidentiality — protecting your brand, pricing, and client information

POPIA — compliance obligations if the agent processes personal data on your behalf

Restraint of trade — preventing the agent from approaching your clients directly

Term and termination — how the relationship ends and what happens to commissions in the pipeline

When Do You Need an Agency Agreement?

Any time you appoint someone to sell on your behalf — whether they are a solo freelance salesperson, a sales agency, or a professional referral partner — you need this agreement in place before they start.

It protects you if they fail to perform, and it protects them if a dispute arises about commission.

Learn More

Learn more about the Agency Agreement on the Contracts4Biz website.

Drafted by SchoemanLaw Inc., aligned with South African labour and commercial law, and written in plain language.

A straightforward document that keeps a good agency relationship professionally sound.