Agreement for Sharing Commission Between Agent and Subagent
Agreement between agent and sub-agent whereby the principal has appointed the sub-agent and sets out the terms of the agreement.
The general rules regarding commission include the following
If there is no agreement as to remuneration (which as a matter of good
practice there should be) the agent is entitled to remuneration
customarily allowed to agents for the type of goods involved in the area
where the agent carries on his activities. If there is no such customary
practice, the agent is entitled to reasonable remuneration.
Where remuneration is wholly or partly commission based, there are
general rules dealing with entitlement to commission payments,
commission on transactions concluded after the end of the agency
contract, apportionment of commission between old and new agents,
and when commission becomes due.
The principal must provide statements of commission quarterly and the
agent must be provided with all available information which he needs to
check the amount of commission due to him.
Sub-agents
A sub-agent is a person whom the original agent employs in the
business of the agency and who is under the control of the original
agent. Thus the relation of the sub-agent to the original agent is, as
between themselves, that of the agent and the principal.
Sub-agency denotes delegation of power by an agent to a person
appointed by him as sub-agent, meaning that the agent himself is a
delegate of his principal. According to this, a person to whom powers
have been delegated to cannot delegate them to another.
Generally, an agent cannot lawfully employ another to perform acts but,
if by the ordinary custom of trade a sub-agent may be employed, the
agent may choose to do so.
There is no obligation for the principal to pay commission to the sub-
agent, only to the agent that he employed. The principal is obligated to
pay commission to his agent.
If a sub-agent is properly appointed, the principal is, insofar as third
parties are concerned, represented by the sub-agent and is bound by
and accountable for his acts as if he were an agent originally appointed
by the principal. The agent is responsible to the principal for the acts of
the sub-agent and the sub-agent is responsible for his acts to the agent,
but not to the principal, except in case of fraud or wilful wrongdoing.
Thus, a commission agent for the sale of goods who makes a proper
employment of a sub-agent for selling his principal’s goods is liable to
the principal for the fraudulent disposition of the goods by a sub-agent
within the course of his employment.
Where an agent appoints a person to act as a sub-agent without
authority from the principal, the agent will be liable for the sub-agent’s
acts both to the principal and to third persons. In that case, the principal
is not represented by or liable for the acts of the sub-agent, nor is the
sub-agent liable to the principal.
A clause can be added to the main agreement between the principal and
the agent for purposes of appointing a sub-agent. The clause may read
as follows: “The agent shall be entitled, without prior consultation, to
appoint sub-agents to perform any part of the services and such sub-
agent may enter contracts with service providers on behalf of the
principal as if they were the original agent. The agent shall remain
responsible for the actions of its sub-agents in relation to the services
performed”.
The first thing that the original agent should do is solidify the
percentages of how much the subagent will get for bringing over new
buyers. If the subagent is guaranteeing and collecting all of the losses
for the buyers, than the standard commission in the pay per head
industry would be anywhere from 20% to 50%. When a subagent is just
getting buyers but is not responsible if they pay or not, than the main
agent generally gives the subagent a much smaller commission
percentage with a figure of around 5% to 15%.
Regardless of what percent a subagent is getting it is extremely
important to carefully monitor all new buyers that are from any subagent.
It is also important not to give the subagent any rights to make
adjustments, delete wagers, move lines, or create receipts or
disbursements. Any of these rights could result in a subagent trying to
cheat or steal from the main agent.
Remuneration
The principal undertakes to pay to the agent, as consideration for the
services provided by the agent, the commissions and fees agreed
between the parties and a sum equivalent to all disbursements (subject,
in the case of disbursements, to the agent providing reasonable and
documented evidence that such disbursements have been incurred).
The agent is entitled to share this remuneration by appointing a sub-
agent to assist with the principal’s services.
In the event that:
• any fees, commission, disbursements or expenses due from the
principal to the agent remain outstanding following the expiry of
the period for settlement of such invoices; and
• the agent or any affiliate of the agent is in possession of funds
belonging to the principal in any jurisdiction, then the agent and
such affiliate of the agent may, at any time, set off such funds
against the due and unpaid fees, commission, or disbursements
outstanding.
In the event that:
• the agent or any affiliate of the agent is in possession of funds
paid by the principal to the agent or any affiliate of the agent; and
• any sums, fees, payments, commissions, disbursements or
expenses due from the principal to the agent or any affiliate of
the agent under any other contractual arrangement are
outstanding, then the agent and/or such affiliate of the agent may,
at any time, set off such funds against the due sums, fees,
payments, commission, disbursements or expenses outstanding
under the other contractual arrangement.
Where the use of the funds for such set off results in insufficient
cleared funds being available to the agent to pay for actual or
anticipated disbursements, the agent shall be entitled to refuse to
provide some or all of the services until such shortfall is made
good by the principal.
R0.00
incl VAT