Agency agreement

An agency agreement is a legal contract between two parties: an agent and a business. It gives the agent authority to act on behalf of the business and perform tasks agreed upon in the contract. This can include selling the company’s services or signing deals.

Under the agreement, the agent is expected to act in the business’s best interest, follow their instructions, and avoid conflicts of interest. For example, a travel agent representing a tour operator must promote the company’s packages honestly, not recommend competitors, and follow the company’s pricing and booking policies.

The business, in turn, must provide the agent with the resources and support to perform their tasks. They also ensure that agents are paid according to the agreed-upon compensation, usually in commissions.

Commissions are typically a percentage of the sales the agent generates. For example, an online travel agency (OTA) may receive a 10 percent commission for every hotel or tour package sold.