The  difference between an exclusive agency and a sole agency is the entitlement of the selling agent to receive an agreed commission or other reward on the sale of the property. … Where the agency is a sole agency, the agent would not be entitled to the commission if the seller is the effective cause of the sale

Online Advertising Agreement

What is included

Agency Agreement for a company appointing the agent as its sole or exclusive agent for the purchase of all goods.

A sole agency agreement is similar to an exclusive agency agreement. You give rights to one agent to sell the property but you may find a buyer yourself. If you find a buyer who has not been introduced by the agent, then no commission is payable to the agent.

Agency Agreement for a Sole Agent Includes terms covering:

  • Appointment of Agent
  • Term
  • Duties of agents
  • No purchase through company
  • Shipment of goods
  • Payment by company
  • Alternative payment clause
  • Repayment of expenses
  • Commission
  • Summary determinations
  • Obligation to be imposed on purchasers
  • Purchases by agents on own account
  • Terms not to be included in contracts negotiated by agents
  • Miscellaneous
  • Law applicable

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What is a Sole Agency Agreement

An agency relationship is where one party (the agent) has the authority to enter contracts with a third party (the customer) on behalf of the second party (the principal).

An Agency Agreement occurs when the agent transacts on behalf of the principal, and the actual sales contract is between the principal and the customer.  A supplier usually imposes few restrictions on agents and these normally relate to the agent’s powers to bind the supplier.

The agent is accountable for everything they do.  If they incur debt, they are the debts of the principal.  If they break the law, the vicarious responsibility is that of the principal.

Agency Agreements often concern agents or principals overseas.  Such Agency Agreements or contracts may include terms from Incoterms.  ‘Incoterms’ refers to the collection of essential international commercial and trade terms.  The terms were devised in recognition of non-uniform standard trade usages between various States.

 This does not represent legal advice by Precedents Online or its Authors

Befefits of a Sole Agency Agreement

A sole agency agreement is a specific type of exclusive agency agreement where one agent is given the exclusive right to represent a principal for a particular purpose, with the added stipulation that the principal can also engage in the activity independently without the agent’s involvement. This agreement is common in real estate, sales, and various service industries. Here are the key benefits of a sole agency agreement:

### Key Benefits of a Sole Agency Agreement

1. **Exclusive Representation with Flexibility**:
– The principal benefits from having a dedicated agent focused on their interests, while retaining the ability to act independently without breaching the agreement.

2. **Strong Incentive for Agent Performance**:
– The agent has a strong motivation to perform well and secure deals, knowing they are the only agent representing the principal. This can lead to increased effort and better results.

3. **Simplified Communication and Coordination**:
– With a single agent handling the representation, communication and coordination become more streamlined and efficient, reducing potential misunderstandings and conflicts.

4. **Consistent Strategy and Messaging**:
– The sole agent can develop and implement a cohesive strategy and messaging for the principal, ensuring consistency across all efforts and enhancing brand integrity.

5. **Potential Cost Savings**:
– The principal can potentially save on costs compared to hiring multiple agents or firms, as the sole agent may offer more favorable terms for exclusivity.

6. **Relationship Building**:
– A sole agency agreement allows for a closer, more collaborative relationship between the principal and the agent, fostering better understanding and alignment of goals.

7. **Market Focus and Expertise**:
– The sole agent often brings specialized knowledge and expertise to the table, focusing on specific markets or niches that align with the principal’s objectives.

### Specific Situations Where Sole Agency Agreements are Beneficial

1. **Real Estate**:
– **Property Sales**: Homeowners can benefit from a sole agency agreement with a real estate agent, ensuring dedicated marketing efforts while retaining the ability to sell the property independently.
– **Rentals**: Property owners can use a sole agency agreement for rental management, ensuring consistent tenant screening and property maintenance.

2. **Sales and Distribution**:
– **Product Representation**: Manufacturers can appoint a sole sales agent for a particular region or market, ensuring focused sales efforts while retaining the ability to make direct sales.
– **Service Contracts**: Service providers can engage a sole agent to secure contracts with clients, knowing that the agent is dedicated to promoting their services.

3. **Marketing and Advertising**:
– **Campaign Management**: Companies can enter into sole agency agreements with marketing firms to manage campaigns, ensuring cohesive branding while allowing in-house marketing efforts.

### Considerations and Challenges

1. **Agent Performance**:
– The success of a sole agency agreement heavily relies on the agent’s performance. Choosing the right agent with a proven track record is crucial.

2. **Dependency**:
– While the principal retains the right to act independently, there may still be a significant reliance on the agent, which can be risky if the agent underperforms.

3. **Market Dynamics**:
– Market conditions can change, and the sole agent must be adaptable and responsive to new challenges and opportunities to ensure continued success.

4. **Legal and Contractual Clarity**:
– The agreement must clearly define the rights and obligations of both parties, including the scope of the agent’s exclusivity and the principal’s independent actions.

### Conclusion

A sole agency agreement offers a balanced approach to exclusive representation, providing the benefits of dedicated agent efforts and strategic consistency while allowing the principal to retain some level of control and independence. When implemented correctly, it can lead to enhanced performance, cost savings, and stronger relationships, making it a valuable arrangement for various business contexts.

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