Agency agreement – commission, territory and severance pay
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An agency agreement is used when an independent commercial agent permanently acts to sell or purchase goods on behalf of a principal. The Commercial Agency Act contains several rules that the agreement must adhere to, including those concerning commission, termination, and indemnity.
Key points in brief
- Commercial agency under the law applies to the independent and permanent mediation of the purchase or sale of goods.
- Commission should be defined for both direct and indirect sales within the customer base/territory.
- Under certain conditions, the agent may be entitled to indemnity when the agreement ends.
- Notice periods are affected by the duration of the agreement.
- Post-contractual non-compete clauses are subject to specific limitations.
| Assignment | Products, market, customer groups, and whether the agent may conclude agreements. |
| Commission | Percentage, calculation basis, when the right arises, and when it is paid. |
| Territory | Geography, exclusivity, and handling of direct sales. |
| Reporting | Leads, orders, forecasts, customer data, and complaints. |
| Exit | Termination, indemnity, customer handover, and non-compete restrictions. |
What distinguishes an agent from a distributor?
The agent normally sells on behalf of the principal and receives a commission, while the distributor buys and resells in their own name and at their own risk. This classification affects rights, risks, and which regulations apply.
Commission and customer base
The law grants the agent the right to commission in several situations, including when an agreement is concluded through the agent's involvement, and in certain cases for customers within an assigned area or customer group. The agreement should therefore define the basis for commission, direct business, returns, credits, and when the commission is earned.
Indemnity when the agreement terminates
Under certain conditions, the agent may be entitled to indemnity, for instance if the agent has brought in new customers or significantly increased trade, and the principal continues to derive substantial benefit from this after the agreement ends. This right cannot always be waived by contract.
Termination and non-compete clause
Indefinite agreements are subject to the statutory notice periods. A non-compete clause following the termination of the agreement must, among other things, be in writing and limited in terms of area, customer base, and goods, and may not apply for longer than the law permits.
Common mistakes
- Using a distribution agreement when the relationship is in practice a commercial agency.
- Failing to regulate commission on direct business within the agent's territory.
- Assuming that indemnity can always be waived by agreement.
- Having an unlimited non-compete clause after the agreement ends.
- Lacking rules on who owns and may use customer data and marketing materials.
Frequently asked questions
What is a commercial agent?
An independent business operator who permanently acts to sell or purchase goods on behalf of a principal by soliciting offers or concluding agreements in the principal's name.
Is the agent entitled to commission after the agreement ends?
In some cases, yes, such as when the business is mainly attributable to the agent's work during the contract period and is concluded within a reasonable time thereafter.
What is indemnity?
A potential compensation when the agency agreement ends if the statutory requirements are met, partly linked to the customer value that the agent has built up.
Can the agent have an exclusive territory?
Yes, but the agreement should clearly define the area and what the exclusivity means for the principal's own sales and other channels.
Agency Agreement Template Package 2026/2027
The template package covers commercial agency, commission, territory, customer base, termination, non-compete clauses, and indemnity.
Sources and further reading
Last updated: October 5, 2026. This article provides general information and does not replace individual legal advice.
