1E9Ct5D

172C H A P T E R I XIt is important to clearly establish in the contract what the activity of the agent will be;nevertheless, it should be understood that the agent must always act in the best interestsof the principal, and therefore the agent does not have to wait to receive specific instructionsfrom the principal. Rather, the agent must do everything within his/her power topromote and conclude all contracts possible on behalf of the principal. This obligationshould be described in the specific contract provisions establishing the procedures forthe promotion and sale of the products or services, as well as the form in which theorders, prices, and quotations to the client will be made.The payment of compensation or commission to the agent is the principal obligationof the principal. This commission generally consists of a percentage of the value of thetransactions that the agent carries out. In practice, it is understood that the agent willonly be entitled to a commission for concluded transactions; however, compensationcan also be agreed upon for the partial execution of a contract, or a right can be establishedto receive a commission for those contracts that are carried out in the exclusivezone of the agent, whether or not he/she has intervened in such transactions.It is advisable to clearly establish in the contract at what point the agent will earn acommission, whether when the principal receives the order, when the principal invoices,or when the principal receives payment by the client. Another aspect that should be consideredis when the commissions owed are to be paid since, although the agent is entitledto them, a time period is usually established for their payment; furthermore, itshould be stipulated what will happen in the case of returns and cancellations, and whatconsequences they will have on the agent’s commission. In practice, commissions lost asa result of returns or cancellations are offset against the payment of future compensation.The agency contract can be representative—governed by the rules applicable to themandate contract (a power of attorney)—or non-representative. In the first case the agentwill pursue and conclude business on behalf and in representation of the principal, whilein the second case the agent will act on behalf of the principal, but the pursuit and conclusionof the business will always be subject to the approval of the principal.The agency contract frequently contains an exclusivity agreement to which one orboth parties are subject. This agreement refers to the zone or zones in which the agentcan and must carry out his/her activities, as well as those in which the principal cannotpursue or conclude business himself or through anyone other than the agent. Ifthe agent violates the exclusivity agreement, the business concluded outside of his/herzone is valid, since the exclusivity agreement does not bind third parties, but only theprincipal and agent; however, the principal can terminate the agency contract forbreach thereof. If it is the principal that does not respect the exclusivity agreement,the agent will be entitled to receive the commission resulting from the transactionscarried out in his/her zone without his/her involvement, provided this is stipulated inthe contract.