Principal in an agency agreement - rights and obligations

Agency agreement - legal basis, structure

The rules for concluding an agency agreement and the procedure for its application in practice are regulated by the provisions of Chapter 52 of the Civil Code of the Russian Federation.
According to the provisions of Art. 1005 of the Civil Code, an agency agreement is an agreement in which one party (the agent), on behalf of the second party (the principal), undertakes to perform certain actions in its interests. In this case, actions can be performed on behalf of both the agent and the principal, but in any case the second finances them. Thus, within the meaning of Art. 1005 of the Civil Code of the Russian Federation in an agency agreement, the principal is a party, in order to satisfy whose interests the other party undertakes to perform the actions specified in the agreement. An agency agreement may have the following structure:

1. Introductory part, which includes:

• name of the document and date of its preparation;
• Full name or official name of the persons entering into the agreement.

1. The main part, which indicates:

• subject of the contract;
• rights and obligations of the parties to the contract;
• deadlines for fulfilling the terms of the agreement;
• deadlines for submitting reports on the results of work performed;
• the procedure for making payments between the parties (this is a paid agreement, you can read about the procedure for paying remuneration here);
• settlement of disputes;
• confidentiality terms;
• other conditions that may be important when concluding a contract of a certain type.

1. The final part, which contains:

• an indication of the possibility of applying legal norms when resolving issues not regulated by the agreement;
• the number of drawn up copies of the contract that have legal force;
• details and signatures of the parties entering into the agreement.

Agent's criminal liability

In some cases, it is possible to be held accountable under the Criminal Code of the Russian Federation. This includes theft of the principal’s property, associated with abuse of trust, misappropriation or embezzlement of his property, disclosure of trade secrets, etc.

Let us give an example when, in addition to civil liability, criminal liability also arises:

An agency agreement was concluded between the bank and the brokerage agency, according to which the contractor undertakes to attract clients to obtain loans, maintain records, conduct large-scale advertising campaigns, and advise on commercial and legal issues. The Agency was provided with copies of internal documents of the financial institution, required for the performance of duties and representing a trade secret.

Subsequently, the founder of the agency sold the information to another bank in order to make a profit. This act is qualified under Part 3 of Art. 183 of the Criminal Code of the Russian Federation.

Parties to the agency agreement

Based on the above definition of an agency agreement, we can conclude that its parties are:

1. An agent is a executor of the terms of the transaction, acting in the interests of the customer.
2. The principal is the orderer of certain actions that the performing agent must perform.

Responsibility for the results obtained as a result of the agent’s execution of the principal’s instructions rests with the latter, since it is he who will have the status of their owner. If it turns out that the agent did not have sufficient experience or knowledge to solve the task assigned to him or deliberately abused the powers granted to him, the principal may file a claim in court to recover material damages or other types of compensation.

Nuances when preparing a report

The agent's report can be prepared either printed or handwritten, on letterhead or on a regular A4 sheet.

The main condition here is that it contains a “live” signature of a representative of the agent company (after receiving its copy, the second party must also endorse the document).

It is not necessary to certify report forms using stamps, because from 2021, commercial companies (enterprises and organizations) can use various types of stamps in their activities only when this norm is enshrined in their local regulations.

This report is always generated in two copies , one of which remains with the agent, the second is transferred to the partner organization.

Who can be a party to an agency agreement?

The legislator does not establish certain requirements for the status of persons who are parties to agency agreements, and does not limit the rights of individual entrepreneurs and individuals (how to conclude an agency agreement with an individual, you can read here) who are not registered as the owner of their own business, to conclude agency agreements. That is why an agent can be either an organization or an individual who does not have the status of an entrepreneur and is not an employee of the principal.

According to the provisions of paragraph 1 of Art. 226 of the Tax Code of the Russian Federation, in the latter case, the principal who has entered into an agency agreement with such a person is recognized as his tax agent. On this basis, he acquires the obligation to withhold personal income tax from the funds earned (clauses 4 and 6 of Article 226 of the Tax Code of the Russian Federation).

You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

The principal in an agency agreement can also be a legal entity or an individual. Legal practice that has developed in the field of contractual relations shows that in both cases it is possible to interact with both companies and citizens registered as individual entrepreneurs.

Preparing an agency report: what to pay attention to?

Depending on the content of specific legal relations involving the agent and the principal, the report may also include:

1. The serial number of the document within a series of reports, if the contract provides for the provision of interim reports during the agent’s work.

4. Information about the amount of the agent's remuneration. Usually they are included in the report if the document contains an agreement column with the principal. By putting a signature on it, the principal certifies his agreement with the reward.

5. Information about the agent’s mutual debts at the time of drawing up the report (if any).

You can download the completed agent report form on our website using the link below.

If in an agency agreement the principal is an individual

An example of an agency agreement in which an individual acts as a principal is:

• an agreement concluded between a tourist and a travel agency - a company that sells the product offered by tour operators (principal - an individual, agent - a legal entity);
• an agreement concluded between the buyer of an apartment and a realtor who provides services for selecting housing according to specified criteria and performs subsequent support of the purchase and sale transaction (principal - an individual, agent - an individual with the status of an individual entrepreneur).

The advantages of concluding this type of agreement for an individual as a principal is the opportunity to save effort and time on solving any problem. After all, agents have the necessary knowledge and skills that allow them to use resources as efficiently as possible to fulfill the terms of the contract.

The disadvantages of involving an intermediary in solving a certain type of problem are:

1. The risk of obtaining a result that does not meet the stated requirements.
2. The need to monitor the agent’s progress in fulfilling his duties.

Correcting errors in the report

Both the agent and the principal need to properly prepare the report. The customer has the right not to accept the document if any defects are found in it. In this case, they must draw up a protocol of objections to the agency report, indicating a detailed list of errors.

If within a month the agent does not receive any objections from the principal, the report is considered to be accepted (according to civil law). The rule is general and applies by default. But it is also possible to set a different deadline by agreement of the parties.

If a protocol of objections is received within the allotted time, the agent must redo his report again. Or it is possible to make changes to both copies. They are then certified by both parties. It is also necessary to record the date of amendments.

Taxation of income received by the principal - an individual

In some cases, the principal, who has the status of an individual, may receive a certain amount of funds based on the results of the agent’s fulfillment of his obligations. An example of such a situation would be the conclusion of an agreement between a real estate agency and the owner of an apartment to rent it out. The income received by the owner of the property from the rental of such housing is subject to income tax, the amount of which is 13% of the amount of money paid by the tenant. In this case, the question arises: should the agent withhold this tax from the principal?

The person from whom the landlord receives funds is the tenant of the residential premises. Based on the provisions of sub. 1 clause 1 art. 228 of the Tax Code of the Russian Federation, the obligation to calculate and pay tax on income received from an organization or individual who is not a tax agent is assigned to the person who received such income.

A real estate agency, acting as an intermediary between the landlord and the tenant, is not a source of income, does not have the status of a tax agent and, as a result, does not assume obligations for the calculation and payment of tax. The remuneration received by the agent from the principal for the performance of the duties assigned to him is taxed in accordance with the tax system chosen by him.

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Is it possible to do without a trial?

If the agent’s act does not contain a crime and the contract provides for the possibility of pre-trial settlement of disagreements, the parties can resolve the problem peacefully: the agent compensates the customer for the full amount of damage, and also pays a fine (if penalties are provided).

Let's consider an example when the principal and the contractor manage to solve the problem peacefully:

An agency agreement was drawn up between the insurance company and the bank, according to which the latter undertakes to sell policies to citizens, keep records and transfer insurance premiums to the principal for each concluded contract.

The agent violated the obligation to transfer insurance premiums, which was discovered by the customer. After submitting a written demand, the bank had to pay premiums and an additional 0.1% of the debt amount for each day of delay to the principal’s current account.

After the agent fulfilled his obligations and paid the penalty, the contract did not terminate.

Rights of the principal under an agency agreement

Civil legislation establishes a list of rights and obligations of the principal, the scope of which depends on the type of agreement being concluded and the conditions it contains.

Based on current legislative norms, when executing an agency agreement, the principal has the right to:

1. Instruct the agent to perform legal and other actions (actual) to the extent established by the provisions of the agreement (Article 1005 of the Civil Code of the Russian Federation).
2. Require the agent to submit a report on the work he has performed (clause 1 of Article 1008 of the Civil Code of the Russian Federation).
3. Require the agent to provide documentary evidence of the fact of spending the funds withheld by him from the principal, unless otherwise established by the provisions of the concluded agreement (Clause 2 of Article 1008 of the Civil Code of the Russian Federation).
4. Submit to the agent objections to the report drawn up by him within 30 days from the date of receipt of such a report, unless the provisions of the concluded agreement provide for other deadlines for the submission of objections (failure to submit such objections entails the recognition of the report as accepted, in accordance with clause 3 of Article 1008 of the Civil Code of the Russian Federation).
5. Refuse to execute the contract, provided that its provisions do not establish the exact period of its validity (Article 1010 of the Civil Code of the Russian Federation).

In addition, Art. 1007 of the Civil Code of the Russian Federation indicates that the concluded agreement may limit the rights and obligations of its parties. In particular, the principal has the right to prohibit the agent from interacting with other principals in the agency agreement - this follows from the provisions of paragraph 2 of this article.

Agent's liability

If everything is clear with the responsibility of the principal (he undertakes to provide the contractor with all the means to fulfill his obligations and pay the remuneration on time), then the responsibility under the agency agreement of the agent himself raises many questions.

Non-fulfillment or improper fulfillment of contractual obligations is regulated by the Civil Code of the Russian Federation:

The law allows the parties to independently establish liability for obligations, but it must be specified in the agreement between the principal and the agent. The latter, if he fails to fulfill his duties, is liable to third parties if he acts on his own behalf.

Example

The travel agency has entered into an agreement with the airline, according to which it must act on its own behalf when selling tickets. The client buys a ticket for a flight, but the plane does not depart on the specified date and there is a delay of 24 hours. Subsequently, the client contacted the travel agency with a claim and a petition for compensation in the amount of 10 thousand rubles. for moral damage.

Here the travel agency will be responsible to the client, but subsequently it can claim the losses incurred from the carrier, since it was as a result of his actions that the damage was caused.

Obligations of the principal (general provisions)

In addition to the rights listed above, the principal is assigned certain responsibilities that he bears in the course of fulfilling the terms of the current agreement.

To them, in accordance with the provisions of Art. 1006 of the Civil Code of the Russian Federation, include:

• payment to the agent of remuneration in the amount fixed by the provisions of the document (if the amount of payment is not established by the agreement, it is determined based on the average market value);
• compliance with the deadlines for payment of remuneration, if established by the provisions of the contract. Otherwise, you will have to pay the agent no later than a week after he submits a report on the results of activities for the past working period.

In addition, the principal, in accordance with the provisions of Art. 1007 of the Civil Code of the Russian Federation, may acquire additional obligations, if any are provided for by the concluded agreement. Thus, the provisions of the document may oblige him:

• do not enter into similar agreements with other agents in the territory specified by the agreement;
• refrain from independently performing actions constituting the subject of the contract in this territory.

Procedure for collecting agency fees

Payment of agency fees is the responsibility of the principal. In the absence of payments, the procedure for collecting agency fees is recommended to be structured as follows:

1. Establish the reason for non-payment of remuneration . There are a great many reasons why a party to a contract does not want to make payment and, first of all, it is necessary to establish a specific one.
2. Notify the principal about the debt . The agent should name the exact amount he is claiming and justify its amount.
3. Sending an official request for payment of remuneration . In a written claim, you should state a demand not only for payment of the amount owed, but also for the penalty incurred in connection with the delay in fulfilling the obligation.
4. Going to court . If the counterparty does not cooperate, then it is necessary to seek legal protection. In the statement of claim, in addition to the amount of the principal debt and the penalty, we add court costs and the amount of the state duty paid.
5. Enforcement of a judicial act . After a court decision has entered into legal force, which has not been executed by the losing party, it is necessary to obtain a writ of execution for its subsequent presentation to the debtor’s bank or bailiff service to initiate enforcement proceedings.

Obligations of the principal as a party to the agency agreement

In the event that the actions performed by the agent entail the emergence of rights and obligations not for him, but for the principal, their relationship is regulated by the provisions of Chapter. 49 of the Civil Code of the Russian Federation, which defines the rules for applying the agency agreement (Article 1011 of the Civil Code of the Russian Federation).

According to the provisions of Art. 975 of the Civil Code of the Russian Federation, the principal (aka the principal) is obliged (unless otherwise established by the provisions of the concluded agreement):

1. Reimburse the costs incurred by the contractor in the course of performing the task assigned to him.
2. Provide the contractor with the means necessary to complete the task.
3. Accept the result of the work performed by the performer.

How often should such a report be completed?

The agency agreement must contain a written statement from the outset as to how often the agent will submit reports.

(according to Article 1008 of the Civil Code of the Russian Federation). This issue is resolved by agreement of the parties. For example, it could be a month or a quarter.

It is worth paying attention to what taxation system is used

each of the parties to the concluded agreement. If there is no report, it will be impossible to calculate taxes and advance payments.

Another important factor is the frequency with which the agent performs the actions assigned by the customer.

If the contract contains numerous transactions, reporting may become a weekly task. Or even daily. It all depends on what kind of agreement suits both parties.

If the agreement does not indicate the deadline for submitting the agency report

, then in this case it is necessary to draw up an agreement in accordance with Article 1008 of the Civil Code of the Russian Federation. That is, as the order is executed - for example, if it is a batch purchase of goods. Or after the contract is completed.