The commission agreement is an agreement under which the first party (commission agent), on behalf of the principal (second party), undertakes to make one or more transactions for a fee at the expense of the principal, but on its own behalf.
The legislation allows on the basis of a contract agreement to conclude various types of transactions, for example, supply contracts. This may be multilateral transactions aimed at creating obligations that are executed without the participation of the principal, but the result of their execution can be transferred to this person.
The contract of the Civil Code Commission provides for the following duties of the commission agent. This party undertakes to execute the order on the most favorable terms for the principal in accordance with his requirements and instructions.
The commission agent is also obliged to fulfill obligations and exercise the rights that arise from transactions with third parties concluded in fulfillment of the contract. This party is not responsible for the non-execution of the transaction concluded at the expense of the principal by third parties, but he must immediately inform the principal if the transaction is not executed. In addition, the commission agent is obliged to collect all evidence and, at the request of the principal, to transfer the rights under this transaction, observing the rules for assignment of the claim.
When executing the order, the commission agent submits a report to the principal and gives him everything that was received. The commission agreement may stipulate the period during which the money or commodity values received must be transferred (transferred) to the principal, and also assign him the right to familiarize himself with the documents of the commission agent for the execution of the agreement. In determining the deadline for submitting the report, as well as the documents attached to it, one should be guided by the legal regulatory acts governing accounting and taxation.
Under the agreement, the commission agent has the right to withhold from all the amounts received at the expense of the principal, the funds due to him for the fulfillment of obligations.
The contract of the commission under the STS provides for the obligations of the principal. He must pay remuneration to the commissioner according to the agreement, and in cases where he has vouched for the transaction by a third party (delcreder), pay an additional bonus in the manner and amount established in the contract.
The essence of the delcredere is that under the agreement the commission agent becomes the guarantor of the person with whom the agreement is concluded on behalf of the principal. If the terms of the transaction are not fulfilled by a third party, the commission agent will be liable. If the contract was not executed due to the fault of the principal, then he must reimburse the commission agent for all expenses incurred and pay a fee on the commission.
Also, the obligations of the principal include the reimbursement of the amounts spent by the commission agent for the execution of orders. If there are no clear criteria for the separation of sales-related costs, it is advisable to clearly state them in the contract.
The principal is obliged to accept the execution by agreement, namely: to receive from the commission agent everything that has been performed, to inspect the acquired property, and also to notify him of the shortcomings found in the received property.
The commission agreement obliges the principal, if there are any objections, to inform the commissioner about them within a month from the moment of receipt of the report, unless the parties specify a different term in the agreement.
The main feature that this document contains is that the commission agent, when making a transaction with a third party, simultaneously acquires rights and obligations - even with the participation of the principal in direct relations with the third party.