Agency Agreement under Swiss Law: What You Need to Know

If you are planning to conduct business in Switzerland, it is essential to understand the local laws and regulations that govern your business activities. One such crucial aspect of doing business in Switzerland is the agency agreement.

An agency agreement is a legally binding contract between two parties, namely the principal and the agent. The principal is the party that hires the agent to perform various tasks on their behalf, while the agent is the party that accepts the role and undertakes the responsibilities assigned to him or her.

Under Swiss law, agency agreements are governed by the Swiss Code of Obligations (CO). The CO defines an agency agreement as a contract in which one party, the agent, undertakes to act as an intermediary for another party, the principal, in concluding contracts or transactions with third parties.

When drafting an agency agreement in Switzerland, there are specific legal requirements that must be met to ensure that the agreement is enforceable. These requirements include:

1. A written agreement: Swiss law requires that agency agreements be made in writing to be enforceable. Oral agreements are not valid, and parties must sign a written agreement that outlines the terms and conditions of the agency arrangement.

2. Clear roles and responsibilities: The agency agreement must clearly define the roles and responsibilities of both parties. The principal must specify the tasks and activities that the agent is authorized to perform on their behalf, while the agent must understand their obligations and limitations under the agreement.

3. Exclusive or non-exclusive: The agency agreement must specify whether the agent is an exclusive or non-exclusive representative of the principal. An exclusive agreement means that the agent is the only representative of the principal in a particular market or territory, while a non-exclusive agreement allows the principal to engage multiple agents.

4. Duration and termination: The agency agreement should include a duration clause that specifies the length of the agreement and the conditions for renewing or terminating it. Also, the agreement should specify the termination rights and obligations of both parties in case of a breach of contract.

5. Compensation and expenses: The agency agreement should clearly define the compensation and expenses that the agent is entitled to receive. The agreement should specify the commission or fee structure, as well as any reimbursable expenses that the agent may incur while performing their duties.

In conclusion, an agency agreement is an essential legal document that governs the relationship between the principal and the agent in doing business in Switzerland. As a business owner, it is crucial to understand the legal framework for agency agreements under Swiss law and ensure that your agreement meets all the necessary legal requirements. A well-drafted agency agreement will protect your business interests and help you navigate the complexities of doing business in Switzerland.