Commercial agent – is a person employed by the relevant company to acquire customers. It is defined as both:
- a profession
- a business opportunity.
Commercial agents are interested in finding clients for various types of businesses. From real estate agents to oil companies. They are independent sellers whose remuneration is usually determined by the commission they charge for the volume of the product sold. It is a useful business entity, as it makes the costs of its activity dependent only on the sales value generated by it. As a result, as a company's profits increase, so does its profits, which enables it to increase the scale of its operating activity at a rapid pace. This is one of the most common forms of sales cooperation because of the above-mentioned bilateral benefits.
As mentioned above, commercial agents mainly operate on the basis of the rules for receiving commission fees. As highlighted in the literature, this type of remuneration leads to high financial results. This applies in particular to insurance agents. However, leaving such a sales model in the company also has negative consequences. Because commercial agents focus on increasing commissions, they resort to illegal market practices, thereby exposing consumers to unfair offers. Despite the increasing effectiveness of the company, its intangible value in the form of a personal brand and image is decreasing. Companies should therefore be cautious when using commissions as they expose themselves to significant intangible losses.
Principal of commercial agents
Like all professions, commercial agents also have their own code of conduct. Such rules should include in particular the obligation not to mislead them as to the scope of the offer. In addition, when representing the client, they must be empowered to undertake specific activities and should not exceed their scope. This is due to the fact that good ethics requires them to respect the legal force entrusted to them.
All goods entrusted by the trader should be used by the trader with due diligence. If the agent notices that the goods he or she offers violate any quality standards, he or she should refrain from doing so. In addition, the consequences of a breach of these rules should always come down to a deduction from the commission or termination of a contract with an agent.
The last rule is to always be considered as a customer benefit. It happens that agents establish a relationship with several different entrepreneurs. In the worst-case scenario, these are the competitors. Irrespective of the conflict of interest, they provide products of given entrepreneurs in a change depending on the commission received on a given transaction. Such action is not only consistent with the commercial agent's ethics, but may also constitute a basis for liability for damages resulting from unfair competition practices.
Finally, it is worth noting that Directive 86/653/EC stipulates that commercial agents are always entitled to receive remuneration, regardless of their performance. This is intended primarily to safeguard them from potential poverty and inefficiency in the performance of their duties.
- Jankowski A. 2015, p. 16-19
- Kimutai B. 2015, p. 20-22
- Marsden A. 2019, p. 9-14
- Jankowski A. (2015), Commission – based compensation – the factor of effectiveness or pathology determinant, "ScienceRise", nr 3
- Kimutai B. (2015), Factors influencing financial inclusion in rural Kenya: A case study of Kenya commercial bank agent outlets in Marakwet West Sub County, University of Nairobi
- Marsden A. (2019), Commercial Agents: Case and Statute Citator, Commercial Chambers
Author: Klaudia Urbańska