6. What if I need to use a middleman (such as an agent) to act on my behalf to negotiate for business or enter into contracts with others. What should I be aware of in such kinds of business dealings?

6. What if I need to use a middleman (such as an agent) to act on my behalf to negotiate for business or enter into contracts with others. What should I be aware of in such kinds of business dealings?

When a person or company sells products through sales agents, that person or company (as the principal) is liable for any contracts that are entered into by its agents, and may be sued on these contracts. The agent, who is not a party to the contracts, is generally not bound by the contracts between the principal and the other party. However, the agent may be personally liable if he acted without the necessary authority (did not act according to the principal's instruction).

The duties of the agent towards the principal include acting in accordance with the principal's instructions with due care and skill, avoiding conflicts of interest, keeping confidential all aspects of the principal's business affairs (in particular avoiding the disclosure of confidential information to competitors), keeping proper accounts and disclosing any personal interest that might influence the principal in making the contract of agency.

The duties of the principal towards the agent include paying the agreed remuneration (or the amount that the services are worth if not expressly stated in the agency contract), and indemnifying the agent for all liabilities and out-of pocket expenses that are reasonably incurred during the course of carrying out the agent's duties, unless such expenses are expressly excluded in the contract of agency.