Clause guide
Agency Clause clause: meaning, risks, and what to negotiate
Clarifies whether either party has authority to act for or bind the other.
What it means
Agency language affects whether one party can create obligations for the other. Without clear wording, there can be disputes about authority, liability, and who is responsible for commitments made to third parties.
Common risks
- • One party may appear to have authority it should not have.
- • Third parties may assume someone can bind your business.
- • Liability can arise from unauthorized promises or actions.
What to check before signing
- • Does the clause clearly deny authority to bind the other party?
- • Are there exceptions for approved representatives?
- • Does the wording match how the relationship works in practice?
Negotiation ideas
- • State clearly that neither party is the other's agent unless expressly authorized in writing.
- • Limit authority to named individuals where necessary.
- • Avoid vague wording that implies broad authority.
Example clause
“Nothing in this Agreement creates any agency, partnership, or joint venture between the parties, and neither party has authority to bind the other except as expressly agreed in writing.”
Frequently asked questions
What is an agency clause?
It is a clause that says whether one party can act on behalf of or legally bind the other.
Related clauses
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