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Let's suppose an agent wishes to sell products on behalf of an indefinite number of principals and the principals are all direct competitors manufacturing the same kind of widgets.

How might the agent provide sufficient disclosure to receive informed consent from each principal to avoid the legal issue of secret commissions? Would it be sufficient to include some type of consent clause upfront in the agency agreement?

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    Do you mean "an indefinite number of principals"? An infinite number is not possible.
    – phoog
    Jan 26, 2023 at 0:28
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    Indefinite yes.. fixed! Jan 26, 2023 at 0:49

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An agent can't represent multiple direct competitors selling identical goods, without breaching the agent's fiduciary duty of loyalty to the principals involved. The conflict is so severe that it can't be waived.

Someone might be what is called in my part of the world a "transaction broker", a "broker", a "wholesaler", or a "consignment seller", who is not an agent for any party, and is instead an independent firm that purchases good from various manufacturers and resells those goods to third parties for this firm's own benefit, or who facilitates sales between two other parties for this firm's own benefit (rather than as an agent for either party to the sale). In financial markets, individuals known as "market makers" also act in something approximating this role.

But, the term "agency" inherently denotes a fiduciary relationship that puts the principal first, allows the agent to act on behalf of the principal, has knowledge received by the agent attributed to the principal, etc. This just can't be done. The role described in the question is not the role of an agent.

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  • My understanding is that if the agent discloses any conflict of interest and obtains the informed consent of all parties involved before negotiations start, no conflict of interest will be deemed to exist. On that basis I'm wondering if it's possible to insert language into the agency agreement prior to any relationship between the agent and principal, to reflect that disclosure and informed consent. Jan 26, 2023 at 9:47
  • Yes and no: Pannini in Germany contracts with both DC, Marvel and many smaller comic companies in the US and France, and is both selling the original English prints as well as translations, the latter with the Pannini mark added. They are both the import agency for most comics in Germany and a contracted publisher.
    – Trish
    Jan 26, 2023 at 13:05
  • @LawStudent At some point, and the example in this question reaches that point, the relationship is just too far removed from the core of what an agency relationship is to be properly described as one. Buying goods and reselling them, or facilitating purchases between two third parties is not usually an agency relationship for that reason alone. For example, Amazon.com is not an agent of the third-party vendors who sell things via its website, even though it brokers sales direct from those third-party vendors to its website visitors. Why would you want an agency relationship with these facts?
    – ohwilleke
    Jan 26, 2023 at 15:16
  • An agency agreement allows for the agent to sell products on behalf of the principal and create legal relations with third parties, without the need to buy and resell goods like a distributor, or only to facilitate legal relations like a broker. Is there a better type of terminology (instead of agent-principal) or agreement you would suggest for this scenario? Jan 27, 2023 at 0:24
  • If the agent wants to also negotiate exclusivity for certain products and/or territories of the principal, an agency agreement seems like the best fit, except for the potential conflict of interest of acting for one or more principals that are direct competitors manufacturing the same kind of widgets. That's why I'm unsure if some kind of general disclosure by the agent and consent from the principal in the agency agreement would suffice to avoid any question about secret commissions? Jan 27, 2023 at 0:25

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