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Implementing legislation

Under local legislation there are no specific laws governing agency agreements. Each agreement is subject to its own terms and conditions, as well as to the general regulations and principles applicable to contracts under the Argentine Civil Code.

While in the past some court precedents and authors considered that the rules on “mandates” were applicable to agents, more recent cases and authors have considered the agency agreement as a separate type of contract, to be governed, inter alia, by the rules selected by the parties, the purpose of the transaction and the commercial usages.

Definition of Commercial Agent

Argentine courts have ruled that an agency agreement would exist when a party (the agent) firmly assumes the obligation to promote, on behalf of the other party (the principal) and through the payment of a retribution, the closing of agreements on behalf of the principal within a determined geographic area, developing its activity independently, unilaterally and in an autonomous way, being only bound by the contractual clauses agreed upon by the parties to the agreement. It has also been ruled that, unless otherwise agreed, the agent would not be a representative of the principal.

The Project for a Unified Civil and Commercial Code defines the agency agreement as an agreement whereby a party (agent) assumes to promote business on behalf of the other (principal) in a continuous way and through the payment of a retribution. The agent is an independent intermediary. Unless otherwise agreed, the agent does not assume the risks of the business and neither is it a representative of the principal.

The agent, being either a legal entity or an individual, performs its activities autonomously and independently from the principal, and is bound by the principal through a contract that intends to bind the parties for some time. In contrast, the attorney in fact or the commissioner, limit their performance to one or more pre-determined operations. The agent is deemed as a professional since he organizes his own business structure – at his own discretion and in view of his own conveniencies - towards the development of his activity, without having to follow any kind of instructions.

Under Argentine law, the agency agreement is an atypical, onerous, bilateral, consensual, commutative and collaborative agreement.

There main types of agency agreements may be categorized as follows:

As to the representation conferred: 

(a) Agency with representation, where the principal grants a power of attorney so that the agent may enter into agreements on behalf and on account of the principal. In this case, the rights and duties arising from the agreements executed by the agent – representative are vested directly upon the principal; and

(b) Agency without representation, where there is no power of attorney, the agent limits his performance to achieve firm offers, so that the principal can close the agreements with the counterparty.As to the term of duration of the agreement

2. As to the term of duration of the agreement:

(a) For a definite period, which may or may not be automatically renewed upon expiration of the agreement, in accordance with the terms agreed upon; and

(b) For an indefinite period, this variant including a unilateral termination clause allowing either party to terminate the relationship. This right is not abusive per se, although an untimely or anti-functional use thereof, under the terms of Section 1071 of the Argentine Civil Code, may lead to a qualification of this conduct as abusive, thus giving rise to a compensation for damages.

According to local case law, agents have the following rights, defined in very broad terms: (a) to collect their fees; and (b) to exclusivity (although it has not been considered to be essential in some cases).

On the other hand, their obligations, also described in very general terms are the following: (1) cooperation with the principal; (2) loyalty and good faith in the performance of their duties; (3) respect to the instructions received from the principal; (4) rendering of accounts; and (5) no unfair competition.

Termination / Indemnity or compensation or both

Agency agreements are not specifically regulated by Argentine law and, therefore, they are subject to their own terms and conditions and to the general regulations and principles applicable to all types of agreements.

In case of a written agreement, termination will be governed by the terms of that agreement.  Should the agreement provide for a duration term and contain an early termination provision, this will govern the termination of the agreement. In the case where no early termination provision is contemplated, the parties will be subject to the general principles on anticipated termination, provided that a reasonable indemnification is paid to the other party, estimated in relation to the duration term of the contractual relationship. In such case, the non-terminating party will be entitled to an indemnification, provided that said termination was not caused by an infringement of the obligations under the agreement subject to termination.

Pursuant to Section 1201 of the Argentine Civil Code, no party to a bilateral agreement (agreement with mutual obligations for the parties) which has not complied with its own obligations may demand the termination of the agreement alleging the infringement incurred by the other party.

On the other hand, Argentine precedents set that although a party to an agency agreement may decide to terminate it, such party will be liable for the payment of past commissions owed to the agent. Therefore, the terminating party will be liable for the lack of payment thereof.

agentlaw.co.uk wishes to thank Navarro Castex Abogados in Buenos Aires for its contribution to this page

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