The Distinction between a Commercial Agent and a Commission Agent in Ethiopia

The Distinction between a Commercial Agent and a Commission Agent in Ethiopia

Both commercial and commission agents are traders that need commercial registration and licensing to operate in Ethiopia according to the Commercial Code, the Commercial Registration and Business Licensing Proclamation No. 980/2016, and the Directive to Provide for Commercial Registration, Licensing, and Post-licensing Inspection, Directive No. 935/2022.

A commercial agent represents the trader in a specified area of trade. Usually, a commercial agent is engaged in activities on behalf of the principal including promoting the products of the company, participating in international tenders legally representing the company and follow-up performances, and executing contracts on behalf of the company he represents. This makes a commercial agent different from a commission agent. A commission agent is involved only in selling and buying goods whereas a commercial agent is engaged in many other activities involving the commercial life of the principal. The scope of power of a commercial agent, therefore, is broader than a commission agent.

Peculiar Features of Commission Agency

A commission agency is a special type of agency relationship with distinct features from an ordinary agency relationship. Some of the peculiar features of a commission agent include the following:

• A commission agent is a trader as per Articles 5(34) and 58 of the Commercial Code.
• The basic requirement in an agency relationship is acting in the name of the principal. But the most important feature of a commission agent (to buy or sell) is the fact that the agent acts in his/her own name. Thus, it’s an exception for a general rule of name test.
• Remuneration for a commission agent is presumed even when parties fail to agree on whether it is payable or not.
• Termination of commission agency is different from the termination of ordinary agency in the sense that the death, incapacity, absence, or bankruptcy of the agent/principal or both in principle does not automatically end the agreement. The termination emanates only when the heirs of the principal or commission agent do not like to take over the duties or rights in the relationship.

Disclaimer: The views and opinions expressed do not reflect the official policy or position of DABLO. The writing is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation.