An agency agreement does not need to be in writing it can also be oral. Often, it can be advantageous for an agent to have only an oral agreement. Oral agreements are typically less extensive than written agreements and usually entail fewer agreed-upon obligations for the agent to fulfill in relation to their principal. Another advantage for agents is that oral agreements rarely include provisions regarding the applicable law and the resolution of disputes. In the absence of such provisions, EU legal provisions stipulate that Swedish law and Swedish courts shall apply provided that the agent is based in Sweden. When Swedish law applies, it is the Commercial Agents Act that becomes applicable to the parties’ cooperation.
Written agency agreements can vary. They can be formalized in more formal contract documents and consist of a couple of pages up to 30 pages. They can also consist of email correspondence where it can be inferred that the parties have agreed to an agency collaboration and the terms that should apply to the collaboration.
In cases where the agent enters into a written agreement with their principal, a shorter written agreement is often preferable to a longer and more extensive one. Typically, longer and more comprehensive agency agreements contain more burdensome and detailed contractual terms that the agent must fulfill. It is not uncommon for the agent to have a slightly weaker negotiating position than the principal and thus may have difficulty negotiating tougher contractual terms.
An advantage for both the agent and the principal of a written agency agreement is that it provides a good basis for them to discuss how the collaboration should proceed. In cases where they are interested in finding a balanced agreement that will be to both parties’ advantage, the finally negotiated agreement can be a good support for them during the term of the agreement. Another advantage is that it becomes clear to both parties what will be expected of them. A more extensive negotiation of the agreement is also a way for them to get to know each other better.
According to the Commercial Agents Act, both the agent and the principal have the right to request that an agency agreement be written down. However, it is uncommon for the parties to dispute whether an agreement should be oral or written, as the parties usually can agree on this.