Agency Agreement

An Agency Agreement in Hong Kong is a legally binding contract in which one party (the principal) authorizes another (the agent) to act on its behalf in a business context. The agent may negotiate deals, market services, collect payments, or perform specific functions within the scope of authority granted.
The relationship must be clearly defined to avoid misrepresentation or liability, especially when the agent is dealing with third parties. According to the Hong Kong Companies Registry, all business arrangements involving local agents should be backed by proper documentation.

A comprehensive Agency Agreement in Hong Kong includes the following key clauses:

Agents in Hong Kong are expected to act honestly, in good faith, and in accordance with the principal’s instructions. Key responsibilities include:

In return, the agent has the right to earn commissions. Working with an external expert or market entry consultant? Download the Consulting Agreement to define clear deliverables, confidentiality obligations, and payment terms for business advisors.

Commission structures in Hong Kong vary based on the nature of the agency business. Typically, the agreement outlines the commission percentage either fixed or based on a tiered system depending on performance. It also defines whether the commission is calculated on gross or net sales figures. Most contracts specify a payment frequency, such as monthly or quarterly, and include a clear deadline for payments, often within 30 days of issuing an invoice.

In Hong Kong, commissions earned under an Agency Agreement are generally taxed as business income, and agents must comply with local tax obligations. It is critical that the agreement sets out a transparent process for resolving commission-related disputes, such as disagreements over returned products, delayed payments, or discrepancies in sales calculations.

Yes, a foreign company can appoint a local agent in Hong Kong without needing to register a local branch. This is a common practice to test the Hong Kong market before committing to a direct presence.
The agency relationship must be established through a valid written contract. For foreign companies appointing a local agent, it’s recommended to consult the InvestHK guide on market entry and agency partnerships. Planning to establish a deeper, equity-based collaboration with your local agent? Download the Partnership Agreement to define capital contributions, profit sharing, and long-term governance terms under Hong Kong law.

Termination clauses should be clear and follow the terms defined in the contract. In general:

Written notice should be delivered through a traceable method (email, courier, registered mail). Upon termination, all intellectual property and confidential materials must be returned.

If an agent fails to fulfill their duties or acts beyond their authorized scope, the principal has several legal remedies under Hong Kong law. The principal may terminate the agreement for cause, withhold any unpaid commissions, and seek compensation for any damages or financial losses resulting from the breach. These remedies are especially important if the breach impacts client relationships or leads to reputational harm.

In cases where the breach involves the misuse of confidential information or unauthorized dealings, the principal can pursue injunctive relief or legal damages through the Hong Kong courts, as supported by procedures outlined on the Hong Kong Judiciary website. Most Agency Agreements should include a 30-day cure period, giving the agent the opportunity to rectify the breach before the contract is officially terminated unless the violation is severe or causes irreparable harm.

In most cases, an agent cannot represent multiple principals if it creates a conflict of interest or violates exclusivity terms. However, non-exclusive agents may be allowed to represent others if:

To avoid legal risk, the Agency Agreement should clearly state whether the agent is exclusive or non-exclusive, and whether multi-representation is permitted.

Yes, under Hong Kong law, a principal may be held liable for an agent’s actions if the agent was acting within their authorized scope. This is known as “vicarious liability.”
To minimize this risk, the principal should include strong contractual safeguards and regularly monitor the agent’s activities.

The principal is generally not liable for actions outside the agent’s authority or for illegal acts committed without consent.

An Agency Agreement is essential for any company local or foreign doing business through representatives in Hong Kong. It clarifies duties, minimizes legal exposure, and protects your brand and commercial interests. If you need a professional, legally compliant agreement tailored to Hong Kong regulations, Themis Partner provides Agency Agreement templates and custom drafting services to suit your business model. Download your Agency Agreement today and ensure your commercial relationships in Hong Kong are legally sound and strategically protected.