How to Prepare an Efficient Intermediation Contract for Your Business
Updated: May 16
The intermediation contract plays a crucial role in facilitating commercial relationships between parties seeking the expertise of a professional to achieve specific outcomes. A well-drafted intermediation contract provides a conducive framework for developing commercial partnerships, wherein the beneficiary delegates the responsibility for achieving certain business targets to an external professional. From setting objectives and delivery timelines to protecting the rights and responsibilities of the parties involved, an intermediation contract can catalyze the attainment of significant business results.
However, preparing an efficient intermediation contract can be a complex task. Like other commercial contracts, the key to success lies in a proper understanding of the industry in which the intermediation will take place and the specific nature of the business using intermediation services.
If you are the beneficiary of the services, it's essential to ensure that all key aspects of your business are communicated to the intermediary and adequately covered in the intermediation contract. You wouldn't want to find out a few months after signing the contract that the progress made does not align with your objectives.
If you are the service provider, it's crucial to understand your client's objectives. Most clients know what results they want to achieve but often communicate them inadequately to external professionals. While it's not your fault as an agent, it's essential to convey this to the client when discussing the commission from the intermediation contract. Alternatively, avoid such situations by including contractual clauses that fully and comprehensively describe the standards and outcomes sought by your client.
In this article, we will guide you through the process of preparing an efficient intermediation contract, whether you are the beneficiary or the service provider of intermediary services. We will explore the key elements to include in the intermediary contract and provide practical tips to ensure that the intermediary relationship is well-defined, and the interests of the parties involved are adequately protected.
1. When to Use an Intermediation Contract Template?
An intermediation contract establishes the rights and obligations between a party seeking intermediation services and the agent or broker providing these services. Typically, intermediation contracts are used in areas such as real estate transactions, insurance, international trade, or recruitment of personnel.
2. Essential Clauses in the Intermediation Contract Template
A well-drafted intermediation contract is essential to protect the interests of both the beneficiary and the service provider. The contract model used should provide clarity on the rights and responsibilities of both parties and set expectations regarding intermediation services.
An efficient intermediation contract should be balanced and reasonable when outlining the rights and obligations of the parties, considering that the achievement of the final result depends not only on the professionalism of the agent but also on how the client communicates requirements or market developments. The intermediation contract should be clear and easily understandable, avoiding complicated legal terminology to prevent any ambiguity or misinterpretation.
To ensure that you are using a well-prepared intermediation contract, check if you have included the following categories of contractual provisions:
Scope of work. Clearly specify the objectives and expectations that the intermediary professional commits to providing and the outcomes the beneficiary wishes to achieve.
Possible objectives in an intermediation contract may include identifying potential clients, negotiating contracts on behalf of the beneficiary, identifying goods or services for purchase, providing consultancy in the beneficiary's specific field, or identifying business or development opportunities for the beneficiary.
In some situations, you may use other contracts, such as service agreements, consulting contracts, collaboration agreements, or partnership agreements, instead of an intermediary contract.
Terms and conditions for service delivery. Ensure that the terms and conditions under which the intermediary professional will conduct their activities are detailed. This may include deadlines for achieving the requested result and the ways in which they have the right to act on behalf of your business.
Check our blog for common mistakes made in contracts and how to avoid them.
Criteria and standards for achieving the results. The intermediation contract should contain sufficient information about the outcomes the beneficiary wants to achieve. For example, in contracts for personnel recruitment, the beneficiary should specify requirements regarding professional training, education, and experience of potential candidates.
Commissions and payment methods. Establish the method for calculating the commission paid by the beneficiary to the agent in exchange for intermediation services. Include payment methods, payment frequency, deadlines, and billing methods.
Confidentiality requirements. If your business involves confidential information, ensure that the intermediary contract includes confidentiality clauses. These clauses will protect sensitive information exchanged between parties and indicate to the agent which information cannot be disclosed.
If preferred, you can separately conclude a confidentiality agreement (NDA) to protect your trade secrets and financial information.
Limitation of Liability. Through an intermediation contract, parties can establish the limits of the agent’s liability for any damages or losses incurred during the business relationship. These may include limitations on compensation paid in certain cases or types of damages that can be repaired.
Dispute Resolution. An intermediation contract should include methods for resolving disputes that may arise during the business relationship. Dispute resolution methods may include mediation, arbitration, or resorting to common court judgments. Including such a clause in the intermediary contract is even more important when the parties come from different jurisdictions to avoid a situation where it is unclear where a potential dispute will be judged.
If you are facing misunderstandings with contractual partners, you can check our section of court claims templates, or you can seek legal assistance in potential disputes.
Drafting an efficient intermediary contract requires attention to detail and a strategic approach. Here are some tips that will help you prepare an efficient intermediary contract for your business:
Clarify Your Objectives. Before starting the drafting of the contract, clarify your objectives and expectations in the relationship with the agent. This will help you include all relevant aspects in the contract and avoid any ambiguity. If your objectives are too general, the intermediation contract may not serve its purpose.
For example, if you tell the agent, "I want to buy a 3-bedroom apartment," they would reasonably be entitled to look for it anywhere in the city, regardless of price or construction type. Instead, if you specify complete criteria regarding the location, characteristics of the apartment, type of construction, positioning in relation to various landmarks, and anything else, the intermediary will know how to appropriately narrow the search.
Check the final form of the contract. After drafting the intermediation contract, make sure to review and revise it carefully. Check if all key elements are included and correct any errors or omissions. Always keep in mind that the agent is a professional in intermediation but may not know your industry as well as you do, no matter how well-intentioned they are. The client should ensure that all their objectives are correctly understood and included in the contract.
Use a professional model of intermediation contract. If you lack legal experience or if your business involves complex legal issues, use a professional model of an intermediary contract, such as the one provided by Docs & Deeds. You can find other contract templates to help manage your business.
Since the content of intermediary services varies from case to case, and the intermediary contract is a flexible one that must be adapted to the parties’ circumstances, if you are not sure you have included all necessary clauses, consult with a lawyer before signing an intermediary contract. A lawyer can provide professional assistance and guidance in properly drafting an efficient intermediary contract, and Docs & Deeds offers highly affordable prices for such services.
As intermediary, the services you provide through the intermediation contract are constantly influenced by external factors: the requirements of the beneficiary, market developments, and the requirements of third parties that may enter into contractual relationships with the beneficiary. Avoid unpleasant situations by implementing the following recommendations:
Specify what happens when you have identified an opportunity that meets the beneficiary's requirements. Practice proves that many agents professionally perform services, but beneficiaries simply refuse the result. Of course, they cannot be compelled to enter into contracts with third parties if they do not wish to or simply dislike the third party identified by the intermediary. However, the intermediary should not engage in unpaid work. As agent, ensure that the intermediation contract expressly states the performed services are considered fulfilled, regardless of whether the beneficiary decides to conclude the final contract with the third party or not.
Ensure you have established all situations in which you receive the commission. Have you encountered clients who try to bypass the intermediary and contact the third party or opportunity identified for “on their own”? They are everywhere. And it is not fair to the intermediary who invested time and resources to perform the contract. Include sufficient clauses in the intermediation contract to ensure fair compensation in case such a situation occurs.
If prevention was not enough, the good news is that we can help. Schedule a legal consultation, and a specialized lawyer will tell you what to do to be properly rewarded for your work.
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