Agency agreement

Agency agreements are governed by Chapter 52 of the Russian Civil Code. One party, the agent, performs legal and other actions on the instructions of the other party, the principal, and receives a fee for this. The agent may act in its own name or in the name of the principal, but always at the principal’s expense.

Where it is used in international payments

The agency model has become the main way to pay abroad when a direct transfer through your own bank does not go through. The importer signs an agreement with a payment agent. The agent pays the foreign supplier’s invoice in the required currency and reports back. The reverse route works the same way: the agent receives the proceeds from the foreign buyer and transfers them to the exporter.

What the agreement should contain

• Subject matter: which payments the agent makes and to whom.
• Procedure for payment orders: how the principal instructs the agent on each payment. See principal’s payment order.
• How the agent’s fee is calculated and which expenses it withholds.
• Execution time and liability for delay.
• Reporting: what the agent provides after the payment. See the agent’s report and completion certificate.
• Whether a sub-agent may be engaged and on what terms.

Unless the agreement states otherwise, the law allows the agent to enter into sub-agency agreements. The agent still remains liable to the principal for the sub-agent. So the sub-agent clause is worth spelling out explicitly.

How it works in a deal through a broker

The client signs an agency agreement with an agent from our pool that we selected for the payment. The execution time is written into the agreement. The exchange rate and the fee are fixed in the payment order for each payment before the roubles are debited. The agent engages a sub-agent only with the client’s consent. The broker’s fee is paid by the agent: the client does not pay VEDmost separately. More details on the How it works page.