When it comes to entering into agency agreements, it is vital to understand the legalities involved in such arrangements. These agreements spell out the terms of the relationship between the principal and agent and set the stage for the actions that can be taken by each party.
However, not all clauses are legal in agency agreements. In this article, we will explore which of the following would be illegal in an Illinois agency agreement.
1. Non-compete Clauses
Non-compete clauses are provisions that limit the ability of an agent to compete with the principal even after the termination of the agreement. Such clauses are usually included in agency agreements to protect the principal from the competition from the agent in the future.
However, in Illinois, non-compete clauses are tightly regulated. The Illinois Freedom to Work Act prohibits employers from entering into non-compete agreements with low-wage workers. Moreover, non-compete agreements can be enforceable only if they are reasonable in terms of geographic scope, duration, and the nature of the business.
Therefore, including non-compete clauses in an Illinois agency agreement can be illegal if they fail to meet these criteria.
2. Exclusivity Clauses
Exclusivity clauses are provisions that restrict the ability of the agent to work with any other principal in the same business. Such clauses are used to ensure that the principal is the only one who can use the agent`s services in a particular market or territory.
In Illinois, exclusivity clauses can be illegal if they violate the state`s antitrust laws. Illinois has strict antitrust laws that prohibit any agreements that restrain trade or competition. Therefore, including an exclusivity clause in an agency agreement that violates these laws can be illegal.
3. Indemnification Clauses
Indemnification clauses are provisions that require the agent to compensate the principal for any losses or damages incurred due to the agent`s actions. Such clauses can be included to protect the principal from any liability arising from the agent`s actions.
However, in Illinois, indemnification clauses can be illegal if they are too broad or one-sided. The Illinois state law prohibits any indemnification clause that requires the agent to indemnify the principal for losses caused by the principal`s own negligence or wrongdoing.
Therefore, including an indemnification clause in an Illinois agency agreement that violates this law can be illegal.
In conclusion, it is essential to understand the legalities involved in agency agreements before entering into one. Non-compete clauses, exclusivity clauses, and indemnification clauses can be illegal in Illinois if they fail to meet the criteria set by the state`s laws.
Therefore, it is crucial to consult with an experienced attorney to draft an agency agreement that complies with Illinois state laws. This can help protect both the principal and the agent and avoid any unnecessary legal disputes in the future.