Where the effect of the Regulations in Great Britain can be quite different from other jurisdictions it is important that the local effect of the Regulations is considered. The legislation provides no further guidance on how the distinction between goods and services is to be made. Compares the previous position and predicts how these provisions will be applied to agencies by the courts. Where an agency contract is entered into for an indefinite period, it will be possible it to be terminated by either party giving notice to the other, provided that the period of notice is at least one month for the first year of the contract, two months for the second year of the contract and three months for the third and subsequent years. This nation has, for decades, been using up its disposal capacity.
How other articles have been and should be applied, remains unanswered. If these periods are lengthened, the period of notice which the principal is required to give must not be shorter than that required to be given by the agent. If an agent dies, he or she has an express entitlement to compensation. Be aware that if there is any ambiguity or difference in how the contract is drafted and how it works in practice then the courts will usually construe the provisions in the agent's favour. At Gregg Latchams we have specialist expertise in the law relating to commercial agents and extensive experience of handling claims under the Regulations both on behalf of commercial agents and their principals. If you require any further information about the termination of commercial agency agreements, compensation and indemnity payments or commercial agency law generally, please contact in our on 020 7216 5562.
Again there is no clear description of what constitutes secondary activity, but the Regulations include a schedule of indicators which the English courts have found very difficult to interpret. Again, the duties that the principal has towards the agent will, in practice, often go considerably further than this, not only because of any terms which may be set out in a written contract but because of various duties which apply under common law. The United Kingdom was one of the three that did not. There is no equivalent provision for compensation payments. The purpose is to compensate the agent for the loss it will suffer as a result of the end of its relationship with the principal. He referred to British Fuels v. The agent must make his claim within 1 year after termination.
Regulation 18 also confirms that if it is the agent who terminates the contract then compensation or indemnity shall also not be payable, unless the agent has terminated the contract for a justifiable cause attributable to the principal which we suggest applies to cases where the principal has committed a fundamental breach of contract or on the grounds of age, infirmity or illness of the commercial agent which is such that the agent cannot reasonably be expected to continue their activities. The duties of the agent according to the Regulations Regulation 3 sets out the duties of a commercial agent to look after the interests of the principal and to act dutifully and in good faith. In particular, it does not provide that in such a situation the agency contract is to be treated as continuing until the expiry of the due period. The current position is that a pure referral agent can be caught by the Regulations if its role is to develop and enhance the goodwill or reputation of the principal. Where an agent dies his or her estate may make the claim. The restriction can last for no more than two years post-termination.
The indemnity payment is capped at a maximum of one year's commission, calculated based on the agent's average annual remuneration over the preceding five years or the period of the agency agreement if less than five years. The Regulations do not apply to employees, individual partners, liquidators or unpaid agents. The first part will examine those main confusions that arise from the Regulations. Unless the parties specifically agree otherwise, any such notice period must expire at the end of a calendar month. If you do not specify what commission is payable then the Regulations will provide that the agent should receive the customary amount paid to agents working on the same type of goods in the same geographical area. At first instance, the Court awarded Nagel damages for breach of contract but held that his claim under the Regulations failed because it was caught by the exception in Regulation 2 2 b. Right to a written contract Either party has the right to request a written document from the other party setting out the terms of the agency agreement.
Then these payments do not apply. Unless otherwise agreed, the first 'quarter' shall run from the date of the agreement. Some principals may be able to include agents on their group policies for employees. They bring into account new considerations for deciding whether to appoint an agent, a distributor or an employee sales or buying force. So understood, the commodity market encompasses any general trading in commodities that takes place in the open market. The amount payable for an indemnity will normally be lower than the amount of compensation payable; however, in some cases the indemnity payment can be higher, particularly in the case of new agencies. Termination The Regulations also govern the termination of agency contracts, which has been one of the most controversial aspects of the Regulations.
The Regulations introduced entirely new rights into the law and it is fair to say the Courts have, at times, struggled to fit the European principles of the Regulations within the common law system that applies here. There may be merit in stating that the agent has no rights to compensation save where the regulations apply when the principal wishes to try to place a cap on compensation payable. This is because the principal argued that if French legal principles were to be applied there was a need for expert evidence. This was critical because if termination was justified then the Principal would have avoided liability for compensation under Regulation 17. However if it is negotiating any extension or variation to the terms of the contract it may then be regarded as having continuing authority even though the authority is only in relation to the one contract. The payment under each option is calculated differently.
The difficulties that this has caused was vividly demonstrated in the recent judgement of Lord Hamilton in an interlocutory hearing in Roy v M R Pearlman Limited 10 March 1999, unreported. Commercial agents enjoy substantial legal protections which are unlike those given to employees. If the parties want the indemnity option to apply, they must state this in the contract, otherwise the default option will be a compensation payment. Other strict provisions In addition to a payment on termination, below is a summary of some of the other key provisions that cannot be opted out of to the agent's detriment: Provision Details Long-stop date for payment of commission Any commission due must be paid to the agent, at the latest, on the last day of the month following the quarter in which it became due. Duties of a principal The principal, like the agent, must act dutifully and in good faith. Again there is no clear description of what constitutes secondary activity, but the Regulations include a schedule of indicators which the English courts have found very difficult to interpret. Stating that the sum included is a genuine pre-estimate of the loss suffered by the agent may assist in enforcing such a provision.
There are a number of grey areas in the Regulations. The Regulations apply to a commercial agent not a distributor who is self-employed, having continuing authority to negotiate the sale or purchase of goods on behalf of the principal, or to negotiate and conclude such transactions on behalf of, and in the name of his principal. If the Regulations apply, an agency agreement entered into for an indefinite period can be terminated by either party on notice. Compensation This provides for the agent to be compensated for damage suffered as a result of termination. The terms of the Regulations are implied into all relevant commercial agency arrangements, whether written, oral formal or informal.
There are a number of different elements of this definition which will need to be considered when deciding whether your proposed agent will be a commercial agent. Outside scope: certain categories of agent are excluded from the scope of the Regulations including officers of companies, associations, partners and any insolvency practitioner. He must give the agent necessary information and documentation relating to the goods and the performance of the agency contract, e. Whilst no derogation from the compensation and indemnity provisions is permitted, principals can insure against some of the risks. It must be emphasised that the parties cannot during the agreement exclude these rights to compensation and indemnity. Any commission paid to an agent on such a transaction is refundable to the principal in such circumstances. It will not capture an agent who is dealing with the provision of services.