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The Commercial Agents Regulations apply to all commercial agents who carry out their agency activities in Great Britain, where English law applies. The Regulations apply regardless of whether the agency relationship has been agreed orally or is in writing.
If the parties have agreed that the agency contract is to be governed by the law of another member state, the Regulations will not apply.
The definition of “commercial agent” is very wide.
A commercial agent includes sales agents, who have the authority of their principal to negotiate and sometimes conclude sales or purchases of goods on behalf of the principal. The commercial agent will not be a party to the sales contract with the customer and will not usually take control of the principal’s goods or take part in their delivery to the customer. An agent will be paid commissions on the sales he makes but usually has no contractual liability to his principal.
It is long established that the Regulations do not apply to an agent who is marketing the sale or purchase of services.
The protection of the Regulations is also afforded to marketing agents, who are engaged merely to develop the goodwill of their principals. Marketing agents act as a representative of the principal and carry out marketing activities for the principal to encourage sales, but they do not have the authority to bind the principal to any supply contract.
Introducing agents are also commercial agents. They are often engaged to find customers for the principal, and as with marketing agents, have no authority to enter into contractual arrangements on the principal’s behalf.
It is well-established that unless an agent falls foul of the exceptional circumstances set out in the schedule to the Regulations, they will be regarded as an agent in most circumstances.
One type of arrangement which is not caught by the Regulations is that of distributorship. A distributor is not a commercial agent. The key difference between an agent and a distributor is that in a distribution relationship the end customers are the customers of the distributor rather than of the principal. In an agency relationship the end customers are the customers of the principal.
It is critical to look at the commercial reality of the arrangement which is in place. What an agent is called or how he or she is described is not determinative of an agent’s status as a commercial agent or otherwise.
Similarly, the title to a written agreement may have some significance but is not the determining factor in whether an agent is afforded the protection of the Regulations. Often parties can become confused about their status because of the language used to describe the arrangement, and it is necessary to consider what in practice the agent is contracted to do, and the legal reality of the arrangement which is in place. It is therefore important that an agent whose agency has been terminated obtains specialist advice on whether they may be regarded as a commercial agent for the purposes of the Commercial Agents Regulations, and benefit from the protection which the Regulations afford to commercial agents in Great Britain.
As specialists in Commercial Agency Law we have significant experience in advising agents and principals.
We advise agents at all stages of their agency. We are frequently instructed by agents who are looking to enter into new agency agreements and require assistance with drafting an agency contract. We also regularly act for agents who have had their agencies terminated and are seeking an indemnity or compensation payment under the Commercial Agents Regulations. Often difficulties arise during an agency and we are instructed to advise on issues relating to territory or accounts being brought “in-house”.
The solicitors in our team are happy to discuss your circumstances without obligation. In many cases we will offer to act pursuant to a “no win, no fee” agreement (also known as a conditional fee arrangement). We understand that an agent seeking indemnity or compensation upon termination of an agency has had a major source of income removed, and we are therefore open to exploring different methods of funding to assist you with your claim.
Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.
Adam is a Partner and Head of our Commercial Litigation department
Suzanne is a Senior Associate in Myerson’s Dispute Resolution department
Lianne is an Associate in our Commercial Litigation department
Robert is an Associate in our Commercial Litigation department