Rights of Agent under the Commercial Agents (Council Directive) Regulations 1993 COPY Flashcards
Regulation 6 (1)
(1) In the absence of any agreement as to remuneration between the parties, a commercial agent shall be entitled to the remuneration that commercial agents appointed for the goods forming the subject of his agency contract are customarily allowed in the place where he carries on his activities and, if there is no such customary practice, a commercial agent shall be entitled to reasonable remuneration taking into account all the aspects of the transaction.
Parkes v. Esso Petroleum [1999]
What does ‘negotiate’ mean in Regulation 2 (1) definition of “commercial agents”.
MORRIT LJ gave it a wide meaning - adopted Oxford English Dictionary definition.
= ‘To deal with, manage, or conduct (a matter, affair etc., requiring some skill or consideration).
Observed that this definition therefore does not require a process of bargaining in the sense of offer, counter-offer, haggling etc.
Barret McKenzie v. Escada (UK) Ltd. [2001]
JUDGE BOWENS:
When valuing compensation for purpose of Regulation 17:
“One is valuing the agency and its connections that have been established by the agent at the time of or immediately before termination, and it is really a question of compensating the notional value of that agency in the open market”.
This was cited with approval by Lord Hoffman in Lonsdale.
Regulation 15
(1) Where an agency contract is concluded for an indefinite period either party may terminate it by notice.
(2)The period of notice shall be—
(a) 1 month for the first year of the contract;
(b) 2 months for the second year commenced;
(c) 3 months for the third year commenced and for the subsequent years;
and the parties may not agree on any shorter periods of notice.
(3) If the parties agree on longer periods than those laid down in para 2 , the period of notice to be observed by the principal must not be shorter than that to be observed by the commercial agent.
(4) Unless otherwise agreed by the parties, the end of the period of notice must coincide with the end of a calendar month.
Regulation 17
(1) Commercial agent, after termination of the agency contract, entitled to compensation or indemnity.
(2) Unless contract says otherwise, entitled to compensation instead of indemnity (English law leaves this to the parties).
(6) entitled to COMPENSATION for the damage he suffers as a result of the termination
(7) such damage shall be deemed to occur particularly when the termination takes place circumstances which—
(a) deprive the commercial agent of the commission which proper performance of the agency contract would have procured for him…
(b) have not enabled the commercial agent to amortize the costs and expenses that he had incurred in the performance of the agency contract
(8) Entitlement to the indemnity or compensation for damage shall also arise where the agency contract is terminated as a result of the death of the commercial agent.
(9) The commercial agent shall lose his entitlement to the indemnity or compensation for damage if within one year following termination of his agency contract he has not notified his principal that he intends pursuing his entitlement.
Light v. Ty Europe Ltd. [2003]
C of A held; ‘termination’ under Regulation 17 covers not only cases where a principal has put an end to the agency but also the case of an agency that has simply run its course – i.e. where the agency has terminated through pure effluxion of time.
Regulation 8
Subject to regulation 9 , a commercial agent shall be entitled to commission on commercial transactions concluded AFTER the agency contract has terminated if —
(a) the transaction is mainly attributable to his efforts during the period covered by the agency contract and if the transaction was entered into within a reasonable period after termination;
(b) the order of the third party reached the principal or the commercial agent before the agency contract terminated.
So agent may still be entitled to commission for transaction concluded even AFTER his agency has been terminated, if it can be attributed to his efforts, and not too long after.
Regulation 3
(1) In performing his activities, a commercial agent must look after the interests of his principal and act dutifully and in good faith.
(2) In particular, a commercial agent must—
(a) make proper efforts to negotiate and, where appropriate, conclude the transactions he is instructed to take care of;
(b) communicate to his principal all the necessary information available to him;
(c) comply with reasonable instructions given by his principal.
Merely restates common law, more or less, of duties AGENT owes to principal.
(Fidelity, full disclosure, skill and care) etc.
Regulation 18
Compensation under regulation 17 not payable to the commercial agent where —
(a) principal has terminated because of default attributable to the commercial agent which would justify immediate termination under Regulation 16
(b) the commercial agent has himself terminated the agency contract, unless such termination is justified—
(i) by circumstances attributable to the principal, or
(ii) on grounds of the age, infirmity or illness of the commercial agent in consequence of which he cannot reasonably be required to continue his activities; or
(c) the commercial agent, with the agreement of his principal, assigns his rights and duties under the agency contract to another person.
Lonsdale (t/a Lonsdale Agencies) v. Howard & Hallam Ltd. [2007]
Leading case on calculation of compensation under Regulation 17 - capital value of the agency approach.
Agent employed by shoe manufacturers - had accrued substantial sums in commission from selling their shoes to shoe shops, distributors etc. - but principal’s business declined so selling trademarks to a third party - agents contract terminated - Q: how much Reg. 17 compensation?
Counsel argued H of L adopt French courts’ approach - somewhat aribrary approach of awarding compensation of 2 years’ worth of commission.
H of L held; NO - this 2 year thing was aribtary and could not be deduced from the text of Regulation 17.
LORD HOFFMAN - must determine CAPITAL VALUE OF AGENCY - value what has been lost by the agent on the termination of the agency - what would the agency be worth if it was sold? (Difficult because UK doesn’t have market for selling agencies, unlike France)
Held; here, as principal’s business was ending, only entitled to £5000.
LORD HOFFMAN:
“What has to be valued is the income stream which the agency would have generated…by reference to the value of the agency on the assumption that it continued
+ including value of FUTURE EARNINGS.
+ Approved Judge Bowens in Barret McKenzie v Escada.
Regulation 4
(1) In his relations with his commercial agent a PRINCIPAL must act dutifully and in good faith.
(2) In particular, a principal must—
(a) provide his commercial agent with the necessary documentation;
(b) obtain for his commercial agent the information necessary for the performance of the agency contract and notify him within reasonable period when he anticipates volume of transactions going to be lower
(3) A principal shall, in addition, inform his commercial agent within a reasonable period of his acceptance, refusal, or non-execution off a transaction which the commercial agent has procured for him.
PRINCIPAL’s duties - big change from Ennglish common law.
Regulation 2 (2)
Provides exclusions - WHO the Regulations do NOT apply to:
(a) agents whose services are unpaid (purely gratuitous agents)
(b) agents who operate on commodity exchanges or in commodity markets
(c) Crown agents
Regulation 2 (3)
Says that the Regulations have NO APPLICATION to persons whose activities as ‘commercial agents’ are to be considered “SECONDARY”
- What is ‘secondary’ then set out in the Schedule to the Regulations.
The Schedule does not define what activities are ‘secondary’; rather sets out when they are ‘primary’ activities - so anyone perfroming functions OUTSIDE the schedule will be performing their activities as commercial agents ‘secondary’, and thus won’t be covered by the regulations.
Regulation 2 (1)
Provides definition of “commercial agent” for the purpose of the regulations.
(1) “commercial agent” means a SELF-EMPLOYED intermediary who has continuing authority to negotiate the sale or purchase of GOODS on behalf of another person (the “principal”), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal; but shall be understood as not including in particular:
(i) a person who does in his capacity as an officer of a company or association…(e.g. directors)
(ii) a partner who does so with authority to bind his partners
(iii) an insolvency practitioner
Regulation 7 (1)
(1) A commercial agent shall be entitled to commission on commercial transactions concluded during the period covered by the agency contract—
(a) where the transaction has been concluded as a result of his action; or
(b) where the transaction is concluded with a third party whom he has previously acquired as a customer for transactions of the same kind.
