Commercial Agents are defined as self employed intermediaries who have 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.
Where the Regulations apply they would apply even if the agreement is entirely oral and accordingly the Agent in such circumstances is still protected by the Regulations.
Many agreements are for an indefinite period and there is often no provision that it is for any set period. In such cases the Regulations provide for minimum periods of notice which are as follows:-
- One month for the first year of the contract
- Two months for the second year
- Three years and subsequently the notice period is 3 months
The reason for termination is crucial when the question of compensation is assessed.
Compensation is not payable where the Principal has justifiably terminated the agreement because of default of the Agent or where the Agent himself terminates the agency except where he justifiably terminates it e.g. in circumstances similar to constructive dismissal or due to age or ill health. Also compensation cannot be claimed when rights and duties under the contract are assigned to another person with the consent of the Principal.
When the agreement is terminated, the Agent may be entitled to certain money claims which are as follows:-
- He is entitled to commission up to the date of termination and for a reasonable period thereafter
- He may also be entitled to damages along the lines of a wrongful dismissal claim in Employment Law if proper notice was not given under his contract
- He will be able to claim either compensation or an indemnity
The difference between payment on an indemnity or compensation basis is as set out below:-
Payment on an indemnity basis is limited to one year’s income i.e. the average annual remuneration over a period of time. Payment on a compensation basis can mean that the calculation is assessed on more than one years income. Where nothing is stated in the contract, or the contract is oral, then the Regulations state that the compensation basis shall apply.
Claims under the Regulations must be made within one year of the termination of the contract, by notification to the Principal of the intendion of making a claim. It is not provided that such notification should be in writing, nor that legal proceedings actually have to be instituted in that time.
Finally, the Regulations make provisions for Commercial Agents in respect of restraint of trade clauses. They provide that such clauses are valid only if in writing and relate to the relevant geographical area, group of customers and goods. They must not last for more than two years to be valid under the Regulations, but this does not mean that if they are for less than two years, that they still cannot be challenged in the courts.
We are a firm of solicitors that specialises in this area of law. We are able to pursue or negotiate a claim on your behalf and can provide you with representation anywhere in the United Kingdom. We are regulated by the Law Society and we combine unrivalled experience and expertise.
We offer an initial free consultation for advice. If after talking to us you decide not to take matters further you are under no obligation to do so and you will not be charged for our initial advice session. If you would like a free assessment of the merits of your case without further obligation, please contact us on 020 7408 1338.
