Q’s and A’s on Agency Law – DOUBLE LENGTH combined for months of November 2014 and December 2014

No, being paid a retainer (whether that be - for example - as a basic amount of remuneration whilst an agency is developing, or (as another example) so as to ensure that you receive a not less than amount of money in return for your services) would not mean that you were therefore outside the scope of the 1993 legislation, and I in fact come across many agents who are paid in just such a way. If of course (however) you are not only paid a retainer but there are other aspects of your relationship with your principal, which other aspects (taken individually and together) may suggest that you are ultimately not to be regarded as being (for the purposes of the Regulations:-) a “commercial agent” (i.e.:- as defined), then the fact of the retainer payment may then be viewed differently. However, and as I say, of and by itself, the payment of a retainer is unlikely to be significantly important from a legal analysis perspective.

Yes, most certainly, as the notice period is very much a period which happens (obviously) during the term of the agency, and is thus merely that time span during which both parties are aware and acknowledge that the relationship is shortly thereafter coming to an end. Further to the above, the requirement in respect to an indemnity claim (as per Regulation 17(3)(a)) to assess the value going forward of the business introduced by the agent either from new customers or (increased business) from existing customers, is, in part, very much referable to the entire agency relationship, which relationship ordinarily ends (and to reiterate:-) not with the date of the termination notice, but with the end of the actual notice period.

Whereas Regulation 18(b)(ii) (in providing that:- an agent may be entitled to compensation/an indemnity where he himself has terminated the agency contract on the grounds of his age, his infirmity or illness in consequence of which he cannot reasonably be required to continue his activities) broadly deals with this situation, there is however no stipulation (within that or any other section of the legislation) as to whether being any particular age is “old enough” (i.e.:- for the purposes of then being able to establish a claim for compensation/an indemnity) and, in the absence of there being also any specific contractual clause dealing with this situation (and which clause might therefore set out what maybe a valid provision which the parties may have agreed more clearly between themselves), it is apparent that first retiring and then pursuing any entitlement to appropriate compensation can be a very risky process and so that I would therefore not advocate that you go about what you want to achieve, in that manner. Instead, we would advise you to pursue a relatively less risky way of approaching this situation, which completely different approach we can discuss with you and (crucially) does not involve you in actually serving notice of retirement as the first step.

On the basis that you can show, firstly, that the relevant sale was (a) predominantly (or “mainly attributable”) as a result of your previous efforts, and (b) concluded within a reasonable period following termination of the agency, and that, secondly, there was never any agreement that you would not be entitled to (so called: -) “pipeline transaction” commissions, the provisions of the relevant section of the Regulations (i.e.:- Regulation 8) are in fact mandatory, and so that (and whereas whether you will be entitled to pipeline transaction commission in any specific transactional instance will depend on the relevant facts) your principal is clearly incorrect as to what he is asserting to you as a point of law.

The first point to make here is that if a mistake has been made, then, ordinarily, the party which has suffered that mistake would be entitled to overturn its effects (and which may involve you having to repay back various amounts of previously paid commission). However, if a principal (as in the circumstances which you describe) has in fact been aware of the error for some considerable time (and, moreover, has continued paying you at the supposedly incorrect rate over that extended awareness period), then it [the principal] may then have some difficulty in arguing its entitlement for the refund of any money, and that being on the basis that it appears to have compounded its original (supposed) error, by (a) waiting so long after evidently first becoming aware of the position, and (b) continuing still actually to pay the supposedly not due amounts. In any event, and as you say, you don’t consider that there was ever any error or miscalculation in the first instance, and, on that basis, you should clearly resist the demands for you to make any payments back.

No, not at all, unless you have agreed to do so (in which case, as to whether you are obligated to have to buy the samples, and for how much in terms of cost, regard needs to be had to the relevant terms of the agreement which you entered into in respect to this issue).

No, that is not correct. Save where the principal may be entitled to terminate an agency on a forthwith basis for breach, the minimum periods of notice as set down in Regulation 15 (i.e. :- where a contract is entered into on an indefinite basis, the relevant periods of notice being: - (a) not less than one month, if the agency has been ongoing less than 12 months, (b) not less than two months’ notice, if the agency has been ongoing more than 12 months but less than two years, and (c) a minimum of three months if the agency has continued for more than two years) are mandatory although, that said, I should add that Regulation 15 also makes clear that any provision in a contract between the parties which entitles an agent to a period of notice which is greater than the relevant statutory minimum, is perfectly fine and allowable. On the basis of the facts as set out in your Question, therefore, and if your principal is unwilling still to afford you the correct period of notice, you should look to claim (in addition to compensation/an indemnity and all and any commissions) “damages in lieu of notice” and being that sum of money which properly reflects what you would have earned over the unacknowledged part of the notice period.

Yes, I do agree that it is an unrealistic obligation to look to impose on any agent, and yes I also definitely agree that you should (therefore) decline to accept this as part of your functions. For the reasons that you give (i.e.: - the risk of summary termination and the consequential likely loss of any compensation/indemnity entitlement) you do need to be very careful as to what you are and are not prepared to do.

Obviously, there will be many points to consider and to discuss, and, first and foremost, depending on whether you have been provided with a draft written contract as part of the proposal. As to this, if you have been provided with a draft agency agreement, it is necessary to establish from that document as to whether it is being proposed that Italian law would govern your relationship with the principal, or (instead:-) English law. Being realistic, if the Italian principal has had produced for it the relevant draft agreement, I would confidently expect that to provide that Italian law will govern the relationship (and also that the Italian Courts would preside over any dispute which you may in the future have with the principal), and your primary consideration at this initial point would therefore be to consider as to whether you are prepared to be governed by another Country’s laws and jurisdiction (in which case you would then need to promptly take advice from a lawyer expert in Italian agency law). If however you are not willing to be governed by another EU’s Country’s laws (and to be subject to its Court’s rulings as regards any aspect of your relationship with your principal), you essentially should promptly do two things: - Firstly, write to the proposed principal and make clear that you do not agree to Italian law and jurisdiction being applicable, and, secondly, put forward your own draft contract, (obviously) stipulating English law, instead. As a PS to the above, all readers of this particular Q and A should be aware:- “EU” law as agents may imagine it in the context of agency law (and beyond the original 1986 “Directive”, which required all Member States to introduce their own laws, reflective of the various provisions as set down in that Directive) does not exist, and so that, instead, each EU Country will have its own individual commercial agency laws which, to a greater or lesser extent, may (in many respects) be similar to UK law, but which will not however be exactly the same. It is because of the many key differences in the law as it affects commercial agents across the EU that I give the advice which I have set out above.

A. As an agent, you will owe each of your principals an ongoing duty to at all times do your best on their respective behalves. In terms of what that obligation means as to your specific duties at trade shows, that will in part depend on what are the reasonable requirements made of you by each of the principals, as there isn’t anything in the actual Agency Regulations which deals more specifically with this point. Following on from the above, and in order therefore to answer your Question, I would need to see copies of any written agency agreements which you may have with the various principals concerned (i.e.:- in order to determine whether any one or more of those contracts may include terms regarding – for example - you having to attend trade show stands for any minimum period), and to also establish with you as to what may have gone on in the past. Obviously, any such contractual provisions must be adhered to and/but if there are in fact no specific contractual terms, the fall-back position is this duty to act in good faith - i.e.: - ensuring that devote sufficient time to each principal (whether that be at a trade show, or outside of that), in order to be able to demonstrate that you are carrying out your fundamental duty to maximise sales opportunities, and to at all times act in the principal’s best interests.

The bespoke terms of your contract we would need to discuss but, in the specific circumstances which you describe, you will likely need a recital in a written agreement which acknowledges the fact of what you may bring in terms of substantial goodwill over a short period (but not expressed as a representation that you will guarantee to be successful, or to do anything specific in this regard), and perhaps even some documental record of your up front concern that you might be dispensed with, promptly. Whereas an entitlement to compensation/an indemnity does not depend (as to the determination of its amount) on the duration of the agency, I would perhaps also discuss with you (a) evaluating the financial worth of what you calculate you are bringing to the principal, and (b) possibly introducing a “not less than” financial compensation package into the terms of the contract, to ensure that you receive not less than the comparable value, as far as possible, of what you introduce (and no matter how short lived the agency may be).

Yes, certainly, provided that where you have a specific agency territory area (or a specific group of customers) which is exclusive to you (meaning that you are entitled to get paid commission in respect to all and any sales to any customer within that territory area or otherwise from that group of accounts, irrespective as to whether or not you yourself were responsible for the relevant sale in question) that you duly receive your commission entitlement. Further to the above, if you are not (however) an exclusive agent (whether by reference to a geographical area or to a named group of accounts) then (a) in what circumstances your principal may sell directly to customers, and (b) whether you are entitled to receive a commission, will depend on the terms of your agreement with your principal. Clearly, being an exclusive agent (as the majority of agents in my experience will be) is the position to be in.