Q’s and A’s on Agency Law – DOUBLE LENGTH combined months of February 2014 and March 2014

What the principal is saying to you is essentially correct apart from the all important point of detail that is that where you and the principal have already agreed and have put into practice a timescale for paying you your commission which timescale is better from your point of view than the “longstop” timeline as set out in Regulation 10(3) which is what he is quoting to you, that that custom and practice will override what is provided for in the Regulation. Accordingly, you would be perfectly entitled to make clear to your principal that what you already have in terms of an arrangement as to when you get paid (a) suits you very well, and that (b) you are not under any obligation to have to agree to any longer payment time schedule.

Unless you have agreed with this principal that that was what you would be doing on its behalf, then what is being said to you as supposedly being an obligation which you have to comply with certainly isn’t anything to which any of your statutory obligations (under Regulation 3) would extend. I would therefore be clear in responding to the Sales Director that whereas you are very happy to pass on to him whatever information you consider worthwhile and which actually (and passively) comes into your knowledge, he is incorrect to state that it is an obligation on your part to actually seek out the relevant information, as that is not your agreed function.

Whereas principals (or their solicitors) will often attempt to catch agents out following a termination by sending the agent an amount of money and offering that sum on the basis that it is “in full and final settlement” of all of the agent’s claims against the principal (or any form of words which many have the same effect), unless there is this suggestion that what is being sent to you is being sent on the basis that it is an attempt to compromise your ability to bring any subsequent claims for compensation or an indemnity (or for anything else to which you may be entitled) then it is ordinarily perfectly acceptable for you to cash/accept the money. Do be clear however that there are many ways to compromise an agent in this situation, and by use of many different words and phrases, and so it is always best to quickly seek advice, to be safe - after all, you do not want to be caught in the position where what you have inadvertently accepted is in effect a nominal amount by comparison with the larger sum which you might otherwise have been entitled to and which is the aggregate of the other claims which you had (including, as I say, compensation or an indemnity).

No, this is not correct. Assuming that we are obviously referring here to compensation (as opposed to an indemnity), the way in which any entitlement is nowadays calculated is formulaic (i.e.:- pursuant to a formula set down and established by the House of Lords in the seminal case of Lonsdale) with the application of that formula resulting in an amount of money calculated as an equivalent of a number of months or years’ net [average] commissions as the hypothetical sales value of the agency, but, crucially, with that resultant sum not being subject to any cap. You need to be very clear about this as accepting an amount by way of compensation on the basis of your misunderstanding that your entitlement is capped in some way may be an error which could cost you a significant amount of money.

No, absolutely not:- Whereas if either the principal or the agent requires that a written agreement is entered into at any point the other party must comply with that request to commit to writing and to a signed document, what (however) that written agreement should consist of is only:- (a) terms which have already been agreed (i.e.:- the agency terms and conditions which have been evidenced by established custom and practice), (b) provisions which may be required by law to be included in the contract, and otherwise (c) any new terms and conditions which both parties additionally now accept as fresh provisions. Crucially, therefore, neither party can insist that the contract contain anything else which doesn’t fit into one of these (a), (b), or (c) categories and that includes any proposed indemnity.

No, not at all:- As things stand, and based on the facts which you have described in your Question, you are currently prospectively entitled to compensation on termination of your agency as opposed to any indemnity, and as long as you do not give any indication of accepting what is being proposed to you (i.e.:- you need to effectively reject it) then, if the principal decides indeed to terminate you at any point and all the whilst that you still have not agreed to any indemnity provision, your contingent entitlement in termination would remain to - as I say - compensation.

I advise you to be very careful in that if you are against most (or any) of the proposed disadvantageous provisions but nevertheless you do not clearly indicate that position (i.e.:- you need to clearly reject the proposed new agreement) and, at the same time, and moreover, you accept the enhanced commission rate, you may nonetheless very well thereby be providing your principal with the basis of the argument that you have in actual effect and after all agreed to the proposed new terms as a whole (- i.e.:- by dint of your clearly accepting at least one aspect of what was proposed as part of the bargain).

If the principal is correct in what it says that you actually agreed that you would achieve a specific minimum level of sales (and I do not know what else you may then have agreed as to what would be the consequences of your failing to achieve the relevant target), then that is something which may make your Question potentially irrelevant (i.e.:- in that you appear to be obligated to achieve the target in any event). However, and that aside, I would otherwise not at all say that being asked to achieve any particular level of sales (whether random or carefully calculated) was a “reasonable instruction” as envisaged by Regulation 3(c) and so, from that perspective, your principal is certainly incorrect in what it is suggesting to you as no agent should ever imagine that having to agree to either any amount by way of a sales target or having to agree to the concept of there being any sales target at all is something actually required by law (i.e.:- it isn’t anything required by the law).

I would say that it appears doubtful that you could claim compensation (certainly in terms of any statutory compensation) - this is very simply because Regulation 2(2)(a) makes clear that the Commercial Agency legislation does not apply to any agents whose activities are unpaid, and whereas I would perhaps endeavour to argue on your behalf that whereas you were not straightaway getting paid the deal was that you would eventually do so, this particular aspect of the law is relatively novel (i.e.:- there are not many agents whose activities as an agent are gratis), and so that my prospective argument may be testing new ground (although that absolutely would not prevent me from putting arguing it).

This is sort of similar to the last Question, but you at least appear to have definitely agreed that you would receive something by way of remuneration. Following on from the above, and in the absence of any obvious agreement reached as between you and the principal concerned, the answer to your Question is to be found in the little used area of the Regulations which is Regulation 6(1), which provides that:- “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”. In summary, therefore, and in the circumstances which you describe, what you should receive by way of commission should be calculated on the basis of what is customary or otherwise what is reasonable.

I would say that, in principle, you may very well be entitled to be paid the equivalent amount of what your commission would have amounted to - I say this because Regulation 11(1)(b) makes clear that the only basis whereby you would not be entitled to be paid commission in circumstances analogous to what you have described is where the relevant order hasn’t proceeded “due to a reason for which the principal is not to blame” - given however what you have explained as to what happened in your Question, I would say that the sequence of events does very much appear to be the fault of the principal and so that, and on account of that reason, I would say that, and to repeat, you appear to be entitled to get paid what your commission would have amounted to.

I doubt it - it is up to a principal as to what money it allocates to relevant budgets, and provided always that (a) the level of support being provided to you isn’t less than what is set out in any written agreement and/or isn’t otherwise less than what is broadly inferred by Regulation 4, and (b) the level of support being withdrawn doesn’t crucially tilt against your ability to achieve any sales targets you had committed to, then, and as I say, I doubt that you can object as, at the end of the day (and despite the great raft of protections which agents have pursuant to the Agents Regulations), a principal may otherwise run its business as it sees fit, for better or for worse.