Q’s and A’s on Agency Law – August 2013

No, not unless your commission rate was agreed as being variable in the way that it appears to be being treated by your principal. Whereas, as a one off gesture of co-operation on your part (which should be contemporaneously and clearly confirmed in writing by you to be no more than that), you might accept a reduction in commission in specific circumstances, you are not ordinarily obligated to do so, and the overhead of whatever is your fixed rate of commission should be as non negotiable as any other fixed cost. An additional point here is that, if you do (unnecessarily) accept variations to your rate of commission, the thin edge of the wedge may later come when, instead of or in addition to looking to reduce your commission rate if a deal with any customer isn’t sufficiently lucrative from the principal’s point of view, the principal may (go further and) seek to unjustifiably argue that any particular third party transaction did not sufficiently involve you to entitle you to get paid any commission at all in that instance, and, if you are clearly your principal’s “exclusive” agent (whether that be by reference to any particular territory area or to any agreed group of customers), then you would similarly ordinarily be entitled to receive your normal rate of commission, regardless as to whatever was your level of involvement with any particular sale.

No, the law hasn’t changed in that, in the event of the death of any person who was an individual agent, his or her estate may potentially be able to bring a claim for compensation or an indemnity (as appropriate), in the same way as in any other relevant termination situation, and that would be against not only any principal with which there was an agency as at the time of death, but also against any other principal with which the deceased agent had had an agency terminated in the twelve months preceding death (and, in addition, against any principal where the agency in question was terminated more than twelve months earlier but where the deceased agent had given proper notice of his intention to bring a claim, within the relevant time limit). If an agency consists of partners (i.e.:- the agent is more than one person in the eyes of the law) and (obviously) the other person or persons who were partners in that partnership have not also died, then, unless, because of the death of the one person, the relevant agency contract is thereby as a result terminated, it is not considered that any claim for any form of compensation/an indemnity upon the death of the one individual would arise. Similarly, if the agency was - say - a limited company and an individual who was the (or one of the) main protagonist(s) of that agency limited company died, no claim for compensation/an indemnity would thereby arise either, although I have seen it argued that, by a roundabout route, perhaps the liquidator of an agency limited company (which company was liquidated as a result of the death of any individual who was the driving force) may in certain circumstances possibly be able to bring a claim - at this stage, however, there have been no reported Court case decisions on agency death compensation claim scenarios, and so the only straightforward situation I can say with certainty that there is the potential to bring a claim for compensation/an indemnity in the event of the death of an agent is where that agent was in the eyes of the law a sole trader, and so that families and the next of kin of such persons need to be made fully aware of this potential to bring a claim (as such claims may be very lucrative), and also be made aware of the need to act as promptly as personal grieving circumstances will allow (as the one year post death or otherwise post termination of agency is still the relevant time deadline).

The answer to your question is that, as regards this issue of any changes to be made to the extent of your territory area or with regards to anything else in any way related to any other fundamental aspect of your agency, and unless you have previously agreed (whether that was in a written agreement or howsoever otherwise (for example:- through custom and practice)), your principal is NOT entitled to act as it - and it alone (i.e.:- at its sole discretion) - decides and so that you absolutely ARE entitled to object to anything like this (and that right to object is irrespective as to the fact as to whether any or none of your agent colleagues agree or disagree with you (in objecting)). The above is because, and very simply, as it takes two to make an agreement (and that is whether that’s an agreement in writing or not), it ordinarily therefore takes two to amend it, and so that therefore one of the contracting parties cannot just make changes as it alone sees fit. You should moreover be aware that, even if you decide not to object to the principal’s actions in this instance, you should via an appropriate form of words at least make clear in writing to your principal that you are not objecting just in this specific instance, thereby effectively reserving your position to object should your principal ever attempt to act in this sort of way again in the future.

My answer to this is that it is in my view very doubtful that you could successfully establish a position to the effect that you are not bound by the contract, on account of the circumstances which you describe - this is because it is generally always the position that, basically, unless you were placed in the most extreme of circumstances, there is nothing (i.e.:- no case law or anything in the Regulations) to suggest that you could avoid the consequences of what is contained in a relevant written agency agreement which you have signed and because you were (in your view) forced into signing it, and that in turn is because, particularly in this day and age of access to information and accessibility to legal advice, there would generally and ordinarily always be the overriding assumption that you had had the opportunity to take legal advice, and/or the opportunity prior to that to at least make clear to your principal (again - best in writing) that you were going to be taking advice, and that you would thereafter communicate your position with regards to the proposed draft contract. Following on from the above, I have often heard agents say that whereas there was a signed written contract with a particular principal that they nevertheless do not consider themselves bound by the relevant document (because supposedly of having been coerced into signing it), and there does sometimes appear to me to have actually been a decision taken by the agent at the relevant point in time to the effect that, as this was their opinion, and when it came to it, they would therefore run with this argument no matter what. My advice however is that this is not a good position to take, and is very unlikely to be successful. As a postscript to the above, I would also add that it is possible for agents to be bound by the terms of a contract which they have not signed, but which they (the agent) have not made sufficiently and appropriately clear to the principal that they do not accept.

Perhaps the most useful piece of advice which I might give to you in circumstances where you are agreeing that, upon termination of your agency, your potential entitlement to any form of compensation will be to an indemnity, is that you clearly establish and agree with the principal, at the outset, and in writing:- What customers the principal has ever dealt with in your territory area, when those customers in question may have last ordered any goods from your principal, and what are the current trading levels of all current customers. The above may ultimately be very important as, in assessing the amount of any indemnity entitlement, and to a significant extent, it is essential to establish what new business the agent introduced and what levels of business he has otherwise increased, during the period of the agency. Further as regards this, and as any principal will generally always seek to argue that the agent has not been directly or predominantly responsible for any customer introductions and otherwise for any increases in sales, the agent taking these proactive steps at the outset of the relationship may ultimately be able to establish that his entitlement to an indemnity is to a substantial sum.

There is nothing in the Regulations which requires any agent to have to call on any customer with a specific regularity or within a specific or particular cycle and so that this is merely a matter of what is necessary - in the agent’s judgment, exercised always in the best interests of the relevant principal - to optimize levels of sales. That said, an agent may of course have a written contract which expressly sets out an agreed call cycle regime (in which case the agent will then be bound to comply with that) but, that aside, the only stipulation of the Regulations as regards this issue is the general one that the agent must act in the best interests of each principal and so as long as the agent can demonstrate that he is doing that, and that he is not in dereliction of any of his responsibilities, there ought to be no issues. The above all explained, I am not clear from your question why the principal has issues with you if you are calling all customers as regularly as you should be doing and perhaps therefore it is a matter of (appropriately forcefully in response) setting out in writing the relevant information as to how regularly you call, explaining why that cycle is reasonable and indeed best and that to call more frequently might actually be counter-productive. That way, the principal may appreciate that he is in fact barking up the wrong tree.