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

Regulation 19 is potentially relevant here as what that provision makes clear is that any agreement struck prior to the termination of an agency and where that agreement is to pay to the agent an amount by way of compensation/an indemnity which is less than the agent would otherwise have been entitled to under the law, all of that is potentially capable of being set aside. In other words (and it is clearly important to establish (a) when the deal was agreed to pay the relevant amount of compensation/ indemnity, and (b) what the agent would otherwise have been entitled to receive by way of the compensatory sum were it not for the deal agreed prior to termination), you can potentially attack the deal agreed on the basis that it was unlawful. In answer to your question, therefore, and even though you have otherwise appeared to have agreed the relevant compensatory amount with your principal, you may very well potentially nevertheless be able to get the agreed deal overturned (and you to receive a greater sum instead), and you should accordingly therefore seek our further advice promptly.

The answer to your question depends on various factors:- Firstly, and whereas you state that you operate your business through a limited company, it is essential however to establish as to whether or not your various principals regard you as an individual or (instead:-) your limited company as actually being the agent. This is very important, as whereas agents may have a limited company through which they operate their business for (say) tax efficacy purposes (on the relevant advice of their accountants), it does not necessarily follow that the agent in any specific instance would (also) be the limited company (as opposed to an individual). Further to the above, the reason for establishing who is the agent is that whereas an individual who is an agent, and subject to the normal criteria, would ordinarily be perfectly able to potentially bring a claim for compensation (or an indemnity) on retirement (but only always in the appropriate circumstances, as laid down by statute and based on the relevant case law), there is nothing however to suggest that an individual who is the driving force behind an agency which is structured in the form of a limited company would himself or herself be individually entitled to any form of compensation/indemnity on his or her retirement (and nor that the limited company itself would in those circumstances be entitled to any form of compensation, either), and so that agents who are considering what corporate entity structure to set up in entering into a relationship with any principal would need to carefully consider and take advice in respect to this aspect (both from us as well as from their accountant). Secondly, if you have a written agency agreement with any principal in question, that would also need to be considered too as, notwithstanding that the identity of the agent may be deemed as being your limited company, your written contract may nevertheless contain a relevant provision which potentially entitles you to receive compensation, in any event. Thirdly, be aware that in all circumstances other than where (as here, and as in this example of retirement in appropriate circumstances) it is relevant as to whether the agent is an individual or not, limited companies which are deemed as being the agents in any scenario are then perfectly entitled to potentially bring claims for compensation/an indemnity, in the same and normal way as individuals.

No, he isn’t. Whereas the Regulations (Regulation 15(2)(c)) do indeed set out a three month notice period (where the agent has represented the principal in question for at least two years), that three month provision is a “maximum minimum” - i.e.:- (and assuming that the principal does not otherwise have grounds to terminate on a “forthwith” basis), that period of three months is the shortest amount of notice which the agent is entitled to be afforded by a principal terminating the agency and/but there is absolutely nothing to prevent the principal and the agent having effectively agreed that the agent shall in fact be afforded a greater period of notice (i.e.:- greater than the maximum minimum), and where such an agreement has been reached the agent is perfectly then entitled to rely on it.

First of all, and to be clear, there is nothing in the Commercial Agents Regulations themselves which refers to sales targets - they [sales targets] are instead a creation of contractual terms and of commercial practice between principal and agent, and, and as I say, there is nothing in the actual legislation which either (a) outlaws the imposition of sales targets, nor anything which (b) (and conversely) makes them compulsory. It follows from the above therefore that enforcement by a principal of any alleged failure by an agent to achieve any sales target is a matter of establishing what was agreed as a matter of contract between the parties and, as integral to that, specifically showing that the agent agreed:- (a) that he or she would achieve a particular level of sales over a relevant period and, moreover, that (b) if those relevant sales numbers were not then however attained that that would then constitute a contractual breach (potentially then entitling the principal to terminate the relationship without having to afford any notice, nor without any obligation to have to pay any form of compensation). From your question, I think (however) that what you are wanting to know is as to whether you have to have knowingly agreed a sales target with your principal (before the principal can justifiably rely on your failure to achieve the target to then terminate your agency without having to afford you any notice, nor to have to pay you any compensation) and the answer to that is absolutely “yes” - the problem however is sometimes in establishing as to whether, without realizing that he had done so (e.g.:- by having failed to have appropriately and promptly responded to (perhaps, and as an example:-) a relevant e-mail received from the principal’s Sales Director, in which e-mail a sales target was stipulated and also as to was to be regarded as the deemed sanction for any failure on the agent’s part to achieve that target) the agent had (albeit unwittingly) thereby effectively agreed that he/she would have to achieve a target, or as to whether the agent without understanding it had entered into a written contract with the principal which agreement contained in it a (nasty) provision and which entitled the principal to (a) set any level of sales targets at its discretion as and when it chose to do so (and so that the agent had given his consent to sales target being set effectively right at the outset), and (b) to terminate the relationship on a forthwith basis in the event of any failure.

To be clear, within 12 months following the termination of any agency governed by the law in this Country, you are not obliged (pursuant to the Commercial Agents Regulations) to have to have issued proceedings in Court (and as may have been suggested by the way in which you have worded your question). Instead, all that needs to have happened within 12 months following the termination (and what indeed must happen) is that you as the agent have to have (appropriately and effectively) notified your principal that you intend pursing your entitlement to compensation/an indemnity, and what would then happen if you failed to do that (i.e.:- within the statutory 12 months period following termination) is that you as the agent would thereafter no longer be able to pursue any such compensatory/indemnity claim. The point I am therefore making is to draw a distinction as between (on the one hand, and pursuant to Regulation 17(9)) notifying of an intention to pursue an entitlement to compensation/an indemnity (the vast majority of which compensatory claims - in our experience - are settled without any necessity whatsoever to bring any Court action), and (on the other hand:-) actually issuing Court proceedings (i.e.:- where an out of Court settlement cannot be negotiated, and should the agent wish to then pursue that litigious course) and where the limitation period in respect to taking such action in Court is in England and Wales 6 (six) years from the date of termination, or (in the case of Scotland:-) 5 years.

Based on what you are describing in your question, this is potentially a criminal law matter - i.e.:- if your principal has been deliberately depriving you of commission which it knows was due to you and, moreover, an individual has been taking the money out for themselves, then that is potentially a matter to promptly be reported to the criminal authorities, for their investigation. That said, what I might however do in the first instance if I were you, and if I wasn’t certain of my facts, would be to list out in as much detail as I could all of the relevant facts and information (in terms of what I considered I was owed), and to then present that to the principal, to see what response I received - it may be that (for example) (a) you had misunderstood certain essential information, and/or that (b) the principal never had any intent not to pay you (and promptly does then do so) and so that (with your being careful to ensure that it is not on the basis of simultaneously compromising your other rights against the principal, and which other rights include those arising from the fact of termination) you get your commission (which, to you, is the most important issue).