Q’s and A’s on Agency Law – DOUBLE LENGTH combined for months of March 2015 and April 2015

I would say that this depends on what exactly happened in terms of the incident to which you refer, how serious it actually was and whether it would be regarded as having been isolated. Further to the above, and whereas Regulation 3 of the Commercial Agents Regulations does require agents to act towards their principals always “in good faith” (which can be taken to include an obligation to act appropriately/responsibly/professionally towards customers), and unless this was not a one off incident and/or was actually rather more serious in terms of the nature of what transpired, I would regard it as unlikely that a Court would look to deny you your entitlement to compensation/an indemnity (as well as to proper notice and, potentially also, to pipeline transaction commission). The answer to your Question is unhelpfully, therefore, that it depends on the facts and circumstances.

The answer is that it does not appear that you should be concerned in that, depending on all other necessary hurdles being capable of being overcome, you will be entitled (and rather than to an indemnity payment) to compensation - this is because, notwithstanding that the laws of another Country which is not in the EU law evidently apply to the contract, English law will still however overridingly apply as far as preserving your right to a payment on termination is concerned, and, because there is no stipulated “opt in” for an indemnity, your entitlement will (by default) be to compensation.

No, not unless (1) you have agreed either (say) in some written contract, and/or (b) the principal being entitled to act in this way has otherwise been established by virtue of your complicity/acceptance through custom and practice. Moreover, there is nothing otherwise in the legislation which deals with this point (about Internet accounts), and so that there is no reason to treat such accounts any differently to “bricks and mortar” accounts.

Subject to the fact that there is one very obvious and fundamentally important exception to what I am immediately about to say (as to which, see below), my answer is that your contract itself (and assuming it to have been continuing all of these years on an indefinite basis) would still be valid (i.e.: - there is nothing in the fact that the agreement was entered to 12 years ago to render it invalid). This therefore means that the six months’ notice period would still be applicable. The above made clear, the all and fundamentally important exception to what I have just explained is the fact that (1) if what you agreed in terms of compensation would result in you being awarded an amount which is less than you would otherwise have been entitled to under the law, and (2) because you agreed that low or zero entitlement before (obviously) termination, that means that that isolated (and ill-advised) agreement on your part ought to be carved out of the agency contract, enabling you to pursue your right to compensation, in the normal way.

The Commercial Agents (Council Directive) Regulations 1993 - and like any other Regulations - require interpretation, and that is because, even if they were “black and white”, there are a lot of circumstances which they don’t specifically cover or deal with, and many of the important provisions actually within the Regulations are either short on explanatory detail, are capable of being either excluded (overridden) or added to, are potentially extremely confusing and/or - quite simply - are open to varied interpretation. Regulation 17 and the rights of agents to compensation/an indemnity on termination are a good (and perhaps the best) example of the above, particularly in view of the fact that neither the words themselves of Regulation 17 nor any other provisions of the Regulations clearly set out how exactly you calculate compensation. Accordingly, judicial guidance is fundamentally necessary and all important (in terms of setting precedents, where appropriate) to assist in interpretation, and this is where the Lonsdale case decision is so vital, as it was a case decided by the House of Lords, and which clearly sets out the basis of how compensation is calculated.

The point about this is that whereas, pursuant to the Agency Regulations, there are indeed a whole raft of protections for agents, some of those protections can be subtly or obviously removed or otherwise significantly varied by a written contract, and so that (by not having an agreement professionally checked) you are effectively moving forward into a relationship without perhaps any real idea about what are your rights and obligations, and what you thought you had as protections having been (or having the future potential to be) varied, caveated or removed altogether. In other words, by signing blind, and unless you are sufficiently experienced or expert yourself, you may not be aware as to (for example) how much you might or recover by way of compensation on termination, and how, why, and whether or not any such rights might potentially be lost completely.

Yes, in effect, although indirectly (i.e: - in that compensation (if that is your prospective entitlement, rather than an indemnity) would reflect the hypothetical sales value of the agency, as at the point of termination, with that value itself thus reflecting the goodwill and business which you have introduced and sustained).

First of all, and unless there is anything in any written agreement entitling your principal to act in this unilateral way, it cannot do so, without your prior agreement. Secondly (and following on from the above), and assuming that the principal had no entitlement to remove responsibility for selling (and getting paid a commission in respect to) products away from you, unless what you are being offered instead is acceptable to you and will provide you with an agency which is at least as sustainable, it does appear that, by its actions, the principal has effectively indeed terminated your agency (as to which fact you need to take advice first and then, secondly, respond in writing appropriately, promptly).

This is one of the prickliest of all issues between principal and agent, and needs always to be dealt with very carefully. Whereas it will be obvious that, and accepting all commercial common sense values, principals will exert pressure on their agents to maximise sales returns, unless however they (the agents) have specifically agreed that they will definitely come-whatever-may achieve a minimum level of sales (and agreed also the consequential rights that the principal will then have to terminate forthwith - no matter what - in the event of any failure), non-achievement to attain a particular level of sales is otherwise capable of being attributable to any one of a number of several factors (none of which are directly or indirectly remotely attributable to any action of lack of action on the part of the agent). In other words, whereas it is of course reflective of commercial reality to discuss and agree sales targets, just so long as it is at the same time recognised (in writing by the principal) that (save for any material dereliction of the agent’s duties, which would anyway place him in potential breach of his obligations pursuant to Regulation 4) the agent’s failure to achieve target does not constitute any sort of breach of contract on his part.

Potentially, yes indeed you could make an additional claim, but probably in part depending on whether your principal was aware that, on the basis of the fact that it was entering into the new two year contract with you, you would then be making this contractual commitment to engaging someone else in your business. This analysis is linked to Regulation 17(7) (b), which provides that an agent may seek to recover damages from his principal in circumstances where termination takes place at a point which does not enable the agent to “amortise the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal”.

Based on what you are saying as to the seasonal nature of your business, and if a proper evaluation of what you would have earned over the relevant period will be more than the equivalent of just an average of three months’ earnings, then you are quite correct to state that the proper payment should reflect the actuality of what you would have been paid. However, what concerns me in terms of the facts stated in your Question is that you say that you have subsequently already been paid the relevant amount of commission, which suggests therefore that (and depending on what was agreed and recorded at the time payment was made to you as to what basis the principal was making such payment) you may have thus compromised your rights already.

Assuming that you have no written agency agreement entitling you to an indemnity (as opposed to compensation), and in terms of assessing your prospective entitlement to (therefore) compensation, that would be based on the hypothetical sales value of the agency as at the point of termination and, given that, at that stage, the potential customer wasn’t yet an actual one, it is arguable as to whether or not it should have any relevance at all (in the valuation process). That said, and depending on how likely a prospect it indeed was at termination that this new account customer would materialise, I might very well argue that it should influence the size of the “multiplier” and I would also strongly argue that the likelihood of the customer coming on board was clear at the termination date, so as to justify a significantly higher compensation award.