Commercial Agency

We can assist agents and principals with the drafting of any aspect of an agency contract. This might involve:

• The drafting of a new, bespoke agency agreement for a principal.
• Reviewing a principal’s existing agency contract and suggesting amendments in line with what the principal wishes to achieve.
• Carrying out a review of a draft agency agreement which has been presented to an agent for signature and suggesting amendments to protect the agent’s position. This might involve a high-level review, a detailed review, or simply a review of specific clauses.

In many cases, it is clear that an agent is a Commercial Agent and has the protection of the Commercial Agents Regulations. In other cases, it is less clear, particularly if the agent is selling software of a type which may not be deemed to be goods or is selling a combination of goods and services. We can advise agents on whether they are a Commercial Agent and are likely to be afforded the protection of the Regulations. 

Sometimes there are jurisdictional issues in an agency contract which need to be given careful consideration. This might arise where an agent carries out his or her agency activities abroad, or the choice of law chosen by the parties to govern the agency agreement is not English law. We can advise agents and principals on which law governs the contract and which courts have jurisdiction to determine any dispute. 

In cases where the law of a different country governs the contract, we have connections with specialist law firms throughout the world who specialise in agency law, to whom we can refer your case. This will ensure you get the specialist agency advice you need. 

It is common for principals to want to vary existing terms of an agency agreement or to impose new terms. We can advise agent and principals on the proposed variation of an agency contract. 

It is important for a principal to understand whether it has the legal right to impose the variation on the agent if the agent does not consent. Obtaining this advice will help the principal avoid the situation where it imposes a change to the agency agreement and faces a claim for a termination payment by the agent.

We can guide principals through the variation process to ensure their position is protected. 

We can also advise agents who are faced with a proposed amendment to the terms of their agency. We will ensure the agent understands their legal position and can respond to the principal in a way which protects their position.

A common scenario is the poor performance of an agent or the failure to meet sales targets. We can advise principals on their legal rights and how best to approach the issue. Sometimes this may give rise to the right of the principal to terminate the agency on the grounds of repudiatory breach, but it is important legal advice is taken before such steps are taken. 

We frequently advise agents and principals on an agent’s entitlements under the Regulations upon termination of the agency agreement. This might involve:

• Considering whether the principal is entitled to terminate the agency on the grounds of repudiatory breach and avoid paying compensation - this may arise where an agent is in serious breach of the agency contract. 
• Considering whether the agent is entitled to retire on the grounds of age or ill health and claim a termination payment under Regulation 17.

It is critical that the correct steps are taken to terminate an agency, and we can guide agents and principals through the termination process, ensuring that due process is followed and the client’s position is not prejudiced. 

The valuation of an agent’s entitlement to compensation under Regulation 17 is ultimately a matter for expert forensic accountancy evidence, but due to our expertise in commercial agency law, we can provide agents and principals with a guide as to the likely value of an agent’s compensation entitlement under Regulation 17. We can also value claims for indemnities under the Regulations. 

Early valuation advice assists principals who may be looking to terminate an agency but need to understand what their potential exposure might be before adopting a strategy to deal with termination. 

Valuation advice enables agents to understand their potential entitlement so that they can make informed decisions about their claims under the Regulations.

We work closely with highly regarded forensic accountants who specialise in valuing agency businesses. This means we can seek the input of the right experts when needed, enabling agents and principals to be expertly advised in all aspects of their dispute and to make the best decisions for their businesses. 

Many claims under the Regulations are resolved successfully before any court or arbitration proceedings are issued. This may be through negotiation or mediation. 

Sometimes it becomes necessary to issue a court claim or commence arbitration proceedings.

Our commercial litigation team are experts in bringing claims under the Commercial Agents Regulations on behalf of agents and principals. We will guide and advise you through the process to ensure you achieve the best outcome possible. 

A principal in the luxury living sector with a long-standing agent of many years wished to terminate his agencies due to the agent’s poor performance. The position was complicated by the fact that the agent had multiple agencies for the principal, some being main agencies and some sub-agencies. None were subject to a written agency agreement. Although termination by the principal was on the grounds of poor performance, the principal did not have the grounds to terminate for repudiatory breach.

Under the Commercial Agents Regulations, the agent was entitled to compensation upon termination by the principal of his main agencies under Regulation 17, and pipeline commissions under Regulation 8. The position differed in respect of the sub-agencies, as an agent is not entitled to compensation upon termination by the main agent of a sub-agency. 

The principal was concerned to terminate the agencies in a sympathetic and fair way due to the long-standing and loyal relationship it held with the agent. 

We assisted the principal in managing the termination, which included preparing correspondence for the principal to send to the agent regarding the proposed termination and drafting the notice of termination. Following the agencies being terminated, we assisted the principal with settlement negotiations with the agent regarding the agent’s entitlements under the Regulations, which resulted in a swift and amicable resolution between the parties and a pleasant separation for all involved. 

The key objective for the principal, in this case, was to ensure a professional and sympathetic termination and the avoidance of any court proceedings. That was achieved through our expertise in managing the termination process and subsequent without prejudice negotiations.

A commercial agent in the cycling industry operated over the course of many years on a commission basis. Various written contracts had been provided to the agent over the course of the relationship, but it was disputed that any of the contracts had ever been signed. The principal sought to vary the agent’s commission structure to the detriment of the agent pursuant to express contractual rights within one of the written agency contracts. The agent asserted that contract was not binding.

The agent wanted to continue with the agency but was not prepared to accept the less favourable terms and reduced commission structure which was being proposed.

The agent sought immediate legal advice on his rights under the Commercial Agents Regulations upon receiving notice of proposed changes from the principal. By seeking early advice, the agent was able to act in a way which did not prejudice his position and did not allow the principal to argue that he had either expressly or impliedly accepted the changes.

The proposed change to the agent’s commission structure was arguably a fundamental breach of the agency contract entitling the agent to treat the agency as terminated and claim a termination payment under Regulation 17. The agent argued the express contractual right to unilaterally vary the agency terms was not binding since he had never signed the contract, but in any event, the proposed changes were unreasonable and not justified so were not permitted even if the written contract was binding.

The agency was ultimately terminated by way of a termination notice, but that was followed by an exchange of correspondence between agent and principal, which resulted in an amicable settlement of the agent’s claim and the avoidance of any court proceedings. The agent was successful in obtaining a termination payment under Regulation 17, and payment of pipeline commissions under Regulation 8 for an agreed period post termination.

In this case we assisted the agent by advising him and preparing the termination notice and subsequent correspondence to his principal without being visible to the principal in the process. It is common for us to assist agents “behind the scenes” in this way, especially where the commercial relationship with the principal needs to be preserved whilst the agency is continuing.

An agent in the fine chemicals industry was appointed to promote the sale of a large pharmaceutical company’s products in the UK and Ireland. The agent had been responsible for bringing various new and significant manufacturing opportunities to the principal, which had resulted in those new products being manufactured and sold to an end user. The agent had product exclusivity under the terms of a written agency agreement and was a commercial agent for the purposes of the Commercial Agents Regulations. The agency was terminated on notice, and Myerson acted for the agent in bringing a claim for termination entitlements under the Regulations.

The agency agreement contained an arbitration clause which required the parties to refer any dispute to arbitration in accordance with the rules of the International Court of Arbitration, with the place of arbitration being in France.

Following a denial of the client’s claims, Myerson issued arbitration proceedings in the ICC. We were successful in bringing the parties round the table for an early without prejudice meeting in London, which resulted in favourable settlement terms for the client involving a significant payment of damages for compensation and pipeline commissions.

We acted for a commercial agent whose agency was terminated without notice. The Principal gave no reason for the termination at the time but later argued it was due to poor performance; a very common reason for Principal’s wishing to terminate an agency on the grounds of repudiatory breach. 

Under the Commercial Agents Regulations, the agent was entitled to compensation under Regulation 17, and pipeline commissions under Regulation 8. The combined value of those entitlements was in excess of £100,000.

Ordinarily, agency claims are issued in the High Court Business and Property Courts of England and Wales. But the written agency agreement contained a jurisdiction clause stating that all disputes under it had to be dealt with by arbitration in the International Chamber of Commerce (ICC) based in Paris.

The position was complicated by the fact that the agency agreement was unsigned and furthermore the Principal refused to recognise the written agency agreement as binding.

After pre-action correspondence did not lead anywhere we lodged an arbitration claim with the ICC. We assisted the agent throughout the arbitration process which resulted in a resolution between the parties at a mediation.

The key objective for the agent, in this case, was to ensure he was adequately compensated for the loss of his agency. That was achieved through our expertise in dealing with the arbitration process and mediation.

We acted for a commercial agent who sold dog treats for a global pet food manufacturer. The Principal had acquired the business of another principal who the agent acted for and then within the space of a few months terminated the agent. We find this often happens where there is an acquisition of an old principal and where the new principal wishes to bring sales “in-house”.

As the agency had terminated the agent was due compensation and pipeline commission in excess of £500,000.

The complicating factor in this case was that the principal was headquartered in the United States of America. Therefore, when issuing a claim for compensation we had to apply to the court for permission to serve proceedings outside of the jurisdiction, which we obtained successfully. The case eventually settled at mediation.

The key objective for the agent was to achieve fair compensation commensurate to the loss of a highly successful agency. We achieved this through our specialism in bringing high-value cross-jurisdictional claims against principals based outside of the UK.