Commercial Agents

Commercial Agents are defined as self-employed intermediaries who have continuing authority to negotiate the sale or purchase of goods on behalf of a principal, or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of a principal.

The Commercial Agents Regulations 1993 lay down the minimum requirements of a contract between an agent and principal, for example, minimum periods of notice, when commission is due and the right to claim compensation on the termination of the contract.

Commercial Agents are entitled to statutory compensation on termination of their agency agreements. This compensation can be substantial and is in addition to any existing contractual rights.

As a result of the Commercial Agents Regulations, there are important questions for agents to consider before entering into or terminating agency agreements. These include:

  • Do the Commercial Agents Regulations apply to the contract?
  • How much compensation is payable and what is the basis of the assessment?
  • In what circumstances is compensation payable?
  • What steps can be taken (both on negotiating the contract and on terminating it) to ensure appropriate compensation is paid?

In the House of Lords case of Lonsdale v Howard & Hallam Ltd it was decided that the level of compensation payable to an agent on termination  should be based on the value of the agency on the assumption that it continued - what would a purchaser pay to receive the income stream generated by the opening?

If you believe your Principal is in breach of your agency agreement, or you simply want more information about your rights, Ashby Cohen can help you. We specialise in commercial agency cases, and our years of experience as lawyers make us uniquely qualified to assist you with any commercial agency issues you may have. Please contact us for an initial free telephone consultation.