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 principals to consider before entering into or terminating agency agreements. These include:

  • How much notice of termination does the principal have to give?
  • Is the principal liable to pay outstanding commission?
  • Is the principal liable for pipeline commisison?
  • Can the principal terminate without being liable to pay anything on termination because of the agent's default?
  • If liable, does the principal have to pay compensaion or an indemnity on termination?
  • How is the amount of compensation or indemnity worked out?

If the Regulations do apply to the agency, a principal should tread carefully before deciding to terminate; his chances of successfully defending a claimby an agent would be strengthened by the principal having entered into a well-drafted agreement at the outset of the relationship which sets out in detail the agent's duties and obligations.

If you need help drafting an agency agreement, or you simply want more information about commercial agencies in general, 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.