Agent Q & A’s

with Christopher Tayton
Clarkslegal LLP

Q. I am an Agent and am
worried that I am not
receiving the correct level of
c o m m i s s i o n f r o m m y
Principal. How can I check
whether my commission
payments are correct?

A. For many Agents, checking they are
receiving the correct commission is
straightforward as they will know how much
they have sold and the rate of commission
they are entitled to receive. This is not
always the case, however, and some Agents
won’t have all the information they need. A
common example is where the final price
for the goods is negotiated by the Principal
rather than the Agent.
Under the Regulations, Principals are
required to provide their Agents with a
statement of commission due, including
the details they used to calculate the
commission owing, by no later than the last
day of the month following the quarter
w h e n t h e c ommi s s i o n i s p a y a b l e
(Regulation 12(1)). Agents also have a right
to demand their Principal provides all
information available that is needed to
check the figures (Regulations 12(2)). Both
these rights can, if necessary, be enforced
through the Courts, but Agents are advised
first to make a written request for this
information, quoting the Regulations if
necessary, and most Principals should
comply.

Q. I have been an Agent for my Principal for a
number of years but do not have a written
agency agreement. My Principal is now saying
that he is not obliged to pay me compensation if
he terminates the arrangement because our
agreement is not in writing.

A. This is incorrect. A commercial agency does
not have to be in writing for the Agent to be
protected by the Commercial Agents
Regulations, including having the right to receive
compensation on termination, or for there to be
a binding contract between the parties. Further,
an Agent without a written agency agreement is
entitled to demand their Principal supplies one
setting out the terms of their agreement
(Regulation 13(1)).

Q. I am coming up to retirement age and had
been expecting a compensation payment under
the Regulations but the Principal for whom I
have worked for many years has gone out of
business. Is there anything I can do?

A. In the current economic climate, many
Principals are facing financial difficulties and
some are ceasing to trade. If your Principal is a
company and does enter insolvent liquidation,
then you, as a commercial agent, will rank
alongside the other unsecured creditors of the
business and will only be paid if the company has
funds remaining once the company’s preferred
creditors, including secured bank loans and
amounts owing to HMRC, are paid off.
You will be given an opportunity to notify the
liquidator of your claim but, in practice, once a
company has gone into liquidation, generally
unsecured creditors don’t recover anything and,
if they do, it is only a small proportion of their
claim.

Chris is a dispute resolution lawyer working out of the
firm’s Reading and London offices.
ISSUE 165
Chris has particular expertise in the Commercial Agents
Regulations (acting for both principals and agents),
advertising law and restrictive covenants in
employment contracts.
He also advises on IT and software related claim, and is
a member of the Society for Computers and Law.

Head Office:
Thames Valley Office: One Forbury Square,
The Forbury, Reading RG1 3EB
Tel: 0118 9604691
www.clarkslegal.com

Disclaimer: This column does not contain legal advice and is for general
guidance only. Agentbase, Clarkslegal LLP and the writer accept no
liability in connection with the general guidance given in this column.

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