Q & As on Agency Law

by David Bentley
of Bentley and Co. Solicitors

Q. One of my main principals has said to me
that it considers that I am operating another
agency in competition with the agency
which I have with them, and that I therefore
have to decide whether I wish to continue
the relationship (or continue representing
the alleged competitor).
What is my position in respect to this
situation?

A. This is an issue which sometimes has no
substance in point of fact, but which generally is
always very important, and thus needs to be
addressed and constantly borne in mind by an
agent:- An agent is obligated to do his or her very
best for any principal, and if he is carrying two or
more brands/or otherwise acting on behalf of two or
more principals whose interests/products
[significantly] compete, then it must follow that the
agent may therefore have to make a decision (as to
which agency may need to be resigned).

Often, the above is a matter of degree – i.e.:- some
principals may be willing to accept some element of
insignificant overlap, and sometimes (maybe being
disingenuous) a principal may raise concerns which,
in actuality, have no substance – however, and
whereas it is recognized that most agents are
specialist in their specific areas, an agent carrying on
two or more agencies which involves selling two or
more directly competitive ranges of products may
entitle the principals concerned to terminate the
agency “forthwith”, and thus with no obligation to
have to thereafter pay the agent any form of
compensation.
The final point to make regarding this is that you
should always take legal advice promptly and before
you do anything in terms of ever considering
resigning an agency – (as alluded to above).
Some principals may actually be acting deviously in
making their allegations as to you supposedly selling
in competition, and in thereby getting you to resign
your own agency – remember that any agent who
resigns his own contract is ordinarily not then
entitled to any form of compensation/an indemnity
(and principals may have been made aware as to
that, and may therefore be trying to deliberately
allege and create a situation to avoid having to
comply with what are generally otherwise their
statutory compensatory payment obligations on
termination).

Q. At the end of each selling season, I am required to send back to one of my
principals the samples which they forwarded
to me before the start.
The problem which I routinely face,
however, is that a number of these sample
items either get “lost” in transit, or otherwise
arrive back damaged and then my principal
looks to me to pay the financial differential,
which can amount to several thousands of
pounds. What do you advise that I do about
this, and can I indeed be made liable?

A. The answer to this question (as to your potential liability) is that, yes, you could be made
liable (if it cannot be proven that it wasn’t your fault
or otherwise your responsibility), and so that my
advice is that you should go to sensible lengths to
cover off this risk, such as:-

Preparing a full written inventory of all stock
items being returned
Using specialist couriers and having their
representative sign an acknowledgment
acknowledging receipt of all of the items (a) as
per the written inventory being supplied, and (2)
being in good condition (save for any specifically
highlighted exceptions). Better still, however, ask
the principal to arrange to collect the samples
itself.

By following the above steps, you are (obviously)
transferring and otherwise minimizing the risk to an
extent, and these are clearly sensible commercial
steps to take.

Q. I have recently had an agency terminated by a company in France, for
which company I have introduced a
significant amount of new customers over a
five year period, and also enhanced their
goodwill and business with existing
customers.
Can I expect to receive a significant amount
by way of compensation, and will that
compensatory sum be calculated pursuant
to English or French law?

A. There are several issues to be addressed in
answering your question – the initial main two
points to look at, are:-

Firstly, as to whether you had any agreement in
writing with this French principal and, if so, whether
that document made any stipulation as to which
Country’s laws were to apply to the agency. If the
answer to this question is “no” (i.e.:- there was no
agreement in writing) then, essentially, and on the
basis that you carried out your agency function in
England, then English law should then be deemed as
having governed the relationship. If (and on the
other hand) there was an agreement in writing, then
it is necessary to see whether that made any
stipulation that French law would apply to the
agency and, if there was such a stipulation in any
written contract, and that stipulation was worded
effectively, then French law would ordinarily apply
instead (i.e.:- rather than English law).

As to your second question, and as to whether you
can expect to recover back a significant amount by
way of compensation, that will basically depend in
the first instance as to the reason why your agency
was terminated – meaning to say that, on the
assumption that your appointment was not
terminated “for cause” (i.e.:- you did nothing which
could have constituted a fundamental breach of
your agency, thereby justifying a “summary”
termination and your thereby losing all of your
statutory financial rights), you could potentially
indeed be entitled to a significant sum by way of
compensation, with exactly how much that
materializes to be depending in part on the first
issue (see above) – i.e.:- as to whether French or
English law is the applicable frame of reference.

David Bentley is a Partner with
Bentley and Co. Solicitors and
specialises in agency law.

7 Littlemoor Road,
Pudsey, Leeds, LS28 8AF
Tel: 0113 236 0550
www.bentleyandco-solicitors.com

Disclaimer: This column does not contain legal advice and is for general guidance
only. Agentbase, Bentley and Co. Solicitors and the writer accept no liability in
connection with the general guidance given in this column.
Please ensure that you obtain legal advice before acting in reliance upon anything
in this article. For example, please be clear that the answers given in this column
may not cover all possible angles, aspects, relevant considerations and/or points
of law and so that all or any information which is given above needs in every
instance to be referred for legal advice for clarification and amplification, before
being relied upon

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