Q & A’s on Agency Law

by David Bentley
of Bentley and Co. Solicitors

Q. I am currently working a two months notice period, and have a number of deals in
the pipeline for this particular principal,
which deals will only come to fruition after
my agency agreement actually terminates.
I suspect that this may in fact be the reason
why my agency was abruptly terminated
after just 18 months, in that my principal has
managed within that time frame to secure a
number of contacts through myself, and
probably now wants to seek to avoid having
to pay me any commission in respect to
these pipeline deals, and going forward
beyond that. How do I go about ensuring
that this does not happen?

A. First of all, I am assuming that you don’t have any agreement with your current principal, which
contains any provision which excludes your
entitlement to these so called “pipeline transaction”
commissions (or which otherwise excludes the
application of Regulation 8).
I also assume that you are not at this point also
wanting my advice as to your potential additional
claim for compensation or an indemnity.
On the basis of my above assumptions being correct,
I would then answer your Question, as follows:-
Basically, establishing an entitlement to post
termination “pipeline transaction” commissions can
sometimes be quite difficult, as, following your no
longer being connected with the relevant company,
the principal concerned will ordinarily try very hard
to muddy the waters and so to be able to
subsequently claim that whereas you may have had
some involvement with a particular deal having
taken place, that deal happening was supposedly
instead substantially due to the efforts of others,
after you were no longer the agent – in this, I have
seen all manner of things argued, such as that the
deal wasn’t actually going ever to happen until the
new agent became involved (who, like Superman,
heroically rescued the transaction after you
supposedly almost lost it for the company) and/or
until one of the Directors personally became
involved, and/or a series of communications may be
produced to supposedly demonstrate that there
was still a lot of negotiating that had to be done
following the termination of your agency, to actually
secure the relevant contract.

The above said, if you can show that the deal in
question ultimately taking place at all was “mainly
attributable” to your efforts (and disregarding that
your input was, obviously, pre-termination of your
agency), and that the transaction was concluded
within (and given the normal sorts of timescales
which prevail in your industry) a reasonable period
following termination, then, potentially, you may
well be entitled to the commission, and it is a matter
therefore of your (for example) keeping all relevant
paper communications and being able to thereby
prove that, by the time you ceased being the agent,
the deal was substantially already struck (or, in the
language used by the Regulations, was “mainly
attributable” to your efforts).
In some instances, I have known Regulation 8 claims
to be financially very substantial of themselves, so
definitely very worthwhile being thorough with – for
example – your paper trailing.

Q. I work on behalf of a principal which also employs reps. In this regard, the company
recently introduced a “Salesman’s
Handbook” which I am told equally applies
to me (and the two other self employed
sales agents) in the same way that it applies
to the company’s employees.
As I already have a written agreement with
this principal, I don’t know what to make of
this proposed new set of rules and,
specifically, as to whether I am indeed
bound by them – can you please advise?

A. The position is, as follows:-

You need first of all to look carefully at what are the
terms of your written agency agreement with this
company, in order thereby to establish whether that
contract makes any reference to your subsequently
being obliged also to be bound by what is contained
in any sort of “handbook” which the principal might
decide down the line to introduce at any point in
time, and which additional set of provisions may
then apply on a par with the terms of your original
contract.

If (however) there is no mention in your written
agreement of any “handbook” (or of any similar
external or additional contractual document,
irrespective as to whatever is the exact word used to
describe it) then, and unless you have ever agreed to
be bound by any such newly introduced set of rules,
you should not be bound to accept these additional
obligations now, and you should therefore make
your position appropriately clear in terms of your
objection, promptly and in writing.
To be clear, the reason why it is potentially
exceptionally bad that you agree to the principal
being entitled to unilaterally introduce any new
“rules” (whether to sit with any current written
agreement which you have, or otherwise to stand
alone) is that whereas whatever is set out in your
original written agreement will bind you and will be
familiar from your point of view, what you cannot
afford to do is agree that the principal can at any
time in the future, and as and when it may elect to do
so, introduce an additional set of obligations for you
to be bound by, none of which additional
obligations you have expressly agreed to previously
(nor which would you ever ordinarily agree to).
Finally, as the principal would (presumably) reserve
to itself the right to additionally update or otherwise
vary its “handbook” further from time to time, you
can clearly see that what you would effectively be
agreeing to is an unknown set of contractual
obligations, the fact of which is potentially so
catastrophically adverse from your point of view
that (and quite apart from any other possible
negative consequences from your perspective) you
may in practice ultimately unlikely ever be entitled to
any form of compensation/an indemnity, on
termination.

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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