Whenever an agency terminates, this ordinarily sets in train a series of potential events about which agents needs to be very much aware. The following summary is not intended to cover off all relevant points, nor to constitute an exhaustive list of all issues about which an agent needs to keep uppermost in mind – however, it may assist some agents’ knowledge with regards to this situation:-
• Firstly, it is necessary to establish that the agency has definitely actually terminated – as to this, sometimes an agency will apparently be terminated verbally, or otherwise in terms which do not clearly establish the fact of the end of the relationship (or of the relationship now being into a notice period), and if in fact there was any misunderstanding that the agency has ended an agent may subsequently then be in fundamental breach of his obligations by effectively meantime having downed tools and not continuing on with his functions. Accordingly, and without thereby (and by his choice of words or actions) inadvertently terminating the agency himself (and ordinarily, save for certain exceptions, an agent deemed to have terminated his own agency would not then be entitled to any compensation/indemnity), the agent needs to promptly take legal advice as to how to establish that the relationship has come to an end (or that he is now operating through a notice period). The foregoing all explained, it is ordinarily the fact that there is actually no doubt when agencies have ended, as there will normally have been some form of written communication.
• Secondly, and assuming that the agency wasn’t terminated on a forthwith basis, there will be a notice period to navigate and, as to this, agents must be very careful to ensure that they fully comply with all of their ongoing obligations, right through to the termination date, as a notice period still constitutes part of the contract period. As to this, and as I say, an agent needs to be aware that the notice period is still part of the agency term, and so that he must continue to observe all of his obligations to the principal in the same way as previously.
• Thirdly, an agent needs to be aware not to accept any offers to settle his prospective claims arising following (notice of) termination, without first having taken (written) legal advice. The agent also needs to be particularly wary (as an example) not to accept any proposals to pay commission on the basis that such payments would actually also compromise all and any other rights and entitlements which the agent may have.
• Fourthly, an agent needs to ensure that he complies with all post termination obligations, including as to the timely return of company property, the observing of any confidential obligations and the compliance with any effective post termination restrictive covenants (again, after having first taken advice).
Finally as regards any ending of an agency relationship, the agent needs to be aware of the absolute requirement to effectively notify the principal within 12 (twelve) months of the date of termination (pursuant to Regulation 17(9) of the laws relating to the UK) of his intention to pursue a claim (for compensation or an indemnity, as appropriate). Beyond that, there will also be relevant overall limitation dates applicable in respect to whichever country’s laws apply. All of this ought (likewise) to be referred to specialist legal advice.
© David Bentley
Bentley Agency Law Ltd