Agents Trading under Their Own Name Not Subject to Regulations…

by Alain Cohen
Director, Ashby Cohen Solicitors, London

A recent decision in the Court
of Appeal emphasised that to
come within the definition of a
“commercial agent” within the
Commercial Agents (Council
Directive) Regulations the
agent has to act on behalf of
the principal and not on his own
The case of Sagal (Trading as Bunz UK) and
Atelier Bunz GmbH involved the sale in the
UK by Mr Sagal of jewellery manufactured by
Bunz in Germany.
The important features of the way the
business was done was that Mr Sagal would
take orders from the UK customers and fax
these to Bunz in Germany, Bunz would
deliver the order to the UK customer and
invoice Mr Sagal and Mr Sagal would invoice
the UK customer in his name, requesting
payment to him, Mr Sagal. Mr Sagal would
receive a 20% discount on Bunz’s wholesale
price and would thus pay 80% of that price
to Bunz.

Under the Regulations, agents are entitled to
potentially significant payments on the
termination of the agency agreement, so
determining when the Regulations apply is
crucially important.
On the facts, the Court ruled that the agent
was not covered by the Regulations.
However, in its judgment the Court went
further, expressing the view that the
Regulations will not apply when an agent
concludes contracts under its own name,
even if the contracts could otherwise be said
to be made on behalf of the principal.
The Court held that the Regulations only
applied when the principal’s name appeared
on the face of the contract made with the
customer. An agency agreement now
seems unlikely to fall within the scope of the
Regulations unless either:
The principal concludes contracts in the
name of the principal directly with
customers, after the agent has
negotiated them or
The agent has authority from the
principal to conclude contracts with
customers using the principal’s name.

Principals and agents should consider their
current documentation and the way they do
business and determine whether or not the
agent is a “commercial agent” in the light of
the Sagal decision.
The decision also raises the possibility that
principals who are about to enter into a new
agency agreement might effectively opt out
of the Regulations by requiring the agent to
conclude contracts with customers in the
agent’s own name.

Ashby Cohen Solicitors Ltd
18 Hanover Street London W1S 1YN
Tel: 0207 408 1338 Fax: 0207 491 0414

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

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