One of the potential benefits to agents following an agency termination situation, is the right to pursue against the principal a claim for commissions in the pipeline. In other words, the potential right to be entitled to commissions in respect to transactions concluded within a reasonable period after the termination date, and where such transactions can be shown to have been mainly attributable to the agent’s efforts (as opposed to anyone else’s). The above referred to right is pursuant to Regulation 8 of the Commercial Agents Regulations, and is potentially quite lucrative from an agent’s point of view (in supplementing other claims, such as any claim to, as appropriate, compensation/an indemnity), but a couple of points need to be carefully noted:-Firstly, the right to these so-called pipeline transaction commissions can in fact be entirely excluded where the parties [i.e:- the principal concerned and the agent] have agreed such an exclusion or carveout. Put another way, if any agent has an agreement with his principal which, via any relevant (obvious or less obvious but nonetheless) effective wording, excludes the right to claim (following termination) Regulation 8 commissions, then such a clause would likely be valid and the agent would not then be able to pursue any such rights. Secondly, and in practice, establishing the right to claim a specific amount by way of pipeline commissions may become quite difficult for those agents who haven’t maintained a clear paper trail to enable them to effectively prove, when any relevant transaction may be concluded post termination, that that transaction was down to their [the agent’s] efforts, as opposed to anyone else’s.
The lessons from the above therefore are:- One: Check agreements before you enter into them (and I’m bound to say, take legal advice) to ensure that your prospective right to claim Regulation 8 pipeline transaction commission is not in fact excluded (and to otherwise be clear as to what terms/conditions may apply to any included right to Regulation 8 commission), and take further note that any effective exclusionary wording may not actually directly refer to “Regulation 8”. Two: Maintain the clearest and most detailed proper trail possible, to hopefully then enable you to straightforwardly establish that any relevant transaction concluded (within a reasonable period) following termination was indisputably predominantly as a result of your efforts.
Bentley and Co.
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 Fax: 0113 236 2511 Email: firstname.lastname@example.org 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 the 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.