Q’s and A’s on agency law

by David Bentley
of Bentley and Co. Solicitors

Q. I am informed by my principal that it is
experiencing cash flow difficulties, and that that
is the reason why I have not been paid my
outstanding commission entitlement (which is
already significantly overdue). What are my rights
in this situation under the Commercial Agents
Regulations, and what do you advise? As I further
understand the position, my principal’s main
suppliers have been paid what they are owed, and
I am not aware of any employees who haven’t
been paid their salaries.

A. My advice is that the Regulations
contain “latest date” provisions as to when an
agent should be paid his commission, and your
agreement with your principal might moreover
entitle you to receive your commission even
sooner than those long stop dates, in any event. A
persisting failure by a principal to pay its agent his
commission on time may be tantamount to a
repudiatory breach of contract, which, in turn,
may then entitle the agent to resign his agency,
and claim compensation/an indemnity. Clearly, if
all other trading “partners” are being paid what
they are owed, then it may be the case that your
principal is regarding its obligation to have to pay
you your commission, too lightly. You need to
seek specialist legal advice, without delay, and
before you take any action.

Q. My main principal (which I have been
representing for approximately ten years) has
recently written to me, “informing” me that, with
effect from 1 August 2011, I am to lose a couple
of Counties off of my territory area. I calculate
that this will involve a loss of commission income
to me of approximately 25%. I do not have any
agreement in writing with this particular
company, and this situation has not ever arisen
before. In fact, no changes to the (unwritten)
terms of my engagement with this principal have
ever previously been made, without my agreeing
to them. What do you advise that I do, and what
are my rights?

A. Again, you need to seek specialist legal
advice, straightaway, and before you take any
action – time would appear very much to be of
the essence here. Reason for the urgency is that
what your principal appears to be intent on doing
is coercing you into accepting a fundamental and
very significant change to the terms of your
agency, and, unless you are very careful, you may
be deemed to have accepted the change, which
ultimately may cost you dearly whenever (for
example) an assessment is required to be made as
to whatever may be your rights to receive
compensation, on termination.
As with the previous question, if the principal
does not promptly reverse its intentions, and thus
back away from its attempt to make unilateral
changes to the terms of your agency, then,
depending on how (and how quickly) you
respond, it may very well be deemed to be in
repudiatory breach of contract.

Q. One of my main principals recently
sent me a commission statement which appears
to me to be inaccurate, in that no reference is
made to a sale which I am fairly clear was
concluded in the relevant period and which, if
that is so, will have generated commission for me.
What can I do in terms of verifying this
information, and is my principal correct that I am
not entitled to have access to its confidential
sales data?

A. No, Regulation 12 provides that you
are entitled to be supplied with all relevant
information which [in the words of sub-
Regulation 12(b)]:- “is available to [the] principal
and which [the agent] needs to check the amount
of commission which is due to him”. That being
so, and in appropriate terms, you should make
clear your position in the matter and what
therefore you require, to your principal.

Q. Whereas one of my main principals has
recently started requiring me to complete its
newly introduced “standard” call reports, I am
concerned that the format of these reports
makes them impractical, and that I would not be
able to adequately comply with this request. I
have held this agency for many years, and do not
have any written contract – what is my legal

A. In the absence of there being any
[relevant provision in any] written agreement nor
any previous relevant “custom and practice”,
consideration of your position focuses on
Regulation 3(c), which obliges you to “comply
with all reasonable instructions” given by your
principal. Clearly, however, as to what is a
reasonable request in any particular situation
depends on the relevant facts and circumstances
and, that being so, I would need to establish with
you factors such as what your principal is asking
that you do, with what sort of regularity you
would be required to comply, and the nature of
your agency (i.e.:- what your function involves
you having to do on the principal’s behalf).

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

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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