Q My agency recently terminated and I am concerned to get paid my commission entitlement in respect to orders which I had lined up to take on behalf of my principal within a relatively short window after the time when my agency ended. Have I the right to pursue that? A Whether you would have the right to pursue any entitlement to (so-called) “pipeline transaction” commissions depends on several factors:- Firstly, whereas [but subject to Regulation 9] Regulation 8 of the Commercial Agents (Council Directive) Regulations 1993 entitles agents to be paid “commission on commercial transactions concluded after the agency contract has terminated if … the transaction was mainly attributable to his [the agent’s] efforts during the period covered by the agency contract and if the transaction was entered into within a reasonable period after that contract terminated”, what would otherwise be that statutory entitlement may however be validly excluded (or limited) by agreement between the parties, and so that it would therefore be a matter of reviewing any agreements which you may have entered into with the principal in question, and thereby determining as to whether the right to pipeline transaction commission was validly excluded in the way I have explained (and keeping in mind that such an exclusion may not be as clearly or obviously set out as a simple stipulation that:- “the application of Regulation 8 is hereby excluded”). Secondly, and assuming that the right to commissions in the pipeline was not excluded by agreement, it is a matter then of determining as to whether any relevant transactions (entered into post termination of the agency) were concluded substantially as a result of [“attributable to”] the efforts of the agent, and (thirdly) ascertaining as to whether any (and, if so, which) of such relevant transactions were concluded within a reasonable period following termination. As is clear from the above, the first step is to have regard to any agency agreement in place, and keeping in mind that (and as another factor to consider) if that contract (directly or indirectly) does refer to Regulation 8 it may not exclude the agent’s entitlement altogether but instead limit it to a specific post termination period. Q I am concerned that I am not being paid all commissions which are due to me – in particular, there have been a number of orders placed by a customer who is based in my territory area and who the principal is claiming is now a house account, and where I am therefore not receiving all commissions which I expect – can the principal do this? A In order to answer your question, it would be necessary to first of all determine as to whether you have any written agreement with the principal concerned (and, if so, to establish what that agreement provides for in terms of potentially entitling the principal to unilaterally nominate any accounts into hose accounts). If in fact (and on the other hand) there is no agreement in writing, it would be necessary primarily otherwise to determine whether there had been any previous custom and practice established whereby (by such custom and practice) you may potentially have effectively agreed that the principal could unilaterally nominate accounts as house accounts (and without thereafter having to pay you any commission). The above aside and if it can be shown that you did not ever agree that the principal could unilaterally nominate/ convert any accounts into house accounts and if it can also be shown that you have in fact an “exclusive” agency (in the sense that you are entitled to receive commission in respect to all sales from a particular group of customers or from a specific geographical area, irrespective as to whether or not you may necessarily have taken the orders in question yourself) then Regulation 7 would ordinarily provide you with a basis for establishing an entitlement to receive the commissions from all such sales. Q I had acted as an agent for one particular principal for a number of years, and have had that agency terminated. In response to the claim which I have initiated for compensation, I am being told that I have in fact no such entitlement as I would not be regarded as a “commercial agent” within the meaning of the Commercial Agents Regulations, as my role did not involve me in actually concluding sales, but only in marketing the company’s products and negotiating orders (with the orders taken by me then being passed to the principal to conclude). What is your view, please? A As the definition of a “commercial agent” [by Regulation 2(1)] is “a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person, or [continuing authority] to negotiate and conclude the sale or purchase of goods on behalf and in the name of that principal”, and as you say that you had authority to negotiate, I do not see that you would not have the clear basis for establishing that (and all other relevant factors considered, such as the provisions of the Schedule to the Regulations) you were not a “commercial agent”. In other words, and on the wording of the definition in Regulation 2(1)) alone, it is quite clear that having the authority just to “negotiate” sales (and subject to any other relevant considerations) would suffice to bring an agent within the scope of the legalisation. Moreover and in any event, the scope of what constitutes an agent in terms of whether what he does constitutes “negotiation” is now interpreted relatively widely pursuant to a series of court cases, and so that (subject, as I say, to consideration of any other relevant criteria) I would not ordinarily expect the function which you describe to be an issue as regards being entitled to bring a claim. Obviously, there may or may not be other aspects to your case in considering as to whether you have claims arising from the termination, but your entitlement to bring a claim based on whether or not you were a “commercial agent” would not appear to be one such issue. Q Whereas I don’t have any agreement in writing with my main principal, I am being required to carry out a significant number of roles which I would regard as being beyond the scope of what was agreed. Am I obligated to have to carry out these additional functions? A A “commercial agent” (as defined by the Commercial Agents Regulations) is required to comply with his or her principal’s “reasonable” instructions, and what is “reasonable” in all of the circumstances can sometimes be unclear. In other words, whether or not you may be obligated to have to comply with what you say you are being asked to do will depend on (for example) what was agreed at the outset as the extent of your role, what may have been agreed subsequently, what may have been indirectly agreed over time through “custom and practice”, and depend also on all of the other relevant circumstances such as whether it’s a one off request which you are being asked to fulfil. Obviously, if you are prepared to carry out additional functions on a one off basis, then you should promptly make that clear (in writing) to your principal (and so that your compliance in one off instances should not be misconstrued as an agreement to take on those duties on a long term basis). Also, keep in mind that if ever you are presented with a detailed written agency agreement (by this principal, or by any other) you need obviously to carefully check it to satisfy yourself that you are able to comply with all of the obligations stipulated. The reason for that is that any subsequent breach on your part may potentially be sufficient to entitle the principal to terminate your agency without any notice (i.e.: – on a forthwith basis) and, in so doing, to thereby prevent you from being able to bring a claim for any compensation/an indemnity. Also, if it is your current principal who presents you with a draft agency agreement then you particularly need to check that in order to ascertain that you are not being asked to undertake obligations which are any different to what you have already agreed to. In other words, whereas either party may require the other party to enter into a written agency agreement, that party being requested to sign the agreement would not be obligated to have to agree to the extent that what is set out in the document does not fairly and accurately reflect the basis of the current agreement, and/or otherwise whey they are prepared to accept as variations. © David Bentley Bentley Agency Law Limited
David Bentley is a Partner with Bentley and Co. Solicitors and specialises in agency law.
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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.