Frequently Asked Legal Questions by Agents

My Principal wishes to terminate my agency as he says he wants to employ a full-time sales person. I have been with him 3 years and wish to know my rights. I have no written contract.

Basically the agent is entitled to three things in this situation:

1. 3 months notice and
2. A payment for commission which will arise as a result of business that is in the pipeline on termination.
   and
3. Compensation.

(For how compensation is calculated see '5' below)

My principal has sent me a new agency contract which contains a clause which states that on termination I am to be 'indemnified' under The Commercial Agents (Council Directive) Regulations 1993. what does this mean?

This means that any compensation for the termination of your agency is to be limited to a maximum of one year’s commission averaged over the previous five years or for a shorter period if the agency have operated for shorter periods. If the agreement does not mention the agent being indemnified on termination the agent will be entitled to compensation.

(For how compensation is calculated see below)

Do I still have the full benefit of the Commercial Agents Regulations even if there is no written contract between myself and my Principal?

Yes. The existence of a commercial agency contract is accepted even where the agency contract was entered into orally.

I am about to reach 65 and have been with my Principal some 20 years. Does our agreement automatically terminate and if so can I claim compensation.

The contract does not necessarily terminate unless it includes a specific retirement age. However, it seems that irrespective of this if the agent wants to carry on and is capable to doing so then in spite of the contractual retirement age he can make a compensation claim.

There is also the possibility that Age Discrimination legislation may affect the situation.

I have no written contract with my Principal but he now wants to terminate my agency. He seems to accept that on top of my notice entitlements he will pay me compensation. How will this be calculated?

Following the House of Lords case in Lonsdale -v Howard & Hallam the compensation that is to be paid upon termination of any agency is now to be calculated forensically. It is to be based on the value of the agency if it was offered on the open market much like any other business. Each calculation will therefore depend on the individual circumstances.

I am presently a sole trader with a number of agencies for various Principals. I now wish to form a limited company and transfer all my agencies to the new company. All my Principals have agreed to do this. Will the limited company still be protected under the Regulations?

When the Regulation was first introduced it was a difficult question given the fact that for them to apply the Regulations require that the agent be 'a self-employed intermediary'. However, as a result of government guidance and case law it is now accepted that the Regulations do apply to agents who are limited liability companies.

My Principal has continuously failed to pay me and on a number of occasions has broken the terms of our written agreement. I could no longer stand it so I resigned. Am I still protected by the Regulations and can I claim compensation?

Yes. Compensation is payable even where the agent resigns if he did so justifiably because the Principal is in serious breach of the contract e.g. where the agent has not been paid. Accordingly the agent can terminate and still claim compensation under the Regulations but as disputes revolve around whether the Agent was justified in resigning, legal advice should be taken on the particular facts.

I have been an agent for some ten years and my Principal says that as he is losing money, he cannot trade anymore. He proposes to cease at the end of this month. Do I still have a claim against him under the Regulations?

The agent in theory has a claim under the Regulations but if the Principal is closing a loss making business of which the agent is part, then the agents claim for compensation may be very little if anything. In spite of what the agents claim may be, it is unlikely that he will get very far with it if the Principal has no money.