Commercial agents – avoiding disputes

We have experience acting for Principals and Agents at various stages of  legal disputes and proceedings across various industries. Get the right agreement with a commercial agent to avoid a dispute later Parties should obtain advice prior to entering into a relationship which may, or may not, amount to an agency. They need to consider

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We have experience acting for Principals and Agents at various stages of  legal disputes and proceedings across various industries.

Get the right agreement with a commercial agent to avoid a dispute later

Parties should obtain advice prior to entering into a relationship which may, or may not, amount to an agency. They need to consider the merits of a specific arrangement, including agency, partnership, distributor, contractor and/or employee. It is imperative that advice is sought from the outset to obtain a proper understanding as to the rights/obligations during the agreement, and upon termination. This will vary significantly depending on the status of the individual/company.

We have advised on cross border agency disputes, including France, Italy and Ireland; dealing with a range of industries from yacht builders to dairy farmers. One of the key principles that occurs throughout these cases, is that if the parties do not properly document their relationship from the outset,  they are likely to encounter significant difficulties at a later stage and it will make disputes far more difficult to resolve.

If an individual is engaged as an agent, and that may be the case whether the parties define it as such or not, then both sides must abide by the Commercial Agents Regulations 1993, which apply to European Member States. There are a number of obligations laid down by the regulations, but the most common area of contention arises upon termination, and the amount of compensation and/or indemnity due to an agent. One way to resolve this is by specifying in the agreement what an agent will be entitled to, although a principal should be aware that this is subject to a statutory minimum.

Once the parties are in dispute, and it is often the case that this arises when a principal seeks to terminate an agent’s contract and attempts to avoid compensation payments, it is important that legal advice is sought. This enables the party, agent or principal, to place themselves into a stronger position during negotiations. Both sides must have clear ideas as to their rights and obligations, and it is only based on the preparation beforehand that a reasonable negotiated settlement will be possible.

If disputes arise it is important that an agent, or principal, keeps a full note of details, if for example, there has been unreasonable treatment, which has not been placed in writing, it would be very difficult for that party to rely on it at a later date without an appropriate record. In addition any party needs to make it clear that they have not waived any breach. If one party breaches the agreement, the other party accepts that breach by conduct i.e. carries on with the contract without complaint, then there is an argument that they have waived the right to rely on it at a later date.

Finally, it is likely that the defending party will make a number of allegations against the other side, meritorious or not, and that party should be willing to deal with that. It is far easier, for example, for a principal to terminate a contract if they can allege that an agent is in material breach and avoid paying compensation or indemnity. This is a common tactic adopted by principals during negotiations and any agent should take steps to deal with allegations that will come their way.

Contact me for further advice in this area or alternatively, more reading on agents agreements is here.

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