We provide specialist and experienced advice with drafting, negotiating, amending commercial agents contracts and also in situations where disputes arise. Our lawyers can help whether you are the Principal or Agent.
Agency law is a complex area covering a multitude of different types of business arrangements which fall short of employment. Agents are a common feature in business and many legal relationships come within the jurisdiction of the Commercial Agency Regulations.
Businesses often use sales agents in order to:
The difference between the relationship of employer and employee and principal and agent is quite fluid under English law, and generally each case is considered on it’s own merits by the courts in the event of dispute. A relationship which may have started with the intention of being agency can change over time, and be found by the courts to have become an employment relationship. This can result in:
Agency law is highly regulated, particularly by EU law. The Commercial Agency (Council Directive) Regulations 1993 (“the agency regulations”) gives sales agents rights, amongst other things to minimum notice periods and potentially significant compensation on termination.
These rights cannot be varied even with both parties consent, so it is highly advisable to take advice on whether what is intended as an agency contract is likely to be classified legally as employment, sales agency, marketing agency or distribution agreement. Marketing and/or distribution agreements are not subject to the agency regulations, making them potentially attractive for the above reasons.
It is highly advisable to have a professionally drafted agency agreement which will make detailed provision, amongst many other things, for:
Watch out for :-
Make it very clear what authority the agent has to negotiate and enter into contracts on your behalf. This also may mean communicating limits ton 3rd parties the agent deals with and consequently means considering the degree you may need to have access to what the agent is doing, who he/she is seeing and so on in terms of records and monitoring to protect your interests.
If the agency relationship involves sale and purchase of goods, the Regulations almost certainly apply. The level of compensation which you may have to pay the agent can be substantial.
Be very clear on this to avoid a dispute with the agent or finding out that he or she has the right to prevent you from expanding your business by using other agents due to exclusivity which may include a time or geographical element.
Consider a mechanism for resolving disputes and be clear as to what events or circumstances or performance indicators would give you the right to terminate the contract.
The agent will be likely to have access to confidential information, customer lists and know how, which you ought to protect carefully and potentially to consider non-competition restrictive covenants.
If you are a business considering an agency arrangement or an agent offered an agreement, please contact our solicitors for a fixed fee quote for a professionally drafted, tailored agreement to maximise your position and minimise your risks under the agency regulations. If you have a dispute, whether as agent or principal, we can help.