Legal Advice for Sales Agents and Principals
If you have legal questions related to the relationship between commercial sales agents and principals you’re on the right page right now
If you have legal questions related to the relationship between commercial sales agents and principals you’re on the right page right now
Legal advice for Sales Agents and Principals is now available via this website to give you help and advice from a top legal team with years of experience in the sales agency field.
Salesagents.uk are teaming up with a firm of professional lawyers to give our website visitors access to legal advice on all matters relating to sales agency relationships, contracts, agreements, and regulations.
The big majority of working relationships between principals and self-employed agents run smoothly.
But if problems do arise you may need professional legal advice to protect your interest and get a fair outcome. If you find yourself in that situation simply complete the form at end of this page, giving us a brief overview of the situation and your contact details, and a member of the legal team will contact you.
By getting good legal advice at the start of the sales agent and principal relationship you can prevent problems from occurring.
A professionally written contract, by a lawyer experienced in sales agency regulation, gives both the principal and the sales agent a clear understanding of the agreement they are entering into from the start.
A professionally drawn up agreement protects both parties. It can be used to settle disputes quickly and inexpensively compared to situations where no agreement, or a poorly written agreement, exists.
If problems and disagreements arise later, the money spent on having the contract drawn up by a legally trained expert will prove a good investment for a principal.
For a sales agent, having the agreement offered by a principal checked by an experienced lawyer can highlight areas of concern that the agent may not have noticed.
If you’re a sales agent or a principal ready to enter into new agreement and you would like legal advice, complete the form below.
Some disputes between agents and principals can be resolved by discussion, but sometimes legal advice is required.
Both sides have rights and obligations. Some of these are covered by EU law, the Commercial Agency (Council Directive) Regulations 1993 (“the agency regulations”). Disputes not dealt with effectively can escalate into expensive and time consuming claims for compensation.
If you have an ongoing dispute and would like legal advice on your rights, obligations, and interpretation of The EU Agency Regulations, complete the form below and a legal representative will contact you.
Salesagents.uk cooporate with Bentley Agency Law Limited which are the leading experts on agency law in the UK.
Bentley Agency Law is a specialist law firm, based in Leeds (England), which practices, exclusively, commercial agency law. It has been in existence for this purpose for approaching 25 years.
If you need professional legal help you can contact their legal team. Initial brief conversation about your case without charge or obligation. To make contact you can use the contact form below or e-mail David Bentley at [email protected] or call him at +44 (0) 113 236 0550.
Below you’ll find answers to FAQs from sales agents on legal issues. If you have additional questions you can e-mail them to us at [email protected] and we’ll (with help from Bentley Agency Law Limited) add it to the list.
Quite simply, you must comply with all contractual obligations, as well as (and pursuant to Regulation 3(2) (c) of the Commercial Agents Regulation) otherwise comply with all reasonable instructions given to you from time to time by the principal.
The key therefore is to understand the nature and detail of what specifically you may have agreed to do in any written contract, or otherwise implicitly accepted as your obligation over a period by custom and practice, and (secondly, and beyond that) adjudge what is and what is not “reasonable” in terms of what you may be being asked to do.
Following on from the above, and with reference to what you have set out in your question, as to whether or not you are obligated to have to report to your principal (e.g.:- as to your sales activities or otherwise as to marketing conditions), and/or to (assist in) collect(ing) debts will depend on (firstly) whether you ever expressly agreed that you would undertake such obligations (or have otherwise undertaken those functions over a sufficiently significant period of time so that it might be regarded that you had thereby implicitly accepted your role in complying with them) or (secondly and otherwise) as to whether what you were being asked to do, and taking account of all circumstances, was reasonable or not.
No, this is not correct, as compliance by the principal with its obligation to afford proper notice does not thereby enable it not to have to comply with its separate obligation to (potentially) have to pay compensation/an indemnity.
Further to the above, if proper notice is not afforded to an agent, he (the agent) would potentially be entitled make a claim for (so-called) damages in lieu of notice (i.e.:- reflecting the net amount which the terminated agent would have earned over the relevant notice period) but that would be in addition to his claims for compensation/an indemnity, pipeline transaction commissions pursuant to (if applicable: -) Regulation 8, and any commissions owed, in any event.
The first point to make to you is that the appropriate length of your notice period need not necessarily be the equivalent of three months, but that it rather depends on how long the agency has been ongoing, the circumstances of termination and (also) whatever may be the correct interpretation of any provisions of any relevant contractual terms agreed (if longer than the statutory minimum period).
The second point to make to you is that if your agency has been terminated (and irrespective as to whether or not you may have been afforded correct notice), you cannot unilaterally decide to continue to act as the principal’s agent if you no longer have authority (/permission) to do so. In other words, and in terms of as to whether the agency is continuing or not, it does not matter whether your principal has acted unlawfully in improperly affording you an insufficient period of notice, as (firstly) if your continuing authority to represent the principal has been withdrawn then you must cease your activities accordingly and/but (secondly, and as advised in the answer to the previous question) and if you can establish that the notice period afforded to you was insufficient, and in addition to all of your other post termination rights, you would be entitled to bring a claim for (so-called) damages in lieu of notice.
Depending on (1) when exactly the agency terminated (and the date when you were given notice of termination need not necessarily coincide with when the agency actually ended), and (2) [depending also on] whatever you may already have communicated to the principal in terms of effectively notifying of your intention to pursue your prospective right/entitlement to compensation/an indemnity, you may now already be too late to proceed with your claim (for compensation/an indemnity), as Regulation 17(9) of the Commercial Agents Regulations is very precise in requiring that agents who intend pursuing their prospective rights to compensation/an indemnity have to have notified of their intention in this regard within (i.e.:- no later than) 12 months following termination.
Following on from the above, my advice would be, and in the circumstances which you describe, to promptly seek our further advice, and so that we can deal extremely urgently with any action which may be required to be taken straightaway, and secondly (and more generally) always seek advice very promptly after you are ever served notice of termination of any agency, as the exact timescales within which you have to have notified of your intention to bring a claim can sometimes be difficult to establish, and (secondly) the obligation to have to effectively notify of your intention to bring a claim is an absolute one in terms of the relevant timescale for compliance.
I doubt that this should be a problem for you in that Regulation 2(1) makes clear that agents who (merely) “negotiate” sales (as opposed to agents who negotiate and conclude sales) are ordinarily to be regarded as commercial agents for all purposes of the legislation, in the same way. In any event, in establishing as to whether you fall within the scope of being a commercial agent for the purposes of the Regulations, it is necessary to establish and consider what your role exactly entails without necessarily being overly concerned with whatever the relevant contractual wording may be which wording might otherwise [deliberately be intended to] suggest that your role falls outside the scope of the statutory definition of what constitutes being an agent.
You need urgently to establish as to whether your agency has indeed been terminated, to which end you should continue to press the principal to confirm in writing what you understood he informed you of over the telephone although, in doing this, the greatest possible care must be taken (i.e.: care in the choice of words which you use) to ensure that, by what precisely you set out in your communication to the principal, it is not credibly possible to claim that you somehow yourself thereby effectively terminated your own agency (as, ordinarily, any agent deemed to have terminated his own agency agreement, would resultantly then lose any entitlement he might otherwise have had to any form of compensation/an indemnity).
Further to the above, if the principal still refuses or declines to confirm in writing its decision to terminate the relationship, then (after very promptly taking advice) you will need to send a carefully worded communication which clearly sets out your understanding of the position and what assumptions (unless otherwise corrected by the principal) you will make on that basis in now going forward, accordingly.
Unless you have ever agreed (either by a provision in a written agreement, or otherwise by custom and practice to such effect) that the principal in this instance is entitled to convert into house accounts any customer accounts introduced by you (or otherwise allocated to you) and to not then have to continue paying you your normal commission entitlement, then the principal cannot lawfully do what you have described and so that you should receive appropriate urgent advice, to protect and remedy your position.
Unless there is either any express provision in any written agreement which entitles the principal to act in the way that you are describing, or there is (otherwise) any established custom and practice (similarly) entitling your principal, then the answer is that your principal, without your agreement, cannot simply and unilaterally restructure territory areas in the way that you have set out (or in any other way). In these situations, it is however essential to raise your objections promptly, effectively and in writing as – but depending on all of the facts and circumstances, and after various steps have been properly taken and legal advice promptly sought and received – you may be able to claim that the principal (by its actions) has effectively constructively terminated your agency.
Whereas (unless there is any provision in any agency agreement which entitles the principal to object as to how many other companies you simultaneously represent) the principal is not expressly entitled to apply pressure in the way that you describe, the principal would (however) be perfectly entitled to criticise you in the event that it was evident that your efforts on its [the principal’s] behalf were less effective on account of the number of other principals you represented thereby making you less able to act in its best interests.
I am assuming that the other agencies to which you refer are non-competing as, unless (and most unusually) a principal had given its consent to the agent operating a competitive agency, the principal would generally always be entitled to question an agent having any another agency involving him [the agent] selling competing products.
Assuming (firstly) that you operate [predominantly] in Great Britain on behalf of this principal, and that (secondly) there is no express agreement to the effect that you have opted rather to be subject to German law, then the answer to your question is that your relationship with this principal appears likely to be governed instead by the Regulations which operate in the UK and not the German very broad equivalent (as the issue as to which country’s laws apply to the agency relationship is not determined by the geographical location of the principal, but ordinarily instead rather by an analysis as to in which country does the agent carry out his agency functions).
This depends and the reason for that can be explained, as follows (although it is also not as simple as straightforwardly claiming the equivalent of x or y months’ gross commission earnings): –
If you do not have any agreement in writing with this principal and cannot therefore establish any contractual entitlement to any greater period of notice, you would ordinarily then be entitled to a minimum of either one month’s notice (i.e.:- if your agency has been ongoing for less than a year), or to a minimum period of two months’ notice (if your agency has been ongoing for more than 12 months but less than 2 years), or (instead:-) to a minimum period of 3 months’ notice (if your agency has been continuing for any period longer than two years). Moreover, and unless it has been otherwise agreed, the end of the notice period must coincide with the actual calendar end of the final month – e.g.:- if your agency had been ongoing for 18 months when it was terminated on 10 November 2017, (and again assuming that you had no contractual agreement to receive any period of notice longer than the statutory minimum of (in this case) 2 months) you should then be entitled to notice through to 31 January 2018.
Finally, if you do happen to have a valid contractual notice entitlement in your favour which entitlement is greater than the statutory minimum, then that contractual entitlement would ordinarily prevail.
Potentially, yes, with two provisions of the Regulations appearing to be in point:
Firstly, Regulation 4(2)(b) requires a principal to notify its agent within a reasonable period if it [the principal] anticipates that the volume of transactions in the territory will be less than the agent could normally have expected; and:-
Secondly, and by Regulation 11(1), the agent’s right to commission can only be extinguished where the transaction in question has not been concluded and where the reason for that (non-conclusion of the relevant sale) is not anything for which the principal could be blamed.
On account of both of the above provisions, it appears that it could be argued that, potentially [and it would always ultimately depend on a careful and detailed analysis and assessment of all of the relevant facts], you may be entitled to receive what would have been your due commission entitlement.