The Regulations (formally called the Commercial Agents (Council Directive) Regulations 1993) were threatened in May 2024, when the Government announced a consultation to consider whether they should be disapplied to new contracts.
In what is likely to be welcome news for agents, and frustrating news for principals, the Government has now announced that the Regulations will remain in force without amendment.
The consultation took place because the Regulations were derived from an EU Directive and, post-Brexit, the Government was considering disapplying them for new contracts.
The Regulations apply to contracts between agents who fall within the definition of “commercial agents” in the Regulations and their principals (i.e. a seller of goods). One of the intentions of the EU Directive, which led to the Regulations, was to provide protections for commercial agents.
As well as imposing duties during the life of the contract, the Regulations mean that, most significantly, principals have to pay compensation or an indemnity to the agent on termination of the contract (subject to some limited exceptions).
Unsurprisingly, the responses to the consultation were polarised between agents and principals. Agents who responded valued the Regulations for the security they provided when negotiating and ending contracts, whilst principals said they were bureaucratic and prevented them from negotiating alternative terms, including lower terms on compensation and indemnity.
Following the consultation, the Government has decided to keep the Regulations in force without amendment, on the basis that there is not a strong enough case for change
The result is that principals and agents can be certain in the knowledge that the Regulations will continue to apply, and can manage their businesses accordingly.
DWF's Ben Griffin specialises in work in the field of commercial agency. The legal directory Legal 500 noted that "Ben Griffin is noted for his expertise in commercial agency disputes, and he has ‘a deep knowledge and understanding of the case law in this field." Ben has co-authored a textbook on commercial agency with Oliver Segal KC (‘Commercial Agency – A Practical and Legal Guide’ by Oliver Segal QC & Ben Griffin – Law Brief Publishing).
If you would like to discuss any issues relating to commercial agency, please contact one of the authors below. .
