23 September 2019

Businesses, acting as principals, entering into contracts with agents to further the sale of their goods, and agents will generally be familiar with the Commercial Agents (Council Directive) Regulations 1993 which were brought in to implement the EU Commercial Agent Directive.

With Brexit looming, one might expect that the future of the Regulations is uncertain. In any event, it will take some time for any change to take place.

These Regulations are important as they set out various matters which apply to the relationship between a principal and its agent which cannot be excluded by the parties or may be excluded only if it is in favour of the agent.

Care requires to be taken where there is any cross-border element, whether within the European Union or further afield. The Regulations do not apply where, for example, the agent is not carrying out any activity within any EEA country. That said, if the contract between the parties specifically states that the Regulations are to apply, then that would be given effect. This is likely to be detrimental to the principal when the Regulations would not otherwise be of relevance.

Of greatest note perhaps regarding the terms of the Regulations is the agent’s right to compensation or indemnity on termination of the agency agreement in certain circumstances. The intention behind this is to protect the agent who is treated under the Directive as being the weaker party. From the agent’s perspective, it is important to note that the Regulations include a time limit on the agent’s ability to claim for indemnity or compensation. That time limit is one year from termination otherwise the agent cannot claim.

BTO is experienced in advising both principals and agents with regard to such contracts and the effect of the Regulations. In addition, through membership of our international network, we have good relations with more than ninety firms worldwide to enable us to source relevant local advice where necessary for our clients.

Contact: Jeremy Glen Partner jsg@bto.co.uk T: 0141 221 8012