How do you negotiate?

The view is often expressed that agency law is the same throughout the European Union as the EU Agents Directive has been implemented into the laws of all 28 member states.

Whilst much of the 28 national laws are very similar, differences remain.  Furthermore differences exist as to how  particular provisions in member states’ agency laws are to be interpreted.

This has been illustrated recently by an English High Court judgment and two judgements of the French Supreme Court as to the meaning of ‘negotiate’.  The concept of negotiation holds an importance place in the definition of a commercial agent who is described by the Directive as ‘............ a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods ...............’

So far as English law is concerned the Court of Appeal decided some years ago that ‘negotiate’ was to be given a wide meaning.  It was decided that ‘negotiate’ was concerned with the agent dealing with, managing, and conducting the relationship between the principal and its customers. More recently the High Court decided that ‘negotiate’ concerned the ability of the agent to win business and not the finalisation of the terms of a contract.

As a result the common perception that ‘negotiating’ must necessitate haggling is misplaced.  Indeed the Court of Appeal’s definition of ‘negotiating’ means that agents who might otherwise have fallen outside of the definition for the purpose of the Commercial Agents Regulations find that they come within it.

But, it would appear, not so in France where the Supreme Court has consistently applied a restrictive definition as to what is meant by ‘negotiate’.  In one very recent judgement the Supreme Court distinguished between an agent with power to negotiate sales with customers and an agent involved simply in promoting the products.  The latter was found not to be a commercial agent as the agent could not affect the terms of the commercial sale.

In another case decided in January 2015 the Supreme Court had to consider the position of an agent which could offer ancillary services to prospective customers.  Although the agency agreement described the agent as a commercial agent, the lack of negotiating powers was highlighted by the Supreme Court in its decision that the agent was not a commercial agent.

The difference as to ‘negotiate’ under English Law and French Law highlights the need to be clear in the agency agreement as to which member state’s laws are to govern the agreement and as to who is a commercial agent in order that principals can be confident as to their position throughout the European Union.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.
Stephen Sidkin
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