Mr Hackett had been a commercial agent for Advanced Medical Computer Systems Limited. Advanced Medical terminated Mr Hackett’s agency on 11 April 1994 without giving Mr Hackett the proper notice as required under the Commercial Agents (Council Directive) Regulations 1993, or paying Mr Hackett any compensation in lieu of the notice. Advanced Medical had also failed to pay any other amounts by way of post-termination commission or compensation.
The Regulations require agents to notify their principals of any intention to bring a claim for indemnity or compensation within one year after the end of the agency contract, otherwise the agent loses the right to claim. Mr Hackett’s solicitors wrote a letter to Advanced Medical on 25 May 1994 to recover outstanding commission due to him under the agency contract, and compensation under the Regulations. Four months later Mr Hackett issued legal proceedings in the High Court against Advanced Medical.
In the proceedings, Advanced Medical claimed that Mr Hackett had failed properly to notify his claim within the one year time limit imposed by the Regulations. After a preliminary hearing on the point, the High Court held that that test for giving proper notice was whether, “a particular communication conveys to the objectively reasonable reader that the agent intends to pursue claims under Regulation 17 [relating to compensation or indemnity].” The High Court went on to say that the agent does not need to specify whether compensation or indemnity is being claimed. The Court held that, in this case, Mr Hackett well satisfied the test and that Advanced Medical could not take advantage of the time limit in this case.
The lesson for both agents and principals is to ensure that they are aware of their respective rights when an agency contract is about to be or has been terminated. Getting the process wrong can be costly for everyone concerned.
This briefing note is for general information. For advice in applying this general information to your specific circumstances, please contact Stephen Sidkin or any member of the Fox Williams’ agentlaw team.(www.agentlaw.co.uk)
Written by John Greager