The issue of the principal’s liability to pay his agent in circumstances where the principal has not been paid is one of the most complex under the Regulations.
A distinction is drawn by the Regulations between commission accruing and becoming due. Ultimately the principal is not liable to pay commission to the commercial agent when the principal has not been paid by the customer and this is due to the customer’s default.
In contrast, if the principal has not been paid because of making a short or late delivery or as a result of delivering defective goods, the principal is still liable to pay commission to the agent.
When involved with the termination of an agency agreement we will explore with our client whether payment has been made of all commission that should have been paid. Often this is not the position. The consequences for both principal and agent can be considerable. We have been involved in a number of cases where “back” commission of this nature has amounted to many £0000’s.