The term “goods” forms a key part in the definition of a commercial agent under The Commercial Agents Regulations.  Unfortunately the Regulations fail to define by what is meant by “goods”.

This was the issue that lay at the heart of the decision of Abbey Life Assurance v Yeap.

In November 2001 the English Court of Appeal referred a question to the European Court as to whether policies for life assurance, annuities, health and pension business, unit trusts, offshore funds business, personal equity plans and other contracts offered by Abbey Life (“Financial Products”) were goods within the provisions of the Regulations and the Directive.  A further question was asked as to whether contracts for such Financial Products had to be marketable and/or assignable before they could be described as “goods” for the purpose of the Regulations and the Directive.

The background to the case was that in 1988 Mr Yeap had become an agent for Abbey Life to sell its Financial Products.  In 1997 Abbey Life terminated his agency and sought to recover a deficit of a £9,377.68 on his commission account.  Mr Yeap defended and counterclaimed by invoking the Regulations.  His defence and counterclaim failed before the Central London County Court which held that the Financial Products were not goods.  Mr Yeap appealed to the Court of Appeal.  In due course it referred two questions to the European Court.

Submissions to the European Court were made by Abbey Life, the UK government and the European Commission.  Mr Yeap did not make a submission.  The UK Government drew attention to the travaux préparatories for the Directive.  It pointed out that the first Commission proposal for the Directive had covered all “commercial transactions”, that is goods and services.  In addition the first Commission proposal had excluded intermediaries who carried on their activities in the insurance or credit fields.

The European Court pointed out that when the Directive had been made by the European Council all references to services had been deleted.  Furthermore the exemption of the above intermediaries had been removed as it had become otiose.  It also pointed to the Commission’s proposed directive to replace Directive 77/92/EEC (the “Insurance Agents Directive”).  The Commission expressed the view that the raison d’être of the Insurance Agents Directive would be doubtful if “that class of persons was already covered by the directive on commercial agents”.

It also accepted the UK submission in respect of the process of production not being equivalent to the provision of “services” within the meaning of the Treaty since it results directly in the manufacture of a material object (as decided by the European Court in an earlier case.)  Similarly the European Court had decided in another case that the fact that an activity may have some physical manifestation, does not mean it entails the supply of goods rather than, or as well as, services.

The European Court further pointed to the UK submission that the whole of Community legislation adopted in the fields of insurance and financial services is based upon the applicability of the Community rules of freedom to provide services or capital and not upon the applicability of the rules on free movement of goods.

As such the European Court had no difficulty finding that an agent involved in the sale of Financial Products did not come within the Directive (and, therefore, the Regulations.)

For a more detailed discussion of the position of “services” under the Directive, please see our briefing note entitled Goods v Services.

This briefing note is for general information. For advice in applying this general information to your specific circumstances, please contact Stephen Sidkin or any members of the Fox Williams’ agentlaw team. (

Written by Steve Sidkin


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