Imballaggi manufactured plastic packaging materials. In addition it imported such materials into the United Kingdom. There was no written agreement between the parties. It was clear from the evidence that Imballaggi had been prepared to do business with Pacflex acting either as a distributor or as an agent. Furthermore, Pacflex’s sales director described agents both as middlemen who acted as agents for a commission and middlemen who bought and resold goods. Pacflex did not, however, hold any stock of Imballaggi’s products.

As a result of Pacflex’s failure to pay for materials received, Imballaggi brought an action against Pacflex. Pacflex admitted that certain invoices were unpaid. However, it claimed unpaid commission and compensation under the Regulations for termination of an agency agreement between the parties. Imballaggi argued that the Regulations did not apply.

It was found that Pacflex had chosen to act as a distributor and so did not have the benefit of the rights and entitlements granted to agents on termination of the agency. This was because, whilst the relationship between the parties was not formalised in a written agreement, business was done on a sale or return basis. In addition there was nothing to indicate that Pacflex had any authority, or even purported to have any authority, at any time, to enter into contracts as an agent on behalf of Imballaggi.

The court then went on to consider whether, if Pacflex had been a agent, its activities as a commercial agent would have been secondary. The court concluded that had Pacflex been an agent, its activities were such as to be secondary in any event.

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 Jane Elliot

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