Mr Parks was the tenant of a service station owned by Esso under an Esso Motor Fuels agency agreement. The terms of the agreement were that Mr Parks was obliged to buy all his motor fuels and lubricant requirements from Esso at prices charged by Esso, that he could not sell any competing products or carry on any other business. Mr Parks had a bare licence to occupy the site, the land and equipment remaining the property of Esso, for which Mr Parks paid prescribed fees. Mr Parks was under an obligation to operate the service station in the manner laid down by Esso in two documents. The shop, the sale of lubricants and the car wash were operated by Mr Parks for his own benefit. However, the sale of fuel was by Mr Parks as agent for Esso such that it remained the property of Esso until property in the fuel passed to the motorist.

Mr Parks was entitled to receive a commission on sales and was permitted to use only credit cards and other banking facilities approved by Esso. Subject to that, the risk of non-payment would be borne by Mr Parks.

The agreement was terminated by Esso with immediate effect in 1997. Esso alleged various breaches of the agreement by Mr Parks, including failure to keep the service station open for 24 hours and failure to supervise the site properly.

Mr Parks issued a claim against Esso claiming, amongst other things, damages for breach of the Commercial Agents (Council Directive) Regulations 1993.

It was held that, under the terms of the agreement, Mr Parks did not have authority to “negotiate the sale or purchase” or to “negotiate and conclude the sale or purchase” on behalf of Esso under the definition of a Commercial Agent in the Regulations. In so far as Mr Parks had a limited discretion with regard to the method of payment, that did not include any process of negotiation in the sale itself. In giving judgment, Lord Justice Morritt stated that:

“If the word “negotiated” is given its ordinary English meaning, I feel myself quite unable to avoid the conclusion the [Mr Parks] is not a commercial agent. He does not negotiate the sale of motor fuel. The price at which motor fuel is sold is fixed by the principal. He concludes the sale as agent, but does not negotiate in any sense at all.”

Lord Justice Morritt went on to state that:

“Did Mr Parks negotiate and conclude the sale of petrol owned by Esso to those who attended his forecourt? I take the normal meaning of the word from the Oxford English Dictionary definition… . This definition does not require a process of bargaining in the sense of … haggle. But equally it does require more than the self-service by the customer followed by payment in the shop of the price shown on the pump.”

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 Sarah Pooley

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