QUESTION:

I was wondering if you could give me any advice on a problem I’m having with an agent. I make and sell handbags. I recently received a re-order from a company my agent had introduced. The company let me know that they were placing the order directly to me. I was confused as I was sure that this order was supposed to go through my agent, and not directly to me. The first order had gone through the agent.

I let my agent know about the re-order, expecting the agent to confirm that, despite the order having been placed directly with me, I still need to pay commission to the agent (which I was happy to do). My agent misunderstood and started sending me very angry emails, about how I am ripping her off. Despite my attempts to explain that this was never my intention, my agent is still very angry and is now threatening me. My agent has informed me that he knows a lot of people in the business and will tell them all about me to make sure ‘they know who they are working with’.

Payment for the first large order from this company is overdue and I have not heard back from them or the agent.

I am worried as I would never think of not paying commission to my agent, but he just will not listen to me. I have paid him on time for all his other work in the past. I am really not sure what to do now and would appreciate your advice.

ANSWER:

There are two separate issues which need to be addressed. I comment very briefly below on each of them as follows:

The first is your agreement with the agent. Whether the agreement is written or unwritten, your agent will owe certain duties to you both as a matter of common law as well as under the Commercial Agents Regulations 1993.

Given that it appears from your email that a misunderstanding is at risk of resulting in serious consequences, you should consider writing formally to the agent:

  1. confirming that you have never sought not to account to the agent for commission in respect of this customer;
  2. informing the agent that he owes a common law fiduciary duty to you as well as a statutory obligation to act dutifully and in good faith towards you and as such if he carries out his threats he will be in breach of both; and
  3. requiring him to confirm in writing to you that he will not carry out his threats.

If he carries out his threats, certain legal issues will arise including whether you wish to terminate the agency agreement and whether his actions have given rise to a defamation claim against him.

The second issue is in securing payment for the first order. When you agreed to make the sale, a contract would have been concluded between you and the company. The terms of payment will be those agreed between you (for example, by reference to your standard terms and conditions of sale) or will be determined under the Sale of Goods Act 1979 (as amended). Subject to establishing the terms of payment you should then seek to ensure that payment is received as soon as possible.

Written by Agentlaw Team

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