Agency Law in Great Britain

Implementing legislation

Commercial Agents (Council Directive) Regulations 1993 (Statutory Instrument 1993 no. 3053 of 7.12.1993 and Statutory Instrument 1993 no. 3173 of 16.12.1993), as amended, and Commercial Agents (Council Directive) Regulations (Northern Ireland) 1993 (Statutory Rules of Northern Ireland 1993 no. 483 of 17.12.1993).

Proper notice

  • 1 month if less than 1 year;
  • 2 months if more than or equal to 1 year and less than 2 years;
  • 3 months if more than or equal to 2 years.

Indemnity or compensation or both

Indemnity or compensation; compensation in absence of express agreement.

Calculation of indemnity/compensation

  • Indemnity: Capped at a maximum of the average annual commission over last 5 years or, if less than 5 years, over duration of agency.
  • Compensation: Determine the value of goodwill which the agent has lost as a result of the termination of the agency. An independent valuation prepared by accountants or valuers is recommended.

Pre-termination commission

Yes.

Post-termination commission

Yes.

Back commission

Yes.

Other entitlements

Right to inspect principal’s books.

Restrictive Covenants

1) Is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?

The Regulations contain no prohibition on such restrictions applying during the term of the agreement. However, restrictions of this nature will still be subject to the common law doctrine of restraint trade. Enforceability will depend on their being reasonable both as between parties and in terms of the public interest. Generally speaking, the narrower or shorter the restriction, the greater the chance of enforceability.

2) Is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?

It is possible to include a post-termination restraint of trade clause on the agent provided that this is agreed in writing, relates only to the territory and good entrusted to the agent under the agency agreement and does not last for more than two years after the termination of the agency agreement. The common law doctrine of restraint of trade will also apply to such restrictions.

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