A judge has held that an agency agreement did not terminate at the point at which an agent stopped selling, because the agent continued dealing with secondary duties for a period of time thereafter.
Agents are entitled to claim for compensation for termination of their agency under the Commercial Agents (Council Directive) Regulations 1993. The claim must be made within twelve months of the termination. In the case in point, the agent was an intermediary engaged to work on behalf of a luxury clothing brand to negotiate sales of the seasonal collections. The trial was that of preliminary issue to decide whether or not a claim for compensation under the Regulations was time-barred.
The claimant argued that secondary duties such as customer service, dealing with discrepancies, repeat orders and chasing for payment did form part of the agreement and therefore the claim was not time-barred. The defendant’s contention was that the agency agreement terminated at the time when the orders for the clothing were finalised, around three months beforehand.
One problem was that most of the discussions regarding the terms of the agreement were conducted by telephone and there was no documentary record of these. It was, however, accepted by both parties that the defendant had given oral notice of the termination but the actual date was not specified.
It was held that although the Regulations define an agent’s role as that of being a ‘continuing authority to negotiate’, the contract did not necessarily end at the point at which the agent stopped negotiating sales. Simon LJ said, “This reducing, but continuing, commercial activity was indistinguishable from the type of commercial activity which occurred during the previous…season."
The full judgment can be found at http://www.bailii.org/ew/cases/EWHC/Comm/2009/2857.html.
This case demonstrates the difficulties that can be experienced when contractual terms are not set out in writing. Had there been a simple clause specifying the notice period and the method by which the notice was to be communicated, both parties would have had a clear understanding of their legal position.
Contact us for advice on any contract law matter.