Commercial Agents
Sep 5, 2007
Author: Iwan Emanuel

In an important recent judgment (Lonsdale v Howard & Hallam Ltd), the court of appeal looked at the law that protects such agents. The regulations provide that self employed agents marketing goods are entitled to a lump sum in many cases where their agreement is terminated, even where proper notice of termination has been given. In addition, where the agent dies or is too old or ill to continue, compensation may be payable. [Partner’s name] a partner in [firm’s name] says “This cannot be excluded by contract terms although it can be capped at a year’s commission if the agreement provides for this by way of what is called an indemnity”. Some of the earlier cases had held that, as a rule of thumb, a payment of two years’ commission in the absence of an indemnity clause, would be payable as is the case in France which has similar laws. However, in this latest court of appeal judgment the judge held that:

· the correct way to calculate damages payable to the agent is the loss of the agency business, including goodwill, similar to the sale of a business in general, and that this will sometimes require an expert witness to give evidence on valuation issues
· the starting point for compensation is not two years' commission as that is too arbitrary in assessing an agent’s loss. Any case holding 2 years as the yardstick was wrong.
· Also there was no 'just and reasonable' test to be used in assessing compensation.

If you need any advice on commercial agency law whether as agent or principal contact us for further information.