The case concerned an agency agreement which gave the principal the right to amend the agent’s territory where the agent failed in the principal’s reasonable opinion to maximise sales opportunities. The court decided that it was reasonable in the circumstances for the principal to conclude that the agent was not maximising sales, and that consequently reducing the agent’s territory did not constitute a termination of the agreement, giving rise to a claim for compensation under the regulations as the agent argued. Nor, the Court held, did the clause in question constitute an agreement to derogate from the agent’s right to compensation which would be void under the regulations.
The Court also held that, had the agent been entitled to compensation, the agent would have had to produce evidence to prove its loss, and could not expect the court to estimate losses flowing from the termination of its own initiative. It was also held that where an agency contract is terminated without the required contractual notice, any claim for loss of commission which would have been earned during the notice period should not be made separately, but would be taken into account in assessing compensation. Finally, the court upheld a provision in the contract limiting the agents rights to commission on transactions concluded after termination due to the agent’s efforts, to transactions concluded within one month of termination.
Edward Miller, IDI country expert for the United Kingdom.
