The agent, Spectrum, had become frustrated by poor service from the principal, Crocs and went so far as to post on its website as a joke, derogatory comments about the principal in the form of a video inspired by the Star Wars films. Crocs claimed that this action (a) was a breach of a condition implied into the agreement by Regulation 3 of the Regulations under which the agent must look after the interests of his principal and act dutifully and in good faith, and that any breach of Regulation 3 entitled the principal to terminate the agreement without making a termination payment under Regulation 18; (b) that Regulation 3 created a specific statutory duty, any breach of which would also justify immediate termination; and/or (c) that the agent was in breach of his fiduciary duty to the principal under the general law, breach of which also justified immediate termination.
However, the Court of Appeal upheld the judgement of the first instance court that although the agent was in breach of the agency agreement, the breach was not sufficiently serious to justify immediate termination on any of the grounds argued. The agent was therefore entitled to compensation under Regulation 17.
Edward Miller, Agency & distribution Country Expert for UK