UK: Recent decision of the English Court of Appeal on Commercial Agency.

Edward MILLER | UK | 2006-03-16


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The Directive provides Member States with the opportunity to choose in national legislation implementing the Directive whether agents should be entitled to compensation or indemnity on termination of their contracts.
Under English law, the parties may choose between the two systems themselves, but if no express election is made, the parties are deemed to have chosen compensation, as was the case here.

The Court held that in assessing compensation, regard should be had to the value of the agency business to a potential buyer.
In the present case, it was relevant that the principal’s business was in decline, which meant that the value of the agency to the terminated agent would have continued to decline had termination not taken place.

The Court rejected the idea that it should follow any general guideline based on French case law that in compensation cases two years’ commission should be paid. The court also held that the quality of the agent’s performance and the duration of the agency (in this case over thirteen years) were not necessarily important factors.

Edward Miller, IDI country expert for the United Kingdom.


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