Commercial Agent in UK Law

It is clear that the "damage" suffered by a commercial agent as a result of the termination of the agency (Regulation 17 (6)) is – generally speaking (and breach of contract cases aside) to be regarded as a putative loss and not simply (by common law standards) actual loss. This is shown by the exclusion of principles of mitigation and applicability of the compensation provisions to termination on death or retirement.

How the claim was put was that the Company could lawfully have determined the Agency Agreement by giving three months notice and, as it had not given that notice, Mr. Vick was entitled to be compensated for the earnings which he would have made in the notice period, in addition to the claim for compensation for loss of the agency altogether.

The French jurisprudence from which the terms of the article is derived appears to regard the agent as having had a share in the goodwill of the principal's business which he has helped to create. The relationship between principal and agent is treated as having existed for their common benefit. They have co-operated in building up the principal's business: the principal by providing a good product and the agent by his skill and effort in selling.

Like any other exercise in valuation, this requires one to say what could reasonably have been obtained, at the date of termination, for the rights which the agent had been enjoying. For this purpose it is obviously necessary to assume that the agency would have continued and the hypothetical purchaser would have been able properly to perform the agency contract.

However, there is at least one type of case in which it is necessary to adopt a purposive approach in order to give effect to the intention of the Directive, namely, where the agency had a limited life and expired by effluxion of time. In that situation it might be said that at the termination of the relationship the agent had nothing he could sell and that no goodwill attached to the business.

Mr. Moser challenged the judge's decision both on the grounds that he had failed to apply the two years' commission guideline and on the grounds that he had failed to give sufficient weight to the duration of the agency (in this case 13-12; years) or the fact that Mr. Lonsdale had performed satisfactorily. However, for the reasons I have already given, I do not think that either of those criticisms is well founded.

"Where an agent has such actual authority and enters into a contract with another party intending to do so on behalf of his principal, it matters not whether he discloses to the other party the identity of his principal, or even that he is contracting on behalf of a principal at all, if the other party is Willing or leads the agent to believe that he is willing to treat as a party to the contract anyone on whose behalf the agent may have been authorised to contract.