Compensation for Commercial Agents
| Author | Asma Vranaki |
| Published date | 01 March 2008 |
| Date | 01 March 2008 |
| DOI | http://doi.org/10.1111/j.1468-2230.2008.00691.x |
CASES
Compensation for Commercial Agents
AsmaVranaki
n
This note examines the decision of the House of Lords in Lonsdale (t/a LonsdaleAgencies) vHoward
&HallamLimited
1
where the House of Lords were asked to rule on the correct method to be
applied when calculating the compensation of commercial agents
2
under Regulation 17 of The
Commercial Agents (Council Directive) Regulations 1993
3
(the Regulations). This ruling settles this
aspect of the law in England and Wales after almost ¢fteen years of legal and commercial uncer-
tainty on the matter.
SUMMARY OF FACTS
The appeal was brought by Lonsdal e trading as Lonsdale Agencies (Lonsdale).
Lonsdale was a commercial agent in the shoe trade whose business consisted of
travelling around his territoryon behalf of all his principals. In1990, Howard &
Hallam Ltd (H&H), who were shoe manufacturers based in Leicester, appointed
Lonsdale as their agents to sell the Elmdale brand in South East England.There
was no written agency agreement and there were speci¢cally no express terms
dealing with the issue of termination.
Over time, H&H were unable to compete with other shoe manufacturers in
terms of quality and design. This led to a decrease in the sales of the Elmdale
brand and a concurrent decrease in the commission income of Lonsdale. In
1997^1998 the gross commission of Lonsdale was in the region of d17,0 0 0 . How -
ever in 2002^2003, his grossincome was onlyin the region of d9,621. H&H ceased
to trade in 2003 and terminated the agency agreement with Lonsdale by giving
reasonable notice (six months). H&H also paid to Lonsdale all the commission
due on the sales he generated during his employment as an agent.
The parties were, however, unable to agree on the amount of compensation
payable to Lonsdale upon termination of the agency agreement. In any event,
H&H paid Lonsdale d7,500 as compensation.
Lonsdale brought proceedings seeking a further d19,670. This amount repre-
sented two years’ gross compensation calculated by reference to the average of
the last ¢ve years of his agency after deducting the amount he already received
n
Lecturer, City LawSchool, City University.
2 A commercial agent is de¢ned as a self-employed intermediary whohas continui ngauthority to
negotiatethe sale or purchase of goods on behalf of hi s principal or to negotiateand conclude such
transactions on behalf or in the name of the principal (Regulation 2(1)of the Regulations).For the
categories of excludedpersons, see Regulation 2(1)(i)^(iii) and Regulation 2(2)of the Regulations.
31993No3053.
r2008 The Authors.Journal Compilation r20 08The Modern Law Review Limited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2008) 71(2) 271^302
To continue reading
Request your trial