Protective Regulations
EU Regulation
EU-wide regulations govern the relationship between self-employed “commercial agents” and their principals. A “principal”, under the Regulations, is a company or individual who appoints the agent .The regulations apply to both written and oral appointments.
Duties of Agent
The agent must act in good faith and look after the interests of his principal / appointing firm. In particular, he must make proper efforts to negotiate and conclude transactions where he is instructed.
Duties of Principal
In his relations with his commercial agent, a principal must act dutifully and in good faith. A principal must in particular:
- provide his commercial agent with the necessary documentation relating to the goods concerned;
- obtain for his commercial agent the information necessary for the performance of the agency contract, and
- in particular notify the commercial agent within a reasonable period once he anticipates that the volume of commercial transactions will be significantly lower than that which the commercial agent could normally have expected.
Right to Commission
Where there is no agreement in relation to remuneration, the remuneration is to be that customary in the business in which the agent works. Where there is no custom in the business and there is no specific agreement on commission, the remuneration should be reasonable in the circumstances.
Commission Due
Commission is due when the principal has concluded the transaction or when it should have been concluded. Commission must be paid no later than one month following the quarter in which it became due.
Termination
The regulations provide for the termination of an agency agreement. If an agency agreement continues beyond its fixed term, it is converted into a contract for an indefinite period.
Compensation
The agent is entitled to be indemnified or compensated after the agency contract has terminated. Compensation may be payable, even if the agency contract was validly terminated at common law.
Basis for Compensation
The payment on the indemnity basis is equitable in nature and is to be awarded having regard to the circumstances. The agent’s entitlement on the indemnity basis is limited to a maximum of one year’s commission.
Restraints
A restraint of trade clause shall be valid only if and to the extent that:
- it is concluded in writing; and
- it relates to the geographical area or the group of customers and the geographical area entrusted to the commercial agent and to the kind of goods covered by his agency under the contract.