Contract and Agency
Most agency relationships are based on a contract or on another consensual basis. The contract may be terminable by notice in accordance with its terms. In defined cases of serious breach, there may be a right to terminate the contract without notice.
Means of Termination
The agency may terminate by agreement. Either the agent or principal may renounce or revoke the agency. This will be usually effective, irrespective of whether there is a breach of contract. If there is a breach of contract, it may give one or other party, a right to damages for any loss thereby caused.
Many agency relationships will terminate in the ordinary course of events. The nature of the agency may be such that once a particular task is done or a period of time has passed, the agency will no longer apply.
Where an agency has terminated, but this position has not been communicated to third parties, the agent may continue as an apparent agent, with power to bind the principal. The general principles of apparent agency apply.
Effect of Termination
Where an agency is terminated, but the agent purports to act as such, he breaches his warranty of authority to third parties. He may be liable to a third party who is unaware of the termination of the agency.
A commercial agency subject to the Regulations and Directive on Commercial Agents may be determined in accordance with that legislation. Minimum periods of notice are required. They increase from one month in the first year to three months after the third year.
Under the EU Directive, a commercial agent has a right to compensation for damage suffered as a result of the termination of the agency. Compensation under the Directive is not necessarily coincidental with the loss incurred. It seeks to compensate the agent for his share of a quasi-proprietary entitlement.