Agency Agreements Notes

Definition:

• Agent is an INTERMEDIARY between the supplier [the “principal”] and the ultimate consumer.

• Agent REPRESENTS the supplier – he can negotiate and [sometimes] conclude contracts for supplier. Agent acts on behalf of the supplier.

• Agent is NOT PARTY to the contract [it is the supplier who contracts with customer]. The agent creates a legal relationship between the supplier and end consumer. Supplier bears the financial and legal risk!

• Agent receives a fee / commission for his services for each contract

Types of Agency Agreements:

1. Sales: Agent has authority to conclude the contract.

2. Marketing: Agent only has authority to negotiate on behalf of the supplier.

3. Exclusive: The Agent is assigned a territory and has exclusive authority to negotiate / conclude contracts over this area. The principal cannot interfere.

4. Non-Exclusive: Agent, principal and other agents can conclude contracts in the territory. Least advantageous for the Agent.

5. Sole: Both agent and principal can conclude contracts within the territory.

Sources of rights / obligations

• Agent has a fiduciary role

• Common law rights for Agent [e.g. indemnity against expenses incurred on principal’s behalf]

• Commercial Agents Regulation 1993

• Contractual rights [from Agency Agreement] the agreement defines the authority of the agent and specifies the rights & duties for both supplier and Agent.

Agent’s authority

General rule: If agent acts within authority [actual or apparent] the contract is binding between the principal and 3^rd party.

1. Actual authority:

• Express; or

• Implied: “usual / customary authority” agent may impliedly have the authority which any agent in THAT position usually has or what is customary for agents in that particular trade to have

2. Apparent / ostensible authority:

• Based on Estoppel [fairness to 3^rd party to impose the authority on the agent]

• 3 requirements =

1. Representation that Agent had authority

2. From someone with authority to make that representation; and

3. 3^rd party must rely on that representation

Agent’s liability

• Acting WITH authority = Agent is NOT liable under the contract – he is a true intermediary

• Acting WITHOUT authority or acting outside the scope of his authority = agent can be liable under TORT or for BREACH OF WARRANTY [i.e. liable for misrepresentation]

Commercial Agents:

Commercial Agents Regulation 1993

• 1^st Jan 1994

• Objective: Offers protection to agents who build the value of their principal’s business [almost acting as quasi-partner]. Harmonizes EC states’ different laws.

• Reg 1(2): Definition of what the regulation applies to: “the regulation governs the relationship between commercial agents and their principals … in relation to the activities of Commercial Agents in GB”

• Reg 2(1) = definition of a commercial agent – applies to BOTH sales and marketing agents:

• When will the regulation apply? 3 criteria =

1. Jurisdiction: activities within the UK – protection by UK regulation. [Selling in another company – protection from that Member State regulation]

2. Commercial agents – must fit definition [see above]

3. The agent must not be excluded:

• Reg 2(3) &(4)

Agents whose activities are secondary = i.e. sales not individually negotiated / agent not using his own skills to develop the market]

Where the contract covers the supply of services rather than goods

Agent’s duties

The agent’s Rights: