The Commercial Agency Regulations 1993 (Regulations) will continue to apply to agency relationships in the UK currently and decisions of the European Court of Justice (ECJ) will continue to bind the laws of England and Wales up and until 31 December.
Whilst the regulations will continue to apply post Brexit, the decisions of the ECJ will no longer be binding on English Courts and therefore, there could be differences in the way in which cases are decided going forward.
It is unlikely that the Regulations themselves will be repealed by Parliament and therefore, these Regulations are likely to continue to bind agency relationships for the foreseeable future. It is worth therefore reminding ourselves of some of the key terms.
When do they apply?
The Regulations apply to commercial agency relationships – not distributorship agreements. The key difference between an agent and a distributor is the payment of a commission to an agent on conclusion of a sale with the end customer, and the end customer contracts directly with the agent’s principal and not the agent.
Certain relationships are excluded, such as employees, partners or unpaid agents and where the agency provided is not the principal activity of the relationship between the agent and the principal.
Unless expressly provided, the Regulations provide the agent with a reasonable or customary entitlement to remuneration for the provision of services and in certain circumstances, entitlement to commissions on transactions which have been provided after the agency relationship has been concluded.
The Regulations also set out rules in respect of the termination of agency contracts. The Regulations provide for implied notice periods for those relationships which do not have a finite period or fixed period agency relationships, where relations continue after the fixed period has come to an end.
The Regulations contain a statutory right for an agent to receive compensation for losses suffered as a result of the agreement being terminated by the principal.
Can they be excluded from application in an agency agreement?
Generally speaking, the operative provisions cannot be excluded from an agency relationship but in certain circumstances their application can be minimised.
The Regulations will continue to be important in governing agency relationships in the post Brexit world for the UK. It will be interesting to see how, over time, the Regulations are interpreted (and if differently) by the UK and European Courts.