Commercial agents: entitlement to compensation or indemnity?
Charles Shearman (t/a Charles Shearman Agencies) v Hunter Boot Ltd concerned a claim by a commercial agent following the termination of his agency. The agreement provided, in essence, that, upon termination, the agent would receive an indemnity, unless compensation would be lower, in which case he would get compensation. The question for determination by the High Court was what was the effect of Regulation 17(2) of the Commercial Agents (Council Directive) Regulations 1993 on this provision? Regulation 17(2) provides: ‘Except where the agency contract otherwise provides, the commercial agent shall be entitled to be compensated rather than indemnified.’
This mattered because, following the House of Lords judgment in Lonsdale v Howard & Hallam, compensation is calculated by reference to the value of the agency depending on the circumstances existing at the time of termination, including earnings potential and the price that a third-party purchaser would pay for it. According to the claimant, this would be a value of not less than £1,454,000. Under Regulation 17(4), any indemnity would be capped at an amount equivalent to the claimant’s average annual commission over the last five years of his agency, which, the defendant maintained, was no more than £204,000…
Click on the link below to read the rest of the Walker Morris briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
Welcome change from presumption of responsibility
Forfeiture of a long residential lease is such a draconian step that consent order conditions may be varied.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.