- Latest available (Revised)
- Original (As made)
This is the original version (as it was originally made). This item of legislation is currently only available in its original format.
7th December 1993
Laid before Parliament
8th December 1993
Coming into Force
1st January 1994
The Secretary of State, being a Minister designated(1) for the purposes of section 2(2) of the European Communities Act 1972(2) in relation to measures relating to relations between commercial agents and their principals, in the exercise of the powers conferred by him by that section, hereby makes the following Regulations:
1. (1) These Regulations may be cited as the Commercial Agents (Council Directive) Regulations 1993 and shall come into force on 1st January 1994.
(2) These Regulations govern the relations between commercial agents and their principals and, subject to paragraph (3), apply in relation to the activities of commercial agents in Great Britain.
(3) Regulations 3 to 22 do not apply where the parties have agreed that the agency contract is to be governed by the law of another member State.
2. (1) In these Regulations—
“commercial agent” means a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the “principal”), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal; but shall be understood as not including in particular:
a person who, in his capacity as an officer of a company or association, is empowered to enter into commitments binding on that company or association;
a partner who is lawfully authorised to enter into commitments binding on his partners;
a person who acts as an insolvency practitioner (as that expression is defined in section 388 of the Insolvency Act 1986(3)) or the equivalent in any other jurisdiction;
“commission” means any part of the remuneration of a commercial agent which varies with the number or value of business transactions;
“restraint of trade clause” means an agreement restricting the business activities of a commercial agent following termination of the agency contract.
(2) These Regulations do not apply to—
(a)commercial agents whose activities are unpaid;
(b)commercial agents when they operate on commodity exchanges or in the commodity market;
(c)the Crown Agents for Overseas Governments and Administrations, as set up under the Crown Agents Act 1979(4), or its subsidiaries.
(3) The provisions of the Schedule to these Regulations have effect for the purpose of determining the persons whose activities as commercial agents are to be considered secondary.
(4) These Regulations shall not apply to the persons referred to in paragraph (3) above.
(5) These Regulations do not extend to Northern Ireland.
3. (1) In performing his activities a commercial agent must look after the interests of his principal and act dutifully and in good faith.
(2) In particular, a commercial agent must—
(a)make proper efforts to negotiate and, where appropriate, conclude the transactions he is instructed to take care of;
(b)communicate to his principal all the necessary information available to him;
(c)comply with reasonable instructions given by his principal.
4. (1) In his relations with his commercial agent a principal must act dutifully and in good faith.
(2) In particular, a principal must—
(a)provide his commercial agent with the necessary documentation relating to the goods concerned;
(b)obtain for his commercial agent the information necessary for the performance of the agency contract, and in particular notify his 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.
(3) A principal shall, in addition, inform his commercial agent within a reasonable period of his acceptance or refusal of, and of any non-execution by him of, a commercial transaction which the commercial agent has procured for him.
5. (1) The parties may not derogate from regulations 3 and 4 above.
(2) The law applicable to the contract shall govern the consequence of breach of the rights and obligations under regulations 3 and 4 above.
6. (1) In the absence of any agreement as to remuneration between the parties, a commercial agent shall be entitled to the remuneration that commercial agents appointed for the goods forming the subject of his agency contract are customarily allowed in the place where he carries on his activities and, if there is no such customary practice, a commercial agent shall be entitled to reasonable remuneration taking into account all the aspects of the transaction.
(2) This regulation is without prejudice to the application of any enactment or rule of law concerning the level of remuneration.
(3) Where a commercial agent is not remunerated (wholly or in part) by commission, regulations 7 to 12 below shall not apply.
7. (1) A commercial agent shall be entitled to commission on commercial transactions concluded during the period covered by the agency contract—
(a)where the transaction has been concluded as a result of his action; or
(b)where the transaction is concluded with a third party whom he has previously acquired as a customer for transactions of the same kind.
(2) A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract where he has an exclusive right to a specific geographical area or to a specific group of customers and where the transaction has been entered into with a customer belonging to that area or group.
8. Subject to regulation 9 below, a commercial agent shall be entitled to commission on commercial transactions concluded after the agency contract has terminated if—
(a)the transaction is mainly attributable to his efforts during the period covered by the agency contract and if the transaction was entered into within a reasonable period after that contract terminated; or
(b)in accordance with the conditions mentioned in regulation 7 above, the order of the third party reached the principal or the commercial agent before the agency contract terminated.
9. (1) A commercial agent shall not be entitled to the commission referred to in regulation 7 above if that commission is payable, by virtue of regulation 8 above, to the previous commercial agent, unless it is equitable because of the circumstances for the commission to be shared between the commercial agents.
(2) The principal shall be liable for any sum due under paragraph (1) above to the person entitled to it in accordance with that paragraph, and any sum which the other commercial agent receives to which he is not entitled shall be refunded to the principal.
10. (1) Commission shall become due as soon as, and to the extent that, one of the following circumstances occurs:
(a)the principal has executed the transaction; or
(b)the principal should, according to his agreement with the third party, have executed the transaction; or
(c)the third party has executed the transaction.
(2) Commission shall become due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction, as he should have.
(3) The commission shall be paid not later than on the last day of the month following the quarter in which it became due, and, for the purposes of these Regulations, unless otherwise agreed between the parties, the first quarter period shall run from the date the agency contract takes effect, and subsequent periods shall run from that date in the third month thereafter or the beginning of the fourth month, whichever is the sooner.
(4) Any agreement to derogate from paragraphs (2) and (3) above to the detriment of the commercial agent shall be void.
11. (1) The right to commission can be extinguished only if and to the extent that—
(a)it is established that the contract between the third party and the principal will not be executed; and
(b)that fact is due to a reason for which the principal is not to blame.
(2) Any commission which the commercial agent has already received shall be refunded if the right to it is extinguished.
(3) Any agreement to derogate from paragraph (1) above to the detriment of the commercial agent shall be void.
12. (1) The principal shall supply his commercial agent with a statement of the commission due, not later than the last day of the month following the quarter in which the commission has become due, and such statement shall set out the main components used in calculating the amount of the commission.
(2) A commercial agent shall be entitled to demand that he be provided with all the information (and in particular an extract from the books) which is available to his principal and which he needs in order to check the amount of the commission due to him.
(3) Any agreement to derogate from paragraphs (1) and (2) above shall be void.
(4) Nothing in this regulation shall remove or restrict the effect of, or prevent reliance upon, any enactment or rule of law which recognises the right of an agent to inspect the books of a principal.
13. (1) The commercial agent and principal shall each be entitled to receive from the other, on request, a signed written document setting out the terms of the agency contract including any terms subsequently agreed.
(2) Any purported waiver of the right referred to in paragraph (1) above shall be void.
14. An agency contract for a fixed period which continues to be performed by both parties after that period has expired shall be deemed to be converted into an agency contract for an indefinite period.
15. (1) Where an agency contract is concluded for an indefinite period either party may terminate it by notice.
(2) The period of notice shall be—
(a)1 month for the first year of the contract;
(b)2 months for the second year commenced;
(c)3 months for the third year commenced and for the subsequent years;
and the parties may not agree on any shorter periods of notice.
(3) If the parties agree on longer periods than those laid down in paragraph (2) above, the period of notice to be observed by the principal must not be shorter than that to be observed by the commercial agent.
(4) Unless otherwise agreed by the parties, the end of the period of notice must coincide with the end of a calendar month.
(5) The provisions of this regulation shall also apply to an agency contract for a fixed period where it is converted under regulation 14 above into an agency contract for an indefinite period subject to the proviso that the earlier fixed period must be taken into account in the calculation of the period of notice.
16. These Regulations shall not affect the application of any enactment or rule of law which provides for the immediate termination of the agency contract—
(a)because of the failure of one party to carry out all or part of his obligations under that contract; or
(b)where exceptional circumstances arise.
17. (1) This regulation has effect for the purpose of ensuring that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraphs (3) to (5) below or compensated for damage in accordance with paragraphs (6) and (7) below.
(2) Except where the agency contact otherwise provides, the commercial agent shall be entitled to be compensated rather than indemnified.
(3) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to an indemnity if and to the extent that—
(a)he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers; and
(b)the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers.
(4) The amount of the indemnity shall not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent’s average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question.
(5) The grant of an indemnity as mentioned above shall not prevent the commercial agent from seeking damages.
(6) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal.
(7) For the purpose of these Regulations such damage shall be deemed to occur particularly when the termination takes place in either or both of the following circumstances, namely circumstances which—
(a)deprive the commercial agent of the commission which proper performance of the agency contract would have procured for him whilst providing his principal with substantial benefits linked to the activities of the commercial agent; or
(b)have not enabled the commercial agent to amortize the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal.
(8) Entitlement to the indemnity or compensation for damage as provided for under paragraphs (2) to (7) above shall also arise where the agency contract is terminated as a result of the death of the commercial agent.
(9) The commercial agent shall lose his entitlement to the indemnity or compensation for damage in the instances provided for in paragraphs (2) to (8) above if within one year following termination of his agency contract he has not notified his principal that he intends pursuing his entitlement.
18. The compensation referred to in regulation 17 above shall not be payable to the commercial agent where—
(a)the principal has terminated the agency contract because of default attributable to the commercial agent which would justify immediate termination of the agency contract pursuant to regulation 16 above; or
(b)the commercial agent has himself terminated the agency contract, unless such termination is justified—
(i)by circumstances attributable to the principal, or
(ii)on grounds of the age, infirmity or illness of the commercial agent in consequence of which he cannot reasonably be required to continue his activities; or
(c)the commercial agent, with the agreement of his principal, assigns his rights and duties under the agency contract to another person.
19. The parties may not derogate from regulations 17 and 18 to the detriment of the commercial agent before the agency contract expires.
20. (1) A restraint of trade clause shall be valid only if and to the extent that—
(a)it is concluded in writing; and
(b)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.
(2) A restraint of trade clause shall be valid for not more than two years after termination of the agency contract.
(3) Nothing in this regulation shall affect any enactment or rule of law which imposes other restrictions on the validity or enforceability of restraint of trade clauses or which enables a court to reduce the obligations on the parties resulting from such clauses.
21. Nothing in these Regulations shall require information to be given where such disclosure would be contrary to public policy.
22. (1) Any notice, statement or other document to be given or supplied to a commercial agent or to be given or supplied to the principal under these Regulations may be so given or supplied:
(a)by delivering it to him;
(b)by leaving it at his proper address addressed to him by name;
(c)by sending it by post to him addressed either to his registered address or to the address of his registered or principal office;
or by any other means provided for in the agency contract.
(2) Any such notice, statement or document may—
(a)in the case of a body corporate, be given or served on the secretary or clerk of that body;
(b)in the case of a partnership, be given to or served on any partner or on any person having the control or management of the partnership business.
23. (1) Notwithstanding any provision in an agency contract made before 1st January 1994, these Regulations shall apply to that contract after that date and, accordingly any provision which is inconsistent with these Regulations shall have effect subject to them.
(2) Nothing in these Regulations shall affect the rights and liabilities of a commercial agent or a principal which have accrued before 1st January 1994.
Parliamentary Under-Secretary of State
Department of Trade and Industry
7th December 1993
1. The activities of a person as a commercial agent are to be considered secondary where it may reasonably be taken that the primary purpose of the arrangement with his principal is other than as set out in paragraph 2 below.
2. An arrangement falls within this paragraph if—
(a)the business of the principal is the sale, or as the case may be purchase, of goods of a particular kind; and
(b)the goods concerned are such that—
(i)transactions are normally individually negotiated and concluded on a commercial basis, and
(ii)procuring a transaction on one occasion is likely to lead to further transactions in those goods with that customer on future occasions, or to transactions in those goods with other customers in the same geographical area or among the same group of customers, and
that accordingly it is in the commercial interests of the principal in developing the market in those goods to appoint a representative to such customers with a view to the representative devoting effort, skill and expenditure from his own resources to that end.
3. The following are indications that an arrangement falls within paragraph 2 above, and the absence of any of them is an indication to the contrary—
(a)the principal is the manufacturer, importer or distributor of the goods;
(b)the goods are specifically identified with the principal in the market in question rather than, or to a greater extent than, with any other person;
(c)the agent devotes substantially the whole of his time to representative activities (whether for one principal or for a number of principals whose interests are not conflicting);
(d)the goods are not normally available in the market in question other than by means of the agent;
(e)the arrangement is described as one of commercial agency.
4. The following are indications that an arrangement does not fall within paragraph 2 above—
(a)promotional material is supplied direct to potential customers;
(b)persons are granted agencies without reference to existing agents in a particular area or in relation to a particular group;
(c)customers normally select the goods for themselves and merely place their orders through the agent.
5. The activities of the following categories of persons are presumed, unless the contrary is established, not to fall within paragraph 2 aboveMail order catalogue agents for consumer goods. Consumer credit agents.
(This Note is not part of the Regulations)
These Regulations implement Council Directive 86/653/EEC on the co-ordination of the laws of member States relating to self-employed commercial agents (OJ No. L382, 31 December 1986, p. 17). The directive is within the scope of the Agreement on the European Economic Area by virtue of paragraph 30 of Annex VII to that agreement.
The Regulations set out the rights and obligations as between commercial agents and their principals (regulations 3 to 5) and deal with remuneration (regulations 6 to 12), and the conclusion and termination of the agency contract (regulations 13 to 16).They contain provisions relating to the indemnity or compensation payable to a commercial agent on termination of his agency contract (regulations 17 to 19) and also to the validity of restraint of trade clauses (regulation 20).
A Compliance Cost Assessment is available, copies of which have been placed in the libraries of both Houses of Parliament. Copies are also available from the Consumer Affairs Division of the Department of Trade and Industry, Room 325, 10-18 Victoria Street, London, SW1H 0NN.
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made):The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include: