FAQs about Agency Law
What is Agency law ?
The 1993 Agency Regulations define a ‘commercial agent’ as any self-employed intermediary who has authority to act in a commercial capacity on behalf of another person.
What do the Agency Regulations regulate in practice?
If a business hires someone to act on their behalf to negotiate the sale or purchase or sale of goods with a third party then this commercial relationship will be regulated under Agency law.
This is because agency law regulates the commercial relationship which forms between companies (principals) and their commercial agents (agents).
What rights do Agency Regulations give?
Agency law is highly regulated by Uk and EU law. The Commercial Agency Directive Regulations 1993 give sales agents rights to minimum notice periods and significant compensation on termination. It is there advisable to have a professional draft the agreement to cap various costs and determine certain aspects of the agreement such as exclusivity clauses and how the agreement can be terminated.
How does using an agent benefit my business ?
They often use sale agents to set up/represent their business in a different country. Or to keep costs down by using an agent on a commission rather than employee set fee basis.
Does the law regard agents as employees?
No, there is a distinction made by law between agents and employees. But there is a fine line between the two which can easily be crossed by the agent. If he is treated as an employee in practice he will be treated as such by the law even if the agreement between the business was strictly on an agent basis. This will entitled him to the same rights as employees and defeat the whole object of being hired as an agent.
Why should I be wary of agents being considered as employees?
Agents may be able to use certain rights they gain if considered by the law as employees to claim compensation even when unlawfully terminating their agency contract.
How can I avoid this from taking place?
Be aware of every section in your agent’s individual contracts and also the wider implications of laws affecting UK agents under Commercial Agency Agreements.
The Regulations govern how much commission an agent is entitled to and whether an employment contract should override the agent agreement.
If you have found this page helpful, please do visit the main agency law page or the commercial law blog.