The Commercial Agents Regulations apply to all commercial
agents who carry out their agency activities in Great Britain, where English
law applies. The Regulations apply regardless of whether the agency
relationship has been agreed orally or is in writing.
If the parties have agreed that the agency contract is to be
governed by the law of another member state, the Regulations will not apply.
The definition of “commercial agent” is very wide.
A commercial agent includes sales agents, who have the
authority of their principal to negotiate and sometimes conclude sales or
purchases of goods on behalf of the principal.The commercial agent will not be
a party to the sales contract with the customer and will not usually take
control of the principal’s goods or take part in their delivery to the
customer. An agent will be paid commissions on the sales he makes but usually
has no contractual liability to his principal.
It is long established that the Regulations do not apply to
an agent who is marketing the sale or purchase of services.
The protection of the Regulations is also afforded to
marketing agents, who are engaged merely to develop the goodwill of their
principals. Marketing agents act as a representative of the principal and carry
out marketing activities for the principal to encourage sales, but they do not
have the authority to bind the principal to any supply contract.
Introducing agents are also commercial agents. They are
often engaged to find customers for the principal, and as with marketing
agents, have no authority to enter into contractual arrangements on the
It is well-established that unless an agent falls foul of
the exceptional circumstances set out in the schedule to the Regulations, they
will be regarded as an agent in most circumstances.
One type of arrangement which is not caught by the
Regulations is that of distributorship. A distributor is not a commercial
agent. The key difference between an agent and a distributor is that in a
distribution relationship the end customers are the customers of the
distributor rather than of the principal. In an agency relationship the end
customers are the customers of the principal.
It is critical to look at the commercial reality of the
arrangement which is in place. What an agent is called or how he or she is
described is not determinative of an agent’s status as a commercial agent or
Similarly, the title to a written agreement may have some
significance but is not the determining factor in whether an agent is afforded
the protection of the Regulations. Often parties can become confused about
their status because of the language used to describe the arrangement, and it
is necessary to consider what in practice the agent is contracted to do, and
the legal reality of the arrangement which is in place. It is therefore
important that an agent whose agency has been terminated obtains specialist
advice on whether they may be regarded as a commercial agent for the purposes of
the Commercial Agents Regulations, and benefit from the protection which the
Regulations afford to commercial agents in Great Britain.