FAQs about Agency Law

Agency Law FAQs

What do the Commercial Agents (Council Directive) Regulation 1993 require of principals and agents?

The Commercial Agents (Council Directive) Regulation 1993 place certain duties and obligations on the principal and agent.  For the purposes of simplicity, it makes sense to examine each parties respective duties in turn.

Agent’s duties

  • Act in good faith.
  • Follow any reasonable instructions delivered by the principal.
  • Supply the principal with essential information.
  • Keep sensitive and confidential information regarding the principal private.
  • As per the instructions of the principal, make reasonable efforts to conclude transactions.

Principal’s duties

  • Provide the agent with sufficient information to check whether the amount of commission paid is in line with the original agreement and agency regulations.
  • At the very least, to pay the agent a “reasonable or customary” commission.
  • To supply any necessary documentation connected to the goods that the agent handles.
  • Pay the agent’s commission on time.
  • Obtain and provide sufficient information to the agent so as to allow him to carry out his obligations under the agreement.
  • Give notice that the agreement is to be terminated (for agreements that carry on indefinitely) – one month in the first year, two in the second and three months thereafter.

What are the agents rights when the agency agreement is terminated ?

Under the Commercial Agents (Council Directive) Regulation 1993, where contracts run for an indefinite period of time, the contract can only be terminated where the principal gives a minimum amount of notice, which is:

  • One month for the first year
  • Two months for the second year
  • Three months thereafter

Under the Commercial Agents (Council Directive) Regulation 1993, Agents are also entitled to claim “compensation or an indemnity” when an agreement is terminated.  If the agent significantly increases the amount of business for the principal through existing customers and/or through new ones, the agent will be entitled to an indemnity if this is provided for in the agreement.  The regulations contain formulas which are used to calculate indemnities.

Depending on the circumstances in which the contract was brought to an end, the agent may also be entitled to claim damages either in addition to an indemnity claim or on their own.

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