Compensation for Commercial Agents

Abstract

This note examines the decision of the House of Lords in Lonsdale (t/a Lonsdale Agencies) v Howard & Hallam Limited1 where the House of Lords were asked to rule on the correct method to be applied when calculating the compensation of commercial agents2 under Regulation 17 of The Commercial Agents (Council Directive) Regulations 19933 (the Regulations). This ruling settles this aspect of the law in England and Wales after almost fifteen years of legal and commercial uncertainty on the matter.

Comment: Mandatory Compensation to Commercial Agents upon Termination of Agency under Ethiopian Law

“…Since goodwill is an important component of any business, commercial agents usually have a certain contribution in the business of the principal. 60 Therefore, "in paying compensation, the principal is buying the agent's patrimonial entitlement rather than redressing future losses". 61 The other argument is that, as discussed above, the agent might have incurred cost in the interest of marketing the business.…”

“…There are arguments that the cost "should represent the cost of the succeeding agent for purchasing the agency (i.e the goodwill created by the leaving agent)." 69 It seems appropriate that the principal should bear the cost, and there should be supplementary remedies against the succeeding agent.…”