Solicitors Sheffield

Is a Principal legally responsible and/or liable for what an agent does ?

This depends on what authority has been given, expressly or impliedly, to the agent. If the agent is acting within authority, the Principal will be bound by the agent’s actions. A Principal can also be liable, if, for example, the agent injures someone, damages property, or makes misrepresentations about the product or service being sold.

What happens after an agency agreement is terminated. Can the agent compete with the Principal or deal with the Principal’s customers or clients ?

Any restrictions must be agreed in advance, in writing. To be effective, the agreement will need to relate to the customers, or territory, or type of goods in relation to which the agent was acting for you. Restrictions can in no case last more than two years, and must be seen to be reasonable.

Can an agent be given exclusive geographical rights and can they be restricted ?

Yes. An agent may insist on exclusive rights to a territory. If the Principal wants to sell through other channels, the agency agreement needs to be clear on this.

What about the agent representing a competitors ?

The starting point is that, as with other commercial contracts, courts are reluctant to interfere with what is either included in an agreement or to consider that an issue which is omitted from a contract should be inferred to apply. So, it is important to be clear about this issue and include provisions in an agreement.

In law, if there is no express agreement, can there still be an agency relationship ?

In short , the answer is yes, no written agreement is necessary, and this can happen in ways such as acquiescence in allowing someone to hold themselves out as an agent over a period of time.

What about possible liabilities to an agent who fails to earn as much as anticipated ?

If the shortfall is caused by failure of the Principal to fulfil obligations under the agreement, the agent may have a claim. There is also an obligation in UK and European law to notify an agent if it appears sales will be lower than the agent could reasonably expect. Failure to do this could make the Principal liable to meet any shortfall.

What happens regarding commission payable to an agent if the customer doesn’t pay?

The agency agreement should specify the position on this, but if it does not, typically commission will not have to be paid if the sales agreement with the customer is not completed because the ultimate customer has not paid.

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