Solicitors Sheffield

AGENCY LAW SOLICITORS SHEFFIELD AND AGENCY AGREEMENTS SHEFFIELD

Agency law is an area of commercial law  and relates to a situation where a business or sales agents is given authority to act on behalf of an entity, normally a business, to deal with third parties.

Commercial Agency law, is a highly contentious area of law.  It can unexpectedly lead to costly legal claims and it is therefore important to realise when a contractual relationship may be defined as a commercial agency arrangement. This is particularly important if the relationship falls within the Commercial Agency Regulations, a European law which applies to the UK.

Various examples of when businesses and companies might use sales agents are when they:

• Appoint third parties to open and/or represent their business in different countries
• Use independent agents who earn commission on sales rather than employing full time employees.

Agency relationships need to be monitored closely. This is because there is a risk that if an agent is treated like an employee in certain ways, they may be entitled to certain employee rights. The courts will decide whether to categorize the legal relationship as an agent or employee on a case-by-case basis. The Court may interpret the reality of the relationshop as employer-employee even if the initial  intention was clearlt to create a principal-agent relationship. In other words, the reality may have evolved into an employment situation.

If the “true”  interpretation of the relationship is employment, this will mean that:

• The agent will be entitled to significant employment rights
• Tax implications for both parties

Another cause for concern is that European law has more stringent agency law requirements which the UK must abide by.  These are outlined in the Commercial Agency (Council Directive The Commercial Agency (Council Directive) Regulations 1993. This directive entitles sales agents to certain rights such as minimum notice periods, covering one month to three, and compensation, which can be substantial, payable upon termination where the agent is deprived of commission or where he has not been paid the costs and expenses he has incurred during the performance of his  duties. In some cases it is not always clear in which case compensation should be paid. This means that it is best to have a very clear agreement with any prosepctive agent.

An agency agreement  will typically cover the following points:

• Restrictions on the agent’s decision making powers and authority
• Fixing Commission levels
• Termination clauses
• Agent exclusivity
• Where the agent can work
• How to terminate the agreement
• Who pays for expenses incurred

If you are a Sheffield business and require an agency agreement then please contact us.