Commercial agency compensation

Termination of Agency

Valuation of Commercial Agencies for Regulation 17

The firm has advised on many compensation claims following the termination of commercial agency agreements, and occasionally when termination was only being contemplated. Apart from the following two reported cases, all our cases have settled by negotiation, at mediation or at arbitration, thereby saving professional costs and allowing the parties to return to concentrate on their businesses.

 

To see some client testimonials following commercial agency compensation negotiations, please click here.

 

One of the firm’s expert witnesses has given oral evidence in confidential arbitrations and in the following two reported cases:

 

The Software Incubator Ltd v Computer Associates UK Ltd [2016] EWHC 1587 (QB)

Our expert was appointed by solicitors acting for the agent to quantify the compensation due under Regulation 17 of The Commercial Agents (Council Directive) Regulations 1993 following the termination of the agency agreement.  At the hearing both experts gave evidence concerning the expected maintainable level of earnings at the valuation date and the appropriate multiplier for the quantification of compensation.

 

The case is particularly important as it concerned the sale of software, while the Regulations are only concerned with the sale of goods.  As a result on 28 March 2019 the Supreme Court decided to refer two questions as to the meaning of “goods” in the Directive to the CJEU.

 

Size of Principal

Computer Associates UK are part of CA Inc., a $19bn US Corporation.

 

Size of Agent

An individual that worked alone.

 

Context

Charles was appointed by solicitors acting for the agent to quantify the compensation due under Regulation 17 of The Commercial Agents Regulations 1993 on termination of the agency agreement.

 

Outcome

The principal claimed there was no loss but on hearing both experts the court awarded compensation of £475,000 under this head of claim.

 

Challenges

The agent has achieved limited sales over a very short period at the very beginning of the life-cycle of this software.  As a result the quantification relied on projections over several years based on a few months’ sales history.

 

Berry v Laytons & Anor [2009] ECC 34, [2009] EWHC 1591 (QB)

This case addressed the compensation that should have been paid to the agent, but for the solicitor’s alleged negligence. The case highlighted the risk of professional negligence when advising on this specialist areas. Charles was appointed by the defendants and both experts gave evidence concerning the level of earnings at the valuation date and the appropriate multiplier for the quantification of compensation.

 

Size of Claim

£400,000 plus interest and costs.

 

Size of Agent

An individual and his small team.

 

Context

Charles was appointed by Laytons to quantified Berry’s damages on the basis of Regulation 17 of The Commercial Agents Regulations 1993 on termination of the agency agreement.

 

Outcome

The Agent’s compensation was reduced by 40% when the Court awarded £240,000 plus interest and costs.

 

Challenges

The case highlighted the risk to solicitors of professional negligence claims when advising Agents on the termination of agency agreements.

 

Charles Lazarevic is the author of the chapter on the quantification of compensation aspects in Susan Singleton’s book: Commercial Agency Agreements Law and Practice (4th Edition, 2015).

 

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