Agency Law In Ireland

 

“Agency Law, in our context, refers to companies or sole traders who engage agents (the Principal) or individuals/companies who in turn act as commercial agents (the agents) on their behalf. This is EU law that originated in France and it imposes a quasi-employer employee relationship on the parties involved, despite them being separate legal entities.”

So, if you are thinking of appointing a Agent.

Make sure you know, not just the business ramifications but the legal implications of appointing an Agent.

See if there isn’t another method of achieving your business goal, such as appointing distributors instead.

It is essential that all parties to a Commercial Agency Agreement are fully aware not merely of the terms of their own contracts but also the wider implications that affect Irish Agents under the terms of Irish law, as enacted by S.I. No. 33/1994 — European Communities (Commercial Agents) Regulations, 1994 (as amended).

These Regulations impose significant rights and obligations on Agents and Principals alike, and affect the Agent’s entitlement to commissions, influence the circumstances in which a Commercial Agency Agreement can be terminated and can be used as a means of claiming significant compensation for Agents when the Agency agreement is unlawfully terminated.

 

So, who are Commercial Agents?

1. For the purposes of the law (see 1994 Regulations), a Commercial Agent is1. any self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the Principal).

AND

2. to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that Principal.Additionally there is a requirement that ‘Any such agreement need not be in writing, but must be evidenced in writing’

This is legal speak for the actual contract need not be in writing, but the company or person seeking to claim that they are commercial agents and therefore come under the Regulations, must be able to show evidence of an existing agency in writing.

 

So, how much is a Commercial Agent entitled to upon termination?

There is little or no cases decided in Ireland as to what amount of compensation an agent might be entitled to upon termination. One theory as to why this is, (that we happen to subscribe to) is that these matters tend to settle before they get to court. If the agent can prove he comes under the Regulations and the contract is being terminated prematurely or unlawfully, then he is entitled to compensation. So all that remains to be agreed is how much compensation is he entitled to. Why go to court?, if all that is left to be decided is the amount of compensation due. It would appear that the agent or business in this country take this pragmatic approach and settle the case before they go before a Judge.

 

So, where those that leave us?

In our experience, if the agency has lasted for any reasonable period of time, then typical compensation for the premature termination of the agency will range from 3 months to 2-3 years commission, usually based on either the previous 3 or 5 years averaged commission, which will be due to the agent after termination.

By the way, if your agency agreement does not state which country’s Laws apply to it, then it is likely, based on European case law, that the applicable law will be the country where the agent lives. This means that if you have an agent in another EU country, then without a written agreement to the contrary, any case will be heard in that country, with all the implications that arise for your business from that, in relation to wasted time, huge costs, etc.

If you have a query in relation to appointing an agent or you are seeking to terminate an agency, we would strongly suggest you get legal advice, we will be happy to assist you in this regard.

THIS IS NOT LEGAL ADVICE. EXPERT LEGAL ADVICE SHOULD ALWAYS BE SOUGHT BEFORE ENGAGING OR DISMISSING OR PURSUING ANY DISPUTE WITH AN AGENT OR WITH A PRINCIPAL.