Reading 5: The Commercial Agents (Council Directive) Regulations 1993

Reading 5: The Commercial Agents (Council
Directive) Regulations 1993

The Commercial Agents (Council Directive) Regulations 1993 (as amended) is an example
of an EU directive incorporated into English law, and implements EU Directive 86/653, as
referred to in the commercial agency contract in Exercise 23.
25 Quickly read Regulation 17(1) on the next page and answer these questions.
1 What is the general aim of the regulations?
2 Under the Act, what two words are used to refer to the money to which an
agent might be entitled following the termination of an agency agreement?
What is the difference in meaning between these two words?

Entitlement of commercial agent to indemnity or compensation
on termination of agency contract
17 (1) This regulation has effect for the purpose of ensuring that the commercial
agent is, after termination of the agency contract, indemnifi ed in
accordance with paragraphs (3) to (5) below or compensated for damage
in accordance with paragraphs (6) and (7) below.
(2) Except where the agency contract otherwise provides, the commercial
agent shall be entitled to be compensated rather than indemnifi ed.
(3) Subject to paragraph (9) and to regulation 18 below, the commercial agent
shall be entitled to an indemnity if and to the extent that—
(a) he has brought the principal new customers or has signifi cantly
increased the volume of business with existing customers and the
principal continues to derive substantial benefi ts from the business
with such customers; and
(b) the payment of this indemnity is equitable having regard to all
the circumstances and, in particular, the commission lost by the
commercial agent on the business transacted with such customers.
(4) The amount of the indemnity shall not exceed a fi gure equivalent to an
indemnity for one year calculated from the commercial agent’s average
annual remuneration over the preceding fi ve years and if the contract goes
back less than fi ve years the indemnity shall be calculated on the average
for the period in question.
(5) The grant of an indemnity as mentioned above shall not prevent the
commercial agent from seeking damages.
(6) Subject to paragraph (9) and to regulation 18 below, the commercial agent
shall be entitled to compensation for the damage he suffers as a result of
the termination of his relations with his principal.
(7) For the purpose of these Regulations such damage shall be deemed to
occur particularly when the termination takes place in either or both of the
following circumstances, namely circumstances which—
(a) deprive the commercial agent of the commission which proper
performance of the agency contract would have procured for him
whilst providing his principal with substantial benefi ts linked to the
activities of the commercial agent; or
(b) have not enabled the commercial agent to amortise the costs and
expenses that he had incurred in the performance of the agency
contract on the advice of his principal.
(8) Entitlement to the indemnity or compensation for damage as provided
for under paragraphs (2) to (7) above shall also arise where the agency
contract is terminated as a result of the death of the commercial agent.
26 Read the whole of Regulation 171 and answer these questions.
1 According to 17(2), under what circumstances will agents be granted an
indemnity rather than compensation?
2 According to 17(3), what is necessary before an indemnity is granted?
3 According to 17(4), how is the indemnity calculated?
4 Is compensation available if contract ends following the death of the agent?
1 The last two paragraphs (17(9) and 17(10)), have been cut from this extract.

27 A colleague from outside the EU contacts you to ask about the legal protections
in place in the EU for commercial agents. Write a summary of Regulation 17 to
circulate to your litigation department.

Categories: