Listening 2: Meeting with corporate counsel

Listening 2: Meeting with corporate counsel

Following two years of increasing sales in southern Europe, Chance Computing wants to break
into the more competitive central European market. Jenny Miller, Sales Director of Chance
Computing, has asked Clive Sanborn, corporate counsel, for advice on terminating a number of
agency agreements.
28 6.2 Listen to the first part of their conversation and answer these questions.
1 Why does Chance Computing want to end the agreements with their agents in
southern Europe?
2 What is the maximum amount of compensation an agent can be paid, according
to the regulations?
29 6.3 Listen to the second part of their conversation and answer these questions.
1 Is compensation limited only to lost commissions?
2 For how many years are the agents’ commercial activities restricted following
termination of the agreement?
30 6.2, 6.3 Listen to the whole conversation again and decide whether these
statements are true (T) or false (F).
1 The agents are in breach of contract.
2 Under the agreement, the minimum notice period is six months.
3 The agreement allows for the payment of an indemnity of up to one year’s
average commission fees.
4 The agents must make any claims for compensation within one year of the
termination of the agreement.
5 The restraint-of-trade clause is valid for five years.
6 Under the law, a restraint-of-trade clause in an agency agreement must refer to
either the relevant geographical area or the type of goods in question.
7 The lawyer believes a court would be likely to find for the agents and not uphold
the restraint-of-trade clause if the principal breached the terms of the agreement.
Speaking 2: Role-play: discussing options
31 Following his discussion with Jenny Miller, Clive Sanborn discusses the options
available to Chance Computing with an intern who is shadowing him. With a partner,
role-play their conversation. Discuss the various options that are available to
Chance Computing, together with their possible outcomes. Consider the best case,
worst case and most likely scenarios.
Student 1: You are Clive Sanborn. Summarise the position that Chance Computing
are in.
Student 2: You are the intern shadowing Clive. Suggest some options for the
company based on the information in this unit.
Writing 2: Summary
32 Write a summary of your discussion. Include a model compensation package for
SAMPLE Chance Computing to offer their agents.

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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.

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Reading 4: Commercial agency contract1

Reading 4: Commercial agency contract1

The ICC2 Model Commercial Agency Contract is commonly used by businesses entering a
new market, and is an example of a standard form3 contract. Its provisions are based on
prevailing practice in international trade rather than national laws.
21 What are the advantages of using a standard form contract based on common
business practices rather than negotiating contracts according to domestic laws?
22 What kind of provisions would you expect to find in a commercial agency
contract?
23 Chance Computing is a UK-based company that produces budget laptop
computers for schoolchildren. It uses agents to sell its products to other
countries. Read the clauses on the next page taken from Chance Computing’s
standard commercial agency contract and answer these questions.
1 Can the agent set the price at which goods will be sold to third parties?
2 Under what circumstances can the contract be terminated?
3 What is the governing law?
4 If the principal breaches the contract, what court has jurisdiction?
1 also commercial agency agreement
2 The International Chamber of Commerce is an organisation of businesses from over
80 countries that works to promote and support global trade and globalisation
3 also boilerplate

3 The Agent shall endeavour to obtain business for the Principal and
is bound to serve the interests of the said Principal to the best of his
ability. He will do his best to provide all information necessary for the
purpose of promoting business, and especially inform the Principal
immediately about every order received.
4 He may not deviate from the prices, delivery and payment conditions
of the Principal without his consent.
9 The contract shall come into force on 10 February 2006 and shall be
valid for an indefi nite period.
Where the contract has been agreed for a fi xed period, it shall be
expected for the same period provided that notice of termination shall
not have been served, by registered letter, at least six months prior to
the end of a calendar quarter.
Where the contract has been agreed for an indefi nite period, it may
be terminated by either party thereto giving, by registered letter, six
months’ notice prior to the end of a calendar quarter.
10 The provisions of the EEC Council Directive of 18 December 1986
on the co-ordination of the laws of the Member States relating to
self-employed agents (86/653/EEC) apply to this agreement. In other
respects, the law of the domicile of the Agent is to be consulted.
11 Any disputes arising out of or in connection with this agreement shall
be decided by the competent Court in the area where the claimant
has his residence or registered offi ces.
24 Take it in turns with a partner to explain the provisions of the contract using
your own words.
EXAMPLE: Clause 4 says that the agent needs permission from the principal
to change prices and conditions of sale, etc.

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Reading 3: Role of commercial agents

Reading 3: Role of commercial agents

Most companies engaged in international trade make use of agents to represent them
abroad. The relationship between agent and principal is commonly governed by a
commercial agency agreement, and the European Union has sought to harmonise1 its
member states’ agency laws in order to give agents greater protection.
This text is taken from the introduction to a document written to inform lawyers about
recent changes in the law concerning commercial agency agreements.
18 Read the text and decide whether these statements are true (T) or false (F).
1 Under EU law, a commercial agent is a person who sells goods and services
on behalf of a principal.
2 Agents are generally paid a flat rate; that is, a charge that is the same for
everyone.
3 Principals will often abandon agency agreements once a customer base
becomes established.
1 The role of commercial agents is well known. They act as independent intermediaries
representing their principals in the market. A commercial agent is defi ned by EU
Directive 86/653 as a person ‘who is a self-employed intermediary having continuing
authority to negotiate the sale or purchase of goods (but not services) on behalf of his
principal or to negotiate and conclude such transactions on behalf of and in the name of
his principal ...’. They do not buy products from their principals, but arrange sales directly
from their principals to the customer. For the provision of this service, commercial
agents are typically paid a commission by their principals, calculated as a percentage of
the sale price of the product to the customer.
2 Commercial agency is of particular importance in international trade. It provides a
convenient structure enabling a foreign supplier to penetrate an overseas market. By
using the services of an agent established in the targeted overseas market, the principal
can benefi t from the knowledge and local connection of the agent, avoid the investment
and commitment of managerial resources required by the establishment of a branch or
subsidiary and, by taking advantage of the agent’s services on a commission basis, can
effectively test the overseas market on a ‘no cure, no pay’ basis.
1 Harmonisation is the process by which different states adopt the same laws.

3 But the position of the commercial agent is vulnerable. Because of the agent’s role as
intermediary, the principal necessarily has perfect knowledge of the customers procured
by the agent. As sales volumes build, the temptation for the principal to circumvent
the agent and enter into direct relationships with customers can often become
overwhelming against the background of an increasing commission bill, often fuelled by
repeat orders from the same customers. It is commonplace, therefore, for the commercial
agent to fi nd his relationship with his principal brought to an end precisely at the
moment where the agent’s efforts have resulted in the establishment of a signifi cant
new customer base for the principal in a new market. In this way, the agent becomes
the victim of his own success and the principal takes advantage of the goodwill in the
principal’s product, created largely as a result of the agent’s efforts.
1 commission a when payment is only made following a positive result
2 intermediary b the benefit a business gets from having a good reputation
3 a ‘no cure, no pay’ basis c someone who carries messages between people who are unable
4 goodwill to meet
d payment to someone who sells goods which is directly related to
the amount of goods sold

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Reading 2: Commercial law internship

Reading 2: Commercial law internship

14 Read this text. Where do you think it appeared?
Powderhouse Sommerville LLP International Commercial Law Internship
The international commercial law fi rm Powderhouse Sommerville LLP launched its International
Commercial Law Internship at the University Law School in 2006 and has renewed it for the
current academic year.
Powderhouse Sommerville LLP is one of the world’s largest law fi rms, with over 1,600 lawyers
and 15 offi ces in North America, Europe and Asia.
Professor May Rikos, Director of the University Law School, said: ‘The University Law School
welcomes the opportunity to work with one of the fi rst-rank global commercial law fi rms.’
Under the terms of the internship, students taking International Commercial Law courses in
Mergers, Comparative Antitrust Law and World Trade Law will be invited to compete for the
internship. Selection will be on the basis of an essay plus interview of the students who achieve
the top essay mark in each of the relevant courses. Applications must be submitted by March
10, and the interviews will take place in late March/early April. The Internship will take place from
May to July inclusive in the Powderhouse Sommerville Frankfurt Offi ce.
Link to application at the bottom of this page.
15 Read the text again and answer these questions.
1 Who can apply for the internship?
2 How will students be chosen for the internship?
3 When and where will the internship take place?
4 How can a student apply?
Writing 1: Letter of application
16 Write a letter of application in response to the internship advertisement in
Exercise 14. Be sure to include all of the sections and ideas necessary.

LAW IN PRACTICE
Lead-in
Internships are very often the first experience young lawyers have of the realities of
globalisation in the workplace. Many large legal firms have offices across the globe,
employing lawyers of many nationalities.
17 Discuss these questions with a partner.
1 What do you understand by the term globalisation?
2 What factors have contributed to the globalisation of the world’s economies?
3 What are the implications of globalisation for:
a businesses? b commercial lawyers?

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Speaking 1: Internships

Speaking 1: Internships

In Listening 1, Michael Grant described his internship with a maritime law firm. It is
common for law-school students to work in the summer months as an intern in a law
firm, government department, non-profit group or organisation. An internship can be paid
or unpaid. Some internships lead to course credits which count towards a law degree.
9 Discuss these questions with a partner.
1 Have you done an internship? If so, describe the organisation and your
duties there.
2 What do you think makes an internship a valuable experience? What can be
gained from it?
3 What would your ideal internship be?
Text analysis: Letter of application for an
internship
Law students often write a letter of application to apply for an internship in response to a
specific advertisement. However, it is also common for a student to write what is known
as a prospecting letter, or letter of interest, in which the sender asks if there are any
openings for interns at the company or institution.
10 Quickly read the letter on page 64 written by a student. Is it a prospecting
letter or a letter of application replying to a specific advertisement?
11 Read the letter again and answer these questions.
1 What kind of organisation is she applying to?
2 Which areas of the law is she interested in?
3 What legal work experience has she had?
4 Which documents are enclosed in the letter?
12 Underline the adverbs used in the letter. Why do you think the writer uses so
many adverbs? What effect does it have?
13 Match the sections and ideas which should be included in a letter of
application for an internship (a–m) with the corresponding sentences in the
letter (1–18). Some sections/ideas are used more than once.
a Reference to how you found out about the internship
b Your address
c Reference to things requested in the ad (writing sample, references, etc.)
and enclosed in the letter
d Recipient’s address
e Reasons for your interest in internship
f Description of your legal work experience
g Introduction, saying who you are
h Date
i Description of your studies and coursework
j A ‘call for action’ which closes the letter
k Salutation
l Reason for writing letter
m Details of any personal qualities, qualifications or skills that make you right
for the internship

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Listening 1: Profile of a commercial lawyer

Listening 1: Profile of a commercial lawyer
Just as commercial law itself encompasses many distinct fields of law, commercial
lawyers often deal with different areas of commercial activity in the course of their
careers. You are going to hear the podcast of an interview with Michael Grant, an
associate at a commercial law firm, which appears on the website of the alumni
association of an Australian university.
5 6.1 Listen and answer these questions.
1 Why has he decided to return to university?
2 What does he advise law students regarding career choices?
6 6.1 Listen again and tick the work he did before joining Ravenstone, Altman
and Ofner, LLP .
1 Preparing notices of dismissal
2 Interviewing junior lawyers for positions at his firm
3 Analysing technical documents
4 Submitting patent applications
5 Writing patent drafts
6 Drafting maritime legislation
7 Resolving charter party disputes
8 Handling cargo claims
9 Litigating ship collisions
Language use: Adverb functions
Adverbs are often used to describe the action expressed by the verb. We
distinguish adverbs of time (e.g. often, usually) and adverbs of manner, which
describe how an action is carried out (slowly, carefully). Adverbs can also be
used to qualify adjectives (e.g. particularly interesting).
7 a Underline the adverbs in the sentences below from Listening 1 and then
decide which function the adverbs have (a–c).
a describing time of action
b describing manner of action
c qualifying an adjective
1 He’s currently undertaking a Master's of e-Law at Monash University.
2 There’s something about the challenge of taking a complex commercial
transaction and expressing it clearly and concisely that really appeals to me.
3 I also had to write patent drafts, which are incredibly detailed descriptions of
the inventions in precise legal terms.
4 It was interesting, although at times extremely difficult and demanding.
5 But I quickly realised that what I liked best was working closely with the
other lawyers on litigation, defending or enforcing patents.
6 I usually spend most of the day reviewing documents, drafting agreements,
meeting with clients and, of course, answering emails.
b Where are the adverbs placed in relation to the verbs?

8 For each of these sentences, decide which adverbs don’t fit.
1 My work often / carefully / regularly involves litigating charter party disputes,
although I occasionally / sometimes / remarkably handle collision cases as
well.
2 Maritime salvage claims can be closely / extremely / incredibly challenging
due to the complicated legal situation.
3 The remarkably / quickly / extremely fast pace of change in the area of
information technology law means that lawyers at our firm have to mainly /
regularly / often attend seminars about the effects of new legislation.
4 Researching technical innovations carefully / extensively / extremely is
a(n) very / extremely / regularly interesting step in the process of writing a
patent draft.

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Key terms: Fields, institutions and concepts in commercial law

Key terms: Fields, institutions and concepts in
commercial law

3 Look at the areas of activity in commercial law mentioned in the first paragraph
of the text above and answer these questions. Use the glossary if necessary.
1 Which field deals with the legal rights associated with products of the mind,
such as patents, copyrights and trademarks?
2 Which field involves the laws and regulations governing market behaviour,
particularly agreements and practices that restrict free enterprise?
3 Which institution deals with the supply of credit information about business
organisations to other businesses and financial institutions?
4 Which field is concerned with the legal relationships between the shipper (or
owner) of goods, the carrier, and the receiver/consignee of goods?
5 Which field focuses on the laws regulating money paid to the government in
connection with commercial transactions?
4 Choose the correct word or phrase to complete these definitions.
1 ‘Agency’ is the term for the relationship of a person who acts in addition to /
on behalf of / on account of another person, known as the principal.
2 Bankruptcy is when someone cannot pay what they owe / own / won, and all
their property is surrendered to a court-appointed person who liquidates the
property to pay the claims of creditors / owners / debtors.
3 A secured transaction is a loan or credit translation / transaction /
termination in which the lender / loaner / debtor acquires a security interest
in certain property owned by the borrower and has the right to repossess the
property if the borrower cannot pay.
4 Negotiable instruments are documents which represent a right of charge /
payment / credit for a specified sum of money on demand or at a defined time.

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Commercial law: THE STUDY OF LAW

Commercial law: THE STUDY OF LAW:

THE STUDY OF LAW
Lead-in
1 Commercial law is the body of law that governs trade and commerce. Discuss
these questions in small groups.
1 What bodies of law govern commerce in your jurisdiction?
2 How would a contract dispute between two companies from different
jurisdictions be settled?
3 Which international bodies do you know that set guidelines for commercial
transactions?
Reading 1: Commercial law
2 Read the text below and decide whether these statements are true (T) or false (F).
1 Commercial law is a general term for a number of diverse areas of the law
which regulate trade and commerce.
2 Contentious work includes the drafting of contracts and advising clients.
3 The Uniform Commercial Code applies to commercial transactions in all of
the member nations of the European Union.
4 The World Trade Organisation checks to see if countries follow the trade
agreements they have signed.
Commercial law
Commercial law deals with issues of both private law and public law. It
developed as a distinct body of jurisprudence with the beginning of largescale
trade, and many of its rules are derived from the practices of traders.
Specific law has developed in a number of commercial fields, including
agency, banking, bankruptcy, carriage of goods, commercial dispute
resolution, company law, competition law, contract, debtor and creditor, sale
of goods and services, intellectual property, landlord and tenant, mercantile
agency, mortgages, negotiable instruments, secured transactions, realproperty
and tax law.
The work of a commercial lawyer may involve any aspect of the law as it
relates to a firm’s business clients, and the role of the lawyer is to facilitate
business clients’ commercial transactions. It is essential for a commercial
lawyer to have not only a good knowledge of a lot of substantive law, but also
a thorough understanding of both contemporary business practices and the
particular business needs of each client.
A commercial lawyer may be asked to advise a client on matters relating to
both non-contentious and contentious work. Non-contentious work largely
involves advising clients on the drafting of contracts, whereas contentious
work commonly involves the consequences of breach of contract.

Many jurisdictions have adopted civil codes that contain comprehensive
statements of their commercial law, e.g. the Uniform Commercial Code (UCC),
which has been generally adopted throughout the USA. Within the European
Union, the European Parliament and the legislatures of member nations are
working to unify their various commercial codes.
A substantial amount of commercial law is governed by international treaties
and conventions. The United Nations Commission on International Trade
Law (UNCITRAL) regulates international trade in cooperation with the World
Trade Organisation (WTO). The WTO is responsible for negotiating and
implementing new trade agreements, and is in charge of policing member
countries’ adherence to these agreements, which are signed by the majority
of the world’s trading nations and ratified by their legislatures (for example,
Parliament in the UK or Congress in the USA).

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