Compensation for Commercial Agents in the House of Lords

Abstract

I. Introduction

In one of the earliest cases on the Commercial Agents (Council Directive) Regulations 1993, Staughton LJ made mention of the belief that ‘commercial agents are a down-trodden race’ entitled to protection from their principals. Down-trodden or not, they receive protection from the Regulations in the form of compensation when their agencies are terminated. The choice of an appropriate and predictable measure of compensation has proved elusive in the English courts because English courts have had to apply the Regulations without quite understanding the rational basis underpinning the protection afforded to commercial agents. Commercial agents are intermediaries between their principals and their principals' business partners, but the Regulations treat them as integral to their principals' businesses. Are commercial agents therefore entitled to compensation on the basis that they are quasi-employees, or are they in some inchoate way quasi-equity-participants in their principals' businesses? Are they being compensated for loss or are they recovering gains that their principals should not retain? The answers to these questions are clearer now that the House of Lords in Lonsdale v Howard & Hallam Ltd has authoritatively laid down the standard for calculating compensation for commercial agents.