On 16 May 2024 the Government launched a consultation to undo the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) and (“the Regulations”).
The function of the consultation is to assess whether the creation of new commercial agents should be stopped under the Regulations. The position at present under the Regulations is that statutory terms are introduced between a business (a principal) and a commercial agent where the agent negotiates the sale or purchase of goods on the principal’s behalf or negotiates and concludes the sale or purchase of goods on the principal’s behalf and in its name. Under the Regulations, the agent has certain statutory rights, including the right to a written statement of terms and perhaps most well-known, the right to compensation in the event of termination of the agency agreement. This means that whether there is a written contract or not, and notwithstanding the terms that may have been agreed between the principal and the agent, the agent has the statutory rights which, in relation to compensation in particular, can be extremely valuable.
The Regulations were a product of the UK’s previous EU membership. The Government is now looking at whether these Regulations impose an unfair burden on businesses and therefore whether it should put forward the abandonment of the creation of new commercial agents. The proposal would not be to take away the status and accrued rights of existing commercial agents, but to stop new ones being created.
The consultation will look at the extent to which the Regulations are understood, the importance of the protections provided under the Regulations, how the Regulations might impact the ability for agents and principals to contract and whether it might lead to an increase or decrease in disputes.
The consultation closes on 11 July 2024.