The purpose of the Commercial Agents (Council Directive) Regulations 1993 was to bolster a commercial agent’s contractual position due to a perceived imbalance of power between the agent and their principal. However, the intention behind such compensation is more clear-cut than its calculation.

At Armstrong Watson we are often asked to assist one of the parties in assessing inter alia the value of the Regulation 17 claim, i.e. the entitlement of the agent to compensation on termination of the agency contract. Since the Court of Appeal’s decision in Lonsdale (t/a Lonsdale Agencies) –v- Howard & Hallam Ltd [2007] 1 WLR 2055, the Regulation 17 claim should be based on the value of the agency of which the agent has been deprived, calculated as at the date of termination.

Whilst subsequent case law has helped to clarify certain aspects of this valuation, it is still far from straightforward and we are therefore able to help those instructing us on a range of issues:

• Understanding the factors that should be taken into account in valuing a commercial agency
• Requesting disclosure in relation to the Regulation 17 claim
• Considering the financial health of both the principal’s and agent’s businesses
• Where an agent acts for more than one agency, considering how the business expenses should be fairly allocated between the different agencies
• Explaining the difference between valuation methods
• Undertaking the valuation of the agency

If you would like to find out more about how we are able to assist you, please get in touch.

Case Studies

   Tobacco industry agency

Matthew Geale was instructed on behalf of the principal to consider the valuation of an agency selling tobacco products. The agency was a multi-million pound business and three different valuation bases were triangulated to estimate its value. He prepared a report, prepared a joint statement with the agent’s expert accountant and attended the mediation where the matter settled.

   Toy industry agency

We were asked to value an agency on a single joint basis in a non-contentious matter where an agent in the toy industry wanted to agree the terms of a potential buy-in by a new investor with a view to him taking over the business in the medium term.

   Heavy plant and equipment agency

Matthew advised the Defendant in the reported case of Timothy Joseph Lawlor -v- Sandvik Mining Construction Mobile Crushers and Screens Limited [2012] EWHC 1188 (QB) regarding the valuation of a commercial agency involved in the international supply of construction plant and equipment. As part of his role, he attended and participated in the mediation of this matter.

   Ice cream agency

Matthew acted as a single joint expert in the valuation of a commercial agency operating in the ice cream industry following the takeover of the principal. Having prepared his report, he also answered questions put to him by both sides. This matter subsequently settled.

   Jewellery agency

Matthew Geale and Liesel Annible were instructed on behalf of the principal to value five agencies in order for them to assess what compensation might be payable if they changed their way of operating their sales function. This matter subsequently settled.