Shearman (t/a Charles Shearman Agencies) v Hunter Boot Ltd [2014] EWHC 47 (QB) (22 January 2014)

Shearman (t/a Charles Shearman Agencies) v Hunter Boot Ltd [2014] EWHC 47 (QB) (22 January 2014)

A contractual clause that entitles the principal to pay the agent whichever of compensation or indemnity is lower at the time of termination is not permitted by Regulation 17(2) of the Commercial Agents (Council Directive) Regulations 1993, as it is inconsistent with the protective purpose of the Directive and the Regulations. Such a clause is a prohibited derogation and is void; the agent is entitled to compensation if no valid election for indemnity has been made.

Citation
[2014] EWHC 47 (QB)
Parties
Claimant: Charles Shearman (trading as Charles Shearman Agencies); Defendant: Hunter Boot Limited
Jurisdiction
England and Wales
Judgment Date
22 January 2014
Procedural Posture
Commercial Agency Contractual Dispute / Interlocutory Judgment on Summary Issue Prior to Trial
Outcome
Clause 14 of the agency agreement is void; the agent is entitled to compensation, not indemnity, if entitled to any payment under Regulation 17.
Legal Topics
Commercial Agency, Compensation Vs Indemnity, Interpretation of EU Directives, Freedom of Contract, Protection of Commercial Agents
Commercial Law Contract Law European Union Law Commercial Agency Compensation Vs Indemnity Interpretation of EU Directives Freedom of Contract Protection of Commercial Agents

Case Brief

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Parties

Charles Shearman (trading as Charles Shearman Agencies)

Claimant

Hunter Boot Limited

Defendant

Procedural Posture

Commercial Agency Contractual Dispute / Interlocutory Judgment on Summary Issue Prior to Trial

Legal Issues

  1. 1 Whether a contractual clause allowing the principal to pay the lesser of compensation or indemnity on termination is valid under the Commercial Agents (Council Directive) Regulations 1993 and Directive 86/653/EEC
  2. 2 Whether such a clause derogates from the agent's statutory protection

Ratio Decidendi

A contractual clause that entitles the principal to pay the agent whichever of compensation or indemnity is lower at the time of termination is not permitted by Regulation 17(2) of the Commercial Agents (Council Directive) Regulations 1993, as it is inconsistent with the protective purpose of the Directive and the Regulations. Such a clause is a prohibited derogation and is void; the agent is entitled to compensation if no valid election for indemnity has been made.

Court Disposition

Clause 14 of the agency agreement is void; the agent is entitled to compensation, not indemnity, if entitled to any payment under Regulation 17.