Shearman (t/a Charles Shearman Agencies) v Hunter Boot Ltd

Shearman (t/a Charles Shearman Agencies) v Hunter Boot Ltd

A contractual clause that entitles the principal to pay the agent whichever of compensation or indemnity is lower at the time of termination is inconsistent with the Commercial Agents (Council Directive) Regulations 1993 and Directive 86/653/EEC, as it creates a contingent entitlement that may be detrimental to the agent and does not provide the clear, non-contingent protection required by the statutory scheme. Such a clause is void, and the agent is entitled to compensation if otherwise eligible.

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 Application for Summary Judgment on Construction of Contract and Statutory Entitlement
Outcome
Clause 14 of the contract is void; if the claimant is entitled to any payment, it is to compensation, not indemnity.
Legal Topics
Commercial Agency, Compensation Vs Indemnity on Termination, Interpretation of Statutory Regulations, Freedom of Contract, Implementation of EU Directives
Commercial Law Contract Law European Union Law Commercial Agency Compensation Vs Indemnity on Termination Interpretation of Statutory Regulations Freedom of Contract Implementation of EU Directives

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Parties

Charles Shearman (trading as Charles Shearman Agencies)

Claimant

Hunter Boot Limited

Defendant

Procedural Posture

Commercial Agency Contractual Dispute / Interlocutory Application for Summary Judgment on Construction of Contract and Statutory Entitlement

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 statutory protection for commercial agents

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 inconsistent with the Commercial Agents (Council Directive) Regulations 1993 and Directive 86/653/EEC, as it creates a contingent entitlement that may be detrimental to the agent and does not provide the clear, non-contingent protection required by the statutory scheme. Such a clause is void, and the agent is entitled to compensation if otherwise eligible.

Court Disposition

Clause 14 of the contract is void; if the claimant is entitled to any payment, it is to compensation, not indemnity.

Orders

  • Clause 14 of the agency agreement is struck down in its entirety.
  • Claimant, if entitled, to receive compensation under Regulation 17, not indemnity.