Terminating an Agency Agreement – Breach of a Commercial Agency Agreement – Compensation for Agents

PJ Pipe and Valve Co Ltd v Audco India Ltd [2005], the Court ruled that damages for a breach of a commercial agency agreement should be assessed on a flexible basis according to the particular facts of each case.

The claimant, PJ Pipe, is an agency in the petrochemicals industry, promoting and selling products in this industry. The defendant, Audco, is based in India and manufactures valves some of which are used in the petrochemical industry.

Audco hired PJ Pipe as their agent and entered into two agreements with them. In 2001, they entered into an Agency Agreement granting PJ Pipe the right to sell products as its agent in Nanhai (the “Nanhai Agreement”). In 2002, the two parties entered into a general exclusive agency agreement which gave PJ Pipe exclusive rights to represent six named UK contractors for a period of two years expiring on 31 December 2003 (the “Exclusive Agreement”).

In September/October 2002, Audco breached the Exclusive Agreement by employing an alternative UK agent and by purporting to terminate the Exclusive Agreement with PJ Pipe before the expiration of the term of the Exclusive Agreement.

PJ Pipe accepted the breach and commenced proceedings against Audco for commission and damages under the two agreements.

Regulation 17 of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053, , provides: ‘(6) . the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal. (7) For the purpose of these Regulations such damage shall be deemed to occur particularly when the termination takes place in either or both of the following circumstances, namely circumstances which- (a) deprive the commercial agent of the commission which proper performance of the agency contract would have procured for him whilst providing his principal with substantial benefits linked to the activities of the commercial agent; or (b) have not enabled the commercial agent to amortize the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal.’

The case concerned a number of issues, for instance, whether the claimant was a commercial agent within the meaning of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (see above) and the approach to be taken in the calculation of the amount of compensation, if any, arising under Regulation 17 of the Regulations. The arguments centred on whether the approach of the French courts should be adopted whereby the level of compensation was fixed as the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract, although the court retained a discretion to award a lesser sum.

PJ Pipe argued that a 5% commission rate should have been awarded as this was the standard commission rate in this industry. Audco contended that there was no such standard commission rate but rather the commission rate depended on a number of factors which would reduce the rate to 3.5%.

The Court concluded that:-
the “rule of thumb” commission level in the oil, gas and petrochemical supply business is 5%;
to reflect commercial reality, the 5% figure is not immutable and will be fact sensitive to the relevant case, particularly when either low or large value orders are involved;
for small amounts of work undertaken late in the day, the commission rate would be 4.5%;
where PJ Pipe had simply “opened the door” for Audco in Nanhai the commission rate would be 3%;
PJ Pipe was a commercial agent for the purpose of The Commercial Agents (Council Directive) Regulations (“the Regulations”) as PJ Pipe played a crucial role in effecting introductions, persuading contractors to deal with Audco and assisting with quotations and queries;
in accordance with the Regulations, the Court should gauge the loss to PJ Pipe by the termination of the agency and avoid any double counting;
the Court need not confine itself to the French two-year tariff approach when assessing loss (the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract); and
PJ Pipe was entitled to compensation of $118,518.60 under the Regulations as well as damages for loss of commission.
It is likely that Audco will appeal this award.

If you require any advice on drafting or termination of agency agreements, please contact us at [email protected]

© RT COOPERS, 2005.

This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Need A Michigan Lawyer?

Being a Michigan lawyer can be an incredibly lucrative occupation. Michigan, after all, is one of the most litigious states in the country. It seems as if every physician, property owner, business owner, oh heck everyone has to occasionally obtain the services of a Michigan lawyer.

And this is of course a wonderful nose for those of us who are attorneys. You see, at a time when, because of the large number of new law school grads, lawyers across the country are finding themselves out of work, a Michigan lawyer like myself finds a higher level of job security. I am happy to report that I’m making a very substantial living practicing law at this time and there are no signs of it abating anytime soon.

Of course, this isn’t just a matter of being in the right place at the right time. Of course being a Michigan lawyer is a case of being in the right place at the right time, but really in this business, but the truth is you have to be confident and well-known before you can take advantage of it. I have been involved in a wide range of legal fields, and have met great success in all of them. I have served as a clerk for several judges, and I have also had a hand and offering some of the most well-known decisions handed down. I have been involved, as an attorney, in divorce law, inheritance, personal injury, malpractice, and real estate. I also served as a prosecutor when I graduated from law school. I’m not the only Michigan lawyer, and it is only because of my hard work that I am one of the most successful of them.

It helps a great deal to work for a reputable law firm as far as exposure is concerned. I work at one of the most respected law firms in the state, and have for ten years. I always had the fortune of having a good reputation, but I had to begin somewhere just like you White House so my start came when I began to work at Levin and Schlitz. Inexperienced, at least, in comparison to my current level of success. Because of my background, and having the requisite skills and knowledge, engendered trust with my partners enough so that I was able to represent their firm and that has earned me quite a bit of respect in the legal community. To make it as a Michigan lawyer is something many can do, but to obtain true respect amongst your peers demands both talent and the right connections.

Tips to Find a Good Bankruptcy Lawyer Who Will Provide the Necessary Legal Services

Bankruptcy is quite a serious matter and there is nothing worse for an individual or a corporation than having to file for bankruptcy. It can affect many people and ruin their careers and lives and render them completely helpless. The very word bankruptcy means a legal state of being unable to repay debts that one owes to the creditors. It is also sometimes referred to as insolvency. It can happen to both individual and organizations. Creditors will normally file a bankruptcy petition in an endeavor to recover a part of the money payable to them by the company or organization when bankruptcy happens to an organization. When it happens to an individual then they get buried in so much debt that they find it impossible to recover from it, and have no other option but to file for bankruptcy.

Therefore, whether it happens to an individual or an organization, it is absolutely necessary to seek the services of a bankruptcy lawyer who is well acquainted with bankruptcy law and will be able to shield you against the petition filed by the creditors. The bankruptcy lawyers are quite expensive and they will only render their services once you convince them that it is possible for you to bear their fees, and pay them on time. But since they are expensive and since your entire financial future depends on their expertise you should be careful as to whom you hire and follow some guidelines while looking for a good bankruptcy lawyer.

  1. The first step in hiring a bankruptcy lawyer is to look for an experienced lawyer who has the necessary expertise to handle any kind of bankruptcy. Remember that your future is in the hands of this individual who will represent you in the court of law. It is their knowledge and expertise which will determine how your case unfolds in the court and what is your chance of winning the case.
  2. It will be prudent to do some background research before you hire an expensive bankruptcy lawyer. Ask your colleagues, friends, neighbors, or any of your acquaintances who have gone through the same ordeal or knows someone who have required the services of a bankruptcy lawyer. Internet search can also throw back results about the lawyers in your location and their specialties. Yellow pages can also be a good source from where you can get hold of a lawyer. Any bankruptcy lawyer that is working in your area should be listed there and hence as per your requirements you can get the contact details of such a lawyer. Just look into the bankruptcy section and you will immediately give a list of all bankruptcy lawyers in your area.
  3. Once you have listed the lawyers in your area, it is time for some background checks on the list and then pick one from the list. Through the internet, it is easy to get information on the lawyers and their case histories, their success rate, and client feedbacks. You can also ask for a review on the lawyer you are interested in, by calling up the court and asking them for a review. You will also be able to check which bankruptcy lawyer has the majority number of winning cases. Also important is to find out which bankruptcy lawyer has the maximum experience of working in your area and the local court, because that will mean that the particular lawyer will have good rapport with the court officials. Hiring lawyer who has a winning streak but belongs to another state is a bad idea, because laws change from one state to another and a lawyer who is working in another state may not be successful in your state, as he won’t have enough information to fight your case.
  4. A consultation session is a must once you have shortlisted two or three lawyers. You can always cal up and request them to meet you for a consultation session. These sessions are usually free of the lawyers’ billing time. If a lawyer demands money for this session, it will be best to avoid that lawyer. This session will be the deal maker, and will certainly help you make that final decision regarding which lawyer is best suited to fight your case.

The current world is dominated by credit card users, and people fall into debts because it is difficult to keep a check on the spending for most people who enjoy the good life. But the result can be huge debts which have led to the increase in bankruptcy petitions which in turn has resulted in an increase in demand for bankruptcy lawyers. The above tips can be used as a guideline for finding the right lawyer as there are risks for a lay person without any knowledge of legal matters to bump into a money grabbing legal monster who is only interested in making a few extra bucks while offering poor legal services in return.

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