§ Mr. Hal Millerasked the Secretary of State for Trade and Industry if he will make a statement on the proposed European Community directive on commercial agents.
§ Mr. Alexander FletcherThe directive is an attempt to co-ordinate throughout the European Community certain elements of the laws governing contracts between principals and their commercial agents for the sale or purchase of goods. It would apply to agents where they are self-employed, incorporated bodies or partnerships. Its provisions would inter alia require the terms of the contract to be expressed in writing at the request of either party, and give the agent a right to information held by the principal to verify the amount of commission due, a mandatory period of notice and an "indemnity" payment by the principal when the contract comes to an end for a variety of reasons.
Wide consultations have been held on the current text of the directive. The CBI and other organisations representative of industry strongly opposes its adoption. Legal opinion is highly critical of the directive. Organisations representing commercial agents strongly favour its adoption. I have carefully considered the arguments.
The directive deals with matters on which principals and agents in the United Kingdom are at present free to negotiate the terms they judge best suited to their business. I see no social or economic justification for government to interfere in contractual relationships freely entered into by commercial parties through legislation to curb their freedom of contract. Nor am I persuaded that notwithstanding their self-employed status, commercial agents are necessarily the weaker party and should be afforded statutory protection analogous to that given to employees in respect of periods of notice and redundancy payments. Indeed, such protection would introduce unjustifiable distortions between commercial agents and other agents and other self-employed traders.
Within the Community there is freedom for commercial agents to supply their services throughout the internal market. I am not convinced that the existence of different national laws regulating some of the details of the contracts between commercial agents and principals constitutes a real obstacle to the development of the internal market.
For all these reasons, in any future discussions which may take place, the United Kingdom will maintain its general reserve on the adoption of a directive in this area.