HC Deb 08 December 1993 vol 234 cc223-4W
Sir Cranley Onslow

To ask the President of the Board of Trade what action his Department is taking to advise United Kingdom companies of the effect of EC directives on the formalisation of agency agreements; and if he will make a statement.

1994. Mr. McLoughlin

A commercial agent is a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the 'principal') or to negotiate and conclude the 'sale or purchase of goods on behalf of and in the name of that principal".

The regulations are designed to lay down minimum requirements governing the contracts between commercial agents and their principals. In particular, they provide the agent with additional benefits which may not currently be available under United Kingdom common law, for example the right to a written contract if he requests one. The regulations have been the subject of consultations with industry in 1987, 1990 and in June this year. A number of revisions to the regulations have been made. The major amendments are:— (i) Applicable Law: The regulations lay down the basic rule that it is where the agent is, rather than the principal, that determines whether the regulations apply but also enable the parties to opt for the law of another member State to govern the contract. (ii) Secondary Activities: The regulations now define the core or essential activities of a commercial agent and provide for those who do not satisfy these criteria to be excluded. Such activities would be secondary. There are specific exclusions for mail order agents and consumer credit agents. (iii) Indemnity/Compensation: Following comments received from industry, the regulations now provide for the parties to choose either an indemnity or compensation payment upon termination of an agency contract. This will allow greater flexibility.

A cost compliance assessment on the possible costs to industry of implementing the EC directive is being made available. In addition, guidance notes will be issued in the near future, detailing what we believe is the intention behind the directive. Copies of this guidance note and the cost compliance assessment will be available from the following address:—

  • Consumer Affairs Division 2a
  • Room 325
  • 10-18 Victoria Street
  • London
  • SW1H ONN
Copies of the regulations themselves will be available from HMSO bookshops.

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