Commercial agent - self-employed sub-agent not contractually bound to principal - not entitled to compensation under regulations

Light and others v Ty Europe Ltd: CA (Lords Justice Ward, Tuckey and Mr Justice Lightman): 25 July 2003

The claimants, self-employed sales agents, entered into agreements with SCS, a company having exclusive rights to market the defendant company's goods.

Subsequently SCS, having no assets, ceased trading.

The claimants continued to negotiate sales on behalf of the defendant, believing they were authorised so to act.

In 2000, the claimants declined offers of employment by the defendant and, relying on regulations 2(1) and 17 of the Commercial Agents (Council Directive) Regulations 1993 (SI No 3173 of 1993), they commenced an action for compensation against it.

A judge, hearing a preliminary issue, rejected the defendant's case that the claimants were not its commercial agents.

The defendant appealed.

Conor Quigley QC and Jasbir Dhillon (instructed by Eversheds) for the defendant; John Hand QC and Oliver Segal (instructed by C W Harwood & Co, Leeds) for the claimants.

Held, allowing the appeal, that entitlement to compensation required the claimants to be within the definition of commercial agents in regulation 2(1) of 'a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of the principal'; that the inescapable conclusion was that the substantial rights and obligations laid down in the 1993 regulations were only intended to apply to those in contractual relationships and thus could provide no protection to the claimants and no entitlement to compensation.