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Euan Duncan STLA Event 3 June 2014

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What is a Contract?

• when are you bound

• how can you be bound

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• managing the process

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Agency v DistributorshipM

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Agency v Distributor

• Both agent and distributor are intermediaries in the supply chain between the principal/supplier & the end customer.

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• The distinguishing factor is the position or status of the intermediary in relation to the principal/supplier & the end customer.

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What is a Commercial Agent?

“ a self-employed intermediary who has continuing

authority to negotiate the sale and purchase of

goods on behalf of another person (“the principal”)

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or to negotiate and conclude the sale of purchase

of goods on behalf of and in the name of that

principal…..”

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Law

• Common law◘ Fiduciary relationship◘ Obey lawful instructions◘ Act within limits of authority◘ Not to make secret profits

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• Statutory◘ Commercial Agents Directive (86/653/EEC) –

under evaluation◘ Commercial Agent’s Regulations 1993

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Agency Agreement

• Why appoint an agent and terms to

consider?

◘ Supplier can retain control of the terms of

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◘ Supplier can retain control of the terms of sale of the product e.g. the price

◘ Restrict the customers the agent deals with

◘ Control over marketing methods

◘ Regulate samples

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Termination of Agency Agreement

• Indefinite term or fixed term

• Benchmarking

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• Benchmarking

• Minimum notice periods◘ One month for the first year◘ Two months for second year◘ Three months for third year and

subsequent years

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Distribution Agreements

• Principal/supplier can pass a large degree of risk onto the distributor

• Distributor more motivated to sell due to risk

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risk

• The principal/supplier only has to monitor one account with the distributor

• No compensation or indemnity is payable to the distributor on termination in the UK

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Managing your distributor

• Written distribution agreement

• Reference underperformance to a

quantitative or qualitative criterion

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• Sales criteria – how the product is

sold and who the product is sold to

• Samples

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Distributor appointed in foreign country

• Points to consider -

◘ Is the agreement subject to the laws of the foreign

country where the distributor is based?

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◘ Is there legislation in that country that specially

related to distribution agreements?

◘ Will the supplier have to comply with any formalities

when appointing the disributor?

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Case

• Raoul Sagal (Trading as Bunz UK) v Atelier

Bunz GMBH

• Raoul Sagal claimed he was commercial

agent for Atelier Bunz GMBH.

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• Sold jewellery designed by Bunz in the UK

under an oral contract.

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Case

• Claramode Limited v Zoomphase Limited (t/a Jenny Packham) 2009 EWHC 2857 (Comm)

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• High Court considered the position of when the agent’s authority ended

in the absence of a clear termination date

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Questions?M

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© MacRoberts LLP 2014

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