Moving with the times – the commercial agents regulations 1993

A recent High Court decision has confirmed that the supply or sale of software constitutes a sale of goods for the purposes of the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) (the Regulations).

The case – The Software Incubator Ltd v Computer Associates Ltd [2016] EWHC 1587 (QB) – brings welcome certainty on this point and shines a light on the Regulations, which despite the significant rights they confer, often go unconsidered before entering into agency arrangements.

The ruling provides a useful opportunity to take a look at the application of the Regulations and some of the key provisions and for software licensors using agents to promote or sell their products to familiarise themselves with the Regulations, especially since many cannot be contracted out of. Grade 9 electricity unit review The background

The Regulations were implemented in the UK on 1 January 1994 (pursuant to EC Directive 86/653/EC (Directive)) to bolster a commercial agent’s contractual position due to the perceived imbalance of power between a commercial agent and that of their principal.

The Regulations define a commercial agent as a self-employed intermediary (which subsequent case law has confirmed can mean an individual, a partnership or a company) who has continuing authority to negotiate (and in some cases conclude) the sale or purchase of ‘goods’, on behalf of or in the name of, another person. Electricity projects for 4th graders The definition of goods (or lack thereof)

Absent of a definition in the Regulations, what constitutes ‘goods’ has been the subject of some debate. U gas cedar hill mo At the time the Regulations came into force, the DTI’s (now BIS) accompanying guidance provided that the definition of goods at s61 of the Sale of Goods Act 1979 (SGA) was a reasonable guide without being determinative.

• The definition of ‘goods’ under the SGA refers to ‘chattels’ and therefore infers that goods must be tangible in nature, which, unless bundled with hardware, software is not; and

• The Regulations refer to a sale or purchase, namely the transfer of title between a seller and a buyer, and software is customarily licensed (albeit often on a perpetual basis), not sold.

• Although software cannot be physically handled or transported, its effects can be likened to gas and electricity (which previous case law has held to constitute goods);

• The sale of goods should not exclude the supply of software just because the ownership of the IP rights in the software will not usually be transferred absolutely (ie by way of assignment).

The case also looked at whether the claimant was entitled to a compensation payment on termination of the agency agreement. Npower gas price per unit Such payments are a key tenet of the Regulations and we look at them in more detail below.

The general rule under the Regulations is that, subject to some exceptions (see below), if the principal terminates an agency agreement, the agent is entitled to receive a compensation or indemnity payment in recognition of the goodwill and business the agent has built up. Electricity usage calculator This cannot be contracted out of to the agent’s detriment. Wb state electricity board recruitment Unless the contract says otherwise, an agent is entitled to compensation rather than an indemnity payment. Save electricity pictures The agent is required to give their principal notice of their intention to claim this payment within one year of termination.

The payment may not be payable where the agent is in serious breach of the agreement or where the agent is terminating the agency agreement for convenience. Gas kush If however the agent is terminating the agreement due to the end of a fixed term contract, the principal’s serious breach or their retirement, ill-health or death, the compensation/ indemnity payment will be due.

• The amount of compensation is worked out by calculating the value of the agent’s business and goodwill (or part being terminated) at the date of termination.

• The maximum that can be awarded is one years’ remuneration based on the average of the agent’s earning over the past five years (or, if the contract for less than five years, over that shorter period).

• While the indemnity appears to provide greater certainty, the payment of the indemnity does not prevent an agent from seeking damages for loss it has suffered.

In addition to a payment on termination, below is a summary of some of the other key provisions that cannot be opted out of to the agent’s detriment:

The principal must supply the agent with a statement of commission by the last day on the month following the quarter when commission became due. Gas leak in house The agent is entitled to all information necessary to check commission.

Where a longer period is agreed, the period of notice to be observed by the principal must not be shorter than that to be observed by the agent.

The case is a good example of how the courts must interpret laws in light of technology not envisaged at the time of its inception, but also of the wider challenge the legislature faces in keeping up to speed with the increasingly digitised environment in which we work.

Following the UK’s vote to leave the EU, it is difficult not to reflect on the genesis of the Regulations. Gas vs electric oven Of course, the effect of Brexit on our laws with European origins is uncertain. Gas kansas city Just a few weeks ago the repeal of or significant amendment to legislation so embedded in the UK’s legal and commercial landscape would have seemed most unlikely yet now, what is certain is that, just as the courts have been doing, we will be moving with the times.

This document is for informational purposes only and does not constitute legal advice. Electricity electricity goodness It is recommended that specific professional advice is sought before acting on any of the information given.