Commercial Thinking
Under the Commercial Agents (Council Directive) Regulations 1993 (the 'Regulations'), a commercial agent (as defined in the Regulations) is entitled to compensation (or, if so agreed in the agency contract, an indemnity) when the agency ends, save is specified circumstances. The Regulations state that such a claim must be notified to the principal within one year of the end of the agency. In the case of Barnett Fashion Agency Limited v Nigel Hall Menswear Limited [2011] EWHC 978 (QB), Barnett Fashion Agency claimed that Nigel Hall Menswear was obliged to pay such compensation.
The background was as follows. Nigel Hall Menswear had appointed David Barnett Associates, a trading partnership between David Barnett and his wife, as commercial agents. After that, David Barnett incorporated Barnett Fashion Agency and then purported to assign the agency contract from David Barnett Associates to Barnett Fashion Agency. He did not, however, adequately notify Nigel Hall Menswear of the assignment and the court found that it was not clear that any assignment had, in fact, been made. In law, while rights of a contract may be assigned, obligations can only be novated, and novation requires the counter party to contract to enter into a novation agreement. Therefore, any claim for compensation would have to have been made by David Barnett Associates, but David Barnett Associates was time-barred from bringing a claim under the Regulations.
The question remains as to whether or not David Barnett Associates or indeed Barnett Fashion Agency would have had more success had they taken legal advice at the various relevant stages of events.
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