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Agency dispute

Appointment Type: Party appointed expert

Service Area: Loss of Profits

Industry: Retail

Litigation Type: Civil

Size of Case: £100,000 - £500,000

Instructed on behalf of the claimants as a party expert after they received a cancellation notice from the respondent in respect of their agency agreement.

The claimant was a European distributor of specialist academic books and journals for the respondent (a UK based publisher) to specifically agreed countries around the world. The claimant had been operating as a distributor for the publisher for over 10 years and had renewed the agency agreement three times during that period.

Following receipt of the cancellation notice the claimant instructed us to value their agency agreement as they deemed that it had been terminated unfairly and that they were due a larger termination payment based on the business they had generated and expected to continue to generate for the respondent.

There are two main methods that can be used to value agency contracts and determine what payments are due on termination. These methods are detailed under regulation 17 of the Commercial Agents (Council Directive) Regulations 1993 and are known as the ”Compensation” and “Indemnity” methods.

For reference the indemnity method limited the maximum claim to one year’s commission based on the average of the agent’s earnings over the past 5 years. The Compensation method values the agent’s business and goodwill at the date of termination by considering both past performance and forecast future performance.

In this case the indemnity method was not stated in the contract in question and as such the compensation method was used. This is the method had was established under the Lonsdale 2007 case and sets out the relevant key considerations for a case of this nature.

Taking the considerations above into account we provided the claimant with advice and calculations as to the value of their agency agreement. Our work was successfully used by the claimant to achieve a settlement in line with their expectations and avoid the costs of going to court.