The Department for Business and Trade has extended the deadline for responses to its consultation on scrapping the Commercial Agents (Council Directive) Regulations 1993. Launched by the previous government, this consultation explores the idea of eliminating these Regulations in the future, which was one of the key-aims of David Cameron’s mission to the EU prior to the Brexit vote back in 2016. Here, James Corlett looks at the new Government’s Aim, and what the consultation highlights.
Introduced in 1993, the Regulations govern the relationship between businesses and their commercial agents—self-employed intermediaries authorized to negotiate or conclude sales or purchases on behalf of the business. These rules provide protections for agents when contracts end, mandate good faith between parties, require written contracts, and grant agents the right to compensation if a contract is terminated and they lose commission.
The Regulations stem from EU membership and they are seen by some as inconsistent with UK legal systems, where agency relationships are governed by domestic rules on agency and contract law.
The Government’s aim is to assess whether these Regulations benefit UK businesses and to consider reverting to pre-1993 legal practices, allowing courts to settle disputes based on contract and agency law. The consultation highlights the unusual precedence of these Regulations over contractual terms in UK business-to-business transactions, potentially causing confusion. However, it acknowledges the Regulations’ role in balancing power for self-employed agents lacking commercial legal advice when dealing with large principals.
The proposal under consideration is to legislate against creating new Commercial Agents under the Regulations, while maintaining protections for existing relationships. Feedback is sought on the potential impact on contractual agreements, legal disputes, and international business dealings.
You can access the consultation here, which is open until 1 August.