Terminating an Agency Agreement – Breach of a Commercial Agency Agreement – Compensation for Agents

PJ Pipe and Valve Co Ltd v Audco India Ltd [2005], the Court ruled that damages for a breach of a commercial agency agreement should be assessed on a flexible basis according to the particular facts of each case.

The claimant, PJ Pipe, is an agency in the petrochemicals industry, promoting and selling products in this industry. The defendant, Audco, is based in India and manufactures valves some of which are used in the petrochemical industry.

Audco hired PJ Pipe as their agent and entered into two agreements with them. In 2001, they entered into an Agency Agreement granting PJ Pipe the right to sell products as its agent in Nanhai (the “Nanhai Agreement”). In 2002, the two parties entered into a general exclusive agency agreement which gave PJ Pipe exclusive rights to represent six named UK contractors for a period of two years expiring on 31 December 2003 (the “Exclusive Agreement”).

In September/October 2002, Audco breached the Exclusive Agreement by employing an alternative UK agent and by purporting to terminate the Exclusive Agreement with PJ Pipe before the expiration of the term of the Exclusive Agreement.

PJ Pipe accepted the breach and commenced proceedings against Audco for commission and damages under the two agreements.

Regulation 17 of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053, , provides: ‘(6) . the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal. (7) For the purpose of these Regulations such damage shall be deemed to occur particularly when the termination takes place in either or both of the following circumstances, namely circumstances which- (a) deprive the commercial agent of the commission which proper performance of the agency contract would have procured for him whilst providing his principal with substantial benefits linked to the activities of the commercial agent; or (b) have not enabled the commercial agent to amortize the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal.’

The case concerned a number of issues, for instance, whether the claimant was a commercial agent within the meaning of the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 (see above) and the approach to be taken in the calculation of the amount of compensation, if any, arising under Regulation 17 of the Regulations. The arguments centred on whether the approach of the French courts should be adopted whereby the level of compensation was fixed as the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract, although the court retained a discretion to award a lesser sum.

PJ Pipe argued that a 5% commission rate should have been awarded as this was the standard commission rate in this industry. Audco contended that there was no such standard commission rate but rather the commission rate depended on a number of factors which would reduce the rate to 3.5%.

The Court concluded that:-
the “rule of thumb” commission level in the oil, gas and petrochemical supply business is 5%;
to reflect commercial reality, the 5% figure is not immutable and will be fact sensitive to the relevant case, particularly when either low or large value orders are involved;
for small amounts of work undertaken late in the day, the commission rate would be 4.5%;
where PJ Pipe had simply “opened the door” for Audco in Nanhai the commission rate would be 3%;
PJ Pipe was a commercial agent for the purpose of The Commercial Agents (Council Directive) Regulations (“the Regulations”) as PJ Pipe played a crucial role in effecting introductions, persuading contractors to deal with Audco and assisting with quotations and queries;
in accordance with the Regulations, the Court should gauge the loss to PJ Pipe by the termination of the agency and avoid any double counting;
the Court need not confine itself to the French two-year tariff approach when assessing loss (the global sum of the last two years’ commission or the sum of two years’ commission calculated over the average of the last three years of the agency contract); and
PJ Pipe was entitled to compensation of $118,518.60 under the Regulations as well as damages for loss of commission.
It is likely that Audco will appeal this award.

If you require any advice on drafting or termination of agency agreements, please contact us at [email protected]

© RT COOPERS, 2005.

This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Finding Asbestos Mesothelioma Legal Information

There are many people who are concerned about this type of cancer caused by too much exposure to asbestos. Mesothelioma legal information is very much needed in order for them to know the ways and means to combat this kind of disease legally. Looking for legal information can really give them a guide of what they will do next. This is in connection to health-related issues that is why knowing the legal information is quite important.

One good way to get that needed information is by consulting a lawyer. With their expertise in this issue, they can give you the exact legal information of your concern. Today there are many lawyers who are in need of cash and this type of problem is what they like most because there are many people involved who are willing to pay on whatever price so finding a good lawyer is very hard to do. You should research the history of a certain lawyer if he already solved a similar case before. Doing this can let you save time and effort in finding a good lawyer that can give you those legal information.

In libraries, there are many references that can be scanned to get asbestos mesothelioma legal information. You should also take a look at the publishing year of that book in order to get updated. This type of cancer is not new so there are many published books about this and as the years has passed there are new and existing laws and issues that are added so looking at the publishing year of the book is essential.

You can also find information online because there are many sites that deal with this issue. Just like offline, you should also be careful in giving out money because there are many scam sites that are ready to take your money away. There are many cases of this type of cancer and it is up to you to take whatever it is that you find helpful in order to have the information that you need.

Keep Your Kid Safe On The Internet! Law Enforcement Agencies And Citizen Groups

I have already submitted a couple of articles about the dangers the internet holds for children. My next series of articles will be about the various citizen groups and law enforcement agencies that work to deter or stop predators and keep children safe online.

The first group I want to cover is a group called Perverted Justice. Their “nickname”, or what they are also known as is PeeJ. Perverted Justice is a citizen group that was set up for the purpose of identifying adults willing to have chat room sexual encounters with minors. Millions of Americans have seen this group in action during the operation series called “To Catch a Predator” that Dateline NBC carried out on the air.

The people who make up Perverted Justice are volunteers. These volunteers carry out sting operations, using “young” sounding screen names, such as sara_so_bored. They then wait for older men to approach them in chatrooms. The volunteers of PeeJ do not make the first contact with the adults, but instead wait to be approached.

Once the men approach the volunteer (who they think is a young teen girl or boy), the volunteer works to get identifying information from the men; information such as a phone number. This information is usually given during talk about setting up an offline meeting with the perceived minor. The PeeJ volunteer then uses a Reverse Look Up service to find out the name of the person who owns the telephone number, and passes the information on to law enforcement.

Perverted Justice was started in 2002 by Xavier Von Erck of Portland Oregon, who got the idea after watching men attempt to woo young girls in chatrooms in Oregon. Von Erck says that PeeJ is a computer watchdog agency that works closely with law enforcement. During the ‘To Catch a Predator’ stings put on by Dateline NBC, Perverted Justice was actually temporarily deputized by law enforcement, since some of the operation was required by law to have been carried out by members of law enforcement.

Von Erck goes on to say that “The media likes to use the term vigilante because it gets attention, but we don’t consider ourselves vigilantes. We cultivate cooperation with police and work within the law to get justice, not outside of the law.”

Perverted Justice’s volunteers act as bait in chatrooms where children and minors can often be found. The profiles the volunteers set up have youthful sounding nicknames and often pictures of children. The volunteers do not initiate contact with the men, but instead wait for the men to first come to them. They refuse to act on tips from internet users, to avoid the risk that someone might use the website for purposes of revenge.

If a man starts chatting with the volunteer and turns the conversation toward sex, the volunteer attempts to obtain identifying information from the man; information such as a telephone number so that a “meeting can be arranged”.

In years past, the chatlog and details would then be published on Perverted Justice’s website. However, beginning in 2003, the organization began its “Information First” program, in which interested police departments could contact Perverted Justice, and any busts made within the jurisdiction of that department would be sent to them without having been posted to the website.

In the early days, PeeJ did not initiate contact with the police, due to the difficulty of prosecuting online criminals in a court of law. Because the law has evolved in such a way that law enforcement now CAN and regularly DOES prosecute online criminals, PeeJ has switched to a policy of cold calling local police with the information they obtained. If a one of the government agencies is interested (police, FBI, military CID, etc.) then the chatlog and other information is not posted to the site until after a conviction has been reached.

To date, Perverted Justice has been responsible for over 100 convictions of online predators. Some of those convictions were witnessed by television-watching Americans, glued to their T.V. screens during the airing of Dateline NBC’s To Catch a Predator series. One of these “public convictions” was a rabbi, who entered a home with the intention of having sexual relations with a minor boy. The “candid-camera” photograph of this rabbi as he was caught by Dateline NBC is posted on my website, which is dedicated to keeping kids safe online.

My website is interactive and includes a place for parents, educators, and interested parties to post methods of keeping kids safe online, as well as a message board where people can chat about online safety and what can be done. I have a page that shows Internet Safety in the news, as well as a page dedicated to educating parents on what can be done to “keep your kid safe on the internet”. Everyone is welcome.

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