5 Top Tips for conducting your Agency in a satisfactory manner and ensuring
you have a strong Claim for compensation If terminated.

EAD’s Tom Vaughan discusses the 5 top tips for Agency Compensation.

1. Do not send or encourage poisonous email exchanges – ensure all email correspondence with your principal is courteous and maintains a professional tone. Where there is a degree of personal animosity between a principal and agent, successive emails can degenerate into outright warfare. If you, as agent, send emails that are impolite they may be seized on by the principal (or his solicitor) as evidence of contractual breach and a failure to conduct the agency dutifully and in good faith. For instance, consider the following email:

Agent@mail.com to principal@mail.com on 7 August 2011 @ 10:54am:

“John, I received your email and frankly I’m sick of you having a go at me about sales figures. The business is failing because your products are crap and there are loads of customer returns. Because of the price of fuel its almost not worth me travelling to Exeter anymore.”

Principal@mail.com to Agent@mail.com on 9 August 2011 @ 09:30am:

“Peter, I think we both know the truth is that since you took on the agency for that other company your mind hasn’t been with it. Your figures are appalling taking into account the size of your area and compared to the other agents. By the way, did I understand you correctly, when you said you are no longer visiting the customers in Exeter?”

2. Adopt new technology when invited to do so by your principal. Courts are sensitive to the realities of business and the pressures faced by companies in seeking to survive. There is case law to suggest that a failure to assist your principal by using new technologies will count against you in court proceedings. By way of example consider the following two examples:

a. “IPAQ issues”. In the case of  Vick v Vogle-Gapes Ltd [2006] EWHC 1579 (QB) (30 June 2006) the court was shown a memo including the following content:    “Also on a separate note we are having major problems with the ipaq (Tony told Amanda early in the week that she can, I quote, “shove it up her a…”). It would be courteous for Tony to apologise to Amanda urgently.” The court was less than impressed.

b. Use of email rather than fax. In the case of Gledhill v Bentley Designs (UK) Ltd [2010] EWHC B8 (Mercantile) (02 June 2010) the court was decidedly unimpressed by the agent’s intransigent approach to the use of technology. The judge recorded: “The methods of modern communications have radically changed over the last two decades with the rapid advances of, and reliance on information technology. Older established businessmen tend to be slower to adapt to these changes and understandable find it difficult to embrace them or are fearful of them. In my judgment Mr Gledhill falls in that category and one must respect him for that. Mr Lalani and those working for him were equally understandably keen on making their business as efficient as possible in a very competitive environment and in my judgment they sought to make those changes at a pace that was sympathetic to their agents.  It was the ratcheting up of the pressure some 18 months after he should have changed over to sending e-mails, not just receiving them as he was happy to do, by trying to make him making him pay for the privilege that caused the terminatory outburst. In my judgment, Mr Gledhill is not only conservative; he is also demonstrably very stubborn and that was plain in the manner he gave evidence under cross examination. Mr Lalani on the other hand came across as very reasonable and understanding only reluctantly dismissing his top agent when he received no apology.”

3. If you sense that the end is nigh, remain on heightened alert and prepare correspondence (email, letter) that you would be happy for a judge to read. Quite often, if a principal is considering changing the way it sells or is simply unhappy with an agent’s performance it will seek advice from a solicitor. It will be told that if it terminates the agency it will have to pay compensation, unless it terminates on the grounds of serious contractual breach. As compensation can be costly it may see if it is possible to “catch you out”.

The principal may then seek to entice you into a breach by, for instance:
a. Inviting you to a meeting that requires you to commit time and travel distance;
b. Asking you to complete weekly or monthly call sheets;
c. Criticising your performance and setting sales targets;
d. Approaching customers to check whether you have called on them;
e. Suggesting the parties enter into a new written contract.

All of these scenarios present a danger and the legal test is the requirement for you to “comply with reasonable instructions”; however, this term is open to interpretation. It is possible to nullify the threat of these various strategies but if you become upset or lose focus you will be ensnared and the principal will get the result it is after. The way to deal with these suggestions is to present yourself as a model of reasonableness, whilst not conceding ground, unless you are prepared to do so. For instance, in relation to the meeting request you could politely ask for an agenda and suggest that if your movements will not take you close to the principal’s offices a telephone conference might suffice.

These tell tale signs are so well rehearsed that when you spot them you may even wish to carefully consider whether you are prepared for a period of scrutiny and whether the agency is, in fact, worth the battle. If you perceive that the principal does not wish to continue with you, you may consider your best case outcome in terms of compensation prior to reaching a conclusion.

4. Be pro – active. If you feel that you should be getting paid on sales taken at trade shows then make sure you are there, if possible. Email your principal a month before the show and ask him to confirm that you can attend and what arrangements can be made. If you are disappointed by sales then politely feedback to your principal explaining what customer feedback you are getting. If the principal perceives that you are “on side” in the battle for sales then this may help to secure your role with the company. It will also pre-empt any moves by your principal in seeking to attach blame for falling sales on you.

5. Be a careful record keeper. If you are terminated “because your customers claim not to have seen you in the last two years” it will be helpful to your cause to be able to produce notes of meetings or telephone calls showing your efforts on behalf of the principal. There are various software tools available to assist with this task. On a day to day basis you need to be acting in your principal’s best interests and records should confirm this, although they are by no means mandatory – how you conduct your agency is largely a matter for you.

For more information on our Agency Compensation services please fill out call back request form or call EAD today on 0151 735 1000.

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