Surviving the consultation: Commercial Agents Regulations 1993 remain, but what does this mean for agents?

Following our previous article where we discussed the consultation output confirming the Commercial Agents (Council Directive) Regulations (CARs) would remain in force without amendment, this article looks at what that means in reality for agents.

What do the CARs do?

The CARs play a crucial role in defining the legal relationship between commercial agents (self-employed individuals who negotiate or conclude sales or purchases of goods on behalf of another business) and their principals (the businesses they represent).

The CARs seek to ensure fair treatment and predictable outcomes in business relationships. Here are the key protections and obligations they provide:

1. Clear rules for contracts
   The CARs offer legal clarity on how agency contracts are formed and terminated. This helps prevent disputes and ensures both parties understand their rights and responsibilities from the outset.
2. Protection of commission rights
   Agents are entitled to commission not only on transactions they directly secure but also, in certain circumstances, those transactions concluded after the agency has ended. This ensures agents are fairly rewarded for their efforts.
3. Compensation or indemnity on termination
   When an agency contract is terminated, agents are generally entitled to either compensation or an indemnity, unless the termination is due to the agent’s serious breach of duty. This provision recognises the value agents bring to a business and protects them from sudden loss of income.
4. Minimum notice periods
   The CARs require minimum notice periods for terminating agency contracts, depending on the length of the relationship. This gives agents time to adjust and seek new opportunities.
5. Non-negotiable obligations
   Certain obligations under the CARs cannot be waived or contracted out of, ensuring a baseline of protection for agents regardless of the terms of their individual contracts.

What are the benefits for agents?

The CARs offer a framework of protections that benefit agents operating in the UK. These statutory provisions not only safeguard agents' financial interests but also promote fairness and transparency in their relationships with principals. 

There are three core advantages:

1. Statutory protections on termination
   One of the most significant benefits for agents is the right to compensation or indemnity upon termination of the agency contract. This entitlement can be substantial, particularly when the agent has played a key role in building up the principal’s business. It ensures that agents are not left financially vulnerable after investing time and effort into developing a client base.
2. Stability and predictability
   The CARs provide a clear and consistent legal framework, which helps reduce the risk of unfair treatment. By setting out defined rights and obligations, the CARs create a stable environment in which agents can operate with confidence, knowing that their contributions are legally recognised and protected.
3. Enforceable legal rights
   Agents also benefit from strong legal recourse if a principal breaches the terms of the contract or terminates the relationship unfairly. These enforceable rights empower agents to challenge unjust actions and seek remedies through legal channels, reinforcing the balance of power in commercial relationships.

CARs legal article series

Please check out the other articles which part of this CARs legal article series:

• The Commercial Agents (Council Directive) Regulations 1993 (“CARs”) explained