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Agency - The Principal

Written by Izaz Ali on 12 December 2007

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The note below looks at the duties owed by a principal to its agent. These are of course subject to variation by agreement and, where they apply, The Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053, as amended by SI 1993/3173 and SI 1998/2868) (the Regulations):

· First and foremost to pay the agent remuneration and/ or commission.

· Where there is no express provision covering remuneration, a court will imply a reasonable sum.

· Common law provisions state that where an agent is entitled to his remuneration on the occurrence of some future event, he will only be entitled to it if that event happens. If it does not take place, then (if the agreement gives him nothing in that event) he will be entitled to nothing on a quantum meruit basis, even though he may have expended significant effort and money.

· Also at common law and subject to any contrary provision, the agent is not entitled to any remuneration unless he was the effective cause of the transaction between principal and third party.

· To pay the agent's expenses and indemnify him against losses incurred in the performance of lawful acts within the scope of the agent's authority (but not against liability arising from the agent's own negligence or default).

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