The Agent 's Primary Activity

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In addition, in order to be covered by the Regulations, the agent’s primary activity must be dealing goods for the principal. Agents who provide services such as travel, insurance and advertising will not be under any protection. Therefore, Regulations will not apply to commercial agents whose activities are secondary. For instance, an officer of a company acting as an “agent” of the company is excluded from the Regulations as it is considered to be a secondary activity. It is important to remember that a commercial agent is someone who holds the authority to negotiate and conclude sales on behalf of the principal. Where the agency is outside the Regulations, for instance, the agent is a partner representative of a company or a…show more content…
This legal right has been described as “one of the most important protective features of the Directive” and can be seen as the agent being “bought out” by his principal. This entitlement derives from the idea that an agent who has participated in building up the business is deprived from the benefit of his investment of time and effort through the act of termination by the principal. Member states were given the freedom to choose either/or option on termination of the commercial agency, as the two regimes are quite distinct and incompatible. Majority of the Member States implementing the Directive have chosen the German-derived indemnity provision, provided that the agent has met the requirements for the provision to applied, which will be discussed below. Through a peculiar system of their own, the UK does not require a particular regime to be followed, but instead gives the option to choose either indemnity or compensation, leaving the choice up to the parties to the agency contract. In the early drafts of the Regulations, the UK Government had only chosen the compensation route, stating that an agent is entitled to damages on termination if he is deprived of commission. Surprisingly, in the final version of the Regulations after the amendments made, the UK Government introduced the notion of indemnity while retaining the compensation provisions at the same time, which resulted in some confusion as it can be argued that it contradicts the Directive’s
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