Do you know what your agent is up to?

February 27, 2013

It is a truth universally acknowledged that a principal who appoints an agent may find itself in need of some legal advice.  This frequently occurs because the agent has been up to no good.  The agent may have been acting for a competitor, or spending much of his time acting for another (non-competing) business, or falsifying orders from customers.  

Frequently, due to the lack of visibility that principals have in relation to their agents’ conduct, a principal will suspect that an agent is up to something, but not be entirely sure.  However, it is possible, by taking advantage of the provisions of the Commercial Agents Regulations and employing a number of different tactics, to find out exactly what an agent is doing on the quiet.

For an agent with a written agreement, the starting point in this process will always be the agency agreement.  A well-drafted agreement will specify the duties of the agent, and the principal may be able to rely on a provision of the agreement to obtain further information about the agent’s activities.

However, even if there is no written agency agreement, the Commercial Agents Regulations provide principals with help in this area.  Regulation 3 requires an agent to comply with the reasonable instructions of his principal.  What would be considered to be ‘reasonable’ will often depend on the circumstances of the relationship.

A word of caution, however – there is a thin line between a reasonable instruction and an unreasonable one.  What might be a reasonable instruction for a principal to give to one of its employees might not be reasonable in the case of an agent.  Although this may sound obvious, there is a danger that if instructions to agents are fired off by email in the middle of the busy working day, the principal may overstep the mark and end up in breach of contract itself! Therefore, careful thought needs to be given to the scope of what is asked and how it is asked, particularly if the agent is a tricky character.   

Even if you just want to get more of an idea about an agent’s activities, the Commercial Agents Regulations can be used to your advantage.  Agents are required to comply with a number of duties (in addition to the duty to comply with reasonable instructions), and it is possible to obtain information from an agent using only those tools in the armoury of the Regulations.

Other approaches are also possible, such as speaking to customers, suppliers or other agents to try to get the inside track on what an agent is doing.  Again, this process must be handled with great care.  This is particularly so if you are considering approaching other agents, as agents often stick together and word could easily get back to the agent you are investigating if you chose the wrong person.

Finally, do not underestimate the usefulness of social media sites such as Facebook.  Monitoring an agent’s pages on this site can be particularly illuminating. For example, your agent may have been claiming to be unable to work due to back problems.  If his Facebook page reveals pictures of him dancing the limbo on holiday in the Caribbean, this rather undermines any compensation claim he might try to bring on resignation!

There are plenty of ways in which principals can find out more information about what their agents are up to. Searching social media sites is something you can easily do yourself, but the other suggestions all need to be handled carefully in order to elicit the information you are looking for and not just end up with a disgruntled agent making an appointment with his solicitor!  


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Emma Roake
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eroake@foxwilliams.com

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