Agent awarded £500,000 damages in breach of contract case
An agent for a software company has been awarded nearly £500,000 in damages and commission following a breach of contract dispute.
The issue arose after the agent entered into an agreement to promote the company’s products. The company became dissatisfied with his work and gave him 90 days’ notice of termination in accordance with the agreement.
A few weeks later it terminated the agreement with immediate effect claiming the agent had failed in his duty to provide the required services because he had become involved with another company.
The agent claimed breach of contract under the Commercial Agents (Council Directive) Regulations 1993.
The company claimed the regulations did not apply because the sale or supply of software was not the "sale of goods" within the definition of "commercial agent". It also submitted that even if the regulations did apply, the agent was in repudiatory breach of the agreement so there could be no contractual damages claim and no claim for commission in respect of post-termination.
The court found in favour of the agent. It held that for the purposes of the regulations, software amounted to goods. It also held that the agent’s activities with the other company did not give rise to a conflict of interest. There had therefore been no lawful basis for the company’s termination of the agreement, which amounted to breach of contract.
The agent was awarded £490,000 damages for loss of future commission and approximately £7,000 for commission he was due immediately after the termination of the contract.
Please contact Simon Porter if you would like more information about the issues raised in this article or any aspect of contract law.