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Agent entitled to commission on contracts completed after he retired

Posted: 23rd September 2014   In: Corporate Commercial

A distribution company has been ordered to pay commission to an agent on deals that were completed after his retirement.

The agent started working for the company, based in Holland, in 1997. It produced and exported various products. The agent’s role was to introduce these products into the UK market, and be a point of contact for customers.

He decided to retire in 2009. He served his notice with the company and the two parties ended their relationship on good terms.

However, the following year the company secured a deal worth £230,000 with one of the agent’s old customers.

He claimed he was entitled to a commission, because of the strong working relationship he had built with that customer.

The company refused to pay him. It pointed out that when the deal was secured, the agent would not have been required as the company had started dealing directly with the customer. Therefore no commission was due.

The agent took the case to court. The judge had to decide if the agent had contributed to the deal, and if so, what would be a reasonable commission to be paid. He ordered the payment of £18,800, given that the deal was completed on the basis of a healthy, long-term working relationship built by the agent.

The company took the case to the Court of Appeal, but it ruled that the judge had been reasonable in his assessment. It upheld his decision.

Please contact Simon Porter if you would like more information about the issues raised in this article.