Termination of an unwritten agency relationship

[Aspley]

Hi, I am selling my cabinet manufacturing business.
How do I stand with regard to an agent who has bought modest business to me fo the past six years. It is likely the guys purchasing the business will not need my agents involvement.

im sure there is probably a minefield to negotiate but would really welcome a starting point.

thanks

[GoodOldBoy]

I assume this agent is self-employed and therefor simply a person with whom you do business.

If so, it is up to you (the business owner) who you do business with. Assuming you do not have a contract with him, I cannot imagine he has any rights to stop you trading with him.

[Aspley]

I assume this agent is self-employed and therefor simply a person with whom you do business.

If so, it is up to you (the business owner) who you do business with. Assuming you do not have a contract with him, I cannot imagine he has any rights to stop you trading with him.

The issue is how I drop the agent. Even though there is no formal contract from what I’ve read there will be an ‘implied’ contract.
can I simply send a letter giving say three months notice of the termination of our relationship and how can I determine what I might, if anything, have to pay him.

thanks for your interest

[ostell]

I don't see it as an agent, he is just a customer that comes to you as he likes your work. I would just write to him as a customer and say you will no longer be running the business after xxxxxx. Thank you for your custom and I'm sure the new owner will be able to help you in the future

[Aspley]

I don't see it as an agent, he is just a customer that comes to you as he likes your work. I would just write to him as a customer and say you will no longer be running the business after xxxxxx. Thank you for your custom and I'm sure the new owner will be able to help you in the future

Maybe I haven’t explained correctly. The guy is an agent in that he sources customers for my product. They order and he receives 7.5% on net sales. He is not employed by me he only receives commission as is the way for most agents. But, under the Commercial Agents Regs 1993 I understand he has an implied contractual relationship with my company.
I think I get that bit, what I am struggling with is how I sever the relationship and how do I calculate compensation or whatever you want to call it.

[ostell]

OK you have a business. Is it a limited company?

[Aspley]

OK you have a business. Is it a limited company?

yes but wouldn’t the same principles apply.....the shares are being sold and the name retained. The new shareholders will not need the agent

[ostell]

So he is an agent of the company, the company still exists, not your problem. I presume you are resigning as director and the other person is becoming director

[Aspley]

Well it is a problem as the new owners will expect to get rid of him

[ostell]

That's not your problem. Any possible agreement was with the company. Let the new owner handle it

[islandgirl]

From my export sales days I remember that in some cases a sacked agent would be due a year's potential commission (based on previous years). Whether this is true here or not I have no idea. I agree with Ostell that it is the new owner's problem - however what if he refuses to sign on the dotted line unless this person is gone?