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What is the difference between compensation and indemnity as a termination payment under the Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053?

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Published on LexisPSL on 09/03/2018

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • What is the difference between compensation and indemnity as a termination payment under the Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053?
  • Compensation
  • Indemnity

What is the difference between compensation and indemnity as a termination payment under the Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053?

We assume that this Q&A is referring to the payment of compensation or indemnity on termination of a commercial agency agreement under Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053.

On termination or expiry of a commercial agency, an agent is normally entitled to a payment from the principal. This may be in the form of either:

  1. an indemnity for commission lost in respect of business the agent introduced that benefits the principal, or

  2. compensation for damage caused by the loss of the agent's relations with the principal

Unless otherwise agreed, the default entitlement is to compensation rather than indemnity. The remedies are alternatives; the agent is not entitled to both. For more information, see below and Practice Note: Termination of commercial agency.

Compensation

Compensation is payable for damage the agent suffers by reason of termination of relations with the principal. Damage is defined as, particularly, circumstances that:

  1. deprive the commercial agent of the commission it would have earned had the contract continued (and the

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