Précis - The Court of Appeal's decision in the case Rossetti Marketing Limited and another v Diamond Sofa Company Limited [2012] discusses two issues of interest - where a commercial agent may act for competing principals and deprivation of a commercial agent's compensation payment due to the agent's breach.

What? The case of Rossetti Marketing Limited and another v Diamond Sofa Company Limited [2012] looks at commercial agents for competing principals and deprivation of a commercial agent's compensation payment due to the agent's breach.

So What? Although these issues were discussed, the judgment leaves confusion as to the issues and is discussed below.

To understand the issues arising out of the case, it is useful to look at these in turn:

Commercial agents acting for competing principals

The key points to note are that an agent can act for two principals with conflicting interests in only two types of case. These are:

  1. where both principals agree that the agent may do so; and
  2. where the principal must have appreciated that the nature of the agent's business is to act for numerous principals; this is the case with estate agents, but is unlikely to extend to other types of agency (including commercial agency) without clear evidence to support it.

It is, however, important to note that this case was decided on its facts, therefore we would encourage you to seek advice should you encounter a similar circumstance.

Depriving a commercial agent of a compensation payment due to the agent's breach

In this case the principal argued that, because the agent had acted for competing principals, the principal was entitled to rely on Regulation 18(a) of the Commercial Agents Regulations to avoid making a compensation payment on termination. This Regulation essentially permits a principal to avoid making a compensation or indemnity payment where the principal has terminated the agency contract because of default attributable to the agent which would justify immediate termination of the agency contract for repudiatory breach.

However, the principal did not know about the breach at the time of termination, and therefore contended that the breach was not the reason for termination. The principal sought to rely on a common law rule that a person can justify terminating a contract on a ground which it didn't know about at the time of termination.

Unfortunately, the Court of Appeal did not have to determine the issue to decide the appeal. This is a real shame, because the comments made in the judgment cast doubt on this issue. The Master of the Rolls simply said that this is a difficult question and may require consideration of the domestic law in other EU jurisdictions.

Previous High Court case law indicates that for Regulation 18(a) the termination must be "because of" the breach. Therefore, if there is a repudiatory breach but the principal terminates the agency contract on some other ground, Regulation 18(a) will not apply.

However, the Court of Appeal did not consider the High Court cases on this subject to be relevant to the issue. It also did not take in to account a case in the European Court of Justice where similar circumstances arose. This judgment therefore leaves some confusion as to what the position is on this issue.