In Sagal (trading as Bunz UK) v Atelier Bunz GmbH  EWCA Civ 700, the Court of Appeal of England and Wales has confirmed that the Commercial Agents Directive 86/653/EEC (the Directive) does not apply to agents who make their own contracts with their customers.
The agent and Claimant in this case was Mr Sagal. The alleged principal and Defendant was Bunz, a German company that designs and manufactures jewellery. The parties agreed that Mr Sagal would be the sole UK agent for Bunz. By July 2002, Mr Sagal had launched himself under the trade name “Bunz UK”.
Bunz UK took orders from customers, sending out confirmation of purchase orders in its own name. It would then place a purchase order on the Defendant which would invoice Bunz UK at a 20 per cent discount on Bunz’s wholesale prices. Bunz UK invoiced its customers requesting direct payment.
On the evidence, the judge in the lower court decided that Mr Sagal had no authority from the Defendant to negotiate or contract on its behalf.
COURT OF APPEAL DECISION
Lord Justice Longmore, giving the lead judgment, turned to the definition of “commercial agent” in Article 1(2) of the Directive:
For the purposes of this Directive “commercial agent” shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called “the principal”, or to negotiate and conclude such transactions on behalf of and in the name of the principal.
Dismissing the appeal, Longmore LJ considered the limbs of the definition. The first limb envisaged that the agent did not have authority to contract on his principal’s behalf but only had authority to negotiate terms. The second limb envisaged that, if the principal did want to make a contract with the customer, the contract would be made directly between the customer and the principal, in the name of the principal. It did not envisage that the agent would enter into a contract in his own name with the customer.
Longmore LJ has simplified the lower court’s task in determining whether an agent is a commercial agent under the Directive. He also emphasised that the court will be reluctant to find a commercial agency where the principal’s name does not appear on the face of the contract. He endorsed the words of the judge of the lower court who said that where the picture presented by the documents was clear, witness evidence about the parties’ relationships “was not going to change that clear picture”.