Commercial Law and Practice LG03 D1

LEGAL PRACTICE COURSE

Commercial Law and Practice
Large Group 3: Agency, Distribution and Franchising


Topic(s):
 Part 1 - Agency
 Part 2 - Distribution (outline only)
 Part 3 - Franchising (outline only)


Learning Outcomes:
By the end of this session you will be able to:
 distinguish between the following different types of marketing relationships: agency,
distribution and franchising;
 outline and explain the different types of authority which may be invested in an agent;
 apply the Commercial Agents (Council Directive) Regulations 1993 to a practical
example;
 explain the potential liability of agents to third parties and apply this to a practical
example;
 outline the legal and practical issues arising in relation to the termination of an agency
relationship.


Session Activities:
 As set out in the session outline.


Materials Attached:
 Session outline.


Preparation for Session:
 Read Chapters 10, 11 and paragraph 12.4 in the Commercial manual.
 If you have time, read Chapters 33 and 34 of your Business Law and Practice manual.
 Read the Commercial Agents (Council Directive) Regulations 1993 (as amended): these
are set out in the Appendix to the Commercial manual.
 Find and read the decision in Mercantile International Group plc v Chuan Soon Huat
Industrial Group [2002] EWCA Civ 288.
 Review paragraphs 1 to 10 inclusive of the attached session outline and complete
paragraph 7 as you are reading Chapter 10 of the Commercial Manual.


Post-Session:
 Review your notes of the session in order to consolidate your understanding.
 Read paragraph 11 of the attached session outline.




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,© City, University of London 2020 2/22 docs_839742151.docx

, LEGAL PRACTICE COURSE


Commercial Law and Practice
Large Group 3: Session Outline

1. Introduction

Marketing arrangements
 Direct sale – need considerable capital and knowledge to sell goods directly, usually for
organise expansion of business, takes long time to happen, sometimes better to use an
existing structure→ so appoint an agent
 Agency Agreements*
 Distribution Agreements*→ sale of goods through a sales of goods contract, usually in
bulk
 Franchising*→ a model you can use as licencing rights and knowledge to a third party
that has obligations to purchase items

LG3  General overview of marketing arrangements:
 Agency (Chapters 10 and 11.1-11.4 manual)
 Distribution (Chapters 10 and 11.5-11.7 manual) - overview
 Franchising (Chapter 12.4 manual and para 11 of this session
outline)
WS5  Agency
 Commercial Agents (Council Directive) Regulations 1993
 Negotiation
 Advising
WS8  Agency
(Skills)  Distribution Agreements
WS9  Franchising

PART 1 - AGENCY

Overview
■ Different types of Agency relationship
■ The power/authority of the Agent (“A”) to bind Principal (“P”)
■ Rights and duties of the Agent
■ Liability of the Agent to a third party (“T”)
■ Termination of an Agency agreement

-Under an agency arrangement, the principle appoints an agent to identify third parties as
customers and negotiate a trade with those third parties for the principal→ so principal can
increase sales rapidly without employing sales and distribution staff and resources, and can
also retain control over transactions
-Another advantage is usually it is based on commission for sales of products without
bearing risk→ contrast to franchising and distribution
-Disadvantages: consider mandatory EU rules, particularly agents rights of termination, issue
of competition law and tax issues