Victoria FergusonIn May 2024, the government launched a consultation about the Commercial Agents (Council Directive) Regulations 1993 (CARs), which is assimilated EU law. The then Conservative government was considering bringing forward legislation that would mean that new commercial agents would not be subject to the CARs. This was part of the government’s review of EU legislation post Brexit.
When the Labour party came into power in July 2024, the consultation on the CARs was extended. In parallel, the Labour government announced that it wanted to reset the relationship with European partners.
On 13 February 2025, the Department for Business and Trade (DBT) confirmed that the CARs will remain in force without amendment. The government response found that overall, the CARs work well for commercial agents and there was not a strong case for change.
The CARs regulate the contract between a business (the principal) and a commercial agent. The CARs apply to commercial agents, who are self-employed intermediaries, with authority to deal with the sale or purchase of goods on behalf of a principal. The CARs do not apply to the supply of services. Where the CARs apply, they impose certain mandatory terms which generally apply to the benefit of the agent. This includes minimum notice periods for termination and a right to a compensation or indemnity payment on termination.
Following the DBT announcement, we know that the CARs are here to stay. This is likely to be good news for agents. The consultation found that agents felt that the CARs offered protections when working with principals. Conversely, principals said that the CARs impede negotiations and can make it difficult to terminate an underperforming agent. They may be less pleased with the DBT announcement. The compensation and indemnity payment on termination is often seen by principals as being burdensome.
Whether businesses are for or against the CARs, we at least have certainty that they apply to commercial agency arrangements. Businesses must therefore continue to reflect the requirements of the CARs in their commercial agency contracts. They should take legal advice to make sure they understand the requirements and consequences of the CARs and are compliant with their requirements.
Businesses operating in the technology sector should also be aware of the Kompaktwerk v LivePerson Netherlands BV case from 2024 in the English Commercial Court. In that case a time-limited subscription to software-as-a-service (SaaS) was found not to be a sale of goods for the purposes of the CARs. So, we know that agents marketing SaaS are not commercial agents.