One of the conditions for an indemnity is that, after the agency agreement has ended, the principal derives substantial benefits from contracts with customers brought in by the agent, or with customers whose business with the principal the agent has significantly increased.<\/p>\n\n\n\n
In practice, this condition gives rise to considerable difficulties of interpretation.<\/p>\n\n\n\n
\u00a0<\/p>\n\n\n\n
\u26a0\ufe0f The legislation does not explain either what the principal\u2019s \u2018benefits\u2019 are or when they should be regarded as \u2018substantial\u2019.<\/p>\n\n\n\n
Legal commentary and case law indicate that the principal\u2019s benefits should be connected with the agent\u2019s activities. They should therefore result from the agent bringing in customers or increasing business with existing customers.<\/p>\n\n\n\n
However, questions remain about the nature of those benefits and how to assess whether they are \u2018substantial\u2019:<\/p>\n\n\n\n
\u27a1\ufe0f Although the term \u2018benefits\u2019 is associated with financial value, some commentators take a broader view and consider that acquiring a lasting customer base may also constitute a benefit.<\/p>\n\n\n\n
\u27a1\ufe0f Although the literal wording of the provision requires the principal to \u2018continue to derive\u2019 substantial benefits, some commentators consider that this should be assessed on the basis of a forecast, rather than events that actually occur after the agreement has ended.<\/p>\n\n\n\n
\u00a0<\/p>\n\n\n\n
\u2757 It is particularly difficult to determine whether the benefits are \u2018substantial\u2019 in a given case. The legislation provides no criteria to assist with this assessment.<\/p>\n\n\n\n
Case law emphasises that bringing in customers is not, by itself, enough to establish that the principal\u2019s benefits are substantial. It must be established that the principal actually derives tangible benefits from those customers.<\/p>\n\n\n\n
It is nevertheless difficult to identify a universal measure of what is \u2018substantial\u2019. Should the assessment be based on the volume of business generated by customers, the profit earned, the number of customers, the durability of business relationships, or other circumstances relating to the principal\u2019s business?<\/p>\n\n\n\n
\u2757 The burden of proving these circumstances rests with the agent.<\/p>\n\n\n\n
\u00a0<\/p>\n\n\n\n
\ud83d\udccc Conclusion<\/p>\n\n\n\n
The concept of \u2018substantial benefits\u2019 is one of the most ambiguous elements of the agency indemnity. The legislation does not determine either which benefits should be taken into account or how their \u2018substantial\u2019 nature should be assessed. As a result, many issues remain disputed in legal commentary and case law, and deciding whether this condition is met requires consideration of the circumstances of each individual case.<\/p>\n\n","protected":false},"excerpt":{"rendered":"
One of the conditions for an indemnity is that, after the agency agreement has ended, the principal derives substantial benefits from contracts with customers brought in by the agent, or with customers whose business with the principal the agent has significantly increased.<\/p>\n","protected":false},"author":0,"featured_media":5826,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"","_seopress_titles_desc":"What are substantial benefits for the principal? 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