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Commercial Law and Practice LG03 D1
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Commercial Law and Practice LG03 D1
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LEGAL PRACTICE COURSECommercial 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.
docs_839742151.docx 1/22 © City, University of London 2020
,© 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
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