Repudiatory breach of an agency contract

A case in the Court of Appeal emphasises the need for principals to ensure that, if terminating a commercial agency contract on the grounds of the commercial agent’s breach of contract, the agent’s breach is a repudiatory breach under English common law rules. If a principal can show that it terminated the contract because of the agent’s repudiatory breach, it can avoid paying compensation on termination.

In this case, the court held that a commercial agent’s breach of his duty to look after the interests of his principal and act dutifully and in good faith was not automatically a repudiatory breach of the agency contract.

Our checklist highlights the circumstances in which a business may want to engage the services of an agent or a distributor.