Sagal (t/a Bunz Uk) v Atelier Bunz GmbH

A self-employed intermediary who negotiates sales for a principal is a commercial agent only where the statutory requirements concerning the principal’s role in the resulting contract are met. An intermediary with authority merely to negotiate must leave the principal to contract directly with the customer. An intermediary with authority to conclude a contract must do so both on the principal’s behalf and in the principal’s name.

Where the contractual documents clearly show that the intermediary contracts in its own name, they are decisive of that issue. Oral evidence and matters such as the intermediary’s margin, resale price or promotional duties cannot displace the documents.

The appellant marketed jewellery in the United Kingdom under the trade name Bunz UK. It took orders from retailers, invoiced them in its own name and then placed corresponding orders with the respondent manufacturer, which invoiced the appellant at a discount.

The appellant claimed protection as a commercial agent under the Commercial Agents (Council Directive) Regulations 1993. HH Judge Mackie QC, sitting in the Commercial Court, held that it lacked authority to negotiate or contract on the respondent’s behalf and was not a commercial agent.

On appeal, the central issue was whether an intermediary which contracts with customers in its own name can nevertheless be a commercial agent within the Regulations and Directive 86/653/EEC.

Appeal dismissed unanimously. Longmore LJ, with whom Lloyd and Laws LJJ agreed, held that the appellant was not a commercial agent.

1. The two limbs of the definition had to be read according to their distinct functions. Under the first limb, an intermediary may have continuing authority to negotiate, but the principal must decide whether to contract directly with the customer in the principal’s own name. Under the second limb, an intermediary with authority to conclude transactions is a commercial agent only if it has authority to conclude, and concludes, contracts both on the principal’s behalf and in the principal’s name.

2. English law may permit an agent to contract on a principal’s behalf in the agent’s own name. That possibility did not satisfy the Directive’s definition. A contrary construction would deprive the second limb of its requirement that contracts be made in the principal’s name.

3. The order confirmations and invoices clearly created one contract between the United Kingdom customer and Bunz UK, which was the appellant’s trade name, and a separate contract between the appellant and Bunz GmbH. The appellant never contracted in Bunz GmbH’s name. The documents therefore established that it was outside the definition.

4. AMB Imballaggi Plastici SRL v Pacflex Ltd [1999] 2 All ER (Comm) 249 was consistent with that conclusion but did not establish that every person acting on a principal’s behalf is a commercial agent. Mercantile International Group Plc v Chuan Soon Huat Industrial Group Ltd [2002] 1 All ER (Comm) 788 showed that clear contractual documentation is critical. The appellant’s margin and the asserted absence of pricing discretion could not alter the documentary position.

5. As additional procedural guidance, the court said that judges should be cautious before permitting commercial-agency disputes to become extended oral trials where the basic contractual documentation can fairly determine the issue.

• Court of Appeal (Civil Division) — dismissed the appeal and upheld the conclusion that the appellant was not a commercial agent: [2009] EWCA Civ 700.
• High Court, Queen’s Bench Division, Commercial Court — HH Judge Mackie QC held that the appellant had no authority to negotiate or contract on the respondent’s behalf and that the Regulations did not apply. No citation was stated.