Rossetti Marketing Ltd v Diamond Sofa Company Ltd & Anor

The Commercial Agents Regulations 1993 do not exclude an agent who acts for multiple principals, including competing principals. Whether the Regulations apply is determined by the terms and context of the agency agreement when made. The statutory duties of good faith and loyalty remain mandatory, but their content is shaped by the contractual context, which must clearly define how competing agencies are to operate. An agency may be transferred by assigning its rights and transferring its obligations with the principal’s consent. A fixed-term agency that continues after expiry becomes an indefinite-term agency, subject to the statutory notice periods.

Rossetti Marketing Ltd claimed compensation and other sums from Diamond Sofa Company Ltd under an agency arrangement for the sale of furniture in the United Kingdom and Ireland. Solutions Marketing Ltd had originally acted as Diamond’s agent. Its business was transferred to Rossetti in early 2008, shortly before Diamond terminated the agency.

The court determined preliminary issues concerning whether the agency fell within the Commercial Agents Regulations 1993, whether an agent could act for competing principals, whether the transfer was an assignment or novation, and the duration of the agency.

1. Scope of the Regulations. The agency was a commercial agency within regulation 2(1). The definition is assessed by reference to the agreement’s terms and context at the date of formation. The singular reference to a principal does not exclude multiple principals, and the Regulations contain no exclusion for competing principals. The statutory duties apply after the relationship has been classified as a commercial agency: paras 46–50.
2. Good faith and loyalty. The duties in the Directive and Regulations are non-derogable, but their content is not invariable. Consistently with Kelly v Cooper [1993] AC 205, the contractual context may permit representation of competing principals. Because of the risks of divided loyalties, the express or implied terms must clearly identify what the agent may do and what each party may expect: paras 51–57.
3. There was an implied term that the agent could continue representing Linkwise and ArtPeak, whose product ranges did not clash with Diamond’s. The term was later varied by the parties’ course of dealing to accommodate Casarredo and Creative. It did not permit placing orders with another principal at Diamond’s expense: paras 56–57.
4. Secondary activities. The Schedule to the Regulations did not make an agent’s activity secondary merely because the agent represented multiple or competing principals. The principal purpose of the arrangements satisfied the Schedule’s substantive criteria, and paragraph 3 contained only non-binding indicators: paras 58–61.
5. Transfer. Contractual rights could be assigned, while contractual burdens required the promisee’s agreement. The arrangement transferred the rights and obligations of the agency from Solutions Marketing Ltd to Rossetti Marketing Ltd with Diamond’s consent. Rossetti therefore became subject to the same terms and duties: paras 62–66.
6. Duration and outcome. The original 12-month agency continued after expiry and became indefinite under regulation 14. The applicable notice period under regulation 15 was three months. The preliminary issues were determined in Rossetti’s favour, subject to the remaining claims and issues: paras 67–68.

First-instance determination of preliminary issues in a claim for compensation and other sums arising from a commercial agency. The judgment records no prior appellate decision.