Companies rely on Agents and Distributors for selling their products and services. Whilst Agents are not direct sales persons, Distributors are the direct salesmen of the products. As such, they are different in many aspects; primarily in stock holding.

An Agent acting for a company that sells widgets – will market, present and represent the widget manufacturer in the marketplace. Whereas a Distributor buys the widgets or stock from the manufacturer, and re-sells the product to the end user.

Agents

Agents, have actual authority (express or implied), to create legal relationships between another, known as a “Principal” (in the above case, the manufacturer) and third parties.

Agents are essentially campaigners of the products and are usually familiar with their market. As the direct connection to the customer, they must know their customer requirements well. Although, they are responsible for selling the products, they do not have any direct connection with the company. They do not buy the products directly from the companies and are not involved in the delivery or after sales / maintenance services. Agents are usually paid on a fixed commission for their work.

Distributors

Moving on to Distributors, they have a direct connection with the company or “Supplier”. Unlike Agents, Distributors purchase the product directly from the company and distribute it in the market. Moreover, Distributors also provide after sales services, which the Agents do not provide.

While an Agent can be called the company’s representative, a Distributor cannot be called so, as he buys the product and then resells it. Agents can be direct employees of the companies or self-employed. On the other hand, Distributors are not employed. The legal relationship between the parties is therefore, totally different.

An Agent is responsible for finding the target people and negotiating with them to buy the product. Although they do not have the final word regarding sales; the last word is reserved to the company. Conversely, Distributors do not have any role in negotiating with the customers; they only perform the role of distributing the product in the market.

Summary

1. Agents are not direct sales persons. Distributors sell the products direct.
2. Agents are only responsible for selling the products.
3. Agents are not involved in the delivery or after sales services. Distributors buy the products directly from the company, distribute it in the market and also provide after sales services, which the Agents do not provide.
4. While an Agent can be called the company’s representative, a Distributor cannot, as he buys the products and then resells them.
5. Agent are responsible for finding the target people and negotiating with them to buy the products. Distributors do not have any role in negotiating with customers; they only perform the role of distributing the product in the market.
6. Think in the following terms:
   1. Agent = Representative
   2. Distributor = Customer

A Company’s Decision

A company’s choice between an Agent and a Distributor will depend on certain factors including; the market size, the type of product and the degree of control a company wants to exercise or is able to exercise in the market. As a rule, you should use an Agency Agreement when you are considering marketing the products of another company. Here are some other considerations:

1. Decide on whether the appointment of an Agent or Distributor is more appropriate in the circumstances.

2. Carry out research on local practices within the territory, if necessary, to help you decide.

3. Check local laws on the relative rights of Agents and Distributors, particularly on termination of the appointment.

Gregory Abrams Davidson LLP

If you or your business have any questions relating to Corporate Law matters and would like a free consultation with a member of our Corporate  Law Team, please contact us on 020 8209 0166. If you prefer, you can contact us by email at jabrams@gadllp.co.uk.

Yesterday, I was asked by the Daily Telegraph to comment on an interesting case between the BBC and the person who plays the character on the programme Tog Gear known as “The Stig”.

The full details of the matter cannot be revealed publicly (you can read further here: http://www.telegraph.co.uk/motoring/news/7954523/BBC-facing-human-rights-battle-with-Top-Gears-The-Stig.html), however, the matter may potentially lead to a clash between the basic principles of Contract Law and Breach of Confidence, on the one hand, and the basic human right of Freedom of Expression as enshrined in the Article 10 of European Convention of Human Rights (enforceable in the UK under the Human Rights Act 1998), on the other.

Under Article 10, “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by a public authority and regardless of frontiers. This Article shall not prevent states from requiring the licensing of broadcasting, television or cinema.”

The Convention continues; “The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for the maintaining of the authority and impartiality of the judiciary.”

Article 10 protects your right to freedom of expression. This includes the right to hold and express opinions yourself as well as to receive and impart information and ideas to others.

Prior to the Human Rights Act, the right to freedom of expression was a negative one (you were free to express yourself, unless the law otherwise prevented you from doing so). With the incorporation of the European Convention on Human Rights into English domestic law, the right to freedom of expression is now expressly guaranteed, albeit qualified by section 2 above.

In Handyside v UK (1976) the ECHR stated that freedom of expression constituted one of the essential foundations of a democratic society and one of the basic conditions for its progress and development of every person. It also made clear that Article 10 applied not only to information or ideas that are favourable and inoffensive but also to those that offend, shock or disturb the State or a sector of the population.

However, where an interference with expression has concerned anti democratic ideas and extreme right wing views contrary to the text and spirit of the Convention, the ECHR has varied between excluding the expression from the scope of Article 10 altogether or concluding that the interference is justified by Article 10(2).

The right to freedom of expression in Article 10 is not an absolute right. It is a qualified right. This means that formalities – including Contract Law as laid down by each member state, conditions, restrictions or penalties may be imposed on the exercise of this right if they are prescribed by law, pursue a legitimate aim and are necessary in a democratic society. This latter condition requires the means employed to be necessary and proportionate to the aim pursued. The legitimate purposes for which freedom of expression can be limited are set out in Article 10(2) set out above (see also section headed ‘A qualified right’ under Article 8).

At this stage it is unclear as to whether a challenge to the contract between the aforementioned parties under Human Rights law will be pursued by the “man behind the mask”. He may have a case, but then again, so does the BBC!

Pensions increase annually. If you’ve left a scheme the value of deferred benefits will increase to keep in line with inflation, and pensions in payment will increase in the same way (personal pensions are different – with them you can buy whatever type of annuity you want). The Chancellor announced in the budget that all government run pensions (e.g. the NHS, Teachers, Police, Civil Service etc) will now rise in accordance with CPI rather than RPI.

CPI has traditionally been lower than RPI for a number of reasons (but note that the government is thinking about bringing housing costs in to the CPI so this is still very fluid) so this will mean that pensioners in such schemes will get less in their retirement than they might have thought.

When valuing a pension for divorce purposes the Court looks at the Cash Equivalent Transfer Value (CETV). This is the money that the scheme administrators would pay in to a private pension for you if you were minded to transfer out (seldom will this result in anything other than you losing money). The pension administrators can value in their own way the cost today of providing the benefits you are entitled to receive in the future. In doing so they are obliged to consider the best interests of the remaining scheme members, not the person hypothetically leaving, so traditionally CETVs don’t reflect the true market value of such pensions anyway.

The change to CPI means that CETVs will be even lower. If you already have a CETV for such a scheme then it is now out of date. Scheme administrators have imposed a temporary moratorium upon supplying CETVs (if you need one quicker you’ll have to go to an actuary, though they can only give you their best guess).

We can help clients through what is a very complicated area of law. Whilst the settlement of some cases will inevitably be delayed, with good will on both sides it will still be possible to come up with solutions and agreements can still be reached.

Expert advice is essential.

Andrew Lee

Andrew Lee is a senior associate solicitor at Gregory Abrams Davidson,  a member of the Advanced Family Law Panel of the Law Society and a Collaborative Family Lawyer. He can be contacted on 0151 236 5000 or at alee@gadllp.co.uk

Background on the Law

Consumer Protection from Unfair Trading Regulations

The Consumer Protection from Unfair Trading Regulations (SI 2008/1977) (CPRs) generally prohibits unfair commercial practices. A commercial practice is unfair if it contravenes the requirements of professional diligence and materially distorts the economic behaviour of the average consumer in relation to a product (or is likely to do so) (regulation 3, CPRs).

Commercial practices are misleading if they give false information which deceives (or is likely to deceive) the average consumer and causes or is likely to cause him to take a transactional decision that he would not otherwise have taken (even if the information given is factually correct) (regulation 5, CPRs).

Commercial practices are misleading if, taking into account the circumstances of the commercial practice and the medium used to communicate it, they omit, hide, disguise or delay material information so as to cause the average consumer to take a transactional decision that they would not otherwise have made (regulation 6, CPRs).

Electronic Commerce (EC Directive) Regulations

The Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) provide that website operators must provide certain information in a form and manner which is easily, directly and permanently accessible (regulation 6, E-Commerce Regulations).

Facts

European Health Insurance Cards (EHICs) provides UK residents with access to state-provided healthcare when they visit another EU member state. UK residents can obtain an EHIC free of charge from the NHS.

Five online traders were offering the EHIC, typically charging £10 per application without clearly stating that they were not the official NHS website. The OFT launched an investigation after complaints were made to the Department of Health and Consumer Direct.

The websites claimed to offer a “review and forward” service for the applications, for which they charged the fee. However, many consumers believed that they were using an official site and were unaware that EHICs were available free of charge from the NHS.

Most search engines use keyword advertising, via which an advertiser can have its messages displayed beside natural search results. Certain websites had purchased sponsored search engine links and therefore featured prominently when consumers searched for EHIC. There are ongoing proceedings in various European countries about such activities, which are often brought under trade mark or passing off/unfair competition laws. (Please see my previous blog post on this subject)

OFT Action

The OFT determined that these organisations had breached regulations 3, 5 and 6 of the CPRs and regulation 6 of the ECRs because they were misleading in their presentation. The websites mimicked the EHIC brand, used an official-sounding domain name and omitted important information by failing to clearly disclose that they were not the official provider of EHICs.

Three traders have signed formal undertakings not to engage in deceptive selling practices. A fourth had its website domain suspended by its domain name registrar and the fifth voluntarily ceased trading.

The OFT will monitor the organisations’ activities and, if they breach the undertakings, it may take court action including applying for an enforcement order under the Enterprise Act 2002.

Gregory Abrams Davidson LLP

If you or your business have any questions relating to Corporate or Media Law matters and would like a free consultation with a member of our Corporate or Media Law Teams, please contact us on 020 8209 0166. If you prefer, you can contact us by email at jabrams@gadllp.co.uk.

This contains the expected operational information and financial statements as well as some fairly interesting stats.

For example, 362,317 new companies were incorporated in the year to 31 March 2010 and of these 229,147 (or 63.2%) opted not to appoint a company secretary. In other words, a company secretary was appointed in 36.8% of new incorporations – despite the fact that companies legislation (Companies Act 2006) no longer requires such an appointment by private companies.

Also, it appears that Companies House has fallen on hard times of late. It had a turnover of £66,401,000 but made an operating loss of £288,000 in 2009/10 as opposed to a surplus of £877,000 in 2008/09!

Raymond Bryce, a law student, failed to see the funny side of former friend, Jeremiah Barber’s post of a paedophiliac picture on his Facebook page with the words “Ray, you like kids and you are gay so  bet you love this picture, Ha Ha”.

Mr. Bryce, who suffers from Asperger Syndrome said more than 800 people would have been able to view the page and that he was too scared to leave his home because he did not know who had seen it.

The posting caused a great deal of stress for both him and his family and Bryce duly sued Barber in the High Court for libel and won damages.  Barber ended up with a large money Judgment against him, a conviction for circulating indecent images of children and 150 hours’ community service… Not a laughing matter!

This is yet another illustration of how some people underestimate the power of the internet and social media from a legal context. Many users seem to forget (or are not aware) that defaming another person and publishing that defamation is libel, whether in print, using posters or through social media. In fact, due to the “targeted” nature of social media, Dr Ian Brown, from the Oxford Internet Institute, argues that it is “worse in some ways than putting offensive posters on lamp posts because it’s going directly to your friends”.

Issues For Employers

Consider the above scenario in a business context. What if employees use their employer’s computer to access Facebook? What if or defamatory comments are placed upon a corporate Facebook page, twitter account, blog?  In such a situation the victim would probably be advised to sue both the individual who posted the comment and the company for not taking action: it is usually going to be more likely that the company has deeper pockets to make a payment and will chose to settle sooner rather than later.

In law a company can be held “vicariously liable” for the actions of its employees. For instance, the employer of a delivery driver who knocks over and injures a pedestrian whilst on his rounds will be sued alongside the employee driver.  So what about an employee who posts inappropriate material at work? One answer would be for the company to argue that the employee was not acting in the course of his work duties that he was, in the legal phrase, “on a frolic of his own”.  However, things aren’t so simple.

The case of Lister & Ors v Hesley Hall Ltd [2001] UKHL 22 dealt with the issue of vicarious liability, specifically, when it will be appropriate to place liability upon the employer.  The House of Lords held that the employer could be held liable for the action of an employee where it was held that the employer should be held vicariously liable where the act complained of is reasonably incidental to the type of business carried on. In the later case of Dubai Aluminium Co Ltd v Salaam & ors HL 2003 IRLR 608, Lord Nicholls said that for vicarious liability to be established the act complained of “must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm’s business or the employee’s employment”.

This should protect an employer in the Bryce – Barber type scenario above.  If an employee posts defamatory material on his personal PC in his own time that should not impact on the employer unless the company is specifically mentioned or linked in some way.  However, if the employee has been specifically authorised by the employer to tweet, blog or update Facebook, Myspace (does anybody still use Myspace??) etc. to market the business and libels a third party, it could be argued that the business should have controlled the employee’s actions and is therefore vicariously liable. Worse still, if the employee is home-based, the company may be held liable and could end up with a nasty bill, which may not be covered by the employers’ liability insurance policy.

Risk Reduction

What the prudent employer ought to do:

1) Social media usage policy: This sets out what is acceptable and what is not. Ideally, this would include a prohibition on disseminating any inappropriate or pornographic images or text and state that the employer will not tolerate any misuse of its social media networks that would breach the confidentiality of it or its clients or cause embarrassment or financial loss to them. (NOTE: There is no reason why that restriction should not extend to employees’ use of social media in their home life.) The policy should also make it clear that any breaches will be treated seriously and may constitute a disciplinary offence leading to dismissal for gross misconduct.   This will enable an employer to argue, should the need arise, that the employee was not authorised to make the comment. (PLEASE CONTACT ME IF YOU REQUIRE A NEW SOCIAL MEDIA USAGE POLICY)

2) Publication: There is a growing trend amongst many companies to publish their Social Media Usage Policy; providing clients, customers and other stakeholders with a degree of comfort about the employee actions and management in this area.

3) Monitoring: The employer should monitor their networks to make sure any offending articles or comments are removed as soon as possible.

4) Access: Limit to a few individuals.

5) Password Protection: The employer should ensure that its own social media profile passwords are kept confidential by those with access. If necessary, change passwords every few months.

6) Reputation: Keep an eye on what is out there. There could be a disgruntled former employee or an unhappy client or customer who sets up a false page and decides to defame others. Although you may be able to proved that the page or site is a fake and you won’t be held “vicariously liable”, it may have damaging effects to your reputation!

7) An Outright Ban?: Some (including Dragon Theo Paphitis) might argue that the solution is to ban social media from the workplace. The recent news story that social networking websites are costing the British economy up to £14 billion a year in lost working time might add substance to that argument.

However, whilst I can understand why certain businesses would want to ban the use of social networks – they are a time consuming distraction – the fact that they are important promotional and communication tools would trump this argument. (Indeed, due to the proliferation of mobile technology into our daily lives, a company would need to go the unlikely extra length of prohibiting its employees from bringing their smartphones to work, in order to fully enforce its social media  ban!)  Instead, I would contend that good management and a sound usage policy (see 1 above) will keep your employees happier… and hopefully, your customers satisfied.

If you or your business have any questions relating to Media Law or Reputation Management matters and would like a free consultation with a member of our Media Law Team, please contact us on 020 8209 0166. If you prefer, you can contact us by email at jabrams@gadllp.co.uk.

About GAD LLP’s Media Law Practice:

Gregory Abrams Davidson’s Media Department is experienced in acting for a variety of media, technology and entertainment companies, celebrities, sports personalities, investors and professionals involved in the sector.We cover many media-focused legal issues, including reputation management, privacy and defamation, Intellectual Property, Entertainment, I.T., telecommunications and E-Commerce, film, TV, music and publishing. We provide a reliable and efficient service, constantly striving to provide practical, commercial, cost-effective legal advice to achieve the right result for our clients in the shortest possible time.

Major problems can arise on the death of the parent in determining the extent of the deceased’s interest in the account (or the child’s intended “lack of interest”) and the uncertainty as to the correct inheritance tax (IHT) treatment of the whole situation.

In Re Northall (deceased) [2010], the deceased, Mrs Northall had purchased her council house with the aid of one of her six sons. The property was later sold. However, the deceased did not have a bank account and so, one of her other sons, Christopher, opened a Joint account with his mother and deposited the sale proceeds of £54,836.00. In the following 3 weeks before her death, Christopher withdrew £28,625 and the day after his mother’s death, transferred the remaining balance into a joint account held with his wife.

Christopher claimed the account had been put into Joint names so he could make withdrawals on behalf of his frail mother. But he further alleged that his mother had instructed him to withdraw money for his own benefit and that any residue within the account upon her death would belong solely to him.

A number of legal principles apply:

1. Joint accounts are ordinarily subject to the standard rule of survivorship – that is to say, upon the death of the first, the entire account passes to the co-owner absolutely. This is common for married couples and of great convenience to all. It is not so beneficial to parent and child, particularly if the remaining children see the only asset of their parent pass by default to the one child whose name appears upon the account.
2. Joint accounts that are deemed to pass by survivorship “pass” outside of a will. It would therefore be irrelevant if the deceased did have a will gifting everything between all the children equally (A major reason why a professionally drafted will by GAD LLP Solicitors will address and review the actual reality of how you legally own and hold assets in order to ensure that you can gift them within a will in accordance with your wishes)
3. When one person alone puts money into joint names, there is a presumption of Resulting Trust in favour of the provider of the funds. This presumption can be rebutted if Christopher could show the circumstances give rise to another technical issue of Advancement (not applicable in this case and to be discusswed in a separate Blog) or he establishes evidence that his mother intended to transfer the beneficial interest in the fund – The burden of proof would rest with Christopher in this latter position.

 Held:

Upon the evidence, there was nothing to support Christopher’s allegation that his mother intended the payments withdrawn to be a gift. Indeed, she had intended the monies to remain hers to spend as she so wished. Similarly, there was no evidence to support the son’s allegation that the remaining balance of the account was to pass to him upon death. The son was ordered to return the balance of the account, together with all withdrawals (save those where evidence was available to show the withdrawal was with his mother’s express instruction). It is unclear who bore the costs of this litigation.

 Conclusion:

Incidents such as these are all too common. Often however, the family disruption of one sibling suing another, or the existence of more modest balances within the account (i.e. not £55,000) often, for practical reasons, results in families not pursuing legitimate legal avenues of redress.

The sensible approach is to ensure your financial affairs are protected by a Lasting Power of Attorney, rather than placing a child’s name upon your account. If however you do choose to add their name, you should document the terms upon which they hold the funds and your intention as to its eventual “direction” upon death. Such formality appears to be taking the proverbial sledgehammer to the nut, but regretfully experience of many Private Client Lawyers dealing with probate is that individuals are rarely robbed by balaclava dressed strangers, but rather, close family members bearing gifts of flowers and “promises” to sort your financial affairs out for you.

Joint Accounts may not therefore necessarily prove to be the answer to all of your problems – they may just be the start!

Around 200 patients who were treated at the Liverpool Women’s Hospital for incontinence have already come forward to sue the hospital. The complaints against Mr Rowlands include misdiagnosis, unnecessary and/or incorrect treatment and a failure to provide adequate aftercare.

If you were a treated by Dr George Rowland and have suffered problems, please call our dedicated Clinical Negligence team on 0151 733 3353.

Gregory Abrams Davidson LLP specialise in obtaining compensation for clients who have sustained injury as a result of Clinical Negligence. We have many years of experience dealing with claims against hospitals (both NHS and Private), dentists and general practitioners. Examples include claims arising as a result of negligently performed operations, misdiagnosis of cancer, injuries arising as a result of negligently performed cosmetic surgery and injuries sustained at birth.

We have offices in Liverpool City Centre, Garston Village and Allerton. If you would like to enquire about a potential Clinical Negligence claim, contact a member of our Team on 0151 733 3353. Calls can be taken 24 hours a day or e-mail us at rmalloy@gadllp.co.uk

The MIB have now agreed with the Secretary of State to refund the £300.00 deduction by the MIB to applicants, where applicable.

If you have been affected you can contact the MIB and claim your refund.

The MIB can be contacted on 01908 830001 or by email: enquiries@mib.org.uk.

If you have been injured in a road traffic accident in the last 3 years and another motorist was at fault, even if that motorist could not be found, or was not insured, you could make a claim for compensation.

Contact Gregory Abrams Davidson LLP now for advice on 0151 236 5000.