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Commercial Agents Case: What are goods?

12 February 2020
This article considers the question of what constitutes "goods" for the purposes of the Commercial Agents (Council) Directive 1993 (the "Regulations"). This is important because  agents who promote a principal's goods benefit from the protections of the Regulations (including the right to post-termination payments) and those who promote services are not.

What are "goods"?

At first it may sound like a daft question. But in the field of commercial agency law, it is a question that keeps coming before the Courts.

The question is important because commercial agents who sell goods on behalf of a principal (and who also satisfy other criteria) are protected by the Commercial Agents (Council) Directive 1993 (the "Regulations"), whilst agents who promote a principal's services, are not.

The Regulations provide significant protections to agents, not least the often substantial post-termination payments that are usually due under the Regulations.

So it comes as no surprise that agents are always keen to ensure that whatever it is they are promoting is classified as goods, and principals take the contrary position.

Most recently, the High Court confirmed that "electricity" is "goods" within the meaning of the Regulations, and therefore the agent was entitled to compensation (in Green Deal Marketing Southern Ltd v Economy Energy Trading Ltd & Ors [2019] EWHC 507).

That decision is not altogether surprising, as gas has previously been found by the courts to be "goods" within the meanings of the Regulations.

And whilst in one case, it was agreed that Sky television digital packages were services and not goods, the question of whether software is goods within the meaning of the Regulations remains unresolved, with the most recent case on that vexed area now pending before the Supreme Court.

In Computer Associates UK Ltd v Software Incubator Limited [2018] EWCA Civ 518, the Court of Appeal concluded that where software is supplied electronically and not on any tangible medium, it cannot be classified as "goods". As a result, agents who promote software which is supplied electronically do not benefit from the protections provided by the Regulations.

That decision was appealed to the Supreme Court and the appeal is outstanding. Interestingly – particularly in the light of Brexit - the Supreme Court has now referred that question to the Court of Justice of the European Union. As a result, it will be some time before we have any clarity on this point.

DWF has specialist teams advising on the impact of the Regulations.  For specialist, commercial and pragmatic advice, please contact Andy Leach or Ben Griffin.