Assignment
Topic
Alpha GmbH (“Alpha”) is a successful
German green electricity and gas company who decided in June 2019 to enter the
British market. Its most senior management agreed on the following business
model for the UK: Alpha’s employees should focus on the supply of energy while
sales (to both individual and corporate customers) should be delegated to
agents. Thus, Alpha concluded between January and April 2020 indefinite term
agency agreements with around a dozen individuals as well as a company, Epsilon
Ltd. (“Epsilon”). Epsilon advertises itself as the high quality but low-cost
solution on the commercial agency market. It employs only two directors. Their
main task is to conclude, on behalf of Epsilon, agency agreements with
individuals with strong sale experience in the specific market considered by
their client, i.e. electricity and gas in the case of Alpha. In consideration
of their sale experience, Epsilon pays its agents a higher than average
commission (with an upper limit of 30% of Epsilon’s own commission from Alpha).
Epsilon concludes with its agents automatically renewable non-exclusive fixed
term (four months) agreements subject to Chinese law. The latter states that
any commercial agency agreement may be terminated at any time without any
compensation or indemnity and that this rule cannot be derogated from by the
parties in their contract. Thanks to its past and on-going experience in the
energy sector, Epsilon has been able to hire around 200 experienced agents to
market Alpha’s products.
Part
1 (2,250 words):
In September 2020, Alpha learnt that
it was unfortunately under investigation by the UK Regulator for mis-selling.
The Regulator has indeed received numerous complaints from consumers, in
particular vulnerable consumers who claim to have received misleading
information. After an internal investigation, Alpha believes that the problem
lies with three agents in particular, who were recently hired and are still on
a trial period of six months. Alpha therefore decides to let go these agents
with immediate effect. To be on the safe side, and avoid further potential
mis-selling issues due to the lack of experience, Alpha has also decided to let
go all other agents on a trial period. It has therefore given a one-week notice
to two other agents, as per the agency agreement. At the same time, Alpha took
this opportunity to get rid of two agents who have been performing very badly,
bringing only one sale per week on average in the last seven months. Their
contracts were immediately terminated. One agent also spontaneously ended last
week his agreement with Alpha as he has contracted COVID-19. In all the above
cases, Alpha has not provided any termination payment, relying in particular on
the explicit exclusion in the agency agreement of any termination payment while
on trial period or the breach of the agency agreement for poor performance.
Please advise Alpha on its legal
position under the Commercial Agents (Council Directive) Regulations 1993.
Part
2 (2,250 words):
Yesterday, Alpha received a letter
from the UK Regulator stating that it was forced, with regret, to hand Alpha
with a 2.4 million pounds fine for continuous and significant breach of its
licence to supply energy. Furthermore, Alpha is prohibited from selling
electricity and gas in the UK for the next five years. All 78934 existing
customers will be moved to another energy supplier within the next 30 days. The
Regulator’s decision is effective as of tomorrow. As a consequence, Alpha is
currently texting or phoning all its remaining agents for the UK market, as
well as those hired by Epsilon, stating that their agreements will be
terminated starting tomorrow and that unfortunately no termination payment will
be made given the exceptional circumstances the company finds itself in.
Moreover, Alpha reserves itself the right to claim back from its agents and
those hired by Epsilon the 2.4 million pounds fine: at the end of the day, they
were solely responsible for the sales, were not they?
Please advise Alpha on its legal
position under the Commercial Agents (Council Directive) Regulations 1993.
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