Facts
- Hunter Boots terminated its sales agency agreement with Charles Shearman
- The contract provided that regulation 17 of the Commercial Agents (Council Directive) Regulations 1993 would entitle Shearman to either an indemnity or compensation, whichever was lower
- Compensation would equate to about £1.5 million; an indemnity would be capped at about £200,000
Issue
- Was Shearman entitled to compensation or an indemnity?
Decision
- Compensation
Reasoning
- A principal must decide absolutely whether an indemnity or compensation will be provided under regulation 17; a conditional choice was not acceptable
- As the term was ineffective, the default compensatory position would be adopted by the parties
