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Shearman v Hunter Boot [2014]

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
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