Lonsdale v Howard & Hallam Limited: The House of Lords Sets Out the Basis of Compensation to be Paid to Commercial Agents

The House of Lords in Lonsdale v Howard & Hallam Limited has confirmed that on termination of a commercial agency agreement the agent's statutory entitlement is, unless the parties have agreed an indemnity, to compensation reflecting the value of the goodwill of the agent's business as at termination. In doing so, the House of Lords has rejected the approach, based on apparent French practice, of a payment based on two years' net commission. Commercial principals will now have to factor in the value of the goodwill of their commercial agent's business when the relationship is terminated.