England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		17 April 2008

1. The main issue in this case is whether the Claimant Mr Raoul Sagal was a Commercial Agent within the meaning of the The Commercial Agents (Council Directive) Regulations 1993 while selling jewellery for the Defendant Atelier Bunz GMBH ("Bunz") under an oral contract which operated for some 3½ years between 1 July 2002 and February 2006.
2. In essence Mr Sagal says that once the substance of the entire commercial relationship and history between the parties is examined rather than the paper trail used for administrative ease it is clear that the relationship was one of commercial agency not independent distributorship. Bunz says that the relationship between the parties is clearly documented and this shows beyond serious argument that Mr Sagal was not a Commercial Agent.

The litigation

3. A Claim Form was issued on 21 September 2006, a Defence was served on 8 December. The trial took place over 4 days from 26 February as the contract between the parties was an oral one and there were disputes about its terms and about its termination. I heard from a number of witnesses, some through an admirable interpreter. I heard from the Claimant Mr Sagal, from his wife and business partner Mrs Helen Sagal, from his accountant Mr George Dub and from Mr Trevor Fitzgerald a retail jeweller in Canterbury. The Defendant called Mr Ruben Bunz its Sales Manager, Mr Georg Bunz the Managing Director and founder and Mr David Gillow, a jeweller formerly in business with Mr Sagal who now works as a Commercial Agent for Bunz. The parties wisely elected not to call other witnesses for whom statements had been prepared and served.

Legal definition of Commercial Agent

4. Before turning to the facts I first set out the test for deciding whether or not a business is a Commercial Agent. Until 1993 a "Commercial Agent" was not an animal familiar to English law as the underlying concept was derived from Roman law developed, but with differences of emphasis, in the legal systems of Germany and France. This animal has become more familiar, particularly in the Mercantile Courts and its features have been clarified in particular by two decisions of the Court of Appeal. If Mr Sagal is a Commercial Agent he can proceed with claims for compensation for loss of his exclusive agency under Regulation 17, valued for now by an expert at £227,304 and will make other claims under Regulations 7, 8 and 12. In this judgment however I am concerned only with the question whether he is a Commercial Agent within Article 2(1) of the 1993 Regulations. The definition is as follows:

'…"commercial agent" means a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the "principal"), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal."

5. In AMB Imballaggi Plastici SRL v Pacflex Ltd [1999] 2 All ER (Cmm) 249 at 252 ("Pacflex") the Court of Appeal held that a person who buys or sells as principal himself does not fall within either limb of the Article 2(1) definition and is therefore not a Commercial Agent for the purposes of the 1993 Regulations.

"If a person buys or sells himself as principal he is outside the ambit of the regulations. This is so because in negotiating that sale or purchase he is acting on his own behalf and not on behalf of another. All the regulations point in the direction of the words 'on behalf of' meaning what an English Court would naturally construe them as meaning. The other person on whose behalf the intermediary has authority to negotiate the sale or purchase of goods is called the 'principal'; the duties are consistent with true agency and not with buying and reselling; 'remuneration' is quite inconsistent with 'mark up', particularly 'mark-up' within the total discretion of the re-seller". (Per Waller LJ at 252 g-j.

In the second Court of Appeal decision Mercantile International Group Plc v Chuan Soon Huat Industrial Group Ltd [2002] EWCA Civ 288 ("MIG"), the reasoning in Pacflex was approved, particularly the above passage - see Lord Justice Rix at para 27.

6. Mr Stuart for the Claimant placed emphasis on other passages in the judgment of Lord Justice Rix. He relied upon the observation in paragraph 6 that "the test is ultimately one of substance rather than form" and on the following passages from paragraphs 21 to 23.

Rix LJ cites Bowstead and Reynolds on Agency -

"The distinction between agent and buyer for resale normally turns on whether the person concerned acts for himself to make such profit as he can or is remunerated by pre-arranged commission. A supplier who himself fixes the resale price is likely to be a buyer for resale ..Exceptionally.. an agent may be remunerated by being allowed to keep the excess over and above a stipulated price … Each transaction must be examined on its facts, considering the extent to which an agent's duties are appropriate …" – para 21.

He then goes on to analyse the reasoning of the decision in Ex parte White, re Nevill (1871) LR 6 Ch App 397 where the court had concluded that the relationship was not one of agency largely because:

"It does not appear that he ever was expected to return any particular contract, or the names of the persons with whom he had dealt. He pursued his own course of dealing with the goods, and frequently before sale he manipulated them to a very great extent by pressing, dyeing, and otherwise altering their character, changing them as much as what terms he pleased as to price and to length of credit …".

"But if the consignee is at liberty, according to the contract between him and his consignor, to sell at any prices he likes, and receive payment at any time he likes, but is to be bound, if he sells the goods, to pay the consignor for them at a fixed price and a fixed time – in my opinion whatever the parties may think their relationship is not that of principal and agent". – paras 22 and 23.

7. Mr Stuart also relied on passages in Pacflex in particular observations by Peter Gibson LJ that "in construing English regulations implementing a European Directive the Court must be on its guard against giving a construction to the provisions of the regulations which defeats the purpose of the Directive or which is inconsistent with how the Directive would be understood in other member states".
8. I do not consider that MIG has the effect claimed for it by Mr Stuart. When referring to the question of substance rather than form Rix LJ did so in a sentence which reads "it is common ground that the word "agent" can be carelessly and indiscriminately used, and that the test is ultimately one of substance rather than form". The passages at paragraphs 21 onwards relied on by the Claimant are part of a review of the authorities which lead up to the conclusions. The Lord Justice points out, in the context of the mark-up in Pacflex, that the significance of that decision was a finding by the trial judge that the basis upon which the parties did business was that of sale and resale. In MIG, unlike Pacflex and another case to which the Lord Justice refers there was documentation "which at any rate purports to describe the relationships between CSH, MIG and the purchasers and to do so in terms whereby direct contracts are brought into existence between CSH and the purchasers through the agency of MIG and with the authority and knowledge of CSH". He adds, at 31, "in my judgement, however, if the parties were not agreed that the documentation was a sham, then I do not see how it is possible to ignore its effect". A distinction in a contract between "substance" and its documentation will therefore be rare.
9. Mr Stuart also places considerable emphasis on the decision of Fulford J in P J Pipe & Valve Co Limited v Audco India Limited [2005] EWHC 1904 (QB) which addresses various aspects of the law of commercial agency. While an important issue in that case was whether PJV was a Commercial Agent that point turned on whether the agent had authority to "negotiate" a sale (or purchase) of goods, an expression to which the Judge held that the court should avoid giving a limited or restricted interpretation. That does not arise here. The limited relevance of that decision is illustrated by the fact that the very careful analysis of the issue made no reference to either of the Court of Appeal decisions which it is common ground are central in this case. Pipe is not a licence for a broad approach to contract in this case.
10. As I see it the test is that set out in AMB with which the Court of Appeal agreed in MIG. Immediately before the passage at 252 relied upon by Mr Kimbell Lord Justice Waller says this "In my view the question whether a person is a Commercial Agent can be more straightforwardly stated by reference to the words used in addition in the definition and was rightly answered by the Judge …". As Peter Gibson LJ puts it at 255 "the plain implication of the language of the Directive and of the Regulations is that if the sale or purchase of goods is negotiated by the intermediary in its own interest rather than on behalf of the principle, the intermediatory is not a Commercial Agent. The paradigm example of an intermediary so negotiating is as a distributor purchasing goods on the manufacturer but reselling the goods for a profit on the mark-up". It is not, as I see it, helpful to depart from that straightforward approach by conducting a close comparison between the facts of this case and those in others. The question is not whether the facts here are similar or different to case A or B where someone was held or held not to be a Commercial Agent but whether as regards the contract in question Mr Sagal was a Commercial Agent within the definition. I say straightaway that in commercial transactions the documents recorded or generated by the relationship are going to be a very important guide, more so than recollections after the event of whether the work Mr Sagal did was broadly that of a distributor or of an agent. These words are understandably used loosely in the business community without regard to any legal definition. Documents and records of transaction are particularly important in this case where the contract itself was an oral one and its terms depend upon the recollections of witnesses giving evidence about relatively sophisticated commercial matters in English, not the first language either of Mr Sagal or of those who took the decisions at Bunz.
11. Many claims under the Regulations are brought by and against relatively modest businesses where the facts are less complex than Pacflex and MIG and the court should try to ensure that they are resolved as quickly and as cheaply as possible. Business people habitually use expressions like "agent" and "distributor" in a variety of loose ways. Moreover relationships which are in law agencies or distributors as such take a wide variety of forms. Evidence from the parties or from their witnesses of what they understand the words to mean and how they characterise a particular commercial relationship will rarely assist.

Facts agreed or not much in dispute

12. Mr Sagal has long experience in the jewellery business. From 1988 to 1992 he was a self-employed distributor of designer jewellery starting with silver and moving on to fine gold. He owned a retail shop in St Albans. He had a jewellery business in Tel Aviv between 1996 and 2001 and in 2002 entered into a contract with Bunz and resumed working in the UK with his wife who is an English law graduate.
13. Bunz is a company which designs and manufactures jewellery made of platinum and gold employing about 45 people based in Dobel, near Karlsruhe in South West Germany. Mr Georg Bunz started the business in 1975 and his products are now sold in about 30 countries under a variety of different arrangements including, in Australia, Spain, the Benelux countries and now the UK, commercial agency. Detailed evidence of arrangements in these countries is in the bundle but it is unnecessary for me to review it for my decision. Bunz had no representative in the UK before Mr Sagal but supplied about 10 shops with jewellery.
14. The parties made contact early in 2002 and there were meetings, mainly between Mr Sagal and Mr Ruben Bunz in April first at the Basel Jewellery Fair and then at Bunz's headquarters at Dobel. At this second meeting the parties discussed a Business Plan prepared in English by Mr Sagal, which outlined what he suggested would be a joint venture between the parties by which he would become the sole UK agent for Bunz. The plan envisaged that Mr Sagal would take orders and fax them to Bunz who would deliver and invoice Mr Sagal who would in turn invoice the customers, those invoices having reference order numbers. Mr Sagal would provide customers with UK standard terms of trading 3 days net or 3% discount for cash on delivery and require 90 days net from Bunz. Bunz would insure the UK collection, a reference to the sample line to be held by Mr Sagal. The only surviving notes of the discussions were taken by Mr Sagal with Ruben Bunz. These were taken in Hebrew but Mr Sagal has provided an English translation. These appear to be consistent with the plan. For about 90% of the products, Mr Sagal was to be sold goods at a 20% discount on Bunz's wholesale prices. Although I will refer to the competing claims by the witnesses about the terms that were agreed I do not place much reliance on the witnesses' recollections in 2008 of matters of detail discussed in English, not the first language of either, in 2002. It is more pertinent to look at what the parties did to determine what they had agreed.
15. By July 2002 Bunz had delivered a sample line of jewellery to Mr Sagal who had already sought and secured orders and launched "Bunz UK" with Bunz's agreement and support. A letter to customers from Mr Sagal at Bunz UK informed them of the "launch of Bunz UK – the UK branch of Bunz …". Brochures and price lists were distributed and the wholesale price for jewellers was arrived at by dividing the list price by 2.2, a result which would give Mr Sagal a 25% margin. Mr Sagal had originally wanted a discount of 25%, this could in practice be achieved by increasing the recommended wholesale price for jewellers in this way.
16. Bundle C contains sample transactions which it is accepted are representative, apart from some exceptions to which I will refer, of the pattern of trading between the parties over three and a half years. Bunz UK would take an order from a customer and then place a purchase order on Bunz. Bunz would then confirm the order giving Mr Sagal's customer number (20638) and showing the appropriate discount. Confirmations and invoices were sent to Mr Sagal in a form apparently identical to those sent to any other Bunz customer. Bunz would send an invoice to Bunz UK which in turn would send its own invoice to its customer requesting that payment be made to Bunz UK. It is unclear whether Mr Sagal ever saw Bunz's standard conditions but he had "Standard Conditions of Supply" regulating contracts between his customer and "the company", Bunz UK. Mr Sagal has produced a small number of documents showing customer numbers used by Bunz for individual retail jewellers in the UK but these appear to relate mainly to packaging and presentation material for little or no charge. The transactions appear to be notional or exceptional.
17. When Mr Sagal did not pay Bunz on time the Bunz accounts department would send, computer generated, "dunning notices" seeking payment. Bunz issued well over 2,000 invoices to Mr Sagal during the period of the contract. From time to time during the contract Bunz agreed to postpone receiving payment from Mr Sagal until his own customer had reimbursed him.
18. Mr Sagal's tax returns for the years 2003 to 2006 describe his occupation as being "jewellery distributor". He called his accountant to put that description in context as being a legacy of history and this is not a matter upon which I place little weight. Of more significance, Mr Sagal accounted for his purchases from Bunz and his sales to his customers, as such, in his accounts for VAT purposes. Mr Sagal's profit and loss accounts for his trading as Bunz UK record a turnover figure and then deduct expenses to arrive at profit. By far the largest expense is "purchases".
19. On three occasions during the life of the contract Mr Sagal had to pursue customers for payment. Each time he claimed the money in his trading name of Bunz UK. For example in December 2003 Mr Lazarus, Mr Sagal's solicitor, made a witness statement in a bankruptcy claim against a customer, stating that the creditor was indeed Bunz UK. The business also seemed to have drawn a distinction when dealing with customers between its obligations to them and its own to Bunz. Thus a letter from Mrs Sagal of 7 September 2005 refers to the need for cash flow management and the fact that Bunz UK has not been paid despite having paid its own suppliers months ago (Mrs Sagal said, probably correctly, that this claim was not true and that she was trying to put pressure on but that does not mean she was mischaracterising the contractual framework). This collection activity, although limited in extent, is consistent with Bunz UK claiming for itself as the seller and not on behalf of Bunz.
20. The parties agree about some other features of their trading relationship although dispute the significance of these. Bunz accepts that one of Mr Sagal's tasks was to promote Bunz in the UK and that it did insure (because it owned it) the sample line of jewellery handed to him in July 2002. It is agreed that Mr Sagal provided information to Bunz about all the UK retailers. Mr Sagal says that was so that credit checks could be carried out by Bunz. Bunz says that this was for the purpose of placing their details on the Bunz website and that it did not seek it to carry out credit checks. No documents suggest that it did do such checks. It is agreed that Mr Sagal did not hold stock but placed an order only when he had one from a customer. It is agreed that Bunz dealt with returns and repairs but it says it did this because it was the one with the facilities to carry out repairs and credit notes were issued by it to Bunz UK and then by Bunz UK to its customer. It is agreed that Bunz funded and expressly authorised all marketing and that Mr Sagal saw to the hallmarking of the jewellery sold in the UK. Mr Sagal sees this as evidence of commercial agency, but Bunz say this was simply part of the deal.
21. There is disagreement about other matters said to be material. Mr Sagal says that the parties had discussed various contractual structures and opted for agency. Bunz disagrees. Mr Sagal says that Bunz fixed the prices he was to charge. Bunz disagrees and say that it agreed only to the 20% discount on wholesale price. The price Mr Sagal charged to retailers was for him and Bunz only suggested a way for him to obtain the return of 25% which he sought. Mr Sagal claims that, despite the documents, Bunz took the risk of bad debtors. Bunz rejects this.
22. Just as Bunz points to descriptions by Mr Sagal of himself as distributor he relies upon Bunz's references to him as "representative" and "agent" (in German as "Vertreter"). Bunz says that in day to day business terminology will be legally imprecise and that the translation of "Commercial Agent" is "Handelsvertreter".
23. There are other documents apparently consistent with Bunz UK trading on its own account. None of the dunning notices is ever questioned in principle. On one of them Mr Sagal writes back in manuscript referring to the dates when invoices are due to be paid by him. Emails from Mrs Sagal refer to the quantities of good which Bunz UK buy from Bunz and to her understanding of what the trading terms are. When their relationship is deteriorating Mr Sagal suggests matters for discussion to improve things including "change of our conditions" apparently to an informal agency.
24. The relationship between the parties was, certainly in the early days, a successful one. The Bunz range available to Mr Sagal was extended to include the Déco Art line in February 2003 and in July 2004 Bunz was named UK jewellery awards manufacturer of the year substantially through the efforts of Mr Sagal. Unfortunately relations deteriorated and by September 2005 grievances had developed including a failure by Mr Sagal to pay monies due or to return to the sample line of jewellery when requested. Similarly Bunz sought to make an issue of Mr Sagal's decision to be involved with distribution for a company BICEGO from Italy despite the fact that it had been made aware of this development and had not opposed it. On 27 January 2006 Mr Sagal wrote to Bunz stating amongst other things "due to your recent actions we are no longer able to work with you. Please refer to my letter I offered you that we find a way to separate amicably. We expect compensation. Should you agree we can discuss the sum and how to move on from here avoiding time wasting costs and possible loss of the market for Bunz". On 7 February 2006 Bunz wrote to Mr Sagal terminating contractual relationships without notice but also as a precaution giving notice of termination to expire at the end of February 2006. The grounds relied on were the allegedly unlawful representation of BICEGO, a cut in turnover and failure to pay some €114,000.
25. The events leading to the termination of the relationship are relevant only to the extent to which they cast light on its terms. As I see it they cast little or no light not already available. The circumstances of the termination become significant only if and when the court determines that the Claimant is a Commercial Agent. Furthermore there are other related issues currently before the court in Karlsruhe. So I propose at this stage to determine only the question of the existence or otherwise of a Commercial Agency. It would be unhelpful for me to reach uninformed conclusions on contractual issues which may be considered by another court and which have not been fully argued before me.

The evidence

26. Although the outcome of this case does not turn on evaluation of the competing accounts of witnesses of various matters I will refer briefly to the evidence of each.
27. Mr Sagal speaks very good but not perfect English and provided a comprehensive witness statement 85 pages long. His testimony, like his witness statement argued his cause, as well as setting out his recollection of events. Answers to questions at times seemed to comprise what would suit his case rather than a considered recollection of what happened. He sometimes persisted with a position in the face of material which one would expect someone as perceptive and intelligent as he to see as plainly contradicting it. He stuck to the view that he was not a distributor but "knew that it would be easier administratively for Bunz if the paperwork trail for the business with the UK customers was conducted through me in the UK". He refers in his witness statement to "invoicing" and other inconvenient words in inverted commas. His claims that prices to the UK customers were fixed by Bunz were not consistent with the documents or with the more measured account given by Mr Ruben Bunz. He insisted that he was sure that all senior staff at Bunz knew and understood that he was a Commercial Agent and not a distributor and there was no evidence at all, beyond his assertion, to support that. He remained of the view, notwithstanding the "dunning notices" and other material that he would only ever be liable to pay money to Bunz if and when the UK customer had first paid him. Despite all the written material he emphasised "that I never bought and sold the Defendant's products on my own account". This claim and other claims such as that Bunz wanted to carry out its own credit checks on new customers were improbable and not supported by the documents. His repeated reliance on the use of words such as "representative" and "agent" in correspondence were unconvincing as was the evidence the other way from Bunz. While it is unnecessary for me to make detailed findings about what was and was not agreed at various times it seems to me very likely that the recollection of Mr Ruben Bunz is more reliable than that of Mr Sagal. Mr Sagal did not intend to mislead the court. He simply misunderstood the process and confused advocacy for his cause with dispassionate recollection of the facts.
28. Mrs Helen Sagal was an intelligent and articulate witness who appeared to confuse what in practice Bunz was willing to do with what it was contractually obliged to do. I find it difficult to accept that she really believed, given the documentary record, that her husband's business was not buying Bunz's products and liable itself for what it bought. I do not suggest that Mrs Sagal was doing anything other than her best to assist the court but she was concentrating on putting over the case rather than giving evidence of what she recalled.
29. Mr George Dub is Mr Sagal's accountant and he explained how his client's tax returns came to refer to him as a "distributor". I have already accepted that little turns on that description. On the question of "closing stock" I found his evidence less convincing. He described "closing stock" as a "misnomer" and said that the turnover should have been recorded instead as "commission earnings". Similarly "gross profit" should really have been "gross commission earnings". He says that this was "loose language" used by his firm "because it was easier that way". While what Mr Dub says about tax may be correct and I hesitate to disagree with a professional accountant, the use of the words turnover and purchases are entirely consistent with the written records of the dealings between the parties.
30. Mr Trevor Fitzgerald is a retail jeweller from Canterbury who has known Mr Sagal for a number of years. He gave evidence of his understanding that he was dealing with Bunz and that Mr Sagal represented Bunz in the UK "as UK agent, trading as Bunz UK". He says that he knew Mr Sagal "was not himself responsible contractually for any problems" and that in his own mind Bunz UK was merely a part of Bunz. Mr Fitzgerald is clearly an honest man but his analysis of the contractual position from his distant standpoint added nothing. I should add that the only reason Bunz did not call similar evidence was because I made it clear, at that later stage of the trial, that I would not find it helpful.
31. Mr Ruben Bunz, Sales Manager and the son of the founder Mr Georg Bunz was the principal witness for the Defendant. His evidence, given with the assistance of an interpreter was cautious and moderate in tone. He was very ready to agree to facts that were unhelpful to his case. He readily accepted that he had no legal basis for objecting to Mr Sagal's BICEGO contract and that he had very often agreed to postpone the payment of overdue invoices for a period and indeed in practice until Mr Sagal had been paid by a customer. In most cases his account was supported by the documents and where these were equivocal, such as on the question of whether the suggestions for retail prices were imposed rather than advised I prefer his account to that of Mr Sagal.
32. Mr Georg Bunz, who founded the firm in 1975 was less directly involved with events affecting Mr Sagal than his son. His recollection was understandably less detailed. His recollection of events was very similar to that of his son Ruben. He was clearly doing his utmost to assist the court with his recollection of events.
33. Mr David Gillow has long experience of the jewellery trade and was at one point in business with Mr Sagal. He gave evidence about his knowledge of Bunz UK while it was operating and of how he came to form a limited liability partnership which now acts as the Commercial Agent for Bunz in the United Kingdom. He too gave honest but irrelevant evidence about his understanding of the meaning of the terms "agent" and "distributor".

Submissions of the Claimant

34. Mr Stuart submits that except for what he describes as the "paper trail" used for invoicing everything about the case indicates a commercial agency rather than an independent distributorship. The court should look at the substance and not merely at the form of invoicing used for administrative ease. He points to the nature of the Claimant's task, to promote Bunz business for its benefit and also suggests that, as in Pacflex, the parties had discussed alternative ways of dealing and chosen agency. He points to insurance, the provision by the Claimant of information about customers, the fixing of retail prices by Bunz, the assumption by Bunz of risk of customers not paying, the absence of any holding of stock by the Claimant and the funding of marketing. He relied on how the parties characterised the relationship and other matters including the fact that Bunz operates through commercial agencies abroad and now in the UK.
35. In his closing submissions Mr Stuart submitted that Regulation 2(1) distinguishes between two forms of Commercial Agencies, the first where the agent may "negotiate the sale or purchase of goods on behalf of another person" and the second where he may, alternatively, "negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal". He says that this is significant. It is plain from the draft that it is not necessary for the goods to be sold in the name of the principal. Thus under the Regulations goods can be sold, or appear to be sold, in the name of the agent so long as the substance of the whole transaction is that the agent is negotiating with the customer "on behalf of the principal". He then makes submissions based upon the English law of undisclosed principal, indirect representation and similar matters set out in Bowstead & Reynolds. He argues from that the existence of documents showing contracts for the sale of goods between UK retailers and the Claimant is not inconsistent with a Commercial Agency given the obligation first to construe the regulations in a way that does not defeat the purpose of the Directive and secondly to look at all the circumstances of the relationship before concluding what its nature is.

Submissions of the Defendant

36. Mr Kimbell submits that it is overwhelmingly clear that the relationship between the parties is that of a distributorship not an agency. He submits that where the documents are clear Mr Stuart's submissions based on "substance" are misconceived. In MIG Rix LJ rejected a submission that in substance the documentation did not reflect the true position which was that there were separate contracts of sale and resale in a chain. If the documentation is not a sham (and no one claims it is) it is not possible to ignore its effect. He submits that the factors identified by the Claimant are either irrelevant or wrong. He says that the initial negotiations were carried through into an arrangement from which it is obvious that the Claimant was buying from the Defendant and then selling under a separate contract to the retailer. He submits that there was no dictation of price. The dunning notices and other documents make it clear that the Claimant was aware of the true contractual position as did his own accounting and tax records. Mr Kimbell submits that the distinction between the two categories of Commercial Agent in Article 2(1) arises because within the civil law tradition a principal is only bound by a contract if it falls expressly within the mandate given to his agent. That agent may have a limited power to negotiate but none to conclude contracts on his principal's behalf. He illustrates this submission with passages from Commercial Agents and the Law by Saintier and Scholes (2005), LLP. The Regulations therefore include within the definition of Commercial Agent those who have authority to negotiate, but not to conclude sales or purchases, in the name of the principal.

Is the Claimant a Commercial Agent?

37. At the outset (in paragraph 10) I set out my views about the definition of a Commercial Agent and now apply that conclusion to the facts.
38. There is overwhelming evidence to show that apart from on very rare and anomalous occasions the relationship was one involving purchase of goods by Mr Sagal from Bunz for the purpose of selling to his customers, mostly UK retail jewellers. He had no authority from Bunz to negotiate or contract on his behalf. This is shown by the documents recording the transactions and confirmed by other written material. The "dunning" letters were generated mechanically but recorded the reality of the contractual position. A manuscript note from Mr Sagal, emails from Mrs Sagal and legal proceedings brought against at least one defaulting jeweller confirm and are consistent with what the documents for each transaction show. The fact that Bunz from time to time agreed to accept payment only when the jeweller paid the Claimant was an indulgence of the kind one seeks in many, if not all, long-term relationships and did not change the contractual position. While I do not attach much importance to Mr Sagal's description of himself in tax records as a "distributor" it is relevant that his trading accounts and tax returns reflect the contractual structure shown by the trade documents and are not consistent with Commercial Agency.
39. The Court of Appeal in MIG and in Pacflex was concerned with relatively complex facts which required the trial judge, at least in MIG, to consider carefully the effect of a large number of documents and the evidence of many witnesses. That exercise is not and should not be necessary in a case like this where the picture presented by the documents is clear. The documents show that Mr Sagal is not a Commercial Agent. Detailed oral evidence was not going to change that clear picture.
40. There is, as I see it, therefore no warrant for going behind the documents and evaluating the relationship between the parties as a matter of "substance". Even if one did that exercise Mr Sagal's claim would still be likely to fail because a number of the features he identifies are consistent both with agency and distributorship and others involve disputes about the facts which, for reasons I have given, I would resolve in favour of Bunz not Mr Sagal.
41. These reasons make it unnecessary for me to evaluate in detail Mr Stuart's able closing argument based upon the alternative definitions within Regulation 2(1) but I should say that the reason for the distinction appears plainly to be that set out in the text book cited by Mr Kimbell. There is thus no room for the broader approach for which Mr Stuart so ingeniously argues.

Conclusion

42. The Claimant was not a Commercial Agent and his claims therefore fail. There may need to be argument about further matters when judgment is handed down. I shall be grateful if the lawyers will let me have, not less than 48 hours before the hand-down of this judgment, notes of corrections of the usual kind, of what further matters they wish to raise and of reasons for anything they seek which is not agreed.