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Powderhouse Sommerville LLP International Commercial Law Internship

The international commercial law firm Powderhouse Sommerville LLP launched its International Commercial Law Internship at the University Law School in 2006 and has renewed it for the current academic year.

Powderhouse Sommerville LLP is one of the world's largest law firms, with over 1,600 lawyers and 15 offices in North America, Europe and Asia.

Professor May Rikos, Director of the University Law School, said: The University Law School welcomes the opportunity to work with one of the first-rank global commercial law firms.'

Under the terms of the internship, students taking International Commercial Law courses in Mergers, Comparative Antitrust Law and World Trade Law will be invited to compete for the internship. Selection will be on the basis of an essay plus interview of the students who achieve the top essay mark in each of the relevant courses. Applications must be submitted by March 10, and the interviews will take place in late March/early April. The Internship will take place from May to July inclusive in the Powderhouse Sommerville Frankfurt Office.

Link to application at the bottom of this page.

15 Read the text again and answer these questions.

1 Who can apply for the internship?

2 How will students be chosen for the internship?

3 When and where will the internship take place?

4 How can a student apply?

(Writing i: Letter of application

Write a letter of application in response to the internship advertisement in Exercise 14. Be sure to include all of the sections and ideas necessary.

Unit 6 Commercial law


Internships are very often the first experience young lawyers have of the realities of globalisation in the workplace. Many large legal firms have offices across the globe, employing lawyers of many nationalities.

17 Discuss these questions with a partner.

1 What do you understand by the term globalisation?

2 What factors have contributed to the globalisation of the world's economies?

3 What are the implications of globalisation for: a businesses? b commercial lawyers?

Reading 3: Role of commercial agents

host companies engaged in international trade make use of agents to represent them abroad. The relationship between agent and principal is commonly governed by a commercial agency agreement, and the European Union has sought to harmonise1 its member states' agency laws in order to give agents greater protection.

This text is taken from the introduction to a document written to inform lawyers about recent changes in the law concerning commercial agency agreements.

18 Read the text and decide whether these statements are true (T) or false (F).

1 Under EU law, a commercial agent is a person who sells goods and services on behalf of a principal.

2 Agents are generally paid a flat rate; that is, a charge that is the same for everyone.

3 Principals will often abandon agency agreements once a customer base becomes established.

The role of commercial agents is well known. They act as independent intermediaries representing their principals in the market. A commercial agent is defined by EU Directive 86/653 as a person 'who is a self-employed intermediary having continuing authority to negotiate the sale or purchase of goods (but not services) on behalf of his principal or to negotiate and conclude such transactions on behalf of and in the name of his principal...'. They do not buy products from their principals, but arrange sales directly from their principals to the customer. For the provision of this service, commercial agents are typically paid a commission by their principals, calculated as a percentage of the sale price of the product to the customer.

Commercial agency is of particular importance in international trade. It provides a convenient structure enabling a foreign supplier to penetrate an overseas market. By using the services of an agent established in the targeted overseas market, the principal can benefit from the knowledge and local connection of the agent, avoid the investment and commitment of managerial resources required by the establishment of a branch or subsidiary and, by taking advantage of the agent's services on a commission basis, can effectively test the overseas market on a 'no cure, no pay' basis.

1 Harmon/sat/on is the process by which different states adopt the same laws.

But the position of the commercial agent is vulnerable. Because of the agent's role as intermediary, the principal necessarily has perfect knowledge of the customers procured by the agent. As sales volumes build, the temptation for the principal to circumvent the agent and enter into direct relationships with customers can often become overwhelming against the background of an increasing commission bill, often fuelled by repeat orders from the same customers. It is commonplace, therefore, for the commercial agent to find his relationship with his principal brought to an end precisely at the moment where die agent's efforts have resulted in the establishment of a significant new customer base for the principal in a new market. In this way, the agent becomes the victim of his own success and the principal takes advantage of the goodwill in the principal's product, created largely as a result of the agent's efforts.

19 Read the text again and answer these questions.

1 Why is commercial agency important for international trade?

2 How do commercial agents sometimes become 'victims of their own success'?

20 Match these words and phrases from the text (1-4) with their definitions (a-d).

1 commission

2 intermediary

3 a 'no cure, no pay' basis

4 goodwill

a when payment is only made following a positive result

b the benefit a business gets from having a good reputation

c someone who carries messages between people who are unable

to meet d payment to someone who sells goods which is directly related to

the amount of goods sold

Reading 4: Commercial agency contract1

(he ICC2 Model Commercial Agency Contract is commonly used by businesses entering a ew market, and is an example of a standard form3 contract. Its provisions are based on jvailing practice in international trade rather than national laws.

What are the advantages of using a standard form contract based on common business practices rather than negotiating contracts according to domestic laws?

What kind of provisions would you expect to find in a commercial agency contract?

Chance Computing is a UK-based company that produces budget laptop computers for schoolchildren. It uses agents to sell its products to other countries. Read the clauses on the next page taken from Chance Computing's standard commercial agency contract and answer these questions.

1 Can the agent set the price at which goods will be sold to third parties? : Under what circumstances can the contract be terminated?

What is the governing law? I If the principal breaches the contract, what court has jurisdiction?

commercial agency agreement

rrternational Chamber of Commerce is an organisation of businesses from over

ntries that works to promote and support global trace and globalisation



Unit 6 Commercial law


The Agent shall endeavour to obtain business Tor the Principal and is bound to serve I he interests of the said Principal to the best of his ability. He will do his best to provide all information neeessar\ for the purpose of promoting business, and especially inform the Principal immediately about every order received.

He may not deviate from the prices, delivery and payment conditions of the Principal without his consent.

9 The contract shall come into force on 10 February 2006 and shall be
valid for an indefinite period.

Where the contract has been agreed for a fixed period, it shall be expected for the same period provided that notice of termination shall not have been served, by registered letter, at least six months prior to the end of a calendar quarter.

Where the contract has been agreed for an indefinite period, it may be terminated by either party thereto giving, by registered letter, six months' notice prior to the end of a calendar quarter.

10 The provisions of the EEC Council Directive of 18 December 1986 on the co-ordination of the laws of the Member States relating to self-employed agents (86/653/EEC) apply to this agreement. In other respects, the law of the domicile of the Agent is to be consulted.

11 Any disputes arising out of or in connection with this agreement shall be decided by the competent Court in the area where the claimant has his residence or registered offices.


24 Take it in turns with a partner to explain the provisions of the contract using your own words.

example: Clause 4 says that the. agent needs permission -from the principal to change prices and. conditions o-f sale, etc.

Reading 5: The Commercial Agents (Council Directive) Regulations 1993

The Commercial Agents (Council Directive] Regulations 1993 (as amended] is an example of an EU directive incorporated into English law, and implements EU Directive 86/653, as referred to in the commercial agency contract in Exercise 23.

25 Quickly read Regulation 17(1) on the next page and answer these questions.

1 What is the general aim of the regulations?

2 Under the Act, what two words are used to refer to the money to which an agent might be entitled following the termination of an agency agreement? What is the difference in meaning between these two words?

Entitlement of commercial agent to indemnity or compensation on termination of agency contract

17 (1) This regulation has effect for the purpose of ensuring that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraphs (3) to (5) below or compensated for damage in accordance with paragraphs (6) and (7) below.

(2) Except where the agency contract otherwise provides, the commercial agent shall be entitled to be compensated rather than indemnified.

(3) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to an indemnity if and to the extent that—


(a) he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers; and

(b) the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers.


(4) The amount of the indemnity shall not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent's average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question.

(5) The grant of an indemnity as mentioned above shall not prevent the commercial agent from seeking damages.

(6) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal.

(7) For the purpose of these Regulations such damage shall be deemed to occur particularly when the termination takes place in either or both of the following circumstances, namely circumstances which—


(a) deprive the commercial agent of the commission which proper performance of the agency contract would have procured for him whilst providing his principal with substantial benefits linked to the activities of the commercial agent; or

(b) have not enabled the commercial agent to amortise the costs and expenses that he had incurred in the performance of the agency contract on the advice of his principal.

(8) Entitlement to the indemnity or compensation for damage as provided
for under paragraphs (2) to (7) above shall also arise where the agency
contract is terminated as a result of the death of the commercial agent.

Read the whole of Regulation 171 and answer these questions.

1 According to 17(2), under what circumstances will agents be granted an indemnity rather than compensation?

2 According to 17(3), what is necessary before an indemnity is granted?

3 According to 17(4), how is the indemnity calculated?

4 Is compensation available if contract ends following the death of the agent?

last two paragraphs (17(9) and 17(10)), have been cut from this extract.

Unit 6 Commercial law

27 A colleague from outside the EU contacts you to ask about the legal protections
in place in the EU for commercial agents. Write a summary of Regulation 17 to
circulate to your litigation department.

Listening 2: Meeting with corporate counsel

Following two years of increasing sales in southern Europe, Chance Computing wants to break into the more competitive central European market. Jenny Miller, Sales Director of Chance Computing, has asked Clive Sanborn, corporate counsel, for advice on terminating a number of agency agreements.

28 ^$6.2 Listen to the first part of their conversation and answer these questions.

1 Why does Chance Computing want to end the agreements with their agents in southern Europe?

2 What is the maximum amount of compensation an agent can be paid, according to the regulations?

29 4 c 6.3 Listen to the second part of their conversation and answer these questions.

1 Is compensation limited only to lost commissions?

2 For how many years are the agents' commercial activities restricted following termination of the agreement?

30 "4 $6.2,6.3 Listen to the whole conversation again and decide whether these
statements are true (T) or false (F).

1 The agents are in breach of contract.

2 Under the agreement, the minimum notice period is six months.

3 The agreement allows for the payment of an indemnity of up to one year's average commission fees.

4 The agents must make any claims for compensation within one year of the termination of the agreement.

5 The restraint-of-trade clause is valid for five years.

6 Under the law, a restraint-of-trade clause in an agency agreement must refer to either the relevant geographical area or the type of goods in question.

7 The lawyer believes a court would be likely to find for the agents and not uphold the restraint-of-trade clause if the principal breached the terms of the agreement.

Speaking 2: Role-play: discussing options

31 Following his discussion with Jenny Miller, Clive Sanborn discusses the options
available to Chance Computing with an intern who is shadowing him. With a partner,
role-play their conversation. Discuss the various options that are available to
Chance Computing, together with their possible outcomes. Consider the best case,
worst case and most likely scenarios.

Student 1:You are Clive Sanborn. Summarise the position that Chance Computing

are in. Student 2:You are the intern shadowing Clive. Suggest some options for the

company based on the information in this unit.

Writing 2: Summary

32 Write a summary of your discussion. Include a model compensation package for

sample Chance Computing to offer their agents



Language Focus

1 Word formationComplete the table with the adjective form of these nouns.


noun adjective
merchant merchantable,, ...

Noun-adjective collocationsWhich of the adjectives from Exercise 1 collocate with these nouns? (Some can collocate with more than one adjective.)

1.................................. instrument

2 ................................. trading

3 ................................. bank

4 agency

5 law

6 terms

I AbbreviationsWhat do these abbreviations stand for?




Key terms in intellectual property lawWhich word completes all of these expressions?


2 ...................... draft ..... application
3 to secure a  
4 to enforce...  
5 to grant.......  

PrepositionsComplete the phrases and sentences below from the unit using the prepositions from the box.

by for into of of on on

1 to advise a client.................................... a matter

abreach................................. contract

Commercial law is governed................................. international treaties.

I An agent works.................................. behalf.................................. a principal.

to apply................................. an internship

a contract comes................................. force

7 I Real property law



Property law governs the right ofuse, control and disposition which a person may have over personal property and real property.

1 aWhat is the difference between personal property and real property?

bWhich of these is considered real property?

aan apartment building ffarmland

ba CD g a forest

c railway tracks ha business plan

da large outdoor sculpture ia car

ea factory

Reading i: Real property law

2 Read the text below and decide whether these statements are true (T) or false (F).

1 A fee simple is an estate of indefinite duration.

2 A life estate can be passed on to the grantee's heirs.

3 A lease grants exclusive possession of real property for a limited term, but does not confer title interest in the property.

4 An oral contract for the purchase of real property is usually valid.

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