Goods & Services What’s the difference? The Definitive Answer?

The Commercial Agents (Council Directive) Regulations 1993 only protect agents who sell goods. An agent selling services falls outside them, which can mean losing the right to compensation or an indemnity on termination, often a substantial sum. So the line between goods and services is not academic: it decides whether an agent is protected at all.

Two things make that line hard to draw. First, neither the Regulations nor the Directive actually define “goods”, so the courts have had to work it out case by case. Second, the digital age broke the old assumptions: is software “goods” when you can no longer hold it in your hand? That single question took a decade and three courts to answer.

This page brings together contributions made to Agentbase by specialist UK agency-law solicitors over more than ten years. It starts with the general goods-versus-services distinction and the commodities exception, then follows the software question from start to finish. Because the software law changed as the case progressed, each contribution there is dated and placed in sequence, so you can see not just what the law is now but how it got there. This is general information, not legal advice, and every situation turns on its own facts (as at 2026), so take specialist advice before acting.

The short answers

Part one: goods or services?

The definitive answer: four solicitors on the grey area

Contributed by Paul Brown of Agentbase, compiling answers from Ben Griffin (Cobbetts), Paul Samuel (Ashby Cohen), David Bentley (Bentley & Co) and Thom Vaughan (EAD Solicitors), November 2012.

I asked a very simple question of a variety of specialist agency law solicitors. But no-one can answer it comprehensively. Here is a compilation of their answers:

Ben Griffin – Solicitor (www.cobbetts.com)

I set out below some examples of the grey area between goods and services. There are not many recent reported cases that touch on this particular point, but a brief review of some of the cases of note are below.

In a Scottish case concerning contracts for the building of conservatories, the court held that the Regulations did not apply as the contracts were not separable into contracts for goods (i.e. the complete conservatory) and contracts for services (labour). In this case, the Court held: “It seems to me that the UK regulations are clear in their term in that they provide rights to agents who regularly enter into contracts of sale or purchase on behalf of their principles. That is what the directive sought to achieve. I think the solicitor for the defenders was right when he said there were two categories of agents for the purposes of the regulations, namely those who enter into contracts for the sale and purchase of goods and every other agent who enters into any other kind of contract. It is as much the purpose of the regulations to limit the rights extended to commercial agents to those involved in the sale and purchase of goods and to exclude all others, as it is to afford the protection itself.” As this is a Scottish case, the English Courts would not be obliged to follow it and we have some doubts as to whether an English Court would agree with this analysis.

In the case of Pace Airline Services v Aerotrans Luftfahrtagentur GmBH (which is unreported) it was suggested that cargo space on an aircraft could be goods.

In Crane v Sky In-home Services and others [2007] EWHC 66 (ChD), Sky television digital packages were agreed by the parties to be services and not goods. In this case the agent sold set-top boxes and subscriptions. The Court held that as the subscriptions were the element of the package that led to repeat business for the principal, rather than the set top box, the activities in selling the set top boxes were secondary to the activities of selling the service (namely the subscription), and therefore, the Regulations did not apply.

Gas has been held by the Court to be “goods” within the meaning of the Regulations (Tamarind International Ltd v Eastern Natural Gas (Retail) Ltd [2000]).

The grey area is made murkier by the fact that an agent who sells services as well as goods may fall outside of the Regulations not because he is deemed not to sell goods, but because his activities are “secondary”.

There are a number of cases on secondary activities and it can be a tricky area. However, analysis of the detailed facts about the operation of the agency and the potential secondary activities argument is always required if an agent sells both goods and services.

Paul Samuel – Solicitor (www.ashbycohen.co.uk)

The essential distinction between goods and services is that goods are tangible – things which you can touch and services are intangible – you cannot physically touch them. A supply of services is the provision of human effort for the benefit of the buyer – in other words the provision of labour as when a hairdresser cuts a customer’s hair. The sale of goods involves a contract to pass ownership of a thing from the seller to the buyer for a sum of money. In the middle, is a contract for the sale of goods and for the seller to carry out work for the buyer in relation to those goods.

An example which is often given is the sale of windows (goods) which then have to be fitted (services). I did send you a suggested article touching on this area at the beginning of the year, but am not sure it was published.

An agent selling storage space would be selling services not goods and would not be protected under the 1993 Regulations. Similarly an agent selling advertising space for a magazine would be selling services – no ownership of anything passes.

David Bentley – Solicitor (www.bentleyandco-solicitors.com)

The question which you ask is not a straightforward one to answer. The Regulations only apply to “goods” (as defined by Section 61 of the Sale of Goods Act 1979), but there are often circumstances which throw up situations where either:-

What an agent sells isn’t obviously not “goods” (e.g.:- in the Tamarind case (in 2000), gas was deemed to be “goods”, and possibly also electricity and in the Crane and Sky case, the sale of digital packages was deemed a service (and in which case therefore the Regulations did not apply)); and/or:-

An agent effectively sells both goods and services on behalf of the same principal (in which case (a) there may need to be a decision taken by a Court as to which the agent was more predominantly selling, and/or (b) an assessment made as to whether, if the agent was selling services more predominantly over goods, that fact then renders the sale of goods aspect as a “secondary activity”, and so as to potentially then take the agent outside the scope and application of the Regulations, altogether); and/or:-

An agent may have sold goods in the first instance on behalf of a principal, but then, having sold those items for that principal, applies a service element to what he has sold, in which case a Court may then decide that only the initial work carried out by the agent (i.e.:- in selling the goods) will be counted in assessing his potential status as a commercial agent.

Following on from the above, I think that it is the case that each situation needs to be judged on its own facts, and that it remains uncertain just how any individual Court might approach the issue.

Please further note that, in the second scenario described above, it may be that a Court would finish up assessing what was the % split of commission as between the sale of goods and the sale of services, and then assess any amount payable pursuant to an indemnity or compensation entitlement, based just on what the agent received in respect to the sale of the goods.

Thom Vaughan – Solicitor (www.eadsolicitors.co.uk)

This continues to be a vexed question (!) and reference to “the grey area” is very appropriate.

In their guidance notes on the Regulations BIS/the DTI say: ‘”Goods” clearly has to be interpreted in accordance with the EC Treaty and, of that reason, the Regulations do not define the word. However, it is considered that the definition of “goods” in s 61(1) of the Sale of Goods Act 1979 as including, inter alia, all personal chattels other than things in action (eg shares) and money, may offer a reasonable guide, without necessarily being absolutely coextensive with the Directive meaning.’ The definition in s 61(1) is: ‘”Goods” includes all personal chattels other than things in action and money, and in Scotland all corporeal moveables except money; and in particular “goods” includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.’

Where a contract includes both goods and services, i.e sale and fitting of double glazing then the court may take a pragmatic approach and look at whether there is a reasonably substantial element of ‘goods’ in a particular transaction and decide accordingly. In Pace Airline Services Ltd v Aerotrans Luftfahrtagentur GmbH (Case C-64/99 [1999] OJ C121/123 concerning the sale of cargo space the court surprisingly indicated this might be ‘goods’ which seems extremely unlikely. The case was to be referred to the European Court of Justice but was settled before it reached that stage. How can cargo space be “goods”??

Financial services are NOT covered by the Regs: In Abbey Life v Yeap [2001] EWCA Civ 706, CA the European Court of Justice the court was asked to look at whether policies for life assurance, annuities, health and pension business, unit trusts, offshore funds business, personal equity plans and other contracts offered by Abbey Life were goods for these purposes. The court held that financial services were outside the agency directive and although goods and services had been in early drafts of the directive services had been removed.

So, there it is. Simple!

Maybe one day this issue will be settled in a court once and for all. But I doubt that as there will always be motive to argue the toss as long as the EC regulations differentiate between goods and services. As long as this is the case, both sides to a dispute with a possible grey area will have a large incentive to argue their case.

So maybe the question we should be asking instead is: Why are agents who are selling services not protected under the Commercial Agents Regulations? Any answers to that one are gratefully received.

Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, Cobbetts LLP, Ashby Cohen Solicitors, Bentley & Co. and EAD Solicitors accept no liability in connection with the general guidance given in this column.

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An update: software on disc, and selling across borders

Contributed by Andrew Leach, DWF LLP, December 2014. What this adds: the Fern case, the licence question, and the cross-border point.

The Commercial Agents Regulations apply only to agents selling “goods” and not services – so what is the difference?

This question is important as an agent deemed to be selling a principal’s services will not be protected by the Regulations. This means that they could lose the right to compensation or an indemnity payment on termination, which can often be substantial. With the increasing use of information technology (particularly the downloading of information technology /software from the internet), the distinction between goods and services has become blurred. Suppose an agent sells a principal’s software, but that software is sold on a CD. Is that agent selling goods or services (or both)? This issue was considered in the recent case of Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis Solutions Inc [2014] EWHC 2908 (Ch).

In that case, the agent sold the principal’s software on CDs, together with an electronic software lock that fitted into a USB port. The Judge concluded that:-

“where software is supplied on CDs there is a real prospect of success in arguing that that is the supply of goods. Where that supply is accompanied by a physical dongle and documentation then the argument is even stronger.”

Whilst the point has not been concluded definitively (the Judge in Fern did not have to answer the question, but had to assess whether such an argument had real prospects), his comments will give comfort to agents who sell software in this way. However, agents and principals who provide customers with licences should take heed of the decision in Fern for another reason, as it questioned whether providing a licence to a customer qualified as a sale of goods. If there is no sale of goods, the Regulations will not apply. In sectors such as software, where licence agreements are common, this issue could be fundamentally important. In Fern the Judge said that it was his view that it was arguable that “sale” and “purchase” in the Regulations would be capable of applying to a transaction based on a licence. That said, he did not give a definitive view on the point and suggested that this question may need to be answered by the European Court of Justice, and thereby made an uncertain area less certain still.

Finally, principals and agents operating across borders need to bear in mind that in some EU countries, such as France, agents that sell and buy services as well as goods are deemed to be commercial agents and therefore have protection. This clearly has implications for principals based in the UK who engage agents based in EU countries and highlights the importance of carefully considering the legal terms of any agency agreement at the outset. DWF LLP has specialist teams advising on the impact of the Commercial Agents Regulations. Our experts take a pragmatic, commercial approach designed around the needs of your business and can advise on all aspects of the principal-agent relationship, from drafting contracts to protecting your position in the event of a dispute.

Andrew Leach, DWF LLP
One Snowhill, Snowhill Queensway, Birmingham B4 6GA · Tel: 0121 212 2620 · www.dwf.co.uk

Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, DWF LLP and the writer accept no liability in connection with the general guidance given in this column. Please ensure that you obtain legal advice before acting in reliance upon anything in this article. For example, please be clear that the answers given in this column may not cover all possible angles, aspects, relevant considerations and/or points of law and so that all or any information which is given above needs in every instance to be referred for legal advice for clarification and amplification, before being relied upon.

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The commodities exception: agents trading on commodity markets

Contributed by DWF LLP, August 2020.

Many agents buy and sell commodities – but are they protected by the Commercial Agents Regulations?

The Commercial Agents (Council Directive) Regulations 1993 (the “Regulations”) usually entitle agents to what can be substantial payments on termination of their contracts.

But the Regulations do not apply to “commercial agents when they operate on commodity exchanges or in the commodity market”.

Until recently, this issue had not been before the Courts.

However, the Court of Appeal has, in a case in which DWF acted for the successful claimant, provided guidance on when a commercial agent may be operating on a commodity exchange or in the commodity market.

In W Nagel (a firm) v Pluczenik Diamond Company NV, the agent (Nagel) worked as the principal’s (Pluczenik’s) broker, assisting it to purchase diamonds from De Beers. The purchases were made at so-called “Sights”, which were organised sales which could only be attended by purchasers accredited by De Beers as a “Sightholder”.

When Pluczenik terminated its contract with Nagel, Nagel brought various claims, including a claim for damages for breach of contract and for compensation under the Regulations.

In the High Court proceedings, the majority of Nagel’s claims succeeded and it was awarded very substantial damages. However, the Judge found that purchases of diamonds made at Sights were made “on commodity exchanges or in the commodity market” and therefore the Regulations did not apply.

Pluczenik appealed the Judge’s findings that Nagel was entitled to damages, and Nagel cross-appealed the Judge’s finding that the Regulations did not apply.

The Court of Appeal: (1) rejected Pluczenik’s appeal and upheld the damages awarded to Nagel; and (2) disagreed with the Judge’s findings on the commodities point and agreed with Nagel’s case that the Regulations did apply.

In doing so the Court of Appeal clarified the commodities exception in the Regulations and held that:

• the relevant question is not whether the goods were sold as a commodity but whether they were sold on a “commodity exchange” or in “the commodity market”;
• an essential feature of a commodity exchange is that the commodities (or rights to buy and sell commodities) which are traded on the exchange can be freely bought and sold among the participants; and
• the commodity market encompasses any general trading in commodities that takes place in the open market.

The Court of Appeal concluded that the Sights would not be understood by commercial people as a commodity exchange nor would sales made by De Beers at such Sights be understood as trading in the commodity market.

This guidance will assist parties in future in determining whether the commodities exception applies and is therefore welcome.

Pluczenik sought permission to appeal to the Supreme Court but its application was rejected.

DWF has specialist teams advising on the impact of the Regulations. For specialist, commercial and pragmatic advice, please contact Andy Leach on 07968 237 414 or Ben Griffin on 03333 203 147 / 07712 356 402.

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Part two: is software “goods”? How the law settled

The current position (read this first)

For years it was unclear whether software counted as “goods” under the Regulations, and therefore whether software sales agents were protected at all. The old rule was that software only counted as goods if it came on a physical medium such as a disc, and not if it was downloaded, an increasingly absurd distinction as the world went digital.

That question was finally resolved by the case of Software Incubator v Computer Associates, which ran from 2016 to 2021 through the High Court, the Court of Appeal and, on a referral, the Court of Justice of the European Union. The settled position now is that software supplied electronically under a perpetual licence is “goods”, so an agent selling it is protected by the Regulations. Software supplied on subscription or as a service, where the customer never owns it, most likely still falls outside.

The three contributions below tell that story in sequence. They disagree with each other because each was written at a different stage of the case, so read them as a timeline, not as competing views. The dates matter.

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2016, the High Court: software is goods

Contributed by Kevin Manship, then Senior Associate at Blake Morgan, November 2016. The first-instance decision, later overturned. Read it as the opening chapter, not the current law.

Since the introduction of the Regulations, there has been considerable uncertainty as to whether transactions involving computer software can be categorised as “sale of goods” for the purposes of the Regulations. The Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”) imply important provisions into an agency contract where the agent can show that they satisfy the definition of “commercial agent” in the Regulations. Amongst other things, that definition requires the agent to have continuing authority to (i) negotiate the sale or purchase of goods on behalf of their principal or (ii) to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal. There is no definition of “goods” in the Regulations, but when the Regulations were implemented on 1 January 1994 there was a generally accepted view (on the basis of guidance given by the Department of Trade and Industry in relation to the Sale of Goods Act 1979) that, for the purposes of the Regulations, the relevant item had to be something physical or tangible in order to be categorised as “goods”. The issue has been considered to a limited extent in previous cases involving agents, where it was concluded that software by itself would not be categorised as “goods”; the software had to be delivered on some form of tangible media, such as a disk, a CD-Rom or a memory stick.

The position has now been clarified in the recent case of The Software Incubator Limited v Computer Associates UK Limited. The case The Software Incubator Limited (“TSI”) was appointed as the non-exclusive agent of Computer Associates UK Limited (“CA”) to promote a specific commoditised software product. The software was intended to co-ordinate and automatically implement the deployment of upgrades for other software applications across different operational environments in large organisations such as banks and insurance companies, so that the underlying applications were fully integrated with the software operating environment. The software could be delivered to customers either on tangible media or electronically and was usually supplied to customers by way of a perpetual licence. CA terminated TSI’s agency agreement in October 2013. TSI then brought a claim for compensation and post-termination commission under the Regulations. One of the arguments put forward by CA was that the Regulations did not apply because the supply of software did not constitute “the sale of goods”. The Judge concluded that in the context of the agency agreement and for the purposes of the Regulations, the supply of the software in question in the case did amount to a “sale of goods” for the following reasons:

• There should be an autonomous definition of sale of goods for the purposes of the Regulations; how software is treated within the “pure” law of sale of goods is of limited assistance (i.e. how goods are defined in the Sale of Goods Act 1979 does not mean they have to be treated in the same way for the purposes of the Regulations).
• Where the “goods” in question (in this case, software) are treated in the agency agreement in the same way as other “tangible” goods, they should be interpreted in the same way when they are clearly a “product” and not a service.
• In the modern world, and in the case of the Regulations, there is no reason to require the particular product to be tangible or a “chattel” in the traditional sense, especially when the software is installed so as to operate in a physical (i.e. hardware) environment.
• There is nothing in EU or domestic legislation or case-law to prevent this interpretation.
• The fact that the proprietorial character of software is intellectual property, rather than real or personal, does not alter the position.
• The fact that sometimes the software in question might be supplied on a limited licence does not affect this conclusion because the Judge has to decide whether TSI was a “commercial agent” in the round and having regard to the principal way in which the software in question was supplied.

The effect of the decision. The decision has been anticipated for some time and will be welcomed by principals and agents as bringing some certainty to this area of law. However, it should not be taken to mean that software can always be treated as “goods” for the purposes of the Regulations. Despite the Judge’s comments on the supply of software on a limited licence, there is likely to be a grey area where software is supplied on a more limited basis than a perpetual licence (e.g. on an annual licence or subscription fee basis or provided through the web as Software as a Service). In those examples, the user effectively rents the right to use the software for a limited period, rather than acquiring an outright perpetual licence (or similar rights which would be akin to acquiring ownership of the software). It is difficult to see how such arrangements could be treated as a “sale of goods” as required by the Regulations. Despite this ongoing uncertainty, principals and agents need to consider the likelihood that the Regulations will apply to agency agreements involving software and should check whether existing agency agreements make provision for the Regulations applying to that agency. If they do not, principals in particular will need to consider what their potential liability might be under the Regulations. Going forward, principals engaging agents who deal with software products should take account of their potential liabilities under the Regulations when setting an agent’s overall commission structure and negotiating commercial terms.

Kevin Manship, Senior Associate at Blake Morgan
One Central Square, Cardiff, CF10 1FS
E: kevin.manship@blakemorgan.co.uk · T: 029 2068 6126 · www.blakemorgan.co.uk

Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, Blake Morgan Solicitors and the writer accept no liability in connection with the general guidance given in this column. Please ensure that you obtain legal advice before acting in reliance upon anything in the article. For example please be clear that the answers given in this column may not cover all possible angles, aspects, relevant considerations and/or points of law and so that all or any information which is given above needs in every instance to be referred for legal advice for clarification and amplification, before being relied upon.

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2018, the Court of Appeal: software is not goods after all

Contributed by Emma Butcher, Associate at Clarkslegal, April 2018. The Court of Appeal reversed the High Court. This was itself later overtaken by the CJEU, so it too is history, not the current position.

In 2016 the case of The Software Incubator Limited v Computer Associates UK Limited made waves in the commercial agency sector by finding that the definition of “goods” for the purpose of the Commercial Agents (Council Directive) Regulations 1993 (the “Regulations”) included software. The Regulations provide important rights for commercial agents, including in particular the right to receive compensation upon termination of the agency agreement, but only protect commercial agents who sell goods, rather than services.

All has now changed however as Computer Associates UK Limited has succeeded in its appeal of the High Court’s 2016 decision. The Court of Appeal has decided that software which is supplied by way of a digital download only is not goods for the purpose of the Regulations. On the other hand, software supplied in a tangible medium, for example on a disc or memory stick, will constitute goods.

The Court of Appeal recognised that this distinction seems somewhat arbitrary and outdated, but decided that it must follow the previous decisions made by both the English and European Courts in this context, which maintain that the definition of “goods” requires a product to have some physical, tangible form. The Court of Appeal said that any change to this definition needs to come from the UK or European Parliaments, and should not be made by the Courts.

The Court of Appeal was particularly influenced by the fact that when the UK’s consumer protection legislation was reformed, by way of the Consumer Rights Act 2015, the government decided to deal with digital downloads not by widening the definition of “goods” (which are defined as “tangible moveable items”), but by including a new category of “digital content”. This, it said, was very relevant and clearly shows that any reform to the commercial agents legislation must similarly come from Parliament.

For now, then, we are back to the old definition of “goods”, and however unfair it may seem, this means that agents who sell software will not be protected by the Regulations, unless that software is supplied in a physical medium. Reform of the Regulations is unlikely to be high on the government’s agenda at the moment, and the Regulations are very much a product of Europe in any event – historically English law has not provided much in the way of rights for commercial agents. It therefore remains to be seen whether the protection offered by the Regulations will continue in its current or altered form after Brexit.

Emma Butcher, Associate at Clarkslegal
Tel: 01189604671 | Ext 4671 · Mobile: 07799 212 511 · Fax: 0118 960 4611 DX 54700 Reading 2
Email: EButcher@clarkslegal.com · www.clarkslegal.com

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2021, the CJEU: software is goods (the decision that settled it)

Contributed by Kevin Manship, Peter Dovey and Co Solicitors, December 2021. Kevin Manship returns to the case five years on. The CJEU confirmed that electronically-supplied software under a perpetual licence is a sale of goods, which is the position that stands today.

Software and commercial agents – what’s all the fuss about?

The importance of “goods” under the Regulations

The Commercial Agents (Council Directive) Regulations 1993 (“the Regulations“) incorporate important obligations and protections into the contractual relationship between a principal and a “commercial agent”.

In order to benefit from the protection of the Regulations, a sales agent must show that they meet the definition of “commercial agent”, which means that they are:

“…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”.

An important element of this definition is that the sales agent must be dealing with the sale or purchase of “goods”. The Regulations do not apply where the agent is dealing with services on behalf of their principal.

What about computer software – goods or services?

For a long time, there has been uncertainty about whether computer software are classified as goods or services under the Regulations.

The term “goods” is not defined in the Regulations and when the Regulations came into force there was a generally accepted view that a product had to be something physical or tangible in order to be categorised as “goods”. This view has prevailed for some time, with the Courts concluding that software had to be delivered in some form of tangible media (ie a disc, a CD-Rom or a memory stick) in order to be classified as “goods” under the Regulations. This has resulted in an unsatisfactory situation where the same piece of computer software would be classified as “goods” under the Regulations if supplied to a customer by disc but would not be classified as “goods” if the customer downloaded the software electronically.

Computer Associates and Software Incubator

Enter the long running dispute between Computer Associates Limited (“CA“) (the sales agent) and Software Incubator Limited (“SI“) which has worked its way through the High Court and the Court of Appeal and will now be considered by the Supreme Court (via a referral by the Supreme Court to the Court of Justice of the European Union (the CJEU”)).

CA had appointed SI as its sales agent to sell CA’s application release software product. The software was sold to customers under a perpetual licence and was primarily delivered to customers electronically without using any tangible media. CA subsequently terminated SI’s sales agency contract and SI then brought claims for compensation and post-termination commission under the Regulations. One of the arguments put forward by CA in defending SI’s claims was that the Regulations did not apply because the supply of software did not constitute “the sale of goods”.

SI was initially successful in the High Court, but the Court of Appeal overturned that decision and found in favour of CA. SI appealed to the Supreme Court but, before making its decision, in 2019 the Supreme Court asked the CJEU to consider two questions:

• Whether computer software supplied to customers electronically, and not on any tangible medium, constitutes “goods”;
• Whether computer software supplied to customers by granting a perpetual licence to use that software constitutes a “sale of goods”.

The CJEU was asked to consider these issues because the Regulations were made in order to implement an EU Directive into UK law. It took the CJEU some time to deal with the matter, but it has recently confirmed that the answer to both questions is yes – for the purposes of the EU Directive, computer software supplied to customers electronically does constitute “goods” and the supply of software in this way by granting a perpetual licence does constitute a “sale of goods”.

What happens now?

The Supreme Court must now provide what will be the final judgment in this case. In theory, it could disregard the decisions given by the CJEU but, given that the Supreme Court asked the CJEU to consider the two questions, this seems unlikely.

Why is this decision important?

We will await the Supreme Court’s judgment but if it does follow the CJEU decisions, this would significantly change the position of many software resellers. As long as they sell computer software by way of a perpetual licence (and otherwise fulfil the requirements of the Regulations), their agency contracts would be governed by the Regulations. This means that the software reseller sales agents could be entitled to claim compensation or indemnity when those contracts are terminated, which could mean significant additional liability for software company principals.

There would still be some uncertainty about transactions involving computer software which do not involve a perpetual licence, such as computer software supplied on a subscription basis or where software is provided as a service. Customers are only entitled to use the computer software for as long as they pay the subscription or for the service. The customer does not permanently own the computer software. It seems unlikely that this type of transaction would be classified as a “sale of goods” and the Regulations would therefore not apply. Still some questions to answer!

Kevin Manship, Solicitor
Peter Dovey and Co Solicitors, 14 Old Square, Lincoln’s Inn, London, WC2A 3UE
Email: kevinmanship@pdcosol.com · Telephone: 07778 010574

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Related reading on Agentbase

• What happens when a commercial sales agent wants to retire?
• Compensation versus an indemnity: some essential differences
• Am I a commercial agent?

This page brings together general guidance contributed by independent solicitors over several years and is not itself legal advice. The law in this area has changed before and may change again, and every agent’s and principal’s circumstances differ, so please take specialist advice before acting on anything here.