Implications of AI agents for agency agreements

Artificial intelligence is moving quickly into the commercial agency world, from tools that help an agent work faster and smarter, to principals who want to require, or to forbid, the use of AI. This page brings together two contributions: a practical look at how AI can help a commercial agent, and a legal look at what happens when AI enters the agency relationship.

The pieces are dated (2023 and 2025), and both the technology and the law are moving fast, so treat them as a guide to the issues rather than the last word, and take advice on anything specific. This is general information, not legal advice.

The short answers

Will AI replace commercial agents?

The prevailing view is no: AI augments an agent rather than replacing them. The relationships, interpersonal skills and judgement an agent brings are the things AI cannot replicate. The practical value is in using AI to work faster and make better-informed decisions.

Can a principal require an agent to use AI?

In principle, yes. An agent must comply with a principal’s reasonable requests, and the courts have backed principals introducing technological change as long as they go about it reasonably. An agent who unreasonably refuses risks being treated as having ended the agency, and so losing the right to compensation or an indemnity.

Can a principal require an agent not to use AI?

In principle, yes, for the same reason. It follows from the same duty to comply with a principal’s reasonable requests.

What are the main legal risks of using AI in an agency?

Confidentiality and data protection. AI tools often need access to large datasets, usually via the cloud, and can share information inadvertently. On data protection, it matters whether the agent is a controller or a processor under UK GDPR, with extra rules if personal data is processed outside the UK and EEA.

How AI can help commercial agents

Contributed by Suzanne Carr, Senior Associate at Myerson Solicitors LLP, July 2023.

Artificial intelligence (AI) is transforming various industries, and as the technology continues to advance, the potential impact on commercial agents is significant.

Whilst the rise of AI has sparked concerns about job security and potential robotic uprising (a la Terminator), the reality is far from a Hollywood-style doomsday scenario. Rest assured we are not on the brink of being replaced by an army of AI-powered machines. AI has the potential to enhance human capabilities rather than replace them entirely. Commercial agents bring invaluable expertise, interpersonal skills and nuanced decision making that AI simply cannot replace. Commercial agents should therefore focus on harnessing the power of AI to their advantage and this blog will explore some of the ways they can do that.

Examples of how AI can be utilised by commercial agents include:

Enhanced data analysis: AI-powered algorithms can quickly analyse vast amounts of data, providing valuable insights into market trends, customer preferences, and competitor behaviour. By utilising AI, commercial agents can gain a deeper understanding of their target markets, enabling them to make informed decisions and develop effective strategies. With real-time data processing, agents can respond promptly to market changes and adjust their approach thereby enhancing their competitiveness.
Improving customer engagement: AI powered virtual assistants can handle routine inquiries, freeing up time to focus on more complex tasks such as building relationships, closing deals and adding the human touch which AI cannot replicate. By using AI powered tools, agents can offer round-the-clock support, ensuring that customers’ needs are met promptly and efficiently whilst improving the overall customer experience.
Improved efficiency: AI can automate repetitive and time-consuming tasks at lightning speed. For instance, AI can streamline inventory management, supply chain optimisation, and order processing. By automating these processes, agents can reduce human errors, lower costs, and improve overall productivity. AI-powered systems can also facilitate predictive analytics, helping agents forecast demand, manage inventory levels, and make proactive decisions. This automation allows agents to focus on strategic activities such as building relationships, negotiating deals, and exploring new business opportunities.

The above are just a few examples of the benefits AI can offer. It is important commercial agents adapt and upskill to leverage AI effectively while ensuring that human interaction and expertise remain integral to their operations. The AI revolution is about cooperation, not competition. So, let’s leave the fear of a robotic uprising behind and embrace the exciting possibilities AI can bring to commercial agents.

How we can help

Our team of experts are ready to assist on all aspects of commercial sales agency law. We are always happy to have an initial no-obligation chat to help guide you in the right direction.

Suzanne Carr is a Senior Associate at Myerson Solicitors LLP. Please do not hesitate to contact us on 0161 941 4000 or via email.

The legal side: can a principal require AI, and what are the risks?

Contributed by Stephen Sidkin, partner at Fox Williams LLP, September 2025.

Salesforce UK Limited is currently advertising Agentforce with the strapline “What AI Was Meant To Be”.

An AI agent can be described as a software programme that can interact with its environment, collect data, and use the data to perform self-determined tasks to meet pre-determined goals. This raises the question whether principles can require their agents – whether individuals, partnerships, or companies – to use AI agents.

Can principals require that their agents use AI agents?

The starting point under both the Commercial Agents Regulations and at common law is that an agent must comply with the reasonable requests of their principal.

This was illustrated some years ago in a case concerning an agent who refused to use new technology introduced by their principal. The manner of the refusal was such as to breach the necessary personal relationship of trust that must exist between principal and agent (in the same way as it is necessary to exist between employer and employee).

This was followed more recently in a case where the agent had resisted the changes introduced by the principal to move to a paperless email communication system. In that case, the principal was able to snatch victory from the jaws of defeat as a result of the way in which the agent behaved.

The key takeaway from both judgments is that the courts will not stand in the way of a principal introducing technological change into their business so far as their agents are concerned provided that the principal goes about requesting their agent’s adoption of the technological change in a reasonable way.

It follows that in principle, principals can require the use by the agents of AI agents.

Can principals require that their agents do not use AI agents?

Although the question may seem counterintuitive, it follows from the cases mentioned above, that in principle, principals can require that their agents do not use AI agents.

Failure to act in accordance with a principal’s reasonable requests

An agent who fails to act in accordance with their principal’s reasonable requests is in danger of the principal claiming that such failure amounts to a serious breach by the agent of the agency agreement which the principal can accept. The result is that the principal claims that it was the agent who brought the agency agreement to an end and, as a consequence, the agent has lost the right to claim compensation or indemnity under the Commercial Agents Regulations.

Risks of using AI agents at a principal’s request

Where an agent uses AI at the request of their principal, it is important to consider confidentiality. The main issues include:

Data access: To function effectively AI agents often require access to large datasets. Such datasets can include confidential information but when processed by an AI system, there is the risk that such information is compromised if there are insufficient security controls.
Cloud storage: Many AI agents operate using cloud-based services. This means that data is transmitted over the internet and stored in external servers. In turn, this introduces additional vulnerability as a result of the possibility of data breaches during transmission or attacks on cloud infrastructure.
Sharing information: A particular way in which an AI agent is similar to an agent is that an AI agent is not immune to sharing information inadvertently! This could occur where an AI agent is integrated into multiple systems or applications resulting in the unintentional sharing of confidential information across the systems.
Data protection: It is also possible that the principal’s data protection strategy is insufficient.

Agents, AI agents, and data protection

The relationship between the principal and agent, particularly concerning data sharing and control, varies on a case-by-case basis.

Establishing the facts about the data flow and use between the parties is important in determining whether, under UK data protection laws, the agent is acting as a processor (for the principal) or as a separate controller.

AI agents add an additional layer of complexity as they may need to process personal data submitted by the agent as a third party service. The agent should clarify its status, and obligations, under data protection laws in respect of its use of the AI agent. This may include the agent being required to ensure that the AI agent is subject to the GDPR-mandated contractual data processing obligations for processors.

If the agent acts as a controller, any processing of personal data must comply with the GDPR principles, including lawfulness, fairness, transparency, data minimization, storage limitation and security.

The agent will also need to be in a position where it can facilitate any data rights requests made by end-customers.

These will all need to be considered in the context of using an AI agent. There will also be additional international transfer requirements to consider if the AI agent is processing personal data outside the UK and EEA.

Failure to comply with applicable data protection laws could expose both the agent and the principal to regulatory sanctions, including fines. Therefore, establishing the facts from the outset is essential to ensure that the necessary measures, as between agent, principal and AI agent, are duly put in place.

Implications of AI agents in agency law: key takeaway

When an agent is requested by their principal to use an AI agent, it is crucial to carefully consider the terms of the request and the intended use of the AI agent, as this can significantly impact the responsibilities and obligations of both principal and agent.

The contributions on this page are general guidance, not legal advice, and reflect the position at the time each was written. Both the technology and the law are developing quickly. Agentbase and the contributing firms accept no liability for any reliance placed on them. Please obtain legal advice before acting on anything set out here.

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