VIC How to Handle Defamation?

[Matthew Jarre]

Hi, I am just looking for some help regarding a situation I have with an independent product sales agent working for my company. This sales agent works alone to find clients and sell my company's products.

This agent also works for another company (she only works for 2 companies) in the same line of business, which didn't bother me initially because our products were not really competing. Recently, however, our products are beginning to overlap and I can see that I am losing business to this other company as sales figures are down by a lot. There is one particular product which bothers me as being very similar, goes by the same product name, has the same minimum quantities and serves the same function. The only difference is the material it is made from and the price. I have spoken to my agent on numerous occasions about this by she refuses to stop selling it. What can I do?

Also, this last week I checked her emails on my server and saw that she sent an email from my company's server using my company signature to the other company she represents in the same industry. The email was about me purchasing four images from this other company she represents. The images were for a project we will be completing for a client. She advised this other company regarding the fee to use their images: "Don't hang back on price is my advice".

I was shocked to see this because she has basically said to charge me the maximum price for the images instead of trying to get the best price for my company. Clearly there is a conflict of interest here but is this gross misconduct and do I have the option of immediately terminating the agency agreement? Obviously, I have lost all trust in my agent and I don't believe she is acting in the best interests of the company but in the best interests of herself. We don't have an agreement in writing but I assume there are implied contractual terms for an ongoing agency relationship.

Also, how should we handle defamation post-termination as she is quite the talker and has talked poorly about previous companies she has worked for in the past. No doubt she will defame my company in front of my customers.

Thanks in advance for the help.

Cheers

 

[James D. Ford - Solicitor]

Hi Matthew

You have a number of options and since the arrangement is with an independent contractor (rather than an employee), you can terminate the agency arrangement, at your discretion, unless you had verbally agreed to any minimum specific length of time? Please advise?

Where the two companies overlap...are you both paying the same commission on sales of the overlapping product if the other company is paying a higher commission, that could be the reason you are losing sales? Is the other company selling the product at a cheaper price?

This is a commercial decision, and since you do not have a written Contract in place, if you would like to offer this agent, a second chance, you might want to consider implementing a written Contract, that would better protect your business, both on an ongoing basis, and if this agent was to be terminated.

In the event you decide to terminate the current verbal agency agreement, how will you prevent the agent from transferring your remaining clients across to the other business? as currently you have no Confidentiality, Restraint of Trade, Intellectual Property, or Trade Secret Protection?

Regarding handling Defamation... again if there is a written Contract, Confidentiality and Non-disparagement clauses would be included to offer some protection...

I would recommend that you put in place written agency contracts as soon as practical with all of your sales agents.

You can only make a claim for Defamation, if what the agent states is false and on a practical level, you can only do something if you find out about what has been discussed (which would be difficult)...

Kind regards

 

[Matthew Jarre]

Thank you for your detailed opinion.

There was only ever an oral agreement over a coffee and no length of time was ever mentioned. Everything has been great until recently. I think the issue is that she is semi-retired and is spending most of her hours working for the other company as their products sell at a higher price which = a higher commission. The other company pays the same % commission as I do.

If I choose to dismiss my agent based on the recent problem she will only be able to take some customers with her. My products and artwork are quite unique so she would not be able to take that with her. In addition, I offer good terms of trade so clients are likely to stay with my company.

I agree with you that perhaps it would be a good idea to set up an agency agreement in writing to offer some protection instead of terminating our relationship immediately. However, how can I trust her after this experience and how will I know that she isn't taking projects which should be mine to my competition?

Are there any recommended templates for such an agency agreement you might be able to suggest?

Kind regards.

 

[James D. Ford - Solicitor]

Hi Matthew

It is hard to make any recommendation regarding an appropriate template Agreement, without understanding the details.

I have a template Independent Contractor - Sales Agreement, that is probably the closest you are going to get, from a template perspective... it might work as a starting point for you.

Please contact me, and I can provide you with a quote.

Kind regards

 

[Matthew Jarre]

Thanks.

Just a quick question.

We agreed verbally only that my agent would receive a percentage of each sale brought to the company. No other contract or agreement exists. Lately, my agent's sales have been terrible. Should I terminate my agent instead based on performance, rather than the above gross misconduct and keep that card in my back pocket?

If I immediately terminate my agent due to poor performance, can my agent claim unfair termination? Is there an implied notice period which I must give my agent? For example, 1 month for each year? Or can I just terminate the agreement immediately and be fully within my rights to do so?

 

[Matthew Jarre]

Extra info: I have previously confronted my agent regarding the huge drop in sales which are clearly evident over the last 5 months.