Win for energy brokers: How recent court decision impacts commission claims in business contracts

Win for energy brokers: How recent court decision impacts commission claims in business contracts

By -Published On: June 7, 2024-Categories: Business, Energy Consultants, Market Insight, News-

The ECA are delighted to share another favourable outcome regarding commission claims.

Engie, represented by its solicitors at Walker Morris, has again successfully defended a claim concerning undisclosed commission amounts.

This decision reflects the courts adopting a fair and common sense approach in business-to-business dealings.

Understanding the “Half-Secret” Commission

In a recent court ruling, it was determined that although the actual amount of commission was not disclosed the broker’s terms and conditions referred to the potential of commission payments to the broker.

The commission was therefore “half secret”.

Legal Criteria for Commission Disclosure

The court set out all the points that a customer must prove to challenge the non-disclosure of commission:

  • Fiduciary Responsibility: the broker must owe a duty to act in the customer’s best interests.
  • Disclosure Obligation: this duty includes the responsibility to disclose the commission amount and its calculation.
  • Informed Consent: the customer must not have given its informed consent to the commission payment

Challenging the Claims Industry’s Approach

For years, claims companies and legal firms have pursued payments from brokers based on partial non-disclosure of commissions claiming a lack of consent.

However, this judgment confirms that it is the customer’s responsibility to review terms and conditions and inquire about commissions.

Essentially if the customer chooses not to read the broker’s terms and conditions and or not ask as to commission then it is unable to later claim the broker’s commission.

The customer in a case such as this has consented to the payment of commission and therefore cannot prove all of the three points above.

The Implications of Customer Responsibility

This decision also again rejects the claim that commercial customers can be said to be vulnerable or unsophisticated.

In a business to business context the law presumes treats customers, be they small businesses or charities, as aware that commission will be paid by the supplier.  If the customer wanted to know more they should have asked.

They must read and question terms as needed, and if dissatisfied, they are free to seek alternative brokers or negotiate different terms.

Conclusion: A Step Forward for Business Autonomy

This verdict is a significant stride toward reinforcing the autonomy of businesses in managing their commercial relationships.

It clarifies that the responsibility to understand and negotiate commission terms lies with the customer, reinforcing the principle that businesses must engage actively and knowledgeably in their contractual relationships.

Join The ECA

If you’re a broker or consultant in the energy industry, consider joining the Energy Consultants Association (ECA) today to stay informed, receive valuable resources, and contribute to the collective voice shaping the future of our industry.

At The ECA, we advocate for transparency and diligence in the energy industry.

Join us today and benefit from industry intelligence, networking opportunities, and a powerful collective voice.

With monthly payment options available, becoming a part of The ECA is now easier than ever. Visit our membership page and take the first step towards a more empowered future in energy consultancy.

Together, we can drive positive change and foster an environment of growth and success in the sector.

One Comment

  1. Andy June 14, 2024 at 1:20 pm - Reply

    The High Court Judgment will likely be overturned by the CoA. The lower courts have got this wrong I think.

Leave A Comment

Receive the latest news in your email
Related articles
Go to Top