The court in Stephen Gledhill v Bentley Designs (UK) Limited [2010] EWHC B8 (Mercantile) considered whether the principal (the defendant) had lawfully terminated the agency agreement on grounds that the agent’s (the claimant) purported abusive conduct had amounted to a fundamental breach of contract and thereby justified the termination.

The claimant was one of 10 agents of the principal. The defendant wished to modernise its business and therefore began to move its business to a paperless environment. It informed all of its agents to communicate with it through email rather than fax or post. However, the claimant refused to comply with the defendant’s requests and continued to communicate with the defendant by fax.

Following continued requests to the claimant to move towards electronic means of communication, the defendant resolved to charge the claimant an administrative fee of £100 for ­having to deal with the claimant’s faxes and letters.

This led to the claimant calling the defendant and leaving a hostile and abusive voice message on the defendant’s managing director’s telephone. This was followed by a fax that allegedly contained an apology from the claimant to the defendant’s managing director. However, the defendant concluded that the fax was not in fact an apology and decided to terminate the agency agreement with the claimant.

The matter came before Judge Simon Brown QC in the Mercantile Court. He set out the following principles before embarking on an analysis of the evidence:Analysing the evidence and the effect of the voice message on the agency relationship, Simon Brown QC found the contents and tone of the telephone call was personal abuse of the worst kind and gross insubordination of the managing director by the claimant, which led to an irrevocable breakdown of the necessary personal relationship of trust required between principal and agent, unless repaired. Such repair could only be at the ­indulgence of the abused, that is, the managing director.

  • As a matter of law, abusive language by an employee towards his or her employer may amount to a repudiatory breach of contract depending on the circumstances. Words spoken in the heat of the moment may not always lead to a conclusion that they are such that the relationship cannot continue (Wilson v Racher [1974] ICR 428);
  • An apology may lead to the ­conclusion that the conduct is not repudiatory but this is likely to be only the position where the words were spoken in heat and haste and the apology is heartfelt and sincere (Charles Letts & Co v Howard [1976] IRLR 248);
  • In this case, as in any like employment contract, the claimant was under an express duty under Clause 3.1 ‘to act towards the principal conscientiously and in good faith’ and ‘any ­serious breach’ of such a term would entitle the defendant to terminate ‘with immediate effect’ under Clause 9.2.1;
  • The relationship of principal and agent is that there is necessarily an implied reciprocal term that neither would ‘without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee’ (
  • Mahmud v. B.C.C.I
    • [1997] ICR 621 per Lord Steyn).

Although the claimant was provided with an opportunity to repair the damage caused this was not done by the claimant – the alleged apology was not an apology but was an attempt by the claimant to justify his behaviour. The voice message and alleged apology was, in the opinion of Simon Brown QC ‘…a course of conduct calculated, or at the very least likely, to destroy or seriously damage the relationship of confidence and trust between principal…and agent (the claimant)’.The following can be taken from Bentley Designs (UK) Limited:

  • the court will look to ascertain whether the behaviour of either the agent or principal is such as to destroy (or likely to destroy) the relationship of confidence and trust between the parties;
  • the court will strictly enforce any express terms in the agency agreement which require the agent and principal to act in good faith towards each other;
  • both agents and principals should always be advised of the circumstances in which the agency agreement may be terminated – this will include circumstances when either party may react to the other in a ­hostile and abusive manner and which may not be followed by a ­genuine apology.

Masood Ahmed is a senior lecturer in law at Birmingham City University