The energy contract looked legitimate. The pricing behind it may never have been fair.
What the contract showed
A commercial energy contract looks like any other business arrangement. There is a named supplier, a contract term, a unit rate for gas or electricity, and a standing charge. The contract is signed, the direct debit is authorised, the bills arrive and are paid. Nothing about the process as the business experienced it suggested anything unusual was happening.
That appearance of normality was precisely what made undisclosed broker commissions so widespread and so difficult for businesses to detect. The contract was real. The energy was delivered. The bills reflected genuine consumption at the agreed rates. What the bills did not and could not reveal was whether the agreed rates were the ones the supplier was actually offering to customers, or whether they had been inflated to fund a payment to the broker that was never mentioned to anyone.
What was actually happening
Energy brokers who arranged undisclosed commissions operated by negotiating a base rate with the supplier and then presenting the client with a higher rate. The margin between those two rates was the commission. It flowed from the supplier to the broker as part of the commercial arrangement between them, with no disclosure to the business that was paying the inflated rate.
The client saw only the rate they were quoted and had no access to the underlying rate. There was no document that would have revealed the arrangement. The only way to have known was to have been told, and the broker had no financial incentive to do so. The higher the inflated rate, the higher the commission. Transparency would have reduced both.
The client saw only the rate they were quoted. The arrangement that produced that rate was invisible to them by design.
The legal principle that applies
English law has long recognised that an agent cannot secretly benefit from a transaction at the expense of the principal they are acting for. A broker arranging an energy contract on behalf of a business is acting as the agent of that business. Receiving an undisclosed commission from the supplier while doing so is a breach of fiduciary duty. That principle is not controversial or recently established. It has been part of the law for more than a century.
What is more recent is the willingness of businesses to bring claims on that basis, and the courts' confirmation that the principle applies in the energy brokerage context. Claims have succeeded. Recoveries have been made. For businesses whose solicitors handled those claims competently, the outcome was satisfactory. For those whose solicitors made mistakes, the professional negligence route against the solicitor is the question now under examination.
Why this matters now
Awareness of the undisclosed commission problem in the commercial energy market has grown significantly in recent years. As more businesses have come to understand what was happening with their energy contracts, legal claims have been brought in larger numbers. The courts have confirmed the legal basis for recovery. The question for businesses that have not yet acted, or whose earlier attempts to claim were unsuccessful, is what options remain.
The answer depends on the specific facts, including when the contracts were in place, whether a claim was ever attempted, and if so how it was handled. Those are questions that a specialist assessment can answer. The assessment through Sold Short is free and carries no commitment. It is the right starting point for any business that has reason to believe it was affected.
For businesses still within the limitation period for a direct claim against the energy broker, that route should be the first consideration. For those whose limitation period has expired, or whose earlier claim failed through solicitor error, the professional negligence route against the solicitor is the question that requires immediate attention. Sold Short can help with both assessments.
The assessment is the starting point and it costs nothing. Whatever the outcome of that review, the business will be in a better position for having had it than for having continued to assume the options are exhausted.
Sold Short helps businesses pursue professional negligence claims where energy commission cases were mishandled. Free assessment. No win no fee. Start today.