International commercial agency

Publié le : 17/03/2009 17 mars mars 03 2009

The commercial agent is an independent professional, he doesn’t purchase the products. He acts in the name of and on behalf of his principal (the company). He is paid by commissions and is entitled to allowance at the end of the contract.

- The agent and the principal are based in Europe

The European Directive n°86/653/CE dated 18 December 1986 must be applied to the commercial agency contract, if the commercial agent carries out his business in a Member State.

The commercial agent is entitled to his commission for any contract entered into, even without his intervention, with a client coming under his territory or under the group of particular people he’s in charge of, when the principal has intervened.

With regards to the end of contract allowance, the Directive leaves an option to the Member States, that is:

- either an indemnity for bringing new clients,
- or a compensation for the damage suffered by the commercial agent.

If it is an indemnity, the Directive determines the amount at one year’s worth of commissions.

If it is a damage suffered by the agent, the Member States can determine the criteria.

Most of the Member States have chosen the indemnity, in particular Germany.

Only France and Ireland have chosen compensation for the damage suffered.

In the United Kingdom, the principle is the damage suffered, except if the option for indemnity was chosen by the parties in the contract.

In France, French case law considers that the damage suffered is calculated on the average of the last two or three years and allows two years worth of commission.

The choice of the applicable law is an essential issue

For example, if the principal is a French company and the agent is German, the contract has been performed for five years, they started from scratch and at the end, the total turnover amounted to € 5 000 000 with an average of € 1 300 000 for the last three years.

If French law applies to the contract, the French court will allow the commercial agent, after five years, a damage amounting to two years worth of commission, with an average on the last three years, that is:

2 x 1 300 000 x 5% = € 130 000

If German law applies to the contract, it is one year’s commission on the average of the last five years, that is:

5 000 000 x 5% = € 50 000
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- The agent is based in Europe and the principal outside Europe

If the agent is based in France and the principal is based in Canada, for example, the European Regulation shall apply.


- The agent is based outside Europe

International principles apply and the parties to the contract can chose the applicable law. Before choosing the applicable law, it is cautious to check what is included in the law chosen by the parties and also to verify if the State court or the Arbitration court decision can be enforced according to the international conventions.

The parties also have to choose the language of the contract and of its interpretation.


As a conclusion

It’s very important to take care over drawing up the contract before signing it, bearing in mind that a contract is mainly useful when disputes arise.





Cet article n'engage que son auteur.

Auteur

Thierry CLERC

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