18. Feb 19

GRP Rainer Rechtsanwälte – Report on commercial agents’ right to claim compensation

Commercial agents are entitled to claim compensation. The European Court of Justice (ECJ) has since clarified that this right persists even if the commercial agency agreement is terminated during the probationary period.

Commercial agents are entitled to claim compensation pursuant to paragraph 89b of the Handelsgesetzbuch (HGB), Germany’s Commercial Code, if the commercial agency agreement is terminated. Because the company frequently continues to profit from the contacts established by the commercial agent and maintain business relations with these clients after the agreement has come to an end, the intention behind this entitlement is to enable agents to benefit from these business dealings as well. The right to claim compensation cannot simply be excluded. We at the commercial law firm GRP Rainer Rechtsanwälte can equally report, however, that this same right has also given rise to legal disputes time and time again.

There are certainly circumstances under which the right to claim compensation can lapse. This can happen if, for instance, the commercial agent is the one who terminates the agreement or misconduct on his or her part resulted in the agreement being terminated. One factor that does not affect the right to claim compensation, on the other hand, is the duration of the contractual relationship or whether the commercial agent is still on employment probation. That was the verdict of the European Court of Justice in a judgment from April 19, 2018 (Az.: C-645/16).

In the instant case, the commercial agency agreement provided for, among other things, a twelve-month probation period. During this period of time, both parties were entitled to terminate the agreement subject to a specified notice period. After the commercial agent clearly failed to meet the company’s expectations as well as the agreed targets, the latter decided to avail itself of this right of termination. The commercial agent subsequently asserted their right to claim compensation. The company took the view that this right does not arise in the event of the agreement being terminated during the probationary period.

The dispute made it all the way to the ECJ, which ruled in favor of the commercial agent. A commercial agent’s rights to compensation are regulated in an EU regulation. The ECJ held that the rights to compensation and damages provided for under this regulation are meant to indemnify the commercial agent for the services performed by him or her from which the company continues to benefit from or for the costs and expenses he or she incurred. The Court went on to state that this entitlement cannot be dismissed on the basis that the agreement was terminated during the probationary period.

Lawyers who are experienced in the field of commercial law can serve as expert advisors to companies and commercial agents alike.

For more informations:

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

Do you have any questions?
Make an appointment at one of our locations in Cologne, Berlin, Dusseldorf, Frankfurt, Hamburg, Munich or Stuttgart! For International inquiries, please contact us at our offices in London or Singapore!