21. Nov 18

Reclaiming advances on commission payments requires transparent presentation

A company demanding that advances on commission payments be repaid by the commercial agent needs to be able to provide detailed reasoning in support of this action as well as present a complete calculation for the recovery of the sums in question.

Commercial agents receive a commission for the deals they broker from the company in whose name they conclude agreements. It is also customary for advances to be paid on this commission or for the parties to agree on what is referred to in German as a “Stornoreserve”, i.e. a reserve sum in case the agreement with clients eventually falls through. However, we at the commercial law firm GRP Rainer Rechtsanwälte note that even under these circumstances the advances on commission payments cannot be automatically clawed back. That was the verdict of the Oberlandesgericht (OLG) Frankfurt, the Higher Regional Court of Frankfurt, in a ruling from 17 August 2017 (Az.: 6 U 214/16).

In the instant case, the financial services company filing the action had concluded a commercial agency agreement with the defendant. It was agreed that in the case of contracts featuring so-called “Haftungszeiten”, i.e. indemnity periods, the right to claim commission would not arise until the client had paid a certain number of premiums. Following the cancellation of various contracts, the company demanded repayment of the amounts that had been advanced on commission payments, which amounted to almost 30,000 euros in total. The action was unsuccessful before the respective regional court, and the Oberlandesgericht Frankfurt also gave clear indications that it intended to dismiss the claim for lack of reasonable prospects of success.

It held that, according to the relevant statutory provisions, the commercial agent is required to repay advances on commission in the event that the client fails to pay and the company is not responsible for this. Accordingly, commission entitlements in the case of agreements featuring indemnity periods only arise if the client has paid a certain number of premiums. The company filing the action demanded that advances on commission from cancelled agreements be paid back. However, the OLG Frankfurt ruled that it had not been able to present a complete calculation for the recovery of the sums in question.

It went on to say that it is necessary for each sum being reclaimed that arises from a cancellation to be substantiated and transparently presented. It is not enough to simply number the claims according to their value and allocate them to a contract brokered by the commercial agent. The Court held that the company must demonstrate that it took every measure necessary to preserve the agreement. In addition, a transparent calculation of the individual cancellation claims needs to be made out in writing. In the present case, the OLG found that it was not clear why numerous cancellations had been allocated to not only one but several recovery sums. All in all, the Court was not able to work out how the amount being reclaimed had come about.

Disputes in relation to commercial agency agreements, e.g. regarding claims for compensation or reclaiming commission, are common. Lawyers who are experienced in the field of commercial law can offer advice.

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