{"id":8157,"date":"2018-08-21T07:00:17","date_gmt":"2018-08-21T05:00:17","guid":{"rendered":"https:\/\/www.legalmondo.com\/?p=8157"},"modified":"2018-08-06T16:23:57","modified_gmt":"2018-08-06T14:23:57","slug":"commercial-agents-indemnity-for-termination-in-trial-period","status":"publish","type":"post","link":"https:\/\/www.legalmondo.com\/es\/2018\/08\/commercial-agents-indemnity-for-termination-in-trial-period\/","title":{"rendered":"Commercial Agents &#8211; Indemnity for termination in trial period?"},"content":{"rendered":"<p>Commercial agents are <strong>very suitable for<\/strong> expanding one\u2019s business into <strong>new markets<\/strong> \u2013 especially for two reasons: First, because they generally have a good <strong>expertise of the market<\/strong> (especially if they reside in that country). Second, because their remuneration (\u201c<em>commission<\/em>\u201d) can be configurated <strong>completely profit-oriented<\/strong> (= remunerated only if they successfully negotiate a new transaction), and related to the turnover they generate.<\/p>\n<p>Nevertheless, both the supplier and the commercial agent may feel the need for an <strong>initial period<\/strong>, in which both get to know each other, the product, the market and the customers as good as possible to subsequently evaluate how to proceed on that market. Therefore, they <strong>may agree on a trial period<\/strong> within which the commercial agency contract can be terminated more easily and sooner than without or after such trial period, e.g.:<\/p>\n<p><em>\u201cThis Agreement shall come into effect on [\u25cf] and shall be in force for a trial period of [\u25cf]\u00a0months (\u201cTrial Period\u201d) during which each Party can terminate the Agreement with [\u25cf]\u00a0months written notice. After such Trial Period, the Agreement shall continue indefinitely, unless terminated according to the rules below.\u201d<\/em><\/p>\n<p>Even if the agency agreement is terminated within such trial period, however, the <strong>agent may be entitled to indemnity or compensation<\/strong> \u2013 as the <a href=\"https:\/\/curia.europa.eu\/jcms\/jcms\/j_6\/en\/\" target=\"_blank\" rel=\"noopener\">Court of Justice of the EU<\/a> just now confirmed (Case Conseils et mise en relations (CMR)\u00a0SARL, decision of 19\u00a0April 2018, <a href=\"http:\/\/curia.europa.eu\/juris\/document\/document.jsf?text=&amp;docid=201266&amp;pageIndex=0&amp;doclang=EN&amp;mode=lst&amp;dir=&amp;occ=first&amp;part=1&amp;cid=215332\" target=\"_blank\" rel=\"noopener\">C-645\/16<\/a>).<\/p>\n<p>The court basically <strong>argues<\/strong> with the wording, context and objective of the <a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/?uri=CELEX%3A31986L0653\" target=\"_blank\" rel=\"noopener\">Commercial Agency Directive<\/a>:<\/p>\n<ul>\n<li>The Commercial Agency Directive also <strong>applies<\/strong> to \u2018\u201d<em>trial periods<\/em>\u201d.<\/li>\n<li>Ending a commercial agency contract \u2013 even within an agreed trial period \u2013 <strong>constitutes a \u201ctermination\u201d<\/strong> of the agency contract, which triggers the claims for indemnity or compensation \u2013 because the commercial agency contract has already been definitively concluded (understanding contrary to French case law, e.g. <a href=\"https:\/\/www.courdecassation.fr\/\" target=\"_blank\" rel=\"noopener\">Cour de Cassation<\/a>, Case No.\u00a0<a href=\"https:\/\/www.legifrance.gouv.fr\/affichJuriJudi.do?idTexte=JURITEXT000030791273\" target=\"_blank\" rel=\"noopener\">14-17894<\/a>).<\/li>\n<li>Goodwill indemnity or compensation are <strong>not forfeited<\/strong> because termination within the trial period is not included in the exhaustive list of exceptions in Article\u00a018 Commercial Agency Directive.<\/li>\n<li>The parties may <strong>derogate<\/strong> from the commercial agent\u2019s mandatory rights <strong>only from the end<\/strong> of the contract (Article\u00a019 Commercial Agency Directive) because the Commercial Agency Directive aims to <strong>protect the commercial agent<\/strong> vis-\u00e0-vis the principal (recital\u00a02 of the Commercial Agency Directive).<\/li>\n<\/ul>\n<h2><strong>Practical tips<\/strong><\/h2>\n<ol>\n<li>Parties are <strong>free to agree on trial periods<\/strong> because it is covered by freedom of contract.<\/li>\n<li><strong>At termination<\/strong>, the commercial agent is, <strong>as a matter of principle<\/strong>, <strong>entitled to an indemnity or compensation<\/strong> \u2013 to \u201c<em>indemnify the agent for his past services from which the principal will continue to benefit beyond the termination<\/em>\u201d, as the EU Court of Justice now put it. Whether the agent can claim indemnity or compensation depends on the law chosen by the parties (or, in absence of choice, by the law of the country where the commercial agent has his habitual residence).<\/li>\n<li>As far as the <strong>indemnity<\/strong> (payable e.g. according to German law) is concerned, <strong>its amount <\/strong>strongly <strong>depends on the <\/strong>commercial agent\u2019s <strong>performance<\/strong> during the term of the contract \u2013 because the claim accrues if and to the extent that (i) the agent has brought the principal new customers or (ii) has significantly increased the business with existing customers and (iii) the principal continues to derive substantial benefits from such business, plus (iv) such indemnity must be equitable. As a <strong>maximum<\/strong>, the indemnity shall not exceed of the <strong>past five years\u2019 average annual remuneration<\/strong> (including commissions and other payments). Such possible costs should therefore be included in one\u2019s business planning before starting to distribute products or services through commercial agents.<\/li>\n<li><strong>Throughout the EU<\/strong>, agency agreements are <strong>widespread<\/strong> in a vast variety of industries: roughly 740,000\u00a0commercial agents operate for 1.7\u00a0million companies and generate sales of EUR\u00a0260\u00a0billion. These figures from 2012 keep growing as indicate <a href=\"http:\/\/ec.europa.eu\/eurostat\/home\" target=\"_blank\" rel=\"noopener\">Eurostat<\/a>\u2019s data, reported by the European Commission in its <a href=\"https:\/\/www.google.com\/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwj1mJzEnoLcAhVR66QKHYMODxwQFggrMAA&amp;url=https%3A%2F%2Fec.europa.eu%2Fdocsroom%2Fdocuments%2F11482%2Fattachments%2F1%2Ftranslations%2Fen%2Frenditions%2Fnative&amp;usg=AOvVaw3UttiJE3rmjMOZoGlQDFL9\" target=\"_blank\" rel=\"noopener\">Refit Evaluation<\/a>. The EU Member States with the most commercial agents are Slovakia (35k) Czech Republic (42k), Germany (42k), France (50k), Spain (50k) and \u2013 by far \u2013 Italy (220k). If the <strong>agent<\/strong> <strong>operates outside<\/strong> the <a href=\"http:\/\/www.efta.int\/eea\" target=\"_blank\" rel=\"noopener\">European Economic Area<\/a>, Principals and commercial agents are <strong>free to derogate<\/strong> even from the otherwise mandatory Commercial Agency Directive, especially if German law is chosen. For details, please see the article \u201c<a href=\"https:\/\/www.legalmondo.com\/2017\/08\/commercial-agents-outside-eea-no-goodwill-indemnity-ingmar-reloaded\/\">Commercial Agents outside the EEA \u2013 No Goodwill Indemnity (Ingmar reloaded)<\/a>\u201d.<\/li>\n<li><strong>Alternatively<\/strong>, one can also do business <strong>through distributors or franchisees<\/strong> or other intermediaries \u2013 where, however, an indemnity may arise at well, especially vis-\u00e0-vis distributors. For details, see the article \u201c<a href=\"https:\/\/www.legalmondo.com\/2016\/11\/german-distributor-indemnity-avoid\/\">German Distributor Indemnity \u2013 How to avoid it<\/a>\u201d.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Commercial agents are very suitable for expanding one\u2019s business into new markets \u2013 especially for two reasons: First, because they generally have a good expertise of the market (especially if they reside in that country). Second, because their remuneration (\u201ccommission\u201d) can be configurated completely profit-oriented (= remunerated only if they successfully negotiate a new transaction), [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":8158,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[220],"class_list":["post-8157","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agency","tag-germany"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/posts\/8157","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/comments?post=8157"}],"version-history":[{"count":1,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/posts\/8157\/revisions"}],"predecessor-version":[{"id":8162,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/posts\/8157\/revisions\/8162"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/media\/8158"}],"wp:attachment":[{"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/media?parent=8157"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/categories?post=8157"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalmondo.com\/es\/wp-json\/wp\/v2\/tags?post=8157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}