Article 1 of the Commercial Agency Law defines the commercial agent as follows:
“For the purposes of this law a commercial agent shall mean any natural or juridical person who ordinarily, without being bound by an employment contract or service - rendering contract, offers bids, concludes purchase sale or lease or renders services in the name and for the account of producers, merchants, distributors or in his om name but for the account of any of these people.
The commercial mediator shall mean, for the purposes of this law, the person whose activity shall be confined-even if he executed only one transaction, to looking for a contractor or negotiating with such a contractor to convince him to conclude a contract and also any person who shall carry out an operation of commercial mediation agency even if he is not accustomed to such operations and only carrying it for once or if this person has concluded an employment contract with the manufacturer, the merchant or the distributor.“
Based on this definition, we will differentiate between the following: agents and distributors. It is important at the outset to understand the basic differences between them. The most fundamental distinction lies in the fact, that an agent arranges sales for the manufacturer to the customer, but never takes title to the goods; title passes directly from the manufacturer to the customer. On the other hand, a distributor buys goods from the manufacturer. After that, he resells them to the customer. This divergence in the structure of the transactions makes a difference in how each sort of representative is paid, in addition to, essentially, the legal governing framework and the consequences thereof.
Employed sales representative
The employed sales representative receives instructions concerning working hours, itinerary, and customer visits. As an employee, he brings or closes business deals on behalf of his employer. In contrast to an agent, he cannot decide freely over his working hours and his activity. As remuneration, he usually earns a fixed wage which is often supplemented by a success-based commission. The Commercial Agency Law then applies to the part of the commission of his remuneration accordingly.
The commercial broker professionally closes business deals on behalf of someone else. In contrast to the agent, however, without being permanently and contractually entrusted with it. He does not have a permanent contract with an employer and thus, he is not obliged to constant customer care and to arrange business deals. Art. 206 of the Trade Law stipulates that the broker must record all the transactions concluded in his pursuit in his books as well as keep them from the documents related to them. He is also obliged to give them true copies when requested from these books the provisions of the commercial books.
In this sort of agency, the agent undertakes to conduct an act on behalf of the principal by selling goods on his behalf but at his own account.
The distributor typically buys goods based on a contract with a manufacturer/supplier and then resells them on his own behalf and on his own account. If the distributor has similar rights and obligations as the agent and he is integrated into the sales organization of the manufacturer or supplier, commercial agency law can partly apply correspondingly, for example, regarding the justification of the distributor’s claims for compensation (see Trade Law).
An existent long-term agreement insures extensive mutual rights and obligations between franchisor and franchisee. The franchisor usually provides the franchisee with a business concept of distributing goods or services under a consistent business name and often with further specifications relating to corporate identity, for which the franchisee must pay a franchise fee. The franchisee, in contrast to the agent, however, acts on his own behalf and on his own account. There is no specific law on franchise. The applicable law, however, is usually the law that has the closest relationship to the provisions of the franchise agreement, which is generally the Trade Law or the Commercial Agency Law.