Following the termination of an agency agreement the agent – regardless of the way and the reasons of the termination- has the right to be indemnified, provided that both of the following conditions are met:
- he has contributed to the addition of new customers to the clientele of the principal or has significantly advanced the business, of the latter with existing customers; and
- the principal continues to derive substantial benefits from the business with such customers.
The amount of the indemnification, which is labeled clientele compensation, must be equitable to the commission (profits) lost by the agent on the business transacted with such customers. This entitlement to an indemnity does not constitute a regular compensation based on fault or negligence of the principal but rather a sui generis claim. For the calculation of the indemnity all the relative circumstances are to be taken into consideration, including the existence of a non-competition clause in the contract, the total amount of the principal’s financial benefits and the agent’s loss of future commissions. However, the total amount of the indemnity cannot exceed the annual average of the annual fees and/or commission collected by the agent over the past five years. In cases where the duration of the
contract is less than five years the indemnity shall be calculated on the average for the respective period.
In order for the agent to seek the indemnity, he must notify the principal within one year following the termination of the agreement about his intention to pursue this entitlement. Such a notification does not need to be formal nor does it need to mention the total amount of the compensation sought. If the agent does notify the principal of his intention, then his claim is subject to a five-year statute of limitation.
In addition to the aforementioned indemnity, the agent is additionally entitled to compensation for any damage suffered by him by the termination of the agency agreement, pursuant to the general provisions of the Greek Civil Code. More particularly, the agent has the right to receive appropriate compensation in the event of an illegal termination of the agreement on behalf of the principal or in case the agent terminated the contract due to a substantial breach of its provisions by the principal. This compensation includes any expenses incurred for the performance of the contract but not amortized yet and any loss of profit for the whole period the agency agreement was supposed to last.
The aforementioned indemnity or compensation is not payable:
- where the principal terminates the agency contract because of a default attributable to the commercial agent which would justify the immediate termination of the contract under Greek law; or
- where the commercial agent terminates the agency contract on his own initiative, unless such termination is justified by circumstances attributable to the principal or on grounds of relating to the agent such as old age, infirmity or illness in consequence of which the agent can no longer, reasonably be required to continue his activities; or
- where, with the agreement of the principal, the commercial agent assigns his rights and duties under the agency contract to a third person.
The parties may not derogate from the indemnity and/or compensation provisions to the detriment of the commercial agent before the agency contract expires. Thus, although such a waiver clause included in the agency agreement would be declared null and void by the courts, this would not be the situation where the parties enter into a subsequent agreement, which partially or in whole derogates from the agent’s entitlements or includes a clause that determines the exact amount of the indemnity, under the condition that this is fair and does not interfere with the ratio of the provision.