Commercial Agency Contracts in Poland

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How are agency agreements regulated in Poland?

In Poland, commercial agency agreements constitute, so-called, “named contracts”, meaning that they are specifically regulated in detail in the Polish Civil Code (Articles 758 to 7649). It should be noted that the general provisions on obligations provided for in the Civil Code, applicable to all contracts, also apply in respect of agency agreements.

The fact that the provisions of the Civil Code on the agency agreement constitute an implementation of Directive 86/653/EEC, leads to the duty of the Polish courts to interpret them in the way that most fully embodies the wording and objectives of the said Directive.

Article 758 §1 of the Polish Civil Code provides the legal definition of an agency agreement, specifying the material elements (essentialia negotii) of such a contract. Under Polish law, a contract which the parties thereto call an agency agreement may be treated as such only if all the features specified in the abovementioned provisions are met.

The constitutive features characterizing the content of an agency agreement are:

  • an undertaking by the party accepting the mandate (the agent) to act as an intermediary in the conclusion of contracts with third parties (clients) to the benefit of the party granting the mandate (the principal), or to conclude such contracts on the principal’s behalf;
  • the intermediation is of a permanent nature;
  • the principal undertakes to pay the agent remuneration for his acts of mediation;
  • a commitment by the agent to act within the scope of his enterprise’s activities – agent must be a professional; and,
  • the principal has the status of an entrepreneur.

It is important to underline that the name given to the contract by the parties is not determinative of its nature. This means that, even if the parties – in an attempt to exclude the application of the rules applicable to agency agreements – chose to name the contract otherwise (for example mandate contract, commercial representation contract), this will not exclude the application of the law applicable to agency contracts to the parties’ agreement (provided that the conditions specified in Art. 758 § 1 of the Polish Civil Code are satisfied).
Other important regulations applicable to agency agreements are contained in Articles 98 to 109 of the Civil Code. These provisions contain the rules for the grant of a power of attorney, within the scope of which the agent is entitled to conclude contracts with third parties on behalf of the principal.

What are the differences from other intermediaries?

Under Polish law, an agent undertakes, in the course of his business, to act as a permanent intermediary in the conclusion of contracts with third parties (clients): (i) to the benefit of the principal, or (ii) on the principal’s behalf.

Therefore, there are two types of agents in Polish law. The first type acts only as an intermediary in the conclusion of contracts between the principal and their clients. Their role is to take all possible actions in order to acquire clients, who then conclude contracts directly with the principal. In such a scenario, the agent does not make any declarations of will on behalf of the principal. The rights and obligations of the second type of agent (i.e. those acting as direct representatives of the principal) are broader than those of the first type, and include both activities aimed at acquiring a client and those aimed at the conclusion of a specific contract on the principal’s behalf. However, it should be noted that the agent must be specifically authorized to conclude contracts on the principal’s behalf. This is because the Polish Civil Code expressly provides that an agent is entitled to conclude contracts on the principal’s behalf, or to accept declarations on their behalf, only where he is empowered thereto. In practice, the parties to an agency agreement include a specific clause in the agreement providing for an express power of attorney to the agent.

It should be stressed that where an agent concludes a contract on behalf of the principal without an empowerment to do so, or does so in excess of the scope of the empowerment granted, the contract so concluded shall be deemed to have been confirmed by the principal unless the principal makes a declaration to the client refusing to confirm the contract immediately when notified of the contract’s conclusion.
Both parties to an agency agreement are obliged to remain loyal to the other party. The agent should, in particular, be obliged to transmit all information which matters to the principal and to observe the latter's instructions as well as to perform, within the scope of the affair managed, acts required to protect the rights of the principal. It should be noted that according to the Civil Code any contractual provisions contrary to one cited above shall be invalid.
The parties may freely regulate the method of calculation and the amount of the agent’s remuneration. If such a method has not been specified in the agency agreement, the agent is entitled to a commission. Its amount depends on the number or value of the concluded contracts.

In case of distribution contracts, it should be noted that such agreements fall within the category of, so-called, “unnamed contracts”, as, under Polish law, they are not separately regulated. The roles of a distributor and an agent differ in important respects. Distributors typically buy and resell the products or services of the principal in their own name in a specific area or country, while agents procure sales contracts for the principal, which are then concluded by the principal in their own name, or – where explicitly empowered to do so – agents may conclude sales contracts on the principal’s behalf.

Contracts with entities acting as occasional business finders would most likely be qualified as contracts for services under Polish law. Such contracts are not required to be between professionals, as the parties thereto do not need to be entrepreneurs. Such agreements, however, do not allow occasional business finders to benefit from the legal protections granted to agents. Moreover, in contrast to an agency agreement, such contracts may be terminated at any time.

Mediators are similar to occasional business finders. They are generally hired in order to intermediate in a specific, single transaction, and their task is to facilitate the conclusion of a deal between the parties. They are entirely independent of the principal.

How to appoint an agent in Poland

In general, under Polish law contracts may be executed in writing (for example in simple written form, official documents, or as notarial deeds), orally, or even implicitly by performance. According to the Civil Code, no specific form is required for the conclusion of an agency agreement. This means that an agency agreement may be concluded in any of the forms permitted under law. However, either party may demand that the other party provide written confirmation of the contract terms, and the provisions amending or supplementing it. Pursuant to the Polish Civil Code, any attempt to waive such a right is invalid.
Note, however, that in order for certain guarantees to apply in the agency relationship, the written form must be observed. For example, if a del credere clause is intended to apply, then the written form is required. Such a clause states that the agent, for a separate remuneration (the del credere commission), shall be responsible to an agreed extent for the client’s performance of an obligation. For this reason, it is recommended that a foreign principal concludes a written form agreement with a Polish agent. Polish law does not require the registration of agents with any legal bodies.

Applicable law to an agency contract in Poland

There are no provisions in Polish law limiting the ability of parties to conclude an agency agreement governed by foreign law. Therefore, the parties may agree that the agency agreement is governed by the laws of the country of which one of the parties is a national or resident.

The freedom of choice of law is guaranteed by the Rome I Regulation (see the EU Guide for details).

It’s necessary to remember that, where the parties have not made a choice in respect of the governing law of an agreement (or such a choice cannot be implied by the terms of the contract or the circumstances of the case), the applicable law should be determined on the basis of the particular type of contract, in accordance with the rules set out in the Rome I Regulation. Article 4 provides a list of contract types and specifies the governing law for each.

It is generally accepted in commentaries on Polish law that an agency agreement should be considered as being a contract for the provision of services, and therefore, pursuant to the rule laid out in Article 4 of the Regulation should be governed by the law of the country where the service provider has his habitual residence.Therefore, in the absence of a clear or implied choice of law, agency agreements should be governed by the law of the country in which the agent resides. Such an assumption is justified, especially when one takes into account that distribution contracts (which are often compared to agency agreement) should be governed by the law of the country where the distributor has his habitual residence.

A foreign principal should remember this when entering into an agreement with a Polish agent. If a foreign principal wishes for the agency agreement to be governed by the law of the country in which he resides or in which he is seated, it is recommended that he explicitly choose the law of such country as the governing law of the agreement.

Dispute resolution clauses in agency agreements in Poland

Yes, it is possible to submit disputes arising from international agency agreements to courts in foreign jurisdictions or to foreign arbitrators.

In order for any disputes which may arise (or which already have arisen) in connection with an agency agreement to be settled by a foreign court, the parties should conclude a jurisdiction agreement (this can be done either by way of a separate agreement or by the inclusion of a specific clause in an agency agreement). The requirements as to the possible forms of the jurisdiction agreement are set out in the Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, known as the Recast Brussels Regulation (see the EU Guide for details).

Nevertheless, it is recommended that an explicit jurisdiction clause, specifying the court competent to settle potential disputes, be included in an agency agreement concluded with a Polish agent or principal in preparation for potential disputes.

It should be noted, however, that there have been cases where the choice of a foreign forum for the settlement of disputes arising from an agency agreement was questioned by the national courts. This has occurred particularly in cases where the contract at issue also provided for the application of the law of a non-EU Member State, the laws of which did not provide the agent with guarantees analogous to those given to agents in the EU).

It is also worth mentioning that the agent is often perceived as the weaker party in an agency agreement. According to certain opinions expressed in Polish doctrine, such a perception results from the fact that an agency agreement – as the source of a legal relationship – is functionally similar to the relationship between an employer and employee. There have been examples of cases brought to Polish courts by agents in order to determine whether the agency agreement, in fact, constituted an employment contract. Although it has not been common for an agent to successfully demonstrate the existence of an employment contract on the basis of an agency agreement, a foreign principal should be aware of the fact that in the event that their relationship with a Polish agent is found to be, in fact by nature an employment relationship, then the choice of a foreign court can be held to be invalid, as, in the light of Article 22 of the Recast Brussels Regulation, a Polish employee (i.e. an employee domiciled in Poland) may exclusively be sued by the “principal” (as the employer) in Polish courts.

It is also possible to include an arbitration clause in an agency agreement, specifying an institutional, or ad hoc, arbitration as to the means of settling possible disputes between the parties. When choosing the seat of such arbitration, the parties to an agency agreement should be aware of the procedural laws regarding arbitration in the chosen jurisdiction (the lex arbitri). These rules may vary depending on the country chosen by the parties.

The Polish Code of Civil Procedure provides for rules applicable to arbitration proceedings where the venue of the arbitration court is located within the territory of the Republic of Poland.

It should also be noted that Poland is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as “New York Convention”).

How to terminate an Agency contract in Poland

Agency agreements may be concluded for a definite or indefinite term. In the first case, the agreement terminates after the term for which it was concluded expires. However, if the parties to the agreement continue to perform their respective rights and duties under it following the expiry of its term, then it is deemed to have been concluded for an indefinite period (pursuant to Article 764 of the Civil Code).

The agency agreement may end either:

  • as a result of the expiry of the agreement’s term (in case of an agreement concluded for a definite term);

  • as a result of the parties’ mutual agreement to its termination;

  • as a result of one party’s unilateral termination of the agreement.

Agency agreements concluded for an indefinite term may be terminated:

  • in accordance with the statutory notice periods (specified in Article 7641 of the Civil Code);

  • in accordance with the notice periods contained in the agreement itself, which, it should be noted, may be shorter than those provided for by statute; or

  • without notice, in those cases specified in Article 7642 of the Civil Code.

The statutory notice periods are as follows:

  • one-month prior notice during the first year of the agreement’s term;

  • two months prior notice during the second year of the agreement’s term;
  • three months prior notice during the third and subsequent years of the agreement’s term.

Note that the statutory notice periods may not be reduced by the terms of the agreement, but they may be extended. Also note that, if extended, the deadline by which the principal may give notice under the statutory notice provisions must be equal to the deadline by which the agent may give such notice.
Agency agreements, regardless of whether concluded for a fixed or indefinite term, may be terminated without notice (pursuant to Article 7642 § 1 of the Civil Code) if either of the parties fails to perform their duties in whole or in part, or where justified by the existence of extraordinary circumstances. If the agreement is terminated without notice on account of circumstances attributable to the other party, then the responsible party shall be bound to redress the damage resulting from its termination suffered by the party terminating the agreement.

Termination indemnity for agency agreements in Poland

The Polish Civil Code provides for specific rules under which an agent is entitled to an indemnity (a “świadczenie wyrównawcze”) in the event of the agency agreement’s termination.

According to Article 7643 of the Civil Code, following the agency agreement’s termination, the agent may demand compensatory remuneration from the principal, if during the agreement’s term, the former solicited new clients or their actions led to a substantial increase in the turnover of clients they had already procured for the principal, and the principal continues to derive significant profits from contracts concluded with such clients. This claim is due to the agent if it would be equitable to grant it taking into account all of the circumstances, and in particular the agent's loss of commission on the contracts concluded by the principal with such clients.

The compensatory remuneration granted to the agent may not exceed the value of the agent's remuneration for one year, calculated on the basis of the average yearly remuneration received in the course of the last five years. If the term of the agency agreement was shorter than five years, then the remuneration shall be calculated on the basis of the average remuneration for its entire term. It is important to emphasize that where the agent receives compensatory remuneration, this does not deprive the agent of the right to seek damages on general principles.

It should be also noted that the agent should file the appropriate demand for payment of such compensatory remuneration with the principal within a year of the agreement’s termination.

Such compensatory remuneration shall not be due to the agent if:

  • the principal has terminated the agreement without notice on account of circumstances attributable to the agent which constitute grounds for the agreement’s termination,
  • the agent has terminated the agreement with notice, unless such termination is on account of circumstances attributable to the principal, or if such termination was justified by the agent's age, disability or disease and considerations of equity do not permit the principle to demand the agent’s continued performance of their duties,
  • the agent, with the principal's consent, has transferred their rights and duties arising from the agreement to a third party.

Until the agreement’s termination, the parties may not agree on terms and conditions less favourable to the agent than those described above (and provided for in Articles 7643 and 7644 of the Civil Code).

Other peculiarities

It is worth mentioning that there are exceptions to the principle in Polish law that an agent is entitled to commissions in relation to those contracts which were concluded during the term of the agency agreement. Article 7611 of the Polish Civil Code provides for two cases where an agent may demand a commission on contracts concluded even after the termination of the agency relationship.

The first case concerns situations where the agent (or the principal) has received an offer to conclude a contract from a client prior to the termination of the agency agreement, however, such a contract was only concluded following the termination of the agency relationship.
The second case concerns a situation where the conclusion of a contract, at a time following the termination of the agency relationship though within a reasonable time of its termination, was achieved predominantly due to the agent’s activities undertaken during the agency agreement’s term. Note that there must exist a direct causal link between the conclusion of the contract and the activities of the former agent.

Another important issue of interest, especially in relation to a foreign principal, is that Polish law provides for the possibility of holding an agent liable for the customer’s failure to pay. In agency agreements concluded in writing, the parties may stipulate that the agent, for a separate remuneration (del credere commission), shall, within the scope agreed, be liable for the client’s performance of their obligations. In the event that the agency agreement is not executed in written form, the agency agreement shall be deemed to have been concluded without this provision. The omission of such a provision on remuneration, in connection with the risk which an agent takes up – in light of current jurisprudence – results in the invalidity of the del credere clause. The agent’s liability may only relate to a specified contract, or contracts with a specified client, the conclusion of which involved the agent acting as an intermediary for the principal, or which the agent concluded on the principal’s behalf.

It should also be noted that, according to the Polish Civil Code, the parties to an agency agreement may limit the competitive activities of an agent for a period of time following the termination of the agency agreement. Such a limitation of competitive activities must be provided for in writing, under pain of invalidity. Furthermore, such a limitation shall be valid if it concerns a particular group of clients or geographic area, comprising the agent’s activity, as well as a type of good or service which constitutes the object of the contract. It should further be underlined that the limitation on competitive activity may not exceed a period of more than two years from the termination of the agency agreement and that such an agreement must provide for the remuneration of the agent with an appropriate pecuniary sum on account of the limitation of the agent’s competitive activity for the term of the limitation, unless otherwise provided for in the agreement, or unless the agency agreement has been terminated for reasons attributable to the agent.
Another feature of interest in agency agreements governed by Polish law is that an agent is entitled to a statutory right to establish a pledge on the assets and securities of the principal, which the agent has received in connection with the agency agreement, in order to secure a claim for remuneration as well as the reimbursement of expenses and advance payments made on behalf of the principal.

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