Commercial Agency Law
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The legal position of the commercial agent

A commercial agent is a self-employed businessperson who is regularly commissioned to broker or conclude business transactions for another business owner. This activity extends to a wide range of transactions, not just individual transactions. The legal classification is a long-term agency relationship between the commercial agent and the business owner. Unlike wholesalers, retailers, or commercial brokers, a commercial agent is contractually integrated into a company's sales and distribution system.

Concluding transactions in one's own name results in a commission transaction. A commercial agent can work for one or more companies, which is referred to as a single-company or multi-company representation. The provisions of the German Commercial Code (HGB) apply to commercial agents, even if they are not merchants themselves, with the exception of agents who work part-time under commercial law.

Commission claims

The commercial agent is entitled to commission for transactions concluded during the term of the contract through their involvement, as well as for follow-up business with customers they have acquired. District agents are entitled to commission even if they were not directly involved in the transaction, but it resulted from their protected district. This entitlement remains even if the commercial agent has been granted specific customer protection.

The commercial agent is also entitled to a so-called overhang commission for post-contractual business. The amount of the commission is stipulated in the commercial agency agreement; if no specific agreement exists, the standard market rate applies. The principal must provide the commercial agent with all relevant information for calculating the commission, usually in the form of a book extract that clearly and completely sets out all business circumstances. If the book extract is refused, the commercial agent can file a staged action.

Non-competition clause

A commercial agent is generally obligated not to engage in any activities during the term of the contract that could harm the interests of the principal. No competing activities may be undertaken without the express consent of the principal. Many contracts provide a specific sales authorization for multiple agents. If such authorization is lacking, a non-competition clause derived from case law in good faith applies. A lawyer can review the scope of contractual and post-contractual non-competition clauses and provide a risk assessment and a sustainable sanction system for your company.

Termination of the commercial agency contract

The commercial agency agreement can be terminated by either party, either ordinarily or extraordinarily. In the event of termination by the commercial agent, the right to compensation is generally void, unless the termination is a justified reaction to the principal's conduct, as provided for in the German Commercial Code (HGB). This claim must be asserted within 12 months, with the maximum amount generally being the average annual commission.

In the event of termination by the principal, the right to compensation is void if the termination is for good cause due to the negligent conduct of the commercial agent. If no agreement can be reached regarding the reason for termination, the dispute is usually settled in court.

termination agreement

Many legal disputes can be avoided through a mutual termination agreement that clearly defines the consequences of the contract termination. Since termination agreements often contain legal pitfalls for the commercial agent, the contract should be carefully reviewed by a lawyer.

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