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Chelsey Thijs
Junior Associate
Corporate Law | M&A | Commercial Law
Knowing your rights as a commercial agent or a principal (i.e. the person the agent concludes the transaction for) is essential for negotiating a commercial agency agreement. Failing to do so can – contrary to common perception - have drastic financial consequences since a commercial agent is not automatically entitled to commissions for sales concluded by the principal with previously acquired customers.
In line with the EU Commercial Agency Directive (art. 7), a commercial agent is, a priori, entitled to a commission for a sale concluded during the term of the commercial agency agreement when the sale:
The commercial agent is entitled to a commission for a sale concluded after the term of the commercial agency agreement when (art. 8 of the EU Commercial Agency Directive):
It was common perception among commercial agents, principals and legal scholars that the right of the commercial agent to an indirect commission, was an absolute right that could not be deviated from by the parties in the commercial agency agreement.
However, in a recent case, the European Court of Justice decided that the right of a commercial agent to indirect commissions is not absolute, taking into account the context, objectives and history of the EU Commercial Agency Directive, i.e. (case C-64/21):
In light of this important decision, it is now clear that the right of a commercial agent to indirect commissions can be excluded in the commercial agency agreement.
The effect of this decision in the EU cannot be underestimated, since it is to be expected that principals will insist on the exclusion of indirect commissions during contract negotiations.
Unclear at this time is whether the exclusion of indirect commissions should be explicitly mentioned in the commercial agency agreement, or whether these can be excluded tacitly/implied, i.e. the right to indirect commissions is simply not mentioned in the commercial agency agreement (which occurred in the case at hand).
For more guidance on commercial agency agreements and optimization of trade intermediary agreements, feel free to reach out to EY Law.
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Chelsey Thijs
Junior Associate
Corporate Law | M&A | Commercial Law