Key Points to Regulate in a Commercial Agent Agreement
Two essential points that should be regulated in a commercial agent agreement are the commission entitlement of the commercial agent and their compensation claim upon termination of the contract. These two points often lead to legal disputes between the commercial agent and the company.
The commercial agent agreement regulates the legal relationship between the commercial agent and the company. Certain core points should be fixed in the contract. These include the district of the commercial agent, the description of the product that the commercial agent is to sell, the maintenance of a customer directory, and the transfer and handover of the customer base, according to the business law firm MTR Legal Attorneys, which advises on commercial law. The commission and compensation claims of the commercial agent should also be clearly defined to avoid future legal disputes between the contracting parties.
Commission Entitlement of the Commercial Agent
The parties are free to agree on how the commercial agent is to be remunerated for their business transactions. However, various legal regulations must be observed to protect the commercial agent.
In principle, different remuneration models are conceivable for the commercial agent. These range from a fixed, success-independent remuneration plus bonuses for successful business transactions to a purely success-dependent payment through commissions. The commission entitlement regularly arises from the mediation and conclusion of transactions by the commercial agent during the contract term between them and the company. Strictly speaking, the claim for payment of the commission generally only arises when the customer has paid the invoice.
Loss of Commission Entitlement
The amount of the commission can be regulated in the commercial agent agreement. If the parties have not made any contractual arrangements in this regard, the statutory provisions apply. According to § 87b HGB, the “usual rate” is then considered agreed.
However, the commission entitlement of the commercial agent can also lapse if the customer is unable or unwilling to pay, or if the transaction is not executed for reasons not attributable to the company. If the commission entitlement lapses, the commercial agent should have the company clearly explain the reasons and, if necessary, consider legal action to enforce their claim.
Compensation Claim upon Termination of the Contract
Similarly, the compensation claim of the commercial agent upon termination of the contract is a frequent point of contention. The compensation claim exists according to § 89b HGB if “the entrepreneur derives substantial benefits from the business relationship with new customers acquired by the commercial agent even after the termination of the contractual relationship.” Additionally, the payment of a compensation claim must be equitable. This compensation claim cannot be contractually excluded and must be asserted within one year after the termination of the contractual relationship.
However, there are various reasons that exclude the commercial agent’s claim to compensation. According to § 89b para. 3, the compensation claim does not exist if the commercial agent has terminated the contractual relationship themselves. This does not apply if the company’s behavior provided justified cause for the termination or if the termination was due to age-related or health reasons.
The compensation claim also does not exist if the company terminated the contract, but the commercial agent’s culpable behavior provided an important reason for the termination. Likewise, the compensation claim lapses if the company and the commercial agent have agreed, after the termination of the commercial agent contract, that a third party will enter into the contractual relationship instead of the commercial agent.
Amount of Compensation Claim
If the commercial agent has a compensation claim after the termination of the contract, the parties often dispute the amount of the claim. The legislator has only stipulated that the claim must not exceed the amount of the average annual commission in the last five years during the existence of the contractual relationship. Additionally, a so-called gross profit is determined based on various factors. The decisive basis for this calculation is the amount of the commission in the last contract year. Based on this, a forecast about the continuation and scope of the business relationship
in the coming years is created, which flows into the calculation of the compensation claim. This can lead to differing views between the parties.
MTR Legal Attorneys advise on commercial agent law.
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