02. Jul 20

Commercial Agency Law: COVID-19, Commission & Contract Design

The coronavirus crisis marks the beginning of difficult times for many commercial agents. It also raises a number of legal issues in connection with commission payments, claims for compensatory adjustment, etc.

Despite the effects of the coronavirus pandemic, commercial agents can still maintain contact with their clients via telephone, email, etc. Personal contact in the form of one-to-one meetings in familiar environments, on the other hand, is no longer feasible in most cases. This, of course, makes the work of commercial agents more difficult. Additionally, clients may shy away from new orders or cancel existing ones due to the uncertainty surrounding the coronavirus crisis.

We at the commercial law firm MTR Rechtsanwälte note that this not only has the potential to expose commercial agents to economic hardship, it also raises legal issues in relation to their clients.

To assist in weathering the economic storm whipped up by the coronavirus, commercial agents can, of course, check whether they might be eligible to benefit from measures included in the German government’s aid packages. Another possible avenue is to take a closer look at the legal relationship with their clients. If there is a lack of orders, how will this affect commission payments and claims for compensatory adjustment? Are commercial agents obligated to generate a specific volume of orders? Can they invoke force majeure citing the coronavirus crisis? In answering these questions, it is a good idea, in particular, to closely review the commercial agency agreements as well as the rights and obligations of the commercial agent, but also to analyze the company.

Of course, this is true not just in times of crisis but in general. The commercial agency agreement should set out the fundamentals in as much detail as possible. Commercial agents are entitled as a matter of principle during the term of the contract to receive commission payments for all the business deals and transactions that can be attributed to their activity. They may also be entitled to claim compensatory adjustment if the company maintains the business contacts facilitated by them even after the commercial agency agreement has come to an end. In this context, it is particularly important to consider international commercial agency law.

Commercial agents also ought to always be mindful of the issue of pseudo-self-employment. This status may apply to a commercial agent if they continuously work full-time or exclusively for one company.

Lawyers with experience in the field of commercial agency law can offer advice.

For more information:

https://www.mtrlegal.com/en/legal-advice/commercial-law/commercial-agency-law.html

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