Commercial agency law is an important area of law for companies that rely on commercial agents as a sales channel. In this wiki article we want to take a closer look at commercial agency law and explain what companies should consider from the point of view of a lawyer.
What is a commercial agent?
A commercial agent is a person or a Companywho works for a company as an independent broker of transactions. The sales representative is not employed, but works on a self-employed basis. The commercial agent is obliged to represent the interests of the company and to do business for it.
What are your obligations towards a commercial agent?
A company has various obligations towards a commercial agent. These include, but are not limited to, the following:
- Information obligation: The company must inform the commercial agent about the products, the sales strategy and the transactions concluded.
- Commission obligation: The company is obliged to invoice and pay the sales agent the agreed commission for successfully concluded transactions.
- Duty of loyalty: The company must have a duty of loyalty to the sales agent and must not disadvantage or advantage him.
- Obligation to provide information: The company must provide the commercial agent with information about the transactions concluded.
What should companies consider when hiring a commercial agent?
Before a company uses a sales representative, it should consider various aspects. These include, but are not limited to, the following:
- Drafting the contract: The company should have a written contract with the commercial agent that clearly defines the rights and obligations of both parties.
- Commission agreement: The company should precisely define the commission and the terms of payment with the sales representative and also include possible special regulations such as rebates or bonuses.
- Notice periods: The company should also contractually specify the notice periods for both parties.
- Non-competition clauses: The company should also contractually include non-compete clauses that prohibit the agent from working for the company's competitors.
- Territory and customer assignments: The company should clearly regulate whether the sales representative is assigned a specific territory, such as a country, or specific customers or customer groups.
What legal peculiarities are there in commercial agency law?
Commercial agency law is a very specific area of law and has a number of special features. These include, but are not limited to, the following:
- Right to compensation: Under certain conditions, a commercial agent has a right to compensation payments if the company terminates the cooperation.
- Non-competition clause: A sales agent may not work for the company's competitors for a certain period of time after the end of the cooperation, if this has been agreed and the sales agent is paid a waiting allowance.
- Place of jurisdiction: In commercial agency law, there are special regulations on the place of jurisdiction for legal disputes between the company and the commercial agent.
- Commission entitlement: The commercial agent is usually entitled to commission for the transactions he brokers. However, if the commercial agent is a regional representative, he is also entitled to commissions for business with customers located in this region, even if he has not actively brokered these transactions.
- Documentation obligations: The company is obliged to provide the commercial agent with a statement of the brokered transactions.
- Form of contract: In commercial agency law, a written agreement between the company and the commercial agent is required, in which the most important points are regulated.
The German Commercial Code (HGB) contains important paragraphs on commercial agency law. Here is a selection:
- § 84 HGB: Definition of the commercial agent and regulations on his activity, conclusion of the contract and power of attorney.
- § 87a HGB: Regulations for compensation claims upon termination of the commercial agency contract.
- § 89 HGB: Provisions on the liability of the commercial agent for breaches of duty and damage to the company.
- § 89b HGB: Non-competition clause and its legal design in the commercial agency contract.
- § 92a HGB: Provisions on the transfer of the commercial agency contract in the event of the death or cessation of business of the commercial agent.
- Section 92 of the German Commercial Code (HGB): Provisions on excerpts from books and on accounting between companies and sales representatives.
These paragraphs form the legal basis for commercial agency law in Germany and are equally important for companies and commercial agents to know their rights and obligations.
When should you seek advice from a law firm?
As a lawyer and specialist lawyer for commercial and corporate law as well as Specialist lawyer for international business law I advise companies on all issues relating to commercial agency law. When drafting commercial agency contracts in particular, it is important that all relevant aspects are taken into account in order to avoid later disputes. Conflicts can also arise when the cooperation between company and commercial agent is terminated, in which case I support my clients and represent them in court disputes.
Another important point in commercial agency law is the distinction from labor law. A commercial agent is not an employee, but a self-employed entrepreneur. Therefore, as a rule, no labor law regulations apply. Nevertheless, it is important that the legal relationship between the company and the commercial agent is clearly clarified in order to avoid later disputes.
In summary, it can be said that commercial agency law is a special area of law that is equally relevant for companies and commercial agents. As a lawyer in this field, I advise my clients comprehensively on all questions relating to commercial agency law and I support them in conflicts and court disputes.