The indemnity in lieu of notice in an agency agreement.

In Italian law, the duration and termination modalities of the agency contract are regulated by Article 1750 of the civil code.

The first paragraph of this article states that 'the fixed-term agency contract which continues to be performed by the parties even after the expiry of the term is transformed into a contract of indefinite duration."

Para. (2) of Art. 1750 of the Civil Code regulates the minimum notice to be given by the parties in the event of termination. Specifically, it provides that: the "open-ended agency contract may be terminated by the parties only if notice is given, which may not be less than":

  • 1 month for the 1st year,
  • 2 months for the 2nd year,
  • 3 months for the 3rd year,
  • 4 months for the 4th year,
  • 5 months for the 5th year,
  • 6 months for the 6th and subsequent years.

Importantly, the parties may provide for a longer notice period, but never inferior to that dictated by the codified rules.

The question arises, therefore, what happens if the notice period is not observed: does the principal owe the agent an indemnity for the notice period not observed?

Example:

Agent X has worked for principal Y for 6 years. Principal Y decides that it does not want to continue working with the agent, a decision supported by mere personal reasons and without the existence of just cause. It terminates the contract without notice and pays the commissions due up to the date of termination.

The lawyer of principal Y, upon learning of the incident, contacted the principal advising him that, on the basis of settled case law, in the event of a principal's failure to give notice of termination the agent is nevertheless entitled to receive a indemnity in lieu of said notice (in this case 6 months) to be calculated on the average of the commissions accrued in the year prior to termination[1].

It may be concluded that where a party terminates, without there being a reason sufficient to justify such a choice, it is obliged to compensate the other party for the damage.

In the event of termination by the principal, such damage shall, in principle, correspond to the commissions that the agent allegedly received in the remaining period of the relationship. [2]

It is disputed whether such indemnity in lieu of notice is due only in the case of (unjustified) termination by the principal or also in the case of termination for just cause by the agent. According to the prevailing case law, it is held that the agent should also be entitled to the indemnity in lieu of notice in this case. [3]in addition to any damages[4].

Moreover, the case law holds that the agent's termination for just cause is converted, where it is established that there is no just cause and unless a different intention on the part of the agent emerges, into a termination without notice, with the consequent right of the principal to receive the indemnity for lack of notice.[5]

Finally, according to authoritative doctrine (Bortolotti) and case law,[6] It would seem that the right of the party affected by the termination cannot be excluded a priori to claim 'full' damages if it proves that the damages amount to a sum greater than the severance pay.

However, it is important to emphasise that the indemnity in lieu of notice is mandatory and cannot be excluded either by collective or individual agreements.[2]

ABSTRACT

  • a fixed-term contract that is continued to be performed following its expiry turns into an open-ended contract
  • the parties may provide for a notice period longer, but never shorter than that provided for by law
  • if terminated without notice, an indemnity in lieu of such notice is nevertheless provided for, to be calculated on the average of the commissions accrued in the year prior to termination
  • it is held that even if the termination for just cause is effected by the principal, the latter shall be entitled to the indemnity for lack of notice
  • it would seem that the right of the party affected by the termination cannot be excluded a priori to claim 'full' damages if it proves that the damages amount to a sum greater than the notice payment

[:de]Art. 1750 of the Civil Code regulates the duration of the agency contract and its termination.

The first paragraph provides that 'the fixed-term agency contract which continues to be performed by the parties even after the expiry of the term is transformed into a contract of indefinite duration."

The second paragraph of Article 1750 of the Civil Code further provides that the "open-ended agency contract may be terminated by the parties only if notice is given, which may not be less than":

- 1 month for the 1st year
- 2 months for the 2nd year
- 3 months for the 3rd year
- 4 months for the 4th year
- 5 months for the 5th year
- 6 months for the 6th and subsequent years

The parties may provide for a notice period that is longer, but never shorter, than that dictated by the codified rules.

The question arises, therefore, what happens if the notice period is not observed: does the offeror owe the agent an indemnity for the notice period not observed?

E.g. Agent X has worked for 6 years for proponent Y. Proposer Y decides it does not want to continue working with the agent, a decision supported by mere and simple personal reasons and without the existence of a just cause. It terminates the contract without notice and pays the commissions due up to the date of termination.
The lawyer of offeror Y, having become aware of the event, contacts the principal advising him that, according to settled case law, in the event of failure to give notice of termination by the principal, the agent is in any event entitled to receive an indemnity in lieu of such notice (in this case 6 months) to be calculated on the average commissions accrued in the year preceding the termination[1].

It is important to stress that the indemnity in lieu of notice is mandatory and cannot be excluded either by collective or individual agreements.[2]

ABSTRACT

  • a fixed-term contract that is continued to be performed following its expiry turns into a contract of indefinite duration;
  • the parties may provide for a notice period longer, but never shorter than that provided for by law;
  • if terminated without notice, an indemnity in lieu of such notice is nevertheless provided for, to be calculated on the average of the commissions accrued in the year prior to termination

[:en]Article 1750 of the Italian Civil Code governs the duration of the agency agreement and its termination.
The first paragraph provides that "the agency agreement for a fixed-term contract, which continues to be performed by the parties even after the expiry of the term turns into an open-ended contract.

The second paragraph of art. 1750 cc, it also provides that the 'agency agreement for an indefinite period may be terminated by the parties only if it is given notice, which may not be less than'.

  • 1 month for the 1 year
  • 2 months for the 2nd year
  • 3 months for the 3rd year
  • 4 months for the 4th year
  • 5 months for the 5th year
  • 6 months for the 6th year and for subsequent years

The parties may stipulate a longer period of notice, but not shorter than that dictated by above mentioned terms.

One wonders, therefore, what happens if the notice period is not met: the principal must pay to the agent compensation for the notice period is not respected?

For example: The agent Caio has worked for six years for the principal Tizio. Tizio chooses not to continue working with the agent, a decision supported by mere and simple personal reasons and without the existence of a just cause. He terminates the contract without notice and pays the commission due to the date of recission.

The lawyer of Tizio, aware of what happened contacts the principal warning him that, based on a constant Italian case-law, in the event the principal teminates the contract without notice the agent is still entitled to receive the payment of the notice period (in this case six months) to be calculated on the average of commissions earned in the year prior to the termination.

Important! The compensation in lieu of notice is mandatory and can not be excluded nor by collective bargaining or individual contracts.

IN SUMMARY
the fixed-term contract which is continued to be performed after its expiry turns into permanent contracts;
the parties may provide for a notice period higher, but never lower than that provided by law;
in case of termination without notice and cause, the agent has right to a compensation in lieu of notice, to be calculated on the average of commissions earned in the year prior to withdrawal[:]

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Defamation on the Internet in Germany and Italy. Comparing legal systems

Some time ago I addressed the issue, now of general interest, of the legal consequences in the case of defamation via the Internet.

I would like to briefly recall that the Court of Livorno recently ruled on this point, giving rise to a new orientation jurisprudential. The  Court decided the conviction of a woman for "defamation", with the aggravating circumstance ".print media"for insulting his former employer on his Facebook profile.

On this issue, the Court of German Supreme Courtwhich stated in a recent judgment of 17.12.2013 that a violation of a person's rights through an internet publication has the same value as a press violation.

According to the judges of Karlsruheviolation of a person's right is also considered to be violated if a person puts harmful material on the Internet and that material is then disseminated by third parties. 

The comparison of the two rights does not have a purely theoretical value, but a strongly practical one. Consider the example where:

an Italian puts material on the net that infringes the rights of a German citizen resident in Germany. The question arises as to whether the latter has the right to sue the Italian in a German court and request the application of German law to resolve the dispute.

Regarding jurisdiction, i.e. which court is competent to decide on the case, one is reminded of the ruling of the Court of Justice of 25.10.2012 by which it granted the aggrieved party the possibility of bringing an action before the court where it has its centre of interests.

As regards the applicable law, however, the general principle of the Rome II Regulation on the law applicable to non-contractual obligations, which in Article 4 provides that it is applicable the law 'of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur."

In the present case, therefore, a German citizen whose personal rights have been violated by a publication put online by an Italian citizen, resident in Italy, could potentially sue the latter in Germany, requesting the application of German law.

 

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Cabotage in Europe and necessary documentation

The Community licence also allows, pursuant to Articles 8 and 9 of the Regulation (EC) No 1072/2009the activity of road haulage cabotage, i.e. the provision of services of carriage of goods by road for hire or reward within the borders of a Member State other than that in which the Community undertaking is established.

Cabotage differs from international intra-community transport in that it takes place entirely within the borders of a single Member State (other than that of establishment).

a) Limitations on cabotage activity

Road freight cabotage is only permitted on a temporary basis and remains subject to various quantitative restrictions

  • The first limitation stems from the need for the presence of the vehicle within the host Member State to be justified on the basis of a previous international transport.
  • The other (quantitative) limits differ depending on whether the host Member State is that of the destination of the previous international transport or is a different State.
    • In the first case, para. I of Art. 8.2 of the Regulation (EC) No 1072/2009 limits the overall duration of the cabotage activity to a maximum of seven days since the last discharge relating to international transport and sets a limit of three permitted operations in that time frame.
    • In the second case, para. II provides that asingle operation within three days of entry of the empty vehicle in the territory of the host Member State, without prejudice to the possibility of carrying out two further operations in different Member States, and always within a maximum period of seven days from the last unloading relating to the international transport.
(b) documentation to be kept on board

Compliance with these quantitative limits must be rigorously documented. In Italy, annotations are no longer required to be made in a special report book. However, Ministerial Decree 03.04.2009, in accordance with Art. 8.3 of the Regulation (EC) No 1072/2009, continues to require the possession of documentation attesting to the incoming international carriage and showing, for each cabotage operation, at least:

  • the sender's name, address and signature;
  • the name, address and signature of the transporter;
  • the name and address of the consignee as well as his signature and the date of delivery once the goods have been delivered;
  • the place and date of acceptance of the goods and the expected place of delivery;
  • the description of the goods and their packaging in common terminology and, in the case of dangerous goods, the generally recognised designation, as well as the number of packages, special marks and numbers on them;
  • the gross weight or quantity, otherwise expressed, of the goods;
  • the registration number of the motor vehicle and trailer.

The above-mentioned quantitative limitations and the related documentation obligation are waived if the cabotage activity is carried out in thecombined (intermodal) goods transport. Wishing to encourage intermodal transport as a possible remedy to the problems of road traffic congestion, environmental protection and traffic safety, European legislation has freed combined goods transport from any quantitative restrictions.

c) Combined goods transport

EEC directive no. 92/106, transposed in Italy by Ministerial Decree of 15.02.2001, derogates by virtue of the criterion of speciality from the general regulations on road haulage cabotage, removing all the quantitative limitations provided for by EC regulation no. 1072/2009 and by Ministerial Decree of 03.04.2009, provided that certain prerequisites for applicability are met. A fundamental prerequisite is, firstly, the combination of the mode of transport by land with rail and/or sea or by inland waterway. Secondly, the transported container must be twenty feet or more. Further prerequisites differ depending on whether the transport is combined ship-road or rail-road respectively:

  • at combined road-ship transport, the stretch by ship must be at least 100 km as the crow flies, while the stretch by road must be at most 150 km as the crow flies between the point of beginning or end of the journey by road and the port.
  • at combined rail-road transportthe rail route must be at least 100 km as the crow flies, while the road route must be the shortest distance between the place where the road journey begins or ends and the nearest appropriate railway station.

As far as combined rail-road transport is concerned, the term "appropriate railway station" Article 1 of Directive 92/106/EEC is applicable only to multimodal railway stations which, having regard to the circumstances of the case, are actually suitable as starting or finishing points for the rail journey. The conditions for the application of the special rules are therefore also fulfilled if there are other railway stations closer to the starting or finishing point of the road journey, but they are not actually functional for intermodal transport.

It is worth noting that It is up to the haulier to prove recurrence of the prerequisites for the applicability of the special rules on the combined transport of goods: in the absence thereof, the quantitative limitations for road cabotage and the related documentation obligation remain in place.

 

lawyer Luca Andretto
collaborator at Studio Dindo, Zorzi & Associates

 

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Documentation to be kept on board in the carriage of goods by road in Italy by foreign companies

The transport of goods by road for third parties on Italian territory may also be carried out by haulage companies established abroad, provided it is in the context of international transport. It may also be transport entirely within Italian borders (cabotage), but in that case strict limits must be respected.

Let us examine below the authorisations and other documents that the haulier must keep on board the vehicle and present at the request of Italian control officers, as well as the sanctions he may incur if he fails to do so.

(a) The Community Licence

The Regulation (EC) No 1072/2009 (which from 04.12.2011 replaces the Regulation (EC) No 881/1992) regulates the Community licence for the international carriage of goods by road for hire or reward, under which any haulage undertaking with an establishment in a Member State may carry out its activities throughout the EU, subject to certain restrictions.

The licence is required only for transport of goods with vehicles whose weight maximum permissible load, including that of trailers, exceeds 3.5 tonnes. If, on the other hand, the maximum weight is 3.5 tonnes or less, transport does not require a Community licence and Art. 1.5(c) of the Regulation (EC) No 1072/2009 expressly exempts it from any special authorisation for international intra-Community transport.

The Community licence is issued by the competent authorities of the Member State where the haulage undertaking is established. The licence shall be unique for each enterpriseTherefore, it is necessary to request the issue of a number of certified copies corresponding to the number of (EU-registered) vehicles that the haulage company has at its disposal, even on a rental basis, leasing or other. A certified copy of the Community licence must be on board each vehiclewhich must be produced at the request of control officers (art. 4.6 of the Regulation (EC) No 1072/2009).

The EU licence is required for motor vehicles only and, therefore, in the case of a vehicle combination, it must be kept on the road tractor and also extends its effect to the trailer or semi-trailer. Only for the road tractor registration in a Member State is required, while the trailer or semi-trailer may also be registered in a third state.

(b) The driver attestation

With regard to drivers of vehicles carrying out intra-Community transport of goods by road for hire or rewardit is obviously necessary for them to have suitable driving startvalid for Europe. In addition to the driving licence, drivers who are not nationals of a Member State also require the driver attestation provided for in Article 5 of the Regulation (EC) No 1072/2009.

The driver attestation is issued to the haulage undertaking (and not to the driver himself) by the competent authorities of his Member State of establishment. It is a name documentwhich identifies the haulage company and the driver and certifies the regularity of the relevant employment relationship. A certificate and a certified copy must therefore be requested for each non-EU driver employed by the haulage company. The certificate must kept in the original in the vehicle driven by the non-EU driver and exhibited at the request of control officers, while the certified copy must be kept on the company's premises.

c) Hire contract and driver's employment contract

Article 2 of the EC Directive 2006/1 requires each Member State to allow road haulage companies established in other Member States the use on its territory of rented vehicles (or in leasing) without driverprovided that these vehicles are driven by personnel from the same company as the one using them. The following documents must be on board the vehicle:

  • rental contract (or of leasing) or certified extract of the contract containing in particular the name of the lessor, the name of the lessee, the date and duration of the contract and the identification of the vehicle;
  • driver's employment contract o certified extract of the contract, containing in particular the name of the employer, the name of the employee, the date and duration of the employment contract, or a recent pay slip.

Following this directive, the Italian State merely issued a ministerial circular (No 63/M4 of 08.05.2006 of the Ministry of Infrastructure and Transport) reiterating the obligation to keep the relevant hire contract and driver's employment contract on board the hired vehicle. However, ministerial circulars are not regulatory sources and, therefore, are not suitable for implementing the rules of a directive which, as is well known, only binds the Member States and cannot in any case be invoked as an act with direct effect against private individuals.

It can, however, be considered that theItalian law was already 'pre-conformed' to the directive and was not, therefore, obliged to implement it further, since already the Ministerial Decree No. 601 of 14.12.1987 laid down in Article 4 the obligation to keep the relevant hire contract and the driver's employment contract, both in original or certified copy, on board the hired vehicle. Consequently, in order to avoid probable disputes, these documents should always be kept in the hired vehicle.

lawyer Luca Andretto
collaborator at Studio Dindo, Zorzi & Associates

 

The Overtaking (1962)
Director: Dino Risi.

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What is the difference between an agency contract and a business intermediary?

What is the main difference between the agent and the business intermediary?

To answer this question, one must first define the two professional figures.

La definition of agentor rather, of agency contract is given by the Civil Code, which provides in Art. 1742 of the Civil Code that

"By the agency contract one party permanently assumes the task of promoting, on behalf of the other, for remuneration the conclusion of contracts in a specified area." (the commercial agent in Germany)

The figure of the agent is not expressly regulated by the Civil Code and thus belongs to the category of atypical contracts, i.e. contracts not expressly regulated by civil law, but created ad hoc by the parties. However, a definition has been given by case law that has qualified the procurer as the one who:

  • "collects customers' orders by forwarding them to the company from which it has been commissioned to procure such commissions, without any stability and on an entirely occasional basis." (Cass. Civ. 1999 no. 1078);
  • "carries out intermediary activities for the purpose of facilitating the conclusion of business, when the activity is carried out on an occasional and occasional basis". (Cass. Civ. 1999 no. 1078).

From these definitions, it follows that the business intermediary differs from the commercial agent essentially with regard to the stability of tenure. Whereas the agent undertakes to promote (precisely) the conclusion of business deals on a permanent basis, the intermediary does not assume any obligation of continuous collaboration and may therefore freely decide whether or not to promote a deal (see also Main differences between the agency contract and the commercial distribution contract)

As to the requirement of occasionality(i.e., the frequency of business that is conveyed), the question arises in doctrine and case law as to how this parameter should really be interpreted as a criterion distinguishing mere procuring activity from agency. In an important ruling in 1999, the Court expressed itself as follows:

"Regarding the character of the continuityit should be noted that it not to be confused with the concept of stability. Stability, in fact, means that the performance is repeated periodically over time, not only de facto, as in continuous performance, but also in compliance with a contractual commitment (Art. 1742(1) of the Civil Code).

The difference is very clear in the case of the agent and the business intermediary. The former's performance is stable in that he is obliged to carry out an activity of promoting contracts; the service of the latter, on the other hand, is occasional in the sense that it does not correspond to a legal necessity, but depends exclusively on the initiative of the procurer. " (Cass. Civ. 1998 No. 7799).

According to this orientation, therefore, in order to distinguish the two figures, one must focus essentially on the obligations assumed by the intermediary: if the latter undertakes to promote business in stable and continuous manner, these will have to be qualified as agentwhereas, in the case does not undertake in any way to promote the principal's business, the principal will qualify as a business intermediary. The volume and quantity of orders that the two figures actually manage to promote have no relevance: paradoxically, the business intermediary may promote and realise a significantly higher number of orders than an agent, but the latter will still qualify as an agent if, contractually, he has not committed himself in any way to promoting the intermediary's activity. The performance of the intermediary is therefore occasional in the sense that it depends solely on his initiative.

Lastly, the question arises as to which of the provisions laid down for the agency contract may be considered applicable by analogy to the business agent contract.

In a judgement of 23.11.2007, the Court of Rome recently ruled that the two figures were applicable on the basis of their intrinsic distinction,

"only those provisions inherent to the agency contract, such as commissionswhich do not presuppose a stable and predetermined character of the relationship and not also those - of law and contract - which do presuppose it."

Basically, only certain agency rules apply to the agent by analogy, but it must be ruled out that those that grant special protection to the agent, such as Article 1750 of the Civil Code, concerning notice periods, and Article 1751 of the Civil Code concerning indemnity for termination of the contract, are applicable to it.

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Advance notice by the agent and continuation of the contractual relationship

In its judgment No. 668 of 25 May 2012, the Court of Cassation reaffirmed the principle of ultratractivity of the contractual relationship. According to that principle, an agency contract of indefinite duration does not terminate when one of the contracting parties terminates the contract, but only when the notice periodestablished in the interest and for the protection of the non-terminating party.

In the present case, the principal communicated his intention to terminate the contract; in the course of the notice periodthe agent also communicated its intention to terminate the contract.

According to the Court, this very declaration by the agent was to be regarded as an implicit waiver of the notice period, with the result that the agent could not request theindemnity in lieu of notice.

In the present case, therefore, given that "the termination of the relationship remains attributable to the will of the principal, the latter remains obliged to pay the termination indemnity pursuant to Article 1751 of the Civil Code."The agent, in fact, is entitled to the indemnity under Art. 1751 of the Civil Code even when he withdraws from the contract for circumstances that, although not constituting a just cause, are attributable to the principal.

 

 

Next stop: paradise (1991)
Directed by Albert Brooks

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The agency contract in Germany.

The purpose of this article is to give the reader some elements for a better understanding of the regulation of the agency contract in Germany, the importance of which is very significant, taking into account the fact that the European directive on the subject of agency was inspired by this model and, consequently, Italian legislation, too, was adapted to it, with the regulatory interventions of 1991 and 1999 the figure 

1) Agency contract and self-employed person.

In German law, the legal figure of the commercial agent is governed by Book 1, Title 7 of the German Commercial Code (HGB- Handelsgesetzbuch) and more precisely by §§ 84-92c. Section 84 HGB opens this title with a definition that qualifies the commercial agent as one who is entrusted by a principal with the task of interceding, in the capacity of an autonomous trader, in business transactions in favour of the latter or of concluding them on its behalf. An agent is one who performs his activity in substantial autonomy and can regulate his own working hours.

This legislative assumption is obviously used in the courts to distinguish the commercial agent from the employee. Case law considers the definition in § 84 Para. I HGB as a general parameter for being able to distinguish the two legal figures, although the circumstances of the case must be taken into account in their entirety and totality.

Given the generic and not easily interpretable character of the concept of autonomy required by § 84 HGB for commercial agents, case law has repeatedly come across this problem. In a well-known ruling of the Federal Labour Court (BAG) in 2003, several contractual agreements were defined as "Arbeitnehmerverdächtig", i.e. which give rise to the suspicion of an employment relationship. Some of them are listed below:

  • request for the transmission of a quarterly forecast on the development of production, covering the individual production departments and a forecast of the percentage assessment of the closing of business of individual customers. Such a request goes beyond the duty to protect the interests set forth in § 86 Para. 1 HGB, which obliges the agent to endeavour to sell products or to complete business, taking into account the interests of the principal;
  • orders to block holidays. This limits the agent's autonomy to determine working hours;
  • the name of the contract is irrelevant for the classification of the legal figure; the absence of an agreement on the beginning and end of the working hours and on the indication of the organisation of the work will be interpreted in favour of the commercial agent's autonomy:

On the contrary, it does not preclude autonomy:

  • the obligation to attend weekly 5-hour conference calls and, in extraordinary cases, to carry out collection orders within a short time,
    the imposition of deadlines for the completion of work, as well as, during the company's settling-in period, the blocking of holidays for a period of 4 to 8 weeks;
  • the communication of production targets, if there remains a considerable margin for self-organisation of working hours:
    an obligation to provide information, unless the agent is obliged to provide copious information on its activities and at short intervals;
  • a quarterly forecast on the development of production certainly exceeds the usual duty to inform, but in itself cannot be regarded as a substantive indication of subordination;
    the agent's prohibition of competition;
  • instructions on working hours, as the employees of the external service also have to adapt to the time requirements of their customers.

According to the OLG (Oberlandesgericht - Court of Appeal) in Koblenz, the type of relationship is explicitly inferred from the personal dependence between the two legal figures and that an economic dependence is neither necessary nor sufficient.
The fact that the agent is linked to the principal through indications and directives that the latter has the power to issue, in general does not affect what is the status of the agent as an independent worker. The employee is one who, unlike the agent, performs his services within an organisation defined by a third party. Relevant for the qualification of the legal figure are the circumstances under which the service is performed and the manner of payment, or purely formal connotations such as the payment of taxes to the social security and health care institutions or the keeping of the agent's personal files.

2) The right to commission.

The agent has according to the § 87 para. 1 HGB right to commission. The agent may exercise this right on all business the conclusion of which has been made possible through an activity attributable to him, or on business concluded with third parties acquired by the agent as clients for business of the same type (§ 87 para. HGB). Therefore, in order to claim the right to commission, it is sufficient to any cooperation of the agent that made it possible for the deal to be concluded.

The parties may, however, agree on an exception clause. Importantly, the second paragraph of Section 87 HGB provides that "the right to the provision ceases when it is certain that the third party does not perform, the sums already received must be returned" ( 87a para. 2 HGB) (so-called star of belief).

It is important to specify that if the principal does not perform the deal completely or partially correctly or in the manner in which it was stipulated, the agent is nevertheless entitled to commission (87-a para. 3 HGB). However, the entitlement to commission shall lapse if the non-performance is attributable to conditions that are not the responsibility of the principal.

La German Supreme Court (BGH - Bundesgerichtshoff) recently ruled on §87a para. 2 HGB specifying that this does not apply if the third party has failed to perform due to a failure to perform on the part of the principal or due to causes attributable to the principal. The Court further specifies that the principal is liable for all situations that led to the non-performance, not only when they are attributable to its personal fault, but also when they are attributable to an entrepreneurial or business risk.

Although it is in the principal's interest to receive the highest number of offers from the agent, the principal's right to decide whether to accept the proposed deal remains unaffected. This decision-making power in the hands of the principal results indirectly from the 86a para. 2 HGBwhich obliges the latter to inform the agent of its intention to accept substantially less business from the agent. This decision-making power is, however, not unlimited: the principal may not refuse completely arbitrarily the conclusion of a procured contract. It must also be emphasised that jurisprudence considers it to be outside the powers of the judge to interfere in the policy of the company, evaluating the decisions taken by the latter. Therefore, the judge must accept any decision that may appear at least plausible.

3. The Area Agent.

Flanking the figure of the agent is that of the area agent (Bezirkshandelsvertreter). This figure is characterised by the fact that he/she has to deal exclusively with an area, entrusted to him/her by the principal or, in other cases, with a specific clientele.

The § 87 para. 2 HGB provides that the area agent is also entitled to commission for business that has been concluded, within the area assigned to him, albeit without his cooperation. Precisely for this reason, it is evident that the appointment of an area agent may have to be rather concealed. It is assumed that the agent may be considered a zone agent if it has been sufficiently clearly qualified as such. In the event of a dispute, the burden of proof falls on the party claiming that the agent is so qualified. Any contractual uncertainties must be clarified by the contracting party.

As for the obligations of the agentThe latter, in carrying out his activity, must look after his area continuously and with particular care, and only by acting in accordance with these criteria will he be entitled to the commission.

A rather recent BGH ruling stated that a business outside the area cannot be considered to be prevented a priori. In fact, if the principal accepts the business, this can be regarded as a tacit enlargement of the area or customer base.

As a rule, an area agent who, with the consent of the principal, carries out activities outside the principal's area or with customers other than those granted, is also entitled to the commission referred to in § 87 para. 1 HGB. However, the parties are free to agree otherwise.

4. Direct sales without producer intervention.

The direct sale to a customer by the manufacturer, despite the fact that the manufacturer has granted a exclusive right to the reseller, is to be considered a breach of contract. But even in the case where exclusivity has not been granted, the manufacturer may not perform at its sole discretion, direct sales to customers in the area the dealer's responsibility.

According to the German Federal Court of Justice, the manufacturer must take due account of and may not, without good reason, oppose the legitimate interests of the retailer who subjects his business and operations to the requirements of the manufacturer.

In a Judgment of the Düsseldorf Court of Appeal of 21.06.2013 (G.R. No. 16 U 172/12) the judges instead denied the existence of a violation of theobligation of loyalty because the manufacturer had not arbitrarily disregarded the legitimate interests of the retailer. In this case, the customers had in fact reiterated that they wanted direct sales from the manufacturer, otherwise they would not have purchased the products.

Considering that the reseller had only a de facto exclusive right, which had not been contractually agreed upon, this decision of the customers constituted, according to the courts, a sufficient reason for the admissibility of direct selling to these customers, especially since the manufacturer had previously offered the reseller a commission payment as compensation.

5. Declaration of bankruptcy and entitlement to commission.

According to the § 115 para. I in correlation with the 116 paragraph I InsO (lnsolvenzordnung - 'bankruptcy law') the opening of bankruptcy proceedings leads to the termination of the agency contractwithout the need to give notice. A continuation of the contractual activities is only possible following an agreement, even tacit, between the agent and the insolvency administrator.

As for the claims to commission accrued following the conclusion of the new contract, these must always be considered as predeductible claims (debts of the estate) § 55 para. I, point InsO. Where the activities carried out by the agent prior to the opening of bankruptcy proceedings have not yet led to the conclusion of a contract with the third party, the entitlement to commission depends on the choice of curator to conclude the deal with the third party or not.

If positivethe right to commission is considered in the light of the 55 paragraph I point InsO as a preferential claim.

Otherwise The right to commission exists in any event irrespective of whether the liquidator has opted to conclude the contract with the third party or has refused it. In such a case, the commission shall be considered an unsecured claim ex § 38 InsO.

A different matter, however, with regard to the agent's entitlement to the non-competition indemnity under the § 90a para. 1 HGBIn this case, the right ceases in the event of termination of the contract following the opening of bankruptcy. At the same time, this event also terminates the agent's non-competition clause that the parties had agreed upon.

Finally, if at the opening of the bankruptcy the contract was already terminated the insolvency administrator may request ex § 103 InsO the maintenance of the non-competition clause and the right to compensation constitutes a claim on the bankruptcy estate.

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Supreme Court: abuse of rights also in tax matters.

[:it]For the Court of Cassation, abuse of rights is also possible in tax matters.

The recent judgments 3242/2013 and 4901/2013 reconfirmed that theinstitution of abuse of rights is also applicable in tax matters.

In order to fully understand the dictate, it is first necessary to understand the concept of abuse of rights, being careful to apply a clear distinction between tax evasion and abuse and avoidance.

Unlike other European countries, such as, for example, Germany, Greece, Switzerland and Portugal, Italy has not transposed the principle of abuse of rights as a rule of law. However, at civil law level, doctrine and jurisprudence have developed this widely. An excellent definition was given by the Supreme Court, which provided that "abuse of rights occurs when the holder of a subjective right, even in the absence of formal prohibitions, exercises it in a manner that is unnecessary and disrespectful of the duty of fairness and good faith, causing a disproportionate and unjustified sacrifice of the other contracting party, and in order to achieve results that are different and additional to those for which those powers or faculties were granted"(Cass. Civ. 2009/20106).

In the tax field, the figure of abuse was introduced, Indeed, in its judgment No. 10981 of 13 May 2009, the Court of Cassation, Civil Tax Section, stated that "the prohibition of abuse of rights translates into a general anti-avoidance principle, which precludes the taxpayer from obtaining tax advantages obtained through the distorted use, even if not in conflict with any specific provision, of legal instruments capable of obtaining a tax benefit or saving, in the absence of economically appreciable reasons justifying the transaction, other than the mere expectation of those benefits."

In essence, the concept of abuse of tax law has been a de facto broadening of the concept of avoidance,limited (erroneously) to case studies (Article 37-bis of Presidential Decree 600/1973).

The recent judgments under review, have reaffirmed the applicability of the institution of abuse also in the tax field. Specifically, they ruled that when a taxpayer, exercising a right expressly recognised to him, does not in reality pursue an end worthy of protection by the system, but, on the contrary, achieves an objective that is contrary to it, no judicial protection can be granted to him. In fact, the person abuses the freedom to adopt a certain treatment for his own benefit by exploiting the variety of legal forms that the legal system makes available to him.

Therefore, as opposed to evasion, which occurs when there is a concealment of taxable wealth i.e. the alteration of an economic fact (such as simulation, fictitious interposition), abuse and avoidance, on the contrary, occur when the taxpayer's tax advantage is undue, since it is obtained by exceeding (or abusing) the advantage expressly recognised by a rule, by pursuing an advantage disapproved by the system.

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Supreme Court: bank not obliged to give notice of protest

[:it]According to a rather recent Supreme Court ruling, 12.2.2013 n. 3286, the bank is not obliged to warn the customer prior to the protest of a cheque issued for lack of funds.In the case under analysis, the Supreme Court rejected the ruling of the appeal instance, brought by a bank, wrongly ordered to pay damages to the account holder.

In this case, the Court of Appeal held that a legitimate interest, on the part of the account holder, cannot be detected in the legitimate expectation to be informed of the sending of a cheque for the raising of the protest. Specifically, they pointed out that such an expectation is not protected by our legal system, since its object is a mere factual interest, not at all comparable to a legitimate interest. The Court, on this point, contested the Court of Appeal's reference to the decision of the United Sections No. 500, of 22.7.1999.

It is recalled, briefly, that this last judgment stated that damage may be compensated pursuant to Article 2043 of the Civil Code.only if it concerns "an interest of relevance to the legal system; be it an interest undifferentiatedly protected in the form of a subjective right (absolute or relative) or in the form of a legitimate interest or other interest that is legally relevant and therefore not attributable to mere factual interest."In conclusion, the judgement points out that the damaging event resulting from a protest cannot be attributable to the conduct of the bank, but only to the account holder. The latter, in fact, is always aware of the state of his current account, and for this reason, any protest for lack of funds will be attributable solely to him, since he has no right to prior notice from the bank.

 

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Flash of genius

Software protection. Patentability or copyright?

[:en]How is software protected? Is it patentable? What is copy-right protection?

These questions were answered by the Court of Justice in a landmark judgment of 2.5.2012 (Case C-406/10)with which it interpreted Directive 91/250/EEC.

Specifically, the Court stated that:

  • the programming language and file format of data used within this programme are not protected by copyright on programmes;
  • he who licences a copy of software may, without the authorisation of the copyright holder, observe, study or experiment with the operation of said programme.

Underlying this decision is a policy adopted by Italy and Europe several years ago, which have chosen the path of the software protection through copyrightonly software that produces a technical effect should be considered patentable.

To briefly understand the difference between the two approaches, suffice it to say:

  • copyright is automatically granted to the author under Article 2575 of the Civil Code;
  • the granting of a patent (Art. 2585 of the Civil Code), on the other hand, must be explicitly requested from a patent office, carrying out a prior search to verify the originality of one's creation.

European and Italian legislators have opted for copyright protection of software, at the in order to balance the conflicting interests at stakeon the one hand the technological progress and, on the other hand, the software producers.

In this way, the author was granted the possibility of economic exploitation of the intellectual creation and, at the same time, everyone is allowed to enjoy the progress achieved (post the non-patentability of the product) avoiding the creation of stable positions of cultural and technological monopoly.

 

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