The agent's right to inspect the principal's books.
Article 1749 of the Civil Code grants the agent the right to inspect the principal's accounting records. The purpose of this rule is to make the ratio as balanced as possible between the agent and the principal, especially in cases where the agent himself has no powers of representation and is therefore not in a position to directly verify what business has been concluded by the principal.
Specifically, the second paragraph of Article 1749 of the Civil Code,[1] provides that:
"the principal delivers to the agent a bank statement commissions due at the latest on the last day of the month following the quarter in which they accrued. "
The third paragraph of Article 1749 of the Civil Code states that:
"The agent is entitled to demand that he be provided with all the information necessary to verify the amount of the commission paid and in particular an extract from the books."
This article is essentially based on the general principle that the principal must act with loyalty and good faith vis-à-vis the agent, imposing, on the one hand, on the principal itself the obligation to make available to the agent, at least on a quarterly basis, a statement of the commissions due, as analytical as possible, and, on the other hand, the agent must have the possibility of verifying that the commissions paid have been calculated correctly.
The importance of this rule is underlined by the fourth paragraph of the same article, which stipulates thenon-derogationeven partial, of the obligations set out therein:
"any agreement contrary to the provisions of this article shall be null and void."
The main procedural tool used by the agent to assert this right is Article 210 of the Code of Civil Procedure. This rule states that the examining magistrate, upon application by a party, may order the other party or a third party to "produce in court a document or other thing whose acquisition it considers necessary for the trial".
The practical application of this rule is not always easy to solve (on the contrary...) and Italian jurisprudence has often had to solve numerous problems related to it.
First of all, it is important to emphasise that, for our legal system, the investigative tool provided for in 210 c.p.c. has residual nature and may only be used if the proof of the fact is not obtainable by the applicant and if the initiative is not merely for exploratory purposes;[2] the granting of such an application is left to the discretion of the court, which may admit it only if it finds that
"the proof of the fact sought to be proved cannot be acquired aliunde, since the initiative cannot have merely exploratory purposes or replace the burden of proof placed on the party."[3]
It follows that the agent, who bears the burden of proving that business has been concluded, may not use that instrument to make up for the failure to comply with one of its evidentiary requirements and must prove that the failure to provide evidence is not attributable to it, and must also specifically indicate the documents from which it requests an extract (which must be directly or indirectly identifiable), since a request that is too general would in fact be exploratory and therefore inadmissible.
According to a recent Supreme Court ruling,
"the agent has a genuine right of access to the books held by the principal that are useful and necessary for the payment of commissions and for the transparent management of the relationship in accordance with the principles of good faith and fair dealing. Accordingly, the principal, when requested (even judicially), has a real obligation to provide the documentation and information requested by the agent in order to enable the exact reconstruction of the agency relationship. "[4]
The sentence continues:
"It is, however, incumbent on the agent acting in order to obtain the production of documents to infer and prove the existence of an interest in bringing proceedings, with circumstantial reference to the relevant events of the relationship (including, first and foremost, the sending or not of commission statements and their content) and an indication of the rights, certain or determinable, for the ascertainment of which the application is made."
According to this principle, an application requesting that the principal be generically ordered to produce statements of account of all customers that the agent has supplied (e.g. without indicating their names), or of customers that the principal has supplied directly in the contract territory (and on whose successful orders the agent would have received indirect commissions), would be likely to be held inadmissible as too general and thus exploratory.
If the judge recognises that the above-mentioned requirements are fulfilled, he may issue an order for the production of such extracts, whereby, in practice (at least in my personal experience...) the principal is ordered to produce the commission statements/accounting sheets relating to the customers for whom the agent has filed an application formerly Article 210 c.p.c.
In essence, the documents to which the agent's right of access applies will be:[5]
- the sales invoices issued to customers;
- the copy of the vat books, the delivery notes of the goods;
- the ENASARCO payment receipts and in any case all those documents necessary for the verification of the individual deal;
- as well as the commission statementsall obviously referring to the area and the period in which the agent carried out his duties.
The judge, having obtained the documentation, may then order a technical accounting expert's report, aimed at verifying the orders received by the principal and counting the payment of commissions.
From a practical point of view, it must also be pointed out that this can often lead to very significant practical problems, arising from the fact that from the documents produced, and elaborated by the expert, often a copious amount of information emerges that was previously unknown (to at least one) of the parties and that this information can give rise to "a case, in the case."
Finally, it should be noted that Art. 210 of the Code of Civil Procedure is not the only instrument in the hands of the agent, who, according to the majority of case law, is in any event entitled to request the commission statement pursuant to Art. 1749 of the Civil Code, also autonomously by way of monitory proceedings.[6]
As may be understood, this issue is of absolute importance, since fundamental rights derive from Article 1749 of the Civil Code that ultimately enable the agent to prove its right to payment of commissions.
[1] Article that transposed by Legislative Decree No. 64 of 1999, Art. 12(2) of Directive 86/653/EEC, which gave the agent the right "to demand that he be provided with all information, in particular a extract from the booksavailable to the principal, necessary to verify the amount of commission due to him. "
[2] See Cass. Civ. 2011 no. 14968
[3] Cass. Civ. 2011, no. 26151.
[4] Cass. Civ. Sec. labour, no. 19319 of 2016.
[5] See Buffa, Bortolotti & Mathis, Distribution Contracts, Wolters Kluver, 2016.
[6] Cass. Civ. 2010, no. 20707.
Unilateral changes to the agency contract by the principal.
When dealing with the subject of unilateral contractual modifications, it is necessary to recall the existence of a fundamental principle of law, i.e. the 'consent of the parties' (under arts. 1325 and 1372 of the Civil Code). Based on this principle, the parties' agreement is necessary for the valid modification of pre-existing contractual agreements (on this point see also The power of the principal to change the client portfolio of his agent). The Supreme Court, precisely on this basis of law, considered null and void precisely a clause inserted in an agency contract that allowed the principal to change the commission rates at will. (Cass. Civ. 1997 No. 11003).
That being so, and on the basis of the case law cited above, it may reasonably be held that a clause conferring the power to unilaterally amend contractual terms must tend to be considered null and void, or at least must be interpreted consistently with the principles dictated by the ECA, if applicable to the relationship.
However, it should be borne in mind that jurisprudence, while not directly addressing the issue, tends to take for granted the nullity of the clause in the contract that differs from the AEC and its replacement by the latter's provision, (Cass. Civ. 2000 no. 8133; Cass. Civ. 2004 No. 10774) referring in particular to Article 2077 of the Civil Code.
Article 2 of the 2009 CSA regulates what are the principal's powers to unilaterally change, i.e. without the need for express approval by the agent, the commissions and products promoted by the agent. This rule provides that, unless otherwise agreed by the parties, such changes may be:
"by minorshall mean reductions of up to 51T3T of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the change, or in the twelve months preceding the change if the preceding year was not worked in full;
by medium size, meaning reductions that affect more than 5% and up to 15% of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the change, or in the twelve months preceding the change if the preceding year was not worked in full;
by majorby which is meant reductions in excess of 15% of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the variation, or in the twelve months preceding the variation if the previous year was not worked in full. "
The rule also states that:
"The variations of minor may be implemented upon written notice to the agent or representative to be given without notice. Such changes shall be effective upon receipt of written notice from the principal by the agent or representative.
Medium and major variations may be implemented upon written notice to the agent or representative to be given, in the case of variations of medium-sized, at least two months in advance, unless otherwise agreed in writing between the parties. In the event of changes in major written notice may not be less than that provided for the termination of the relationshipunless the parties agree in writing to a different term. If the agent or representative communicates, within the peremptory term of thirty days from the receipt of the communication, that it does not accept the medium or major variations, the principal's communication shall constitute notice for the termination of the agency or representation relationship, at the initiative of the principal. "
"L'set of minor variations made in a period of 18 months prior to the last variation, will be considered as single variationfor the application of this Article 2, both for the purpose of requiring notice and for the purpose of considering the relationship as terminated at the initiative of the principal. For agents and representatives acting as sole agents, all minor variations made within a period of 24 months preceding the last variation shall be deemed to be a single variation. "
It follows from reading this article, therefore, that:
- on the one hand the principal is conferred a potestative right to make changes that lead to a decrease in the products promoted and the commission of its agent;
- on the other hand the agent, for the medium to large variations, has the right to communicate its refusal within 30 days from receipt of the notice, thus transforming it into a notice of termination at the initiative of the principal.
The above-mentioned rule only regulates changes to the contract by the principal, aimed at decreasing the amount of the commission and the area (products, clientele, territory).
Since Art. 1752 of the Civil Code provides that the agency agreement must be evidenced in writing, it follows that amendments are also valid only if they comply with this requirement. Importantly, the law does not require the written form "ad substantiam"but "ad probationem"This implies that it is not necessary for the modification, in order for it to be effective between the parties, to be expressly agreed upon in writing, but it is sufficient that the agreement on such a modification can be inferred even only from tacit conduct of the parties and that there is a written record of such conduct.
The termination indemnity in the agency contract: Art. 1751 of the Civil Code and AEC compared.
As has already been pointed out, severance pay in Italy follows a binary systemon the one hand, the discipline governed by theArticle 1751 of the Civil Code and, on the other hand, the regulation of AECs. (cf. also Collective bargaining. Origins, value and enforceability. And if a contractor is a foreigner, do they apply or not?)
The current version of Article 1751 of the Civil Code, as amended by Legislative Decree 1999 No. 65, implementing Directive 86/853/EEC, provides that:
"upon termination of the relationship, the principal is obliged to pay the agent an indemnity if the following conditions are fulfilled:
- the agent has procured new customers to the principal or significantly developed business with existing customers;
- the principal still receive substantial benefits arising from business with such customers;
- the payment of this allowance is fairtaking into account all the circumstances of the case, in particular the commissions that the agent loses and that result from business with such customers."
The third paragraph of the same article states that theallowance is not due when:
- the principal terminates the contract for a default attributable to the agent, which, because of its seriousness, does not permit the continuation, even temporarily, of the relationship;
- l'agent terminates the contractunless the termination is justified by circumstances attributable to the principal or by circumstances attributable to the agent, such as age, infirmity or illness, for which the agent can no longer reasonably be asked to continue the activity;
- when, pursuant to an agreement with the principal, theagent assigns to a third party the rights and obligations which it has by virtue of the agency contract.
About the amount of the indemnity, pursuant to Article 1751(3) of the Civil Code, it:
"may not exceed a figure equivalent to oneannual allowance calculated on the basis of the annual average of the remuneration received by the agent over the last five years and, if the contract dates back less than five years, on the average of the period in question."
The criterion in Article 1751 of the Civil Code, does not contain any calculation methodbut only a ceiling (i.e. an annuity to be calculated on the basis of the average commission of the last five years) and two conditions to the fulfilment of which the accrual of the indemnity is subject, namely that
- the agent has procured new customers and/or 'intensified' the turnover of existing ones;
- the indemnity is "equitable" in light of "all the circumstances of the case including the commissions that the agent loses as a result of the termination of the contract.
On the other hand, the contractual regulation of AECs establishes a certain and precise method of calculation based on three different items:
- the indemnity for termination of the relationship (the 'FIRR', consisting of an annual provision in the special fund managed by ENASARCO) calculated on the basis of the AEC;
- l'supplementary customer allowancepaid to the agent even in the absence of an increase in clientele, (equal to approx. 4% on the total amount of commissions and other sums accrued);
- l'allowance meritocraticlinked to an increase in customers and/or turnover.
As can be seen, both systems have within them both advantages and disadvantages for the contracting parties.
I advantages for the agent of theindemnity pursuant to Article 1751 c.c. are the fact that the compensation paid by the court is often higher than that provided for in the CEC.
The disadvantages normally lie in the fact that:
- only a maximum is set, but a calculation criterion is absolutely missing;
- the burden of proving the increase/intensification of the clientele and the fairness of the indemnity rests entirely on the agent;
- the indemnity is excluded in all cases where the agent is terminated from the contract without just cause.[1]
As for the allowance calculated according to the AEC i advantages are quite obvious, given that:
- a clear and defined calculation criterion is configured;
- FIRR and client indemnity are due (subject to exceptions) at all times, even in the event of termination by the party;
- no burden of proof is placed on the agent.
As to the disadvantages for the agent, it should be noted that, in fact, the indemnity paid under Article 1751 of the Civil Code is very often higher than that guaranteed by the AEC.
It should be noted that the European Court of Justice, in a ruling of 23 March 2006,[2] ha disputed the legitimacy of the severance payment as regulated by the AEC. Such agreements, according to the Court, may only derogate from the rules laid down in Directive 86/653/EEC if, on analysis ex antethe application of the AEC would result in the agent being treated economically more favourably than under Article 1751 of the Civil Code. Now, since there are no calculation tools that make it possible to predict the amount of the codified indemnity and it can only be known and calculated after the termination of the relationship and since, according to the Court, the assessment as to whether the treatment of the AEC is (always) more favourable than the civil law discipline must be made ex anteit is clear that, following this reasoning, only a calculation system that always guarantees the maximum allowance can be considered in line with the principles dictated by the directive and the ruling of the Court of Justice.[3]
Despite the ruling of the Court of Justice, However, the orientation of the Supreme Court appears to be in the process of consolidation according to which the criteria for quantifying the severance indemnity provided for by collective bargaining must in any event be considered as a minimum treatment which must be guaranteed to the agent, subject to the need for the judge, once he has ascertained the existence or non-existence of the requirements provided for by Art. 1751 of the Civil Code, to carry out a kind of case-by-case assessment in order to evaluate the fairness of the solution resulting from the AEC, with discretionary power, taking into account all the circumstances of the concrete case.[4]
It should be noted, however, that there is a minority orientation of the jurisprudence on the merits, which has held the AEC to be inapplicable to our system and has therefore not recognised the discipline set forth therein as a guaranteed minimum for the agent.[5]
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[1] Art. 1751 (2) (1): "The indemnity shall not be due [...] when the agent terminates the contract, unless the termination is justified by circumstances attributable to the principal or by circumstances attributable to the agent, such as age, infirmity or illness, for which the agent can no longer reasonably be required to continue the activity"
[2] Court of Justice 2006, C-465/04.
[3] Baldi-Venezia, Il contratto di agenzia, 2014, GIUFFRÈ; Bortolotti, L'indennità di risoluzione del rapporto secondo il nuovo Accordo Economico Collettivo Settore industria, 2014, www.newsmercati.it.
[4] Cass. Civ. 2009 no. 12724; Cass. Civ. 2012 no. 8295; Cass. Civ. 2013 no. 18413; Cass. Civ. 2014 no. 7567; Cf. Baldi-Venezia, Il contratto di agenzia, 2014, GIUFFRÈ, "This solution does not appear satisfactory and, above all, does not concretely identify the quantification criteria to be adopted, leaving the judge of merit with a wide margin of discretion, which does not militate in favour of the future identification of precise and uniform criteria to the detriment of a principle of certainty'..
[5] Tribunale Treviso 29 May 2008; Tribunale Treviso 8 June 2008; Tribunale di Roma 11 July 2008.
The natural person agent, parasubordinate work and the employment rite.
Law No. 533/73 introduced into the Italian procedural system the so-called "rito lavoro", a procedure characterised by the principles of orality and immediacy. Point 3 of paragraph 1 of Article 409 of the Code of Civil Procedure, introduced by this Law expressly provides that the following are also subject to the labour procedure
"agency and commercial representation relationships [...] which take the form of continuous and coordinated work, predominantly personal even if not of a subordinate nature."
Therefore, disputes relating to agency and representation relationships are also subject to the labour court if the work performance is characterised by the continuity, from coordination and the prevailing personality (cf. also The agency contract and the employment relationship: distinguishing criteria and evaluation parameters).
A third figure, namely that of 'parasubordinate' work, has thus arisen alongside the already existing categories of self-employed and subordinate workers. It was first elaborated by doctrine, and then transposed by case law itself,[1] to respond to a real need to define those self-employed relationships in which, in fact, the worker is in a position of dependence towards the principal that is less strong than that of a subordinate worker, but certainly much more binding than self-employed relationships. In this way, a category of subjects has been enucleated that is deemed worthy of even stronger protection, which brings them closer in this respect to subordinate workers.
The question arises as to whether only commercial agents acting as natural persons are subject to labour proceedings, or also agents who, although they operate in the form of corporations, have a structure such that the personal element of the service prevails (e.g. single-member companies). According to the most recent case law of the Court of Cassation, they are deemed to be subject to the employment procedure, only disputes involving agents acting as natural personsexcluding all cases of an agent operating in the form of a company, be it a partnership or a corporation, regular or irregular.[2] In a recent ruling, the Supreme Court stated that:[3]
"where the agent is a company or avails itself of an autonomous entrepreneurial structure, the personal character of the service is lost, with the consequence that the relationship can no longer be brought under the provision of Article 409 of the Code of Civil Procedure and, therefore, to the employment rite, since, where the capacity of agent is assumed by a corporation or partnership, the company, even if lacking legal personality, still represents an autonomous centre of legal relations that stands between the partner and the principal".
Jurisprudence also holds that the natural person agent who performs the its own activity using its own personnel, provided that in the relationship the organisational aspect of the agent does not prevail over that of personal performance:[4] Although the personality of the service must be prevalent, it need not be exclusive. On the other hand, parasubordination must be excluded if the activity is carried out according to entrepreneurial criteria such that the agent merely coordinates and directs his collaborators, without performing any promotional activity.[5] (cf. also What is the difference between an agency contract and a business intermediary?)
Parasubordinate workers are subject to the same legal treatment as employees not only with regard to the application of the labour law, but also to the right to the revaluation of labour claims[6] and the substantive legal institution of the invalidity of waivers and settlements relating to the employee's unavailable rights pursuant to Article 2113 of the Civil Code, which we will discuss in the following section.
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[1] Cass. civ. Sec. labor, 1998, no. 4580.
[2] Civil cassation 2012, no. 2158, By far the prevailing case law holds, however, that when the agent is a corporation or makes use of an autonomous entrepreneurial structure, the personal character of the service ceases to exist and the relationship cannot be brought within the scope of Article 409, given that if the capacity of agent is assumed by a corporation or partnership, the corporation, even if lacking legal personality, still constitutes an autonomous centre of legal relations that stands between the shareholder and the principal; Civil cassation no. 2509/1997; Civil cassation no. 9547/2001; Civil cassation no. 14813/2005; Civil cassation no. 6351/2006; Civil cassation no. 15535/2011; App. Florence, 11/04/2007 "Disputes between the agent and the principal fall within the jurisdiction of the labour court if the activity performed has the characteristics of parasubordination, i.e. where the agent performs the activity predominantly with personal labour. This requirement is lacking when the agent performs the activity in the form of a company, even a partnership or an irregular or de facto one, and also when the activity, although performed on an individual basis, is characterised by the prevalence of the organisational moment of the work of its employees and collaborators over the personal contribution.'; Bortolotti, Il contratto di agenzia commerciale, CEDAM, 2007.
[3] Cass. Civ. 2005 No. 14813.
[4] See also Cass. Civ. Sec. lavoro, 1998 No. 14454: which excluded the predominantly personal character of the agent ".that he had availed himself of two employees, a driver, a warehouseman, several vehicles and, above all, no less than six sub-agents, taking on the economic burden of the entire organisation also in terms of remuneration'.
[5] Cass. civ. Sec. II Ord., 22/03/2006, no. 6351.
[6] Art. 429, third paragraph, c.p.c. ".The court, when pronouncing a judgment sentencing the payment of sums of money in respect of employment claims, must determine, in addition to interest at the legal rate, the greater damage, if any, suffered by the employee as a result of the diminution in the value of his claim, sentencing him to pay the relevant sum with effect from the day on which the right accrued."
The law applicable to the international agency contract.
When operating in the field of international contract law, certainly the first aspect to be analysed is to understand by which law the contractual relationship is governed.
As is well known, the regulation of applicable law, in the European context, is dictated by the European Regulation Rome I, No 593/2008 on the law applicable to contractual obligations.
Article 3 of the Regulation gives the parties the freedom to choose to which law to subject the contractual relationship:
"...the choice is express, or clearly follows from the provisions of the contract or the circumstances of the case"
In the event that the parties have not chosen to which jurisdiction the contract shall be subject, the following shall apply Article 4 of the Regulation, which sets out the criteria for identifying the law applicable to the relationship. Specifically, Article 4(1)(B) of the Regulation prescribes that contracts relating to the provision of services, which also includes agency contracts, are governed by the law of the country in which the service provider (the agent, therefore) is habitually resident. This implies that all agency relationships between a foreign principal and an Italian agent, for which the parties have not (expressly) chosen the applicable law, will be governed by the law of the country in which the agent has its habitual domicile, i.e. normally by Italian law.
It can therefore be said that the Italian law is applicable to the international agency contract in the following cases:
- in the case of choice of parts (Art. 3 Rome I Regulation);
- at absence of choice of the parties, in all cases where the agent has its habitual residence on Italian territory (Art. 4 Rome I Regulation);
- in the event that the parties decide to submit the contract to foreign law, the Italian rules shall apply ".internationally imperative"or "necessary application" (Art. 9 Rome I Regulation).
With reference to this last point, which certainly constitutes one of the most complex and critical profiles of international trade law, it is deemed necessary to briefly elaborate.
As is well known the freedom given to the contracting parties to choose how to regulate a contractual relationship encounters limitsIn all legal systems there exist mandatory rules intended precisely to limit the freedom of the parties in order to ensure the observance of certain principles. Applying this principle in the sphere of international contracts is not easy, precisely because one is obliged to deal with the mandatory rules of two or more jurisdictions: the one chosen by the parties and the one which, in the absence of choice, would apply pursuant to Art. 3 of the Rome I Regulation.
How, then, does the right granted to the parties to choose the applicable law fit in with the principle that the mandatory rules applicable in the absence of choice must be respected?
In principle, it may be said that the choice of a particular law entails the total derogation of the rules of a particular legal system (including mandatory rules) in favour of those of another legal system. This implies that, normally, if the parties choose to subject their contract to another legal system, their contract will have to comply with the mandatory rules of that system, but not those of the system derogated from through their choice.
However, it should be noted that, in particular cases, national legislators may decide to attribute to certain standards an even more binding valuesuch as to make them mandatory even at the choice of the parties: these rules are defined as "internationally imperative"or of 'necessary application' and are thus distinguished from those that are 'merely mandatory'.
In the European context, this principle is governed by Article 9 of the Rome I Regulation, which defines the rules of necessary application as:
"... provisions compliance with which is regarded as crucial by a country for the safeguarding of its public interests, such as its political, social or economic organisation, to such an extent as to require their application to all situations falling within their scope, whatever the law applicable to the contract under this Regulation."
The European Court of Justice intervened to interpret the scope of this rule in the Unamar case: in this ruling, the Court stated that the national court may apply the most protective rules of its own law (instead of the law chosen by the parties)
"...only if the court before which the case is brought makes a detailed finding that, in the context of that transposition, the legislature of the State of the forum considered it crucial, within the legal system concerned, to afford commercial agents protection additional to that provided for by that directive, taking account, in that regard, of the nature and purpose of those mandatory provisions.
From this ruling, it follows that in order to prevail over the law of another country based on the same directive, it is not sufficient that the rules chosen provide for a higher level of protection and attribute to them the character of internationally mandatory rules, but that it must also be shown that this choice is of crucial importance for the system in questionin view of the nature and purpose pursued by the rules in question.
The agent's obligation to inform the principal
The duty to provide information is governed by Art. 1746 of the Civil Code. This provision requires the agent to provide the principal with information on market conditions in the assigned area, as well as any other information useful for assessing the convenience of individual business. Specifically, that article provides that the agent shall:
"provide the principal with information regarding market conditions in the area assigned to him, and any other information useful for assessing the suitability of individual deals"
As can be seen, the information requested from the agent can be of two types:
- information concerning the market conditions;
- information needed to assess the convenience of the deal.
The agent, therefore, plays a dual role in the contractual relationship. On the one hand, he has to sound out the development of the area and customers entrusted to him, in order to keep the principal up-to-date on what is actually happening there. On the other hand, he performs the delicate task of scrutinising the suitability of individual deals and the solvency of the customers to whom orders are given.
Not a few problems arise precisely from the interpretation of this article. In particular, it is not easy to understand what are the limits to the principal's right to demand detailed and continuous information from the agent: as a general rule, it is considered that an excessive extension of this obligation could even be considered an indication to question the agent's independence and thus make the relationship qualify as an employment relationship.
That said, with reference to the duty of the agent to inform on the market conditionsit is possible to hold that the principal may require the agent to keep the agent informed, to the extent possible, of everything of which it becomes aware concerning the market situation and its changes in relation to the area assigned to it. This does not implyhowever, an obligation on the agent to make assessments, forecasts or indications as to the future prospects of the market itself. Indeed, the agent is only obliged to report information on potential or actual competitors, which is necessary for the principal to formulate a commercial policy that can be as effective as possible in the area assigned to the agent.
Under the second aspecti.e. the obligation to assess the suitability of the bargain, the agent must assess for each individual bargain (and client) what the contractor's concrete capacity to perform is.
Supplementing the provisions of Article 1746 of the Civil Code, Article 1 of the AEC Industry 2014 and Trade 2009 provides that, unless otherwise agreed,
"The agent shall carry out his activity autonomously and independently [and][...] shall be obliged to keep the principal constantly informed of the situation on the market in which he operates, but shall not be obliged to report at predetermined intervals on the performance of his activities. "
Art. 5 of the AEC Industry and Art. 4 of the AEC Commerce also clarifies that the agent:
"must perform the task entrusted to him in accordance with the instructions given by the company and provide information concerning market conditions in the area assigned to him, as well as any other information useful to the principal in assessing the suitability of individual deals. "
The agent is therefore on the one hand obliged to inform the principal and on the other hand has the right to act in full organisational autonomy: it is therefore necessary to find the right balance between the opposing demands of the agent's organisational autonomy and his obligation to follow instructionsi of the principal.
Therefore, on the one hand, the principal, having to respect the agent's autonomy, may not, for exampleon the one hand, impose on the agent the daily list of customers to be visited and plan the itineraries to be followed by the agent, but on the other hand may ask the agent to visit certain customers or categories of customers it cares about and require the agent to organise the visits in such a way as to adequately cover all customers and to report back to it.
That being said, doctrine and case law hold that the obligation to provide information has no fundamental relevance . In any event, it may in concrete terms be of such relevance as to justify, in the event of a breach, the termination of the relationship due to fault on the part of the agent, if the omissions are likely to cause serious negative consequences for the principal's business performance (Cass. Civ. 1994 No. 7644).
Early termination of an agency contract. How is the indemnity for lack of notice calculated?
The termination of an agency contract is expressly regulated in Art. 1750(2) of the Civil Code. This article grants both parties the right to freely withdraw from the contract for an indefinite period of time, without justification, by giving notice to the other within a specified time limit.
Article 1750(3) of the Civil Code further provides that the "agency contract of indefinite duration may only be terminated by the parties 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.
It is important to remember that the parties may provide for a notice period that is longer, but never shorter, than that dictated by the codified rules.
One wonders, outside the cases where early termination is permissible, what happens when a party terminates the agency agreement without observing notice. In this situation, two types of problems usually arise:
- understand whether the contractual relationship continues or is interrupted;
- understand whether and to what extent the other party will be entitled to the damages.
With regard to the first point, a distinction must be made between fixed-term and open-ended contracts.
With reference to the contract to fixed-termit is common ground that the contract continues to be effective until its expiry. In such a case, an unlawful termination will in no way terminate the contract, which will therefore continue even after the unjustified termination until its normal expiry (cf. Cass. Civ. 1990 no. 1614).
"con an agency contract where the principal unlawfully terminates the relationship and consequently fails to provide the agent with the cooperation indispensable for the performance of its activities, this does not result in the termination of the contract, which is to be regarded as still being in force until the scheduled expiry datebut rather the liability of the principal itself, who is obliged - even in the absence of a default notice - to compensate the agent for the damage."
In such a case, although the contract continues to be effective even after the unjustified termination, it must also be borne in mind that, in principle, it will be almost impossible for the non-terminating party to actually continue the relationship. Precisely on this point, the Supreme Court in the above-mentioned judgment stated that:
"è practically impossible for an agent to continue promoting business where the principal has given notice of termination, albeit unlawful, and has consequently behaved in a manner consistent with that termination by ceasing to provide the agent with the cooperation necessary for the performance of the relationship."
It follows, therefore, that the continuation of the contractual relationship until its natural expiry will in fact entitle the agent to claim damages, to be quantified in the loss of earnings for the remaining duration of the relationship.
With reference to the open-ended contractThe question was posed in different terms before the reform of Art. 1750 of the Civil Code, which was so replaced by Art. 3 of Legislative Decree 10 Sept. 1991, No. 3030, implementing Directive 86/653/EC. With the reform, in fact, the reference in Article 1750 of the Civil Code, which granted the parties the option of replacing notice with the payment of an indemnity, was eliminatedwhich was (and still is) determined by collective economic agreements (see also (cf. calculation of former AEC 2014 allowances, calculation of former AEC 2009 allowances, calculation of ex ANA allowances 2003).
Following this legislative intervention, the majority orientation of the case law and part of the doctrine (Bortolotti), considers that the abrogation of the possibility of the parties to replace the notice with an indemnity, has in fact attributed a 'real effectiveness' to the notice with the consequence of recognising, at least from a theoretical point of view, the right of the non-terminating party to continue the relationship until the expiry of the notice.
The Court of Cassation, on this point, recently reiterated in judgment no. 8295 of 25 May 2012the principle, of the real effectiveness of the notice or of ultrateractivity of the contractual relationship.
"In accordance with the principle of continuation of the relationship during the notice period, the open-ended agency contract does not terminate when one of the parties terminates the contract, but only when the notice period expiresin the interest and for the protection of the non-terminating party."
According to the above case law, giving "real" effect to the notice confers on the non-terminating party the right to continue the relationship until its natural expiry. Although, as noted above, in practice it is difficult to continue a relationship that has been de facto terminated by one of the parties, the parties' right to the continuation of the relationship until its natural expiry translates into the right to claim damages, which, in the case of the agent, may be higher than theallowance for lack of notice (equal to the commissions lost by the agent during the notice period, averaged over the previous year).
The further damage that the agent could claim by way of compensation of damage, may be found, for example, in the case of the sale of seasonal goods. Consider the sale of a seasonal product (e.g. Easter egg, swimming costume, ski-pass, etc.): it is clear that if the termination takes place at the time when the sales season is about to start, the commissions lost by the agent during the notice period will almost certainly be higher than the average of the previous year.
In the case of wrongful termination by the agent, the principalmay, for example, suffer damage resulting from the loss of market sharecaused by the diversion of customers to competitors of the principal.
However, it should be emphasised that according to part of the doctrine (Toffoletto, Baldi-Venezia) and the case law (Civil cassation 1999 No. 5577), in the contract of indefinite duration the notice, contrary, constitutes an obligation of the withdrawing party and is not given 'real' effect. Any breach of that obligation therefore does not affect the validity of the termination, giving rise to only to an obligation to pay damages, corresponding to the indemnity for loss of notice.
While this discussion of the real and obligatory effectiveness of the notice period is still ongoing with regard to the civil law regulation of the agency relationship, as set forth in Article 1750 of the Civil Code, the collective bargaining agreements in force to date, AEC 2009 for trade and AEC 2014 for industry, expressly grant the parties the right to terminate the relationship earlywithout prejudice to the other party's right to severance pay.
Specifically, Article 11 of the AEC 2009 and Article 9 of the AEC 2014 provide that:
"if the withdrawing party at any time wishes to terminate the relationship with immediate effect, it shall pay the other party, in lieu of notice, a sum by way of compensation equal to one-twelfth of the commissions pertaining to the preceding calendar year as many months of notice are due. If the relationship began during the preceding calendar year, the following months of the current year shall be counted towards the twelve-month reference period.
In addition, there is a alternative calculation criterion to the one highlighted above, according to which:
"Where more favourable. the average salary for determining the indemnity in question shall be calculated over the twelve months immediately preceding the notice of termination. Where the relationship has lasted less than twelve months, the said calculation shall be made on the basis of the monthly average of the commissions paid during that relationship."
Therefore, to calculate the amount due as replacement of notice, it will be necessary to perform a double calculationfollowing the two different periods and apply whichever of the two is more favourable to the agent.
Main differences between the agency contract and the commercial distribution contract
The sales dealership contract and the agency contract are among the most common forms of organising distribution. These contracts are united by the fact that both the agent and the dealer undertake the obligation to organise and promote, in an autonomous manner, sales in accordance with the manufacturer's policies, integrating themselves within the manufacturer's distribution network. What mainly differentiates these two intermediaries is the fact that, whereas the agent undertakes, in return for a commission, to promote the conclusion of contracts between the manufacturer and the customers whom the agent has procured, the dealer acts as a buyer-seller and his source of income is based on the difference between the purchase price and the resale price.
The sales concession is a particularly important instrument for the organisation of distribution in markets, both domestic and foreign, which differs from other non-integrated retailers (e.g. 'wholesalers') in that it performs aautonomous promotion and organisation of sales of the grantor's productsin a given territory, which, in principle, is granted to him on an exclusive basis.
A definition of this type of contract is not given by the Civil Codeas it has not been regulated in our legal system and must therefore be qualified as an atypical contract. In any case, if one wants to give a definition of the sales agent, it can be framed as a commercial entrepreneur, who concludes a framework contract with the manufacturer, of fixed or indefinite duration, to regulate, in a given area, all the sales that are carried out on a stable and continuous basis by the grantor to the dealer.
La definition of agent, or rather, of agency contract is, on the other hand, given by the Civil Code, which provides atArticle 1742 of the Civil Code that 'With the agency contract one party undertakes on a permanent basis the task of promoting, on behalf of the other, against remuneration the conclusion of contracts in a specified area' (see also What is the difference between an agency contract and a business intermediary?).
Therefore, while the dealer deals in his own name and on his own behalfby purchasing the goods directly from the grantor and reselling them to third parties, contrary to theagent acts on behalf of and as an autonomous collaborator of the principal, promoting the conclusion of sales contracts to third parties and, only to the extent that he has the power of representation, also in the name of the principal.
Thus, although the agent and the dealer perform a very similar function, in that both are in charge of organising the distribution of a principal's products, in a given territory entrusted to them, as autonomous entrepreneurs, but integrated into the manufacturer's sales network, at the same time, they distinguish in a very pronounced way, in the way they manage sales the agent is purely and simply an intermediary of the principal, the dealer, on the other hand, buys the products directly from the licensor and is himself responsible for reselling them directly to the end customer, who has been procured by him.
Looking at the two figures from a strategic point of view, it can be seen that thecommercial agent allows the principal to have stronger and more direct control over customersas the sale is made by the principal itself and the agent is instead responsible for passing the order on to the principal, the dealer has instead the task of organising the sales phase to the end customer and, often, also the service phase, and therefore normally has more direct control over the customerIt also performs activities related to the promotion of the sale, such as customs clearance of goods, shipment to the consignee and warehousing.
These types of contracts also differ in terms of the commercial risks that the manufacturer assumes: in the distribution the risk is definitely shifted more to the dealer, who bears the potential danger of not being able to resell the purchased products. On the contrary in the case of agencythe risk of non-performance by the end customer, falls directly back on the principal, especially if the parties have applied Italian law, since in our legal system the usability of the so-called ''default clause'' is limited.star of belief"has in fact been deleted. It is briefly recalled that with such a clause, the agent assumes in part or in full, the risk of non-payment by a third party introduced by it, undertaking to reimburse the principal, within the agreed limits, for the loss incurred by the latter.
It should be noted, however, that in most sales distribution contracts there is a clause, which postpones the dealer's obligation to pay for the goods, only after payment of the product by the end customer. It is evident that such an agreement will greatly shift the entrepreneurial risk towards the grantor.
Certainly, one aspect that strongly distinguishes the two contracts is theseverance pay (on this subject see also calculation of indemnity pursuant to art. 1751 of the civil code., calculation of former AEC 2014 allowances calculation of former AEC 2009 allowances e calculation of ex ANA allowances 2003). As is well known, the agency contract expressly provides, in Article 1751 of the Civil Code, for the agent's right to receive, under certain conditions, an indemnity following the termination of the contractual relationship. Likewise cannot be said for the sales concession contract. Italian jurisprudence, in fact, differs from the jurisprudence of several European countries - e.g. Austria and Germany) does not recognise this right to the concessionaire.
Authoritative doctrine dissociates itself from this jurisprudential orientation, stating that "even in the absence of legislative provisions, the right to an indemnity in an agency contract in which the agent is also authorised to make purchases on its own account as a dealer could be extended to the business carried on by the dealer. Indeed, it seems to us that in such cases, since it is a mixed contract, in which the cause of the agency contract prevails, the indemnity for termination, by virtue of the principle of absorption, could be extended to the business carried on by the agent as dealer"(Venice-Baldi).
The agent's right to commissions on direct, indirect and area business.
Article 1748 of the Civil Code provides that the agent's right to commission exists essentially in three cases: for directly promoted business by the agent; for business concluded by the principal without the agent's intervention with previously procured customers by the agent ('subsequent business") and business concluded directly by the principal without the intervention of the agent with customers belonging to a restricted area or clientele to the agent.
As is well known, the agent's remuneration consists of a commission, which normally consists of a percentage of the amount of the business concluded by the principal with its customer through the agent's intermediation. Before proceeding to identify for which business the commission is actually due, it is worth recalling that the parties are free to contractually determine the manner in which the agent's remuneration is to be calculated,[1] through, for example, the payment of:
- a surchargei.e. the percentage related to the full or partial difference between the list price and the higher selling price;
- a fixed-sum remuneration for each contract concluded, irrespective of its amount; or
- remuneration through a guaranteed fixedoften combined with a variable commission remuneration. (It is important to remember that if the remuneration is determined solely in a fixed form, this may be an element that, combined with other indications of subordination, may lead to the relationship being qualified as one of employment).[2]
That said, the agent's right to commissions is governed by Art. 1748 of the Civil Code, which provides as follows:
"For all business concluded during the contract the agent is entitled to commission when the transaction has been concluded as a result of its intervention.
The commission is also due for business concluded by the principal with third parties that the agent had previously acquired as customers for business of the same type or
belonging to the area or category or group of customers reserved for the agent, unless otherwise agreed."
The agent's commission is thus due in essentially three cases:
- for the directly promoted business by the agent;
- for business concluded by the principal, without the intervention of the agent with previously procured customers by the agent ('subsequent business");
- business concluded directly from the principal without intervention of the agent with customers belonging to a restricted area or clientele to the agent (so-called '.direct business").
The three 'categories' of commissions listed above are briefly analysed below.
1. Business promoted directly by the agent.
Article 7(1)(a) of the Directive 86/653/EEC states the following:
"for a commercial transaction concluded during the agency contract, the commercial agent is entitled to commission: a) when the transaction has been concluded thanks to his intervention [...]".
Principle that was fully transposed into our legal system with Art. 3 of the legislative decree 65/99which amended Article 1748 of the Civil Code.
Bearing in mind that the legislation makes the agent's entitlement to commission conditional upon his actual intervention in the conclusion of the deal, it is essential to understand when a deal can be said to be actually concluded thanks to the agent's intervention. While there are no doubts in the case where the agent directly collects the order from the customer and transmits it to the principal, it will certainly be less clear when the initial contact activity carried out by the agent is followed by a negotiation conducted by the principal or another agent.[3]
On the other hand, it is not necessary to verify the agent's intervention in the conclusion of the bargain if he is reserved a zone and the business is concluded in the exclusive territory of the agent; in such a case, the agent will in any event be paid a commission, unless the parties have contractually agreed to exclude the right to commission on the business directly carried out by the principal (a matter that will be dealt with in the following paragraph 3).
Still different is the case of the area agent who has promoted business with customers from outside their territory. According to authoritative doctrine,[4] in which case the agent would not accrue any commission since the business is outside the scope of the agency contract. According to this guideline, the agent would only accrue commission if it appears that the parties have agreed - expressly or tacitly - to bring the business under the contract, otherwise, i.e. if it is not sufficiently clear that the agent's activity is to be regarded as promotion under the contract, the agent would not accrue commission.
The 2014 AEC Industry (Art. 6) and the 2009 AEC Commerce (Art. 5) regulate the still different circumstance where the promotion and execution of a deal involves areas and/or customers entrusted exclusively to different agents. In that case, the AEC provide that, unless otherwise agreed
"the relevant commission shall be paid to the agent, who has actually promoted the business, unless otherwise agreed between the parties for an equitable sharing of the commission. "
Finally, it should be borne in mind that Art. 1748(1) does not determine the time at which the right to commission is acquired, a problem that is addressed in Art. 1748(4) below.
- Read also: When is the principal obliged to pay commission?
2. Business concluded directly by the principal, with customers procured by the agent.
The second case is the one introduced by Art. 7(1)(b) of the directive, which provides that the agent is entitled to commission:
" when the transaction was concluded with a third party whom he had previously acquired as a customer for transactions of the same kind."
Our legal system has incorporated this provision in Art. 1748 para. 2 of the Civil Code; according to this provision, the non-exclusive agent, once he has placed an order with the principal for a customer he has acquired, is thus also entitled to commission for business that the principal subsequently concludes, provided that it is of the same type.
The purpose of the rule is to protect relationships with non-exclusive agents, who are only entitled to remuneration for the business they promote, and thus to prevent the principal from circumventing the (non-exclusive) agent's right to remuneration by simply contacting the clients acquired by the agent directly for subsequent business.
To understand what is meant by business of the 'same kind'a 2016 Court of Justice ruling can come to the rescue,[5] that (although it deals with the different question of the qualification of 'new client' for the purposes of quantifying the severance payment)[6]It held that even those with whom the principal already had business relations concerning the same types of goods (in this case sunglasses) but of different brands could be considered new customers if the sale of the new brands to customers already acquired by the principal required the establishment of specific business relations.
Looking at this ruling from a different perspective (i.e. from the principal's side) and applying it to the regulation of commissions (and not severance pay) one could affirm that the (non-exclusive) agent may not accrue any commission on business concluded by the principal with customers that the agent had previously procured, not only if it concerns products belonging to a different product sector, but even of the same type, but of a different brand, if the principal proves that such sales activity was the consequence of active commercial activity.
3. Direct business within the agent's area or with its exclusive customers.
In the event that the agent is granted a zonethe agent has pursuant to Art. 1748 (2) of the Civil Code a right to commission on business concluded by the principal with third parties within its territory, regardless of the place of execution of the deal.
This principle was also enshrined in Article 5(6) of theAEC 20 June 1956 for agents of industrial companies, effective erga omneswhich provided for the area agent's right to commission on business concluded directly by the principal, without requiring that performance must take place in the area.
Given that in our legal system the agent's exclusivity constitutes under Art. 1743 of the Civil Code a natural element of the contract and that it is therefore presumed to exist in the contractual relationship, the agent's entitlement to commissions on the principal's direct business always exists, unless otherwise agreed by the parties. According to doctrine and jurisprudence, in the event of a waiver of exclusivity by the parties, the right to commission on direct business will automatically cease to exist, since, in such a case, the "area or [...] category of customers reserved for the agent"as provided for in Article 1748 of the Civil Code.[7]
Lastly, it should be noted that the parties may nevertheless expressly stipulate a agreement by which they exclude the right to commission on direct businesseven if exclusivity is retained for the agent, in such a case, the agent will only be entitled to commission on business that it has personally promoted (point 1) and on 'subsequent' business (point 2).
Less settled is the question whether the commission for business is due to the agent in the area where the customer then actually sends the goods for resale (sales outlets). In the absence of an agreement, if contracts are concluded at the customer's place of business and it is then the latter that distributes the goods to its branches/stores, it is thought to be preferable that the agent be paid commission where the customer is located, irrelevant being where the contract is then performed.[8]
A different question is whether the agent may claim the right to commission on sales that the customer (gorssista) makes to the public in the agent's area, through its outlets. Italian jurisprudence[9] and the Court of Justice,[10] inclines to exclude the agent's right to receive commissions for such sales, given that Article 1748(2) of the Civil Code presupposes that such sales are concluded by a person, i.e. the principal, in an immediate relationship with the purchaser, i.e. in which the exchange of consideration takes place immediately and directly between the two parties, without the intervention of intermediaries and without further intermediate steps.
[1] Our legislation does not give a definition of commission, but the European directive does. 86/653/EEC which states in Article 6§2 as follows: "All elements of remuneration that vary according to the number or value of business shall be deemed to constitute commission for the purposes of this Directive. "
[2] See Cass. Civ. 2012 no. 12776; Cass. Civ. 2009 no. 9686; Cass. Civ. 1998, no. 1737.
[3] Bortolotti, Distribution Contracts, 2016, p. 266, Wolters Kluver.
[4] Ibid.
[5] Court of Justice 7 April 2016, No. C-315/2014, Marchon v. Karaszhiewicz.
[6] Quagliarella, New clients in the agency contract: recent Community case law.
[7] See Venezia, Il contratto di agenzia, 2014, Giuffré.
[8] Ibid, p. 275.
[9] Cass. Civ. 2001 No. 11197, (in the case in point, the Court of Cassation annulled the judgment on the merits that had recognised the commission in relation to sales made by a wholesaler, who had purchased the products marketed by the principal and had subsequently placed them on retail sale through its own salespersons).
[10] Judgment of 17 January 2008, No. 19/17, with a note by Venezia, Il necessario intervento del preponente per il diritto dell'agente alla provigione per l'affare concluso da un terzo, in Contracts 2008, p. 307 et seq.
The 'minimum turnover' clause in the agency contract
One of the most frequently used and widely used clauses in agency contracts is certainly the 'minimum turnover' clause. With this clause, the parties establish the minimum annual turnover threshold that the agent must contribute to the principal.
In this regard, the question arises as to the validity of this clause and the consequences if the agent fails to meet the agreed thresholds.
Firstly, on a preliminary basis, so to speak, according to case law, the agreed turnover must be fairSecondly, it is noted that a clause granting the principal the power to unilaterally modify the minimum turnover figures during the course of the relationship is of doubtful validity: as a matter of principle, the parties cannot always and indiscriminately introduce contractual clauses conferring on one party the power to modify the contract in a discretionary manner, especially if they concern fundamental elements of the relationship, such as, for example, the zonethe agent's customer package, the commissionscontractual minimums, etc..
According to settled case-law, this power vested in the principal is, in principle, also subject to the general principles of our legal system of fairness and good faith in the performance of the contractual relationship, governed precisely by Articles 1175, 1375 and 1749 of the Civil Code.[1] In general, in an agency contract, the assignment to the principal of the power to modify essential elements of the relationship must "be justified by the need to better adapt the relationship to the needs of the parties as they have changed over time"[2] e not may result in a substantial circumvention of contractual obligations.
That said, in principle, case law holds that the failure to reach an agreed minimum implies a de facto default of the agent. The biggest problem is to understand whether this constitutes a breach of such gravity as to justify termination by the principal.
In the event that the parties had not foreseen anything in this regard, it will be necessary to assess, on a case-by-case basis, the seriousness of this breach and whether it could constitute a termination for just cause or termination of the contract.
If, on the contrary, the parties had expressly provided in the contract that failure to reach the minimums would result in the immediate termination of the relationship and, therefore, had provided for a express termination clause under Article 1456 of the Civil Code, it must be held that until a few years ago case law unequivocally held that:
"when [...] the parties, in their autonomy and freedom of bargaining, have previously assessed the significance of a specific non-performance, implying that the non-performance is of retermination of the contract without notice, the court may not make any enquiry into the extent of the non-performance itself in relation to the interest of the other contracting partybut must only accept whether it is attributable to the obligor at least by reason of fault, which is presumed under Art. 1218 of the Civil Code.".[3]
This jurisprudential direction has been radically changed by a more recent (and now consolidated) orientation of the Court in 2011,[4] in which the Court of Cassation, although on the one hand recognised the legitimacy of inserting an express termination clause in the contract, on the other hand partially limited its effectiveness: in this ruling, the Court specified that the termination of an agency contract by virtue of an express termination clause entails the preliminary and necessary verification by the court of the existence of a breach. The judge, specifically, will have to verify whether:
- the breach is of such gravity as to exclude theallowance for lack of notice pursuant to Article 1750 of the Civil Code;
- the breach is of such gravity as to exclude the agent's right to receive theseverance pay pursuant to Article 1751 of the Civil Code.
These are briefly analysed below.
(a) Indemnity for lack of notice
It is well established that the agency contract is subject to aanalogous application of Art. 2119 of the Civil Code., which provides for the right of the parties to terminate without notice in the event of a cause that does not permit the continuation, even provisional, of the relationship.
On the basis of this assumption, the aforementioned case law has therefore held that in the event of recourse by the principal to an express termination clause, the latter may be considered valid to the extent that it justifies a termination in the first place, since the freedom of the parties cannot in fact be absolute. The judge, in such cases, will have to ascertain whether the failure to achieve the budget is a "cause that does not permit the continuation, even temporarily, of the relationship'..[5]
Applying this principle to the minimum turnover clause, the case law on the merits has recently held that in itself the failure to achieve the budget of sale does not legitimise an immediate termination of the relationship by the principal,
"because [...] it is not one of the agent's obligations to cause the principal to achieve a certain turnover and because it is not possible, in principle, to charge the agent for the failure to achieve objectives, irrespective of whether or not that failure is attributable to the agent's defaulting behaviour.[6]
b) Severance pay
Similarly, as far as theseverance pay, the assessment of the gravity of the breach must be made on the basis of the standard set forth in Article 1751 of the Civil Code, which also makes the termination of this indemnity conditional upon the occurrence of a breach which, because of its seriousness "does not permit the continuation, even temporarily, of the relationship."
Since Art. 1751 of the Civil Code expressly provides that all the provisions contained therein are mandatory to the detriment of the agent, the possibility of excluding the agent's right to the termination indemnity shall be subject to the existence of a serious breach, irrespective of the insertion within the contract of an express termination clause.[7]
It follows that the non-achievement of the objectives, if it is unrelated to precise and specific failures of the agent that must be specifically proved by the principal, cannot be used as a ground for the breach of the fiduciary relationship such as to prevent the continuation of the relationship.[8]
__________________________
[1] On this point cf. Cass. Civ. No. 9924, 2009.
[2] Cass. Civ. no. 5467, no. 2000.
[5] Cass. Civ. 14.2.2011 no. 3595.
[6] Brescia Court of Appeal of 15.9.2019.
[7] Cf. on this point Court of Modena 10 June 2011.
[8] Id. Brescia Court of Appeal of 15.9.2019.