Contratto di agenzia Archivi - Page 5 of 6

The non-compete obligation in the agency contract: during and after termination of the relationship.

In the European context, it is certainly surprising that the 86/653/EEC makes no mention whatsoever of the agent's obligation not to compete with the principal during the course of the contractual relationship.

This approach has led most of the Member Countries not to mention, regulatively and expressly, this institution in their legal systems. Therefore, in the European context absolutely not to be taken for granted that the agent, in the absence of a special agreement between the parties, is obliged not to work for competitors of the principal during the contractual relationship.

In contrast, under Italian law during the course of the relationship, the prohibition of competition is "natural effect of the contract"This, even though there is no specific rule providing for it, such as, for example, Art. 2015 of the Civil Code for employees, is indirectly inferred from para. 1 of Art. 1746 of the Civil Code, according to which the agent must protect the interests of the principal and act loyally and good faith.

As for the period following the termination of the contract, i.e. the so-called prohibition of 'post-contractual' competition, it was partly regulated by the directive, which dictated the minimum protections to be respected by all signatory countries. They are:

to be stipulated for registered;
concerning the sector geographical area or group of persons and the geographical sector entrusted to the commercial agent, as well as the goods for which the commercial agent had representation under the contract, and thecommercial agent had representation under the terms of the contract.
which is of a duration not exceeding two years from the contractual relationship

The directive has therefore provided that the post-contractual non-compete agreement is permissible only by specific agreement of the parties and in any event within certain legal limits. Indeed, an obligation of that nature, which certainly has the utility of ensuring that the principal can maintain the clientele that was managed by the agent prior to the termination of the relationship, nevertheless has the side effect of actually making it impossible for the agent to carry on its business and for that reason has been expressly limited by the European directive, so as to guarantee the interests of both parties.

The prohibition of 'post-contractual' competition was introduced in our country of Article 1751encore c.c., by Decree 303 of 1991. Specifically, the first paragraph of Article 1751encore provides that:

"An agreement restricting competition by the agent after termination of the contract shall be in writing. It must concern the same area, customers and kind of goods or services for which the agency contract was concluded and its duration may not exceed two years after the termination of the contract."

The second paragraph of Article 1751encore c.c., was inserted by Law No. 422 of 2000, and states that:

"acceptance of the non-competition agreement entails, upon termination of the relationship, the payment to the commercial agent of an indemnity of a non-commission nature. The indemnity shall be commensurate with the duration, not exceeding two years after the termination of the contract, the nature of the agency contract and the severance payment."

It is important to emphasise that the latter article applies only to certain categories of agents of commerce, which were considered more deserving of protection. Article 23.2 of the aforementioned Law No 422 of 2000, which introduced precisely the second paragraph of Article 1751encore c.c., expressly provided that the article applies:

"exclusively to agents practising in the form of sole proprietorships, partnerships or single-member corporations, as well as, where provided for by national economic agreements in the sector, to corporations consisting exclusively or predominantly of commercial agents. The provisions of paragraph 1 shall take effect on 1 June 2001."

Therefore, the post-contractual non-compete agreement has, in the first place, onerous charactersecondly, it must relate to the same area, clientele and type of goods or services for which the agency contract was concluded (Trib. Florence 20 November 2012) and, in addition, must assume the written form ad substantiam (Trib. Milan 12 September 2011).

As for the quantificationan indemnity of a non-commissionable nature is provided for the agententrusted to negotiation between the partiestaking into account the National Economic Agreements of the category.

In the absence of individual agreementand only when AECs are not applicable, Art. 1751encore third paragraph, provides that the indemnity shall be determined by the court in equity, with reference:

the average of the fees collected by the agent during the term of the contract and their impact on the total turnover over the same period;
the causes of termination of the agency contract;
to the size of the area assigned to the agent;
the existence or non-existence of exclusivity for a single principal.

ABSTRACT

under Italian law during the course of the relationship, the non-competition clause is a 'natural effect of the contract'
the prohibition of 'post-contractual' competition was introduced in our country in Art. 1751encore c.c.. It must relate to the same area, clientele and type of goods or services for which the agency contract was concluded, its duration may not exceed two years following the termination of the contract and it must be concluded in writing
acceptance of the covenant not to compete entails, upon termination of the relationship, the payment to the commercial agent of an indemnity of a non-commission nature
an indemnity of a non-commissionable nature is envisaged for the agent, entrusted to negotiation between the parties, taking into account the National Economic Agreements for the category
in the absence of an individual agreement, and only when the ERM is not applicable, Art. 1751encore third paragraph, provides that the indemnity shall be determined by the court on an equitable basis

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Area exclusivity in the agency contract.

While the exclusive right is a 'natural' element of the agency contract, it is not an 'essential' element, the contracting parties may derogate from this right, or contractually delimit its exact extent.

In Italian law, the agent's exclusivity constitutes a natural element of the contract: Article 1743 of the Civil Code, in fact, provides that "the principal may not use several agents at the same time in the same area and for the same branch of activity". This implies that, unless otherwise agreed by the parties, it is presumed to exist in the contractual relationship.

That said, it is noted that, although the issue of agent 'exclusivity' is of fundamental importance, the Community legislator in the dir. 86/653/ECC limited itself to partially regulating this institution, i.e. only with specific reference to the agent's commission (cf. Art. 7 Dir. 86/653/EEC).

It follows that, contrary to Italian law, the opposite principle applies in most European countries, i.e. that, in the absence of an agreement between the parties, the agent will not benefit from area exclusivity (cf. area agent, in German law).

Therefore, while in the European context (in principle), it is considered that zone exclusivity must be expressly agreed upon, in Italy the exclusive is regarded as a natural feature of the contract and, therefore, present in every relationship, unless the parties have stipulated otherwise (see also Agent and/or Area Manager? A brief overview.)

With regard to function, zone exclusivity evidently pursues the in order to protect the agent and his earnings prospects. Indeed, if the principal could use several agents in the same area, the agents would see their profit prospects significantly reduced: the agents would be in competition with each other and the commissions due for business concluded by one of them could not be paid to the others.

That being said, it should certainly be borne in mind that, while Art. 1743 of the Civil Code is intended to protect the agent from any direct actions of the principal in its area, theArt. 1748(2) of the Civil Code provides that the agent is entitled to commissions also on business concluded with customers ".belonging to the area or category or group of customers reserved for the agent". According to this rule, it is apparently assumed, unless otherwise agreed, that the principal is free to make all types of sales even in the areas that have been granted to the agent on an exclusive basis.

Italian jurisprudence, in an attempt to overcome this apparent contradiction, has expressed itself several times, asserting that the principal's right, under Art. 1748.2 of the Civil Code, to make direct sales also in the agent's territory, must be partially limited, since this right may be exercised only on an occasional basis and it must be ruled out that the principal may carry out a systematic and organised sales activities in the agent's exclusive area. It is stated, for example, in a recent Supreme Court ruling that:

"in the agency relationship, the proposer may not operate, on a continuous basis, in the agent's area of competence but, pursuant to Article 1748(2) of the Civil Code, has only the power to conclude, directly, individual deals, even if of significant size, the performance of which gives rise to the agent's right to receive the so-called indirect commissions, has only the power to conclude, directly, individual deals, even if of significant size, the performance of which gives rise to the agent's right to receive the so-called indirect commissions; it follows that, where the proposer's intervention is merely isolated, the right to the payment of the commission is, in turn, episodic and not periodical, and, as such, is subject to the ordinary limitation period under Art. 2946 of the Civil Code and not to the 'short' limitation period under Art. 2948(4) of the Civil Code. (Cass. Civ. 2008, no. 15069).

It must also be said that it is such systematic conduct is unlikely to be found in practiceas the principal tends to have no interest in selling directly if he then has to pay commission to the agent anyway. The manufacturer, in other words, would perform the same work as the agent in its stead, bear the agent's costs, without making a profit, and in any event have to pay commission to an inert agent. On the other hand, it is more likely that the principal, who on the basis of a reassessment of market conditions deems it preferable to sell directly to the end customer without using the agent any longer, would simply terminate the agency contract.

Nevertheless, it is nevertheless clear that this approach, according to which, in the absence of an agreement to the contrary, the principal must limit his activity in the agent's territory to occasional business, can give several practical problemsrelated precisely to interpreting the distinction, which is far from clear, between occasional, and therefore legitimate, breaches from continuing breaches of exclusivity.

In this regard, a orientation of authoritative doctrine (Bortolotti)According to which it is preferable to construe the exclusivity of Art. 1743 of the Civil Code as meaning that the principal is free to make as many direct sales in the agent's exclusive area as it wishes, provided that it pays the indirect commission, and that there is therefore a violation of the exclusivity only when the principal appoints other agents in the area or tries to circumvent the exclusivity by fictitiously interposing third parties in order not to pay the indirect commission.

In any event, provided that the exclusive right is a 'natural' element of the agency contract, it is not an 'essential' element, the contracting parties may derogate from this right, or contractually delimit its exact extent.
On the basis of the above, it is advisable, in order to avoid any uncertainty and reduce potential disputes to a minimum, to contractually clarify how and to what extent the principal may carry out direct sales in the territory and what the consequences are in the event of individual or repeated breaches of contract.

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The obligation to register as a commercial agent.

According to well-established doctrine and case law, both Italian and of the European Court of Justice, the non-registration of an Italian commercial agent, operating in Italy, does not invalidate the agency contract.

It can be said that Italian jurisprudence arrived at this conclusion after a not short and linear path. It all started from the fact that theArticle 9 of Law No 204 of 3 May 1985expressly states that "it is prohibited for anyone who is not enrolled in the register referred to in this law to exercise the activity of agent or sales representative".

Italian jurisprudence, until the entry into force of European legislation (86/653/EEC)The Court of First Instance has inferred from the above-mentioned rule a complete ban on the exercise of the profession by non-registered agents, with the consequent nullity formerly Article 1418 of the Civil Code of the contractual relationship, on the ground that it is contrary to mandatory rules. (e.g. Cass. Civ. No. 4154 of 1992).

Following the entry into force of Directive 86/653/EEC, the Court of Bologna, in a dispute in which an unregistered agent was denied the right to receive theseverance payprovided for in Article 1751 of the Civil Code, due to the nullity of the relevant contract, submitted the following question to the Court of Justice:

"Is Directive 86/653/EEC incompatible with Articles 2 and 9 of Italian domestic law No 204 of 3 May 1985, which make the validity of agency contracts subject to the registration of commercial agents in a special register?".

The Court of Justice, in a judgment of 30.4.1998, in the case Barbara Bellone / Yokohama spa stated the following:

"Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents precludes national legislation which makes the validity of an agency contract conditional upon the commercial agent being entered in a special register".

It is noted that, although the Court did not expressly address the question of the nullity of contracts with non-registered agents, it did in fact intend to affirm the incompatibility of Article 9 of the 1985 Law with respect to the validity of the relevant contracts.

It must therefore be considered that the has direct effect, with the consequent obligation for national courts to disapply the incompatible domestic provision. The Court of Cassation on this point, now in a uniform manner, has repeatedly held

"the validity of agency contracts concluded with non-registered agents on the ground that the rule stipulating their nullity, Art. 9 Law No 204 of 1985being contrary to Community Directive No 653 of 1986, it had to be disapplied. Those principles, supported by the decision of the Court of Justice of the European Union of 30 April 1998 (in Case C-215/97 Bellone and Yokohama s.p.a.), according to which 'it is contrary to national legislation to make the validity of an agency contract conditional on the commercial agent being entered in a special register', must be confirmed, with the result that the plea must be rejected.." (among others, cf. Cass. Civ. No. 18202 of 2005).

Italian jurisprudence has therefore interpreted this rule, stating that the national court is obliged to interpret domestic laws as far as possible in the light of the wording and purpose of Directive 86/653/EEC, so as to allow application in accordance with its objectives.

On the basis of these case law guidelines, the legislator with the D. Lgs 26.03.2010, n. 59Italian law has transposed the EU directive 2006/123/ECknown as the 'Services Directive'. Among the objectives pursued by the EU directive was that of simplifying the methods of access also to the activity of commercial agent. To this end, therefore, Article 74 of Legislative Decree 59/2010 expressly provided:

the suppressionamong others, of the role of agents and sales representatives ('RAR'), provided for in Article 2 of Law 204/1985;
making the commencement of the commercial agent activity subject to the DIA (Dichiarazione Inizio Attività) - now SCIA (Segnalazione Certificata di Inizio Attività) - accompanied by self-certifications and certifications attesting to the possession of the requirements;
registration of the activity of agents or sales representatives in the RI (Registro delle Imprese) if the activity is carried out in the form of a company, or in a special section of the REA (Repertoire of Economic and Administrative News).

The actual abolition of the Role became effective on 12 May 2012, following the entry into force of the implementing Ministerial Decree of 26.10.11.

As of this date, therefore, those who intend to commence the activity of commercial agency must submit to the Chamber of Commerce registry office of the province where they carry out their activity, a special SCIA, accompanied by the certifications and declarations in lieu of the law 204/1985, by filling out the 'ARC' form attached to the implementing decree.

For agency contracts that were concluded before the abolition of the register, the Italian court must therefore be deemed to disapply the legislation in force at the time, and it may be concluded that following the Bellone judgment, contracts with agents who were not registered must be considered fully valid.

Lastly, it should be noted that the obligation for agents to register (although this has been waived and no longer has any real effect) existed only for agents practising in Italy and must be excluded not only for agents residing abroad, but also for Italian agents who in fact operate and promote business abroad.

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Can the parties request witness evidence of the existence of an agency contract?

What happens if the parties do not conclude the agency agreement in writing, but only on the basis of verbal agreements? Can the parties prove the existence of the relationship by means of witnesses?

With reference to these aspects, the second paragraph of Article 1742 of the Civil Code provides that "the contract must be proven in writing. Each party shall be entitled to obtain from the other a document signed by it reproducing the contents of the contract and of the additional terms".

The Court recently ruled on the interpretation of this rule, consolidating what is the orientation of case law, according to which the agency contract cannot be proved by witnesses, but only in writingexcept to prove the blameless loss of the document (Cass. Civ. no. 16/03/2015, no. 5165) (cf. also What is the difference between an agency contract and a business intermediary? e Main differences between the agency contract and the commercial distribution contract).

Although at first glance this judgment does not seem to add much to what is already set forth in Article 1742 of the Civil Code, a closer reading of the regulatory text reveals that this article may give rise to conflicting interpretations and generate rather significant problems. Specifically, this rule, on the one hand, imposes on the parties the burden of proving the agency contract in writing, implicitly excluding evidence by witnesses, but, on the other hand, attributes to them the unwaivable right to demand a written document from each other incorporating the content of their verbal agreement.

It is clear that the coordination between the requirement of the written form and the right of the parties to obtain a document reproducing the content of the agreement contains inconsistencies within it: think of the (rather frequent) case where the parties have entered into an agency agreement verbally and, in the course of the relationship, the principal refuses to provide the agent with a written document reproducing its contents.
In such a case, may the agent, who is granted an unwaivable right to have the verbal agreement set out in a written document, take legal action to obtain such a document and, in order to prove the existence of the contractual relationship, request evidence by witnesses?

To answer this question, it is necessary to take a small step back and analyse the origin of the current wording of the regulatory text. Article 1742 of the Civil Code was thus amended by Legislative Decree No 303 of 10 September 1991, which expressly transposed European Directive 86/653on the coordination of the laws of the Member States relating to self-employed commercial agents.
The directive, specifically, introduced two fundamental concepts, namely:

to give each party the right to request and obtain from the other a signed document reproducing the contents of the agency agreement (Art. 13(1));
to allow Member States, if they so wish, to "provide that an agency contract shall only be valid if evidenced in writing." (Art. 13, §2)

In introducing these general principles, the directive was inspired by the German model, which at the § 85HGB (Handelsgesetzbuch - Commercial Code), explicitly provides (and provided) for the right of each party to "demand that both the content of the contract and subsequent agreements relating to it be included in a document signed by the other party. "

It is necessary to specify that such a document drawn up by only one party would not constitute a real contract, but rather a unilateral declaration by which one party indicates what it considers to be the content of the contract. (see Bortolotti, Contract Handbook of International Commercial Law)

Therefore, according to the legal text, the parties, who have not entered into a contract in writing, cannot prove in court, by means of witnesses, the contractual relationship and any changes to that relationship (e.g. increases in commissions, expansion of the area) that were agreed upon between the parties orally. To the contrary, will only be able to prove whether there are 'written traces' proving the actual agreement of the parties, such as exchanges of e-mails and correspondence, order confirmations from which the actual existence of such changes can be presumed, etc.

In any event, as noted above, the (unwaivable!) possibility of the party requesting to be provided with a written document reproducing the content of the contract is expressly provided for. But what happens if the other party refusesor does not recognise that verbal agreements existed between them. In such a case, could the requesting party take legal action to have the existence of the relationship recognised and use witnesses to do so?

On the basis of the foregoing, this question no longer seems to be a foregone conclusion, and the interpretation of the Supreme Court, examined above, according to which "the agency contract must be proven in writing, pursuant to Article 1742(2) of the Civil Code, as amended by Legislative Decree No. 303 of 10 September 1991, so that testimonial evidence (except to prove the irresponsible loss of the document) and evidence by presumptions is inadmissible", may not be agreeable in part.

According to authoritative doctrine (Bortolotti), the party's unwaivable right to be able to obtain a written document reproducing the content of the contract, is not compatible with a restrictive interpretation of the rule, which would prohibit the possibility of using witness evidence to obtain such a written document.

If one were to follow this interpretationnot only very authoritative, but also highly consistent with the practical needs of the parties and the practice of business relations, the party wishing to obtain from the other party a written document reproducing the existing verbal agreements may use testimonial evidence in the proceedings aimed at obtaining the written document from the other party. After obtaining such a document, the party may assert its rights in the course of any dispute.

This orientation is mainly based on the fact that, the choice of the legislator to introduce the requirement of the written form is incompatible with the (inalienable) right of the parties to have the verbal agreement incorporated in writing.

If this were not done, one would find oneself in the paradoxical situationof the party to be able to exercise its unwaivable right. The purpose of the rule is to enable a party to obtain a written document that facilitates the protection of its rights and, therefore, to require written proof of the herbal agreements that a party requests to be formalised would constitute a paradox, which would therefore render the rule under scrutiny completely ineffective.

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The 'star of belief' in the agency contract.

The so-called 'star of the believer' clause[1] can be defined as a genuine guarantee, whereby a party 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 suffered by the latter.[2]

In matters of agency, the usability of such a clause is in fact which disappeared as a result of the reform of Law No 256 of 21 December 1999, by which Article 1746 of the Civil Code was amended. It is recalled that with the reform, a third paragraph in Art. 1746 of the Civil Code.. This paragraph introduced an explicit prohibition to include in agency contracts a clause that

"places liability, even if only partial, on the agent for the third party's non-performance".

However, the rule expressly provides for the parties' right to derogate from this prohibition, but only

"for individual transactions of a particular nature and amount, individually determined".

The guarantee in such cases, however, will meet the quantitative limitation imposed by the same paragraph 3 of Art. 1746 of the Civil Code, as it may not exceed the commission that the agent would be entitled to receive in respect of the same business.

In scope Europeanit is noted that, despite its relevance and the critical issues associated with it, the Directive No. 86/653 EECneglected to regulate this institution, which was (and still is) regulated in the remaining member states mainly in the following two ways:

the parties can only agree on the star del credere for certain affairs or customers, but, in such cases, the agent guarantees to 100% the principal's risk (a mechanism followed, for example, by Germany, Finland and Portugal);
there is a generic warranty obligation charged to the agent on all business promoted by the agent, but of much lower amount to the actual damage suffered by the principal (e.g. Belgium and the Netherlands).

Prior to the 1999 reform, Italy also fell within the second category: the agent's "star del credere" was not specifically regulated in the civil code, but was regulated as a contingent and pactual institution by the Collective Economic Agreements. The agent was bound to the "star del credere" exclusively by covenant and in compliance with the rules of the Collective Economic Agreements having effect erga omnes (art. 7, b.e.c. 20 June 1956) according to which the agreed charge to be borne by the agent could not exceed 20% of the loss suffered by the principal, a figure reduced by the collective economic agreements valid as a private agreement (9 June 1988, trade sector and 16 November 1988, industry sector) to 15%.

The Court of Cassation recently ruled on a case brought by an agent seeking payment of the agreed-upon star del credere fee in a contractual relationship established prior to the reform of Article 1746(3), which took place at the end of 1999.[3]

In that judgment, the Court makes a brief analysis of the development of the institution, recalling that it, already provided for in the Commercial Code, found its way into the Civil Code at 'Article 1736 of the Civil Code, concerning commission contracts. Art. 1736 of the Civil Code, in fact, provides that the commission agent is liable to the principal for the performance of the bargain, having at the same time a right to special remuneration or a higher commission. In this perspective, the commission agent, as agent of the principal, on whose behalf it acts, acts as guarantor to the principal of the solvency of the third party.

The Court, in essence, reconfirmed the orientation expressed and reaffirmed by the prevailing jurisprudence of legitimacy,[4] according to which the agency contract (before the reformArticle 1736 of the Civil Code on the subject of contracts of commission could not be applied by analogy, since the agent's liability for star del credere was specifically governed by Art.collective economic agreement 20 June 1956made compulsory erga omnes by Presidential Decree No. 1450/1961 (limiting the agent's liability without further compensation to 20% of the loss suffered by the principal), or by the more favourable rules set forth in subsequent collective agreements in the sector (where the parties have adhered thereto), which adopt the narrower limit of 15%.[5] Based on this reasoning, the Court stated that:

"in the absence of an explicit agreement on remuneration and in the absence of evidence of a will of the parties in that sense, no additional remuneration is due to the agent for the adjudication of the star del credere."

A as a result of this regulatory intervention, (after 1999) the usability of the star del credere is in fact much less relevant in our system. The parties may, in fact, only agree on this on a case-by-case basis and, moreover, the agent's guarantee must be limited to an amount equal to and not exceeding its commission.

In practice, the legislature has applied and imposed the requirements (examined above) of both systems used by the Member States and has restricted the usability of this institution in such a way as to effectively remove it from our legal system.

On the one hand the star of believing, so disciplined, no longer has the function of guaranteeing the principal for certain business that it considers to be risky (the guarantee is not 100%, but is only equal to the commission that the agent would be entitled to receive for that particular business), on the other hand cannot be used to empower the agentin that it cannot operate with respect to all business promoted by the agent, but only in individual cases where the principal has a suspicion that the customer is untrustworthy.

This choice in fact constitutes a serious disadvantage for the Italian principal wishing to enter new markets and submit its law to foreign agents. Indeed, the star del credere should be seen as a protection for the principal, especially when the principal deals with agents in foreign markets, for which the star del credere should be a highly necessary means, considering the greater difficulty for the principal to obtain information on the reliability and solvency of foreign clients, procured by the agent.

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[1] The term 'star del credere' is regulated in Article 1736 of the Civil Code, on the subject of commission, which provides: "A commission agent who, by agreement or custom, is obliged to "star del credere" is liable to the principal for the performance of the bargain. In such a case, he shall be entitled, in addition to the commission, to a fee or a higher commission, which, in the absence of an agreement, shall be determined according to the custom of the place where the business is transacted. In the absence of usage, the court shall decide according to equity." Through this clause, the commissioner assumes the role of a guarantor under Art. 1936 of the third party with whom it contracts, guaranteeing the principal the regular performance of the third party's obligation and the successful completion of the transaction.

[2] See Bortolotti, Distribution Contracts, 2016, Wolters Kluwer, p. 241.

[3] Cass. Civ. 2015, no. 4461.

[4] See, e.g., Court of Cass. Civ. no. 1999, no. 12879.

[5] Cass. Civ. 1999, no. 3902/99

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The power of the principal to change the client portfolio of his agent

[:en]With Judgment of 2 July 2015, No 13580the Court of Cassation has ruled on a point that is very often the subject of dispute in contractual relations between agent and principal. The case was as follows: a principal, who had been assigned the power to change the customer portfolio of its agent during the course of the contractual relationship, used this clause, in order to effect a drastic reduction in the agent's customer portfolio of 88% (on this point see also Unilateral changes to the agency contract by the principal).

The Court, which was questioned on the legitimacy of such conduct, noted that although the principal is generically given the power to reduce the customer base of its agent, this power should, however, be exercised primarily for the purpose of adjusting the contract to the actual evolution of the relationship over time. Moreover, again according to the Supreme Court, this power must in any event be subject to limits and be exercised by the holder with fairness and good faith.

The appeal was essentially based on the allegation of breach and/or misapplication, by the principal, of theArticle 2 A.E.C. 2002 (collective economic agreements) and Article 2697 of the Civil Code. Paragraphs 3, 4 and 5 (relevant here) of Article 2 A.E.C. 2002 read as follows:

"Zone variations (territory, clientele, products) and the amount of commissions, except in minor cases (meaning reductions of up to five per cent of the value of the commissions accruing to the agent or representative in the calendar year preceding the variation, or in the twelve months preceding the variation if the preceding year has not been worked in full), may be implemented upon written notice to the agent or representative to be given at least two months in advance (or four months in advance in the case of agents and representatives engaged in business exclusively for one company), unless the parties agree in writing to a different commencement date.

If these changes are of such a magnitude as to appreciably alter the economic content of the relationship (appreciable variation being understood as reductions greater than twenty per cent of the value of the commissions accruing to the agent in the calendar year preceding the variation, or in the twelve months preceding the variation if the preceding year was not worked in full), the written notice shall not be less than that provided for the termination of the relationship.

If the agent or representative communicates, within 30 days, not to accept changes that significantly alter the economic content of the relationship, the communication of the principal shall constitute notice of termination of the relationship of agency or representation, at the initiative of the principal".

It follows from reading this article, therefore, that the principal is conferred a potestative right, consisting in the possibility of decreasing his agent's clientele. In that case, if the agent communicates that it does not accept the decreases imposed on it by the principal, a just cause for terminationwhich allows the principal to terminate the contractual relationship without having to pay the agent the termination indemnity pursuant to Article 1751 of the Civil Code.

However, this potestative right is, according to settled case law, also subject to the general principles of our legal system, of fairness and good faithin the performance of the contractual relationship, governed precisely by Articles 1175, 1375 and 1749 of the Civil Code (cf. Cass. no. 9924/09).

Moreover, the Court itself referred to a guideline of its own (cf. Cass. 5467/2000), according to which, in general, in an agency contract, the granting to the principal of the power to amend certain clauses (in particular those relating to the territorial scope and the amount of the commission) should 'be justified by the need to better adapt the relationship to the needs of the parties as they have changed over time'.

The use of potestative powers, therefore, must not, however, result in a substantial circumvention of contractual obligations and must therefore be limited and subject to the principles of fairness and good faith.

The Court concluded, stating that in the present case, the principal essentially used and disguised its own potentative rightthe purpose of reducing, precisely, the clientele of its agent, in order to put the latter in a de facto situation impossible to accept and, therefore, with the purpose and function of having the contractual relationship terminated, without the obligation to pay the indemnity in lieu of notice arising.

Finally, it is recalled that the Court has already referred numerous times to the principle of acting in good faith pursuant to Article 1375 of the Civil Code. On other occasions it has, for example, considered contrary to this principle the conduct of the principal who had made a radical change in pricing policyso as to make it effectively impossible for the agent to operate (cf. Cass. Civ. 1995 No. 1142), the refusal unconditionally and systematically of make garlic course orders transmitted by the agent (Court of Cass. Civ. 1985 No. 6475), replace the agent during the notice period, at the same time informing the customers (Cass. Civ. 1991 No. 1032).[:de]With Judgment of 2 July 2015, No 13580the Court of Cassation has ruled on a point that is very often the subject of dispute in contractual relations between agent and principal. The case was as follows: a principal, who had been assigned the power to change the customer portfolio of its agent during the course of the contractual relationship, used this clause in order to make a drastic reduction in the agent's customer portfolio, amounting to 88%.

Moreover, the same Court referred to its own orientation (see Court of Cassation 5467/2000), according to which, in general, in an agency contract, the granting to the principal of the power to amend certain clauses (in particular those relating to the territorial scope and the amount of the commission), should "be justified by the need to better adapt the relationship to the needs of the parties, as they have changed in the course of time".

Finally, it is recalled that the Court has already referred numerous times to the principle of acting in good faith pursuant to Article 1375 of the Civil Code. On other occasions it has, for example, considered contrary to this principle the conduct of the principal who had made a radical change in pricing policyso as to make it effectively impossible for the agent to operate (cf. Cass. Civ. 1995 No. 1142), the refusal unconditionally and systematically of make garlic course orders transmitted by the agent (Civil Cass. 1985 No. 6475), replace the agent during the notice period, at the same time informing the customers (Civil Cass. 1991 No. 1032).[:en]With Judgment of 2 July 2015, No 13580the Court of Cassation has ruled on a point that is very often the subject of dispute in contractual relations between agent and principal. The case was as follows: a principal, who had been assigned the power to change the customer portfolio of its agent during the course of the contractual relationship, used this clause in order to make a drastic reduction in the agent's customer portfolio, amounting to 88%.

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Derogation of the agent's notice period.

Article 1750 of the Civil Code, as replaced by Article 3 of Legislative Decree No 303 of 10 September 1991 (implementing the Community Directive 86/653), states that:

"If the agency contract is a indefiniteeither party may terminate the contract by giving notice to the other within a fixed period of time (para. 2).
"The notice period may in no case be less than to one month for the first year of the contract, to two months for the second year commenced, to three months for the third year commenced, to four months for the fourth year, to five months for the fifth year and to six months for the sixth year and all subsequent years (para. 3).
"The parties may agree on longer notice periods, but the principal may not observe a shorter time limit to that imposed on the agent"(para. 4).

It should be recalled that the amendments made to Article 1750 of the Civil Code by Legislative Decree No 303 of 1991 were implemented in line with Community Directive No 653 of 1986, which expressly provided that:

1. If the agency agreement is concluded for an indefinite period, either party may terminate it by notice.
2. The notice period is one month for the first year of the agency agreement, two months for the second year commenced, three months for the third year commenced and for subsequent years. The parties may not agree on shorter terms.
3. Member States may fix the notice period at four months for the fourth year, five months for the fifth year and six months for the sixth and all subsequent years. They may provide that the parties may not agree on shorter periods.

The question has been raised as to whether the parties may derogate in part from the normative dictate of Article 1750 of the Civil Code.., reducing the notice periods set by the legislature. Specifically, it has been argued that the protection expressly provided for by the directives is referable only to the first three years and that therefore it would be permissible to argue that the term of notice mandatory by the parties would be referable only to the three months. If this theory were followed, the parties could partially derogate from Art. 1750 of the Civil Code and provide for a notice period of three months also for relationships lasting more than three years.

The Court of Cassation has ruled on this issue, rejecting this argument in its entiretyarguing that "in the matter of agency contracts of indefinite duration, the term of notice, pursuant to Article 1750 of the Civil Code (as replaced by Article 3 of Legislative Decree No 303 of 10 September 1991), cannot be less than one month for each year, or fraction thereof, of the duration of the contract up to a maximum of six months, since the Italian legislature - as permitted by Article 15 of EEC Council Directive No 86/653/EEC of 18 December 1986, without prejudice to the mandatory protection for the first three years - has provided for increasing terms of four, five, and six months for the years following the third year. 15 of EEC Council Directive 86/653/EEC of 18 December 1986, without prejudice to the mandatory protection for the first three-year period, the Italian legislature - as allowed by Article 15 of the EEC Council Directive 86/653/EEC of 18 December 1986, without prejudice to the mandatory protection for the first three-year period - has provided, also for the years following the third year, increasing terms of four, five and six months (respectively for the fourth, fifth, sixth and subsequent years) which cannot be derogated by the parties." (Cass. Civ. No. 16487, 2014)

Therefore, according to the Court, the notice period in Art. 1750 of the Civil Code is not binding on the parties, or rather, the parties may only provide for terms that are longer, but not shorter, than those indicated in the code.

Lastly, I recall that failure to give notice entitles the agent to demand theallowance in lieu of notice.

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Main obligations of the agent. Is a simple propaganda activity sufficient?

According to Art. 1742 of the Civil Code, the agent in the contractual relationship "undertakes on a permanent basis to promote, on behalf of the other, against remuneration the conclusion of contracts in a specified area." (cf. obligations of the agent under German law)

With reference to this article, the Court of Cassation recently pronounced a judgment that focused precisely on the essential elements of the agency contract. The Court specified that the activity of promoting the conclusion of contracts, which precisely constitutes the typical obligation of the agent pursuant to Article 1742 of the Civil Code, cannot consist in a simple activity of '....propaganda"even if this results in an increase in sales; in fact, a mere activity of promoting the conclusion of contracts is not sufficient to accrue the agent's entitlement to commission, as it is it is necessary for the agent himself to carry out an activity of convincing the potential customer to place orders for the principal's products. Only in that case, i.e. if the promoted contract is successful due to the agent's activity, will the agent be entitled to the commission. (see also Unilateral changes to the agency contract by the principal. e The agent's obligation to inform the principal).

The Supreme Court has stated on this point that the agent's performance consists of

"at acts of varied and non-predetermined content - such as advertising, preparing contracts, receiving and forwarding proposals to the principal for acceptance - acts all of which tend to promote the conclusion of contracts in a particular area on behalf of the principalnone of these activities constitutes an indispensable component of the agent's performance." (Cass. Civ. 4.9.2014 no. 18690).

Case law, therefore, makes a clear distinction between propaganda and promotional activity.

The activity of promotion, in fact, is considered to be the typical performance of the commercial agent, pursuant to Article 1742 of the Civil Code. Promoting the conclusion of a contract therefore means pushing, proposing, implementing a series of activities so that certain contracts are concluded in a given area. Promotional activities, it should be noted, include several impulse' activities and 'facilitation', aimed precisely at the placement of a good or service in a given area, designed to increase or support towards purchase the demand for the product offered by the principal.

These impulse activities include (mainly) propaganda, which is designed to persuade and inform a potential customer of the existence of the product or service, illustrating its qualities and characteristics.

In any event, mere propaganda activity is not sufficient for an agency relationship to be deemed to exist. Lastly, I note that case law does not exclude the possibility of making the action of propaganda pre-eminent over that of preparing and arranging the contract.

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The termination clause for just cause in the agency contract. Valuation parameters.

On the subject of the termination of the employment relationship, Article 2119 of the Civil Code provides that "either party may terminate the contract before the end of the term, if the contract is a fixed-term contract, or without notice, if the contract is of indefinite duration, if a cause arises that does not permit the continuation, even temporarily, of the relationship."

Case law, now rather uniformly, considers Article 2119 of the Civil Code is applicable by analogy. also to the agency relationship. Therefore, also in this context, the obligation of the terminator of an open-ended contract to give notice does not exist if there is a (just) cause that does not permit the continuation of the relationship, even temporarily (Cass. Civ. 14.2.2011 no. 3595).

Moreover, according to case law and authoritative doctrine, in such cases the principal's obligation to pay the agent would cease to exist. indemnity in lieu of notice which was not given, given the termination of the relationship for reasons attributable to the agent himself.

Given that the analogical applicability of Art. 2119 para. 1 of the Civil Code to the agency relationship is rather unquestionable, the question arises as to when a just cause for termination of the contract can be said to exist for the principal.

The Supreme Court of Cassation has ruled on this issue stating that '.the institution of termination for just cause, provided for by Article 2119, paragraph 1, of the Civil Code in relation to the employment contract, is also applicable to the agency contract, taking into account, however, for the assessment of the seriousness of the conduct, that in the latter context the relationship of trust - in correspondence with the greater autonomy of management of the activity in terms of places, times, methods and means, in accordance with the achievement of the business purposes - assumes greater intensity compared to the employment relationship. It follows that, for the purposes of the lawfulness of the termination, a fact of minor importance is sufficient, according to an assessment entrusted to the judge of the merits which cannot be challenged in a court of law, if adequately and correctly motivated. (In the present case, the Court held that the existence of just cause for the agent's termination had been correctly established, due to the non-payment of commissions relating to a specific order, received directly from the principal, but from third parties falling within the agent's exclusive area and which the latter had previously acquired as customers)." (Cass. Civ. 5.11.2013 no. 24776).

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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

[1] see e.g. Cass. Civ. 21 December 2010, no. 25902

[2] Civil Cassation, 15 June 1994, No 5795

[3] Civil Cassation, 18 March 1993, No 3211

[4] Civil Cassation, 9 April 1992, No 4337

[5] Cass. civ. Sec. II Sent., 30 September 2016, no. 19579

[6] Civil Cassation, 2 February 1991, No 1032

[: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

[1] see e.g. Cass. Civ. 21 December 2010, no. 25902

[2] Civil cassation, sec. lav., 15/06/1994, no. 5795

[: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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The original article was written in Italian and translated with Deepl and may therefore have some inaccuracies.

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Agency contract

While the exclusive right is a 'natural' element of the agency contract, it is not an 'essential' element, the contracting parties may derogate from this right, or contractually delimit its exact extent.

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The original article was written in Italian and translated with Deepl and may therefore have some inaccuracies.

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INFORMATION PURSUANT TO ART. 13
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