What is the difference between an agency contract and a business intermediary?
What is the main difference between the agent and the business intermediary?
To answer this question, one must first define the two professional figures.
La definition of agentor rather, of agency contract is given by the Civil Code, which provides in Art. 1742 of the Civil Code that
"By the agency contract one party permanently assumes the task of promoting, on behalf of the other, for remuneration the conclusion of contracts in a specified area." (the commercial agent in Germany)
The figure of the agent is not expressly regulated by the Civil Code and thus belongs to the category of atypical contracts, i.e. contracts not expressly regulated by civil law, but created ad hoc by the parties. However, a definition has been given by case law that has qualified the procurer as the one who:
- "collects customers' orders by forwarding them to the company from which it has been commissioned to procure such commissions, without any stability and on an entirely occasional basis." (Cass. Civ. 1999 no. 1078);
- "carries out intermediary activities for the purpose of facilitating the conclusion of business, when the activity is carried out on an occasional and occasional basis". (Cass. Civ. 1999 no. 1078).
From these definitions, it follows that the business intermediary differs from the commercial agent essentially with regard to the stability of tenure. Whereas the agent undertakes to promote (precisely) the conclusion of business deals on a permanent basis, the intermediary does not assume any obligation of continuous collaboration and may therefore freely decide whether or not to promote a deal (see also Main differences between the agency contract and the commercial distribution contract)
As to the requirement of occasionality(i.e., the frequency of business that is conveyed), the question arises in doctrine and case law as to how this parameter should really be interpreted as a criterion distinguishing mere procuring activity from agency. In an important ruling in 1999, the Court expressed itself as follows:
"Regarding the character of the continuityit should be noted that it not to be confused with the concept of stability. Stability, in fact, means that the performance is repeated periodically over time, not only de facto, as in continuous performance, but also in compliance with a contractual commitment (Art. 1742(1) of the Civil Code).
The difference is very clear in the case of the agent and the business intermediary. The former's performance is stable in that he is obliged to carry out an activity of promoting contracts; the service of the latter, on the other hand, is occasional in the sense that it does not correspond to a legal necessity, but depends exclusively on the initiative of the procurer. " (Cass. Civ. 1998 No. 7799).
According to this orientation, therefore, in order to distinguish the two figures, one must focus essentially on the obligations assumed by the intermediary: if the latter undertakes to promote business in stable and continuous manner, these will have to be qualified as agentwhereas, in the case does not undertake in any way to promote the principal's business, the principal will qualify as a business intermediary. The volume and quantity of orders that the two figures actually manage to promote have no relevance: paradoxically, the business intermediary may promote and realise a significantly higher number of orders than an agent, but the latter will still qualify as an agent if, contractually, he has not committed himself in any way to promoting the intermediary's activity. The performance of the intermediary is therefore occasional in the sense that it depends solely on his initiative.
Lastly, the question arises as to which of the provisions laid down for the agency contract may be considered applicable by analogy to the business agent contract.
In a judgement of 23.11.2007, the Court of Rome recently ruled that the two figures were applicable on the basis of their intrinsic distinction,
"only those provisions inherent to the agency contract, such as commissionswhich do not presuppose a stable and predetermined character of the relationship and not also those - of law and contract - which do presuppose it."
Basically, only certain agency rules apply to the agent by analogy, but it must be ruled out that those that grant special protection to the agent, such as Article 1750 of the Civil Code, concerning notice periods, and Article 1751 of the Civil Code concerning indemnity for termination of the contract, are applicable to it.
Advance notice by the agent and continuation of the contractual relationship
In its judgment No. 668 of 25 May 2012, the Court of Cassation reaffirmed the principle of ultratractivity of the contractual relationship. According to that principle, an agency contract of indefinite duration does not terminate when one of the contracting parties terminates the contract, but only when the notice periodestablished in the interest and for the protection of the non-terminating party.
In the present case, the principal communicated his intention to terminate the contract; in the course of the notice periodthe agent also communicated its intention to terminate the contract.
According to the Court, this very declaration by the agent was to be regarded as an implicit waiver of the notice period, with the result that the agent could not request theindemnity in lieu of notice.
In the present case, therefore, given that "the termination of the relationship remains attributable to the will of the principal, the latter remains obliged to pay the termination indemnity pursuant to Article 1751 of the Civil Code."The agent, in fact, is entitled to the indemnity under Art. 1751 of the Civil Code even when he withdraws from the contract for circumstances that, although not constituting a just cause, are attributable to the principal.
Next stop: paradise (1991)
Directed by Albert Brooks
The agency contract in Germany.
The purpose of this article is to give the reader some elements for a better understanding of the regulation of the agency contract in Germany, the importance of which is very significant, taking into account the fact that the European directive on the subject of agency was inspired by this model and, consequently, Italian legislation, too, was adapted to it, with the regulatory interventions of 1991 and 1999 the figure
1) Agency contract and self-employed person.
In German law, the legal figure of the commercial agent is governed by Book 1, Title 7 of the German Commercial Code (HGB- Handelsgesetzbuch) and more precisely by §§ 84-92c. Section 84 HGB opens this title with a definition that qualifies the commercial agent as one who is entrusted by a principal with the task of interceding, in the capacity of an autonomous trader, in business transactions in favour of the latter or of concluding them on its behalf. An agent is one who performs his activity in substantial autonomy and can regulate his own working hours.
This legislative assumption is obviously used in the courts to distinguish the commercial agent from the employee. Case law considers the definition in § 84 Para. I HGB as a general parameter for being able to distinguish the two legal figures, although the circumstances of the case must be taken into account in their entirety and totality.
Given the generic and not easily interpretable character of the concept of autonomy required by § 84 HGB for commercial agents, case law has repeatedly come across this problem. In a well-known ruling of the Federal Labour Court (BAG) in 2003, several contractual agreements were defined as "Arbeitnehmerverdächtig", i.e. which give rise to the suspicion of an employment relationship. Some of them are listed below:
- request for the transmission of a quarterly forecast on the development of production, covering the individual production departments and a forecast of the percentage assessment of the closing of business of individual customers. Such a request goes beyond the duty to protect the interests set forth in § 86 Para. 1 HGB, which obliges the agent to endeavour to sell products or to complete business, taking into account the interests of the principal;
- orders to block holidays. This limits the agent's autonomy to determine working hours;
- the name of the contract is irrelevant for the classification of the legal figure; the absence of an agreement on the beginning and end of the working hours and on the indication of the organisation of the work will be interpreted in favour of the commercial agent's autonomy:
On the contrary, it does not preclude autonomy:
- the obligation to attend weekly 5-hour conference calls and, in extraordinary cases, to carry out collection orders within a short time,
the imposition of deadlines for the completion of work, as well as, during the company's settling-in period, the blocking of holidays for a period of 4 to 8 weeks; - the communication of production targets, if there remains a considerable margin for self-organisation of working hours:
an obligation to provide information, unless the agent is obliged to provide copious information on its activities and at short intervals; - a quarterly forecast on the development of production certainly exceeds the usual duty to inform, but in itself cannot be regarded as a substantive indication of subordination;
the agent's prohibition of competition; - instructions on working hours, as the employees of the external service also have to adapt to the time requirements of their customers.
According to the OLG (Oberlandesgericht - Court of Appeal) in Koblenz, the type of relationship is explicitly inferred from the personal dependence between the two legal figures and that an economic dependence is neither necessary nor sufficient.
The fact that the agent is linked to the principal through indications and directives that the latter has the power to issue, in general does not affect what is the status of the agent as an independent worker. The employee is one who, unlike the agent, performs his services within an organisation defined by a third party. Relevant for the qualification of the legal figure are the circumstances under which the service is performed and the manner of payment, or purely formal connotations such as the payment of taxes to the social security and health care institutions or the keeping of the agent's personal files.
2) The right to commission.
The agent has according to the § 87 para. 1 HGB right to commission. The agent may exercise this right on all business the conclusion of which has been made possible through an activity attributable to him, or on business concluded with third parties acquired by the agent as clients for business of the same type (§ 87 para. HGB). Therefore, in order to claim the right to commission, it is sufficient to any cooperation of the agent that made it possible for the deal to be concluded.
The parties may, however, agree on an exception clause. Importantly, the second paragraph of Section 87 HGB provides that "the right to the provision ceases when it is certain that the third party does not perform, the sums already received must be returned" ( 87a para. 2 HGB) (so-called star of belief).
It is important to specify that if the principal does not perform the deal completely or partially correctly or in the manner in which it was stipulated, the agent is nevertheless entitled to commission (87-a para. 3 HGB). However, the entitlement to commission shall lapse if the non-performance is attributable to conditions that are not the responsibility of the principal.
La German Supreme Court (BGH - Bundesgerichtshoff) recently ruled on §87a para. 2 HGB specifying that this does not apply if the third party has failed to perform due to a failure to perform on the part of the principal or due to causes attributable to the principal. The Court further specifies that the principal is liable for all situations that led to the non-performance, not only when they are attributable to its personal fault, but also when they are attributable to an entrepreneurial or business risk.
Although it is in the principal's interest to receive the highest number of offers from the agent, the principal's right to decide whether to accept the proposed deal remains unaffected. This decision-making power in the hands of the principal results indirectly from the 86a para. 2 HGBwhich obliges the latter to inform the agent of its intention to accept substantially less business from the agent. This decision-making power is, however, not unlimited: the principal may not refuse completely arbitrarily the conclusion of a procured contract. It must also be emphasised that jurisprudence considers it to be outside the powers of the judge to interfere in the policy of the company, evaluating the decisions taken by the latter. Therefore, the judge must accept any decision that may appear at least plausible.
3. The Area Agent.
Flanking the figure of the agent is that of the area agent (Bezirkshandelsvertreter). This figure is characterised by the fact that he/she has to deal exclusively with an area, entrusted to him/her by the principal or, in other cases, with a specific clientele.
The § 87 para. 2 HGB provides that the area agent is also entitled to commission for business that has been concluded, within the area assigned to him, albeit without his cooperation. Precisely for this reason, it is evident that the appointment of an area agent may have to be rather concealed. It is assumed that the agent may be considered a zone agent if it has been sufficiently clearly qualified as such. In the event of a dispute, the burden of proof falls on the party claiming that the agent is so qualified. Any contractual uncertainties must be clarified by the contracting party.
As for the obligations of the agentThe latter, in carrying out his activity, must look after his area continuously and with particular care, and only by acting in accordance with these criteria will he be entitled to the commission.
A rather recent BGH ruling stated that a business outside the area cannot be considered to be prevented a priori. In fact, if the principal accepts the business, this can be regarded as a tacit enlargement of the area or customer base.
As a rule, an area agent who, with the consent of the principal, carries out activities outside the principal's area or with customers other than those granted, is also entitled to the commission referred to in § 87 para. 1 HGB. However, the parties are free to agree otherwise.
4. Direct sales without producer intervention.
The direct sale to a customer by the manufacturer, despite the fact that the manufacturer has granted a exclusive right to the reseller, is to be considered a breach of contract. But even in the case where exclusivity has not been granted, the manufacturer may not perform at its sole discretion, direct sales to customers in the area the dealer's responsibility.
According to the German Federal Court of Justice, the manufacturer must take due account of and may not, without good reason, oppose the legitimate interests of the retailer who subjects his business and operations to the requirements of the manufacturer.
In a Judgment of the Düsseldorf Court of Appeal of 21.06.2013 (G.R. No. 16 U 172/12) the judges instead denied the existence of a violation of theobligation of loyalty because the manufacturer had not arbitrarily disregarded the legitimate interests of the retailer. In this case, the customers had in fact reiterated that they wanted direct sales from the manufacturer, otherwise they would not have purchased the products.
Considering that the reseller had only a de facto exclusive right, which had not been contractually agreed upon, this decision of the customers constituted, according to the courts, a sufficient reason for the admissibility of direct selling to these customers, especially since the manufacturer had previously offered the reseller a commission payment as compensation.
5. Declaration of bankruptcy and entitlement to commission.
According to the § 115 para. I in correlation with the 116 paragraph I InsO (lnsolvenzordnung - 'bankruptcy law') the opening of bankruptcy proceedings leads to the termination of the agency contractwithout the need to give notice. A continuation of the contractual activities is only possible following an agreement, even tacit, between the agent and the insolvency administrator.
As for the claims to commission accrued following the conclusion of the new contract, these must always be considered as predeductible claims (debts of the estate) § 55 para. I, point InsO. Where the activities carried out by the agent prior to the opening of bankruptcy proceedings have not yet led to the conclusion of a contract with the third party, the entitlement to commission depends on the choice of curator to conclude the deal with the third party or not.
If positivethe right to commission is considered in the light of the 55 paragraph I point InsO as a preferential claim.
Otherwise The right to commission exists in any event irrespective of whether the liquidator has opted to conclude the contract with the third party or has refused it. In such a case, the commission shall be considered an unsecured claim ex § 38 InsO.
A different matter, however, with regard to the agent's entitlement to the non-competition indemnity under the § 90a para. 1 HGBIn this case, the right ceases in the event of termination of the contract following the opening of bankruptcy. At the same time, this event also terminates the agent's non-competition clause that the parties had agreed upon.
Finally, if at the opening of the bankruptcy the contract was already terminated the insolvency administrator may request ex § 103 InsO the maintenance of the non-competition clause and the right to compensation constitutes a claim on the bankruptcy estate.
Conference on the agency contract in the Civic Library.
[:it]Friday 8 June, 3 p.m, at the Verona Public Library conference on the Agency Contract was held, which I had the pleasure of organising in collaboration with Veronalegal. Participating as speakers were thelawyer Valerio Sangiovanni (lawyer in Milan), Dr Maura Mancini (Labour Magistrate at the Court of Brescia), Mslawyer Eve Tessera (French lawyer, registered in Verona) and the undersigned.
The following topics were covered:
- study of a agency contract (lawyer Valerio Sangiovanni)
- the termination indemnity pursuant to Article 1751 of the Civil Code (Dr Maura Mancini)
- the Agency Contract in France (Advocate Eve Tessera)
- the Agency Contract in Germany (yours truly...)
I would like to sincerely thank all the participants of the conference and the speakers who proved to be not only extremely competent, but also very clear and helpful.
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