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 an instrument of particular importance for the organisation of distribution on 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 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).