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:

  1. for the directly promoted business by the agent;
  2. for business concluded by the principal, without the intervention of the agent with previously procured customers by the agent ('subsequent business“);
  3. 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, paragraph 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.