Main differences between the agency contract and the commercial distribution contract
The sales dealership contract and the agency contract are among the most common forms of organising distribution. These contracts are united by the fact that both the agent and the dealer undertake the obligation to organise and promote, in an autonomous manner, sales in accordance with the manufacturer's policies, integrating themselves within the manufacturer's distribution network. What mainly differentiates these two intermediaries is the fact that, whereas the agent undertakes, in return for a commission, to promote the conclusion of contracts between the manufacturer and the customers whom the agent has procured, the dealer acts as a buyer-seller and his source of income is based on the difference between the purchase price and the resale price.
The sales concession is a particularly important instrument for the organisation of distribution in markets, both domestic and foreign, which differs from other non-integrated retailers (e.g. 'wholesalers') in that it performs aautonomous promotion and organisation of sales of the grantor's productsin a given territory, which, in principle, is granted to him on an exclusive basis.
A definition of this type of contract is not given by the Civil Codeas it has not been regulated in our legal system and must therefore be qualified as an atypical contract. In any case, if one wants to give a definition of the sales agent, it can be framed as a commercial entrepreneur, who concludes a framework contract with the manufacturer, of fixed or indefinite duration, to regulate, in a given area, all the sales that are carried out on a stable and continuous basis by the grantor to the dealer.
La definition of agent, or rather, of agency contract is, on the other hand, given by the Civil Code, which provides atArticle 1742 of the Civil Code that 'With the agency contract one party undertakes on a permanent basis the task of promoting, on behalf of the other, against remuneration the conclusion of contracts in a specified area' (see also What is the difference between an agency contract and a business intermediary?).
Therefore, while the dealer deals in his own name and on his own behalfby purchasing the goods directly from the grantor and reselling them to third parties, contrary to theagent acts on behalf of and as an autonomous collaborator of the principal, promoting the conclusion of sales contracts to third parties and, only to the extent that he has the power of representation, also in the name of the principal.
Thus, although the agent and the dealer perform a very similar function, in that both are in charge of organising the distribution of a principal's products, in a given territory entrusted to them, as autonomous entrepreneurs, but integrated into the manufacturer's sales network, at the same time, they distinguish in a very pronounced way, in the way they manage sales the agent is purely and simply an intermediary of the principal, the dealer, on the other hand, buys the products directly from the licensor and is himself responsible for reselling them directly to the end customer, who has been procured by him.
Looking at the two figures from a strategic point of view, it can be seen that thecommercial agent allows the principal to have stronger and more direct control over customersas the sale is made by the principal itself and the agent is instead responsible for passing the order on to the principal, the dealer has instead the task of organising the sales phase to the end customer and, often, also the service phase, and therefore normally has more direct control over the customerIt also performs activities related to the promotion of the sale, such as customs clearance of goods, shipment to the consignee and warehousing.
These types of contracts also differ in terms of the commercial risks that the manufacturer assumes: in the distribution the risk is definitely shifted more to the dealer, who bears the potential danger of not being able to resell the purchased products. On the contrary in the case of agencythe risk of non-performance by the end customer, falls directly back on the principal, especially if the parties have applied Italian law, since in our legal system the usability of the so-called ''default clause'' is limited.star of belief"has in fact been deleted. It is briefly recalled that with such a clause, the agent assumes in part or in full, the risk of non-payment by a third party introduced by it, undertaking to reimburse the principal, within the agreed limits, for the loss incurred by the latter.
It should be noted, however, that in most sales distribution contracts there is a clause, which postpones the dealer's obligation to pay for the goods, only after payment of the product by the end customer. It is evident that such an agreement will greatly shift the entrepreneurial risk towards the grantor.
Certainly, one aspect that strongly distinguishes the two contracts is theseverance pay (on this subject see also calculation of indemnity pursuant to art. 1751 of the civil code., calculation of former AEC 2014 allowances calculation of former AEC 2009 allowances e calculation of ex ANA allowances 2003). As is well known, the agency contract expressly provides, in Article 1751 of the Civil Code, for the agent's right to receive, under certain conditions, an indemnity following the termination of the contractual relationship. Likewise cannot be said for the sales concession contract. Italian jurisprudence, in fact, differs from the jurisprudence of several European countries - e.g. Austria and Germany) does not recognise this right to the concessionaire.
Authoritative doctrine dissociates itself from this jurisprudential orientation, stating that "even in the absence of legislative provisions, the right to an indemnity in an agency contract in which the agent is also authorised to make purchases on its own account as a dealer could be extended to the business carried on by the dealer. Indeed, it seems to us that in such cases, since it is a mixed contract, in which the cause of the agency contract prevails, the indemnity for termination, by virtue of the principle of absorption, could be extended to the business carried on by the agent as dealer"(Venice-Baldi).
The '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