The principal's bankruptcy. For what amounts can the agent be filed as a debtor?

Article 2751-encore c. c., confers in favour of the agent a general lien on movable property that is placed in accordance with Article 2777 of the Civil Code immediately after legal costs and employees' claims. That article reads as follows:

"Claims relating to: [...] the following have a general lien on furniture commissions arising from the agency relationship due for thelast year of performance and the allowance due for termination same."

This rule constitutes one of several indications of the legislative tendency to assimilate the agent to the employee; by virtue of this provision, the agent may claim a general lien on the debtor's assets both for commissions accrued in the last year of performance and for indemnities due as a consequence of the termination of the relationship itself.

It should be noted that in 2013 the United Sections[1] have definitively established that the principle that the general privilege provided for by the provision under comment does not assist claims for commissions due to the corporation exercising the activity of an agent.

As for the annual deadline provided for in Art. 2751-encore c.c. it is referable to commissions and not to other indemnity items; moreover, according to doctrine[2] and case law[3]this last year does not start from the date of declaration of insolvency, but since the termination of the relationship, since in the explicit letter of the rule, reference is made to the "last year of service" and not to the last year in respect of the bankruptcy. It should be pointed out that, according to the majority case law, if the agency relationship was still in existence at the date of bankruptcy, this annual period should be considered to coincide with the date of the declaration of bankruptcy itself.[4]

It is very important to point out that Article 1748 of the Civil Code provides that:

"The agent shall be entitled to commission on business concluded after the date of termination of the contract if the proposal is received by the principal or the agent at an earlier date or the business is concluded within a reasonable time after the date of termination of the contract and the conclusion is predominantly attributable to the agent's activity."

In the light of this normative dictate, therefore, the privilege includes business promoted by the agent before the termination of the relationship and concluded both before and after the termination[5] even if they have not yet been performed by the principal.[6]

On the contrary, the recognition that Article 2751-bis(3) makes of the privilege relating to the indemnities due for the termination of the relationship is independent of any reference or temporal limitation.[7] The same cannot be said for thesupplementary customer allowancewhich is of a contractual and not a regulatory nature (governed precisely by the ERM) and therefore non-returnable in the exhaustive list provided for in the rule under analysis.

On the basis of the foregoing, in the event the contractual relationship is terminated for reasons not attributable to the agent and, following the termination of the relationship, the principal enters into bankruptcy, the agent will have the right to file a claim for the commissions relating to the last year of business and severance indemnities pursuant to Article 1751 of the Civil Code and, in the event of termination ad nutumcompensation for lack of notice.

A much-discussed issue concerns the effects of bankruptcy on an ongoing agency relationship at the time of the declaration of insolvency itself. In fact, in the silence of the law, the question arises as to whether, in the event of the principal's bankruptcy, the agency contract should be governed by the general rules set forth in Article 72 of the L.F. and therefore its performance should be suspended until the liquidator, authorised by the committee of creditors, declares to take over or dissolve the relationship, or should the rule dedicated to the mandate (Article 78 L.F.) apply, with the consequence that if the principal goes bankrupt, the contract itself is automatically dissolved.

This issue has great practical relevance, in fact, should Article 72 of the Bankruptcy Law be deemed applicable, the contractual relationship is not dissolved following the mere declaration of bankruptcy, but rather remains suspended in a sort of quiescent phase, until such time as the liquidator opts for the continuation or termination of the relevant contractual relationship, with the consequent right, in the latter case, of the agent to severance indemnities. Otherwise, i.e. application of theArticle 78 F.L., the dissolution operates as of right, with the consequent exclusion of the agent's right to payment of indemnities due for the termination of the relationship.

The majority case law on this point holds that:

"with reference to the agency contract, by virtue of the peculiar fiduciary nature of the relationship of principal, in the event of bankruptcy, the new general rule contained in Article 72 of the Bankruptcy Law is not applicable, and indeed the contract is terminated ope legis, with the exclusion of the agent's right to payment of the indemnity for termination of the relationship and lack of notice precisely as a consequence of the operation of the termination of the contract for a cause independent of the will of the parties."[8]

On the contrary, if the general rules of Article 72 of the Bankruptcy Law are deemed applicable and the liquidator opts for the continuation of the relationship, the agent's claims accrued as a result of the performance of its activity during the bankruptcy are lodged in prededuction for the activity performed after the declaration of insolvency pursuant to Article 111(1)(1) of the Bankruptcy Law.[9]

Finally, it should be noted that, with regard to contributions paid to the institute ENASARCO since they are neither compensatory nor commissionable in nature, they are not covered by the privilege under Article 2751 encore Civil Code, nor can they fall under the provision of Article 2753 of the Civil Code, which is exclusive to subordinate employment.[10]

 

_________________________________

[1] Cass. Civ. Sec. Un. 2013 no. 27986.

[2] Venice - Baldi, The Agency Contract, p. 299, 2015, Milan.

[3] Trib. Perugia 30.12.1991; Trib. Rome 19.9.2007.

[4] Trib. Prato 18 January 2012, in Bankruptcy 2012, p. 583, with a brief note by COMMISSO, Dissolution ex lege of the agency contract in the event of the principal's bankruptcy.

[5] Venice - Baldi, The Agency Contract, p. 300, 2015, Milan.

[6] Cass. Civ. 2011, no. 9539.

[7] Trib. Rome 19 September 2007.

[8] Trib. Prato 18 January 2012, in Bankruptcy 2012, p. 583, with a brief note by COMMISSO, Dissolution ex lege of the agency contract in the event of the principal's bankruptcy

[9] Practical Memento, Business crisis and bankruptcy, p. 435, no. 3100, 2016, Ipsoa.

[10] Venice - Baldi, The Agency Contract, p. 299, 2015, Milan

by admin

How is the contract termination indemnity calculated according to the 2014 Industry AEC?

Article 10 of the 2014 Industry AEC (see also , divides the severance pay into three components:

  • termination indemnity, set aside by the principal in the ENASARCO fund (FIRR) (Chapter I);
  • supplementary customer indemnity paid to the agent or representative even in the absence of an increase in customers and/or turnover (Chapter II);
  • merit-based allowance, linked to an increase in customers and/or turnover (Chapter III).

Para. (3) of Article 10 also provides that the indemnity is to be calculated on all sums, however denominated, received by the agent in the course of the relationship, as well as on sums in respect of which at the time of termination of the relationship the right to payment in favour of the agent or agent has arisen, even if they have not been paid in whole or in part.

This implies that these allowances (on this subject see also calculation of indemnity pursuant to art. 1751 of the civil code., calculation of former AEC 2009 allowances, calculation of ex ANA allowances 2003) should also be calculated taking into account:

  • non-commissionable remuneration, such as reimbursement of expenses and/or ancillary activities;
  • amounts accrued but not yet received and/or paid to the agent at the date of termination.

(cf. also Collective bargaining. Origins, value and enforceability. And if a contractor is a foreigner, do they apply or not?)

I. FIRR

The FIRR is set aside at ENASARCO by the principal and, upon termination of the relationship, is due to the agent regardless of any increase in clientele and/or business. On the other hand, it is not paid in the event of termination of the relationship at the initiative of the principal, justified by the following conduct on the part of the agent: undue withholding of sums due to the principal, unfair competition, violation of the exclusivity obligation for a single firm.

The obligation to set aside the FIRR only exists if the AEC apply to the relationship. The AEC are only applicable to the contract if both parties (principal and agent) are members of the contracting trade unions, or, otherwise, the parties have expressly referred to the AEC in the contract, or have provided for their implicit application in the course of the relationship (e.g., where the principal has provided for a spontaneous, constant and uniform application of certain provisions of the AEC).[1]  This implies that in the event of non-application of the AEC, the principal is not required to set aside the FIRR, but only to pay social security contributions to Enasarco.[2] (on this point cf. the social security obligation of the Italian agent and the foreign principal).

It is important to note that case law[3] and doctrine,[4] unequivocally hold that the claim for payment of the FIRR must be made against Enasarco and not against the principal, except for any sums not set aside by the latter.

This allowance is calculated annually as follows:

ONE-MAN AGENT

  • 4% on the portion of commissions up to € 12,400 per year
  • 2% on the portion of commissions between € 12,400 p.a. and € 18,600 p.a.
  • 1% on the portion of commissions exceeding € 18,600 per year

MULTI-FIRM AGENT

  • 4% on the portion of commissions up to € 6,200 per annum
  • 2% on the portion of commissions between € 6,200 p.a. and € 9,300 p.a.
  • 1% on the portion of commissions exceeding € 9,300 per year
II. SUPPLEMENTARY ALLOWANCE

According to majority case law, AECs represent a guaranteed minimum treatment for the agent,[5] such indemnity will be paid to the agent upon termination of the relationship and will be due to the agent regardless of proof by the agent that it has developed the principal's business and/or clientele, as is the case with the civil law indemnity under Art. 1751 of the Civil Code (on this point see severance pay in agency contracts).

It will be recognised at the following rates:

3% on the total amount of commissions and other sums due
0.50% additional on commissions accrued from the fourth year (up to a maximum annual limit of € 45,000 in commissions)
additional 0.50% on commissions accruing from the sixth completed year (up to a maximum annual limit of € 45,000 in commissions)

This indemnity shall be due in all cases where the termination of the relationship is not due to a fact attributable to the agent (whether in the case of a fixed term or open term contract). No facts attributable to the agent shall be deemed to be facts:

  • resignation due to established serious breach of duty by the principal,
  • resignation as a result of permanent and total disability,
  • resignation due to infirmity and/or illness that does not permit continuation of the relationship,
  • resignation following the attainment of the ENASARCO old-age or early old-age pension,
  • resignation following the attainment of an old age or early old age pension INPS.
III. MERITOCRATIC ALLOWANCE

The AEC Industry 2014 provides for a rather structured calculation to quantify the meritocratic allowance, which will only be paid to the agent if it is higher than the sum of the two allowances analysed above (FIRR + supplementary).

The calculation of the meritocratic allowance is as follows:

  • Determination of theincrease in customersconsisting of the difference between the commissions received by the agent at the beginning and at the end of the relationship, bearing in mind that the prognosis period will vary depending on the agent's status as a sole or multiple agent and the duration of the relationship, according to the following table:
Type and duration Years
Multi-firm agent with a term of 5 years or less 2,00
Single agent with a term of 5 years or less 2,25
Multi-firm agent with a term of more than 5 years and less than or equal to 10 years 2,50
Single agent for more than 5 years and less than or equal to 10 years 2,75
Multi-firm agent for more than 10 years 3,00
Single agent for more than 10 years 3,25
  • The initial figure is made homogeneous with the final figure by applying to it the Istat revaluation coefficient for labour credits.
  • The rate of migration of customers according to the following table:
Type and duration percentage
Multi-firm agent with a term of 5 years or less 27%
Single agent with a term of 5 years or less 15%
Multi-firm agent with a term of more than 5 years and less than or equal to 10 years 22%
Single agent for more than 5 years and less than or equal to 10 years 20%
Multi-firm agent for more than 10 years 37%
Single agent for more than 10 years 35%
  • For the first year of the prognosis period, the aforementioned rate of migration is subtracted from the value of the increment referred to in point 1. For the subsequent years of the prognosis period, the same migration rate is subtracted from the value determined for the previous year of the prognosis period. The results thus obtained are added together.
  • The amount obtained is reduced on a lump-sum basis by a variable percentage equal to:
    • To 10% for contracts of 5 years or less;
    • To 15% for contracts with a duration of more than 5 years and less than 10 years
    • At 20% for agency contracts exceeding 10 years.
  • Compare the meritocratic indemnity calculated according to the preceding points with the maximum value of the indemnity provided for in the third paragraph of Art. 1751 of the Civil Code.
  • The termination indemnity and the customer indemnity are deducted from the meritocratic indemnity obtained.

[1] See Bortolotti, Distribution Contracts, 2016, Wolter Kluwer, p. 87 ff.

[2] Trib. Rome 14.1.2010.

[3] Trib. Bari 2.5.2012.

[4] Bortolotti, Distribution Contracts, 2016, Wolter Kluwer, p. 365 ff.

[5] See on this point Cass. Civ. 2014 no. 7567. However, it should be noted that the European Court of Justice, in a judgment of 23 March 2006, challenged the legitimacy of the supplementary client indemnity as provided for by the AEC, which allows the agent to receive a termination indemnity in any event, even if the agent has not actually developed the principal's clientele and the latter benefits from it even after the termination of the relationship; in line with this orientation there is a minority direction of the case law on the merits, which has held the AEC inapplicable to our system and has therefore not recognised the agent's entitlement to the rules set out therein as a guaranteed minimum (Tribunale Treviso 29 May 2008. Tribunale Treviso 8 June 2008; Tribunale di Roma 11 July 2008).

by admin

The social security obligation of the Italian agent and the foreign principal.

The ENASARCO Foundation is the National Assistance Board for Agents and Sales Representatives and was established in 1938. Since 1973[1] ENASARCO has become an entity governed by private law that pursues purposes of public interest through the management of supplementary compulsory forms of pensions in favour of Commercial Agents and Representatives and whose public control is entrusted to the Ministry of Labour, Health and Social Policies and the Ministry of Economy and Finance.

ENASARCO's activities, legal nature and the tasks that the Foundation pursues are governed by the Regulation of Institutional Activities, which was recently amended on 1 January 2012.

Articles 1 and 2 of the Regulation impose the obligation of registration and consequently of contribution to the ENASARCO Foundation on all agents (whether in individual or company form) operating on the national territory on behalf of Italian principals or foreign principals having their head office or any .

There is nothing in the 2012 Regulations on the obligation of registration of agents operating in Italy in favour of principals from the European Union who do not have a head office or dependency in Italy. This regulatory 'gap' has been filled by a circular of ENASARCO[2] and an interpellation by the Ministry of Labour[3] which also extended the obligation to register to the following categories:[4]

  • for agents operating in Italy and abroad, provided that the agent resides in Italy and performs a substantial part of its activities there;
  • for agents operating in Italy and abroad who do not reside in Italy, provided that the agent has its centre of interests in Italy (assessed by reference to the number of services rendered, the duration of the activity, and the will of the person concerned);
  • for agents who habitually work in Italy and who go to perform activities exclusively abroad, provided that the duration of such activity does not exceed twenty-four months.

As to the annual amount to be set aside by the principal in the FIRR, it is quantified by the AEC industry 2014 as follows:[5]

"Single agent or sales representative in

  • 4% on the portion of commissions up to Euro 12,400.00 per year;
  • 2% on the portion of commissions between Euro 12,400.01 per year and Euro 18,600.00 per year;
  • 1 % on the portion of commissions exceeding Euro 18,600.00 per year.

Agent or multi-firm representative:

  • 4% on the portion of commissions up to Euro 6,200.00 per year;
  • 2% on the portion of commissions between Euro 6,200.01 per year and Euro 9,300.00 per year;
  • 1 % on the portion of commissions exceeding Euro 9,300.00 per year."

The compulsory social security rates, which the principal is required to pay annually to ENASARCO, are regulated in Article 4 of the Regulation and are equal to:

2012 2013 2014 2015 2016 2017 2018 2019 2020
13,50% 13,75% 14,20% 14,65% 15,10% 15,55% 16,00% 16,50% 17,00%

 

Contributions are calculated on all sums due to the agent for any reason in connection with the agency relationship, even if not yet settled, including advances and premiums (art. 4 of the Rules), but within the mandatory limit of € 37,500.00 per year if the agent is engaged in business for a single principal and € 25,000.00 for each principal of a multi-firm agent (art. 5 of the Rules).

In the event of failure to pay contributions on the part of the principal, Article 36 of the Regulation imposes as a penalty the payment of a rate of 5.5% per annum on the amount of contributions not paid by the due date, with a cap of 40%.

It is important to emphasise that although the obligation to pay contributions is borne equally by the principal and the agent, it should be noted that the principal is solely responsible for the payment of contributions, even for the part borne by the agent, and that such payments must be made '.with a maximum periodicity of three months, in relation to sums owed to the agent for any reason."

As for the limitation period of ENASARCO's right to claim payment of contributions, it is five years.[7] On the other hand, the prescriptive term of the agent's action for damages for failure to pay or insufficient payment of ENASARCO contributions is ten years, commencing from the time when the agent, having reached retirement age, loses the relative right or sees it reduced by reason of the omission.[8]

As already mentioned in the introductory part of this article, to which we refer,[9] the pension scheme managed by ENASARCO represents a unique case not only in Europe, but also in Italy, since it is supplementary to the pension that agents are obliged to pay personally to INPS.[10] Representatives and commercial agents are therefore obliged to pay contributions to two bodies: on the one hand, personally to Inps and, on the other hand, to ENASARCO, whose contribution, as we have seen, is paid by the principal as withholding agent.[11]

As regards the quantification of INPS contributions, a variable rate of approximately 20/23% is envisaged. It should be noted, however, that on the portion of income exceeding € 100,324.00 for those enrolled after 01.01.1996 (and € 76,718.00 for those enrolled before that date), there is no obligation to pay INPS.

[1] Pursuant to Law No. 12 of 2 February 1973

[2] AIS Circular No. 2/2012 protocol number AIS/46.

[3] Ministry of Labour Interpretation No. 32/2013.

[4] See also Baldi-Venezia, The Agency Contract, 2014, GIUFFRÈ.

[5] The FIRR provided by the 2014 AEC industry is given as an example; however, it is noted that the FIRR provided by the other AECs in force to date are generally in line with this collective agreement.

[6] Article 7, Law No. 12 of 2 February 1973.

[7] Cass. 1983 No. 5532.

[8] Cass. Civ. 1983 No. 5532.

[9] See § 1 of this article.

[10] See footnote 1

[11] The recognition of this special status of the Fund dates back to Law 613/1966 and has remained unchanged to this day.

by admin

The agent's right to commission: when is the principal obliged to pay?

Commission is normally the agent's main means of remuneration, consisting of a percentage related to the value of the business promoted by the agent. The Civil Code regulates the right to commission in Art. 1748 of the Civil Code. Specifically, para. (1) of that article provides that:

"For all business concluded during the contract, the agent is entitled to the commission when the transaction has been concluded as a result of its intervention. "

Moreover, the fourth paragraph of Article 1748 of the Civil Code reads as follows:

"The agent is obliged to return the commissions collected only if and to the extent that it is certain that the contract between the third party and the principal will not be performed for reasons not attributable to the principal."

The agent is therefore entitled to the commission only if there is the conclusion of a contract between the principal and the third partycommission is not due and, in any event, if it has already been paid to the agent, must be returned to the principal if the third party fails to perform the contractfor causes not attributable to the principal itself.

The above articles set out the prerequisites for the agent's entitlement to commission to arise. This moment, however, must be absolutely distinct from the moment of accrual of the commission itself, i.e. when the agent may claim its payment (see also on this point The 'star of belief' in the agency contract).

This distinction follows from a reading of Art. 1748(4) of the Civil Code:

"Unless otherwise agreed, the commission shall be payable to the agent from the moment and to the extent where the principal has rendered or should have rendered the performance under the contract with the third party. The agent shall be entitled to commission at the latest, without limitation, from the time and to the extent that the third party has rendered or should have rendered the performance if the principal had rendered the performance at its expense."

A reading of this rule shows that there are two distinct moments on which the actual accrual of the commission depends:

  • when the service is performed by the principal (the so-called 'general' criterion);
  • at the latest, and without fail, when the service was performed by the third party (the good performance of the business).

With reference to the first pointcommission accrues from when the principal performs its service, or should have performed it by virtue of the contract concluded with the third party (i.e. the customer). This constitutes the so-called "general" regime, which applies whenever the parties have not agreed otherwise.

On this point, it must certainly be emphasised that the rule does not expressly refer only to the moment in which the principal performs his service, but rather to the moment in which he should have executed itaccording to the agreements he had made with the client.

Think of the classic example where the principal undertakes to deliver the goods by a certain date: if the principal does not send the goods by that date, the commission will still be due to the agent, as the failure to perform is attributable to a default on the part of the principal.

An interesting aspect is that the article obliges the principal to pay the commission to the agent, only in the event that the same is actually required to perform the service under the contract. This implies that if the principal's non-performance is due to causes not attributable to it, the agent's right to payment of the commission itself is forfeited.

Returning to the case analysed above, i.e. the delivery of goods: if the principal has not sent the goods due to force majeure, i.e. because the customer has not paid for the goods sold or the balance of the down payment in the manner agreed upon by the parties, the principal will no longer be liable to pay the commission.

Therefore, the right to the commission accrueda, unless otherwise agreed between the parties, when the principal's failure to perform constitutes a breach vis-à-vis the third party.

The general criterion described above is however derogable by the parties, who may agree otherwise, postponing or bringing forward the time at which the right to commission accrues, anchoring it at a different time than the principal's performance.

This option granted to the contracting parties is ceiling mandatory, which is enshrined in the second sentence of Art. 1748(4) of the Civil Code:

"the commission shall be due to the agent, at the latest, from the time and to the extent that the third party has performed or would have had to perform the service if the principal had performed the service at its expense."

This means, in essence, that it is possible to postpone the accrual of commissions, as long as it is made payment by the third partyi.e. at the latest upon the successful performance of the business. The latter hypothesis, however, must always be subject to the principal having performed its own performance. In essence, the reference to the time when the third party should have rendered the performance must be interpreted as meaning that the agent may treat the commission as due even in the event of non-payment by the customer, but only where this results from the default of the principal (cf. on this point Venezia-Baldi, Il contratto di agenzia, p. 273, Giuffrè Editore, 2014).

With the following examples, an attempt is made to make the above case clearer:

  • the principal correctly delivers the goods to the customer, who, notwithstanding the principal's performance, does not pay the price of the goods within the agreed time limit: in this case, the principal cannot be considered to be obliged to pay the commission, since the non-performance of the third party is not justified by a non-performance of the principal himself
  • the principal delivers the wrong goods to the customer, who fails to pay the price within the agreed time limit. In this case, it may reasonably be held that payment of the commission is due, since the third party's non-performance is caused by the principal's own non-performance (on this point cf. Bortolitti, Distribution Contracts, p. 285, 2016, Wolters Kluver).

by admin

The agent's right to inspect the principal's books.

Article 1749 of the Civil Code grants the agent the right to inspect the principal's accounting records. The purpose of this rule is to make the ratio as balanced as possible between the agent and the principal, especially in cases where the agent himself has no powers of representation and is therefore not in a position to directly verify what business has been concluded by the principal.

Specifically, the second paragraph of Article 1749 of the Civil Code,[1] provides that:

"the principal delivers to the agent a bank statement commissions due at the latest on the last day of the month following the quarter in which they accrued. "

The third paragraph of Article 1749 of the Civil Code states that:

"The agent is entitled to demand that he be provided with all the information necessary to verify the amount of the commission paid and in particular an extract from the books."

This article is essentially based on the general principle that the principal must act with loyalty and good faith vis-à-vis the agent, imposing, on the one hand, on the principal itself the obligation to make available to the agent, at least on a quarterly basis, a statement of the commissions due, as analytical as possible, and, on the other hand, the agent must have the possibility of verifying that the commissions paid have been calculated correctly.

The importance of this rule is underlined by the fourth paragraph of the same article, which stipulates thenon-derogationeven partial, of the obligations set out therein:

"any agreement contrary to the provisions of this article shall be null and void."

The main procedural tool used by the agent to assert this right is Article 210 of the Code of Civil Procedure. This rule states that the examining magistrate, upon application by a party, may order the other party or a third party to "produce in court a document or other thing whose acquisition it considers necessary for the trial". 

The practical application of this rule is not always easy to solve (on the contrary...) and Italian jurisprudence has often had to solve numerous problems related to it.

First of all, it is important to emphasise that, for our legal system, the investigative tool provided for in 210 c.p.c. has residual nature and may only be used if the proof of the fact is not obtainable by the applicant and if the initiative is not merely for exploratory purposes;[2] the granting of such an application is left to the discretion of the court, which may admit it only if it finds that

 "the proof of the fact sought to be proved cannot be acquired aliunde, since the initiative cannot have merely exploratory purposes or replace the burden of proof placed on the party."[3]

It follows that the agent, who bears the burden of proving that business has been concluded, may not use that instrument to make up for the failure to comply with one of its evidentiary requirements and must prove that the failure to provide evidence is not attributable to it, and must also specifically indicate the documents from which it requests an extract (which must be directly or indirectly identifiable), since a request that is too general would in fact be exploratory and therefore inadmissible.

According to a recent Supreme Court ruling,

"the agent has a genuine right of access to the books held by the principal that are useful and necessary for the payment of commissions and for the transparent management of the relationship in accordance with the principles of good faith and fair dealing. Accordingly, the principal, when requested (even judicially), has a real obligation to provide the documentation and information requested by the agent in order to enable the exact reconstruction of the agency relationship. "[4]

The sentence continues:

"It is, however, incumbent on the agent acting in order to obtain the production of documents to infer and prove the existence of an interest in bringing proceedings, with circumstantial reference to the relevant events of the relationship (including, first and foremost, the sending or not of commission statements and their content) and an indication of the rights, certain or determinable, for the ascertainment of which the application is made."

According to this principle, an application requesting that the principal be generically ordered to produce statements of account of all customers that the agent has supplied (e.g. without indicating their names), or of customers that the principal has supplied directly in the contract territory (and on whose successful orders the agent would have received indirect commissions), would be likely to be held inadmissible as too general and thus exploratory.

If the judge recognises that the above-mentioned requirements are fulfilled, he may issue an order for the production of such extracts, whereby, in practice (at least in my personal experience...) the principal is ordered to produce the commission statements/accounting sheets relating to the customers for whom the agent has filed an application formerly Article 210 c.p.c.

In essence, the documents to which the agent's right of access applies will be:[5]

  • the sales invoices issued to customers;
  • the copy of the vat books, the delivery notes of the goods;
  • the ENASARCO payment receipts and in any case all those documents necessary for the verification of the individual deal;
  • as well as the commission statementsall obviously referring to the area and the period in which the agent carried out his duties.

The judge, having obtained the documentation, may then order a technical accounting expert's report, aimed at verifying the orders received by the principal and counting the payment of commissions.

From a practical point of view, it must also be pointed out that this can often lead to very significant practical problems, arising from the fact that from the documents produced, and elaborated by the expert, often a copious amount of information emerges that was previously unknown (to at least one) of the parties and that this information can give rise to "a case, in the case."

Finally, it should be noted that Art. 210 of the Code of Civil Procedure is not the only instrument in the hands of the agent, who, according to the majority of case law, is in any event entitled to request the commission statement pursuant to Art. 1749 of the Civil Code, also autonomously by way of monitory proceedings.[6]

As may be understood, this issue is of absolute importance, since fundamental rights derive from Article 1749 of the Civil Code that ultimately enable the agent to prove its right to payment of commissions.

[1] Article that transposed by Legislative Decree No. 64 of 1999, Art. 12(2) of Directive 86/653/EEC, which gave the agent the right "to demand that he be provided with all information, in particular a extract from the booksavailable to the principal, necessary to verify the amount of commission due to him. "

[2] See Cass. Civ. 2011 no. 14968

[3] Cass. Civ. 2011, no. 26151.

[4] Cass. Civ. Sec. labour, no. 19319 of 2016.

[5] See Buffa, Bortolotti & Mathis, Distribution Contracts, Wolters Kluver, 2016.

[6] Cass. Civ. 2010, no. 20707.

by admin

Unilateral changes to the agency contract by the principal.

When dealing with the subject of unilateral contractual modifications, it is necessary to recall the existence of a fundamental principle of law, i.e. the 'consent of the parties' (under arts. 1325 and 1372 of the Civil Code). Based on this principle, the parties' agreement is necessary for the valid modification of pre-existing contractual agreements (on this point see also The power of the principal to change the client portfolio of his agent). The Supreme Court, precisely on this basis of law, considered null and void precisely a clause inserted in an agency contract that allowed the principal to change the commission rates at will. (Cass. Civ. 1997 No. 11003).

That being so, and on the basis of the case law cited above, it may reasonably be held that a clause conferring the power to unilaterally amend contractual terms must tend to be considered null and void, or at least must be interpreted consistently with the principles dictated by the ECA, if applicable to the relationship.

However, it should be borne in mind that jurisprudence, while not directly addressing the issue, tends to take for granted the nullity of the clause in the contract that differs from the AEC and its replacement by the latter's provision, (Cass. Civ. 2000 no. 8133; Cass. Civ. 2004 No. 10774) referring in particular to Article 2077 of the Civil Code.

Article 2 of the 2009 CSA regulates what are the principal's powers to unilaterally change, i.e. without the need for express approval by the agent, the commissions and products promoted by the agent. This rule provides that, unless otherwise agreed by the parties, such changes may be:

"by minorshall mean reductions of up to 51T3T of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the change, or in the twelve months preceding the change if the preceding year was not worked in full;
by medium size, meaning reductions that affect more than 5% and up to 15% of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the change, or in the twelve months preceding the change if the preceding year was not worked in full;
by majorby which is meant reductions in excess of 15% of the agent's or representative's commissions in the calendar year (1 January - 31 December) preceding the variation, or in the twelve months preceding the variation if the previous year was not worked in full. "

The rule also states that:

"The variations of minor may be implemented upon written notice to the agent or representative to be given without notice. Such changes shall be effective upon receipt of written notice from the principal by the agent or representative.
Medium and major variations may be implemented upon written notice to the agent or representative to be given, in the case of variations of medium-sized, at least two months in advance, unless otherwise agreed in writing between the parties. In the event of changes in major written notice may not be less than that provided for the termination of the relationshipunless the parties agree in writing to a different term. If the agent or representative communicates, within the peremptory term of thirty days from the receipt of the communication, that it does not accept the medium or major variations, the principal's communication shall constitute notice for the termination of the agency or representation relationship, at the initiative of the principal. "

"L'set of minor variations made in a period of 18 months prior to the last variation, will be considered as single variationfor the application of this Article 2, both for the purpose of requiring notice and for the purpose of considering the relationship as terminated at the initiative of the principal. For agents and representatives acting as sole agents, all minor variations made within a period of 24 months preceding the last variation shall be deemed to be a single variation. "

It follows from reading this article, therefore, that:

  • on the one hand the principal is conferred a potestative right to make changes that lead to a decrease in the products promoted and the commission of its agent;
  • on the other hand the agent, for the medium to large variations, has the right to communicate its refusal within 30 days from receipt of the notice, thus transforming it into a notice of termination at the initiative of the principal.

The above-mentioned rule only regulates changes to the contract by the principal, aimed at decreasing the amount of the commission and the area (products, clientele, territory).

Since Art. 1752 of the Civil Code provides that the agency agreement must be evidenced in writing, it follows that amendments are also valid only if they comply with this requirement. Importantly, the law does not require the written form "ad substantiam"but "ad probationem"This implies that it is not necessary for the modification, in order for it to be effective between the parties, to be expressly agreed upon in writing, but it is sufficient that the agreement on such a modification can be inferred even only from tacit conduct of the parties and that there is a written record of such conduct.

by admin

The termination indemnity in the agency contract: Art. 1751 of the Civil Code and AEC compared.

As has already been pointed out, severance pay in Italy follows a binary systemon the one hand, the discipline governed by theArticle 1751 of the Civil Code and, on the other hand, the regulation of AECs. (cf. also Collective bargaining. Origins, value and enforceability. And if a contractor is a foreigner, do they apply or not?)

The current version of Article 1751 of the Civil Code, as amended by Legislative Decree 1999 No. 65, implementing Directive 86/853/EEC, provides that:

"upon termination of the relationship, the principal is obliged to pay the agent an indemnity if the following conditions are fulfilled:

  1. the agent has procured new customers to the principal or significantly developed business with existing customers;
  2. the principal still receive substantial benefits arising from business with such customers;
  3. the payment of this allowance is fairtaking into account all the circumstances of the case, in particular the commissions that the agent loses and that result from business with such customers."

The third paragraph of the same article states that theallowance is not due when:

  • the principal terminates the contract for a default attributable to the agent, which, because of its seriousness, does not permit the continuation, even temporarily, of the relationship;
  • l'agent terminates the contractunless the termination is justified by circumstances attributable to the principal or by circumstances attributable to the agent, such as age, infirmity or illness, for which the agent can no longer reasonably be asked to continue the activity;
  • when, pursuant to an agreement with the principal, theagent assigns to a third party the rights and obligations which it has by virtue of the agency contract.

About the amount of the indemnity, pursuant to Article 1751(3) of the Civil Code, it:

"may not exceed a figure equivalent to oneannual allowance calculated on the basis of the annual average of the remuneration received by the agent over the last five years and, if the contract dates back less than five years, on the average of the period in question."

The criterion in Article 1751 of the Civil Code, does not contain any calculation methodbut only a ceiling (i.e. an annuity to be calculated on the basis of the average commission of the last five years) and two conditions to the fulfilment of which the accrual of the indemnity is subject, namely that

  • the agent has procured new customers and/or 'intensified' the turnover of existing ones;
  • the indemnity is "equitable" in light of "all the circumstances of the case including the commissions that the agent loses as a result of the termination of the contract.

On the other hand, the contractual regulation of AECs establishes a certain and precise method of calculation based on three different items:

  • the indemnity for termination of the relationship (the 'FIRR', consisting of an annual provision in the special fund managed by ENASARCO) calculated on the basis of the AEC;
  • l'supplementary customer allowancepaid to the agent even in the absence of an increase in clientele, (equal to approx. 4% on the total amount of commissions and other sums accrued);
  • l'allowance meritocraticlinked to an increase in customers and/or turnover.

As can be seen, both systems have within them both advantages and disadvantages for the contracting parties.

I advantages for the agent of theindemnity pursuant to Article 1751 c.c. are the fact that the compensation paid by the court is often higher than that provided for in the CEC.

The disadvantages normally lie in the fact that:

  • only a maximum is set, but a calculation criterion is absolutely missing;
  • the burden of proving the increase/intensification of the clientele and the fairness of the indemnity rests entirely on the agent;
  • the indemnity is excluded in all cases where the agent is terminated from the contract without just cause.[1]

As for the allowance calculated according to the AEC i advantages are quite obvious, given that:

  • a clear and defined calculation criterion is configured;
  • FIRR and client indemnity are due (subject to exceptions) at all times, even in the event of termination by the party;
  • no burden of proof is placed on the agent.

As to the disadvantages for the agent, it should be noted that, in fact, the indemnity paid under Article 1751 of the Civil Code is very often higher than that guaranteed by the AEC.

It should be noted that the European Court of Justice, in a ruling of 23 March 2006,[2] ha disputed the legitimacy of the severance payment as regulated by the AEC. Such agreements, according to the Court, may only derogate from the rules laid down in Directive 86/653/EEC if, on analysis ex antethe application of the AEC would result in the agent being treated economically more favourably than under Article 1751 of the Civil Code. Now, since there are no calculation tools that make it possible to predict the amount of the codified indemnity and it can only be known and calculated after the termination of the relationship and since, according to the Court, the assessment as to whether the treatment of the AEC is (always) more favourable than the civil law discipline must be made ex anteit is clear that, following this reasoning, only a calculation system that always guarantees the maximum allowance can be considered in line with the principles dictated by the directive and the ruling of the Court of Justice.[3]

Despite the ruling of the Court of Justice, However, the orientation of the Supreme Court appears to be in the process of consolidation according to which the criteria for quantifying the severance indemnity provided for by collective bargaining must in any event be considered as a minimum treatment which must be guaranteed to the agent, subject to the need for the judge, once he has ascertained the existence or non-existence of the requirements provided for by Art. 1751 of the Civil Code, to carry out a kind of case-by-case assessment in order to evaluate the fairness of the solution resulting from the AEC, with discretionary power, taking into account all the circumstances of the concrete case.[4]

It should be noted, however, that there is a minority orientation of the jurisprudence on the merits, which has held the AEC to be inapplicable to our system and has therefore not recognised the discipline set forth therein as a guaranteed minimum for the agent.[5]

____________________

[1] Art. 1751 (2) (1): "The indemnity shall not be due [...] when the agent terminates the contract, unless the termination is justified by circumstances attributable to the principal or by circumstances attributable to the agent, such as age, infirmity or illness, for which the agent can no longer reasonably be required to continue the activity"

[2] Court of Justice 2006, C-465/04.

[3] Baldi-Venezia, Il contratto di agenzia, 2014, GIUFFRÈ; Bortolotti, L'indennità di risoluzione del rapporto secondo il nuovo Accordo Economico Collettivo Settore industria, 2014, www.newsmercati.it.

[4] Cass. Civ. 2009 no. 12724; Cass. Civ. 2012 no. 8295; Cass. Civ. 2013 no. 18413; Cass. Civ. 2014 no. 7567; Cf. Baldi-Venezia, Il contratto di agenzia, 2014, GIUFFRÈ, "This solution does not appear satisfactory and, above all, does not concretely identify the quantification criteria to be adopted, leaving the judge of merit with a wide margin of discretion, which does not militate in favour of the future identification of precise and uniform criteria to the detriment of a principle of certainty'..

[5] Tribunale Treviso 29 May 2008; Tribunale Treviso 8 June 2008; Tribunale di Roma 11 July 2008.

by admin

The natural person agent, parasubordinate work and the employment rite.

Law No. 533/73 introduced into the Italian procedural system the so-called "rito lavoro", a procedure characterised by the principles of orality and immediacy. Point 3 of paragraph 1 of Article 409 of the Code of Civil Procedure, introduced by this Law expressly provides that the following are also subject to the labour procedure

"agency and commercial representation relationships [...] which take the form of continuous and coordinated work, predominantly personal even if not of a subordinate nature."

Therefore, disputes relating to agency and representation relationships are also subject to the labour court if the work performance is characterised by the continuity, from coordination and the prevailing personality (cf. also The agency contract and the employment relationship: distinguishing criteria and evaluation parameters).

A third figure, namely that of 'parasubordinate' work, has thus arisen alongside the already existing categories of self-employed and subordinate workers. It was first elaborated by doctrine, and then transposed by case law itself,[1] to respond to a real need to define those self-employed relationships in which, in fact, the worker is in a position of dependence towards the principal that is less strong than that of a subordinate worker, but certainly much more binding than self-employed relationships. In this way, a category of subjects has been enucleated that is deemed worthy of even stronger protection, which brings them closer in this respect to subordinate workers.

The question arises as to whether only commercial agents acting as natural persons are subject to labour proceedings, or also agents who, although they operate in the form of corporations, have a structure such that the personal element of the service prevails (e.g. single-member companies). According to the most recent case law of the Court of Cassation, they are deemed to be subject to the employment procedure, only disputes involving agents acting as natural personsexcluding all cases of an agent operating in the form of a company, be it a partnership or a corporation, regular or irregular.[2] In a recent ruling, the Supreme Court stated that:[3]

"where the agent is a company or avails itself of an autonomous entrepreneurial structure, the personal character of the service is lost, with the consequence that the relationship can no longer be brought under the provision of Article 409 of the Code of Civil Procedure and, therefore, to the employment rite, since, where the capacity of agent is assumed by a corporation or partnership, the company, even if lacking legal personality, still represents an autonomous centre of legal relations that stands between the partner and the principal".

Jurisprudence also holds that the natural person agent who performs the its own activity using its own personnel, provided that in the relationship the organisational aspect of the agent does not prevail over that of personal performance:[4] Although the personality of the service must be prevalent, it need not be exclusive. On the other hand, parasubordination must be excluded if the activity is carried out according to entrepreneurial criteria such that the agent merely coordinates and directs his collaborators, without performing any promotional activity.[5] (cf. also What is the difference between an agency contract and a business intermediary?)

Parasubordinate workers are subject to the same legal treatment as employees not only with regard to the application of the labour law, but also to the right to the revaluation of labour claims[6] and the substantive legal institution of the invalidity of waivers and settlements relating to the employee's unavailable rights pursuant to Article 2113 of the Civil Code, which we will discuss in the following section.

_______________________

[1] Cass. civ. Sec. labor, 1998, no. 4580.

[2] Civil cassation 2012, no. 2158, By far the prevailing case law holds, however, that when the agent is a corporation or makes use of an autonomous entrepreneurial structure, the personal character of the service ceases to exist and the relationship cannot be brought within the scope of Article 409, given that if the capacity of agent is assumed by a corporation or partnership, the corporation, even if lacking legal personality, still constitutes an autonomous centre of legal relations that stands between the shareholder and the principal; Civil cassation no. 2509/1997; Civil cassation no. 9547/2001; Civil cassation no. 14813/2005; Civil cassation no. 6351/2006; Civil cassation no. 15535/2011; App. Florence, 11/04/2007 "Disputes between the agent and the principal fall within the jurisdiction of the labour court if the activity performed has the characteristics of parasubordination, i.e. where the agent performs the activity predominantly with personal labour. This requirement is lacking when the agent performs the activity in the form of a company, even a partnership or an irregular or de facto one, and also when the activity, although performed on an individual basis, is characterised by the prevalence of the organisational moment of the work of its employees and collaborators over the personal contribution.'; Bortolotti, Il contratto di agenzia commerciale, CEDAM, 2007.

[3] Cass. Civ. 2005 No. 14813.

[4] See also Cass. Civ. Sec. lavoro, 1998 No. 14454: which excluded the predominantly personal character of the agent ".that he had availed himself of two employees, a driver, a warehouseman, several vehicles and, above all, no less than six sub-agents, taking on the economic burden of the entire organisation also in terms of remuneration'.

[5] Cass. civ. Sec. II Ord., 22/03/2006, no. 6351.

[6] Art. 429, third paragraph, c.p.c. ".The court, when pronouncing a judgment sentencing the payment of sums of money in respect of employment claims, must determine, in addition to interest at the legal rate, the greater damage, if any, suffered by the employee as a result of the diminution in the value of his claim, sentencing him to pay the relevant sum with effect from the day on which the right accrued."

by admin

The law applicable to the international agency contract.

When operating in the field of international contract law, certainly the first aspect to be analysed is to understand by which law the contractual relationship is governed.
As is well known, the regulation of applicable law, in the European context, is dictated by the European Regulation Rome I, No 593/2008 on the law applicable to contractual obligations.

Article 3 of the Regulation gives the parties the freedom to choose to which law to subject the contractual relationship:

"...the choice is express, or clearly follows from the provisions of the contract or the circumstances of the case"

In the event that the parties have not chosen to which jurisdiction the contract shall be subject, the following shall apply Article 4 of the Regulation, which sets out the criteria for identifying the law applicable to the relationship. Specifically, Article 4(1)(B) of the Regulation prescribes that contracts relating to the provision of services, which also includes agency contracts, are governed by the law of the country in which the service provider (the agent, therefore) is habitually resident. This implies that all agency relationships between a foreign principal and an Italian agent, for which the parties have not (expressly) chosen the applicable law, will be governed by the law of the country in which the agent has its habitual domicile, i.e. normally by Italian law.

It can therefore be said that the Italian law is applicable to the international agency contract in the following cases:

  • in the case of choice of parts (Art. 3 Rome I Regulation);
  • at absence of choice of the parties, in all cases where the agent has its habitual residence on Italian territory (Art. 4 Rome I Regulation);
  • in the event that the parties decide to submit the contract to foreign law, the Italian rules shall apply ".internationally imperative"or "necessary application" (Art. 9 Rome I Regulation).

With reference to this last point, which certainly constitutes one of the most complex and critical profiles of international trade law, it is deemed necessary to briefly elaborate.

As is well known the freedom given to the contracting parties to choose how to regulate a contractual relationship encounters limitsIn all legal systems there exist mandatory rules intended precisely to limit the freedom of the parties in order to ensure the observance of certain principles. Applying this principle in the sphere of international contracts is not easy, precisely because one is obliged to deal with the mandatory rules of two or more jurisdictions: the one chosen by the parties and the one which, in the absence of choice, would apply pursuant to Art. 3 of the Rome I Regulation.

How, then, does the right granted to the parties to choose the applicable law fit in with the principle that the mandatory rules applicable in the absence of choice must be respected?

In principle, it may be said that the choice of a particular law entails the total derogation of the rules of a particular legal system (including mandatory rules) in favour of those of another legal system. This implies that, normally, if the parties choose to subject their contract to another legal system, their contract will have to comply with the mandatory rules of that system, but not those of the system derogated from through their choice.

However, it should be noted that, in particular cases, national legislators may decide to attribute to certain standards an even more binding valuesuch as to make them mandatory even at the choice of the parties: these rules are defined as "internationally imperative"or of 'necessary application' and are thus distinguished from those that are 'merely mandatory'.

In the European context, this principle is governed by Article 9 of the Rome I Regulation, which defines the rules of necessary application as:

"... provisions compliance with which is regarded as crucial by a country for the safeguarding of its public interests, such as its political, social or economic organisation, to such an extent as to require their application to all situations falling within their scope, whatever the law applicable to the contract under this Regulation."

The European Court of Justice intervened to interpret the scope of this rule in the Unamar case: in this ruling, the Court stated that the national court may apply the most protective rules of its own law (instead of the law chosen by the parties)

"...only if the court before which the case is brought makes a detailed finding that, in the context of that transposition, the legislature of the State of the forum considered it crucial, within the legal system concerned, to afford commercial agents protection additional to that provided for by that directive, taking account, in that regard, of the nature and purpose of those mandatory provisions.

From this ruling, it follows that in order to prevail over the law of another country based on the same directive, it is not sufficient that the rules chosen provide for a higher level of protection and attribute to them the character of internationally mandatory rules, but that it must also be shown that this choice is of crucial importance for the system in questionin view of the nature and purpose pursued by the rules in question.

by admin

The agent's obligation to inform the principal

The duty to provide information is governed by Art. 1746 of the Civil Code. This provision requires the agent to provide the principal with information on market conditions in the assigned area, as well as any other information useful for assessing the convenience of individual business. Specifically, that article provides that the agent shall:

"provide the principal with information regarding market conditions in the area assigned to him, and any other information useful for assessing the suitability of individual deals"

As can be seen, the information requested from the agent can be of two types:

  • information concerning the market conditions;
  • information needed to assess the convenience of the deal.

The agent, therefore, plays a dual role in the contractual relationship. On the one hand, he has to sound out the development of the area and customers entrusted to him, in order to keep the principal up-to-date on what is actually happening there. On the other hand, he performs the delicate task of scrutinising the suitability of individual deals and the solvency of the customers to whom orders are given.

Not a few problems arise precisely from the interpretation of this article. In particular, it is not easy to understand what are the limits to the principal's right to demand detailed and continuous information from the agent: as a general rule, it is considered that an excessive extension of this obligation could even be considered an indication to question the agent's independence and thus make the relationship qualify as an employment relationship.

That said, with reference to the duty of the agent to inform on the market conditionsit is possible to hold that the principal may require the agent to keep the agent informed, to the extent possible, of everything of which it becomes aware concerning the market situation and its changes in relation to the area assigned to it. This does not implyhowever, an obligation on the agent to make assessments, forecasts or indications as to the future prospects of the market itself. Indeed, the agent is only obliged to report information on potential or actual competitors, which is necessary for the principal to formulate a commercial policy that can be as effective as possible in the area assigned to the agent.

Under the second aspecti.e. the obligation to assess the suitability of the bargain, the agent must assess for each individual bargain (and client) what the contractor's concrete capacity to perform is.

Supplementing the provisions of Article 1746 of the Civil Code, Article 1 of the AEC Industry 2014 and Trade 2009 provides that, unless otherwise agreed,

"The agent shall carry out his activity autonomously and independently [and][...] shall be obliged to keep the principal constantly informed of the situation on the market in which he operates, but shall not be obliged to report at predetermined intervals on the performance of his activities. "

Art. 5 of the AEC Industry and Art. 4 of the AEC Commerce also clarifies that the agent:

"must perform the task entrusted to him in accordance with the instructions given by the company and provide information concerning market conditions in the area assigned to him, as well as any other information useful to the principal in assessing the suitability of individual deals. "

The agent is therefore on the one hand obliged to inform the principal and on the other hand has the right to act in full organisational autonomy: it is therefore necessary to find the right balance between the opposing demands of the agent's organisational autonomy and his obligation to follow instructionsi of the principal.

Therefore, on the one hand, the principal, having to respect the agent's autonomy, may not, for exampleon the one hand, impose on the agent the daily list of customers to be visited and plan the itineraries to be followed by the agent, but on the other hand may ask the agent to visit certain customers or categories of customers it cares about and require the agent to organise the visits in such a way as to adequately cover all customers and to report back to it.

That being said, doctrine and case law hold that the obligation to provide information has no fundamental relevance . In any event, it may in concrete terms be of such relevance as to justify, in the event of a breach, the termination of the relationship due to fault on the part of the agent, if the omissions are likely to cause serious negative consequences for the principal's business performance (Cass. Civ. 1994 No. 7644).

by admin