Legal Updates

Commercial Law – Payment of Commission – Commercial Agency Regulations – Commercial Agent – Community Regulations

The case of Heirs of Paul Chevassus-Marche v Groupe Danone and Others (Case C-19/07) [2008], involved a determination on community laws relating to commercial agents. According to Article 7(2) of Council Directive (EEC) 86/653 (On the coordination of the laws of the member states relating to self-employed commercial agents) (“the Directive”):

“A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract either where he was entrusted with a specific geographical area or group of customers... And where the transaction has been entered into with a customer belonging to that area or group...”.

Article 10 provides as follows:

“(1) The commission shall become due as soon as and to the extent that one of the following circumstances obtains:

(a) the principal has executed the transaction; or the principal should, according to his agreement with the third party, have executed the transaction; or…

(c) the third party has executed the transaction.

(2) The commission shall become due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction, as he should have”.

In 1987, the first respondent in this case concluded an exclusive mandate with C. The applicants in this case were heirs to C’s estate. The exclusive mandate concerned the first respondent’s representation of C’s subsidiaries, namely the second and third respondents, in their dealings with the importers, wholesalers and retailers of their goods in a specific geographical area.

Before the termination of that contract, C requested payment of various sums. Such sums included commissions relating to purchases made by two companies established in his geographical area.

The requests for payment were refused on the ground that the purchases concerned had been made from central buying officers or dealers in metropolitan France, an area outside the control of the respondents, and without any action on C's part.

C then brought an action concerning payment of commission.

The national court made a reference to the Court of Justice of the European Communities. The question concerned a request for a preliminary ruling on the interpretation of Article 7(2) of the Directive. The question referred by the national court was as to whether Article 7(2) of the directive was to be interpreted as meaning that:

“A commercial agent entrusted with a specific geographical area was entitled to commission where a commercial transaction between a third party and a customer belonging to that area had been concluded without any action, either direct or indirect, on the principal's part”.

It was held as follows:

The court was of the opinion that

·        Article 7(2) of the Directive had to be interpreted as meaning that a commercial agent entrusted with a specific geographical area did not have the right to a commission for transactions concluded by customers belonging to that area without any action, direct or indirect, on the part of the principal.

·        Article 7(2) merely refers to any transactions concluded during the period covered by the agency contract. There is no requirement that those transactions had to be entered into with a customer belonging to a geographical area or a group of customers for whom the commercial agent was responsible.

·        There is not an express requirement for action on the part of the principal, and there is no requirement for action on the part of the commercial agent.

·        However, it should be noted that when considering Article 7(2) in conjunction with Article 10, the commercial agent's right to commission arises either:

§                            when the principal has (or should have) carried out his obligation; or

§                            when the third party to the agency contract, namely, the customer, has (or should have) carried out his obligation.

·        The presence of the principal in the transactions for which the commercial agent could claim commission was indispensable. It therefore followed that the commercial agent could claim commission. The commercial agent’s claim for commission could be made on the basis of a transaction only to the extent that the principal had acted, directly or indirectly, in the conclusion of that transaction.

·        As a result, this meant that it was for the national court to establish:

“Whether or not the evidence before it, assessed in the light of the aim of protecting the commercial agent and of the obligation on the principal to act dutifully and in good faith, allowed it to establish the existence of such action, be that action of a legal nature”.

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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

 

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