Tag Archives: Lawyer

Politics Law Society

Managing director liable despite settlement clause in termination agreement

Managing director liable despite settlement clause in termination agreement

Managing director liable despite settlement clause in termination agreement

A managing director may be liable towards the company despite a settlement clause in the termination agreement. That was the verdict of the Oberlandesgericht (OLG) München, the Higher Regional Court of Munich.

The company and the managing director may agree to a settlement clause within the framework of a termination agreement according to which the parties will be indemnified from and against all mutual claims. We at the commercial law firm GRP Rainer Rechtsanwälte note that neither party can invoke this clause if it fraudulently conceals material circumstances. It was with this in mind that the OLG München held a managing director liable in spite of a settlement clause and awarded the company damages in a ruling from 18 April 2018 (Az.: 7 U 3130/17).

In the instant case, the defendant was the sole managing director of a GmbH, a type of German private limited liability company. The managing director“s service contract stipulated, among other things, that he required written approval from the general meeting of the shareholders prior to concluding rental agreements with a term of longer than three years or an annual rent of more than 24,000 euros. In December of 2014, the managing director nonetheless entered into a ten-year rental agreement with an annual rent of around 51,000 euros without the consent of the general meeting. In April of 2015, the managing director“s service contract was terminated by mutual agreement. At the same time, the parties agreed to a settlement clause pursuant to which all claims arising from the service contract were considered settled.

At this point in time, the company had no knowledge of the rental agreement that had recently been concluded. It later reached a settlement with the renter to terminate the rental agreement in return for payment of compensation in the amount of 60,000 euros. The company subsequently sued its former managing director for payment of this amount.

The OLG München awarded damages, ruling that the defendant should not have entered into the rental agreement without the general meeting“s written approval and that in doing so he had breached his obligations to the company. The fact that he was said to have acted in the interests of the company did not affect this outcome. The Court went on to state that the settlement clause in the termination agreement equally did not preclude the claim for damages. The OLG München noted that while the claim did indeed fall within the ambit of the clause because the latter concerned all claims of the parties, the defendant could not rely on it because he had exceeded his authority, then fraudulently concealed this and failed to come clean even at a later date,

Lawyers who are experienced in the field of company law can advise companies as well as managing directors.

https://www.grprainer.com/en/legal-advice/company-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BGH: Beer cannot be promoted as „bekömmlich“

BGH: Beer cannot be promoted as „bekömmlich“

BGH: Beer cannot be promoted as "bekömmlich"

Beer cannot be promoted as „bekömmlich“, i.e. „wholesome“ or „agreeable“ (in terms of its digestibility). That was the verdict of the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, in a ruling from 17 May 2018 (Az.: I ZR 252/16). This description was said to be in violation of the Health Claims Regulation.

We at the commercial law firm GRP Rainer Rechtsanwälte note that the Health Claims Regulation prohibits drinks with an alcohol content of more than 1.2 per cent from featuring health claims.

The dispute before the BGH concerned a brewery“s advertising that promoted various kinds of beer with an alcohol content of more than 1.2 per cent as „bekömmlich“. A consumer protection organization had taken the view that this promotional description was unlawful and decided to file a lawsuit. The action was successful before the court of final instance.

The BGH held that when it comes to alcoholic drinks with an alcohol content of more than 1.2 per cent, health claims are prohibited as part of not only the labelling but any advertising. The Court ruled that a statement or description is not only deemed to be a health claim if it promises an improvement in health, but also if it merely suggests that consuming the food or drink in question does not have any adverse effects on health that could be associated with its consumption in other circumstances. It went on to state that consumers understand „bekömmlich“ to mean „gesund“ („healthy“), „zuträglich“ („agreeable“ or „beneficial“) and „leicht verdaulich“ („easily digestible“), and this gives the impression that the drink is well tolerated when consumed long term. The BGH concluded that it was not apparent from the advertising that the term „bekömmlich“ refers only to the taste.

In doing so, the BGH followed the jurisprudence of the Court of Justice of the European Union (ECJ). The latter ruled as early as 2012 that ambiguous statements in relation to alcoholic drinks are unlawful. The ECJ prohibited winemakers from promoting their wine using the term „bekömmlich“ on the basis of its low acidity. However, back in 2011 the BGH deemed „bekömmlich“ acceptable in reference to a herbal liqueur.

Following the BGH“s more recent ruling, breweries as well as other food and drink producers will have to adjust their advertising practices. Advertising featuring health claims can easily give rise to violations of competition law, potentially resulting in formal warnings, damages claims or injunction suits. Lawyers who are versed in the field of competition law can assist businesses in fending off or enforcing claims arising from violations of competition law.

https://www.grprainer.com/en/legal-advice/competition-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

OLG Köln: Unfair advertising due to false statements about discount promotion

OLG Köln: Unfair advertising due to false statements about discount promotion

OLG Köln: Unfair advertising due to false statements about discount promotion

Caution is in order if someone is offering discounts on „fast alles“, i.e. „almost everything“. Advertising featuring a discount promotion that excludes large sections of the product range from the discount is misleading and unfair. That was the verdict of the Oberlandesgericht (OLG) Köln, the Higher Regional Court of Cologne.

Misleading advertising or misleading business activities are a violation of the Gesetz gegen den unlauteren Wettbewerb (UWG), Germany“s Act Against Unfair Competition. We at the commercial law firm GRP Rainer Rechtsanwälte note that violations of competition law can give rise to injunctions suits or damages claims.

In a judgment from 20 April 2018, the 6th Civil Division of the OLG Köln ruled that a furniture store is not allowed to advertise that it is offering a 30 per cent discount on almost everything if in fact a large proportion of the product range is excluded from the discount (Az.:6 U 153/17).

The furniture store had boasted in a brochure about a „30 per cent discount on almost everything“. The German word „fast“ („almost“) was printed vertically in the crease of the folded brochure in considerably smaller and less conspicuous writing than the rest of the text. While the Division left open the question of whether this layout was enough to significantly mislead consumers in its own right, the numerous exceptions to the discount promotion proved to be too much for the judges. For instance, the products of 40 producers were excluded from the discount promotion in the same way as goods that were already reduced or offers from the furniture store“s brochures, advertisements, mailings etc.

It was mentioned in a speech bubble in the brochure that the discount applied to upholstery furniture, wall units, kitchens, bedrooms as well as many other product categories – „einfach fast alles“ („almost everything“). The OLG held that this list was misleading to consumers, stating that the latter could only construe the list to meant that the discount applies without restrictions, with the exception of product categories not included in the list, e.g. garden furniture.

The Division went on to further criticize the statements on display in the advertising relating to the discount as being objectively wrong and a brazen lie without reasonable justification, and that these kinds of false statements could not be rectified by an explanatory note.

Lawyers who are experienced in the field of competition law can advise on matters pertaining to this field of law and enforce or fend off claims arising from violations of competition law.

https://www.grprainer.com/en/legal-advice/competition-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

Reclaiming advances on commission payments requires transparent presentation

Reclaiming advances on commission payments requires transparent presentation

Reclaiming advances on commission payments requires transparent presentation

A company demanding that advances on commission payments be repaid by the commercial agent needs to be able to provide detailed reasoning in support of this action as well as present a complete calculation for the recovery of the sums in question.

Commercial agents receive a commission for the deals they broker from the company in whose name they conclude agreements. It is also customary for advances to be paid on this commission or for the parties to agree on what is referred to in German as a „Stornoreserve“, i.e. a reserve sum in case the agreement with clients eventually falls through. However, we at the commercial law firm GRP Rainer Rechtsanwälte note that even under these circumstances the advances on commission payments cannot be automatically clawed back. That was the verdict of the Oberlandesgericht (OLG) Frankfurt, the Higher Regional Court of Frankfurt, in a ruling from 17 August 2017 (Az.: 6 U 214/16).

In the instant case, the financial services company filing the action had concluded a commercial agency agreement with the defendant. It was agreed that in the case of contracts featuring so-called „Haftungszeiten“, i.e. indemnity periods, the right to claim commission would not arise until the client had paid a certain number of premiums. Following the cancellation of various contracts, the company demanded repayment of the amounts that had been advanced on commission payments, which amounted to almost 30,000 euros in total. The action was unsuccessful before the respective regional court, and the Oberlandesgericht Frankfurt also gave clear indications that it intended to dismiss the claim for lack of reasonable prospects of success.

It held that, according to the relevant statutory provisions, the commercial agent is required to repay advances on commission in the event that the client fails to pay and the company is not responsible for this. Accordingly, commission entitlements in the case of agreements featuring indemnity periods only arise if the client has paid a certain number of premiums. The company filing the action demanded that advances on commission from cancelled agreements be paid back. However, the OLG Frankfurt ruled that it had not been able to present a complete calculation for the recovery of the sums in question.

It went on to say that it is necessary for each sum being reclaimed that arises from a cancellation to be substantiated and transparently presented. It is not enough to simply number the claims according to their value and allocate them to a contract brokered by the commercial agent. The Court held that the company must demonstrate that it took every measure necessary to preserve the agreement. In addition, a transparent calculation of the individual cancellation claims needs to be made out in writing. In the present case, the OLG found that it was not clear why numerous cancellations had been allocated to not only one but several recovery sums. All in all, the Court was not able to work out how the amount being reclaimed had come about.

Disputes in relation to commercial agency agreements, e.g. regarding claims for compensation or reclaiming commission, are common. Lawyers who are experienced in the field of commercial law can offer advice.

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

EGC: A word mark consisting of two letters can be registered as an EU trade mark

EGC: A word mark consisting of two letters can be registered as an EU trade mark

EGC: A word mark consisting of two letters can be registered as an EU trade mark

It is possible even for a word mark consisting solely of two letters to be registered as an EU trade mark. This was confirmed by the EGC in rulings from 24 April 2018 (Az.: T-207/17 and T-208/17).

We at the commercial law firm GRP Rainer Rechtsanwälte note that commercial symbols need to be sufficiently distinct from the products and services of other providers in order for them to be capable of being registered as a trade mark and to benefit from the protection that comes with trade mark registration. The General Court of the European Union (EGC) has now ruled that it is possible for a word mark to have the required distinctive character even if it consists of only two letters.

A US company had successfully applied to register a word mark made up of two letters in conjunction with a figurative mark with the European Union Intellectual Property Office (EUIPO) as an EU trade mark for various goods and services, including printers and cartridges. A Polish company requested that this mark be declared invalid, arguing that it was descriptive and lacked distinctive character. The petition was rejected by the EUIPO and the claim dismissed by the EGC.

The line of reasoning employed by the Polish company bringing the claim, i.e. that it is especially common in the field of technology for short combinations of letters to be used as descriptions for products and services, failed to convince. The EGC held that a mark is not considered to only have descriptive character simply because it consists of two letters. It found that the contested combination of letters is not often used and nor is it perceived as a designation that lacks distinctive character. The mark was also said to serve as an indication of the origin of the products to the relevant audience. Moreover, the plaintiff had failed to demonstrate that at the time of the mark“s registration another business made use of similar or identical marks to market their products. The Court therefore concluded that the registered EU trade mark need not be declared invalid.

Trade marks are of considerable value to businesses because they give rise to a high degree of brand recognition among consumers. Consequently, trade mark protection is also important. However, before a commercial mark can be registered as a trade mark, it needs to be assessed whether the necessary requirements for registration have been met and whether or not rights associated with existing trade marks would be infringed. Lawyers who are experienced in the field of intellectual property law can advise on matters relating to trade mark registration and protection.

https://www.grprainer.com/en/legal-advice/ip-law/trademark-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

Unfair exploitation of a product“s reputation by imitating its well-known design

Unfair exploitation of a product“s reputation by imitating its well-known design

Unfair exploitation of a product"s reputation by imitating its well-known design

A product“s good reputation can be deemed to have been unfairly exploited even if the presentation of the product has been imitated but the word mark has not been infringed. That was the verdict of the Oberlandesgericht (OLG) Frankfurt, the Higher Regional Court of Frankfurt.

We at the commercial law firm GRP Rainer Rechtsanwälte note that if goods or services are offered that are an imitation of a competitor“s products, this constitutes a violation of the Gesetz gegen den unlauteren Wettbewerb (UWG), Germany“s Unfair Competition Act. According to a ruling of the Oberlandesgericht Frankfurt from 28 February 2018, imitating the features of a well-known product may constitute unfair exploitation of the latter even if the word mark on the counterfeit product is distinct from the one featured on the imitated product (Az.: 6 W 14/18).

In the case in question, a company from Malaysia had presented an adhesive at a specialist trade fair, the presentation and colour scheme of which bore a strong resemblance to a well-known product made by a German manufacturer. The only thing distinguishing the products was the different inscriptions on the tubes. The OLG Frankfurt ruled that the German company was entitled to sue for an injunction.

The Court held that the German manufacturer“s product had competitive originality. It went on to explain that this kind of originality presupposes that the product“s specific form or certain characteristics are capable of informing consumers about its commercial origin or special features. The Court noted that it is the overall impression created by the design that matters. These requirements were found to have been met in the case of the adhesive, whose overall impression was said to be influenced mainly by the shape of the tube, the colour scheme and the screw cap. The OLG ruled that these features are familiar to consumers, stating that the characteristic combination of colours and shape give rise to a high degree of brand recognition independent of the word mark. It expanded on this point by noting that it is possible to identify the product even if the writing is not yet legible.

The OLG concluded that the Asian company“s product was an imitation because it featured the imitated product“s defining characteristics such as the shape of the tube and colour scheme in a very similar form. All in all, the Asian company was deemed to be unfairly exploiting the good reputation enjoyed by its German competitor“s product. To this end, the Court held that it is sufficient for consumers to project the original product“s good reputation onto the imitation.

Lawyers who are experienced in the field of competition law can advise on matters pertaining to trademark law as well as in relation to violations of the UWG.

https://www.grprainer.com/en/legal-advice/competition-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

OLG München – Extraordinary termination of a commercial agency agreement

OLG München – Extraordinary termination of a commercial agency agreement

OLG München - Extraordinary termination of a commercial agency agreement

It is possible for a commercial agency agreement to be extraordinarily terminated for good cause if the relationship of trust between the parties has broken down. That was the verdict of the Oberlandesgericht (OLG) München, the Higher Regional Court of Munich.

A commercial agency agreement can be terminated by any party to the agreement if there is good cause for doing so. We at the commercial law firm GRP Rainer Rechtsanwälte note that sec. 89a of the Handelsgesetzbuch (HGB), Germany“s Commercial Code, provides that this right cannot be excluded or limited. However, the legislature left open the definition of what exactly constitutes good cause. According to a ruling of the OLG München from 8 February 2018, there is deemed to be good cause justifying termination of a commercial agency agreement if the relationship of trust between the parties has irretrievably broken down and it is no longer reasonable to expect further cooperation in consideration of all factors relevant to the circumstances of the specific case (Az.: 23 U 1932/17).

In the instant case, the plaintiff had entered into a commercial agency agreement with the defendant, according to which it was amicably settled that activities relating to the role of the commercial agent would be carried out by the plaintiff“s husband. When the latter downloaded extensive data records onto his private computer without permission, the company issued extraordinary notice of termination. The plaintiff took action against this, demanding, among other things, payment of commission, bonuses and a commercial agency settlement.

The OLG München held that the extraordinary notice of termination had been justified, ruling that downloading and saving the data records had not been necessary for the purposes of carrying out activities relating to the role of the commercial agent and that the plaintiff could be held responsible for her husband“s conduct in this regard. The OLG München took the view that downloading the data without permission was so serious that the relationship of trust between the parties had irretrievably broken down and it was no longer reasonable to expect the contractual relationship to continue until the end of the ordinary notice period for termination. The Court stated that the fact that the plaintiff had worked with the company for more than 20 years changed nothing. It went on to say that it had not even been necessary to issue a prior formal warning, as the relationship of trust had been severely shaken by the impropriety, such that the former could not be restored with a successful warning.

Legal disputes between commercial agents and commercial enterprises are common. Lawyers who are experienced in the field commercial law can advise on matters ranging from drafting to terminating a commercial agency agreement.

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

Bundeskartellamt imposes fines running into millions for illegal arrangements

Bundeskartellamt imposes fines running into millions for illegal arrangements

Bundeskartellamt imposes fines running into millions for illegal arrangements

The Bundeskartallemt, Germany“s Federal Cartel Office, has imposed fines totaling approx. 23 million euros in response to the collective calculation of uniform price recommendations.

According to a case report of the Bundeskartellamt from 16 March 2018, Germany“s Federal Cartel Office imposed fines amounting to about 23 million euros in total on ten businesses and an individual involved in the plumbing and heating services sector in a decision from 21 February 2018 (Az.: B5 – 139/12).

In justifying its decision to impose the fines, the Bundeskartallemt cited that the competing plumbing supplies wholesalers had collectively calculated the respective recommendations for gross list prices as detailed in their sales catalogues using internal data such as operating costs, mobility and minimum discounts. In the course of this, the highest purchase price that a plumbing supplies wholesaler was able to obtain from the manufacturer served as the basis.

The businesses, members of the costing committee for a North-Rhine Westphalia plumbing services association called „Mittelstandskreis Sanitär Nordrhein-Westfalen“, or „MKS NRW“ for short, recommended using these gross list prices amongst each other as well as to other members. This frequently led to these prices being either included in the catalogues or only slightly adjusted. The Bundeskartellamt found that the common calculation basis gave rise to an anti-competitive alignment of the initial price level and thus resulted in less competition.

The exceptional derogation for recommendations made by small and medium-sized enterprises was definitively abolished when the 7th amendment to Germany“s Act Against Restraints of Competition, the Gesetz gegen Wettbewerbsbeschränkungen (GWB), entered into force. The members of the MKS NRW would therefore have been obliged to re-assess and cease their anti-competitive conduct. Instead, they continued to collectively calculate the gross list prices until the search in March of 2013. Due to the fact that those involved cooperated with the Bundeskartellamt in uncovering the cartel, they benefited from a leniency programme, which resulted in the fines being reduced.

For those adversely affected by the cartel, the Bundeskartellamt“s decision means that they can demand compensation from the cartelists. We at the commercial law firm GRP Rainer Rechtsanwälte note that it is no longer necessary to furnish evidence substantiating the violation.

We also note that violations of antitrust law or competition law are met with severe penalties, and the violations need not be obvious as in the case of illegal price-fixing arrangements. Lawyers who are experienced in the fields of antitrust law and competition law can advise businesses on enforcing or fending off claims arising from violations of antitrust law or competition law.

https://www.grprainer.com/en/legal-advice/antitrust-law.html

GRP Rainer www.grprainer.com/en/ is an international full service law firm. The lawyers counsel on corporate and commercial law, business law, tax law, IT law and IP law and distribution law. The law firm advises international companies, corporations, mid-sized businesses and private clients worldwide. GRP Rainer can be found in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

BVerfG – Proportionality in relation to allegations of delayed filing for insolvency

BVerfG – Proportionality in relation to allegations of delayed filing for insolvency

BVerfG - Proportionality in relation to allegations of delayed filing for insolvency

Allegations of delayed filing for insolvency are easily made, yet the investigations need to maintain a sense of proportion. A home search can just as easily overshoot the mark.

A managing director“s obligations include, among other things, filing for insolvency in due time. The application for insolvency must be submitted without undue delay, but no later than three weeks after the onset of insolvency or over-indebtedness. We at the commercial law firm GRP Rainer Rechtsanwälte note that by failing to meet this obligation, the managing director renders him- or herself liable to prosecution.

Allegations of delayed filing for insolvency are easily made. However, the public prosecutor“s office needs to maintain a sense of proportion during investigations. Searching the managing director“s private living quarters may be unconstitutional if the initial suspicion is not based on concrete facts but rather vague indications and mere supposition, as the Bundesverfassungsgericht (BVerfG), Germany“s Federal Constitutional Court, made clear in a ruling from 10 January 2018 (Az.: 2 BvR 2993/14).

In the case in question, two companies had maintained close business relations for years. When one of them, a GmbH, fell into arrears with its payments and these payments failed to materialize even after several formal reminders, the creditor lodged a criminal complaint. The competent public prosecutor“s office subsequently opened an investigation on suspicion of failure to file for insolvency in due time. During the course of the investigation, a search of the managing director“s business premises and living quarters was ordered and carried out. The managing director lodged a complaint against the search order and at the same time demanded that the seized documents be handed over, arguing that there were no indications that the company was insolvent. He further argued that it was evident from the correspondence that the asserted claims were being disputed and for this reason had not been paid. The managing director also claimed that the search order was disproportionate given the numerous other investigative measures that could have been taken that would not have violated constitutional rights to the same extent.

The seizure of the documents was later reversed and the investigation suspended. The managing director nonetheless brought a constitutional complaint due to violation of his constitutional rights. The BVerfG upheld the complaint in relation to the house search, stating that for a house search to be conducted the initial suspicion needs to be based on concrete evidence and the search must be proportionate. It went on to say that, in any event, a search is disproportionate if alternative investigative methods that would not have violated constitutional rights to the same extent are avoided without plausible cause. The Court held that in this case it should have been possible to inspect the list of debtors and the annual financial statements of the GmbH, or to request information from the account screening file.

If allegations of delayed filing for insolvency are made or insolvency is imminent, lawyers who are experienced in the field of company law can serve as professional advisers.

https://www.grprainer.com/en/legal-advice/company-law/restructuring-insolvency.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Contact
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
Phone: +49 221-27 22 75-0
Fax: +49 221-27 22 75-24
E-Mail: info@grprainer.com
Url: http://www.grprainer.com/en

Politics Law Society

ECJ – Commercial agents can claim compensation for termination during probationary period

ECJ – Commercial agents can claim compensation for termination during probationary period

ECJ - Commercial agents can claim compensation for termination during probationary period

Even if a commercial agency agreement is terminated during the probationary period, the commercial agent may still be entitled to claim compensation or damages. That was the verdict of the ECJ.

After a commercial agency agreement is terminated, the commercial agent is normally entitled to claim compensation. We at the commercial law firm GRP Rainer Rechtsanwälte note that this may not be the case if, for instance, the commercial agent was the one who terminated the agreement or the termination is attributable to wrongful acts committed by the commercial agent. Having said that, termination of the commercial agency agreement during the probationary period is not grounds for the right to claim compensation lapsing. That was the verdict of the Court of Justice of the European Union in a ruling from 19 April 2018 (Az.: C-645/16).

In the instant case, the company and the commercial agent had settled on a twelve-month probationary period in the agreement. Both parties were entitled to terminate the agreement within this timeframe allowing for a certain notice period. Because the commercial agent fell well short of the contractually agreed target, the company issued notice of termination within the probationary period. The commercial agent subsequently asserted a claim for payment of compensation for the loss associated with the termination of the agreement. The point of contention was then whether such a claim can be made even if the contractual relationship is terminated during the probationary period.

Commercial agents“ rights to claim compensation are laid out in an EU directive. The Court of Justice held that the rights provided for in the directive to claim compensation and damages are not meant to serve as a sanction against terminating an agreement but rather as a means for compensating the commercial agent both for services he or she performed which the company continues to benefit from as well as for any costs and expenses he or she incurs. The Court of Justice went on to state that if the conditions set out in the directive are fulfilled, the right to compensation cannot be denied solely on the basis that the agreement was terminated during the probationary period; the right to claim compensation is equally applicable during the probationary period.

The case before the ECJ concerned a legal dispute in France. However, the ruling also has implications for German commercial agency law. The relevant German provisions are closely aligned with the EU directive. As such, it is not possible to circumvent commercial agents“ rights to claim compensation by terminating the agreement during the probationary period.

Lawyers who are experienced in the field of commercial law can serve as professional advisers to businesses and commercial agents, advising on matters ranging from drafting agreements to enforcing claims or fending off those brought by contractual partners.

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

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