BGH strengthens commercial agents“ entitlement to payment of voluntary contributions

http://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html
The Bundesgerichtshof (German Federal Court of Justice) has strengthened the rights of commercial agents after their agency agreements have been terminated with its ruling of November 5, 2015 (Az.: VII ZR 59/14).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: It is not uncommon in cases involving commercial agency (http://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html) agreements for companies to pay a contribution towards the commercial agent“s office costs. One of the possible associated conditions could be that the contribution shall only be paid if it relates to an ongoing contractual relationship. Due to the fact that it is quite possible for periods of notice spanning many years to be agreed in agency agreements, this entails the commercial agent having to bear the office costs on his own for the rest of the contract term following termination of the agreement.

The BGH has now ruled that if the general terms and conditions of a commercial agency agreement include such a clause, it will certainly be invalid if the commercial agent has to observe a limitation period that spans many years for ordinary termination of the agreement.

In the instant case, the plaintiff had worked for a company as a financial adviser since 1996. In addition to commission payments, he also received a voluntary contribution to cover office and organisational expenses. This was on condition that the contractual relationship be ongoing. In January 2011, the company terminated the agreement effective as of June 30, 2014 and discontinued paying the voluntary contributions.

The financial advisor“s legal action challenging this was successful before the BGH. According to the Court, the contractual provision providing that the contribution for office costs was only to be paid if the contractual relationship was ongoing represented a significant impediment to the commercial agent“s right to terminate the agreement, at least in the event that the commercial agent has to observe a limitation period that spans many years. After notice of termination had been issued, it was said that the commercial agent continued to be obliged to conclude contracts on behalf of the company until the end of the contract term. To this end, it was necessary for him to maintain an office. The BGH went on to state that in the absence of further contribution payments he was forced to cover the costs for this on his own, which resulted in a considerable loss of income. The Court stated that the provision in question was therefore certainly invalid if the commercial agent had to adhere to a notice period of several years.

This ruling also means that the BGH has changed its previous jurisprudence, with the result that companies no longer enjoy complete freedom when it comes to arranging the payment of voluntary contributions. As a consequence, it is even more important for both companies and commercial agents to draw up agreements in as detailed a manner as possible. Lawyers who are competent in the field of commercial law can advise on drafting commercial agency agreements.

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

GRP Rainer LLP is an international law firm with lawyers and tax advisers specializing in business law, commercial law and company law and tax law. The attorneys counsel international commercial and industrial companies and corporations, as well as associations, mid-sized businesses, institutional investors and private individuals worldwide from offices in Cologne, Berlin, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart, Germany and London UK.

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