Prohibition of competition – BGH bolsters commercial agents“ rights

Commercial agency agreements often include a prohibition of competition, also known as a no-competition clause. Notwithstanding this, certain clauses in the general terms and conditions may be invalid, as is clear from a ruling of the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court (Az.: VII ZR 100/15).

Companies frequently arrange a post-contractual prohibition of competition with their commercial agents, whereby the commercial agent commits not to entice any clients away from the company over a specified period of time after the agreement has been terminated. However, we at the commercial law firm GRP Rainer Rechtsanwälte note that these kinds of clauses in the general terms and conditions may be invalid if they“re not drafted in a sufficiently transparent manner. That was the verdict of the BGH.

In the instant case, the commercial agent had served as a financial advisor to a company. In September of 2011, the contractual relationship was brought to an end. It had been contractually agreed in the general terms and conditions that the financial advisor would not lure clients away from the company or attempt to do so for a period of two years following termination of the commercial agency relationship.

The company took the view that the financial advisor had violated this agreement, arguing that the latter had induced four clients to change or terminate their contracts during the term of the post-contractual prohibition of competition, or at least attempted to do so. The company raising the legal action therefore asserted claims against the financial advisor, but the action was unsuccessful even before the BGH.

The Karlsruhe judges held that the post-contractual prohibition of competition in the general terms and conditions had not been effectively agreed. The clause „Vermögensberater verpflichtet sich, es für die Dauer von zwei Jahren nach Beendigung des Handelsvertreterverhältnisses zu unterlassen, der Gesellschaft Kunden abzuwerben oder dies auch nur zu versuchen“ (the commercial agent commits not to entice clients away from the company or even to attempt to do so for a period of two years following termination of the commercial agency agreement) was said to constitute a violation of the requirement for transparency and was thus invalid.

The Court held that the post-contractual prohibition of competition unquestionably represented one of the company“s general terms and conditions. The clause was said to violate the requirement for transparency because it failed to make sufficiently clear whether the prohibition of competition extended only to parties who were clients during the term of the agreement or whether it also covered parties who only became clients after the commercial agency agreement had been terminated. The Court therefore ruled that the scope of the prohibition of competition was unclear to the agent. As such, the BGH went on to conclude that it did not even need to be established whether the prohibition of competition was invalid due to the lack of a specific arrangements for parent leave compensation.

Lawyers who are experienced in the field of commercial law can advise companies and commercial agents alike.

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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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