• Careers
  • Contact Us

Commercial Agents Entitled to Statutory Compensation Even If Termination Occurs in Trial Period

on Wednesday, 08 August 2018.

Under the Commercial Agents Directive, self-employed agents are entitled to certain minimum rights. This includes a right to compensation or indemnity on termination of the agency, except in certain limited circumstances...

...even if the agency agreement has been terminated with appropriate notice. This is intended to reward the agent for the benefit that the agent has brought to the principal's business.

One question arose as to whether these rights still applied when termination takes place during an initial trial period. The European Court of Justice has answered that question in the recent case of Conseils en mise en relations SARL v Demeures terre en tradition SARL ('C' and 'D' respectively).

Facts of the Case

C was to provide agency services to D, and this was subject to an initial trial period of 12 months. After the trial period, the contract would run for an indefinite period. Each party could terminate the agreement during the initial trial period. D terminated the contract by notice during the initial trial period, because it was dissatisfied with the sales achieved by C. C claimed for compensation under the Directive.

Decision

Following a referral from the French courts, the European Court has sided with the agent. The agent has the right to compensation even if termination takes place during a trial period. The early timing does not change the underlying legal position. Any derogation from the right to compensation or indemnity must be strictly interpreted, the Court said. 

Comment

Many people who promote or market goods as agent are entitled to rights that go beyond what they contract says. This area of law has become more and more known since it was introduced over 20 years ago. However, some agents are still not aware of their entitlements.

This case further cements those rights for agents. 


If you are an agent and want to understand your entitlements under the law, please contact Paul Gershlick in our Commercial Contracts  team on 01923 919 320.

Leave a comment

You are commenting as guest.