Commercial agent disputes

A commercial agent often works for years on a short contract and an understanding about territory that nobody wrote down. Then sales fall, the principal reorganises its distribution, or the agent takes on a competing line, and each side discovers how little the paperwork actually settles. The agent claims commission on orders it never handled; the principal wants out quickly and cheaply. Left to escalate, the argument tends to cost more than the relationship ever earned.

Much of what an agent may claim rests on rules the parties cannot set aside by contract, so a sensible settlement starts with knowing exactly what is owed and what is merely asserted. The negotiation usually turns on:

• the rules on whether someone is a commercial agent at all, or a distributor, broker or employee in all but name;
• the rules on which orders earn commission, including repeat business from the agent’s territory or customers;
• the rules on the statements and records an agent may demand to check the commission paid;
• the rules on the duties each side owes while the contract runs — loyalty, information, and warning of a drop in volumes;
• the rules on ending the contract — notice, serious breach, and termination with immediate effect;
• the rules on the indemnity or compensation an agent may claim once the relationship ends, and on what can reduce it;
• the rules on a restraint of trade after termination, and how far it may reach in territory and products;
• the rules on del credere clauses and when an agent answers for a customer who does not pay.

Our lawyers can support you with this.