Commercial Agents Law

German Commercial Agents Law embraces all those legal aspects which pertain or relate to a commercial agent’s business activities and to the legal relationship existing between the commercial agent and the company for which the commercial agent is working. A commercial agent is an independent business person whose permanent job and obligation it is to initiate business transactions for another entrepreneur or to conclude such business transactions for and on behalf of such entrepreneur.

In contrast to the distributor or authorized dealer the commercial agent does not act in his own name, but rather in the name of the company which the agent is representing. As opposed to the members of a company’s field staff, who are company  employees, the commercial agent engages in his activities on an independent and autonomous basis. Frequent questions which come up  in this context  relate to those criteria which are decisive for the differentiation between the status of  the commercial agent and other forms of commercial  activities. In so far it is indispensable to have a detailed and closer look at all of those general circumstances which are determinative for the parties’ contractual relationship.

A commercial agency can be constituted in various forms. Thus a  commercial agent can act  as an agent who is authorized to sign contracts  or as a middleman negotiating and bringing about direct transactions between the parties involved; the agent may operate in working for one company only, who is barred from working for other principals as well, or work for several principals at a time, as sole representative or as a regional representative. Another option which is also conceivable is doing commercial agency work as a secondary or side-line job. In addition the law also covers the comprehensive field of insurance agents’ working conditions.

Central questions and problems need to be taken care of when it comes to  drafting commercial agents’ contracts. It is, amongst others, already at this point that the mutual duties and obligations of the contracting parties of a commercial agency agreement need to be carefully considered and precisely defined. The decisive points are, amongst others, the agent’s obligation and duty to use his best efforts in order to arrive at the conclusion of contracts/initiation of positive business transactions, the safeguarding of the entrepreneur’s interests, the entrepreneur’s comprehensive information, business management with the due diligence of a prudent  businessman, the preservation of business and trade secrets and the issues of competing activities.

Other central points of interest which are covered by German commercial agency law are issues of statements of calculated commissions and payments of commissions. In frequent cases another important subject to which attention is to be given is the obligation to elaborate an comprehensive report on the commission account.

When it comes to the termination of commercial agency agreements and relations disputes often arise on the issue of a justified compensatory claim for  the agent’s loss of clientele.


Other legal areas around Distribution Law