24 Mar Commercial agency: Measures against unilateral fee increases by the principal
On 16 February 2022, the Parliament adopted a law amending the Economic Law Code with regard to commercial agency contracts. The aim of this new set of rules is to protect commercial agents against unilateral fee increases or imposition of new fees by the principal.
A commercial agency contract is a contract in which one of the parties (the commercial agent) is entrusted, on a permanent basis and against remuneration, by the other party (the principal), without acting as his subordinate, with the negotiation and possibly the conclusion of business deals in the name and on behalf of the principal.
Just as the principal could not unilaterally change the originally agreed upon commission rate, no longer can he also unilaterally increase certain fees or impose new fees to the agent. The same protection that already applied to unilateral changes to commissions must now also apply to unilateral fee increases. Thus, any increase or imposition of new fees by the principal shall be deemed as an effective breach of the commercial agency contract. In such an event, the commercial agent invoking the breach of the commercial agency contract is entitled to claim compensation from the principal and to work forthwith for one of the principal’s competitors, any non-competition clause in place being deemed irremediably voided.
A special regime is also set in place for agents in the insurance sector, credit institutions and regulated securities markets. In these sectors, collective agreements to change the amount of commissions and/or fees or the way they are calculated, concluded within a joint consultative body, is to be considered as binding on all agents and on the principal, but in this case the incurred changes cannot result in the termination of the commercial agency contract.
For more information on this subject, please feel free to contact Mr Guillaume RUE.
The Cairn Legal team