• Commercial Agency Law: Rights and Obligations of Commercial Agents
  • September 30, 2014 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Düsseldorf Office
  • For commercial agents, some rights and obligations are regulated separately in the German Commercial Code (Handelsgesetzbuch (HGB)). Special attention needs to be paid e.g. to claims for commission and compensation.

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Commercial agents are widespread in many industries, yet they occupy a special position in business life. As such, they are subject to special rights and obligations. First of all, the definition of the status of commercial agent is important. Commercial agents are to be distinguished from employed sales representatives as well as from franchisees, brokers and freelance workers. Additionally, they cannot operate on a quasi-self-employed basis. This delimitation can prove difficult and is not always clear-cut.

    A prerequisite for the status of commercial agents is an independent commercial trade that operates at its own risk as a business. The trade must be registered and all relevant authorities informed, such as the Chamber of Industry and Commerce (Industrie- und Handelskammer (IHK)) or the tax office.

    The commercial agent concludes or brokers transactions for other businesses and invoices in their name. Here it should be noted that a commercial agent does not work on a quasi-self-employed basis. Significant indications of quasi-self-employment include if the commercial agent works exclusively or on an ongoing basis predominantly for one client, has no employees of its own that are subject to mandatory social insurance contributions and the client also has its permanent employees perform comparable activities. This kind of quasi-self-employment can have a severe impact on social insurance schemes and the duty to pay contributions.

    The commercial agent is entitled to commission for the business transactions which it concludes for another business. It is often the case that the business continues to profit from the concluded business transaction for a longer period of time. In these instances, the commercial agent has a right to compensation. Moreover, the commercial agent’s right to commission does not become inapplicable if, for example, the business is unable to supply. The right to commission arises upon conclusion of the business transaction. In the case of delayed payments, it can happen that businesses try to shift the risk onto the commercial agent. However, the German Federal Court of Justice (Bundesgerichtshof) has already reached several judgments protecting the commercial agent in such cases.

    In order to avoid subsequent legal disputes, it makes sense from the start of activities and when concluding agreements to place your trust in the assistance of a lawyer competent in the fields of commercial agency law and labour law. This applies all the more if international commercial agency law is relevant.