19 Apr

Commercial agents are entitled to the indemnity and compensation provided for even if termination of the agency contract occurs during the trial period

The Court of Justice of the European Union has ruled that commercial agents are entitled to the indemnity and compensation provided for even if termination of the agency contract occurs during the trial period (judgment of today, April, 19).

Trial period

In today’s judgment, the Court observes first of all that, as that the directive does not regulate the provision of a trial period, such a period falls within scope of the freedom of contract of the parties and is not as such prohibited by the directive.

Next, the Court states, on the basis of an interpretation of the wording of the directive, that the indemnity and compensation regimes laid down by the directive are not intended to penalise termination of the contract but to indemnify the commercial agent for his past services from which the principal will continue to benefit beyond the termination of the contractual relationship or for the costs and expenses he has incurred in providing those services.

Consequently, the agent cannot be denied the indemnity or compensation on the sole ground that the termination of the commercial agency contract occurred during the trial period, as long as the conditions for the award of the indemnity or compensation set out in the Directive are satisfied. It follows that the right to indemnity and compensation is applicable even if the termination of the contractual relationship between the principal and the commercial agent occurs during the trial period.

Protect the commercial agent

The Court states that that conclusion is supported by the objective of the Directive, which is, inter alia, to protect the commercial agent in his relations with the principal, and in the light of which any interpretation of that directive which may be detrimental to the agent is not permissible.

Making reparation conditional on whether or not a trial period is provided for in the commercial agency contract, without regard for the performance of the agent or the costs and expenses that he has incurred, would be detrimental to the agent, since he may be denied any reparation on the sole ground that the contract he has with the principal includes a trial period.

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