Notification for a non-renewal of a commercial agency contract by an agent and his right for compensation

A commercial agent who refused to conclude a new contract when it ended did not take the initiative to terminate the contract. The commercial agent is therefore entitled to receive compensation. (C. Cass. Com. 21 june 2017, pourvoi n°15-29127)

 

The commercial agent has a right to compensation in case of termination of his contract. This indemnity provided by French and European Law aims to compensate the consequences of the termination.

This indemnity is due except in certain cases, for example the serious misconduct of the commercial agent or if the termination of the contract results from the agent’s initiative. (Article L134-13 of the French Commercial Code)

In this case, several agency contracts had been concluded between a principal and a commercial agent.

Contracts for commercial agents were fixed-term contracts.

Contracts ended on December 31, 2011. The commercial agent addressed on May 2, 2011 and September 8, 2011 letters to inform the principal that he did not wish to renew the contracts agencies after their term.

Negotiations were undertaken to try to agree on new contractual conditions but these negotiations were not successful. This
agency contracts therefore ended on 31 December 2011.

One of the questions raised to the court was whether the commercial agent could be indemnified for the termination in application of articles L134-12 and L134-14 of the Commercial Code.

The principal claimed that the commercial agent had initiated this termination and therefore could not be entitled to receive damages.

The commercial agent considered that the end of the contract was not on his initiative.

The misleading element in this dispute was that the commercial agent had notified his intention not to see the contracts renewed.

The Court of Cassation, however, distinguished this denunciation of the renewal and the termination of the contract. It states that « a commercial agent who refuses to conclude a new contract at the end of the preceding contract does not have the initiative to terminate the contract » in application of Article L134-13 of the Commercial Code.

The commercial agent who denounces the renewal of the fixed-term contract therefore still benefits from his right to compensation since the end of the contract is not due to his intention to terminate this agreement.

This decision illustrates the difference between the contract and the commercial relationship.

The agent, by notifying the non-renewal of his contract, terminated his relationship with his principal but did not terminate the contract. This contract only ended because it reached its term.

The position of the Court of Cassation must be approved and it constitutes a correct qualification of the notification of the non-renewal of a contract. The contract ended with the arrival of the term. The notification only prevented the creation of a new contract.

 

By Olivier VIBERT, Attorney, Paris

IFL AVOCATS

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