Commercial agents are entitled to the indemnity and compensation provided for even if the agency contract is terminated during the trial period, the Court of Justice of the EU ruled in a judgment Thursday 19 April (C-645/16).
In 2011, the company DTT entered into a commercial agency contract with the company CMR. CMR was required to sell 25 individual houses per year on behalf of DTT. That contract provided for a 12-month trial period, during which each party was allowed to terminate the contract subject to notice being given. Around six months after the contract was concluded, DTT terminated it on the grounds that CMR had made only one sale in five months. CMR brought the matter before the French courts to obtain compensation from DTT.
According to the directive (86/653) on independent commercial agents, the commercial agent is entitled, following termination of the contract, to indemnity or compensation for damage, as long as several conditions are met.
Having had the matter referred to it by the French Court of Cassation, the Court of Justice states that any interpretation of the directive to the detriment of the commercial agent is excluded. It considers that the indemnity regimes provided for by the directive aim first and foremost to compensate the commercial agent for its past services from which the principal will continue to benefit beyond the termination of the contractual relationship or for the costs and expenses incurred in providing the services.
The Court consequently considers that the agent should not be deprived of indemnity or compensation on the sole grounds that the termination of the commercial agency contract came during the trial period, as long as the conditions for awarding this indemnity have been met. (Original version in French by Mathieu Bion)