In a judgment delivered on Thursday 4 June, the Court of Justice of the European Union ruled that an individual does not necessarily need to have the power to alter the prices of the goods that he or she sells on behalf of the principal in order to be classed as a commercial agent (Case C-828/18).
In 2013, two French companies, Trendsetteuse and DCA, entered into an oral agreement whereby Trendsetteuse entered into contracts with French retailers on DCA’s behalf to sell ready-to-wear products and fashion accessories in exchange for commission on the sale price. Consequently, the remit Trendsetteuse was fulfilling involved develop a client base, getting orders, concluding sales contracts, and monitoring shipments and deliveries. It did not, however, have the power to change the conditions of sale, and particularly not to negotiate product prices.
DCA was dissatisfied with Trendsetteuse's performance in one geographical area and so outsourced work in that area to another company. Trendsetteuse then terminated the contract on the basis that fault lay entirely with DCA and claimed payment of the termination fee that is legally owed to a commercial agent. DCA refused to pay this fee, arguing that Trendsetteuse was not a commercial agent, as it did not have the power to negotiate product prices.
The Paris Commercial Court referred the case to the Court for a preliminary ruling and the Court ruled against DCA.
The European Court found that the main tasks of a commercial agent are to bring the principal new customers and develop its business with existing customers.
It interpreted the meaning of the term “negotiate”, as defined in Directive (86/653) regulating the activities of self-employed commercial agents, in such a way as to take into account the objectives pursued by EU law, i.e. to protect commercial agents in their relationships with their principals and to promote the security of commercial transactions, particularly cross-border transactions.
The Court concluded by noting that interpreting the directive as meaning that, in order to benefit from its protection, an individual must necessarily have the option of altering the prices of the goods that he or she sells on behalf of the principal would limit the scope of the protection by excluding any individual who did not have that option.
The judgment is not available in English. To read it in French, go to: https://bit.ly/3dCYsqe (Original version in French by Mathieu Bion)