This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

The commercial agency contract implies that the agent is entrusted by the principal with the power to negotiate contracts in its name and on its behalf and possibly to conclude contracts. 

The ability to enter into contracts has been the subject of divergent interpretations by legal commentators and the courts. According to the majority of the case law, commercial agents must have both a power of negotiation and representation allowing them to contract on behalf and for the account of the principal, even if only occasionally . The power to contract means that the the principal is bound, by virtue of the theory of representation . Consequently, an intermediary, whose contract specifies that he cannot bind the principal and may not take any action likely to make third parties believe that he has the authority to bind the latter, is not a commercial agent . Similarly, where the intermediary is required to submit purchase orders for the consent of his contracting partner, he has no power to bind the latter and cannot be classified as a commercial agent . In a minority of cases it has been held that the fact that the representative did not conclude any contracts does not rule out the classification as a commercial agent insofar as Article L. 134-1 of the Commercial code expresses it only as a possibility . The fact that the contracts are signed by the principal does not call into question the status of his representative as a commercial agent, provided that they were signed on the basis of rates negotiated by the latter .

Article L. 134-1 of the Commercial Code is somewhat ambiguous insofar as it accepts the two interpretations i.e. whether the agent is regarded as having the possibility to contract or whether it should be required that he can contract even if in practice this occurs only occasionally. Those in favor of the interpretation according to which agents should be able to negotiate contracts are supported by the EU directive on self-employed commercial agents as Article 1(2) thereof states that “ “commercial agent” shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the “principal”, or to negotiate and conclude such transactions on behalf of and in the name of that principal”. 

The concept of “negotiation”, which is not defined by the directive or by Article L. 134-1 of the Commercial Code, has also given rise to various  interpretations. There are two conflicting views. According to the first which was for a long time the minority view, the power to negotiate includes a permanent mandate to visit, in the name of the principal, potential clients and to present in an attractive manner, the contract goods and to initiate and take orders . By virtue thereof, an independent professional who permanently represents his principal's interest with purchasing groups, acts for and on behalf of that principal, negotiates sales contracts, takes orders and faithfully transfers customers' requests, is a commercial agent and not a commodity broker . The activity of prospecting and presenting the products to customers in an appealing manner , the taking of orders , the signing of a contract  are elements which characterize the agent's power to negotiate and to contract. Finding new franchisees is also compatible with the function of commercial agent .

According to the second view, overwhelmingly supported by the majority and upheld by the Court of Cassation, negotiation implies having a margin of maneuver for at least part of the economic transaction . Thus, the possibility to set  or negotiate prices , payment deadlines or terms of sale , discounts and payment terms , the power to grant discounts on listed prices  are elements which characterize the agent's power to negotiate and to contract. The courts' position on this matter has been strongly criticized by legal commentators. They have highlighted the inconsistency of the interpretation of the term “negotiate” given by the Court of Cassation in respect of the nature of the commercial agent's mandate. By definition, the agent must comply with the instructions of his principal and may not depart from them. Therefore, making the classification of commercial agent subject the possibility of a margin for maneuver to depart from it is, for many writers, an incorrect interpretation of the law and the directive. Despite the criticism, the Court of Cassation remained inflexible and continued to require that the agent have a margin of maneuver in negotiations for at least a part of the transaction, even if the courts ruling on the merits have frequently attempted to soften that stance . A preliminary question was nevertheless referred to the Court of Justice on the exact content of the concept of negotiation, and in particular whether  the “negotiation” role of commercial agents necessarily implies the power to modify the prices or terms of sale set by the principal . The Court replied that although Directive No 86/653 does not define “negotiate”, the fact that the act of negotiating must relate to “the sale or the purchase of goods” for the “principal” highlights the intention of the Union legislature that the purpose of the act is the conclusion of sales or purchasing contracts on behalf of a principal. In addition, “the main tasks of a commercial agent are to bring the principal new customers and to develop business with existing customers”. However, the commercial agent may carry out these tasks by providing information and advice as well as pitches to promote the conclusion of the deal for the sale of goods on behalf of the principal, without the commercial agent having the authority to modify the prices of those goods. The Court therefore concluded that a person does not necessarily need to have  the power to change the prices of the goods he sells on behalf of the  principal in order to be classified as a commercial agent” .

That solution, which is binding on national courts and in particular on France, where the national court is located, will therefore have significant consequences under French law . It facilitates the recognition of the status of commercial agent and boost claims for the two-year indemnity, thus progressively making the recourse to commercial agents less attractive for principals. The Court of Cassation  and the trial courts  are now obliged to question the case law depriving of the status of commercial agents intermediaries only entrusted with the task of disseminating information to customers , setting up meetings, writing sales reports and customer follow-up , sales promotion or the setting-up of animations , the presentation of samples in his showroom, ensuring the follow-up of supplies to clients and the availability of products , the provision of radio-telephony services and the registration of requests for subscriptions without being able to negotiate the prices of subscriptions . Similarly, the courts will no longer be able to continue denying agent status to intermediaries on the grounds that they are contractually bound to comply with prices  and general terms of sale  provided by the principal and to obtain his approval to deviate from them . Today, a representative who assists the principal in preparing responses to calls for tenders, provides pricing recommendations, secures a price reduction in favor of a customer, and contributes to revenue growth and the launch of new products  or who is tasked with presenting, among all the principal’s offers, those that are most relevant for the targeted client, in order to guide their choice and facilitate the conclusion of sales contracts, whether or not they are able to modify the contractual terms or prices , holds the power to negotiate that characterizes a commercial agency agreement. Similarly, a person who, through their efforts and commercial actions, has contributed to the promotion and enhancement of the value of the principal’s products within the national territory and to the development of a French customer base, and whose role is not limited to establishing contacts and performing administrative tasks, qualifies as a commercial agent . This is especially the case of a person responsible for promoting the conclusion of commercial transactions on behalf of a third party, and who, in the performance of that task, has had the power to negotiate prices with customers, may claim the status of commercial agent .

On the other hand, those who are limited to visiting traders in order to promote pharmaceutical products, providing information and advice in order to encourage the best results possible but only taking occasional orders , those whose tasks are limited to product storage and patient monitoring  or who are entrusted with a mission of commercial assistance and communication with neither the power to offer goods for sale to customers in their client's name or enter into contracts and receive payment on the latter's behalf should continue to be ineligible for the status of agent . This also applies in the case of an agent who brings together his principals with potential purchasers without taking orders or concluding contracts for and on behalf of the principals  or the intermediary whose role is limited to sharing his client network or acting as a business finder without being able to negotiate independently on behalf of his principal  or to assisting in the search for investors as part of a fundraising operation .

CA Paris, 12 May 2000, LawLex200200004997JBJ: an intermediary who has not received any agency for negotiating and possibly concluding sale, purchase, rental or service provision contracts on behalf of his principal, cannot benefit from the commercial agent status; 14 December 2005, LawLex200700001117JBJ: a person who introduces himself to potential users as a representative of a service provider, not merely to inform them on the products and services of his principal but to canvass them in order to have them sign contracts, has the specific power of negotiating and contracting of the commercial agent; Cass. com., 12 December 2006, LawLex200600002584JBJ, where the principal has discretion for accepting the transferred orders, the representative is not entrusted with the power of negotiating and cannot claim the commercial agent status ; CA Colmar, 1 April 2015, LawLex201500000479JBJ, refusing to accord the status of commercial agent to a party whose role is merely to forward orders to the supplier and who has no power to accept those orders on the latter's behalf.

Cass. com., 12 October 2010, LawLex201000001126JBJ, relating to a contract which imposed on an operator the obligation to offer, as a matter of priority and on an exclusive basis, to an undertaking the area on which it could prospect without authorizing it to bind that undertaking to third parties or to negotiate on its behalf; 24 September 2013, LawLex201300001426JBJ, an intermediary who was never authorized to contract directly in the name and on behalf of his contracting partner, either with his public clients or with his few private clients, and who does not have the independence required to negotiate contracts; CA Paris, 14 June 2018, LawLex201800000932JBJ; CA Agen, 31 May 2021, LawLex202100003318JBJ.

CA Paris, 14 December 2005, LawLex200700001117JBJ ; CA Bordeaux, 16 April 2015, LawLex201500000537JBJ.

CA Paris, 11 October 2012, LawLex201200002185JBJ.

Cass. com., 9 December 2014, LawLex201400001455JBJ; see also CA Nîmes, 6 June 2013, LawLex201300001016JBJ; CA Paris, 16 January 2020, LawLex202000000061JBJ.

Cass. com., 19 June 2019, LawLex201900000836JBJ.

Cass. com., 15 January 2008, LawLex200800000106JBJ. Also see CA Poitiers, 10 January 2014, LawLex201400000060JBJ, which states that the power to negotiate implies reaching terms that are more favorable to the customer rather than obtaining a price above the floor price.

CA Reims, 21 July 2009, LawLex200900003632JBJ; CA Pau, 17 November 2009, LawLex201000000212JBJ; CA Versailles, 18 July 2013, LawLex201300001179JBJ; CA Basse-Terre, 28 October 2013, LawLex201300001571JBJ, for a distributor of LPG cylinders  having no power to negotiate prices and terms of sale.

Cass. com., 14 June 2005, LawLex200500006645JBJ; 20 January 2015, LawLex201500000104JBJ; CA Montpellier, 12 February 2019, LawLex201900000229JBJ, power to grant discounts to customers, even if within the limits set by the principal, who may refuse the purchasers presented. 

CA Paris, 15 November 2012, LawLex201200002369JBJ; CA Rennes, 3 March 2015, LawLex201500000319JBJ; CA Paris, 29 March 2018, LawLex201800000545JBJ.

See e.g. CA Rouen, 20 March 2014, LawLex201400001811JBJ, finding that the agent has bargaining power even if the prices are fixed by the principal insofar as he has a choice in the different financial terms able to be offered; CA Metz, 27 May 2014, LawLex201400000739JBJ, holding that it is sufficient that the agent approaches and canvasses the clientele to be able to claim the benefit of the status of agent; CA Douai, 26 November 2015, LawLex201500001655JBJ, holding that the status applies even in the absence of power to negotiate prices where the representative ensures the customer contracts with the principal; CA Toulouse, 23 March 2016, LawLex201600000676JBJ: the commercial agent's capacity to negotiate does not solely or necessarily relate to the prices of the goods to be sold; CA Orléans, 31 March 2016, LawLex201600000762JBJ: holding that  negotiations carried out by the agent is not limited to prices and can focus on payment terms, delivery costs, the exemption of premiums (agios), the differentiation of the monthly payments according to the items and on items other than those for which the appointment was made.

T. com. Paris, 19 December 2018, LawLex201900000220JBJ.

CA Versailles, 26 June 2018, LawLex201800001001JBJ.

CJEU Case C-828/18 Trendsetteuse SAR, Judgment of 4 June 2020, LawLex202100004218JBJ.

See, beyond that, Cass. com., January 11, 2023, LawLex202300000593JBJ, holding that the reversal of case law applies to a commercial agent subject to French law even if he is established and carries out his activity outside the territory of the European Union.

For the immediate application of this solution to another case, see Cass. com., 2 December 2020, LawLex202000003487JBJ. See also: Cass. com., 12 May 2021, LawLex202100002927JBJ; 16 June 2021, LawLex202100003901JBJ; 7 September 2022, LawLex202200006722JBJ and LawLex202200006686JBJ; 24 April 2024, LawLex202400003345JBJ.

CA Paris, 1 October 2020, LawLex202000002214JBJ; 20 May 2021, LawLex202100003060JBJ;
CA Grenoble, 21 July 2021, LawLex202100004988JBJ; CA Versailles, 30 September 2021, LawLex202100005529JBJ; T. com., Nanterre Commercial Court, 9 December 2021, LawLex202100006324JBJ; CA Rennes, 26 April 2022, LawLex202200002341JBJ; CA Dijon, 21 April 2022, LawLex202200002332JBJ; CA Versailles, 17 February 2022, LawLex202200001233JBJ;
CA Paris, 8 February 2024, LawLex202400001484JBJ.

CA Versailles, 8 February 2007, LawLex200700001710JBJ: where the commercial agent status is not necessarily reserved for representatives who conclude contracts, the functions exercised by them cannot merely be to make technical presentations to customers or to provide advice and assistance without taking orders; Cass. com., 3 October 2000, LawLex200200004901JBJ: a representative entrusted with a task of customer information and not the negotiation of sale contract terms, cannot benefit from the status of commercial agent; CA Bordeaux, 9 May 2011, LawLex201100001125JBJ.

CA Paris, 15 November 2018, LawLex201800001756JBJ; 13 June 2019, LawLex201900000800JBJ.

CA Paris, 23 May 2001, LawLex200200004972JBJ: an intermediary who is mainly entrusted with the promotion of sales of certain business names and the setting-up of animations in return for commission payment is a provider of services who implements under the best conditions master distribution contracts previously concluded by its principal; Cass. com., 27 April 2011, LawLex201100000851JBJ: a company whose mission is simply to visit health care professionals to promote the supplier's products and provide information does not have permanent authority to negotiate contracts in the name and on behalf of the supplier and cannot claim to be a commercial agent; CA Besançon, 24 April 2018, LawLex201800000636JBJ.

CA Paris, 9 October 2014, LawLex201400001128JBJ.

CA Versailles, 16 December 2005, LawLex200500004665JBJ; See, along the same lines, CA Paris, 23 February 2006, LawLex200600002015JBJ: a distributor of mobile phone subscriptions cannot rely on the commercial agent status where he has no power of negotiating and concluding contracts on behalf of the telephone operator; Cass. com., 20 May 2008, LawLex200800000749JBJ: the distributor of radio-telephony services who is required to use a standard subscription application form, general subscription terms and the operator's prices, to transfer to it any subscription application for approval and who is not entrusted with taking commitments or taking out obligations on its behalf, cannot claim the commercial agent status; 20 May 2008, LawLex200800000751JBJ: a person who disseminates telephone subscription is not a commercial agent where its role is only to ensure the sale of the operator's offers, to carry out various material tasks linked to the subscription of contracts and to ensure the management of subscriptions, without negotiating and even concluding services sale contracts; 15 January 2008, LawLex200800000106JBJ: where there is no power to negotiate the price of subscriptions, the person who disseminates radio-telephony services cannot claim the status of commercial agent; CA Paris, 12 September 2013, LawLex201300001417JBJ; CA Versailles, 15 May 2014, LawLex201400002061JBJ, for a distributor of telephone subscriptions which, in law and in fact, has neither the right to deviate from the operator's terms and rates and whose orders may be refused.

CA Paris, 14 June 2018, LawLex201800000975JBJ; CA Bordeaux, 21 November 2018, LawLex201900001442JBJ; see also, for a representative able to offer several price options but who did not have the power to modify the prices, CA Paris, 10 October 2013, LawLex201300001392JBJ; CA Colmar, 7 November 2014, LawLex201400001323JBJ; CA Paris, 3 May 2018, LawLex201800000678JBJ.

CA Paris, 3 May 2018, LawLex201800000678JBJ.

CA Montpellier, 17 December 2019, LawLex201900001602JBJ, representative not empowered to agree to payment in two installments as requested by the customer.

CA Montpellier, 24 October 2012, LawLex201200002252JBJ; CA Paris, 24 October 2013, LawLex201300001472JBJ; CA Paris, 7 April 2016, LawLex201600000823JBJ; 14 June 2018, LawLex201800000932JBJ.

CA Versailles, 28 March 2024, LawLex202400002793JBJ. Also see CA Paris, 20 May 2021, LawLex202100003060JBJ, cited above.

Cass. com., 23 June 2021, LawLex202100004091JBJ; CA Montpellier, 2 November 2021, LawLex202100005753JBJ; 10 January 2023, LawLex202300000935JBJ; CA Versailles, January 11, 2024, LawLex202400000415JBJ.

CA Caen, 28 September 2023, LawLex202300012032JBJ.

CA Paris, 19 September 2024, LawLex202400006815JBJ.

Cass. com., 27 April 2011, LawLex201100000851JBJ.

CA Paris, 21 February 2024, LawLex202400001666JBJ. See also CA Reims, 8 June 2021, LawLex202100003613JBJ.

CA Paris, 14 November 2013, LawLex201300001602JBJ.

CA Versailles, 18 December 1997, LawLex200200004749JBJ; Cass. com., 6 March 2001, LawLex200200004693JBJ.

CA Toulouse, 8 January 2014, LawLex201400000052JBJ, which specifies that the essential criterion for classifying a contract as an agency agreement lies in the agent’s ability to negotiate independently, not in their ability to personally conclude the contract; CA Paris, 3 October 2019, LawLex201900001186JBJ; 3 February 2020, LawLex202000000232JBJ; CA Colmar, 19 August 2020, LawLex202000001985JBJ.

CA Versailles, 9 January 2014, LawLex201400000094JBJ.

Cass. com., 5 October 2022, LawLex202200008370JBJ.

CA Rennes, 4 October 2022, LawLex202200008351JBJ.

CA Rennes, 26 February 2013, LawLex201300000258JBJ.

CA Paris, 24 March 2000, LawLex200200004706JBJ; Cass. com., 14 June 2005, LawLex200500006645JBJ. CA Rennes, 14 January 2020, LawLex202000000069JBJ.

CA Paris, 30 May 2013, LawLex201300000898JBJ; CA Rouen, 20 March 2014, LawLex201400001811JBJ, holding that the power to negotiate can be more general and include all elements governing a potential client's decision to purchase; CA Toulouse, 28 February 2018, LawLex201800000370JBJ; CA Lyon, 8 March 2018, LawLex201800000410JBJ; CA Paris, 3 February 2020, LawLex202000000232JBJ. But see CA  Montpellier, 17 December 2019, LawLex201900001602JBJ, holding that the agent's bargaining power involves more than just promoting a product or prospecting for customers and guiding their choice.

CA Versailles, 8 February 2007, LawLex200700001710JBJ; CA Rennes, 28 April 2015, LawLex201500000558JBJ.

451. Power to negotiate and to contract