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

According to Article L. 134-12 of the Commercial Code, commercial agents are entitled to an indemnity for the loss suffered in case of termination of their relationships with the principal. The legal indemnity is owed regardless of the duration of the agency contract . The termination of the commercial agency contract, even for a fixed- term contract, entitles the agent to compensation for the dam …

Implementation of the termination.

According to Article L. 134-12 of the Commercial Code, commercial agents are entitled to an indemnity for the loss suffered in case of termination of their relationships with the principal. The legal indemnity is owed regardless of the duration of the agency contract . The termination of the commercial agency contract, even for a fixed- term contract, entitles the agent to compensation for the damage resulting from the future loss of income derived of the joint exploitation of customers  and the costs and investments made to no avail by the commercial agent. On the other hand, it has been held that the termination of a fixed-term agency contract does not give rise to the payment of the prior notice indemnity pursuant to Article L. 134-11 , but may, where the termination is in breach, result in the right to compensation in addition to the payment of the legal indemnity laid down in Article L. 134-12 . The contract may also provide that an indemnity is owed to the agent, regardless of the circumstances of the termination.

In all events, the commercial agent bound by a fixed-term contract does not have a right to renewal. The principal is free not to renew his contract  provided that he does not commit any abuse. The refusal to renew constitutes an abuse, i.e. a termination entitling the agent to a termination indemnity , where the principal does not establish any particular circumstance or economic difficulty , relies on fallacious grounds  or notifies his intention not to renew after having obtained an excessive commitment from the agent .

Although there is no need in principle to comply with a notice period in case of termination of a fixed-term contract , there is, however, one legal exception: a commercial agent who has contracted a tacitly renewable fixed-term agreement which is then terminated may claim the payment of an indemnity in lieu of prior notice in addition to the legal indemnity , where he has not committed any serious fault. In effect, Article L. 134-11 of the Commercial Code expressly provides for the conversion of the fixed-term contract into an open-ended contract where the contract continues to be performed after its term . In such a case, according to Article L. 134-11(2), each party may end the contract by giving prior notice, and only the serious negligence or force majeure may deprive the agent of compensation for loss suffered. The calculation of the duration of the prior notice takes account of the contractual period which went before the conversion of the fixed-term contract into an open-ended contract. In addition, the agent might be tempted to claim he is entitled to the right to a notice period under the general law pursuant to Article L. 442-1, II of the Commercial Code (previously L. 442-6, I, 5°) The courts will have to specify the principle and the conditions of applicability of this rule with regard to the specific rules governing agency agreements.

A serious breach by the agent precludes the right to severance pay, including in the event of non-renewal of the contract. Thus, the fact that the principal did not claim serious breach when informing the agent that the contract would not be renewed, which he is under no obligation to justify, does not prevent him from invoking the existence of such a breach at a later date to contest the payment of any indemnity .

Cass. com., 13 November 2003, LawLex200300004375JBJ. For an example of the application of the usual indemnity of two years' commissions for a contract having lasted only two years: CA Lyon, 9 July 2015, No 14/04940, LawLex20150000978.

Cass. com., 3 October 2006, LawLex200600002103JBJ; CA Paris, 22 February 2001, LawLex200200004965JBJ: the commercial agent whose principal has put an end to the fixed-term contract is entitled to compensation for the loss caused by the termination of his agency. 

CA Paris, 15 May 2003, LawLex200300003966JBJ: insofar as it has been enforced after its term, the contract is deemed to be converted into an open contract which entitles to the indemnity set forth in Article L. 134-11 of the Commercial Code where no prior notice has been complied with.

See, for example, CA Nîmes, 3 April 2003, LawLex200300004438JBJ: where a fixed-term contract is still enforced after its term by both parties, without a new commercial agent contract or amendment being concluded, it is deemed converted into an open-ended contract.

Cass. com., 19 June 2019, LawLex201900000836JBJ.

CA Rouen, 14 May 1998, LawLex200200005127JBJ.

Cass. com., 26 November 2003, LawLex200300004470JBJ: "The provisions […] of Article L. 134-12 of the Commercial Code which require the principal to compensate for the loss suffered by the commercial agent due to the termination of the commercial agency contract, do not prevent compensation for the specific loss suffered by the agent where the causes of that termination are negligent". 

Regarding joint interest agency, See Cass. com., 15 January 2008, LawLex200800000106JBJ.

CA Colmar, 9 September 1988, LawLex200200005728JBJ.

Cass. com., 14 March 1994, LawLex200200005458JBJ, upholding CA Toulouse, 10 May 1993, LawLex200200005996JBJ; Cass. com., 20 February 1996, LawLex200200005538JBJ, confirming CA Toulouse, 14 March 1994, LawLex200200005380JBJ.

Cass. com., 27 October 1998, LawLex200200005146JBJ, upholding CA Paris, 1 December 1995, LawLex200200005513JBJ.

Cass. com., 31 March 1998, LawLex200200005113JBJ, upholding CA Paris, 15 December 1995, LawLex200200005517JBJ.

French Distribution Law

508. Implementation of the termination.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

508. Implementation of the termination.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise