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

If the legal regime of Articles L. 134-1 et seq. of the Commercial Code sets out the provisions that are common to the principal and the commercial agent, provisions relating to the consequences of the termination as such only concern the commercial agent. There is no provision for a right to compensation in favor of the principal when the agent is at the origin of the termination.
As a result, th …

Principal's right to compensation.

If the legal regime of Articles L. 134-1 et seq. of the Commercial Code sets out the provisions that are common to the principal and the commercial agent, provisions relating to the consequences of the termination as such only concern the commercial agent. There is no provision for a right to compensation in favor of the principal when the agent is at the origin of the termination.

As a result, the issue of the right to compensation of the principal has been settled by case law in compliance with the provisions of the Civil Code which govern the general law on mandates . In accordance with Article 2007 of the Civil Code, the principal must be compensated where the termination of the contract at the agent's initiative is prejudicial to him . According to the Court of Cassation, the loss by the agent at fault of his right to a compensatory indemnity does not deprive the principal of the right to seek compensation for the damage caused by the fault: both sanctions may be combined .

Only an abusive termination of the agency contract or the commercial agent's unfair behavior entitles the principal to compensation . The abusive character of the termination is established where it is sudden , or where the agent uses a false pretext to suddenly terminate the agency contract, requiring his principal to reorganize his distribution in a hurry in twelve “départements”, therefore causing harm for which he must compensate . Disloyal conduct by the agent not only gives rise to compensation in respect of the principal's loss but also deprives him of the compensation for termination where that fact constitutes a serious fault . Damage to reputation and brand image may also be compensated: such is the case where the lack of prospecting in the extremely large territory granted exclusively to the agent prevented the dissemination of the trademark, whereas in other countries, the results were excellent despite the crisis .

The principal who is a victim of unfair competition by his agent cannot, however, claim compensation with respect to the loss of clientele insofar as customers remain free to choose their contracting parties . Likewise, no compensation is due if he is unable to show that the fall in the agent's turnover is directly attributable to his unfair activity or that his disloyal acts have harmed him in the case of the improvement of his own results . In addition, the principal can only be compensated for the breaches established and not for the loss of expected profits compared to the turnover achieved by other agents . However, the principal loses the right to be compensated, even in the case of breaches which, when taken in their entirety are of a somewhat serious nature, where he has tolerated them by not initiating a termination of the contract .

Civil Code Article 2007: “An agent may renounce the agency by giving notice of his renunciation to the principal. Nevertheless, where that renunciation prejudices the principal, he must be compensated by the agent, unless the latter is unable to continue the agency without himself suffering a considerable loss”.

CA Colmar, 17 November 1992, LawLex200200005954JBJ.

CA Paris, 28 November 2018, LawLex201800001857JBJ.

CA Paris, 16 June 2016, LawLex201600001184JBJ.

Cass. com., 19 October 2022, LawLex202200009314JBJ.

CA Versailles, 26 June 1997, LawLex200200005027JBJ.

CA Lyon, 10 September 1999, LawLex200200005234JBJ; Cass. com., 14 March 1995, LawLex200200005453JBJ; CA Aix-en-Provence, 19 June 2006, LawLex200600002464JBJ: the sudden termination of the contract by the commercial agent, with no intention of performing the two-month contractual notice, incurs its liability with respect to the principal.

CA Aix-en-Provence, 5 November 2004, LawLex200500005637JBJ.

Cass. com., 15 May 2007, LawLex200700000700JBJ.

Cass. com., 9 December 2014, LawLex201400001454JBJ.

CA Rouen, 16 December 2009, LawLex201000000216JBJ.

CA Amiens, 21 February 2019, LawLex201900000276JBJ; see also CA Versailles, 21 May 2019, LawLex201900000711JBJ, highlighting that the calculation of the compensation owed by the agent to the principal for the drop in turnover caused by the appropriation of a major client for  a third party must take into account the fact that this client was already dissatisfied with contractual products which were subject to a number of issues due to non-conformity.

French Distribution Law

519. Principal's right to compensation.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

519. Principal's right to compensation.

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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