Lawyer for commercial agency law in Germany

The law regulates when a transaction is subject to commission, as well as the conditions for calculating commission. Many provisions of commercial agency law are mandatory and therefore cannot be freely agreed upon, even if both parties wish to do so. The reason for this is that the commercial agent is considered by the legislator to be in need of protection. Commission regulations that deviate from the law are therefore only valid if they deviate from non-mandatory statutory regulations.

In general, the following applies:

• There is a claim to commission for transactions that are attributable to the activities of the commercial agent or were concluded by their customers, or within their district; even after termination of the agency agreement.

• The claim arises as soon as the entrepreneur has executed the transaction. It is subject to the condition that the customer has made the payment.

• In the absence of an agreement, the ‘usual’ commission rate applies. This rate may not always be obvious; thus, a written agreement is strongly recommended.

• Commissions must be settled monthly; and there is a right to request an account statement from the entrepreneur.

We check whether the requirements for a commission claim have been met and whether a proper commission statement has been issued.

The commercial agency agreement can be terminated by either party within the notice periods of Section 89 HGB or within the contractually agreed notice periods. If the commercial agent terminates the contract without good cause and thus voluntarily leaves their positions, they are only entitled to compensation under Section 89b HGB if the termination is due to age or illness, and further employment is unreasonable. On the other hand, if the principal terminates the contract with notice, the commercial agent is entitled to compensation.

In the case of extraordinary termination, the situation is reversed. If the commercial agent terminates because it is unreasonable for them to continue the contract with the principal, they retain the right to compensation. On the other hand, if the principal gives extraordinary notice of termination because they can no longer reasonably be expected to continue the contract with the commercial agent, the latter is not entitled to compensation.

Any intention to terminate the contract must therefore be carefully considered. Disputes are common in this context, as the type of termination determines whether or not a potentially large sum is paid to the commercial agent. AHS Rechtsanwälte will provide you with comprehensive advice!"

If the commercial agency agreement is duly terminated by the principal, the commercial agent is generally entitled to compensation. If he terminates the contract himself, he does not have this claim. However, there are exceptions. Whether and to what extent a claim for compensation actually exists depends primarily on whether the commercial agent has acquired new customers or intensified business with existing customers. The calculation is very complicated in detail - we will do it for you! In any case, the amount of compensation is capped at the average annual commission of the past five years.

Calculation of the compensation claim:

Gross compensation

The basis for the calculation of the compensation claim is initially the calculation of the so-called gross compensation. The calculation of the gross compensation:

1) First, determine the total commissions/remuneration of the last contract year for customers acquired by the commercial agent (excluding purely administrative commissions) and for intensified old customers (approx. 30% increase).

2) Then determine the percentage of customers that the company loses on average per year (churn rate), e.g. 20%.

3) Then forecast the future commissions for the next 3 - 5 years. To do this, sum 1 is adjusted for the churn rate. This result is sum 1 for the following year, which in turn is to be adjusted by the churn rate and so on until the stock is mathematically exhausted.

4) These amounts must be discounted, as they would not have been received until later if the contract had been continued. (Discounting factor f: 1/[(1+(i interest rate/100)]n number of years). Discounting is to be carried out for each of the calculated amounts and then the total sum is to be formed.

5) There may be a loss of benefits for the company, e.g. due to partial discontinuation of business operations, migration of customers with the commercial agent to the competition, etc.. This amount must then be deducted.

6) Equitable considerations must then be made. E.g. the pull effect of the brand “selling itself”, pension contributions, cost savings of the commercial agent. A deduction may have to be made here.

Calculation of the maximum limit

The maximum compensation claim is the average annual commission of the last five contract years. If the term is shorter, this is taken as the basis. For the calculation, add up all commissions or other remuneration paid in the last five years (not expenses or cost reimbursements) and divide this by the number of years. If this average is lower than the calculated gross compensation, the compensation entitlement is this maximum limit.

However, this calculation ultimately only provides an indication, as equity considerations in particular can lead to a different result. In the event of a lawsuit, the commercial agent must provide evidence of the new customers he has acquired and the commission cut. The company must prove why the migration rate may be higher, why the benefits for the company are not sustainable, etc. Instead of lengthy and expensive court proceedings, it is often preferable to reach an agreement in advance. The above-mentioned information is required both for court proceedings and for an out-of-court settlement. All parties involved would do well to create an appropriate file in order to be able to provide plausible evidence for their claims.