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European Directive on Harmonizing Laws for Self-Employed Commercial Agents (86/653/EEC), Lecture notes of Law

The text of Council Directive 86/653/EEC, adopted on December 18, 1986, which aims to harmonize the laws of Member States relating to self-employed commercial agents. The directive covers the scope, definitions, and rights of commercial agents, including their remuneration, termination of contracts, and indemnities. It also addresses the relationship between commercial agents and principals, as well as the application of restraint of trade clauses.

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bg1
31
.
12
.
86
Official
Journal
of
the
European
Communities
No
L
382
/
17
COUNCIL
DIRECTIVE
of
18
December
1986
on
the
coordination
of
the
laws
of
the
Member
States
relating
to
self-employed
commercial
agents
(
86
/
653
/
EEC
)
already
made
,
when
harmonizing
the
laws
of
the
Member
States
relating to
commercial
agents
;
Whereas
additional
transitional
periods
should
be
allowed
for
certain
Member
States
which
have
to
make
a
particular
effort
to
adapt
their
regulations
,
especially
those
concerning
indemnity
for
termination
of
contract
between
the
principal
and
the
commercial
agent
,
to
the
requirements
of
this
Directive
,
HAS
ADOPTED
THIS
DIRECTIVE
:
CHAPTER
I
Scope
THE
COUNCIL
OF
THE
EUROPEAN
COMMUNITIES
,
Having
regard
to
the
Treaty
establishing
the
European
Economic
Community
,
and
in
particular
Articles
57
(
2
)
and
100
thereof
,
Having
regard
to
the
proposal
from
the
Commission
(
J
),
Having
regard
to
the
opinion
of
the
European
Parliament
(
2
),
Having
regard
to
the
opinion
of
the
Economic
and
Social
Committee
(
3
),
Whereas
the
restrictions
on
the
freedom
of
establishment
and
the
freedom
to
provide
services
in
respect
of
activities
of
intermediaries
in
commerce
,
industry
and
small
craft
industries
were
abolished
by
Directive
64
/
224
/
EEC
(
4
);
Whereas
the
differences
in
national
laws
concerning
commercial
representation
substantially
affect
the
conditions
of
competition
and
the
carrying-on
of
that
activity
within
the
Community
and
are
detrimental
both
to
the
protection
available
to
commercial
agents
vis-ci-vis
their
principals
and
to
the
security
of
commercial
transactions
;
whereas
moreover
those
differences
are
such
as
to
inhibit
substantially
the
conclusion
and
operation
of
commercial
representation
contracts
where
principal
and
commercial
agent
are
established
in
different
Member
States
;
Whereas
trade
in
goods
between
Member
States
should
be
carried
on
under
conditions
which
are
similar
to
those
of
a
single
market
,
and
this
necessitates
approximation
of
the
legal
systems
of
the
Member
States
to
the
extent
required
for
the
proper
functioning
of
the
common
market
;
whereas
in
this
regard
the
rules
concerning
conflict
of
laws
do
not
,
in
the
matter
of
commercial
representation
,
remove
the
inconsistencies
referred
to
above
,
nor
would
they
even
if
they
were
made
uniform
,
and
accordingly
the
proposed
harmonization
is
necessary
notwithstanding
the
existence
of
those
rules
;
Whereas
in
this
regard
the
legal
relationship
between
commercial
agent
and
principal
must
be
given
priority
;
Whereas
it
is
appropriate
to
be
guided
by
the
principles
of
Article
117
of
the
Treaty
and
to
maintain
improvements
Article
1
1
.
The
harmonization
measures
prescribed
by
this
Directive
shall
apply
to
the
laws
,
regulations
and
administrative
provisions
of
the
Member
States
governing
the
relations
between
commercial
agents
and
their
principals
.
2
.
For
the
purposes
of
this
Directive
,
'
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
.
3
.
A
commercial
agent
shall
be
understood
within
the
meaning
of
this
Directive
as
not
including
in
particular
:
a
person
who
,
in
his
capacity
as
a{i
officer
,
is
empowered
to
enter
into
commitments
binding
on
a
company
or
association
,
a
partner
who
is
lawfully
authorized
to
enter
into
commitments
binding
on
his
partners
,
a
receiver
,
a
receiver
and
manager
,
a
liquidator
or
a
trustee
in
bankruptcy
.
(')
OJ
No
C
13
,
18
.
1
.
1977
,
p
.
2
;
OJ
No
C
56
,
2
.
3
.
1979
,
p
.
5
.
Article
2
1
.
This
Directive
shall
not
apply
to
:
commercial
agents
whose
activities
are
unpaid
,
(
2
)
OJ
No
C
239
,
9
.
10
.
1978
,
p.
17
.
(
3
)
OJ
No
C
59
,
8
.
3
.
1978
,
p.
31
.
(
4
)
OJ
No
56
,
4
.
4
.
1964
,
p
.
869
/
64
.
pf3
pf4
pf5

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    1. (^86) Official Journal of the European Communities No L 382 / 17 COUNCIL DIRECTIVE of 18 December 1986

on the coordination of the laws of the Member States relating to self-employed commercial

agents ( 86 / 653 / EEC ) already made , when harmonizing the laws of the Member States relating to commercial agents ; Whereas additional transitional periods should be allowed for certain Member States which have to make a particular effort to adapt their regulations , especially those concerning indemnity for termination of contract between the principal and the commercial agent , to the requirements of this Directive , HAS ADOPTED THIS DIRECTIVE : CHAPTER I Scope THE COUNCIL OF THE EUROPEAN COMMUNITIES , Having regard to the Treaty establishing the European Economic Community , and in particular Articles 57 ( 2 ) and 100 thereof, Having regard to the proposal from the Commission ( J ), Having regard to the opinion of the European Parliament ( 2 ), Having regard to the opinion of the Economic and Social Committee ( 3 ), Whereas the restrictions on the freedom of establishment and the freedom to provide services in respect of activities of intermediaries in commerce , industry and small craft industries were abolished by Directive 64 / 224 / EEC ( 4 ); Whereas the differences in national laws concerning commercial representation substantially affect the conditions of competition and the carrying-on of that activity within the Community and are detrimental both to the protection available to commercial agents vis-ci-vis their principals and to the security of commercial transactions ; whereas moreover those differences are such as to inhibit substantially the conclusion and operation of commercial representation contracts where principal and commercial agent are established in different Member States ; Whereas trade in goods between Member States should be carried on under conditions which are similar to those of a single market, and this necessitates approximation of the legal systems of the Member States to the extent required for the proper functioning of the common market ; whereas in this regard the rules concerning conflict of laws do not , in the matter of commercial representation , remove the inconsistencies referred to above , nor would they even if they were made uniform , and accordingly the proposed harmonization is necessary notwithstanding the existence of those rules ; Whereas in this regard the legal relationship between commercial agent and principal must be given priority ; Whereas it is appropriate to be guided by the principles of Article 117 of the Treaty and to maintain improvements Article 1

  1. The harmonization measures prescribed by this Directive shall apply to the laws , regulations and administrative provisions of the Member States governing the relations between commercial agents and their principals.
  2. For the purposes of this Directive , '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.
  3. A commercial agent shall be understood within the meaning of this Directive as not including in particular :

— a person who , in his capacity as a{i officer , is empowered

to enter into commitments binding on a company or association , — a partner who is lawfully authorized to enter into commitments binding on his partners , — a receiver , a receiver and manager, a liquidator or a trustee in bankruptcy. (') OJ No C 13 , 18. 1. 1977 , p. 2 ; OJ No C 56 , 2. 3. 1979 , p. 5. Article 2

  1. This Directive shall not apply to : — commercial agents whose activities are unpaid , ( 2 ) OJ No C 239 , 9. 10. 1978 , p. 17. ( 3 ) OJ No C 59 , 8. 3. 1978 , p. 31. ( 4 ) OJ No 56 , 4. 4. 1964 , p. 869 / 64.

No L 382 / (^18) Official Journal of the European Communities 31. 12. 86 CHAPTER III Remuneration — commercial agents when they operate on commodity exchanges or in the commodity market, or — the body known as the Crown Agents for Overseas Governments and Administrations , as set up under the Crown Agents Act 1979 in the United Kingdom , or its subsidiaries.

  1. Each of the Member States shall have the right to provide that the Directive shall not apply to those persons whose activities as commercial agents are considered secondary by the law of that Member State. Article 6
  2. In the absence of any agreement on this matter between the parties , and without prejudice to the application of the compulsory provisions of the Member States concerning the level of remuneration , a commercial agent shall be entitled to the remuneration that commercial agents appointed for the goods forming the subject of his agency contract are customarily allowed in the place where he carries on his activities. If there is no such customary practice a commercial agent shall be entitled to reasonable remuneration taking into account all the aspects of the transaction.
  3. Any part of the remuneration which varies with the number or value of business transactions shall be deemed to be commission within the meaning of this Directive.
  4. Articles 7 to 1 2 shall not apply if the commercial agent is not remunerated wholly or in part by commission. CHAPTER II Rights and obligations Article 3
  5. In performing has activities a commercial agent must look after his principal's interests and act dutifully and in good faith.
  6. In particular , a commercial agent must : Article 7
  7. A commercial agent shall be entitled to commission on commercial transactions concluded during the period covered by the agency contract: ( a ) where the transaction has been concluded as a result of his action ; or ( b ) where the transaction is concluded with a third party whom he has previously acquired as a customer for transactions of the same kind.
  8. A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract : — either where he is entrusted with a specific geographical area or group of customers , — or where he has an exclusive right to a specific geographical area or group of customers , and where the transaction has been entered into with a customer belonging to that area or group. Member States shall include in their legislation one of the possibilities referred to in the above two indents. ( a ) make proper efforts to negotiate and , where appropriate , conclude the transactions he is instructed to take care of; ( b ) communicate to his principal all the necessary information available to him ; ( c ) comply with reasonable instructions given by his principal. Article 4
  9. In his relations with his commercial agent a principal must act dutifully and in good faith.
  10. A principal must in particular : ( a ) provide his commercial agent with the necessary documentation relating to the goods concerned ; ( b ) obtain for his commercial agent the information necessary for the performance of the agency contract , and in particular notify the commercial agent within a

reasonable period once he anticipates that the volume of

commercial transactions will be significantly lower than that which the commercial agent could normally have expected.

3. A principal must , in addition , inform the commercial

agent within a reasonable period of his acceptance , refusal ,

and of any non-execution of a commercial transaction which

the commercial agent has procured for the principal. Article 5

The parties may not derogate from the provisions of

Articles 3 and 4. Article 8 A commercial agent shall be entitled to commission on commercial transactions concluded after the agency contract has terminated : ( a ) if the transaction is mainly attributable to the commercial agent's efforts during the period covered by

No L 382 / (^20) Official Journal of the European Communities 31. 12. 86 years. They may decide that the parties may not agree to shorter periods.

  1. If the parties agree on longer periods than those laid down in paragraphs 2 and 3 , the period of notice to be observed by the principal must not be shorter than that to be observed by the commercial agent.
  2. Unless otherwise agreed by the parties , the end of the period of notice must coincide with the end of a calendar month.
  3. The provisions of this Article shall apply to an agency contract for a fixed period where it is converted under Article 14 into an agency contract for an indefinite period , subject to the proviso that the earlier fixed period must be taken into account in the calculation of the period of notice. ( c ) The grant of such an indemnity shall not prevent the commercial agent from seeking damages.
  4. The commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with the principal. Such damage shall be deemed to occur particularly when the termination takes place in circumstances : — depriving the commercial agent of the commission which proper performance of the agency contract would have procured him whilst providing the principal with substantial benefits linked to the commercial agent's activities , — and / or which have not enabled the commercial agent to amortize the costs and expenses that he had incurred for the performance of the agency contract on the principal's advice.
  5. Entitlement to the indemnity as provided for in paragraph 2 or to compensation for damage as provided for under paragraph 3 , shall also arise where the agency contract is terminated as a result of the commercial agent's death.
  6. The commercial agent shall lose his entitlement to the indemnity in the instances provided for in paragraph 2 or to compensation for damage in the instances provided for in paragraph 3 , if within one year following termination of the contract he has not notified the principal that he intends pursuing his entitlement.
  7. The Commission shall submit to the Council , within eight years following the date of notification of this Directive , a report on the implementation of this Article , and shall if necessary submit to it proposals for amendments. Article 16 Nothing in this Directive shall affect the application of the law of the Member States where the latter provides for the immediate termination of the agency contract: ( a ) because of the failure of one party to carry out all or part of his obligations ; ( b ) where exceptional circumstances arise. Article 18 The indemnity or compensation referred to in Article 17 shall not be payable: ( a ) where the principal has terminated the agency contract because of default attributable to the commercial agent which would justify immediate termination of the agency contract under national law; ( b ) where the commercial agent has terminated the agency contract , unless such termination is justified by circumstances attributable to the principal or on grounds of age , infirmity or illness of the commercial agent in consequence of which he cannot reasonably be required to continue his activities ; ( c ) where , with the agreement of the principal , the commercial agent assigns his rights and duties under the agency contract to another person. Article 17
  8. Member States shall take the measures necessary to ensure that the commercial agent is , after termination of the agency contract, indemnified in accordance with paragraph 2 or compensated for damage in accordance with paragraph 3.
  9. ( a ) The commercial agent shall be entitled to an indemnity if and to the extent that: — he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers , and — the payment of this indemnity is equitable having regard to all the circumstances and , in particular , the commission lost by the commercial agent on the business transacted with such customers. Member States may provide for such circumstances also to include the application or otherwise of a restraint of trade clause, within the meaning of Article 20 ; ( b ) The amount of the indemnity may not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent's average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question; Article 19 The parties may not derogate from Articles 17 and 18 to the detriment of the commercial agent before the agency contract expires.
    1. (^86) Official Journal of the European Communities No L 382 / 21 Article 22
  1. Member States shall bring into force the provisions necessary to comply with this Directive before 1 January
  2. They shall forthwith inform the Commission thereof. Such provisions shall apply at least to contracts concluded after their entry into force. They shall apply to contracts in operation by 1 January 1994 at the latest.
  3. As from the notification of this Directive, Member States shall communicate to the Commission the main laws , regulations and administrative provisions which they adopt in the field governed by this Directive.
  4. However , with regard to Ireland and the United Kingdom , 1 January 1990 referred to in paragraph 1 shall be replaced by 1 January 1994. With regard to Italy , 1 January 1990 shall be replaced by 1 January 1993 in the case of the obligations deriving from Article 17. Article 20
  5. For the purposes of this Directive , an agreement restricting the business activities of a commercial agent following termination of the agency contract is hereinafter referred to as a restraint of trade clause.
  6. A restraint of trade clause shall be valid only if and to the extent that : ( a ) it is concluded in writing; and ( b ) it relates to the geographical area or the group of customers and the geographical area entrusted to the commercial agent and to the kind of goods covered by his agency under the contract.
  7. A restraint of trade clause shall be valid for not more than two years after termination of the agency contract.
  8. This Article shall not affect provisions of national law which impose other restrictions on the validity or enforceability of restraint of trade clauses or which enable the courts to reduce the obligations on the parties resulting from such an agreement. Article 23 CHAPTER V^ This^ Directive^ is^ addressed^ to^ the^ Member^ States^. General and final provisions Article 21 Nothing in this Directive shall require a Member State to provide for the disclosure of information where such disclosure would be contrary to public policy. Done at Brussels , 18 December 1986. For the Council The President M. JOPLING