Distribution of goods via commercial agents and exclusive distributors in Greece
3 April 2019
Commercial agent
A commercial agent is a self-employed business person entitled to execute legal transactions for another company and in its name (e.g. sale of products to customers in the name of another company). He/She acts for and on behalf of third parties, and receives a commission for his/her services by the supplier. Unlike the distributor, the commercial agent does not purchase the products, but acts as an intermediary between the company and the customer.
When the existant business relationship between supplier and agent assumes these characteristics, then a commercial agency contract is deemed concluded. Irrespective of whether this contract is written or oral, the commercial agent can claim the same rights against the supplier.
The commercial agency contract is drawn up informally, and the “signed document” term referred to in the provision of Article 8 par. 1, subpar. b, of Presidential Decree No 219/1991, shall be considered to have, not a constitutive, but a probative effect regarding the contract’s content. When in doubt, courts tend to rule in the commercial agent’s favour; thus, it is recommended that the relevant contracts shall be put in writing.
Applicable Law
Commercial agency contracts have been regulated by the provisions of Directive 86/653/EU, of 18 December 1986, which has been harmonized with national legislations in all Member States. In Greece, this Directive has been transposed to the national legislation by Presidential Decree No 219/1991, which contains detailed provisions on the parties’ rights and obligations, and particularly on the protection of commercial agents.
The law to be applied to contractual obligations is determined by the relevant Convention signed by the Member States (including Greece) in Rome in 1980. The Convention applies to contractual obligations in which the parties are subject to different Member States’ jurisdictions. As stated in the Convention, the parties have freedom of choice over the applicable law, which must be expressed into the contract through a relevant clause. According to Article 4 of the Convention, if there is no such choice-of-law clause, the contract shall be governed by the law of the country with which it is most closely connected, or where the performance which is characteristic of the contract comes into effect. In case of a commercial agency contract, this would be the place where the agent conducts his/her business activity.
The revised provisions of Brussels (Ibis) Regulation (EU) No 1215/2012 have enhanced the effectiveness of agreements on the prorogation of jurisdiction, as compared to the provisions of Regulation (EC) No 44/2001: this Regulation provides for these agreements’ independence from the main contracts of substantive law, and the applicable law to their substantial validity. In fact, the new article 25 (5) of Regulation expressly provides that: “An agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid.”
Jurisdiction
Irrespective of the matter of the applicable law, questions arise as to the courts before which the parties to the contract would wish to bring their cases in the event of any disputes. This can be contractually agreed by what is known as jurisdictional clause. This clause determines which courts have jurisdiction in the event of any disputes, and unless the parties have agreed otherwise, the jurisdiction of these courts is exclusive.
If an exclusive venue has not been agreed upon, the parties can determine the place of performance. Thus, the courts having jurisdiction may be determined (indirectly), as set out in Article 6, par.1 of European Council Regulation (EC) Νο 44/2001, of 22 December 2000.
Claim for compensation for clientele upon termination of the contract
Pursuant to Greek Presidential Decree No 219/1991, Article 9, the commercial agent is entitled to equitable compensation counterbalanced against the profit made by the principal.
Article 9 of Presidential Decree No 219/1991 requires that three equivalent conditions shall be met concurrently (for the commercial agent to be entitled to compensation for clientele upon termination of the contract), as follows: a) he/she has introduced to the principal new customers or has significantly increased the volume of work with existing customers during the contract, b) the principal continues to derive substantial benefits from the business with such customers after the termination of the contract, and c) the amount of compensation shall be fairly determined taking into account all the circumstances of each individual case and, particularly, the commissions not received by the commercial agent for transactions with such customers.
The Greek courts tend to grant further compensation apart from compensation for clientele, in accordance with the general principles of civil law.
Exclusive distributor
Another common form of contractual agreement in modern markets is the exclusive distribution agreement, namely a special long-term contractual obligation in which one party to the agreement (producer or wholesaler) shall be obliged to sell to the other party (distributor), exclusively within a particular territory, the contractual products, which, then shall be sold by the distributor to customers for and in his/her own name bearing the business risk.
Analogous application of the provisions on commercial agents
According to Greek case-law, an analogous application of the provisions on commercial agents to exclusive distributors mainly presumes that the contractual relationship is similar to that of a commercial agent.
According to current Greek case-law, exclusive distributors are granted equitable compensation for clientele, even in case of an invalidly agreed transfer of clientele upon the termination of the contract. For this reason, it is at least recommended that a contractual agreement requiring client data to be deleted after the termination of the contract is performed.