The agency contract represents one of the most common forms of commercial collaboration in the distribution of goods and services. Governed by Articles 1742 et seq. of the Civil Code, it is a typical contract, with reciprocal performance, through which one party—the agent—assumes the permanent responsibility of promoting, on behalf of the other party—the principal—the conclusion of contracts in a specific area and for a specific category of business.
The regulatory framework also includes collective economic agreements (CFAs) under common law (CJLAs), which complement the provisions of the Civil Code and will be applicable where both parties are members of the signatory associations or where they are expressly or implicitly referred to in the individual agency contract.
Essential characteristics and legal nature
The defining characteristic of an agency contract is the stability of the assignment, which clearly differentiates it from other contractual arrangements such as business procurement or occasional representation. The agent is not subordinate to the principal—which excludes the application of the rules governing subordinate employment—but acts independently, albeit in compliance with the instructions given and within the scope of the assignment received.
The contract may be for a fixed or indefinite term and may or may not include the agent’s power of representation. Otherwise, the contract entered into by the third party will be finalized only with the principal’s acceptance.
Obligations of the agent and the principal
The agent is required to:
- promote the conclusion of contracts with diligence and good faith;
- follow the principal’s instructions;
- provide relevant information on market trends;
- respect territorial exclusivity, if agreed.
The principal, for his part, must:
- provide the agent with the documentation necessary for carrying out the activity;
- pay the commissions due under the contracts concluded;
- communicate to the agent, within reasonable timeframes, the acceptance or rejection of the proposals received.
Commissions
The right to commission is one of the central aspects of the relationship. The agent is entitled to commission:
- on all contracts concluded thanks to his intervention;
- on those concluded without his intervention, but with clients acquired by him or reserved for him.
Article 1748 of the Italian Civil Code specifically regulates the accrual and due date of commission, as well as the principal’s obligation to provide periodic reporting. In the event of non-payment, the rules governing late payments in commercial transactions apply.
Indennità di fine rapporto
One of the most sensitive issues in practice is the termination of the contract and the agent’s right to severance pay, governed by Article 1751 of the Italian Civil Code, as amended pursuant to Directive 86/653/EEC.
The agent is entitled to compensation if he has brought new customers to the principal or has significantly increased business with existing customers, and if the principal will continue to benefit from the activity carried out by the agent, even after the termination of the relationship.
Furthermore, the payment of compensation must be fair, taking into account all the circumstances of the specific case.
This right can be excluded only in the case of:
- termination of the relationship due to serious breach of contract by the agent;
- termination due to the agent’s initiative, unless there is just cause for termination, circumstances attributable to the principal that may justify the termination, or circumstances attributable to the agent such as age, infirmity or illness for which the agent cannot reasonably be asked to continue the collaboration;
- assignment of the contract to another agent with the consent of the principal.
Even the AECs, where applicable, provide for different criteria for calculating and determining severance pay, with the consequent proliferation of disputes regarding its exact determination.
Aspetti pratici e clausole critiche
When drafting an agency contract, particular attention must be paid to:
- exclusivity clauses: both in the agent’s and the principal’s name (which constitute a natural but not essential element of the relationship);
- duration and notice of termination;
- express termination clause and penalties (without prejudice to the problems relating to its practical application based on the evolution of jurisprudence);
- post-contractual non-competition, the validity of which is subject to time (maximum two years), territorial and product-specific limits (for these clauses too, case law has undergone an interesting evolution);
- competent judge and applicable law, in the case of transnational relationships.
Conclusion
Agency agreements are a flexible and powerful tool for commercial expansion, but they present a series of legal implications that require careful analysis and customization. Proper drafting and management of the agreement is essential to prevent disputes and ensure balance between the parties. It is advisable to seek specialized advice not only in drafting the agreement but also throughout the entire execution phase of the relationship, with a strategic vision geared towards protecting and enhancing the company’s interests.
