In the complex landscape of commercial relationships between companies, two contractual forms of great practical importance frequently emerge: the agency agreement and the sales concession agreement. These legal instruments, although often used for at least partially similar purposes—namely, the promotion and distribution of goods or services—present significant differences, both in terms of their legal structure and in terms of risk allocation, the rights of the parties, and the manner in which customer relationships are managed. Understanding these differences is essential for entrepreneurs and economic operators to properly establish contractual relationships and develop a distribution network consistent with their business strategy.
The agency contract: definition, regulation and operational implications
The agency agreement is expressly governed by Articles 1742 et seq. of the Civil Code, which provide a detailed regulatory framework. Under this agreement, one party (the agent) undertakes a permanent obligation to another party (the principal) to promote, within a specific geographic area or with reference to a specific client segment, the conclusion of contracts on behalf of the principal. In addition to the Civil Code, collective economic agreements should also be mentioned. Where applicable, they constitute an additional body of legislation that complements and sometimes overlaps with the Civil Code. To resolve any conflicts, the general principle of hierarchy of sources must be used, which permits derogation only from the specific provisions of the Civil Code. The agent, unless otherwise agreed (a mandate with representation), is not authorized to directly conclude such contracts, but acts as an intermediary.
The agent works on a stable and continuous basis for the principal, complying with the obligations of diligence, fairness, and good faith. They are typically remunerated through commissions calculated on the business concluded through their services, but do not assume any direct financial risk. A particularly important aspect is the legal protection afforded to the agent, which includes, among other things, the right to severance pay, which compensates for the goodwill contributed to the principal through the development and growth of their client base.
The sales concession contract: framework and peculiarities
The sales concession agreement, or distribution agreement, is not expressly regulated by the Civil Code, but is widely recognized in practice and case law. Unlike an agent, the dealer purchases goods from the grantor to resell them on his own account, acting as an independent entrepreneur and assuming full risks and rewards of resale.
Its managerial autonomy is accompanied by responsibility for unsold stock and all operating costs. The dealer’s profit is derived from the margin between the purchase price and the selling price. The parties enjoy broad contractual freedom, and territorial or product exclusivity clauses are often included, useful for defining and protecting operating areas.
The most recent Italian case law defines the sales concession agreement as an atypical contract with a complex function of exchange and collaboration, characterized by a natural obligation on the concessionaire to carry out promotional activities. This promotional obligation brings the sales concession agreement closer to an agency agreement within the broader category of distribution agreements.
Comparison between agency agreement and sales concession agreement
The crucial point in the distinction between the two figures is the role assumed by the individual in the commercial chain. The agent acts on behalf of the principal, establishing relationships with customers on behalf of the latter, while the dealer operates in his own name and on his own behalf, establishing a direct relationship with the end customer.
This results in a substantial difference in ownership of the customer, which in the case of an agent remains with the principal, while in the case of a dealer it belongs to the distributor. The economic risk also follows the same logic: it is the principal who bears the risk in the agency contract, while it is the dealer who assumes it in the concession contract.
From a legal perspective, agency agreements enjoy specific rules, with well-defined rights for the agent, while concession agreements, lacking codified rules, depend heavily on the agreements stipulated between the parties and, in part, on the analogous application of some provisions regarding supply. Finally, regarding information obligations, the agent is required to keep the principal constantly updated; the concessionaire, on the other hand, enjoys greater operational freedom, unless otherwise contractually provided.
A further difference from the regulatory perspective is the applicability of antitrust legislation to the sales concession contract, while it is generally excluded from the agency contract.
Practical implications and selection criteria
The choice between the two contracts depends on multiple strategic factors. An agency contract is preferable for companies wishing to maintain more direct control over their sales network, commercial policy, and customer relations. A sales concession, on the other hand, is ideal for companies seeking to rapidly expand their market presence by outsourcing the commercial, logistical, and promotional management of their products.
The level of risk the company is willing to take, the structure of its network, and its medium- to long-term objectives are key variables. If the focus is on brand and positioning control, an agency offers greater protection. If, on the other hand, speed and the distributor’s managerial autonomy are key, a concession may be the most effective option.
Conclusion
Properly defining a contractual relationship is essential to prevent disputes, protect the parties’ economic interests, and ensure solid and sustainable business development. Relying on a professional with expertise in commercial law allows us to thoroughly analyze the company’s operational needs and identify the most suitable contractual instrument. Every business has its own unique characteristics, and a well-structured contract is the first step towards an effective and legally secure sales network.
Alberto Venezia
