FRANCE: The Paris Court of Appeals enforces clause setting a sales agent's termination indemnity at one year's commission.
Following the non-renewal of its agency contract, a sales agent sued its former principal for payment of the indemnity provided for by Article L. 134-12 of the Commercial Code to compensate for the harm incurred upon the termination of such relationships.
The Court of Appeals upheld the lower court's decision setting the indemnity at one year's worth of commissions. The judges took into consideration the terms of the contract, which provided for an indemnity equal to twelve months of commissions, the duration of the relationship between the parties (three years), and the fact that the contract had been terminated in accordance with the provisions of the contract.
This decision runs counter to the dominant case law in this area, which refuses the enforcement of clauses that predetermine the amount of such indemnities, leaving their evaluation up to the discretionary power of the courts.
Didier Ferrier, IDI Country Expert for France.
The text of the judgement, together with other interesting case-law on agency and distribution contracts, can be found in the French page of the Reports Section of the website, while the relevant legislation concerning agency and distribution agreements in France can be found in the Legislation Section of the Website.
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