The parties(1) had entered into a commercial agency agreement in 2010. Approximately 2½ years later, the principal sent a Standard Operating Procedure (SOP) for the agent to sign. The SOP contained terms limiting the commercial agent’s rights to inform and answer questions from customers. The agent refused to sign the SOP. In consequence, the principal terminated the agency agreement arguing that the commercial agent had materially breached the agency agreement.
According to an expert’s report, such SOPs are not unusual between principals and agents in the pharmaceutical industry. Further, the SOP did not contain any terms considered particularly burdensome to the agent. However, the agent argued that the wording of terms in the SOP made it unclear if the agent could continue as an independent agent under the agency agreement, and the agent requested the principal to answer certain questions relating to this matter. The principal did not answer these questions.
The Danish Supreme Court which ruled in favor of the commercial agent. The Court found that certain terms in the SOP did in fact make it unclear if the agent could continue as an independent agent under the agency agreement. The fact that the principal did not answer the agent’s questions also influenced the Court’s decision. For these reasons, the Court found that it was not relevant that the SOP was not unusual in the pharmaceutical industry and that it was not particularly burdensome to the agent.
Thus, the commercial agent did not breach the commercial agency agreement by not signing the SOP, and the Court ordered the principal to pay damages and remuneration for its unjustified termination of the agency agreement.
Peter E. P. Gregersen, IDI agency & distribution country expert for Denmark
(1) Supreme Court Judgment of 12 March 2019 in case 91/2018 published in UfR 2019.2160