Paris commercial court asked for the EUCJ’s interpretation of the EU Directive of December 18, 1986, regarding the notion of “negotiation” of contracts. If the purpose of the negotiation is the conclusion of contracts on behalf of the principal, the EUCJ considers that the directive does not necessarily imply that the commercial agent can himself fix the price of the goods of which he ensures the sale on behalf of the principal (CJEU, case C-828/18, point 28).
In three recent decisions, the Cour de Cassation applied this principle:
• Cass. Com., January 27, 2021, n ° 18-10.835:
“[The agent] does not produce any negotiation or contract document drawn up on behalf of the [principal], well deduced from this exactly that the [agent] having no negotiating power on behalf of the [principal], the parties had concluded and executed a brokerage agreement and not a commercial agent, which excluded the application of the provisions of Article L. 134-12 of the Commercial Code” (i.e. the termination indemnity right).
• Cass. Com., February 10, 2021, n ° 19-13.604:
“If most of the actions carried out by the [agent] on behalf of the [principal] constituted services, [the agent] had sometimes been led to take initiatives locally, to recommend and carry out some commercial actions, to intervene in the course of operations and to receive, on an occasional basis, purchase orders which concerned supplies following a call for tenders after the commercial negotiations had already took place, it did not permanently have the power to negotiate contracts in the name and on behalf of the [principal], the Court of Appeal deduced from this exactly that the [agent] did not have the capacity of “commercial agent”.
• Cass. Com., May 12, 2021, n ° 19-17.042:
The Court had to rule on a non-formalized, not written relation. The principal had terminated a contract with an end-client representing 90% of the sales generated by the agent. The agent decided to terminate the agency agreement due to circumstances due to the principal and claimed for a termination indemnity.
The Court referred to the Trendsetteuse decision and quashed the appeal judgment with such reference because it was based on the inability of the agent to modify the conditions of the contracts, in particular the prices, of the principal who, according to the Court Appeal, “[kept] control and control over the determination of the terms of contracts and, in particular, of prices”.
The Court of Cassation considers that “by basing itself on the inability of the [agent] to modify the conditions of the contracts, and in particular the prices, the court of appeal violated the [applicable legal rules]”.
The agent argued that, although various exchanges showed that the principal had reserved the negotiation of certain contracts, the agent had no less power to negotiate what was attested by a former employee of the principal and what the Court call should have been raised.
One may take it that the negotiation is still a requirement for the benefit of the commercial agent status, but the absence of power to negotiate prices or conditions of sale, is not sufficient to avoid the application of the related rules.
As a conclusion, one may consider that the commercial agent protective status could now only be turned down, if the principal proves that the agent has never made legal acts for the principal, but only material.
EUCJ Trendsetteuse case also available in the IDI section of EU Case law
Frédéric Fournier, IDI Country Expert for agency in France