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FRANCE: French restrictive interpretation of commercial agent qualification. A recent decision of the EU Court of Justice.

Since 2000, French courts have considered that the agent cannot benefit from the qualification of commercial agent (e.g. mainly the right to termination indemnity), when an agent has no power to negotiate prices/discounts and sales/purchase/service conditions on behalf and for the account of the principal.

Frédéric FOURNIER - 15.07.20
Country expert - IDARB Arbitrator

Consequently, when the agent must strictly apply prices/discounts and conditions of sales/purchase/service fixed by the principal or when the agent is assigned to contact and search prospects or commercial leads (French Supreme Court, commercial section, 3 Oct. 2000, no 97-19999; 6 March 2001; 20 January 2015, no 13-24231; Versailles Appeals Court, 23 April 2020, no 18/08750), he cannot benefit from the protective regime of commercial agents. The title itself of the contract or the will of the parties or reference to the provisions applicable to agency does imply the application of commercial agency regime to a contract, but only the effective and actual relation (French Supreme Court, commercial section, 10 December 2003, no 01-11923). While the Paris Appeals Court turned down the transmission of a potential prejudicial question to the EUCJ in regard thereof, considering that the above principles undoubtfully comply with the EU Directive (Appeals Court of Paris, Section 5, 26 Jan. 2017, no 15/04995), the commercial court of Paris accepted it (19 December 2018, no 2017015204) requesting that EUCJ interprets the word “negotiate” in Article 1er, paragraph 2, of Directive N°86/653/CEE. The EUCJ replied on June 4, 2020, that power to negotiate granted to the agent does not mean necessarily power to negotiate the prices of the products. The reply is limited to the question. Then, to date, should the commercial agent be unable to prove a  wide power to negotiate the contractual terms, one can expect that the agent will be deemed a service provider or a broker (with no mandatory termination indemnity). If the commercial agent has no right to conclude agreements, but the right to negotiate conditions of sale and price, he will benefit from the regime of the commercial agency.

 

JUDGEMENT OF THE EU COURT OF JUSTICE - CASE C-828/18

 

Frédéric Fournier, IDI Country Expert for agency in France

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