The new Civil Code now incorporated as new types of contracts distribution and licence (franchise) contract and incorporated the long term agency contract. The former Act CXVII of 2000 on the independent commercial agency was repealed parallel with the entering into force of the new Civil Code and on the agency fee due to the agent under the agency agreement is regulated by the Government Decree No 65/2014 (III.13.) which entered into force also on 15 March, 2014.
Now the government decree was modified as of 1 January 2016. According to the Civil Code, long-term agency contracts are such contract, under which the agent undertakes to enter into a long-term relationship and to negotiate – acting independently – contracts for the principal to be concluded with third parties, and to conclude such contract in the principal’s name, and the principal undertakes to pay the fee agreed upon.
The rules of the Civil Code and the government decree are applicable for all long-term agency contracts, however, in some cases regarding the agency fee there are exceptions.
Until now the following areas were regarded as exceptions: it is not mandatory to apply certain rules (as detailed below) for long-term agent persons or organizations (brokers) acting under the effect of laws regulating voluntary mutual insurance funds, credit institutions and financial enterprises, private pensions and private pension funds, employment pensions, financial enterprises and commodities exchange.
As of 1 January 2016, insurance brokers were added to the exception circle.
The government decree prohibits derogation in the long-term agency contract from the following legal rules prejudicially for the agent:
- · the agency fee is due at the latest when the third person performed the contract or should have performed the contract if the principal would have performed;
- · the agent is still entitled to receive the agency fee in case the third party does not perform, except when the non-performance is attributable to a reason for which the principal is not liable;
- · the principal must hand over a settlement of accounts to the agent about the agency fee due to the agent until the last day of the quarter when the agency fee became due and also pay the agency fee at the same time;
- · the long-term agent is entitled to receive information in connection with the agency fee due to the agent, especially the extract of books of the principal in connection with the contracts after which the agency fee is due to the agent.
However, such derogation is possible in the agency contracts to be concluded with the agents belonging to the exception circle.
Agnes Szent-Ivany IDI country expert for Hungary
