POLAND: an interesting judgement on goodwill indemnity in agency contracts.



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According to Article 7643 of the Civil Code after the agency contract is terminated, the agent may demand a compensatory performance (goodwill indemnity) from the principal if, during the term of the agency contract, he obtained new clients or led to a significant increase in turnover with existing clients, and the principal continues to draw significant benefits from contracts with those clients. The agent is entitled to that claim if, given all the circumstances, and especially the loss by the agent of the commission on the contracts executed by the principal with those clients, such a claim is supported by the equity principle.

According to the facts of the case plaintiff demanded the payment in the amount of PLN 156.555,00 on the basis of Article 7643. The court of the first instance stated that the amount of the goodwill indemnity shall correspond to the amount of net income of the agent decreased by the operating costs and awarded the amount of PLN 74.435,45. The appeal court dismissed the claim in whole saying that the former agent did not prove that the principal obtained significant benefits from contracts concluded by him.

The Supreme Court indicated that the goodwill indemnity shall be distinguished from compensation claims or any remuneration claims arising in connection with termination of the agency contract. The provisions regulating the agency relationship provide original mechanism ensuring participation of the former agent in principal’s benefits in case the agent made a major contribution towards those benefits. The Supreme Court did not share the opinion of the appeal court, according to which the former agent shall prove actual and specific value of profits generated by him during the term of the agency contract. The provision regarding the goodwill indemnity refers on the other hand to benefit in more general sense that may be composed of many different elements, e.g. obtaining regular clients by the principal or strengthening his market position. In other words, the agent’s activity may lead to obtaining regular source of income by the principal after the termination of the agency contract. The necessity to prove the “significant benefits” in adequate financial amount would lead to the ineffectiveness of the agent’s claim. 

Taking the foregoing into account the Supreme Court concluded that the “significant benefits” reffered to in article 7643 of the Civil Code shall be understood as the result of agent’s activity during the term of the agency contract. The courts are entitled to apply article 322 of the Civil Procedure Code, according to which the court may award the relevant sum of money at his own discretion and on the basis of all circumstances of the case, if proving the exact amount of claim is impossible or significantly difficult.  


Olga Stejnert-Roszak, IDI agency & distribution country expert for Poland.

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