Sales Agent: an original indemnity calculation

The judgment rendered by the Court of Appeal of Rennes on May 27, 2025 in the case between Mr. [V] and the company Solimco offers significant insight into two central issues of the status of the commercial agent applied to the real estate field: the validity of the contractual clauses aimed at capping the indemnity for termination of contract and the modalities of calculation of this indemnity by the judge. This decision, although partly part of an established body of case law, is distinguished by its pragmatic and original approach to the assessment of damage in a sector with irregular activity such as real estate.

In this case, a commercial agent contract was concluded on February 1, 2016. The principal put an end to it by letter of 19 June 2022.

We will not address the issues of notice, very factual. Our analysis will be structured in two stages. We will first examine the Court’s position on the nullity of the indemnity limitation clause, which constitutes a vigorous reaffirmation of the public policy nature of the agent’s right to compensation

The nullity of the clause limiting the compensation: a confirmation of the public policy nature of the status

The Court of Appeal of Rennes, in its decision, unambiguously dismisses the clause of the contract which aimed to cap the termination indemnity. This position is firmly anchored in the guiding principles of the status of commercial agent, the protective nature of which is constantly recalled by case law.

The intangible principle of the right to compensatory compensation

The right to termination indemnity is the cornerstone of the status of the commercial agent. Provided for by Article L. 134-12 of the French Commercial Code, it aims to compensate the damage suffered by the agent due to the loss, for the future, of the income derived from the clientele that it has contributed to create or develop in the common interest of the principal. The principal, in fact, retains the benefit of this patrimonial value after the termination, thus justifying compensation for the agent.

This right to compensation is a matter of public policy, as specified in Article L. 134-16 of the same Code. Any agreement to the contrary shall be deemed unwritten. The case law is particularly strict on this point, systematically invalidating the clauses that aim to abolish or reduce this right on a flat-rate basis even before the damage has arisen. The right to compensation is due solely because of the termination of the contract attributable to the principal, without the agent having to prove the very existence of damage. Only the exceptions exhaustively listed in Article L. 134-13, such as the serious misconduct of the agent, may deprive him of this indemnity. As for the amount of this compensation, the principle is that it must compensate the entire damage suffered by the agent.

The sanction by the Court of a clause deemed non-recompensatory

In the case commented on, the contract provided for limiting the compensation to “a maximum amount equal to 3 times the monthly average of the commissions received by the agent over the last 12 months”

The Court of Appeal of Rennes rejects the application of this clause in very clear terms. It considers that if the parties can agree in advance on compensation, it is on the condition that it “provides full compensation for the damage suffered by the commercial agent”. It specifies that”it follows that if the parties can agree on compensation cumulating with that which is legally provided for, any clause providing for different compensation is null and void”. In the present case, the Court considers that the clause, which results in compensation equivalent to three months of commissions after more than six years of relationship, “is not likely to compensate for the damage suffered by Mr. [V]”

In doing so, the Court does not condemn in principle any clause of advance fixing of compensation. Rather, it recalls the criterion of their validity: the amount provided for must be an early and serious assessment of the damage, and not a simple derisory ceiling aimed at circumventing the public policy nature of Article L. 134-12. A clause that would result in compensation manifestly lower than the assessment of the damage suffered by the agent is thus deprived of effect, leaving it to the judge to fix the amount of compensation himself. It is on this issue that the decision is original.

The calculation of the compensation: between the uses of the profession and the sovereign power of appreciation of the judges

Once the limitation clause was removed, the Court had to calculate the compensation. His reasoning illustrates the room for manoeuvre available to trial judges to adapt to the specificities of each species, even if it means departing from traditional calculation methods, namely two years of commissions.

Rejection of the calculation bases proposed by the parties

The Court successively rejected the two calculation proposals. On the one hand, it rejects the agent’s request, which claimed two years of commissions calculated over the period 2018-2020 on the grounds of a decline in activity in 2021 due to the health crisis.

On the other hand, and as seen previously, it discards the calculation method provided for in the contract and invoked by the principal, deeming it not to comply with the principle of full compensation.

The setting of a “fair sum” based on recent activity

The usual practice of the courts is to pay the equivalent of two years of commissions. The question then arises of the reference years to be used as a basis for calculation.

To assess the damage, the Court decides to rely on a reference period that it considers relevant: the last two effective years of the relationship, from October 2020 to October 2022. She therefore refuses to rule out the COVID period as requested by the agent. It justifies this refusal to exclude the COVID period on the grounds that “the activity of commercial agent in real estate matters is by nature insecure and, as the court notes,” non-recurring “. It does not depend on a sustainable clientele. The prejudice of Mr. [V] must be assessed in the light of this necessarily irregular chosen activity “. The finding of uncertainty may seem accurate. This has been illustrated by the violent decline that the market has suffered since the end of 2022. However, it could be objected that COVID is an exceptional situation with no specific link to the real estate market chosen by the agent. And most importantly, that COVID has stopped. However, the compensation is intended to compensate for the commissions that would have been collected in the future if the activity had been maintained. COVID no longer has an impact on this activity sinceit has ceased, as have the measures taken by the authorities on this occasion. It could therefore be argued that the future compensation must be calculated on the basis of commissions paid without taking into account this exceptional period.

Once the basis has been determined, the Court does not order the principal to pay the equivalent of two, or even one year’s commissions on the basis of this average. It grants Mr [V] a “fair sum of 60,000 euros”, stating that this amount “corresponds to approximately one year of gross commissions”. But, and this is a lack of the decision, it does not include any explanation for the choice to deviate from the usual practice of granting two years’ commission. If the Court of Appeal had wanted to take into account the specificities of the real estate market, it might as well have considered that it, given its current difficulties, which are not the fault of the agent, will probably not allow the agent to quickly find an equivalent level of remuneration. On the contrary, it could have advocated maintaining the principle of paying two years’ commission.

This approach demonstrates the sovereign power of the trial judges in determining the quantum of compensation. While the practice of allocating the equivalent of two years of commissions is often cited as a reference, in this case, the Court moderated the amount by taking into account the nature of the activity and by describing the activity of real estate agent as “insecure” and “non-recurring”, not depending on a “perennial clientele”

This judgment is an important reminder that if the right to compensation is of public order, its amount is not automatic. The judges retain full latitude to assess the damage in concreto, deviating from custom when the specificities of the contractual relationship or the sector of activity concerned justify it. It will be interesting to see, in the event of an appeal in cassation, whether or not the Court of Cassation validates the reasoning held by the appeal judges. For practitioners, this decision underlines the importance of not merely invoking a use, but providing the judge with all the elements to assess the reality and extent of the harm suffered by the agent.