a serious fault on the Agent's part;

Your sales agent is underperforming and you want to end the relationship?  

This could cost you dearly. 

Indeed, Article L.134-12 of the Commercial Code provides that the commercial agent is entitled, in the event of termination of his relations at the initiative of the principal, to a customer compensation.  

This compensation is justified by the nature of the mandate of common interest of this contract. The common goal of the parties is the development of a clientele, each developing its business by developing the common activity. At the end of the contract, the commercial agent loses the benefit of the patrimonial value attached to the clientele that he has helped to develop, while his principal retains the operation. The purpose of the termination indemnity is to compensate the commercial agent for this loss.

 In accordance with Article L.134-16 of the Commercial Code, any clause or agreement contrary to the provisions of Articles L.134-12 and L.134-13 of the Commercial Code is deemed unwritten. These provisions are therefore of public order, and it is not possible to derogate from them. The case law thus regularly recalls that any clause that would have the purpose of making the commercial agent waive in advance his right to his compensatory indemnity at the end of the contract is ineffective, whether the clause is included in the commercial agent contract or in a separate act (Cass.com, October 21, 2014, No. 13-18370

).
 

Your main loophole: the sales agent who has committed serious misconduct loses his right to customer compensation.

 However, in accordance with settled case law, the parties cannot contractually define the concept of serious misconduct. This is defined by case law as misconduct “undermining the purpose of the mandate of common interest and making it impossible to maintain the contractual relationship“. (Cass. Com., 15 October 2002 No.00-18.122.) 

The characterization of serious misconduct being likely to deprive the commercial agent of his right to compensation, serious misconduct is assessed restrictively by the case   

law.
 

It is up to the principal who invokes the existence of a serious fault of the commercial agent to exonerate himself from the payment of the indemnity at the end of the contract to prove it.  

Gouache Avocats will help you identify what could constitute serious misconduct and whether your decision is taken sufficiently in advance of its implementation to build and characterize this serious misconduct. 

The fault depriving the agent of his right to compensation must be raised without delay by the principal (Cass. com., 8 Dec. 2009, No. 08-17.749). 

It is therefore necessary to act as soon as the fault occurs if possible. 

Attention, since a judgment of November 2022 (Cass. com., 16 Nov. 2022, No.21-17.423), on the contrary, it should be noted that serious misconduct discovered after the termination of the contract does not prevent the commercial agent from receiving his compensation. This is a stricter interpretation, in line with the position of the European courts (for an application see CA Poitiers, November 7, 2023, No.22/01754).

 We are therefore not looking for serious misconduct after the termination of the commercial agency contract but before. Gouache Avocats is here to help you find it. 

To deepen: some cases of serious misconduct
 

The main cases of serious misconduct are:
  

• Buyer and reseller of your products; 

The mere decrease in the sales agent’s turnover does not in itself constitute serious misconduct on the part of the agent (Cass. Com. 14 December 2010 No.0-17318). For the decline in the commercial agent’s activity to constitute serious misconduct, the principal must demonstrate that it is a direct result of the agent’s behaviour.

  Thus, the serious misconduct of the agent is characterized when the decline in turnover results from the prolonged absence of customer prospecting by the agent (Cass. Com. October 12, 2010 No. 09-16886), the discontinuation of trade shows and visits from certain regular customers (Cass., Com., June 9, 2015, No. 14-14.396) or when it results from a manifest and widespread disinterest of the commercial agent in the execution of his mandate (Cass. com. 9-12-2014 No. 13-28.170).
 

• who are the leaders, what are the motivations of this group, is it homogeneous and solid?  Com. 24 May 2011 No.10-16969);
    

In accordance with Article L.134-3 of the Commercial Code, the commercial agent may accept without authorisation the representation of new principals, but it may not accept the representation of a company competing with that of one of its principals without the latter’s agreement. 

The sale of products that are complementary and not substitutable for those of the principal does not constitute a violation of the principal’s non-competition obligation (Cass. Com, November 10, 2015, No. 14-14820). 

But there are a multitude of serious faults recognized by case law:
  

• The violation of the approval clause stipulated in the agent’s contract (Cass. com., June 29, 2022, No. 20-13.228);
   

• Intermediary (see our services to help you choose the most suitable intermediary contract). 

• what are the claims? 2021, No. 19-11.644);
   

• The concealment of a parallel activity in violation of his duty of loyalty (Cass. com., 8 Oct. 2013, No. 12-24.064);
   

• The fact of concealing that the agent was not only acting for the principal on the occasion of the marketing of its products, but also, for a commission, for one of its suppliers on the occasion of the supply of these products (Cass. com., 20 Sept. 2016, No. 15-12.994);
   

• Overriding the principal’s refusal to prospect a specific client (Cass. com., 4 Oct. 2016, No. 15-17.992);
   

• what are the claims? 2000, No. 97-22.482);
   

• Failure to prospect customers from one of the two countries whose operation was contractually entrusted to it (CA Paris, 17 Feb. 2011, No. 06/07930);
   

• what are the claims? 2001, No. 98-13.656);
   

• Attacking a customer in front of customers and employees of the principal, during an evening organized to retain the principal’s customers (Cass. com., 11 Feb. 2003, No. 01-16.484);
   

• The fact that the agent canvassed for himself a client while as a commercial agent he had to canvass a client only on behalf of his principal (CA Aix-en-Provence, March 28, 2013, No. 11/13236);
   
• The production of a false commercial agent contract in order to obtain commissions and indemnities (Cass. com., 29 Nov. 2011, No. 10-25.874).