Drafting a commercial intermediary contract

You want to organize your distribution by using commercial intermediaries: brokers, agents, commercial agents, commission agents.

You need secure contracts that allow you to fully execute your commercial policy, protecting your image vis-à-vis your customers.

These contracts are intended to anticipate, deter and allow the settlement of disputes in the best possible conditions.

If at the conclusion of the contract between the commercial intermediary and the network organizer, the trust that prevails and the enthusiasm to start a distribution relationship sometimes lead to underestimating the content of the contract, it is indeed the one that will be called upon in the event of subsequent difficulties of execution and at the end of the contract, in particular of mandate or agency, when the interests of the parties will be totally divergent, concerning the commissions remaining to be paid and the customer compensation in particular.

Gouache Avocats, as a lawyer in law of the commercial agent, and because of his in-depth knowledge of all intermediary contracts, will ensure:

the correct qualification of the chosen contract: brokerage, mandate, commercial agent, commission;

the absence of the possibility of reclassifying this contract into another type of contract (for example, a brokerage contract in a mandate, or a mandate in a commercial agency, the latter point being particularly delicate to manage and technical since the termination of the4 June 2020 of the Court of Justice of the European Union (CJEU) (Case C-828/18 Trendsetteuse SARL v DCA SARL),

the compliance of all the clauses of the contract with the mandatory provisions of the law: for example, the status of commercial agents of Articles L. 134-1 et seq. of the Commercial Code, or of the Monetary and Financial Code for credit brokers.

Beyond this requirement which is due to you, but which it must be remembered that it makes it possible to ensure the solidity of your distribution network and is a determinant of the valuation of your company, Gouache avocat will allow your contract to reflect your commercial policy and ensure that you can supervise the commercial action of your commercial intermediaries:

use of your commercial media,

use of your commercial speeches,

respect for your prices,

adherence to your sales promotions,

use of your pre-contractual consumer / customer information documents,

collection of the information necessary for the opening of customer accounts,

collection of the supporting documents necessary for the opening of accounts receivable, the execution of contracts, the collection,

enrolling in a loyalty program,

Satisfaction measurement

It is the loyalty of your business practices that depends on it, as well as the image of your brand with your customers.

Our Method for Drafting a Commercial Intermediary Agreement

There is no standard contract, no template. Beyond the clauses necessary for the qualification of each intermediary contract, all the other clauses are intended to reflect your choices:

commercial policy;

organization of your distribution network.

We therefore ask you first of all about what is important to you, in terms of what you expect from your distributors.

This approach is organized around a comprehensive questionnaire that structures our exchanges around concrete themes. For each question, we present the possible response options, their advantages and disadvantages, share our market benchmarks and make our recommendations.

This method guarantees you a brokerage, mandate, or sales agent or commission contract that is personalized and effective with regard to your commercial policy.

To delve deeper: The content of a sales agent contract

There is no “template” for a sales agent contract. Moreover, a commercial agent contract can perfectly well be verbal, and therefore not be the subject of any formalisation.

This is not in anyone’s interest: first the proof of his talenaked will be difficult, if not impossible, and neither party will be able to establish its rights. Then, you will not have any duplication clause of your commercial policy and your risks of damage to your brand image will be maximum. Finally, no rules guiding the relationship will be accessible to the agent, which will quickly be detrimental to the relationship, as everyone is unaware of the agreed standard of behavior. It should be noted that the agent must produce a copy of his commercial agent contract if he must register in the register of commercial agents.

The sales agent contract must include at least the following clauses.

The sales agent contract must list the products and services that the agent is responsible for selling. This makes it possible to ensure that the commercial agent will represent the entire range of the principal, without omission or on the contrary to segment the products and services to be presented according to the categories of customers to whom the commercial agent must present them.

Of course, the market is not static and the promoter of the distribution network will regularly change the characteristics of products and services, add new ones and take them away. The catalogue of products and services represented by the sales agent must therefore be able to evolve, which the contract must provide for.

This definition will serve as a basis for any exclusivity of the commercial agent. The latter is prohibited from concluding a representation contract with another mandate.

The geographical extent of the area on which the commercial agent will actively prospect must be precisely defined: list of municipal territories, administrative districts, legendary map.

This definition makes it possible to ensure optimal organisation of the exploitation of the market by agents. It does not mean, however, that commercial agents benefit from an exclusive representation of products in this territory: this exclusivity is optional.

If stipulated, the principal shall not use another commercial agent for the within the geographical limits assigned exclusively to the commercial agent. It is an intra-brand competition protection for the sales agent. From the principal’s point of view, it is then necessary to ensure that the sales agent is not underperforming. The question of defining contractual performance objectives is then asked.

In the same way, it is possible to define categories of customers that the sales agent will have to visit. This makes it possible to optimize the organization of distribution and to ensure that the sales agent focuses on canvassing the customers targeted by his principal.

The commercial agency contract is a particular form of mandate, specifically defined by law.

Like any mandate, it can be “suppletive” or “imperative”.

The substitute mandate is the one that will leave the agent free from the conditions of execution of his mission.

If the principal wants to duplicate a commercial policy precisely, if he wants to give himself any guarantee that no deceptive or unfair commercial practice will be implemented by the commercial agent, if he wants to ensure that his brand is perceived in a homogeneous way by customers, he will have every interest in stipulating an imperative mandate.

The clauses of the contract will set the scope and degree of control of this commercial policy and this image: marketing material used, graphic charter of media, logo typing of vehicles, frames of commercial speech, the scope of what can be lawfully framed is wide and the firm will bring in this regard all its experience in the drafting of your commercial agency contract.

the contract may be for a fixed or for an indefinite period In practice, it is often of indefinite duration. In this case, either party may terminate it at any time, subject to prior notice, in accordance with Article L.134-11 of the Commercial Code.

The period of notice shall be one month for the first year of the contract, two months for the second year started, three months for the third year started and subsequent years. Where there is no agreement to the contrary, the end of the period of notice shall coincide with the end of a calendar month.

The parties shall not agree on shorter periods of notice. If they agree on longer periods, the notice period provided for the principal must not be shorter than that provided for the agent.

These provisions shall not apply where the contract is terminated by a serious misconduct on the part of one of the parties, or due to an act of God.

It can be seen here that the contract can adjust certain characteristics of the notice period.

The rules of the mandate (Articles 1999 and 2000 of the Civil Code) which provide that the principal covers the costs and losses of the agent in the exercise of the mission are applicable if they are not excluded by the commercial agency contract.

The financial consideration for the performance of the commercial agent’s mission is not defined by the Commercial Code.

The contract is therefore free to organise the remuneration:

fixed or proportional commission,

definition of the basis of the proportional commission,

rate, rate escalation, amounts, discounting amounts,

quality indicators that can be used to modulate the commissioning,

on commission in the event of the achievement of objectives,

liabilities: at the time of ordering or collection,

Commission statements

payment terms.

These clauses must be clearly drafted and not subject to interpretation.

Sometimes a duke-belief clause is stipulated.

A clause of belief has the effect of constituting the commercial agent guarantor of the payment of the price of the contracts that it intermediates.

In the event of non-payment of a delivered product or a service performed by a client of the principal, the latter may then request payment from the commercial agent, who benefits from a recourse action against the defaulting client.

With the remuneration clause, it is fundamental to ensure the attractiveness of the distribution network for sales agents and attract the best salespeople. This clause is indeed essential to the patrimonialisation of the commercial agency. It allows the agent to create enterprise value. This value is directly related to the assignability of the contract, which guarantees the sales agent future income.

The assignment of the agency contract is provided for by theArticle L134-13 of the Commercial Code which provides:

according to an agreement with AMER SPORTS FRANCE, the Agent assigns to a third party the rights and obligations he holds under this agency agreement.

The terms of assignments must be clearly mentioned in the contract.

The principal cannot accept that the contract is transferable without any control, because he has concluded the contract only in consideration of the qualities of the agent, essential to the representation of his products. It is therefore desirable that a clause of intuitu personae and approval of the assignee of the agency contract be stipulated. The transfer will then be possible, but with regard to objective criteria allowing the principal to ensure that the transferee has the qualities required to exercise the mandate that was entrusted to the transferring commercial agent. These criteria are specified in the clause and a standard assignment procedure is provided for.

It should be noted that the contract may also authorize the agent to enter into commercial sub-agency contracts.

The objective clause is lawful in principle. Objectives must be quantifiable (e.g. turnover, margin) in order to be sanctioned. To avoid contesting the clause, for example on the basis of abuse of rights, the objectives set must be reasonable, so that a normally diligent commercial agent must be able to achieve them.

The commercial agent contract does not follow any strict formality. However, to provide a good basis for the relationship between the principal and the commercial agent, it is essential to include all the important elements. Only in this way will possible disputes be avoided. To have a well-written contract, it is advisable to hire a commercial business professional.

It is essential to draft all the clauses to define the applicable law and the competent jurisdiction in case of conflict, but also to settle everything that may arise from the international nature of the contract: language of exchanges and media, currency of payment, international guarantees of payment of prices, withholding taxes on commissions, etc.