During the second half of 2024, the Court of Cassation rendered several significant decisions, notably concerning the termination of commercial agent contracts, both with respect to the grounds justifying the cessation of the relationship and regarding the resulting indemnity consequences. We will below review four significant judgments illustrating these specific points.
Serious breach, a retroactive termination cannot be justified by a continued contract
In a ruling of December 4, 2024 ( Cass. com, n° 23-16.9621), The Court recalls that serious deprivation of compensation may only be established if it makes it impossible to maintain the contract.
In the present case, an agent was seeking payment of commissions and termination compensation after having initiated judicial termination of the contract, invoking several breaches by his principal. The latter, in defense, alleged gross negligence on the part of the agent ( namely a lack of financial independence ) the court of appeal had fixed the termination date to a prior date, in 2018, based on this fault. The Court of Cassation overturned this analysis and held that the contract continued to produce its effects well after the date retained, that the principal had even expressed, in 2019, his willingness to continue the relationship, and that the activity, although attenuated, had continued until 2021. Consequently, the alleged fault of the agent could not have been qualified as gross negligence, as it had not rendered impossible the maintenance of the contractual link at the date retained.
The serious breach must have caused the termination to deprive the employee of their compensation
By a decision of December 4, 2024 ( Cass. com, n° 23-19.8202), The Court recalls a fundamental requirement regarding commercial agents: a serious fault only deprives the agent of their compensation if it actually caused the termination of the contract.
In this case, an agent had his contract terminated by the principal for repeated breaches ( errors on construction sites, miscalculated commissions, customer dissatisfaction ). The agent was claiming the termination indemnity provided for in Article L134-12 of the Commercial Code, which the principal refused, citing a serious breach. The letter of termination only mentioned the accumulation of faults, without precisely characterizing a determining breach. Furthermore, some grievances held by the judges were not even mentioned in this letter. The Court therefore quashes the appellate judgment and specifies that a breach prior to the termination, not mentioned in the notification and discovered subsequently, cannot justify the exclusion of the right to indemnity.
This solution confirms the importance of the principal’s motivation for termination, otherwise the benefit of the gross negligence exception will be lost.
The marketing approval of the products justifies the termination initiated by the agent
In a decision of November 14, 2024 ( Cass. com, n° 23-15.1463), The Court of Cassation reminds that the commercial agent may take the initiative to terminate the contract without losing his right to compensation when the termination is caused by circumstances attributable to the principal.
In the present case, the agent represented two ranges of prostheses, the marketing of which was successively suspended: one by decision of the client, and the other following the non-renewal of “CE” certification. The client then offered a substitute product, which the agent refused, before notifying the contract termination. The Court of Appeal rejected all compensation, finding that the agent had initiated the termination.
The Court of Cassation censures this analysis and considers that the disappearance of the products forming the exclusive subject of the contract rendered it inoperative and that this situation resulted from facts attributable to the principal. Furthermore, it emphasizes that the contract linked the agent only to defined ranges and that he remained free to refuse any representation of new products. Consequently, the refusal of the substitute product could not be attributed to him and the termination indemnity was indeed due by the principal.
The illness or age may justify a termination initiated by the agent, subject to conditions
In a ruling of November 14, 2024 ( Cass. com, n° 23-16.9804), [The Court of Cassation addresses a sensitive question: is the termination indemnity paid to the agent in the event of termination due to their health condition? Article L134-13 of the Commercial Code indeed provides an exception: even in the event of termination initiated by the agent, the indemnity is maintained if the agent can no longer pursue their activity for reasons of health, age, or infirmity.].
In the present case, the agent invoked debilitating fibromyalgia and had notified his resignation with notice. The appellate court rejected his claim for compensation, finding that his condition did not preclude any professional activity, particularly due to his political engagement or certain subsequent interventions following the termination.
The Court of Cassation quashed this analysis: it is not total incapacity to exercise professional activity that matters, but the reasonable impossibility of continuing a sales agent activity, given its requirements. In the absence of such a concrete analysis, the compensation could not be denied. This decision strengthens the protection of the agent in cases of forced departure for health reasons.
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Source:
- https://www.legifrance.gouv.fr/juri/id/JURITEXT000050762224?init=true&page=1&query=23-16.962&searchField=ALL&tab_selection=all – Court of Cassation, Civil Chamber, Commercial Chamber, December 4, 2024, 23-16.962, Unpublished ↩︎
- https://www.legifrance.gouv.fr/juri/id/JURITEXT000050762227?isSuggest=true – Court of Cassation, Civil Chamber, Commercial Section, December 4, 2024, 23-19.820, Unpublished ↩︎
- https://www.legifrance.gouv.fr/juri/id/JURITEXT000050761420 – Court of Cassation, Civil Chamber, Commercial Chamber, November 14, 2024, 23-15.146, Unpublished ↩︎
- https://www.legifrance.gouv.fr/juri/id/JURITEXT000050784069 – Court of Cassation, Civil Chamber, Commercial Section, November 14, 2024, 23-16.980, Unpublished ↩︎
