The breach of contract of an agent commercial is a crucial step in the professional life of this independent. This marks the termination of contractual relations between the principal and the commercial agent and entails numerous consequences. Among these, notably, the question of right to compensation which the commercial agent must be entitled to if he/she has not resigned or committed a serious breach of conduct. The question of his compensatory damages of notice, the right of succession of the commercial agent , even the obligation to post-contractual non-competition clause prohibiting the commercial agent from selling, after the termination of his contract, products or services competitive to those he sold on behalf of his former principal. In some cases, clauses damages and compensation may furthermore be claimed in the event of sudden or abusive termination.
For all these reasons, the breach of commercial agent contract therefore constitutes a delicate moment which requires the accompaniment of experts to avoid any errors.
Specialized in commercial agent law , the Cabinet AUMANS AVOCATS Cabinet AUMANS AVOCATS presents to you the terms of termination of the commercial agent contract and the elements to take into account on this occasion (termination letter, template, explanations…).
The termination clauses of the contract
The termination of the commercial agent agreement may be the effect of one or the other party to the agreement. The commercial agent, like the principal, may therefore terminate it contractual relationship subject to certain conditions.
It is therefore initially necessary to distinguish according to whether agency agreement is fixed-term or indefinite.
If the contract was concluded for a fixed term (CDD) and does not contain any tacit renewal clauses, it is deemed to terminate at the expiry of its term. The contract will, however, be converted to an indefinite-term contract if the parties decide to continue to perform the service beyond the initially agreed term.
If the contract is for a fixed term, unless otherwise specified not possible to terminate it before its expiry unless serious breach committed by one or the other of the parties.
The party which has initiated the termination of the commercial agent’s contract before its expiry date, absent a serious breach or invoking a serious breach which will not be upheld by the court, may be held liable to compensate the other party for damages suffered by its counterparty due to the premature termination of the contract.
If this breach results in this way from an initiative of the client, he may be held liable to pay the sales agent commissions that he would normally have been entitled to receive during the remaining term of the contract until its contractually provided term.
If the contract was concluded at for an indefinite term (IDT) , the termination may occur at any time, the question being solely whether the termination, whether initiated by the principal or the commercial agent, occurs or not serious misconduct , in which case, no prior notice will need to be given.
In the event that no formalities are provided by the Commercial Code to terminate the commercial agent agreement, a registered letter or a registered letter would nevertheless be advisable. Just to provide certain deadline for termination and to specify the grounds invoked in support of termination if applicable.
Clearly, in the event of a wrongful termination of the contract, it will occur without a formal termination letter.
That is the case, among other things, if the principal fails to provide the commercial agent with the necessary resources to perform its contract normally. For example, by failing to pay the commercial agent their commissions or by omitting to provide them with the necessary information to properly exercise their mandate (catalogs, prices, product characteristics, etc.). In this case, there will not be a termination letter but one whereby the agent will acknowledge the termination of exclusive liabilities of its principal. In such a case, the commercial agent must act with caution: if the acknowledgement of termination is not justified, it will then be considered resignation on the part of the commercial agent.
Un notice period must be observed for all termination of a commercial agent’s contract without gross negligence in accordance with Article L.134-12 of the Commercial Code :
- In France, the period is set for the first year of practice to a one month’s notice. It is extended by one month for the second year, then by an additional month from the third.
- For the Belgium and in most other countries, the notice period is longer from the fourth year as it increases by another month for each year of service. And this, up to the sixth year of the contract.
Finally, any termination of an employment contract for a sales agent may be accompanied by a non-compete clause post-contractual. This clause will restrict the sales agent during the exercise of his activities for a a period of two years at most.
What are the elements to consider in a commercial agent contract termination letter ?
Several elements must be taken into account for drafting a contract termination letter sales representative.
If the termination is initiated by the sales agent for personal convenience, i.e., without having any grievances to assert against the principal justifying the termination of the contract , the termination letter may take the form of a clean and simple resignation letter. Of course, in this case, the sales agent will not be entitled to any end-of-contract payment. This will be the case if the sales agent resigns without being able to invoke the exceptions to the right to end-of-contract payment provided for in Article Article 134-13 of the Commercial Code.
Given the above, in such a case, it may therefore be interesting for the agent to consider a possible transfer of his card from one sales agent to another sales agent rather than resigning outright.
However, if the agent resigns due to his age, his health condition, etc. and that these grounds are validly invoked, he may then claim the end-of-contract indemnity notwithstanding his resignation. In this case, the resignation letter must have been drafted with care in order to be effectively invoked by the commercial agent to assert his entitlement to indemnity.
In the absence of serious fault invoked, the contract termination letter for a sales agent must take into account the notice periods to take effect, in other words for the termination of the contract to occur.
Without exhaustive detail, the elements to be disclosed in the termination letter will include, among others, the following (to be adapted, of course, according to the various scenarios) :
- Sender’s details ;
- Recipient details ;
- References of the contract invoked (date of signature of the contract, title, or even subject, etc.) ;
- Subject of the letter (to terminate the contractual relationship) ;
- Reasons for termination if applicable ;
- Expected date of termination of the contract, taking into account the notice period ;
- Modes of compensation for the agent, if applicable ;
- Date and place of establishment of the letter ;
- Signature.
Commercial Agent Contract Termination Letter Template
Providing a model for termination of a commercial agent contract in abstracto has no sense as long the cases of circumstances justifying the termination the terms of a commercial agent contract may vary.
The the drafting of such a letter is of importance such is the case where the use of standard mail is not possible. The termination letter must, on the contrary, contain all the key elements to be asserted and to be established carefully on a case-by-case basis.The AUMANS AVOCATS is therefore at your disposal to analyze your situation with regard to your contract of business agent, and to establish with you, where appropriate best conditions all correspondence required, whether it concerns letter of termination of your business agent contract or a formal demand letter, etc.
