Germany

Indemnity or compensation or both

Indemnity

Calculation of indemnity/compensation

Capped at a maximum of the average of the annual commission earned by the agent over the last 5 years of the agency if shorter, over duration of agency

Pre-termination commission

Yes

Post-termination commission

Yes

Back commission

Yes

Other entitlements

Right to demand an extract from the books concerning all transactions for which agent has a claim

agentlaw.co.uk. wishes to thank Weitnauer Rechtsanwalte Solicitors for its contribution to this section

Restrictive Covenants

Implementing Legislation

German Trade Law Act (Handelsgesetzbuch – HGB)

1) Under German law is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?

According to section 86(1) of the German Trade Law Act (Handelsgesetzbuch – HGB), any self-employed agent has the general duty to look after the interests of his principal. This duty implies, among other things, an obligation of non-competition. It is, therefore, not necessary for a restraint of trade clause operating during the agency agreement to be agreed between the principal and agent as, by law, it is inherent in every agency agreement.

This general restraint of trade clause, which is inherent in every agency agreement can be extended by the parties. However, any restraint of trade clause which exceeds the due protection of the principal’s interests may be subject to German Antitrust Law.

2) Under German law is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?

It is possible to agree on a restraint of trade clause operating following the termination or expiry of the agency agreement as well.

Section 90(a) of the German Trade Law Act defines the conditions for a restraint of trade clause operating following the termination or expiry of the agency agreement. A restraint of trade clause is only valid if:

1. it relates to the geographical area or the group of customers and the geographical area entrusted to the commercial agent and to the kind of goods covered by his agency under the contract;
2. it was agreed before the expiry of the agency agreement;
3. it is in writing;
4. an official copy of the agreement, signed by the principal, is handed to the agent; and 
5. the restraint of trade agreement does not exceed two years after the termination of the agency agreement.

During the time the restraint of trade is enforced, the principal has to pay a proper indemnity to the commercial agent. This, however, is no precondition for the validity of the restraint of trade agreement. If there is no such regulation in the agreement, the obligation for the principal to pay a proper indemnity results directly from section 90(a)(1)(3) of the German Trade Law Act.

Finally, according to section90(a)(4) of the German Trade Law Act, all requirements mentioned above which are in favour of the agent are mandatory.

agentlaw.co.uk. wishes to thank Kleiner Rechtsanwaelte of Stuttgart for its contribution to this section