Provisions governing commercial agency contracts are contained in Act No. 89/2012 Coll., the Civil Code.
The notice period for the first year of the agency is one month, two months for the second year and three months for the third and subsequent years.
In the case of an exclusive agency:
- each party is entitled to terminate the contract for failure to meet the agreed (or a reasonable if not agreed) volume of transactions;
- the agent may terminate the contract with immediate effect if the principal uses the services of another agent;
- the principal may terminate the contract with immediate effect if the agent performs the same activity for another principal.
Indemnity or compensation or both
The former indemnity which was available to agents has been replaced by a “special remuneration“. Such special remuneration has to be demanded by the agent within one year of termination of the contract.
Calculation of indemnity/compensation
Special remuneration may not exceed the average annual commission over last 5 years or, if the duration of the contract was less than 5 years, over the contractual period. If the duration of the contract was less than a year, the special remuneration cannot exceed the total commission for the entire duration of the contract.
The calculation of the special remuneration is based on:
- the advantages the principal continues to derive after termination of the contract from the business relations established by the agent with new customers or significantly increased with existing customers; and
- the equitability of the special remuneration taking into account all circumstances of the case.
The parties may agree to the restraint of trade clause with several restrictions set out by law.
The agent has the right to access such information of the principal (including the principal’s books) which is required to verify the amount of the commission due to that agent.
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