Act no. 56 of 19 June 1992 relating to Commercial Agents and Commercial Travellers.
Indemnity or compensation or both
Calculation of indemnity/compensation
The maximum is the average of the annual commission earned by the agent over the last 5 years of the agency if shorter, over duration of agency.
1) Is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
The principal rule under Norwegian law is freedom to contract. Thus, a commercial agent and his principal may agree on a restraint of trade clause during the continuance of the agency agreement. Both the character and scope of the clause have to be reasonable. An unreasonable non-competition clause can be adjusted or set aside in accordance with Section 36 or 38 of the Contract Act (4/1918). However, the Norwegian Supreme Court has not yet adjusted or set aside a restraint of trade clause in an agency agreement on the basis of unreasonableness.
Regardless of whether the parties have agreed upon a concrete restraint of trade clause, the background law can imply restraint of trade to a certain degree. Pursuant to section 5 of the Norwegian Agency Act (56/1992), a commercial agent shall look after his principal’s interests dutifully and in good faith, as well as comply with any reasonable instructions given by the principal. In some cases this implies an obligation of non-competition, but not always. Whether the agent’s actions constitute a breach of his obligations under section 5 depends on a concrete evaluation of the agency agreement in question, the relevant business sector and the instructions given by the principal. As an example, an attempt to transfer the principal’s customers to another principal has been deemed as disloyal conduct by the Norwegian Supreme Court (Rt.1970/718).
Section 5 implements article 3 and 5 of the Self-Employed Agents Directive of 1986 (86/653/ECC). It is an invariable rule and the parties may not derogate from the provisions of this section.
2) 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?
Under Norwegian law, a commercial agent and his principal may agree on a post-termination restraint of trade clause. This must be put in writing and can last for up to two years after termination or expiry of the agreement. It will not be binding on the agent where it unreasonably restricts the agent’s opportunity to make a living or goes further than is necessary to protect the principal against competition.
agentlaw.co.uk would like to thank Kluge Advokatfirma DA for its contribution to this section.