The main source of legal protection for commercial agents in Switzerland is derived from statute and is contained in The Code of Obligations.
An agent is defined by The Code of Obligations as a person who undertakes, on a permanent or part time basis, to negotiate the conclusion of business for one or more principals or to conclude business on their principal’s behalf, without being dependent on a contract of employment from the principal.
Unlike the Commercial Agents Regulations in the UK, the Code of Obligations includes the provision of services as well as goods in commercial agency contracts.
The Code of Obligations permits the agent and principal to contract out of certain provisions. As such, certain statutory provisions can be overridden by the contract itself. There also exist mandatory provisions to protect the position of the agent, and therefore these cannot be contracted out of.
The Code of Obligations does not exclude agents whose agency activities are secondary i.e. their activities are not the primary purpose of their agreement with the principal.
The Code of Obligations provides statutory notice periods to which the agent is entitled on termination. The statutory period of notice required depends upon the duration of the agency contract.
Where the agency contract is not agreed for a specific duration, and a fixed duration does not result from the objective of the agency contract, it can be terminated in the first year of the contract by either party giving an advance notice of one month. This notice takes effect at the end of the following month. The parties may agree to a shorter notice period for termination, however this must be stipulated in writing in the agency contract.
Where the contract has lasted for at least one year, it can be terminated with an advance notice of two months, which takes effect at the end of the next quarter. The parties are free to agree to a longer notice period for termination.
The terms of notice must be the same for both the agent and principal.
Under the Code of Obligations, a terminated agent is entitled to an indemnity. The commercial agent shall be entitled to an indemnity if and to the extent that: (i) he has appreciably increased the number of the principal’s clients; (ii) the principal, or its successor in title, benefits from business connections with these clients even after the end of the agency contract; (iii) unless it is inequitable to provide an indemnity to the commercial agent. This provision cannot be removed by the agency contract.
The amount of the indemnity cannot exceed the annual net profit resulting from the agency contract corresponding to the average of the last five years, or to that of the whole duration of the contract if it has lasted for less than five years.
An indemnity is not payable where the agency contract is terminated for just reasons.
Under Swiss law a terminated agent is entitled to the following commission:
Pre-termination commission, i.e. commission on transactions concluded during the agency contract (including all orders accepted by the principal up to the date of termination, even if the transaction is performed by the principal only after termination). It is possible for the parties to exclude this in the agency contract.
Post-termination commission, but only if it is expressly provided for in the agency contract. Post-termination commission is an agent’s entitlement to commission on transactions concluded within a reasonable period after the agency contract was terminated. The relevant transactions are those which are mainly attributable to work done by the agent during the agency contract and which are entered into within a reasonable time of termination.
Back-commission, i.e an agent’s entitlement to commission on orders obtained by the agent and accepted by the principal, but where the customer does not pay the principal in respect of the order for a reason for which the principal is to blame (for example, delivery of defective goods). This right arises both during and after termination of the agency contact.
It is possible for the agent, with the agreement of his principal, to give his rights and duties under the contract to another person. All parties, including the recipient of rights and duties under the agency contract, must execute a new agreement for the transfer of the rights and duties to be valid.
Parties are able to choose the law governing the contract. The forum where the dispute will be heard, unless otherwise provided, will be where the agent usually performs their work.
The position regarding Switzerland and the EU Member States
There exists an agreement between the EU, its Member States and Switzerland. This agreement is published in the Official Journal of the European Communities dated 30 April 2002. Reference is made to Directive 86/653/EEC of 18 December 1986 on the co-ordination of the laws of Member States relating to self-employed commercial agents.
Under this agreement Switzerland is to be treated as a Member State within the meaning of this Directive. It therefore follows that Directive 86/653/EEC can apply to commercial agents in Switzerland.
Under Swiss law the parties are permitted to agree that the contract is governed by the law of another State.