Will your commercial agency agreement end soon? Be careful with provisions regarding the calculation of the indemnity for termination!

Lieselot SeghersAdverit Antwerp, Belgium

If you work with commercial agents, you are probably aware that the agreement you conclude with them is subject to a number of mandatory statutory provisions.

For instance, you probably know that the commercial agent is entitled to an indemnity for termination after the end of the commercial agency agreement, if he demonstrates that he has brought in new customers or has substantially increased business with existing customers, and that these efforts can still provide substantial benefits to the company after the end of the commercial agency agreement.

The law merely provides that this indemnity may not exceed the amount of one year’s remuneration (calculated on the basis of the average of the preceding five years), but beyond that, the parties themselves must decide what the actual amount of this indemnity will be.

Because the understanding between the parties may no longer be optimal after the end of the commercial agency agreement, it is often decided in advance – that is, before the end of the agreement – to regulate how the indemnity for termination will be calculated.

In that case, however, be careful: after all, a party protected by mandatory statutory provisions cannot waive the protective right before it becomes applicable. The Antwerp Court of Appeal ruled in a judgment of 19 May 2021 that contracts concluded before the commercial agency has ended may not provide for an arrangement regarding the calculation of the indemnity for termination, if the calculation is or may be to the detriment of the commercial agent.

Do you have any questions about this? Please do not hesitate to get in touch.

Related practice areas

Commercial law Civil law

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