Distribution law

The field of distribution law includes all types of sale and distribution of goods, insurances, savings agreements with building and loan associations, capital investments and services of all kinds such as e.g. telephone, TV and online services. The distribution and sale of the same is implemented by way of a number of different types of marketing means and methods; these include more particularly commercial travelers or traveling salesmen who are working on a commission basis, commercial agents, authorized dealers/ distributors, sales representatives, dealers who permanently buy and sell goods in their own name for the account of another, insurance brokers and franchisees. Other fields of such operations are direct distribution, multi-level marketing or network and internet distribution which directly address the final consumers. In our era of world-wide globalization special significance is to be attributed especially to cross-border sales and distribution and the ensueing application of the rules of international distribution laws.

 

The principal provision of German distribution law is Section 89 b of the German Commercial Code, which governs the commercial agent’s claim for compensation or indemnification following the termination of his or her contract with the entrepreneur or principal. This provision was revised on 05 August 2009 by the Ruling which was entered by the Court of Justice of the European Communities on 23 March 2009. Distribution intermediaries who will only receive one „single commission“ are now, as a matter of principle, also entitled to claim an indemnification or compensation. In some respects divergences are to be found on the EU and the EEC levels. It is on account of the EU Commercial Agents Directive that it is especially France which has different regulations due to which a commercial agent is regularly better off than his German counterpart.  Switzerland, which is known for not being a member of the EU, has special legal regulations of its own. Thus the remuneration which is granted in Switzerland is far less than the one which is provided under the EU Directive. On the EU level it is stipulated that the agent’s claim for compensation or indemnification is imperative, that is to say that it is not subject to the disposition of the parties as long as the contract is in force. Even though numerous attempts are made to circumvent this stipulation it is in most of these cases found that these attempts are inoperative and of no effect. As the claim cannot arise if and when the entrepreneur or principal terminates the distribution intermediary’s contract for good reason, it is frequently attempted to assert the grounds of termination without prior notice. In Germany and in some other European countries this right is not only vested in commercial agents, but also in authorized distributors and franchisees. Yet there may be individual cases where the administration of law varies considerably such as, for example, in Austria, where jurisdiction is in many respects similar to German jurisdiction.

 

 In addition there are numerous open questions to be answered when it comes to the remuneration of a distribution intermediary. In this respect it is so far important to differentiate between the commission for business transactions concluded by a commercial agent or acquisition and new business commission (‚Abschlussprovision’) and the commission for business negotiated by a commercial agent (‚Vermittlungsprovision’) on the one hand and the administration and portfolio maintenance commissions on the other hand. Special significance is to be attributed to the commercial agent’s entitlement to inspect the principal’s books.

 

In our office we have four specialized lawyers who are working in this field of law and more particularly in the areas of commercial agents’ law, authorized distributors’ law, insurance agents law and franchising, and who are all working on both the national and the cross-border, i.e. international levels.

 

 

Other legal areas around Distribution Law