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Germany

Implementing legislation

Secs. 87, 87 a - c, 89 b of the German Commercial Code ("HGB") of 10.05.1897 amended by the Statutes of 23.10.1989 and of 31.07.2009

Proper notice

1 month during year 1
2 months during year 2

3 months during years 3, 4 and 5

6 months after year 5

Unless otherwise agreed by the parties, the end of the period of notice must coincide with the end of a calendar month.

Indemnity or compensation or both

Indemnity; To be demanded (at least out of court) within one year after termination of the agreement.

Calculation of indemnity/compensation

Since the adaptation of Sec. 89 b HGB in 2009 due to a judgment of the European Court of Justice of March 29, 2009 the starting point for the calculation of indemnity is the advantages the principal continues to derive after termination of the agreement from the business relations established by the agent with new customers or significantly increased with existing customers. Secondly it has to be assessed whether the indemnity calculated on the advantages which the principal derives is equitable, e. g. when taking the agent’s losses into account. The aspect of equity may result in an increase or decrease of the indemnity claim.

Capped at a maximum of the average of the annual commission earned by the agent over the last 5 years of the agency if shorter, over duration of agency

Pre-termination commission
Yes

Post-termination commission
Yes

Back commission
Yes

Other entitlements
Right to demand an extract from the books concerning all transactions for which the agent has a claim

Restrictive Covenants

Implementing Legislation

German Trade Law Act (Handelsgesetzbuch – HGB)

1) Under German law is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?

According to section 86(1) of the German Trade Law Act (Handelsgesetzbuch – HGB), any self-employed agent has the general duty to look after the interests of his principal. This duty implies, among other things, an obligation of non-competition. It is therefore not necessary for a restraint of trade clause operating during the agency agreement to be agreed between the principal and agent as, by law, it is inherent in every agency agreement.

This general restraint of trade clause, which is inherent in every agency agreement can be extended by the parties. However, any restraint of trade clause which exceeds the due protection of the principal’s interests may be subject to German Antitrust Law.

2) Under German law 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?

It is possible to agree on a restraint of trade clause operating following the termination or expiry of the agency agreement as well.

Section 90(a) of the German Trade Law Act defines the conditions for a restraint of trade clause operating following the termination or expiry of the agency agreement. A restraint of trade clause is only valid if:

  1. it relates to the geographical area or the group of customers and the geographical area entrusted to the commercial agent and to the kind of goods covered by his agency under the contract;
  2. it was agreed before the expiry of the agency agreement;
  3. it is in writing;
  4. an official copy of the agreement, signed by the principal, is handed to the agent; and 
  5. the restraint of trade agreement does not exceed two years after the termination of the agency agreement.

During the time the restraint of trade is enforced, the principal has to pay a proper indemnity to the commercial agent. This, however, is no precondition for the validity of the restraint of trade agreement. If there is no such regulation in the agreement, the obligation for the principal to pay a proper indemnity results directly from section 90(a)(1)(3) of the German Trade Law Act.

Finally, according to section90(a)(4) of the German Trade Law Act, all requirements mentioned above which are in favour of the agent are mandatory.

agentlaw.co.uk. wishes to thank Kleiner Rechtsanwaelte of Stuttgart for its contribution to this section

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