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Latvia

Implementing legislation

The Commercial Code (Part A, Section VI), as amended

Proper notice

1 month if less than or equal to 1 year
2 months if more than 1 year and less than or equal to 2 years
3 months if more than 2 years and less than or equal to 3 years
4 months if more than 3 years


Indemnity or compensation or both

Indemnity only

Calculation of indemnity/compensation

Capped at a maximum of the average annual commission over last 5 years or, if less than 5 years, over the agency

Pre-termination commission

Yes

Post-termination commission

Yes

Back commission

Yes

Other comments

There are special rules for del credere agents

Restrictive Covenants

Implementing Legislation

The Commercial Law (1 January 2002)

1) Under Latvian 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 the Commercial Law, the commercial agent has a statutory obligation to act for the benefit of his principal. Consequently, during the agency agreement the commercial agent has to refrain from such business activities that would harm the legal interests of the principal. The agent can carry out such competitive activities only with the consent of the principal. The parties to the agency agreement may specify the exact scope of the restraint of trade clause. However, it should be noted that this restraint of trade is not all embracing and can only be imposed if it is necessary to do so and taking into account the particular circumstances of each case with proportionality being observed.

2) Under Latvian 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?

On the expiration/termination of an agency agreement the restraint of trade provisions also expire. However, the principal and the agent can agree, in writing, to continue the restraint of trade provisions as provided for in the agency agreement after termination of the agency agreement. Those restrictions on trade may relate only to the geographical territory, the group of clients or the field of activities entrusted to the commercial agent. The time period of the restrictions on trade may not exceed two years after the agency agreement was terminated/expired and the principal has to pay an adequate remuneration to the agent for the time of the restraint.

Prior to the termination/expiration of the agency agreement, the principal may at any time, in writing, waive the contractual restrictions of trade on the agent. In such case, the duty of the principal to pay the remuneration shall cease only after six months from the date of notification of the waiver. However, if the principal has terminated the agency agreement due to the fault of the agent, the agent loses the right to receive remuneration but is still obliged to observe the restraint of trade provision previously agreed with the principal.

If the agent has terminated the agency agreement due to the fault of the principal, the agent may, in writing, waive the restraint of trade provision by giving one month’s notice to the principal.

agentlaw.co.uk. wishes to thank Deloitte, Riga for its contribution to this page 

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