Commercial Agents Authority to Negotiate Sales

Posted by

Preliminary Ruling

On 4 June 2020 the European Court of Justice (ECJ) gave a preliminary ruling in the case Trendsetteuse Sarl / DCA Sarl[1]. The ruling contains valuable considerations on the interpretation of Article 1, paragraph 2 of Council Directive 86/653/EEC (Commercial Agents Directive)[2].

Commercial Agent within the meaning of the Commercial Agents Directive

Article 1, paragraph of the Commercial Agents Directive provides the following definition of a commercial agent:

“For the purposes of this Directive, ‘commercial agent’ shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the ‘principal’, or to negotiate and conclude such transactions on behalf of the principal”

Request for a preliminary ruling

The question referred to the ECJ for a preliminary ruling was about the interpretation of the term ‘negotiate’ in Article 1, paragraph 2 of the Commercial Agents Directive. More specifically whether the term ‘negotiate’ implies that a party must have the power to negotiate the price and commercial terms of a contract in the name and on behalf of its principal in order to qualify as a commercial agent.

Considerations of the ECJ

In its ruling the ECJ recalled that the term “negotiate” used in the Commercial Agents Directive is an autonomous concept of European Union law that had to be interpreted in a uniform manner in the territory of the Union[3].

As a consequence the term ‘negotiate’ must be interpreted in the context of Article 1, paragraph 2 and the objectives of the Commercial Agents Directive.

As to the context the ECJ considered that an obligation of the commercial agent in the performance of the agency contract is to take care of the principal’s interests, specifically by properly dedicating himself to the negotiation of the transactions for which he has been put in charge by the principal. The specific activities to be performed by the commercial agent therefore depend on what the agency contract provides within the above context.

With regard to the main tasks of the commercial agent (the acquisition of new customers for the principal’s products and the increase of the transactions with already existing customers[4]), the ECJ considers that such tasks can be fulfilled by providing information and advice and by conducting meetings. By carrying out such activities sales of the principal’s products can be promoted without the commercial agent having the authority to negotiate the price and other commercial terms of a sales contract.

Preliminary ruling

Based on the above and with due consideration of the aim of the Commercial Agents Directive, the ECJ ruled that Article 1, paragraph 2 of the Commercial Agents Directive must be interpreted in the sense that it is not required that a person has the authority to determine/change the price of the goods he sells in the name and on behalf of his principal, to qualify as a commercial agent within the meaning of this provision.   

[1] ECJ, June 4, 2020, Trendsetteuse SARL v. DCA SARL, C-828/18

[2] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31986L0653&from=EN

[3] See also https://curia.europa.eu/juris/liste.jsf?language=en&td=ALL&num=C-523/18

[4] Article 4, paragraph 3 and Article 17, paragraph 2 a) of the Commercial Agents Directive