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What effects does Corona have on the commercial agent's commission claim?

In the context of the corona crisis, the question arises whether the current special circumstances have an impact on commercial agents’ entitlement to receive commission. At present, many companies have to deal with their customers ordering less or canceling orders. Businesses may also find themselves unable to deliver due to supply difficulties of their suppliers or subcontractors or due to disruptions in their own companies. Among other things, this leads to the question of whether businesses will have to pay commission for transactions that have not been concluded?

The answer to this question arises from Section 87a German Commercial Code.

Section 87a(2) Commercial Code stipulates that there will be no right to commission if the customer fails to perform. According to Section 87(3) Commercial Code, however, commercial agents are also entitled to receive commission if the principal has not carried out the transaction. An exception to this rule must be made if the non-performance is due to circumstances for which the principal is not responsible.

The following arises therefrom:

  • If a transaction cannot be carried out because the customer has become insolvent, there is no entitlement to receive commission. The same will likely apply in the event of imminent insolvency.
  • There will likely be no entitlement to commission either even if the customer’s financial situation has deteriorated such that the supplier must expect that the customer will not be able to pay and it is not possible for the customer to provide a collateral or make an advance payment.
  • If the customer withdraws from the contract on the basis of a provision already contained in the original purchase agreement, no commission will be due either.
  • If, on the other hand, the customer wants to cancel the contract without being entitled to it, acceptance of this request by the supplier will generally result in the commission claim remaining in force. In several decisions, however, the courts allowed for exceptions to this principle. In constellations in which it is unreasonable for suppliers to refuse customer requests for cancelation, the claim to commission may not apply, depending on the circumstances of the individual case. There is much to suggest that, in cases where the customer’s business incurred difficulties through no fault of the customer’s due to the effects of the corona crisis, or the customer has no more use for the goods, acceptance of the cancelation of the transaction will result in the commission not being due. This will need to be assessed, however, in the light of all circumstances of the individual case.
  • Where suppliers are unable to perform the contract with customers, e.g., because they have not been supplied or their own production had to be shut down, it depends on the individual case as to whether the reasons for this are assessed as circumstances for which the supplier is responsible (consequence: claim for commission) or is not responsible (consequence: no claim for commission). The supplier will be responsible for everything which falls into its business and operational risk sphere. Circumstances which are to be considered force majeure no longer fall within the supplier’s sphere of responsibility. Therefore, delivery difficulties caused by corona may well result in the commercial agent not being entitled to receive commission for the transaction that was not carried out.

Tip for use in practice: Make sure to document the reasons well that may have led you to not pay commission to your commercial agent for a transaction that was not carried out due to corona-related circumstances. You must be able to prove those reasons. Also, commercial agents do not necessarily have to claim the commission right away and could therefore wait until a later date (such as the termination of the contract) before claiming it within the limitation period.

Status: April 3, 2020