The principal is the person or legal entity who engages the commercial agent. The commercial agent then acts in the principal’s name and at his expense.
The German term for compensation upon end of the agency cooperation. The rules on commercial agents in the EU and Denmark is inspired by German law.
THE BASE YEAR
The last 12 months before the end of a commercial agency agreement. It has great significance in connection with the calculation of compensation for an agent for whom the agency is coming to an end, as the turnover in the base year is the starting point for calculating said compensation.
Protection offered by the Commercial Agents Act which cannot be derogated from to the detriment of one of the parties in a commercial agency, unless the cooperation has been terminated and then only by agreement.
These are primarily protection rules favouring the commercial agent, such as the right to a written agreement, payment of commissions and when they are due, the right to access commission calculations, a minimum notice of termination and the rules compensation.
As a starting point, the commercial agent is only entitled to commission on orders entered into during the agency period. However, the commercial agent is also entitled to so-called post-commission if the basis for the agreement has been established during the agency period and the agreement has then been entered into within a reasonable time after the agency ends.
GENERAL AGENT (ALSO CALLED MAIN AGENT)
An agent who has typically hired sub-agents for the direct customer contact.
The term is also used – incorrectly – for exclusive distributors.
Upon termination of the commercial agency agreement, the commercial agent is entitled to compensation under section 24 of the Commercial Agents Act if the commercial agent has acquired new clients or expanded the principal’s trade with existing clients. The principal can also benefit after the termination of the agreement. However, it is an additional condition that payment of the compensation is reasonable, especially given the agent’s loss of commission on sales to the customers in question.
According to section 2 of the Commercial Agent Act, “commercial agent” means a person who, on behalf of another (the principal), has undertaken, at the principal’s expense, to act independently and continuously for the sale or purchase of goods by obtaining offers (orders) for the principal or entering into agreements in the Principal’s name.
THE COMMERCIAL AGENCY ACT
The full title of the Commercial Agents Act is Act No. 272 of May 2nd 1990 on Commercial Agents and Commercial Travelers.
In an agency relationship with sub-agents (see “sub-agents”), the main agent is the agent with whom the principal has entered into the original agreement. The main agent is accountable to the principal for his sub-agents.
The Danish Commercial Agents Act also covers purchasing agents, i.e. agents who, on behalf of the principal, have undertaken, for a fee or commission, to make purchases of goods by obtaining offers (orders) for the principal or by entering into an agreement to that effect in the name of the principal.
In connection with the termination of the cooperation, the commercial agent may be entitled to compensation from the principal if the commercial agent has acquired new clients for the principal. The commercial agent may also be entitled to compensation if he has increased the turnover significantly on the existing customers – referred to as the intensified customers.
Not to be confused with commercial agencies. Like the commercial agent, the commission agent acts at the expense of a principal. However, unlike the commercial agent, the commission agent acts in his own name.
Depending on the wording, a non-competition clause prevents the person bound by the clause from conducting or engaging in competing business for a limited period – even after the termination of the contractual relationship.
Depending on its wording, a customer clause prevents the commercial agent bound by the clause from establishing or maintaining business relationships with the principal’s customers and other business connections, with whom the commercial agent had contact during the agency period, for a limited period.
According to section 9 of the Commercial Agents Act, the commercial agent is entitled to commission on agreements entered into by the commercial agent’s participation, contracts entered into with a third party obtained by the commercial agent, and agreements entered into with a third party within the commercial agent’s assigned territory.
The commercial agent’s claim for compensation for lost commission in the event of premature (unjustified) termination of the agency agreement.
The agent must be compensated the earnings he would have had, had the agency agreement not prematurely been terminated. Thus, the agent is entitled to the commission he could reasonably expect to receive during a notice period with a deduction of saved operating expenses due to the termination.
Many commercial agent agreements define a geographical territory within which the commercial agent operates.
A sub-agent acts on behalf of the main agent and thus has no agreement with the principal. The main agent is accountable to the principal for his sub-agents.