Agency contract in Italy:
- Agency contract and exclusivity in Italy
- Duties and obligations of the commercial agent in Italy
- Duties and obligations of the commercial principal in Italy
- Italian agent and foreign company
- Italian agent: contributions to Enasarco
The Italian agency agreement is governed by article 1742 and following of the Italian Civil Code, as well as the collective bargaining agreement (Accordi Economici Collettivi “AEC”) signed with the unions (if applicable as AEC are applicable only if the parties expressly agree on its application in the agency contract or do refer at it when managing its relationship.).
It is an agreement whereby one party, called “agent”, takes on the task of promoting continuously on behalf of an other (the principal, usually a company) to conclude contracts in a particular area.
The mandate includes promoting the careful analysis of the assigned area, the identification of possible interest(s) for the principal, conducting negotiations, the transmission of proposals and counter proposals, etc… : It is distinct from the right to sign the contracts on behalf of the principal (called right of representation), indeed, the conclusion is often entrusted to the firm principal who will sign the contract prepared by the agent.
Essential condition of the agency agreement is its stability, that is, systematically and continuously, carried by the agent for the promotion of the interests of the principal in the specified area. The compensation for this activity (commission) is usually a percentage of the value of each deal/contract concluded .
Italian law provides a very complex regulation for the indemnity in the case of termination of agency contracts.
Upon termination of the agency contract, in addition to the notice period requirements – if not for just cause -, the agent is entitled to receive compensation for termination of contract, as provided by art. 1751 of the Italian civil Code or by the collective bargaining trough three indemnities: FIRR, the supplementary indemnity of clientele and the meritocratic indemnity, the sum of which 3 indemnities cannot exceed the limit provided by article 1751, section 3, of the Italian Civil Code.
Article 1751 of Italian Civil Code states that, in case of termination of the agency contract, the agent is entitled to an indemnity to the extend that:
- The agent has brought to the principal new customers or has significantly increased the volume of business with existing customers and the principal continued to derive substantial benefit from the business with the customer and
- The payment of the indemnity is equitable having regard to all circumstances and, in particular, to the compensations lost by the agent on the business transactions with the customers.
Article 1751, section 3, of the Italian Civil Code provides that the full amount due to the agent as indemnity of termination cannot be more than an amount equal to annual indemnity calculated on the annual average of commissions collected by the agent during the last five years (or less if the relationship was shorter).