What is a commercial agent?

The sales agent is a agent loaded, permanently and independentto negotiate and possibly conclude contracts for the sale, purchase, rental or provision of services, in the name and on behalf of a company mandante.

It offers to this company (the principal) sa commercial competence and sound market experience, whether in industry, real estate, sports, construction, IT, medical, etc. Its principal may be a producer, an industrialist, a merchant or another commercial agent.

In other words, the commercial agent is a trade intermediary who deals with customers, in the name and on behalf of a company whose products he distributes. Its primary function is to bring new customers and retain those already approached.

The commercial agent may exercise one of the following legal statuses:

• Individual contractor (including under the micro-entrepreneur regime). The commercial agent is a natural person.
• Business (EURL or SASU) The commercial agent is a legal person.

In either case, he can exercise alone or with staff. He may also enter into commercial agent contracts with other commercial agents. In this case, the commercial agent is the principal and the commercial sub-agents are his agents.

The profession of commercial agent is economically accessible. The commercial agent does not need significant funds to practice as long as he is not the owner of the goods (he does not hold any stock) and he does not need to enter into a lease to occupy commercial premises.

What is the difference between the sales agent and the business provider?

Unlike a commercial agent who negotiates and concludes commercial transactions in the name and on behalf of his principal, the business person only connects the company and the customer. It identifies prospects but does not intervene to conclude contracts on behalf of one of the parties.

The business provider acts in his own name and on his own behalf. It does not represent the company for which it carries out a prospecting mission.

His intervention is punctual and ceases as soon as the parties have been put in contact, while the mission of the commercial agent is permanent.

The major consequence of this difference lies in the fact that, unlike the commercial agent, the business provider does not not entitled to termination indemnity (equal to 2 or 3 years commission).

Independence of the commercial agent

The commercial agent uses the name, logo or trademark the company that entrusts the sale of its products or services to it.

However, the commercial agent exercises independent. He freely manages the organization of its work and alone determines its level of activity and its financial objectives without the mandating company being able to give it directives.

For example, the commercial agent may use sub-agents that he pays. These are other commercial agents with whom he concludes an agency contract. In this case, the commercial agent is the principal and the sub-agents are his agents.

Thus, the commercial agent does not hold an employment contract in respect of that activity and carries out without subordination link with the mandating company. The sales agent has a commercial agency contract specifying in particular his status as a self-employed person, the nature of his services, the conditions of exercise and the terms of remuneration.

Drafting a contract written is not required. On the other hand, in the absence of a written document, it may be appropriate to lay down, in a simple document, the basis for the organization of the commercial agency contract. This document will take care to mention the purpose of the mandate (products or services for sale, target clientele) and the minimum remuneration of the agent.

Reciprocal duty of loyalty

The sales agent and the company have a reciprocal duty of loyalty :

• The principal must take all practical steps to allow the commercial agent to carry out his mandate normally.

For example, he must make available to the agent the documents necessary for the activity (purchase orders, product data sheets) as well as correspondence exchanged with customers, invoices and the amount of commissions. The company must also notify the customer of the price increase, delivery delays and acceptance of a quote within a reasonable time.

Likewise, it is for the principal to provide the agent with all the accounting documents necessary for calculating the commissions due to him.

• THEsales agent must carry out its mandate as a good professional.

He must preserve the image of the requesting company by presenting the products or services marketed in accordance with the technical guides provided by the company. The commercial agent must also inform his principal of the market outlook.

In addition, the commercial agent must obtain the consent of the principal to represent another company competing with the latter.

How is the sales agent paid?

The remuneration of the commercial agent is freely set by the parties in the agency contract.

Most often, the commercial agent is entitled to a commission each time a commercial transaction is concluded through its intervention. He also has a right to commission when one of his clients subsequently concludes a similar contract directly with the requesting company (unless the agency contract opposes it).

The amount of the commission is generally calculated as a percentage of the turnover achieved by the agent. It can also be a lump sum.

The commercial agent loses his right to commission if it is established that the contract between the customer and the mandating company will not be performed (for example, in sales, when it is established that the buyer will not pay the price). In this case, it may be forced to reimburse commissions that he would have already received.

Nevertheless, the agent retains his right to commission if the non-performance of the contract is due to circumstances attributable to the requesting company (e.g. late delivery).

What is the taxation of the commercial agent?

The tax regime of the commercial agent varies according to whether he is practicing as aindividual contractor (including micro-entrepreneur) or business (SASU or EURL)

Notice period in case of early termination

When one of the parties takes the initiative to terminate the commercial agent contract early (before the end of the term), a notice period must be respected. This period varies according to the duration of the contract in question:

• 1 month notice in case of breach of contract during its first year
• 2 months notice in the event of breach of contract during its second year
• 3 months notice in the event of a breach during the third and subsequent years of the contract.

If the fixed-term contract has been converted into a contract of indefinite duration, the period of notice must take into account the preceding fixed-term period.

The commercial agent and the mandating company may also agree, in the contract, on a longer notice period.

End-of-contract compensation

In the event of termination of his contract with the principal, the commercial agent is entitled to a termination indemnity as compensation for the damage suffered (loss of income).

This compensatory allowance shall be paid in following situations :

• The commercial agent contract is has come to an end and is not renewed.
• The commercial agent contract was broken before its term by the principal (unless the agent is guilty of serious misconduct).
• In case of death of agent (the compensation is paid to rights holders).
• Where the termination of the contract is due to his age, infirmity or illness as a result of which the continuation of its activity can no longer be reasonably demanded.

The allowance is calculated by reference to gross commissions collected by the commercial agent in recent years. It is usually equal to 2 or 3 years of commissions.

In the event of a dispute, the judge may assess the amount of compensation taking into account multiple items, such as:

• The loss of commissions to which the agent could reasonably have been entitled in the continuation of the mandate
• Deprivation of the possibility of transferring his mandate to a successor for consideration (this right has patrimonial value)
• The loss or reduction of the profit that he could derive from the investments made for the execution of this contract
• Expenses resulting from the termination of the contract, including severance payments for staff who have become redundant (if the staff member employed employees or commercial sub-agents).

However, the termination indemnity is not due to the agent in the following cases

• The termination of the contract is caused by gross misconduct of the commercial agent (e.g. physical and verbal aggression of a customer, refusal to comply with sales methods, failures in sending orders on many occasions).
• The termination of the contract results from the agent's initiative. The staff member retains his right to compensation if the termination is due to age, infirmity or illness or to circumstances attributable to the principal (e.g. breach of duty of loyalty).
• According to an agreement with the principal, the agent assigns his commercial agent contract to a third party. Indeed, the commercial agent can present to the principal a successor to whom he assigns his rights and obligations. If he accepts this assignment, the principal is exempted from the payment of the termination indemnity.