A commercial agent whose contract is terminated is entitled to a compensatory indemnity, and that right is mandatory: Article L. 134-16 of the Commercial Code deems unwritten any clause derogating from it to the agent’s detriment. Two traps nevertheless account for the majority of lost claims: the one-year period for notifying the principal of the intention to assert the right, and the foreign law clause, whose effectiveness is not the same depending on whether the principal is established inside or outside the European Union.
An independent agent works the French market for nine years for an Italian manufacturer, then for an American one. The first contract is governed by Italian law, the second by the law of the State of New York, and both contain an arbitration clause seated abroad. Both principals end the relationship within a few months of each other. The agent was earning on average four hundred thousand euros of commission a year. Depending on how the two files are conducted, he will recover several hundred thousand euros, or nothing at all.
Characterisation, which governs everything else
Article L. 134-1 of the Commercial Code defines a commercial agent as an agent who, as an independent professional and without being bound by a contract of employment, has continuing authority to negotiate and, where appropriate, to conclude contracts of sale, purchase, hire or the provision of services in the name and on behalf of producers, industrialists, traders or other commercial agents. The characterisation depends neither on the title given to the contract nor on the intention the parties profess.
The word negotiate long served to defeat the characterisation, on the ground that the person concerned could alter neither the prices nor the principal’s terms. That reading has been abandoned. The Court of Justice of the European Union held that a person need not have the power to alter prices in order to be a commercial agent (Trendsetteuse, C-828/18), and the Court of Cassation reversed its position accordingly, holding that the power to alter the terms of the contracts concluded by the principal is not required (Cass. Com., 12 May 2021, No 19-17.042). Many distributors, business introducers and independent sales representatives are in fact commercial agents without knowing it.
The right to an indemnity and its mandatory character
Article L. 134-12 of the Commercial Code gives the agent, on the ending of his relations with the principal, a right to a compensatory indemnity for the loss suffered. Article L. 134-16 locks that right in place by deeming unwritten any clause contrary to the protective provisions of the statute where it is unfavourable to the agent. There is therefore no point in stipulating an advance waiver or a fixed cap.
Three situations nevertheless deprive the agent of the indemnity under Article L. 134-13: serious misconduct by the agent; termination at the agent’s initiative, unless justified by circumstances attributable to the principal or by the agent’s age, infirmity or illness; and assignment of the contract to a third party with the principal’s agreement. Serious misconduct is the principals’ systematic line of defence, and its most frequent form is the discovery, after termination, of failings nobody had complained of during the relationship.
The one-year period, the first killer of claims
Article L. 134-12 subordinates the right to compensation to a notification: the agent loses that right if he has not notified the principal, within one year of the ending of the contract, that he intends to assert it. That period is not a limitation period to be interrupted by a late writ; it is a condition of the existence of the right. An agent who negotiates amicably for fourteen months before consulting a lawyer no longer has a claim.
Two points govern its application. The notification is subject to no particular formality provided it manifests an unequivocal intention to assert the right (Cass. Com., 15 March 2017, No 15-20.115), which sometimes saves a file by means of a single email. And time runs from the expiry of the notice period, not from the day the agent learns of the termination, as the Court of Justice made clear by a judgment of 23 April 2026 (C-204/25). The calculation should be redone on the documents as soon as the termination letter is received, rather than assumed.
The amount: what the two-year practice is really worth
Practice commonly awards two years of gross commission, calculated on the average of the last three years. It is worth knowing what that usage is and what it is not. Article L. 134-12 speaks of compensation for the loss suffered, which calls for a concrete assessment, and the Court of Cassation dismissed an appeal criticising trial judges for fixing the indemnity in accordance with a usage, noting that they had carried out their own assessment and had awarded two years for two mandates but only one for a third.
One factor favours agents operating in France and remains underused: France opted for the compensation for damage system of Article 17(3) of Directive 86/653 rather than the indemnity system of Article 17(2), which is capped at one year’s remuneration. The ceiling of one year’s commission known to other national laws therefore does not apply here. An agent whose contract is governed by a foreign law may see his indemnity halved or worse, which is what makes the next question worth so much.
The applicable law, at the heart of international disputes
Two judgments of the Court of Justice frame the matter. In Ingmar (C-381/98) the Court held that Articles 17 and 18 of the Directive must apply where the agent carried on his activity in a Member State, even though the contract is governed by the law of a non-member country chosen by the parties. In Unamar (C-184/12) it accepted that a Member State may set aside the law of another Member State even though that law complies with the Directive, provided the court finds in detail that the legislature of the forum intended to grant protection going beyond the Community minimum.
The French position is more reserved than is often assumed. The Commercial Chamber held that the protective regime of the commercial agent is a matter of domestic public policy but does not constitute an overriding mandatory rule applicable in the international order, in a case governed by the law of the State of New York (Cass. Com., 28 November 2000, No 98-11.335), a solution followed since. How that case law fits with Ingmar, where the principal is established in a third country and the agent active in France, is not definitively settled. It is ground that has to be argued, and the way the action is brought counts as much as the merits.
Jurisdiction, arbitration and the non-competition clause
On jurisdiction, the Brussels I bis Regulation treats an agency contract as the provision of services, and the Court of Justice held that the place of the main provision is, failing any stipulation, the place where the agent principally carried on his activity (Wood Floor Solutions, C-19/09). An agent active in France therefore usually has a French forum available, which changes the position entirely compared with proceedings brought at the principal’s seat.
An arbitration clause seated outside the Union is the real obstacle, because it removes the dispute from the national court that might have applied the Ingmar reasoning. French case law has accepted, in distribution matters, that certain jurisdiction clauses may be set aside, but the transposition to commercial agency is not established and has to be argued as such. Finally, Article L. 134-14 of the Commercial Code frames the post-termination non-competition clause: it must be in writing, relate to the geographical area and the group of customers entrusted to the agent and to the type of goods or services covered by the contract, and it is valid for no more than two years after termination.
What the firm does
For agents, the firm acts from the day the termination letter arrives: it checks the characterisation, which is often contested and often decisive; it sends the notification required by Article L. 134-12 within the one-year period, calculated from the expiry of the notice; it quantifies the indemnity on the commission statements; and it chooses the forum, since a French court and a foreign arbitral tribunal will not produce the same outcome on the same facts.
For principals, it drafts agency contracts that state the territory, the customers, the commission and the notice period precisely, documents performance during the relationship so that a defence of serious misconduct rests on contemporaneous evidence rather than on a post hoc reconstruction, and structures the law and jurisdiction clauses realistically. A first assessment is normally possible within a few days on the strength of the contract, the commission statements for the last three years and the termination correspondence.
Your agency contract has been terminated, or you are ending one? The one-year notification period runs from the end of the notice, and it is a condition of the right itself. The firm assesses the file quickly.
Frequently asked questions
Must an agent be able to negotiate prices to be a commercial agent?
No. The Court of Justice held in Trendsetteuse (C-828/18) that a person need not have the power to alter prices to qualify as a commercial agent, and the Court of Cassation reversed its earlier position accordingly on 12 May 2021. What matters is continuing authority to negotiate contracts in the name and on behalf of the principal, as an independent professional. Many distributors and business introducers are in fact commercial agents.
What is the usual amount of the termination indemnity?
Practice commonly awards two years of gross commission on the average of the last three years, but that is a usage and not a rule. Article L. 134-12 requires compensation for the loss actually suffered, and courts assess it concretely, sometimes awarding less. France applies the compensation for damage system of Article 17(3) of Directive 86/653, so the one-year ceiling known to other national laws does not apply.
By when must the indemnity be claimed?
Within one year of the ending of the contract, by notifying the principal of the intention to assert the right. That period is a condition of the existence of the right, not a limitation period that a late writ can interrupt. The notification requires no particular form provided it shows an unequivocal intention, and time runs from the expiry of the notice period, as the Court of Justice confirmed on 23 April 2026 (C-204/25).
Does a foreign law clause deprive the agent of the indemnity?
Not necessarily. In Ingmar (C-381/98) the Court of Justice held that Articles 17 and 18 of the Directive apply where the agent carried on his activity in a Member State even though the contract is governed by the law of a non-member country. French case law is more reserved, holding the agency regime to be domestic public policy rather than an overriding mandatory rule. The point has to be argued, and the choice of forum matters as much as the merits.
When does the contract end for the purposes of the one-year period?
At the expiry of the notice period, not on the date the termination letter is received or sent. The Court of Justice so ruled on 23 April 2026 (C-204/25). Where a contract is terminated with a three-month notice period, the one-year deadline therefore falls fifteen months after the letter, but relying on that without recalculating it on the documents is how claims are lost.
Further reading: governing law and jurisdiction clauses, the Vienna Convention on the international sale of goods, recovering an unpaid invoice from a foreign customer.
Written by Hervé Guyader, avocat at the Paris Bar, doctor of law. This content is general information and is no substitute for advice on your own matter.