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Distribution law in Germany and Italy

Drafting contracts

The law firm Dolce Lauda has many years of expertise in German-Italian distribution law.

We assist our clients in setting up their distribution business in Italy and in Germany and in enforcing their rights. Our clients include companies, commercial agents, brokers, authorized dealers and franchisees.

We advise you on the drafting of your contracts in order to jointly develop a contract that is tailor-made for you. We discuss the advantages and disadvantages of the different forms of distribution with you and recommend suitable contractual solutions on the basis of your economic goals, which will also protect your interests in the event of conflict. Due to our dual specialization in German and Italian distribution law, we are able to offer you an optimal contractual arrangement tailored to your specific case.

Representation in case of dispute

In the event of a dispute, we have the necessary know-how and many years of experience to represent you before ordinary courts or arbitration tribunals in a manner that is in your best interests. Typical disputes in distribution law are disputes in connection with the termination of the contractual relationship, in particular the assertion of claims for information, book statements, commission, compensation and damages.

Specialized in Italian distribution law

Our lawyers specializing in distribution law were trained in Italy and Germany, are admitted to the bar in both countries and offer not only sound legal know-how on the differences in distribution law between Germany and Italy, but also the necessary sense for pragmatic solutions and understanding of internal corporate decision-making processes.

Our distribution law services in detail

Commercial agents play an important role in the marketing of products and services in many industries and distribution systems between Italy and Germany. Despite any globalization and digitalization, a dynamic commercial agent can still represent a significant added value for the represented companies.

We assist commercial agents and companies in all legal matters. Our services include in particular:

  • Drafting and reviewing commercial agency agreements
  • Enforcement of the claims of commercial agents and companies in the event of disputes, in particular with regard to the assertion of claims for information, book statements, commission, compensation and damages.
  • Advice with regard to issuing or warding off ordinary or extraordinary notice of termination
  • Assistance in setting up distribution structures with commercial agents and other sales intermediaries

The authorized dealer is also a key figure in setting up an international distribution network. He is an independent entrepreneur who buys and sells the company's products on his own account. The authorized dealer builds up his own customer base, which is not necessarily known to the entrepreneur. If the entrepreneur wishes to secure the future use of the customer base, it is therefore advisable to make a corresponding contractual arrangement. If an authorized dealer is integrated into the sales organization of a company in a manner comparable to a commercial agent, a claim for compensation may be due under German law; Italian law, on the other hand, does not provide for a claim for compensation on the part of the authorized dealer.

We advise authorized dealers and companies on all legal issues. Our services include in particular

  • Drafting and reviewing authorized dealer agreements
  • Enforcement of the claims of authorized dealers and companies in disputes, in particular with regard to the assertion of claims for compensation and damages.
  • Advising on the issuance or defense of ordinary or extraordinary notice of termination
  • Assistance in setting up distribution structures with authorized dealers and other sales intermediaries

If a company wishes to impose extensive requirements on its sales partners regarding the uniform design of showrooms, the corporate design, the training of employees and the manner of operating a shop, while leaving the corresponding design and business model to the sales partner to use, a franchise agreement may be the optimal solution.

We assist franchisees and franchisors in all legal matters. Our services include in particular

  • Drafting and reviewing franchise agreements
  • Advice on pre-contractual duties of disclosure
  • Enforcing the claims of franchisees and franchisors in the event of disputes
  • Support in issuing or defending against ordinary or extraordinary termination of the contract
  • Assistance in setting up distribution structures with franchisees and other sales intermediaries

Special features of distribution law under Italian law

Although the Commercial Agents Directive 86/653/EEC has brought about harmonization in the field of commercial agents, there are still noteworthy national peculiarities.

Commercial agency law

Application of collective agreements - payment of social security contributions

Under Italian law, collective agreements ("Accordi economici collettivi") may apply to commercial agency agreements and the company may be obliged to pay social contributions, irrespective of the determination of an employee status.

Commercial agency law

Initiation of employment-related legal proceedings

There are significant procedural peculiarities to be considered in a legal dispute with Italian commercial agents. Under Italian procedural law, for example, a commercial agent is generally allowed to initiate labor law court proceedings ("rito del lavoro"), which can lead to a considerable acceleration of the duration of the proceedings and lower court costs.

Commercial agency law

Priority of claims in insolvency proceedings

In the event of insolvency of the company, Italian law also gives preferential treatment to the commercial agent: in principle, commission claims of a commercial agent from the last year of activity, as well as the compensation claim in general, are to be considered preferential and are therefore to be satisfied out of the proceeds of the insolvency estate in priority to the claims of other creditors.

Read more about insolvency proceedings in Italy.

Dealership law

No legal standardization

The authorized dealer contract is not standardized by law in Italy either; it is generally recognized as an atypical contract. Due to the different types of authorized dealer agreements, there is often uncertainty in practice about essential legal questions if no corresponding contractual provision has been made, such as whether the agreement establishes a binding continuing obligation or which notice periods, if any, must be observed. Unlike under German law, in Italy the legal provisions of commercial agency law are generally not applied by analogy to the authorized dealer agreement. For example, case law applies a wide range between 2 and 18 months when calculating the notice period of an authorized dealer contract, whereas a maximum notice period of 6 months must be observed by law for commercial agency contracts.

Dealership law

No right to compensation for the authorized dealer

Under Italian law, the authorized dealer is not entitled to compensation for the acquired customer base, irrespective of whether special conditions such as integration into the company's sales organization or an obligation to transfer customer data exist in the individual case.

Franchise law

Franchise agreement

In contrast to Germany and other European countries, a franchise law was introduced in Italy in 2004. This law standardizes the pre-contractual duties of disclosure and sets out the content requirements for a franchise agreement. If you wish to expand your business model to Italy by way of franchising, it is advisable to implement these requirements. We would be pleased to offer you the corresponding advice and drafting of contracts.

Special features of distribution law in Germany compared to Italy?

Are you Italian and are you interested in the specifics of distribution law in Germany? You can find information about this on the Italian version of this page.

Frequently asked questions by our clients

According to both Italian and German law, the written form is generally not required, therefore an oral agreement is as binding as a written one for both parties. The company cannot therefore argue that an agency agreement was not concluded because there is no written contract. Under Italian law, however, the written form is required for evidence purposes. However, if a commercial agent resident in Germany works for an Italian company, he can invoke German law and thus prove the conclusion of the contract by any means of evidence.

The contracting parties are allowed to determine the law applicable to the contract themselves in accordance with Art. 3 of EU Regulation No. 593/2008. In the absence of a choice of law, which is generally the case for oral contracts, the law applicable to the agency contract is the law of the country in which the commercial agent has his habitual residence. Thus, if a commercial agent resident in Germany works for an Italian company, the agency agreement is in principle subject to German law.

The same principle also applies to authorised dealers: In the absence of a choice of law, distribution contracts are governed by the law of the state in which the distributor has his habitual residence.

In principle, termination without notice is only effective if there is good cause. Good cause is, for example, a material breach of contract due to which the other party to the contract can no longer reasonably be expected to continue the contract. Under German law, however, a warning must usually be given before the contract can be terminated without notice.

Minimum turnover clauses are often agreed in agency agreements, often combined with the company's power to terminate the agreement for cause if the agreed minimum turnover is not achieved. However, neither under Italian nor German law does the use of such a clause alone offer the certainty of a valid agreement on an extraordinary right of. Firstly, it must also be proven in the specific case that the failed achievement of the minimum turnover equals a material breach of contract; secondly, both legal systems require fault for the occurrence of the legal consequences of a breach of contract. The failure to achieve the specified minimum turnover can depend on many factors, such as the quality of the goods or the pricing policy, not all of which fall within the distributor's sphere of responsibility. Thus, the court always will have to examine whether the terminating party can reasonably be expected to continue the contract until the expiry of the notice period, taking into account all circumstances of the individual case and weighing the interests of both parties to the contract.

If the termination without notice is unjustified for lack of cause and the commercial agent wants to invoke such invalidity, he must react correctly to the termination. He shall not, for example, simultaneously reject the termination and start a competing activity, as this would put him at risk of being given a second (now justified) termination without notice. In many cases it is advisable to declare a counter-termination for cause, since the company does not allow the commercial agent / distributor to continue his contractual activities. Furthermore, the commercial agent can insist on payment of the outstanding commissions, claim for damages and compensation.

If the contract runs for an indefinite period, ordinary termination is generally allowed in compliance with the respective statutory notice period. Only fixed-term contracts are not subject to early termination.

In principle, the notice period is linked to the duration of the contract. Under both Italian and German law, the statutory notice period for commercial agency contracts is at least one month and at most six months. Under German law, these notice periods must in principle also be observed for authorised dealer contracts, whereas Italian law does not provide for rigid notice periods; according to the relevant Italian case law, a reasonable notice period ranges between 2 and 18 months.

As a rule, after the termination of the contractual relationship, the commercial agent can claim an appropriate compensation payment from the principal to whom he leaves a customer base which he has built up and/or intensified. This means: Only to the extent that the commercial agent has acquired new business relationships or intensified existing business relationships and the company derives significant benefits from these business relationships even after the termination of the contractual relationship, the commercial agent is entitled to compensation. Furthermore, the payment of the compensation must be equitable, taking into account all circumstances.

Both Italian and German law only determine the maximum amount of the compensation claim, which is an annual commission or other annual remuneration calculated on the average of the last five years of the commercial agent's activity. Different approaches are followed in Italy and Germany for the calculation of the actual due compensation. In Italy, the maximum amount is used as the basis for assessment and, if necessary, reduced by equitable discounts. In Germany, a gross compensation is determined on the basis of the commissions earned by the commercial agent in the last contract year for new customers and a forecast of future (lost) commissions. The gross compensation thus determined is then adjusted by equity considerations and compared to the maximum limit.  

According to German law, the distributor can claim a compensation claim from the company only if specific conditions are met. On a case law basis, the compensation rules for commercial agents (§ 89b HGB) are applied in favour of the distributor by way of analogy insofar the latter is integrated into the company's sales organisation and it lies within his duties to transmit customer data to the company. Some Courts question the relevance of costumer data transmission and therefore grant the distributor compensation irrespective of any such contractual obligation. All other requirements for the assertion of a compensation claim (benefits from new business relations, etc.) also remain unchanged vis-à-vis distributors.  

Under Italian law, the distributor has no claim to compensation. This also applies if a German distributor acts for an Italian company and the contracting parties make a choice of law in favour of Italian law.

The claim for compensation cannot be excluded in advance by the contracting parties. Only after the termination of the contractual relationship can the compensation claim be effectively waived by way of an agreement.

According to Italian law, a post-contractual agreement is possible but can be contested for a period of 6 months if indispensable claims of the commercial agent are affected and certain formal requirements have not been met (e.g. court settlement or approval by public authorities).

Italian collective agreements have played a significant role in Italy for a long time, at least as far as national agency agreements are concerned. In the case of a cross-border contract, such collective agreements usually only apply by explicit reference in the contract. If no reference is made to a specific collective agreement for commercial agents, the contract is governed exclusively by the statutory provisions. 

Italian collective agreements are a useful supplement to the statutory provisions. Many provisions are of advantage for the commercial agent, for example, a minimum compensation claim is often granted even in  case the agent fails to acquire new customers. However, the calculation of the compensation claim is often disadvantageous for successful commercial agents in relation to the statutory regulation. Fortunately for the agent, it has already been clarified by the highest courts that the commercial agent can chose the calculation which favours him more in his specific case.

The contracting parties may contractually choose one or more courts of jurisdiction. In the absence of such a clause, the court of the other party's registered office is generally competent. For example, a German company has to sue its Italian distribution partner in Italy, while the latter has to file his lawsuit against the company in Germany. In addition, the commercial agent or the distributor can also benefit from a more favourable rule, whereby he is allowed to sue at the place of performance - usually at his place of residence. Thus, the commercial agent or the distributor working in Germany can in principle sue the Italian company before a German court. 

In Italy, the commercial agent has basically the possibility to initiate the special procedure for labour matters ("rito del lavoro"), since commercial agents are assimilated to employees under Italian law. This special procedure is significantly faster and cheaper than the ordinary civil procedure.

Italian law provides for many exceptions to the principle of equal treatment of creditors. For example, the commercial agent's commission claims from the last year of activity, as well as the compensation claim, are generally considered preferential and are therefore to be satisfied out of the liquidation of the debtor's movable assets with priority over other unsecured creditors. This also applies in principle to commercial agencies in the form of partnerships, but not to corporations. The assertion of claims against the insolvent company is only possible via an Italian certified email address (PEC). Should such an event occur, we will be happy to assist you. 

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