The right to extraordinary termination pursuant to section 89a, subsection 1, sentence 2 of the German Commercial Code (HGB) may neither be excluded nor restricted in the commercial agency agreement. According to established case law, an inadmissible restriction of the freedom to terminate the contract may exist to the detriment of the commercial agent if the termination by the commercial agent is associated with considerable financial disadvantages for him.
In its decision of January 19, 2023 (VII ZR 787/21), the German Supreme Court (BGH) confirmed that if an agreed advance payment of expected commissions proves to be an inadmissible restriction on termination pursuant to section 89a, subsection 1, sentence 2 of the German Commercial Code (HGB), the principal cannot reclaim the advance payments granted under the law on enrichment pursuant to section 812, subsection 1 of the German Civil Code (BGB).
The case concerned a commercial agency agreement under which the commercial agent was granted a minimum monthly payment to be offset against his commission claims. Furthermore, it was contractually stipulated that in the event of termination of the commercial agency agreement, irrespective of the reason for termination, the negative balance was to become due immediately at the expense of the commercial agent plus the agreed interest. The principal had sued the commercial agent for repayment of a considerable sum. In the first instance, the action was dismissed; in the second instance, the commercial agent was convicted. The appeal to the German Supreme Court (BGH) lodged by the commercial agent was successful, since according to the German Supreme Court (BGH) it must be examined in each individual case whether there is an inadmissible restriction on termination within the meaning of section 89a, subsection 1, sentence 2 of the German Commercial Code (HGB). The decisive factor is likely to be that the provision results in significant financial disadvantages for the commercial agent in the event of termination of the contract. The amount to be repaid according to the relevant clause, the agreement of a contractual penalty in case of termination, the granting of an interest-free loan combined with the obligation to pay interest subsequently in case of termination of the contract can be considered as decisive criteria.
The case was referred back to the Court of Appeal for a new decision. We will let you know.