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Commercial agency agreement: Claim for damages by the company against the commercial agent for lack of effort to procure business

Distribution law

Commercial agency agreement: Claim for damages by the company against the commercial agent for lack of effort to procure business

The Cologne Higher Regional Court ruled in its decision of September 22, 2023 (case no. 19 U 150/22) that the commercial agent is liable to pay damages to the company for breach of his obligations under Section 86 of the German Commercial Code (HGB) if he does not make sufficient efforts to conclude new business after the notice of termination of the agency agreement.

In our opinion, the court’s decision on the applicable principles of presentation and burden of proof is of even greater importance, as the enforcement of a claim for compensation against the commercial agent often fails due to problems of proof. According to the court, if the commercial agent’s business transactions decline significantly after the notice of termination has been given, the commercial agent has a secondary burden of proof to show why this significant decline is due to circumstances other than a restriction of the activity he has performed.

In the present case, the company was able to demonstrate a drastic decline in business transactions in the period after the notice of termination had been given compared to the period before, which allowed the assumption that the commercial agent carried out his activities after the notice of termination to an extent that no longer corresponded to the duties incumbent upon him. The commercial agent was unable to explain at the trial why this considerable decline was due to other circumstances. For this reason, the court affirmed a breach of the commercial agent’s duty of care and awarded the company a claim for damages.