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Italian Commercial Agency Law: Termination of the agency agreement for cause if sales targets are not met

Distribution law

Italian Commercial Agency Law: Termination of the agency agreement for cause if sales targets are not met

In its decision of June 23, 2022, the Tribunale di Roma (Labour Section, Judgment No. 5995 of 23.06.2022) declared it unlawful to terminate a commercial agency contract on the basis of a clause providing a termination "for good cause" (giusta causa) in the event of failure to achieve a specified sales target. According to the Court, the concept of good cause cannot be solely defined by the parties, as they could otherwise undermine the minimum regulatory protection imposed by law.

Therefore, merely falling below a specified minimum threshold does not justify a termination for good cause. Rather, it must be examined in the individual case whether there actually is a violation attributable to the commercial agent. In the present case, the commercial agent in question had proven to the court that his performance had been appreciated by the company, even if it was below the threshold. In fact, he had been singled out as one of the best resources in the entire sales network.

With this decision, the court follows the majority case law, which continues to consider the existence of good cause and the existence of a culpable breach by the commercial agent as indispensable.