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Commercial Agents: No Entitlement to “Loyalty Bonus”

Jun 29, 17 • Commercial LawNo Comments

The German law governing commercial agencies includes numerous provisions that cannot be freely chosen by the contracting parties but must be strictly observed. The best known example is the so-called compensation claim, a sort of severance payment a commercial agent can demand from a company upon termination of the agency contract.

Commercial agent claims compensation

The Federal Supreme Court had to decide whether a clause in an agency contract was effective in that the commercial agent agreed to forego payment of a so-called loyalty bonus when asserting the compensation claim. The loyalty bonus is a payment made as part of a pension scheme financed by company contributions. There is no statutory obligation to pay this benefit.

As was already the case under the decision of 2003, in this new decision, the Federal Supreme Court was right in holding that the stated clause was not inappropriately disadvantageous to the commercial agent. The clause was not surprising, either.

Entitlement to loyalty bonus lapses upon assertion of claim

The commercial agent should be aware that the mere wording of the clause can cause his claim to a loyalty bonus to lapse as of the moment he asserts his compensation claim. In such case it is irrelevant whether the claim is substantiated, how much it is, or whether it is enforceable. The decision as to whether to assert it should hence be well-considered.

Our specialized attorneys will be glad to assist you in the creation of agency contracts.

Continue reading:
Post-contractual non-competition clauses for commercial agents
Important elements of a commercial agent contract

Thomas Schwab

Thomas Schwab

Attorney Thomas Schwab mainly handles general contract, corporate, civil, commercial, inheritance and international business law matters.

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