Claims for compensation indemnity during the contract period or after contract termination

Commercial agents are entitled to claim compensation for establishing a customer base after termination of the relationship with the principal within a fixed time frame.

Calculation rules for compensation indemnity claims

Calculation of such claims is legally complicated and roughly involves the following two basic steps:

• Commissions for the past 12 months before termination have to be identified and a business forecast for a period of 3 until 5 years has to be established,
• Accrued commissions for the past 5 years before termination have to be identified for an annual average value which is the maximum claim amount.

Several further aspects of the specific business relationship have additionally to be taken into consideration.

Both final values have to be compared and the lower of either is regarded as being the final compensation indemnity in favor of the agent.

Agency-specific and general statutory limitation periods will apply and have to be strictly obeyed. Determination of the relevant parameters for the specific business has to be done and reviewed together with a German lawyer familiar within this complex legal area.

Can one exclude or limit the agent's right to compensation indemnity?

No, the compensation claim may neither be waived nor limited for example by a lump sum. Therefore any restrictive agreement, eg a contractual clause defining the term "new customers" is not permitted and legally ineffective.

Should the parties agree on such a limitation clause the commercial agent can nevertheless demand a higher compensation according to the legal requirements.

A limitation of the compensation indemnity is only possible if the commercial agent shall not be active in the Euopean Union. In such a case the regulations of the respective country have to be considered.