By the lawyer. Alberto Venezia
1. Introduction and exclusive right
Among the frequently disputed interpretative issues in agency agreements is the issue of transactions concluded by the principal within the area or with the client base assigned to the agent, but without the agent’s direct intervention. This context includes the issue of the agent’s right to commission, which is closely linked to the existence or otherwise of an exclusive right in favor of the agent.
Exclusivity is governed by Article 1743 of the Italian Civil Code, which generally provides for a perfect bilateral exclusivity, i.e., the agent’s right to commission on all transactions concluded in the assigned area, with the principal prohibited from appointing other agents in the area and the agent’s obligation not to accept assignments for competing products. The right of exclusivity, which constitutes a natural element of the agency contract, is however freely derogable by the parties, who can therefore agree as they see fit in the individual contract, including by expanding (usually at the agent’s expense) the limits of the exclusivity.
Article 1748, paragraphs 1 and 2 of the Italian Civil Code, in line with the derogability of the exclusive right, in regulating the right to commissions, establishes that:
“For all transactions concluded during the contract, the agent is entitled to a commission when the transaction is concluded as a result of his or her intervention. The commission is also due for transactions concluded by the principal with third parties whom the agent had previously acquired as clients for transactions of the same type or belonging to the area, category, or group of clients reserved for the agent, unless otherwise agreed.
The agent is also entitled to commission for business concluded directly by the principal with third parties whom he had already acquired as clients for business of the same type or who had been contacted by the agent first.”
The rationale behind the provision lies in the need to protect the agent’s preparatory work, preventing the principal from surreptitiously concluding contracts by bypassing the agent’s intermediation and depriving him of the related commission. However, it is possible to contractually establish different commission allocation criteria, perhaps excluding it for direct business concluded in the principal’s local area. In the absence of any agreement to the contrary, the general criterion applies, which awards the agent commission on all business concluded with clients or in the assigned area.
2. Definition of “business concluded directly by the principal”
The classic case is when the principal closes a contract directly with a customer located in the agent’s area or belonging to the agent’s portfolio, without any intervention by the latter in the specific transaction.
It is irrelevant whether the principal acts independently or through another party: what is relevant is the client’s objective membership in the portfolio or area assigned to the agent.
3. When is the agent’s commission due?
The right to commission may arise in two distinct cases:
a) Customers already acquired by the agent for business of the same type
Here the agent has already handled previous business with that client: it is therefore assumed that the direct conclusion by the principal is the result of a commercial relationship generated (or fueled) by the agent’s activity.
b) Customers contacted first by the agent
Even in the absence of previous business, if the client was approached first by the agent, and if the deal concluded is of the same type as the one initiated by the agent, the agent should still be entitled to a commission. This mechanism protects the agent’s market prospecting activity, which is an essential component of their role.
There then remains the delicate issue related to the existence of possible contractual agreements to the contrary.
4. The agent’s role in concluding the deal and the burden of proof
If the agent did not have a direct role in the individual negotiation, but the contract was nevertheless concluded within his area or within the client portfolio assigned to him, the question arises of whether the agent is entitled to the commission even though he did not actually facilitate the deal.
The answer is usually yes. if the objective conditions set out in Article 1748, paragraph 2, are met : no specific causal contribution from the agent to the transaction is required, but only a territorial or relational connection (client or assigned area) and a correlation between the concluded transaction and the type of activity carried out.
However, if the principal does not recognize commissions, the agent will be responsible for proving the successful conclusion of the transaction as well as its proper execution with payment by the client. The criteria for accruing commissions have also changed following the amendment made to Article 1748 of the Italian Civil Code by Legislative Decree 65/99, but it is still possible to make the due date of the commission coincide with the actual payment by the client, provided that this is expressly provided for in the contract, in derogation of the general principle connected with the performance of the service by the principal.
5. The contrary agreement: is it valid?
The Civil Code admits the possibility, pursuant to art. 1748 of the Italian Civil Code , that the parties provide for a contrary agreement, therefore excluding the commission for business concluded directly by the principal in the area or with the clientele entrusted to the agent.
However, such a clause cannot completely nullify the agent’s rights, especially if the business derives from clients procured or cultivated by the agent himself. In such cases, case law tends to rigorously evaluate the validity of the agreement, in light of the principle of good faith and the protection of the work performed.
6. Conclusions
The issue of business concluded directly by the principal in the area or with assigned clients is certainly a sensitive one within the framework of agency contracts, where the agent’s financial interest in compensation for the work performed is balanced against the principal’s right to contractual freedom.
The legislator, with Article 1748, paragraph 2, introduced concrete protection for the agent, extending the right to commission beyond the concept of direct promotion, unless otherwise agreed.
Careful drafting of the contract, a clear delimitation of the area/client base, and transparent management of information flows between agent and principal are essential tools for preventing disputes and ensuring a correct contractual balance.”
