In the complex landscape of commercial relations between companies, two contractual forms of great practical importance frequently emerge: the agency contract and the sales concession contract. These legal instruments, although often used for at least partially similar purposes—namely, the promotion and distribution of goods or services—present significant differences, both in terms of their legal structure and in terms of risk allocation, the rights of the parties, and the way customer relationships are managed. Understanding these differences is essential for entrepreneurs and economic operators, in order to correctly establish contractual relationships and develop a distribution network consistent with their business strategy.
The agency contract: definition, regulation and operational implications
The agency contract is expressly governed by Articles 1742 et seq. of the Civil Code, which provide a detailed regulatory framework. Under this contract, one party (the agent) undertakes a permanent obligation towards another party (the principal) to promote, in a specific geographical area or with reference to a specific customer segment, the conclusion of contracts on behalf of the principal. Alongside the Civil Code, collective economic agreements should also be mentioned. Where applicable, they constitute an additional body of legislation that complements and sometimes overlaps with the provisions of the Civil Code. To resolve any conflicts, the general principle of hierarchy of sources must be used, which allows for derogation only from the specific provisions of the Civil Code. The agent, unless otherwise agreed (representative mandate), is not authorized to directly conclude such contracts, but acts as an intermediary.
The agent operates on a stable and continuous basis for the principal, in compliance with obligations of diligence, fairness and good faith. He is usually remunerated through commissions calculated on the deals concluded thanks to his intervention, without however assuming any direct financial risk. A particularly important aspect is the legal protection granted to the agent, which includes, among other things, the right to severance pay, as compensation for the goodwill contributed to the principal through the development and growth of the client base.
The sales concession contract: framework and peculiarities
The sales concession contract, or distribution contract, is not expressly regulated by the Civil Code, but is widely recognized by practice and jurisprudence. Unlike the agent, the dealer purchases the goods from the grantor to resell them on his own account, acting as an independent entrepreneur and assuming full risks and benefits of the resale.
Its managerial autonomy is accompanied by responsibility for unsold goods and all operating costs. The dealer’s profit comes from the margin between the purchase price and the selling price. The parties enjoy broad contractual freedom, and territorial or product exclusivity clauses are often included, useful for defining and protecting operational areas.
The most recent Italian jurisprudence defines the sales concession agreement as an atypical contract with a complex exchange and collaboration function, characterized by a natural obligation on the concessionaire to carry out promotional activities. The obligation to promote brings the sales concession contract closer to that of agency within the broader category of distribution contracts.
Comparison between agency agreement and sales concession agreement
The crucial point in the distinction between the two figures is given by the role assumed by the subject in the commercial chain. The agent acts on behalf of the principal, establishing relationships with customers in the latter’s name, while the dealer operates in his own name and on his own behalf, establishing a direct relationship with the end customer.
This results in a substantial difference in ownership of the customer, which in the case of the agent remains with the principal, while in the case of the dealer it is the distributor’s. The economic risk also follows the same logic: it is the principal who bears the risk in the agency contract, while it is the concessionaire who assumes it in the concession contract.
From a legal perspective, agency contracts enjoy specific rules, with well-defined rights for the agent, while concession contracts, which lack codified rules, depend heavily on agreements between the parties and, in part, on the analogous application of some of the provisions governing supply. Finally, regarding information obligations, the agent is required to keep the principal constantly updated; the dealer, however, enjoys greater operational freedom, unless otherwise contractually provided.
A further difference from the regulatory perspective is the applicability of antitrust legislation to the sales concession contract, while it is generally excluded from the agency contract.
Practical implications and selection criteria
The choice between the two contracts depends on multiple strategic factors. An agency contract is preferable for companies wishing to maintain more direct control over their sales network, commercial policy, and customer relations. Concessionary sales, on the other hand, are recommended when you intend to rapidly expand your market presence by delegating the commercial, logistical, and promotional management of your products to third parties.
The level of risk the company is willing to take, the structure of its network, and its medium- to long-term objectives are key variables. If you’re aiming for brand and positioning control, the agency offers greater protection. If, however, speed and the distributor’s managerial autonomy are prioritized, concessions may be the most effective option.
Conclusion
Correctly defining the contractual relationship is essential to prevent disputes, protect the parties’ economic interests, and ensure solid and sustainable business development. Relying on a professional with expertise in commercial law allows you to thoroughly analyze the company’s operational needs and identify the most suitable contractual instrument. Every business has its own unique characteristics, and a well-structured contract is the first step toward an effective and legally secure sales network.
Alberto Venezia
