When does an agreement qualify as a “commercial agency agreement” (and why does that matter)?

Whether an agreement is a commercial agency agreement is determined by the actual content of the agreement. The name of the agreement is not relevant. Instead, the overall picture of the circumstances is decisive. This is the result of the judgement of the Higher Regional Court (OLG) Frankfurt am Main of 8 July 2025 (Case No. 14 U 193/23).

Facts of the case

The OLG Frankfurt am Main based its ruling on the following facts: The defendant is a manufacturer of COVID‑19 tests. It engaged the plaintiff to distribute these tests. The parties entitled the underlying contract “Cooperation Agreement.” Following the mutual termination of the agreement, the plaintiff asserted claims for commission, compensation, and information under commercial agency law, arguing inter alia that the agreement concluded constituted a commercial agency agreement. The defendant disputed this.

The Regional Court (LG) Marburg dismissed the action. No commercial agency agreement had been concluded between the parties; therefore, the asserted indemnity claim for compensation would also be invalid. In particular, only the brokering of certain products—not the defendant’s entire product range—had been agreed. Moreover, the arrangement was limited to a three‑year term rather than a permanent mandate. In addition, the Parties did not agree on any obligation of the plaintiff to act , nor had the defendant been granted any right to issue instructions and the parties had expressly incorporated provisions of commercial agency law into the contract. This would not have been necessary if they had intended to conclude a commercial agency agreement. The parties had not designated the agreement as a commercial agency agreement, but as a cooperation agreement. The agreement was therefore not to be classified as a commercial agency agreement, and claims under commercial agency law were not admissible.

Reasons

The plaintiff appealed the decision of the Regional Court (LG) Marburg to the Higher Regional Court (OLG) Frankfurt am Main. The appeal was successful. The OLG clarified that the agreement is to be classified as a commercial agency agreement. The decisive factor is the actual content of the agreement. The overall picture of the circumstances must be considered, including both the contractual arrangements and their practical implementation. That overall picture must show that a self‑employed commercial agent is continuously entrusted with brokering transactions for another principal or concluding transactions on the principal’s behalf. A continuous appointment does not necessarily require an open‑ended term. Rather, what is necessary is that the commercial agent is integrated into the principal’s sales organization. The designation used by the parties and their own classification of the agreement are not decisive on their own.

Under the parties’ agreement, the plaintiff had to continuously handle the brokerage and distribution of the products through his sales and contact network. Specifically, the plaintiff had to sell newly manufactured products for the defendant on an ongoing basis. This shows that the plaintiff was integrated into the defendant’s sales organization. This integration and the contractual use of commercial agency terminology are decisive for the existence of a commercial agency agreement.

Guidance

The ruling by the OLG Frankfurt shows once again that particular caution is required when concluding distribution agreements. The classification of an agreement as a commercial agency agreement is crucial, especially with regard to the commercial agent's entitlement to compensation. The commercial agent can demand this if he has acquired new customers for the principal, significantly expanded existing business relationships and the principal continues to derive considerable benefits from this even after the end of the contractual relationship, for example, if these customers continue to be supplied by the company. At the end of the agreement, the commercial agent can then demand appropriate compensation, which – very roughly – amounts to up to one year's commission, measured against the average of the last five years, according to (German) commercial agency law.

What is special about this requirement is that the parties cannot deviate from it before or during the term of the agreement. Hence, from the principal’s point of view, classifying the contract as a commercial agency agreement always has the risk of a compensation claim. However, this risk is not excluded merely because the arrangement is not a “classic” commercial agency agreement. Under certain conditions, case law also grants authorized dealers, resellers, or distributors a corresponding compensation claim. The actual content of the agreement is also decisive here. Also, in international constellations, the choice of law or the place of distribution can play a decisive role.