Legal Question in Business Law in France

Dear Sir,

The first issue to be dealt with is to determine which law is applicable to your agency agreement. Although France is part to the 1980 Rome Convention on the applicable law to contractual obligations, before French courts, the applicable law shall be determined by the 1978 Hague Convention on the Law applicable to Agency which provides that the internal law chosen by the principal and the agent shall govern the agency relationship between them or, in so far as it has not been chosen, the applicable law shall be the internal law of the State where, at the time of formation of the agency relationship, the agent has his business establishment or habitual residence. Should French internal law be applicable, article L.134-12 of the French commercial code provides that if the relationship with their principal cesases, commercial agents shall be entitled to an indemnity for the loss suffered and article L134-13 states that this compensation shall not be due if the cessation of the contract is caused by the serious negligence of the commercial agent. In practice to assess the quantum of the indemnity French courts often apply the former rule awarding the equivalent of two years of commisions. However, according to the French Cour de cassation (Supreme Court), the agent is entitled to claim full damages, which means that the amount claimed could be more than 2 years. The agent must give evidence of his claim. There are local courts which consider that the tax consequences of the indemnity should also be paid by the principal. Furthermore, a further indemnity could also be sought in case the principal has not complied with the obligation to give a notice period (three months for a duration of six years). The agent is also entitled to claim payment of commission for transactions concluded after the agency contract ceases when the transaction is mainly due to his activity during the agency contract and has been concluded within a reasonable period after the contract ceases.I remain at your disposal for any further information.

Yours sincerely

Didier Lebon

Avocat

Tel +333.20.55.43.32

Fax +333.20.55.78.51