DIFFERENT LAWS IN DIFFERENT COUNTRIES

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1 DIFFERENT LAWS IN DIFFERENT COUNTRIES 1. Belgium 2. Croatia 3. Cyprus 4. Czech Republic 5. Denmark 6. Finland 7. France 8. Germany 9. Greece 10. Hungary 11. Iceland 12. Ireland 13. Isle of Man 14. Italy 15. Luxembourg 16. The Netherlands 17. Norway 18. Poland 19. Portugal 20. Romania 21. Spain 22. Switzerland 23. Turkey 24. United Kingdom

2 BELGIUM Agency agreements are regulated by the Act on Commercial Agency Agreements 1995, which sets out an agent's rights, particularly in relation to termination of the agreement and the protection of his goodwill. Distribution agreements may fall within the scope of the Unilateral Termination of Exclusive Distribution Agreements for an Indefinite Term 1961 (1961 Act). The 1961 Act gives substantial protection to the terminated dealer engaged in an agreement for an indefinite term, including the right to: a. reasonable advance notice of termination; and b. compensation for lay-off costs, goodwill, and certain marketing and other costs. The 1961 Act also provides that agreements for a fixed term become agreements for an indefinite term on their third renewal. Product franchising agreements may fall within the scope of the 1961 Act. Business format franchising agreements (for services) are not currently regulated; however, proposed prior-disclosure legislation may come into force during /25

3 CROATIA The Law on Obligation (published in Official Gazette No. 35/05) regulates agency agreements. A representative must not work for another principal, without a prior approval, in the same territory and for the same activity (Law on Obligation).. The Law on Commerce (published in Official Gazette No. 49/03, 103/03 and 170/03) regulates distribution agreements. Distribution can be exclusive, non-exclusive or selective.. The Law on Commerce regulates franchising (published in Official Gazette No. 49/ 03, 103/03 and 170/03). 3/25

4 CYPRUS Commercial agency agreements are governed by the Regulation of the Relationship Between Commercial Agent and Principal Law 51(1)/92, as amended by Law 149(1)/2000. The Regulation governs, among other things: a. an agent's duties towards his principal; b. remuneration c. termination of the contract; d. rights to compensation.. There is no statutory regulation governing distribution agreements. There is no statutory regulation governing franchising agreements. 4/25

5 CZECH REPUBLIC The Commercial Code regulates commercial agency agreements, which must be in writing. An agent is obliged to seek potential customers interested in contracting with the principal and can be obliged to make contracts with those potential customers on behalf of the principal. An agent is entitled to commission for the concluded agreements and to compensation on the termination of the agency agreement. There are no specific laws relating to distribution agreements. Anti-trust regulations are usually relevant.. There are no specific laws relating to franchising agreements. However, the Commercial Code regulates industrial property license contracts. Anti-trust regulations are also usually relevant. 5/25

6 DENMARK Denmark has implemented Directive 86/ 653/EEC on self-employed commercial agents (Danish Act on Commercial Agents (Act No. 272 of 5 February 1990)). In case of termination, agents are entitled to an indemnity provided that: a. the agent has found new customers and/or extended the trade with the initial customers; b. this has led to substantial benefits for the principal; and c. it is deemed reasonable. A substantial number of the provisions of the Act are mandatory and cannot be derogated from agency agreements. There is no statutory law on distribution agreements, but competition rules may apply. There is no statutory law on franchising agreements, apart from general contract law rules. Provided that the requirements set out in the general group exemption in Regulation (EC) No. 2790/99 on the application of Article 81(3) of the EC Treaty to categories of vertical agreements and concerted practices are met, franchising agreements will not infringe competition law. 6/25

7 FINLAND 4. Agency The Agency Act (1992/417) contains mandatory rules on: a. the termination of agency contracts; b. the compensation payable; c. restrictions on competition; d. the agent's right to information from the principal. 5. Distribution No statutes specifically regulate distributorships, but a number of statutes indirectly apply to distribution agreements. 6. Franchising No specific statutes regulate franchises, but a number of statutes indirectly apply to franchising agreements. 7/25

8 FRANCE Commercial agency contracts are governed by Directive 86/653/EEC on selfemployed commercial agents, which has been implemented by the Commercial Code. There is no specific law relating to distribution agreements and they are, therefore, subject to contract law, the Commercial Code and competition law. There is no specific law governing franchising. However, franchise agreements must comply with the provisions of the Commercial Code, competition law, contract law and IP law. 8/25

9 GERMANY Agency arrangements are governed by the Commercial Code, which implements Directive 86/653/EEC on self-employed commercial agents. They contain a number of mandatory provisions to protect agents, covering, in particular: a. minimum notice periods for indefinite-term agency contracts; b. last date for payment of commission; c. validity of post-termination restrictions; and d. compensation for the agent on termination. Distribution systems which are unlikely to noticeably influence cross-border trading are subject to the Act against Restrictions on Competition. Agreements on price and conditions between enterprises for their transactions with third parties are forbidden. In addition, German cartel law permits price recommendations only when they refer to branded goods and are explicitly stated to be non-binding. Distribution systems which noticeably interfere with cross-border trade in the EU are primarily subject to EC cartel law. See above, Distribution. 9/25

10 GREECE Law 219/1991 provides that agency contracts should be in writing, and sets out minimum notice periods and provisions on compensation for agents in the case of termination of the agreement by the principal. There are no specific rules on distribution in Greece. Under case law, exclusive distribution agreements are regulated by agency law. There is no specific franchise law in Greece. However, Regulation (EEC) No. 4087/88 on the application of Article 85(3) of the EC Treaty to categories of franchise agreements is directly applicable in Greece. Laws on, for example, intellectual and industrial property, commercial agents and consumer protection, apply by analogy. 10/25

11 HUNGARY Agency is regulated by the Independent Commercial Agency Contract Act (CXV11:2000). Under the Act: a. independent agency activities must be governed by a written commercial agency contract; b. an agent is usually authorised to sign contracts in the name of the principal; c. both principal and agent are strictly liable for any breach of contract; d. the contract can contain a non-compete clause for up to two years after termination, provided that the agent is given an additional fee. Distribution agreements are regulated by general contract law and supply agreement provisions in the Civil Code. As distribution agreements are often subject to competition investigation, competition law should also be considered when entering into an agreement. Franchising agreements are currently only regulated by general contract law. As with distribution agreements, competition law should be considered when concluding an agreement. 11/25

12 ICELAND Icelandic Act No. 103/1992 on Agency Agreements, which transposes Directive 86/653/ EEC on self-employed commercial agents, contains a number of mandatory provisions which protect agents (but only where the agency agreement is in writing). Mandatory provisions include a right to a reasonable commission and to termination notices and indemnities. There are no specific laws on distribution or franchising in Iceland. General principles on supply of goods apply, as well as EC competition regulations. See above, Distribution. 12/25

13 IRELAND Commercial agency is regulated by the European Communities (Communities Agents) Regulations 1994 and 1997 (Regulations). Agency agreements must be evidenced in writing. The Regulations contain mandatory provisions to protect agents. Distribution agreements are a type of contract for sale. Therefore, suppliers' duties are set out in the Sale of Goods Act 1893, as amended by the Sale of Goods and Supply of Services Act There is no direct legislation governing franchising. 13/25

14 ISLE OF MAN There are no specific laws on agency, distribution or franchising in the Isle of Man. See above, Agency. See above, Agency 14/25

15 ITALY There are many mandatory rules aimed at protecting the agent, such as: a. the right to receive, subject to certain conditions, compensation on termination of the agreement; b. a minimum notice period to withdraw from the agreement; and c. limits on non-compete clauses. A distribution agreement is not subject to any specific legislation. However, the Italian legal system regulates certain contractual forms which are often used for this purpose, including: a. the supply agreement (somministrazione), under which a party undertakes to supply the other party with goods on a continuous or periodical basis; or b. the contratto estimatorio, where a party delivers goods to another party which is obliged to pay the relevant consideration, unless it returns the goods to the supplier within a certain time limit. In addition, commercial practice has developed "atypical" distribution agreements. These are subject to the mandatory provisions of Italian law and are regulated by the provisions of law concerning similar contracts (such as supply agreements), which are applied by way of analogy. On 6 May 2004, Law no. 129 on the regulation of franchising was enacted. In addition to clarifying what the content of franchising agreements must be, the new law introduced several new measures regarding: a. the minimum term of franchising contracts (three years); b. the mandatory formalisation of the contract; and c. the express indication of the expenses and investments the affiliate is required to make before the start of the contract. 15/25

16 LUXEMBURG The Law of 3 June 1994 organising relationships between independent commercial agents and their principals regulates independent commercial agents. It defines an independent agent and governs: a. remuneration; b. the reasons for terminating the agency agree-ment; c. the notice period and its consequences (such as indemnification for the agent's clients and non-compete clauses). There is no specific law relating to distribution agreements. However, clauses preventing a distributor from selling below a certain price threshold set by the supplier are prohibited. There is no specific law governing franchising. 16/25

17 THE NETHERLANDS The Civil Code governs commercial agency. A number of the provisions are mandatory and protect agents. The provisions deal particularly with: a. minimum notice periods for termination; b. termination requirements; c. the right to compensation in the event of irregular termination; d. the calculation of an agent's compensation in the event of irregular termination; e. goodwill compensation. There are no specific laws regulating distribution agreements.. There are no specific laws regulating franchises. However, the Dutch concept of reasonableness and equity is often applied by the courts. 17/25

18 NORWAY The Commercial Agents Act of 1992 no. 56 regulates the legal position of commercial agents in Norway. The legal status of commercial agents in Norway is the same as in the EU. There is no statute in Norway that explicitly deals with distribution agreements. However, the general provisions in the Contracts Act of 1918 no. 4 and the Competition Act of 2004 no. 12 may be relevant. EC competition rules may also be applicable. The position is the same as for distribution (see above, Distribution). 18/25

19 POLAND Agency contracts are governed by the Polish Civil Code of 23 April The content of agency contracts must comply with the provisions set out in the Civil Code, which, in particular, regulate contractual terms governing: a. the obligations of the parties; b. the performance of the agent; and c. the termination of the contract. An agent usually acts on behalf of a principal and always on its account. Therefore, agency contracts generally do not fall within the scope of anti-trust regulations regarding vertical agreements. No specific legislation on distribution or franchising agreements has been enacted in Poland so far. However, these agreements may fall within the scope of provisions regulating anti-trust activities (see Question 24). See above, Distribution. 19/25

20 PORTUGAL The Agency Act contains a number of mandatory provisions to protect agents, including (Decree Law no. 178/86, 3 July, as amended): a. minimum notice periods for indefinite contracts; b. the validity of post-termination restrictions; c. indemnity or compensation for the agent on termination of the agreement. There is no specific law applicable to distribution agreements. There is no specific law applicable to franchising agreements. 20/25

21 ROMANIA Agents can negotiate and conclude business arrangements in the name of another undertaking in accordance with the Permanent Commercial Agents Law 509/2002. Agents are entitled to minimum termination notice periods and compensation for termination of the agreement. There are no specific rules on distribution, except for the restrictions under the competition regulations. Franchise agreements are regulated under Government Ordinance 52/1997. The main restrictions are those imposed under the competition regulations. 21/25

22 SPAIN There are several mandatory regulatory provisions to protect agents such as: a. a minimum pre-notice period for termination of indefinite duration agreements; b. on termination of the agency agreement, rights of the agents to indemnity for the clientele generated during the term of the agreement, provided that the principal obtains a substantial benefit from taking over such clientele; c. rights of the agent concerning the calculation and payment of commissions; d. requirements for the validity of post-contractual non-compete clauses; e. mandatory submission of claims to the courts where the agent is located. Distribution agreements are not governed by specific statutory provisions. However, care must be taken when drafting clauses that could conflict with anti-trust legislation. There are no specific laws governing the rights of the parties under a franchise agreement except, regarding retail trade, those establishing minimum administrative obligations on franchising companies setting up franchises in Spain. Franchise agreements must comply with anti-trust legislation. 22/25

23 SWITZERLAND An agent must safeguard the interests of his principal and has a duty of secrecy (Swiss Code of Obligations 1911). On termination of an agreement, an agent is entitled to fair compensation if the principal substantially benefits, even after termination, from the business relations established with the acquired clientele. There is no specific regulation governing this. There is no specific regulation governing this. 23/25

24 TURKEY The Commercial Code regulates: a. the rights and obligations of an agent; b. an agent's remuneration; c. measures used to prevent damage, or loss in value, to the products while being handled by an agent; d. liens that an agent can hold over products; e. the termination of agency agreements; f. obligations for compensation to an agent. There is no specific law regulating distribution agreements. However, there is a block exemption that sets out the circumstances in which a distribution agreement is not prohibited by competition law. Franchise agreements are regulated by, among other things, the: a. Code of Obligations; b. Act on the Protection of Competition /25

25 UNITED KINGDOM The Commercial Agents Regulations 1993 provide protection where an agent is paid to negotiate the sale or purchase of goods within the EU. The regulations are onerous for the principal, for example, agents are entitled to minimum notice periods and compensation for termination of the agreement.. There are no specific laws on distribution in the UK.. There are no specific franchise laws in the UK. A franchise is treated in a similar way as a licence for intellectual property. 25/25

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