Commercial agency agreements: subtle amendment, major consequences?

The law of 16 February 2022 amended Article 13 of Book X of the Belgian Code of Economic Law with effect from 14 March 2022. This makes an important change to the mandatory rules on commercial agency agreements.

From now on, Article X.13 §2 states that any unilateral substantial or structural increase or levy of costs by the principal at the expense of the commercial agent is regarded as an act equivalent to termination of the commercial agency contract.

In the event of such unilateral termination of the contract by the principal, the agent will no longer be bound by any non-compete clause, which is almost always included in commercial agency agreements, and will be able to claim a termination fee and a Goodwill indemnity.

With this amendment, the legislator wants to offer additional protection to the commercial agent who, after concluding the contract, would be confronted with unilaterally imposed (additional) costs that are often imposed on the agent because of his dependent position (the agent is usually bound by exclusivity and non-compete clauses).

Such protection already existed for the commercial agent who saw its commissions or the way they are calculated changed unilaterally by the principal. The current legislative amendment is mainly motivated by the abuse of the imbalance between principal and agent that occurs more frequently in the insurance, credit institution and regulated securities markets.

The amended article does also provide that a court could, in certain circumstances, find that the commercial agent has tacitly agreed to the unilaterally changed costs if it has accepted the increased or additionally imposed costs for a "relatively long period of time" without reservation or protest.

Of course, this provision does not preclude the parties from making changes to the cost allocation in mutual consultation; one of the legislator's aims in amending the law was to encourage mutual consultation between principal and agent.

Conclusion :

Henceforth, a commercial agent may invoke against its principal any unilateral change by the principal in either his commission or the costs to be borne by him, as a termination of the contract. However, the agent must invoke the termination within a certain period.

In such cases, the agent must not comply with the non-compete clause and is entitled to a termination indemnity and a Goodwill indemnity payable by the principal.

Since it is a mandatory provision protecting the commercial agent, the principal and the agent cannot deviate from it in their contract. Any deviating contractual provision will be considered as relatively null and void.

Parties to a commercial agency contract should therefore check their contract as soon as possible for provisions that are contrary to this new rule, or be aware of the consequences when applying these provisions

The Act can be consulted at https://www.ejustice.just.fgov.be/cgi_loi/change_lg.pl?language=nl&la=N&cn=2022021603&table_name=wet