The status and termination of the commercial agency contract are governed by articles L 134-1 to L 134-17 of the French commercial code (and also by EC directive n°86/653 18 december 1986).
As per article L131-1 of the French commercial code a commercial agent is defined as any person (company or individual) who has authority to negotiate and conclude contracts for sale or lease of goods on behalf of a principal. Basically the rights and obligations of the commercial agent are defined by articles L 134-2 and follows of the French commercial code. In particular these articles provide that the agent has to comply with the sale instructions and prices communicated by his principal. In the meantime the contracts concluded by the agent will bind the principal (and not the agent). The agent and the principal have mutually to disclose all the information necessary for the performance by the agent of its obligations as per the agency agreement.
French Law contains some specific rules (article 134-11 and follows) regarding the period of notice (article L134-11) and the compensation to be paid to the agent on termination of the commercial agency agreement (article L 134-12).
If the agreement has an indefinite term, the parties have to comply with a specific period of notice (one month if the agreement is terminated during the first year, two months if the agreement is terminated during the second year and three months after or during the third year).The French Supreme Court recently (3 April 2012) held that in case of sudden termination of a business relationship, article L 442-6-1-5 of the French commercial code can not be invoked by a commercial agent (in order to obtain a longer period of notice than the notice provided by the article L 134-11). Therefore, a termination notice of a commercial agency contract has to comply with the specific rules of the article L 134-11 of the French commercial code.
In case of breach of contract, the commercial agent is entitled to receive a compensation as a result of the damage suffered (article L 134-12 of the French commercial code). Any agent has to evidence the prejudice suffered. If the contract is concluded for a fixed term, the agent should be entitled to claim the commissions he would have received up to the normal term of the contract.
Nevertheless, as per article L 134-13 of the commercial code, the compensation has not to be paid if the agent has committed a specific fault (“faute grave”) or if the termination was requested by the agent except if such a termination results from a breach of contract by the principal or results from the agent’s age or illness. In addition, no compensation could be paid if the agent transfers/sells his contract to an another agent. Nevertheless this transfer has to be agreed by the principal.