Sales Agent Law Austria: We Will Enforce Your Claims As Commercial Agent / Sales Agent or Company Throughout Austria: Law Experts Attorneys at Law, Attorney at Law Dr Wiesflecker, Innsbruck/Tyrol and Vienna, Austria
The commercial agents / sales agents and their principal, commercial agency law as a specialist area – Law Experts Attorneys at Law, Austria
Commercial agents / Sales agents are sales specialists who mostly work independently for one or more companies and on the basis of a commercial agency agreement. As commercial agents they constantly broker business for other companies and, in accordance with the commercial agency legislation, are also obliged to make every effort to acquire business. Generally, the commercial agent does not sign this business himself but brokers it. Given his role the commercial agent is an extremely important part of the distribution chain for many companies.
Generally, the commercial agent signs a ‘commercial agency agreement’ with the company (Principal). This contract has to operate within the legal limits of commercial agency legislation. Disputes arise in most cases from the commercial agency relationship during the course of terminating the agreement. This is essentially particularly to do with dissolving or terminating the commercial agency agreement, commission claims and the commercial agent’s claim for compensation.
Your specialist for matters concerning commercial agency legislation, Attorney at Law Dr Hannes Wiesflecker, Austria
Due to his many years of experience working at renowned international law firms and his specialisation in corporate and contract law, Dr Hannes Wiesflecker has the relevant expertise and years of experience to succeed in enforcing or defending against legal claims in the areas of commercial agency law and distribution law.
Commercial agency law as a specialist area of private law requires appropriate experience and the right specialist knowledge. A good understanding of the judicature on commercial agency law is crucial to make your claims thoroughly and in a timely fashion and to defend against any unjustified claims. Corresponding regulations for registering claims and statutory periods of limitation must be observed.
We will be happy to advise you competently and comprehensively!
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Find more information on the Sales Agent Law Austria / Austrian Sales Representatives Act (Handelsvertretergesetz, HVertrG), Commercial Agents, Austrian Sales Agents and Sales Representatives in Austria as follows:
The Information Disclosure Obligations Between Sales Agents/Sales Representatives and Their Principals - Sales Agent Law Austria
Both, sales representatives and their principals are subject to due diligence obligations and disclosure obligations as part of their business relationships. On the one hand, as a matter of law, the sales representative must principally report all sales transactions made to the principal. However, this does not mean that the sales representative is under any obligation, to keep the principal abreast of all daily business transactions every single day. In this context, it must be taken into account that the sales representative is fundamentally an independent and autonomous contractor. Moreover, from the perspective of the principal, any ties that bind or restrict the sales representative that could suggest or establish grounds for an employment relationship should be avoided.
Principally, the sales representative’s aforementioned obligations to disclose information already exist on the basis of the Austrian Sales Representatives Act (Handelsvertretergesetz, abbreviated HVertrG); however, it is possible to include more specific and concrete details in the wording of the respective contract with the sales representative.
Nevertheless, the principal is also subject to certain information disclosure obligations. For instance, the principal must provide the sales representative with all of the documentation and information the sales representative needs to perform his/her duties. Furthermore, the principal must notify the sales agent about foreseeable sales declines or, for example, the cessation of business segments, the manufacturing of certain products, etc., which affect the sales agent.
Contract Closing Obligation, Protection of Interests Obligation – Statutory and Contractual Duties of the Sales Representative Pursuant to the Austrian Sales Representatives Act
Under the Austrian Sales Representatives Act, sales representatives always assume an obligation to broker and close sales contracts. This means that the sales representative must strive to continuously solicit new business relationships on behalf of the principal and must also work to maintain and expand existing business relationships.
However, the sales representative’s/sales agent’s right and/or obligation to directly close business deals and to render services beyond the general brokerage and closing of contracts (e.g. customer maintenance, authority to enter into contracts, collection activities affiliated with accounts receivable, credit checks, delivery warehouse maintenance, training seminars, etc.) are activities that are contingent upon the inclusion of respective terms and conditions in the contract with the sales representative/agent.
Furthermore, it must be emphasized that the commissions paid to sales representatives only cover the work specified in the contract with the sales representative for which such remuneration is supposed to be paid. If the sales representative performs additional duties that are not specified in the contract, such as the facilitation of training seminars or the performance of certain transports, separate payment for this work is principally mandatory.
The protection of interests obligation must also be addressed when it comes to the relationship with sales representatives. The obligations listed as examples in § 5 of the Austrian Sales Representatives Act refer, among other things, to the obligation to make the required reports to the principal and to promptly notify the principal of any business transaction that has been closed. Other obligations the law explicitly standardizes include § 7 Sect 1 Austrian Sales Representatives Act, which prohibits the acceptance of rewards and the mandate pursuant to § 26 Sect 1 Sales Representatives Act, which requires the sales representatives to continue to perform his/her work in the event of risks inherent in delays affiliated with the company’s insolvency, until other precautions can be implemented.
The characteristics of the relationship with sales representatives/agents also principally give rise to the prohibition of competition while the relationship with the sales representative/agent is in good standing, as well as the obligation to protect business and company secrets and the obligation to archive/store as well as release tangible and intangible company property.
Term and Termination of the Contract with a Sales Representative - Sales Agent Law Austria / Sales Representatives Actin Austria
Principally, as is common practice in general contract law, contracts may be made for a specific period of time (term) or for an indefinite period of time. Just like in general contract law, a contract made for a definitive period of term ends once the term expires. The mere passing of time thus terminates the contractual relationship. However, pursuant to § 20 Austrian Sales Representatives Act, a contract made for a certain period of time, which continues for a conclusive defined period, is deemed prolonged by an indefinite period of time. This consequence must therefore always be considered if the contracting parties “simply continue their cooperation” once the respective contract has ended.
If a contract has been made for an indefinite period of time, it may be terminated on the basis of the statutory advance termination notice periods pursuant to § 21 Austrian Sales Representatives Act.
The so-called “chain contracts,” which are in fact separate individual contractual relationships, into which the respective parties enter again and again or link together and thus establish a continuous contractual relationships, should also be mentioned in this context.
The Austrian Sales Representative’s Entitlement to a Commission, Austrian Sales Representatives Act
The Austrian Sales Representatives Act principally does not provide any stipulations as to the calculation basis for sales representative commissions. The principal and the sales representative are at liberty to agree upon the calculation basis for commissions, such as sales revenues, purchase price, sales price, the difference between the two, etc., at their discretion.
Nevertheless, pursuant to § 10 Sect 2 Austrian Sales Representatives Act, principals are not permitted to deduct any discounts they e.g. grant to third parties, from the computation basis for the commission.
Compensation Entitlement According to the Austrian Sales Representatives Act, Austrian Sales Agents and Sales Representatives
Art 24 of the Austrian Sales Representatives Act governs the compensation entitlement of sales agents/representatives. This provision stipulates that once the contractual relationship with the sales representative ends under the prerequisites specified in § 24 HVertrG, the sales agent/representative is entitled to compensation. As the term “entitlement to compensation” implies, the primary objective of the entitlement to compensation is to allow the sales agent/representative to participate in the success of the company in some way in exchange for his/her significant contributions to this success.
Principally, 3 prerequisites must be met for an entitlement to compensation to materialize First and foremost, the sales representative must have brought on board new customers on behalf of the company or must have significantly expanded business relationships that already existed. According to the Austrian Sales Representatives Act, an entitlement to compensation cannot be established in the absence of new customers or new business. This is very often a point of disagreement in practice, since the differences in opinion as to what defines a new or an existing customer or to what end business relationships have been significantly expanded can of course be vast.
The second issue that must be addressed with regard to compensation entitlements is the prerequisite that the principal must be able to likely generate significant benefits from the newly created business relationships even after the contract with the sales representative has been terminated. The third condition is that the compensation payment, taking into account all circumstances, must meet the standards of what is defined as reasonable.
If just one of these conditions is not met, an entitlement to compensation does not exist. The burden of proof that the prerequisites for the entitlement are met is upon the sales representative. If all of the three requirements are met, the compensation entitlement must be computed by deploying a relatively complex method. Principally, the compensation ceiling is one annual commissions income.
Statute of Limitations Based Forfeiture of Sales Representative Entitlements - Sales Agent Law Austria
Contractual modifications of the statutes of limitations by the contracting parties are both, feasible and possible. Hence, the respective contract with the sales representative must be reviewed thoroughly since it is not uncommon for the statute of limitations to have been reduced to e.g. half a year in actual contracts. Failure to pay attention to shortened statutes of limitations may result in the forfeiture of entitlements.
However, according to the Austrian Sales Representatives Act, the general statute of limitations for entitlements arising from a sales representative’s contract totals 3 years. Nonetheless, as far as the claiming of compensation entitlements is concerned, the statute of limitations expires after a year. Hence, any compensation entitlement must be verifiably made with the other party within a year.