Key points
- When the contract ends, a commercial agent (agent commercial) is entitled to a compensatory indemnity under Article L134-12 of the French Commercial Code (Code de commerce).
- It compensates for the loss of the customer base the agent developed, which continues to benefit the principal, regardless of any fault on the principal’s part.
- In the absence of a statutory scale, court practice often uses two years of commissions, but the court must assess the actual loss in concrete terms.
- The agent loses the right if they do not notify the principal, within one year of the termination, of their intention to assert their rights.
- Article L134-13 excludes the indemnity in the event of serious misconduct by the agent, termination at the agent’s initiative, or assignment of the contract with the principal’s consent.
- The indemnity is separate from post-termination commissions, notice not observed, or a specific loss linked to the termination.
When the contract ends, a commercial agent is, in principle, entitled to a compensatory indemnity. It is one of the strongest protections of the agent’s status, and one of the heaviest risks for the principal. Its calculation does not follow a statutory scale: it results from practice and from a case-by-case assessment. Understanding its logic is essential, whether you want to claim it or challenge it.
The principle: compensating the loss
Article L134-12 of the Commercial Code sets out the principle: “on termination of their relationship with the principal, the commercial agent is entitled to a compensatory indemnity for the loss suffered” (unofficial translation). The indemnity does not compensate a fault by the principal: it compensates the agent for losing the customer base they helped create or develop and which continues to benefit the principal after their departure. It is due whatever the cause of termination, except in the cases of exclusion provided for by law.
The two-years-of-commissions method
In the absence of a statutory scale, court practice has developed a benchmark: the indemnity is often set at two years of commissions, calculated on the average of the last years of performance of the contract. This amount is in no way automatic, however. The French Supreme Court (Cour de cassation) requires a concrete assessment of the loss, not the mere application of a custom; it thus upheld an indemnity of two years of commissions because the lower court had justified it by the loss of the income derived from the customer base and by the length of the contracts (French Supreme Court (Cour de cassation), commercial chamber, 28 May 2002, No. 00-16.857, published in the Bulletin). The amount can therefore vary with the circumstances: length of the relationship, size of the customer base brought in, share of the agent’s activity devoted to the principal, existence of other agency contracts.
By way of illustration, using two years of commissions amounts to doubling the average annual commissions received, subject to the concrete assessment of the case. This benchmark is indicative and does not prejudge the court’s decision.
The one-year time limit: a condition not to miss
The right to the indemnity is subject to a strict time limit. Under Article L134-12, “the commercial agent loses the right to compensation if they have not notified the principal, within one year of the termination of the contract, that they intend to assert their rights” (unofficial translation). Once that time limit has passed, the agent forfeits the right, whatever the value of the claim. Giving this notice in the proper form and on time is therefore the first thing to get right.
The text also protects the agent’s heirs: they benefit from the right to compensation when the contract ends because of the agent’s death.
When is the indemnity not due?
Article L134-13 lists the cases of exclusion exhaustively. The indemnity is not due where the termination results from serious misconduct (faute grave) by the agent; where it arises at the agent’s initiative, unless that initiative is justified by circumstances attributable to the principal or by the agent’s age, infirmity or illness making it unreasonable to continue the activity; or where the agent has assigned the contract to a third party with the principal’s consent. Outside these cases, the indemnity remains due.
Points to watch
- Notify the principal, within one year, of the intention to assert your rights.
- Gather the commission statements for the last few years to establish the calculation basis.
- Document the size and value of the customer base brought in.
- Check that none of the exclusions in Article L134-13 applies.
- On the principal’s side, raise and prove any serious misconduct in good time.
What the indemnity covers, and what it does not
The indemnity under Article L134-12 compensates for the loss of the customer base and of the source of income the agency represented. It is separate from other heads of claim the agent may pursue depending on the case: commissions on transactions concluded after termination of the contract, under the conditions of Article L. 134-7 of the Commercial Code (in French) (post-termination commissions), notice not observed (Article L. 134-11 of the Commercial Code (in French)), or compensation for a specific loss linked to the circumstances of the termination. Confusing these heads of claim leads either to undervaluing the claim or to weakening it. A rigorous valuation distinguishes each head of loss and supports each one separately.
Conversely, the indemnity is not a penalty on the principal: it is due even where the termination is lawful and involves no fault. It is a counterpart of the agent’s status, not compensation for a fault.
Negotiate rather than litigate
Many indemnity cases are resolved through a settlement agreement (transaction). It has advantages for both parties: legal certainty, speed, confidentiality and control over the amount. To be valid, the settlement requires mutual concessions and a written document (Article 2044 of the French Civil Code (in French)), as well as informed consent. Well constructed, it settles the dispute for good and avoids the uncertainty of litigation. Its terms still need to be negotiated with knowledge of the real value of the claim, which requires a serious prior assessment.
End-of-contract indemnity checklist
- Notify the principal, within one year, of the intention to assert your rights.
- Establish the average commissions over the last few years.
- Document the customer base brought in and its value to the principal.
- Distinguish the indemnity, post-termination commissions and notice.
- Check that no exclusion applies (Article L134-13).
- Assess whether a settlement is advisable before any litigation.
FAQ
Is a commercial agent’s indemnity always two years of commissions?
No: it is a frequent benchmark, not a statutory scale. The Cour de cassation requires a concrete assessment of the actual loss, not the application of a mere custom (French Supreme Court (Cour de cassation), commercial chamber, 28 May 2002, No. 00-16.857).
What happens if the agent resigns?
In principle, the indemnity is not due if the termination results from the agent’s initiative, unless there are circumstances attributable to the principal or linked to the agent’s age, infirmity or illness (Article L134-13).
Is there a time limit to act?
Yes: the agent must notify the principal, within one year of the termination, of their intention to assert their rights, failing which they lose the indemnity (Article L134-12).
Are post-termination commissions added to the indemnity?
Yes, they are separate heads of claim. Commissions due on transactions in progress or concluded after termination can be combined, subject to conditions, with the compensatory indemnity, which for its part compensates for the loss of the customer base.
Official sources
- Article L134-12 of the Commercial Code, termination indemnity: Légifrance (in French)
- Article L134-13 of the Commercial Code, cases of exclusion: Légifrance (in French)
Every situation is different and we make no promise of outcome. To assess or challenge a commercial agent’s end-of-contract indemnity, our commercial law lawyers assist you.
