German Commercial Agency Law and Agent Indemnity

A commercial agent (Handelsvertreter) is a self-employed intermediary permanently entrusted with negotiating or concluding transactions on behalf of another business (Section 84 HGB). German law, based on EU Directive 86/653/EEC, contains numerous mandatory rules protecting agents.

Key issues in German agency agreements

• Commission (Sections 87 et seq. HGB): direct and territory commissions, post-contractual commissions, entitlement if the principal does not perform the transaction.
• Statement of accounts (Section 87c HGB): the agent may demand a complete extract from the principal’s books – enforceable by staged action (Stufenklage).
• Notice periods (Section 89 HGB): minimum one month in the first year, rising to six months after five years, each to the end of a calendar month.
• Post-contractual non-compete (Section 90a HGB): written form, maximum two years, and appropriate compensation.
• Employee or agent? Misclassification can trigger social security liabilities and labour court jurisdiction.

Goodwill indemnity under Section 89b HGB

When the contract ends, the agent may claim reasonable compensation for the customer base he has built up and from which the principal continues to benefit. The claim cannot be excluded in advance. It is capped at one year’s average remuneration calculated over the last five years and must be asserted within one year after termination.

1. Identify new customers and substantially expanded existing customers.
2. Forecast the principal’s future benefits and the agent’s lost commissions, including churn and discounting.
3. Assess equity and apply the statutory cap.

German courts apply the indemnity by analogy to authorised dealers who are integrated into the supplier’s sales network and obliged to transfer their customer data. For agents active in the EU, the indemnity applies even if the parties chose the law of a non-EU country (CJEU, Ingmar, C-381/98).