An agency contract is when the agent acts on behalf of another party to promote the stipulation of contracts in a given area, in return for remuneration (commission) on a permanent and professional basis. An agent’s assignment is an atypical partnership not mentioned under the Civil Code or other laws. Under this partnership the agent is not employed or under the direction of an employer but establishes an occasional, discontinuous relationship with the principal which has no loyalty ties or predetermination of the area in which to operate.

Agent services consist of acts of varied and non-predetermined content, which promote the stipulation of contracts in a given area on behalf of the principal. The agent’s main obligation consists in seeking out potential customers, illustrating and advertising products to conclude a deal.

The area is determined either in a geographical sense (with reference to a more or less vast region), or in relation to parties identified by name or categories (e.g. large-scale distribution) or both. The absence of an express determination of the agent’s area of activity does not preclude the existence of an agency agreement where a designation can be inferred from the reference to the region where the parties operate when the relationship began.

The agent’s remuneration consists of commissions, i.e. a percentage to be calculated on the value of the contracts stipulated due to the agent’s work. The agent is entitled to a commission if the principal concludes the deal due to the agent’s actions.

The commission is agreed between the parties and is calculated based on the invoiced amounts issued to customers, net of discounts or amounts for various types of compensation (postal charges, bank charges, stamp duty, etc.)

Unless otherwise stipulated in the agency agreement, the agent is entitled to commission:

• From the time when the principal has performed or should have performed the service under the contract stipulated with the third party;
• at the latest, at the time when the third party has performed (i.e. the deal has gone through) or should have performed the service if the principal performed its service.

Commissions must be paid to the agent at the latest on the last day of the month following the quarter during which they were accrued, net of the contributions and deductions made by the agent. Within the same period, the Principal shall deliver to the Agent a statement of the commissions due. This statement shall specify the essential elements on which the commissions are calculated.

This is when an agent undertakes not to take on any other sales assignments for products similar or competing with those of the principal and the latter undertakes not to use the services of other agents in the same region and for the same type of work.

The exclusive right is a natural but not essential element of the agency contract. Its absence does not affect the validity of the contract, which continues to be effective. It may be derogated from by the contracting parties by adding an express clause.

The agent’s breach of exclusivity entitles the principal to damages and the latter to terminate the contract for just cause.

A direct or indirect breach of exclusivity by the principal entitles the agent to a commission even for contracts stipulated without their involvement.

If the principal violates the exclusivity, the agent will benefit from the payment under Art. 1748 paragraph 2 of the Italian Civil Code, which requires the commission to be paid for business concluded by the principal with third parties whom the agent had acquired as customers for the business of the same kind, in the same region, category or group of customers reserved for the agent, unless otherwise agreed.

At the time of termination of a fixed-term or open-ended agency relationship, the agent has several rights, including the right to receive the relationship termination indemnity under art. 1751 of the Italian Civil Code and collective bargaining.

The indemnity is a consideration that the principal pays to the agent for clientele that the latter has procured and which the principal will continue to use. 

Where only the legal rules apply to the agency relationship, there is a single termination indemnity which is governed by the Italian Civil Code. Art. 1751 paragraph 1 of the Italian Civil Code provides that upon relationship termination, the principal must pay the agent an indemnity only if the following conditions are jointly met:

• the agent has procured new customers for the principal or has developed business with existing customers and the principal continues to receive substantial benefits from the procured business even after the relationship termination;
• this indemnity is equitable for the circumstances, particularly commissions which the agent loses and which result from the business with those customers.

The indemnity provided for by the Collective Bargaining Agreements is different from that provided for in Article 1751 of the Italian Civil Code, in its assumptions and methods in which it is calculated. It takes three forms:

• an indemnity to be set aside in the specific fund (FIRR) set up at Ensarco and paid at the relationship’s termination;
• a supplementary customer indemnity (ISC), which is paid by the principal in most cases;
• a merit indemnity, which rewards the agent for any incremental contribution made to the principal.