Mandatory Provisions of the Agency Act
The Act on Commercial Representatives and Salesmen contains a number of mandatory provisions applicable to agency agreements, which the parties cannot deviate from. A contractual term that deviates from a mandatory provision of the Agency Act is either null and void or otherwise non-binding on the agent.
The following provisions relating to conclusion and termination of an agency agreement are mandatory:
Upon request of either party, an agency agreement must be concluded in writing.
The notice period of an agency agreement shall be at least one month per each year of the term, however, no more than six months (if the agreement has been in force for six years or more).
The non-competition obligation of an agent may remain in force no more than two years following termination of the agreement.
The mandatory provisions relating to the parties’ obligations are as follows:
The agent must act loyally towards the principal, and inform the principal of all matters that may be of relevance for the agent’s activities, as well as of all offers and concluded contracts without undue delay.
The principal must act loyally towards the agent and to provide the agent with all information and materials necessary for the agent’s activities, such as product samples, models, specifications and price lists.
The principal must without delay inform the agent of the decisions regarding offers, i.e., whether the principal intends to accept or reject an offer, as well as of anticipated reductions in the volume of the activities.
The mandatory provisions relating to commission and indemnity relating to termination of the agreement are as follows:
The agent’s entitlement to commission cannot be agreed to arise after the customer has or should have made the payment to the principal.
An agent forfeits his/her right to commission only for external reasons not attributable to the principal.
The parties may agree that the commission will become due no later than one month following expiry of the quarter during which the agent’s entitlement to the provision has arisen.
The agent shall be entitled to receive a monthly commission statement, which shall list the concluded contracts and the amount of the agent’s commission.
The agent shall be entitled to receive an extract of the principal’s books and all other information available to the principal to the extent necessary for the agent to verify the commission statement. In addition, the agent has the right to have the principal’s books audited on justified grounds.
The agent’s statutory right to indemnification due to termination of the agreement cannot be limited in advance.
Prior to termination of the agreement, the agent cannot forfeit his/her right to indemnification due to termination.