The Directive was implemented into Swedish law by amending the Commercial Agents Act on 1 January 1992 and applies to contracts in operation after 1 January 1994.
Definition of agent
A commercial agent is defined as a person who, in the course of conducting a business, contracts with the principal to independently and on a permanent basis act on behalf of the principal in the sale or purchase of goods. This can be accomplished either through the receipt of offers made to the principal or through the conclusion of contracts in the name of the principal. Employees are not agents. The requirement that the agent must be involved in the sale or purchase of goods means that the law is not applicable to agents who deal with securities, bonds, shares, insurances, real estate or ships.
If the parties have not agreed the agent’s remuneration, it shall be determined in accordance with that which is customary in the location in which the agent carries out his business activities. If no such custom exists, the remuneration is determined according to what is reasonable. Commission must be paid within one month of the expiry of the quarter in which the commission is earned. The principal has to provide the agent with a commission statement not later than one month after the expiry of each quarter. The commission statement shall contain information about the commission earned during the quarter.
The agent is entitled to receive from the principal any and all information which is required by the agent in order to verify whether the commission note encompasses the amount of commission earned. Extracts from the principal’s accounts constitute such information. If the principal fails to provide the agent with such information or there is reason to assume that the information in the commission statement is incorrect the agent is entitled to review the principal’s accounts to the extent required. The principal may determine whether the review shall be conducted by the agent himself or by an accountant.
If the agent does not receive commission or other remuneration when due from the principal, or where there is material cause to believe that he will not receive it, the agent has the right to retain goods, materials and documents as security for his claim. However, power of attorney and other documents of importance may not be retained. Goods retained by the agent may be sold by him three months after the agent has notified the principal that the goods have been retained. The agent may apply the proceeds of the sale in satisfaction of the claims in respect of which the goods constituted security.
Upon termination of the agency agreement, the agent shall be entitled to severance compensation if:
the agent has provided the principal with new customers or has significantly increased trade with the existing group of customers, and the principal will derive a significant advantage from such development; or
severance compensation is reasonable in all the circumstances and, in particular, the loss to the agent of commission in respect of contracts with the customers referred to in above.
The severance compensation shall not exceed a sum corresponding to the remuneration for one year, calculated according to the average annual remuneration during the last five years or during the period in which the agent performed the agency, whichever is shorter.
The agent is not entitled to severance compensation
if the principal terminates the agreement as a result of the intentional or negligent failure of the agent;
the agency agreement is transferred to another party; or
the agency agreement is terminated as a result of the bankruptcy or insolvent liquidation of the agent.
If the agent terminates the agency agreement, he is entitled to compensation only where the termination is related to certain circumstances attributable to the principal or the termination is a result of the agent’s age, sickness etc. and he cannot reasonably be required to continue with his activities. The agent must notify the principal of his claim to severance compensation within one year from the date of termination of the agreement.
The Swedish legal system did not previously recognise severance compensation for agents before the Council directive came into force. The law had to be amended to comply with the directive.
If the agent or the principal fails to fulfil his contractual or statutory obligations, or the agency agreement is terminated as a consequence of the bankruptcy or insolvency of either of the parties, the party shall be liable to compensate the other for damage so caused, unless he can show that the failure was not due to his own negligence. A party claiming damages shall notify the other party without unreasonable delay when he becomes aware or should have become aware of the circumstances that the claims are based on. If he fails to do so, he shall forfeit his right to damages unless the other party has acted with gross negligence or in bad faith.
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