Differences between commercial agents and authorised dealers
A commercial agent usually brokers business in the name and for the account of a company (principal) and receives a commission for doing so. They do not own the goods and often work according to the company's instructions.
The authorised dealer (‘reseller’, ‘distributor’) buys products at his own risk and resells them. He generate their profit from the margin and acts more independently, but often according to contractual specifications.
Any possible compensation/indemnification claim of authorised dealers in Austria should be examined carefully.
Compensation and indemnification claims of the authorised dealers in Austria
Compensation for investments
According to Section 454 of the Austrian Commercial Code (UGB), entrepreneurs (including authorised dealers) and commercial agents who are bound by vertical distribution agreements are entitled to compensation for investments that they had to make under the agreement for a uniform distribution system if these investments are neither amortised nor reasonably realisable when the agreement is terminated.
However, the authorised dealer may not have terminated the contract himself without good cause attributable to the principal or have given the principal no good cause to terminate the contract, otherwise the claim will lapse. The same applies if the authorised dealer has transferred his rights and obligations to another party in accordance with an agreement with the principal.
Indemnification claim ("Ausgleichsanspruch")
There is no regulation comparable to the HVertrG for authorised dealers regarding an indemnifiaction claim. In certain cases, however, commercial agency law is applied by analogy and the authorised dealer is entitled to compensation.
The Austrian Supreme Court of Justice (OGH) considers this to be justified if the contractual relationships correspond economically to those between the entrepreneur and the commercial agent, in particular if the authorised dealer has been granted an exclusive right of sale. This also applies if the contract strongly resembles the characteristics of a commercial agency contract or if not granting a claim would contradict the intentions of the law.
The authorised dealer must be integrated into the supplier's sales organisation and assume similar tasks to those of a commercial agent, including the transfer of their customer base at the end of the contract.
Whether an authorised dealer is integrated into the entrepreneur's sales organisation and whether and to what extent there is an obligation to transfer the customer base (customer data) when the contract ends depends on various criteria. The decisive factor is an overall view of the authorised dealer's rights and obligations. To this end, case law has developed more detailed criteria, the presence/absence of which serves the correct legal classification of an authorised dealer agreement in the respective case.
According to Austrian law, different claims can be attached to the termination of the contractual relationship depending on whether or not the authorised dealer fulfils these conditions for analogy. Under the conditions of Sec. Commercial Agency Act. 24 (HVertrG), the authorised dealer is therefore generally entitled to indemnification if commercial agency law is applicable by analogy.
However, the dealer is not entitled to such compensation in the following cases:
If the authorised dealer has terminated the contract himself or dissolved it prematurely, unless the termination is due to circumstances attributable to the entrepreneur/principal (e.g. significant breaches of contract), or for reasons of age or illness;
If the binding entrepreneur has terminated or prematurely dissolved the contract due to culpable conduct on the part of the authorised dealer that constitutes good cause under Sec. 22;
if the authorised dealer has transferred his rights and obligations to another party in accordance with an agreement concluded with the principal on the occasion of the termination of the contractual relationship;
if the distributor has not acquired new customers for the principal or the principal has not benefited significantly from his activities.
Compensation for damages
Other claims for damages are also conceivable, which the authorised dealer could derive from a premature termination for which the other party or both parties are responsible (if commercial agency law applies, this is also analogous to Sec. 23 of the HVertrG).
Lawyer distribution law
Dr. Simon Harald Baier LL.M. advises on distribution contracts and authorised dealers, as well as on all matters of commercial and competition law.
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