Under the [Italian] law on commercial agents, implementing the EU Directive 653/86[1], the agent’s fees (commission) are normally due if and when the principal gives, or ought to give course to a business with a ‘contractual’ customer[2]. However, principal and agent may agree to postpone said accrual event, at the latest when it is the principal’s customer who performs, or ought to perform.

This principle has been recently applied by the Italian Cassation court in the case Biotronik (decision no. 3483 of Feb 12, 2020): this was concerning, inter alia, the question whether a commercial agent operating in the public healthcare procurement sector had to be paid commissions (i) to be calculated on the value of any referred awarded tenders awarded by a public healthcare agency (which operates in Italy within a nationwide system – let’s call it NHS), or (ii) just on the supplies actually deriving from those tenders. In that industry, in fact, each NHS supplier must first win a tender that defines the essential terms for orders for goods/services to be subsequently issued.

Of course, the agent went for the bigger fish, firstly; and he was fine with it. However, the appellate court (judgement no. 84/2017) reversed the first instance court’s decision by stating that “the quantities covered by the tenders were merely presumptive and did not necessarily correspond to as many actual supplies, amounting to specific requests made by the healthcare agencies to the supplier, according to their actual needs”. On the other hand, the appellate court said, the agreement between the agent and the principal was fairly clear on that point, by stating that commissions were to be calculated “on the net amounts of all invoices issued by the principal, resulting from orders procured by the agent, or from customers operating in the agent’s exclusive area.” So, the agent brought the case before the Cassation court; with no avail, though. In fact, the Cassation justices upheld the appellate court’s decision. It is noteworthy to observe that the Cassation focused on the wording of the agency agreement, concluding that “…, therefore, it is have regard to the specific orders placed by NHS following the awarded tenders, and not to the tenders themselves…”. It remains upon the agent, the burden of proof that specifically relates, “in the case of a plurality of procured business, which of these has been actually concluded, and for what amount.”

The Cassation, perplexingly indeed, recalled the accrual/payment concepts as illustrated above, and drew a distinction instead between (i) the moment when a business is agreed between the principal and its customer; and (ii) the moment when the principal performs, or should have performed, said business. This is incorrect, firstly because to have a business entered by the principal and his customer is a necessary, but not sufficient condition: in fact, no commission is due in case the principal fails to perform on account of a cause beyond his control (e.g. force majeure) or a default by the customer (art. 1748(6) it. civ. code). Secondly, the distinction seems out-of-place; the point was actually ‘what was the business to calculate commissions against?’.

Those who are interested in receiving (free) full copy of the annotated decision, please write to newsletter@lexmill.com.



[1] Legislative decree no. 65 of Feb 15, 1999 implementing the Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents.

[2] Namely, a business with a customer either directly referred by the agent, or belonging to a group or area reserved for the agent.

<img src="" class="rounded-circle shadow border border-white border-width-4 me-3" width="60" height="60" alt="Carlo Mosca">
Author: Carlo Mosca

A lawyer specializing in international commercial transactions. Lexmill's founding partner.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.