Within the framework of an economically oriented and market-legally efficient distribution policy, companies are increasingly choosing the indirect sales channel for their products, i.e., by interposing persons and institutions—so-called sales organs—that help the company (under certain circumstances in an intermediary capacity) to get its products to the final consumer.
A frequently encountered manifestation of such indirect sales organs in practice is the sales intermediary. Sales intermediaries are legally independent bodies that provide support in the distribution process. Typical forms of sales intermediaries are commercial agents, commission agents, and commercial brokers. These are roughly distinguished from one another below, although the specific special forms, regulations, and legal peculiarities will not be discussed in detail:
A. Commercial Agent
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General
According to § 84 of the German Commercial Code (HGB), a commercial agent is anyone who, as a self-employed trader, is permanently entrusted with brokering transactions for another entrepreneur or concluding them in their name.
A commercial agent can be any natural or legal person (e.g., AG, GmbH but also OHG and KG). As a self-employed trader, a commercial agent has the legal status of a self-employed person, although they do not necessarily have to be a merchant (§ 84 IV HGB). A trade license is therefore usually sufficient to take up the activity—whether part-time or full-time. -
Independence
A decisive characteristic of a commercial agent is their independence. In particular, their autonomy within the framework of marketing planning, as well as the independent acquisition and maintenance of a customer base, and the autonomously initiated marketing strategy distinguish them particularly from other forms of activity of sales intermediaries.
The assessment of the question of whether self-employed or dependent activity exists is essentially carried out by considering the overall picture of the contractual arrangement and actual handling (focus theory) as well as according to the principles and demarcation criteria developed by the prevailing case law (in particular place, type and manner of activity, entrepreneurial risk, type and manner of remuneration, etc.). A commercial agent is essentially free to organize their activities and determine their working hours.
However, if the activity of the sales intermediary does not meet the criteria of legal independence, they are not a commercial agent within the meaning of §§ 84 ff., but are classified—regardless of their designation—as an employee of a company. In individual cases, however, commercial agents can be placed in a position similar to an employee economically and socially under certain conditions, with the consequence that individual labor law norms for the protection of a commercial agent are applied analogously.
Commercial agents who are not classified as employee-like self-employed persons can usually insure themselves voluntarily. The specific legal and social security classification of a sales intermediary can, however, only be made in individual cases after examination and overall consideration of all aspects and criteria of the specific design of the activity.
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Remuneration
For their sales performance, the commercial agent essentially receives a performance-based commission remuneration, § 87 HGB, whereby the specific amount can be structured differently depending on the industry and product type as well as value and is freely negotiated between the parties.
According to § 87 Para. 1 HGB, the claim to commission arises upon the conclusion of a contractually agreed transaction through the activity of the commercial agent. Commercial agents can be equipped either exclusively with the authority to broker or also with the authority to conclude contracts, which in turn affects the scope of the tasks assigned to them. In the case of mere authority to broker, the commercial agent (brokering agent) brokers transactions of the entrepreneur with third parties by essentially promoting their conclusion by influencing the third party. In the case of authority to conclude contracts, the commercial agent (concluding agent) executes the conclusion of the transaction themselves.
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Demarcation
The essential difference to the commission agent is that a commercial agent works in the name of others and for the account of others, whereas the commission agent—as shown further below—acts in their own name.
In contrast to a commercial broker, a commercial agent is permanently integrated into the sales and distribution of another company and not just on a case-by-case basis.
B. Commercial Broker
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General
According to the regulations of §§ 93 f. HGB, a commercial broker is anyone who, without being permanently entrusted by contract and obligated to act, professionally undertakes for other persons the brokering of contracts for the acquisition or sale of goods or securities, for insurance, freight transport, ship rental, or other objects of commercial traffic.
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Demarcation from Commercial Agent
As already mentioned above, the essential difference to the commercial agent lies in the absence of a permanent commission. If someone is permanently entrusted with brokering on the basis of a contractual relationship, they are not to be classified as a commercial broker according to § 93 I HGB, but rather as a commercial agent. In contrast, actually repeated or ongoing activity without permanent commission is intended to fall under the scope of § 93 HGB.
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Activity / Remuneration / Special Forms
The commercial broker has to broker the conclusion of the contract and not just provide proof of the opportunity to do so. For this, it is necessary that they enter into contact with both contracting parties and thereby contribute to the conclusion of the contract. They have nothing to do with the actual “exchange of goods” itself.
Since the commercial broker is usually in a contractual relationship with both parties, this special intermediary role justifies, according to the conventional view pursuant to § 99 HGB, a commission claim by operation of law also against the counterparty. In practice, various special forms of brokerage activity are very frequently encountered (for example, civil brokers, insurance brokers, etc.).
Civil brokers are in particular real estate brokers, loan brokers, and marriage brokers. Even immovable property can be the subject of a commercial brokerage contract, although the provisions of the HGB do not apply here. Insurance brokers, on the other hand, are generally commissioned by the policyholder but receive their commission from the insurer, e.g., within the framework of a brokerage agreement, and not from the policyholder, even if no corresponding commission sharing agreement within the meaning of § 99 HGB has been made (BGH 94, 359).
In practice, brokers are engaged on a case-by-case basis for specific transactions.
C. Commission Agent
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General
As stated above, the commission agent, unlike the commercial agent, acts in their own name but sells goods or securities professionally for the account of another (the principal) (§§ 383 ff. HGB). They are also remunerated by a commission, which is basically freely agreed between the parties.
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Duties of the Commission Agent
It should be noted that, according to § 384 HGB, the commission agent must execute the commission with the diligence of a prudent merchant, safeguard the interests of the principal, and follow their instructions. After completion of the execution transaction, they are also subject to various duties, among others, which they must strictly observe, specifically essentially:
- Duty of Notification:
The commission agent must give the principal all necessary news and news important regarding the transaction and notify them of the execution of the transaction without delay (notice of execution). - Duty to Account:
The commission agent must account in writing for the execution transaction. - Duty to Surrender:
According to § 384 HGB, the commission agent must surrender to the principal everything they have obtained from the management of the business and received for the execution of the transaction (§ 675, § 667 BGB).
If the commission agent is a sales commission agent, they must accordingly surrender the money received from the sale of goods to the principal or assign any purchase price claim against the purchaser to the principal. Should they be in possession of unsold goods, they must transfer them back. In the special form of the purchasing commission agent, they must accordingly transfer the obtained ownership of the goods acquired for the account of the principal to the principal or assign any obtained claim for transfer of ownership to them. Should they be in possession of an unused purchase price advance, they must, however, return it.
- Duty of Notification:
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It is common in the commission business for the manufacturer to set a price limit that the commission agent may not undercut when selling and may not exceed in the event of a purchase (§ 386 HGB).
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It should also be noted that if the commission agent does not act according to the instructions of the principal, they are obliged to pay damages to the principal according to § 385 HGB and the principal generally does not need to accept the transaction as valid for their account.
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Special Form: Consignment
Consignment is a special form of commission business, whereby the principal sends the commission agent (who is referred to as the consignee in this case) goods ready for sale as consignment stock for the purpose of sale on their account (the principal’s).
A noteworthy advantage of engaging a commission agent is that the entrepreneur’s (principal’s) distribution network can be expanded considerably in a significantly more cost-effective manner, whereby due to the extensive duties of the commission agent, supervision and control in all areas of the execution transaction remain largely with the principal.
For the commission agent, on the other hand, the fact is advantageous that they do not bind themselves contractually to purchase vis-à-vis the principal, but can return the goods to the principal in the event of an unsuccessful sale.
(Status: December 2011. All information is subject to change and provided without guarantee.)