Commercial agents, brokers, and commission agents – distinctions

Τhat is, one involving intermediary persons and institutions, so-called sales organs, who help the company get its products to the end buyer. Sales intermediaries are legally independent bodies that act in a supporting role within the distribution process. Typical forms are the commercial agent, the commission agent, and the commercial broker, which are broadly distinguished from one another below, drawing on the terminology of the German Commercial Code (HGB), without addressing every special form or point of detail.

A. Commercial agent

Under § 84 HGB, a commercial agent is a person who, as an independent trader, is permanently entrusted with negotiating transactions for another business, or with concluding them in that business’s name. A commercial agent may be any natural or legal person (e.g. an AG or GmbH, but also an OHG or KG). As an independent trader, the commercial agent has the legal status of a self-employed person, but need not necessarily be a merchant (§ 84(4) HGB). To take up the activity — whether as a secondary or principal occupation — a trade licence generally suffices.

The decisive characteristic is the agent’s independence — in particular, autonomy in planning their own marketing, and independent responsibility for building and maintaining their own customer base and for their own marketing strategy; these set the commercial agent apart from the other forms of sales intermediary. Whether an activity is independent or not is assessed essentially on the overall picture presented by the contractual arrangement and its actual conduct (the “centre of gravity” test), supplemented by the criteria for distinction developed in case law (in particular the place and manner of the activity, entrepreneurial risk, and the type of remuneration). A commercial agent is essentially free to organise their own activity and working time. Where the activity of the sales intermediary does not meet the criteria for legal independence, it does not constitute a commercial agency relationship but an employment relationship, and the intermediary is classified as an employee of the company.

For their sales performance, the commercial agent receives a success-based commission under § 87 HGB, the specific amount of which is freely negotiated. The right to commission arises upon the conclusion, through the commercial agent’s efforts, of a transaction falling within the scope of the agency agreement. Commercial agents may be vested either exclusively with authority to negotiate (promoting the conclusion of a transaction by acting on third parties) or with authority to conclude transactions themselves (which affects the scope of the tasks entrusted to them).

The key difference from the commission agent is that the commercial agent acts in another’s name and for another’s account, whereas the commission agent acts in their own name; the difference from the commercial broker lies in the commercial agent’s permanent integration into a company’s sales organisation.

Both German law (§ 89b HGB) and Greek law (Article 9 of Presidential Decree 219/1991) grant the commercial agent, under certain conditions, a post-termination indemnity claim where the agent has brought new customers to the business or substantially expanded existing business relationships, and the business continues to derive significant benefit from these even after termination of the contract. Under Greek law, the commercial agent must assert this claim against the business within one year of termination of the contract, failing which it lapses.

Under Greek law, the commercial agent (εμπορικός αντιπρόσωπος) is governed by Presidential Decree 219/1991, which transposes the EU Commercial Agents Directive (86/653/EEC) into Greek law and corresponds, in substance, largely to German law. Notably, the application of this regime was expressly extended by Article 14(4) of Law 3557/2007 to service agency agreements and, under certain conditions, to exclusive distribution agreements, provided the distributor is, in practice, integrated into the supplier’s sales organisation.

B. Commercial broker

Under §§ 93 et seq. HGB, a commercial broker is a person who, without being permanently and contractually entrusted to do so, undertakes on a commercial basis, for other persons, to negotiate contracts for the acquisition or disposal of goods, securities, insurance, carriage of goods, or ship charters. The key difference from the commercial agent lies in the absence of a standing engagement: a person permanently entrusted with negotiation under a contractual relationship is a commercial agent, not a commercial broker, whereas activity that is actually carried out repeatedly or on an ongoing basis, without a standing engagement, falls under § 93 HGB.

The commercial broker’s task is to bring about the conclusion of the contract, not merely to point out an opportunity for it; the broker makes contact with both contracting parties. Because the broker is generally in a contractual relationship with both parties, this intermediary role gives rise, under § 99 HGB, to a statutory right to commission also against the other party to the transaction. Special forms encountered in practice include, among others, civil-law brokers (such as real estate, loan, and marriage brokers) and insurance brokers, the latter usually remunerated by the insurer.

Under Greek law, brokerage activity (μεσιτεία) is governed generally by Articles 703–707 of the Civil Code (AK), regardless of whether it concerns goods, securities, insurance, freight transactions, or other commercial subject matter. For the practically significant special case of the real estate broker, additional professional rules apply (including licensing requirements and information duties) under Articles 197–204 of Law 4072/2012, which supplement, but do not displace, the general provisions of Articles 703–707 AK. Under Article 703 AK, the client owes the Greek broker commission, in principle, only where the contract actually comes about as a result of the broker’s negotiation or introduction; where only a preliminary contract results and its final conclusion fails to materialise, only half the commission is owed. Under Article 707 AK, a disproportionately high broker’s commission may be judicially reduced to a reasonable amount.

C. Commission agent

The commission agent acts in their own name but sells goods or securities on a commercial basis for the account of another (the principal), §§ 383 et seq. HGB; the commission agent is remunerated by a freely agreed commission. The commission agent must carry out the commission with the diligence of a prudent merchant (§ 384 HGB) and is, in particular, subject to the following duties:

• Duty of notification: prompt notice of the execution of the transaction.
• Duty to account: written accounting for the execution transaction.
• Duty to hand over: handing over everything the commission agent has obtained from carrying out the transaction (§ 384 HGB in conjunction with §§ 675, 667 BGB) — the sale price in the case of a selling commission agent, or title to the goods in the case of a buying commission agent.
• Price limits: compliance with any price limits set by the principal (§ 386 HGB); a breach of instructions renders the commission agent liable in damages.

A special form of the commission transaction is consignment, under which the principal sends the commission agent (the consignee) ready-to-sell goods, as a consignment stock, for sale on the principal’s account. The advantage of using a commission agent lies in the cost-effective expansion of the sales network while the principal retains control; for the commission agent, the advantage is that they do not enter into a contract of sale with the principal and can return unsold goods.

Under Greek law, the commission agent (παραγγελιοδόχος) is separately governed by Articles 90 et seq. of the Εμπορικός Νόμος (the Commercial Code of 1835): Article 90 defines the commission agent as the person who acts in their own name, or under a trade name, for the account of a principal. Where the commission agent instead acts in the principal’s name, Article 91 of the Εμπ.Ν. refers additionally to the civil-law provisions on mandate/agency (Articles 713 et seq. AK).
Note: under Greek law, separate civil-law provisions for commercial brokers are found in Articles 197–204 of Law 4072/2012 (formerly Presidential Decree 248/1993); the commercial agent is governed by Presidential Decree 219/1991 implementing EU Commercial Agents Directive 86/653/EEC (see “Commercial Agency and Distribution Law”).

Economic advantages of the commission model

• For the business (the principal): the sales network can be expanded cost-effectively, while oversight and control over the business are preserved thanks to the commission agent’s strict duties.
• For the commission agent: no contractual commitment under a contract of sale, and no risk of unsold goods, since these can be returned to the principal if the sale does not succeed.