Commercial Law – Payment of Commission – Commercial Agency Regulations – Commercial Agent

The case of Heirs of Paul Chevassus-Marche v Groupe Danone and Others (Case C-19/07) [2008], involved a determination on community laws relating to commercial agents. According to Article 7(2) of Council Directive (EEC) 86/653 (On the coordination of the laws of the member states relating to self-employed commercial agents) (“the Directive”):

“A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract either where he was entrusted with a specific geographical area or group of customers… And where the transaction has been entered into with a customer belonging to that area or group…”.

Article 10 provides as follows:

“(1) The commission shall become due as soon as and to the extent that one of the following circumstances obtains:

(a) the principal has executed the transaction; or the principal should, according to his agreement with the third party, have executed the transaction; or…

(c) the third party has executed the transaction.

(2) The commission shall become due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction, as he should have”.

In 1987, the first respondent in this case concluded an exclusive mandate with C. The applicants in this case were heirs to C’s estate. The exclusive mandate concerned the first respondent’s representation of C’s subsidiaries, namely the second and third respondents, in their dealings with the importers, wholesalers and retailers of their goods in a specific geographical area.

Before the termination of that contract, C requested payment of various sums. Such sums included commissions relating to purchases made by two companies established in his geographical area.

The requests for payment were refused on the ground that the purchases concerned had been made from central buying officers or dealers in metropolitan France, an area outside the control of the respondents, and without any action on C’s part.

C then brought an action concerning payment of commission.

The national court made a reference to the Court of Justice of the European Communities. The question concerned a request for a preliminary ruling on the interpretation of Article 7(2) of the Directive. The question referred by the national court was as to whether Article 7(2) of the directive was to be interpreted as meaning that:

“A commercial agent entrusted with a specific geographical area was entitled to commission where a commercial transaction between a third party and a customer belonging to that area had been concluded without any action, either direct or indirect, on the principal’s part”.

It was held as follows:

The court was of the opinion that

· Article 7(2) of the Directive had to be interpreted as meaning that a commercial agent entrusted with a specific geographical area did not have the right to a commission for transactions concluded by customers belonging to that area without any action, direct or indirect, on the part of the principal.

· Article 7(2) merely refers to any transactions concluded during the period covered by the agency contract. There is no requirement that those transactions had to be entered into with a customer belonging to a geographical area or a group of customers for whom the commercial agent was responsible.

· There is not an express requirement for action on the part of the principal, and there is no requirement for action on the part of the commercial agent.

· However, it should be noted that when considering Article 7(2) in conjunction with Article 10, the commercial agent’s right to commission arises either:

§ when the principal has (or should have) carried out his obligation; or

§ when the third party to the agency contract, namely, the customer, has (or should have) carried out his obligation.

· The presence of the principal in the transactions for which the commercial agent could claim commission was indispensable. It therefore followed that the commercial agent could claim commission. The commercial agent’s claim for commission could be made on the basis of a transaction only to the extent that the principal had acted, directly or indirectly, in the conclusion of that transaction.

· As a result, this meant that it was for the national court to establish:

“Whether or not the evidence before it, assessed in the light of the aim of protecting the commercial agent and of the obligation on the principal to act dutifully and in good faith, allowed it to establish the existence of such action, be that action of a legal nature”.

© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Real Estate Agency Best Practice – Protect Your Commission Before You Give Out Details

If you haven’t figured it out yet, the commercial real estate market is like all others when it comes to the competition in your area and people taking your business away from you. Be mindful that contact details given to the wrong person and without some written protection of your commission will likely mean that you loose the deal or loose the client or both.

Trust no one when it comes to your commission. Get all verbal facts and agreements in writing before you release your prospect information; and it’s not just the other agents that you need to worry about.

Experience proves that even clients will take verbal information and use it to their advantage if they can to close the deal directly and avoid commission. This means that you must have a paper trail that supports your claim on commission and the introduction of the prospect. You appointment to act for the client or that of the other agent should be valid and in writing. There is only one way to do things and that is the right way.

If you are approaching another agent to do a conjunction deal on one of their listings, do not presume that they have a valid appointment to act. Ask for some proof or commitment from them before you offer to work with them in conjunction.

Can you trust a verbal agreement from the client or another agent that your introduction of a prospect will be honoured when it comes to commission? No, is the simple answer.

Always back up any verbal agreement by supporting it in writing before you release details of the deal or the prospect to others. Money speaks many languages and influences many decisions. If commission can be saved because the deal with you as the real estate agent is not in writing or evidenced in some way, then expect that such will be the case.

An agreement is not a solid agreement until you have firmly tied it down with written instructions. Many people conveniently forget what was said when it comes to contracts or leases involving lots of money. In commercial real estate that is just about every deal. Expect disagreements and problems, so protect yourself and your commission at all times.

Take your own notes from any verbal instructions or agreements but then take it to the next level and put it in writing. It is quite common to have legal battles when it comes to commercial property, clients, and real estate agents. Critical statements and information must be checked and evidenced back to the source.

In any conjunction with another agent there is a temptation to act on a verbal agreement that the other agent will work with you if you introduce a qualified prospect to their listing. If you know the other agent, the temptation is to do the deal and do the paperwork later. So many commissions have been lost simply with this one situation.

Many clients have said that they will pay you commission if you bring them a purchaser for the property at the right price. Heard that before haven’t you?

So the way you can protect your commissions with other agents is to create a well-crafted letter of conjunction or agreement that can be sent to the other agent at a moment’s notice. It should contain key descriptive details on:

  • Name of the agents involved
  • Details of the owner or of the property
  • Details of the commission
  • Details of how the commission will be paid and by when
  • Date of agreement
  • Signatures of all key parties

Acting on unchecked or incorrect property information will also open the door to debate and legal claim. If you are in the property game long enough, you will be involved with such disputes, and the only way you can protect yourself is by diligence to detail and the evidence of everything. Stay legal and stay safe. You will create better deals.

Inside Legal Shield: A Critical 3rd Party Review

About Legal Shield

Legal Shield is a company founded in 1972 by entrepreneur and visionary, Harland Stonecipher. Mr. Stonecipher founded the company after being involved in a serious vehicle accident. Although he had car insurance to assist in his vehicle damage as well as health insurance to cover his hospital bills, he was completely unprepared for the legal expenses he quickly incurred.

Mr. Stonecipher quickly realized that although the United States has long had one of the world’s most advanced legal systems offering “justice for all”, often times that justice comes at quite a steep price that the average American unfortunately struggles to afford.

He decided to create a solution and thereby offer top legal services to Americans everywhere at a fraction of what those same services would normally cost. Pre-Paid Legal Services was born.

The company expanded quickly and was even listed on the New York Stock Exchange where it was a consistent top performer. In June of 2011, Stonecipher and his shareholders completed the sale and managerial transfer of the company to Midocean Partners, making it a privately held company for the first time in a long while.

The decision to re-brand and rename the company, Legal Shield, was officially announced at the company’s convention in Dallas, Texas on September 10, 2011. Legal Shield provides its services throughout the United States as well as in 4 Canadian provinces.

Legal Shield Service Summary

Legal Shield services are available on a month-to-month basis. Members have access to a multitude of service offerings that are tailored specifically to their needs. For $26 a month, one of the most popular plans the company offers members is called the Family Plan. It provides members with 5 main areas of coverage.

The first area of coverage is preventive legal services. Members receive access to premier law firms in their state for unlimited phone consultations. Members can have wills prepared for them as well as letters or phone calls written or placed on their behalf by the law firm.

The second area coverage is for motor vehicle incidents. Members can receive representation and consultation for moving traffic violations as well as for incidents of manslaughter, involuntary manslaughter, negligent homicide, and other vehicular homicide charges.

The third coverage area is trial defense. Members receive 75 hours of their law firm’s time for civil or criminal suit consultation and representation. Additional hours are available at a significant discount of the law firms’ regular hourly rate.

The fourth area is IRS audit coverage. Members have access to up to 50 hours of a tax attorney’s assistance in case they are audited by the IRS.
The fifth area of coverage provides members with a 25 % discount of the law firm’s regular hourly rate for legal issues that do not fall within the four areas of coverage.

Legal Shield also offers its members 24/7 access to an attorney should they be detained by police, be involved in a car accident, etc.

Another one of Legal Shields more popular services is its Identity Theft Shield. For a monthly fee this service provides continual monitoring of a member’s credit profile as well as full forensic restoration services in case their identity is compromised.

Compensation

Legal Shield markets its services through a diverse network of business affiliates known as independent associates. In order to enroll as an associate one must pay a one time fee of $249. The company provides marketing materials, support, and on going training.

Legal Shield pays advanced commissions on the sale of its membership plans.These upfront bonuses can be quite lucrative allowing associates to generate large commissions paid on a daily basis. Legal Shield associates also have the ability to recruit other associates to market the company’s services and recruit associates. Associates are able to earn commission overrides on the sales efforts of those within their own personal sales organisations.

The Missing Piece

The Legal Shield financial opportunity provides associates with a fantastic opportunity to build a lucrative home-based business and achieve financial independence. However, as with any business enterprise an associate’s chances of success are directly related to hard work and effort in order to achieve maximum results.

Although Legal Shield may sometimes provide its associates with potential customers or leads the reality is that the vast majority of an associate’s responsibility is to find new customers and sales associates on their own. This presents numerous challenges for any associate especially those who have not been able to grow a business beyond their friends and family members.

However, with the dramatic rise of the internet, Legal Shield associates can now equip themselves with dynamic new online marketing strategies and approaches that will help them grow a successful Legal Shield business without having to chase friends and family members around. Mastering online marketing strategies is a critical component to success in Legal Shield and for many associates it is the “missing piece” to achieving great success with this company.