France: Agreement of intuitu personae clauses in agency agreements becomes more important

published on 17 October 2022 | reading time approx. 1 minute

The Court of Cassation has reinforced the importance of agreeing intuitu personae clauses in agency agreements with legal entities.

In two recent judgments of the same day (Cass. com. June 29, 2022 n°20-11.952 and n°20-13.228), the Court of Cassation clarified for the first time that the commercial agent's failure to comply with an intuitu personae clause agreed in the agency agreement is to be classified as a serious misconduct justifying termination of the agency agreement without compensation.

As a reminder, the public policy provisions of the Commercial Code provide that the commercial agent is entitled to a compensation payment in case of termination of his contract (article L134-12 of the Commercial Code), except in particular in case of commission of a serious misconduct by the commercial agent (article L134-13 of the Commercial Code).

If the commercial agent is a legal entity, it is ruled that intuitu personae is to be assessed in relation to the legal entity itself and not in relation to its directors or shareholders. Therefore, unless there is a special clause, changes in the control or management of the commercial agency company are not valid grounds for unilateral termination of the commercial agency contract by the principal (Cass. com. January 29, 2013 No. 11-23.676).

The inclusion of an intuitu personae clause, in particular in the form of an approval in the event of a change of control or management, is therefore necessary so that the principal has a say in these changes, which may, however, profoundly affect the commercial agent's activities. A breach of such a clause entitles the principal to terminate the agency contract for serious misconduct without paying any compensation. This is the contribution of these judgments, which reinforce the interest in including intuitu personae clauses in commercial agency contracts.