Question: I have been working in the UK for 10 years as a UK agent for an Italian principal company. We signed an agency agreement governed by the Italian laws. Said company was bought by another one when my agency contract and relationship were still pending.The new business asked me to sign a new agency agreement regarding the same products and region but under different terms and conditions. For instance, they would not grant regional exclusive sale privileges and would establish new sales targets to be met in order to obtain the annual agency agreement renewal.Can I refuse the new contract? In case of agency contract termination, would I be entitled to any compensation?
Answer: Under Italian law, in the case of a business sale, the new business takes on all the pending business relationships, unless stipulated and agreed upon differently. This means that legally the original contract is in force between you and the new business, and the new agreement contract shall be seen as an amendment of the previous contract. The agent (yourself) is allowed to refuse said amendments. Should the principal refuse to keep the old contract in force, the agent may terminate the contract.
In a situation of contract termination by the agent, several compensations would be granted under the mandatory Italian law. Said compensations might apply even over less favourable conditions, possibly agreed by the parties in the lease agreement. For instance, the agent might be entitled to claim
(i) an early termination indemnity, or
(ii) a portfolio improvement compensation.
Indemnities and compensations would likely also be calculated based on how many years the agreement had lasted.If the amendment were accepted, the agent would then be subject to the new regulations and possibly lose all compensation and the indemnity rights which had accrued during the 10-year period of the original agency agreement.If on the one hand you are reluctant to accept the new conditions but want to keep the job and, on the other hand, the new business owner insists for the new terms,it might be possible to negotiate an acceptable outcome for both parties based on Italian law.
An example of such could be if the principal grants a lump sum to you the agent to settle the accrued 10-year time rights and subsequently the new agency terms apply after said settlement.Our Italian lawyers assist agents and principals with national and international agency agreement relationships, start-up contracts, amendments and early terminations. We would be glad to review the applicable case circumstances and suggest an appropriate course of action with respect to your specific needs and expectations.
Should you like to contact one of our Italian lawyers, please click here.
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