The European Court of Justice (ECJ) has responded to two preliminary questions referred from a court in Germany on the interpretation of the indemnity provisions in the Directive on commercial agents (89/653/EEC). The case before the national court concerns termination of an agency contract for commission sales of fuel at a petrol station owned by Tamoil (part of the Oilinvest group). The first question referred to the ECJ was whether the level of indemnity paid to the agent on termination is automatically limited to the commission lost as a result of termination even where the benefits to the principal may be higher in value. The ECJ held that a member state can adjust the indemnity payment to make it equitable in light of the circumstances but there should not be any automatic application of such a rule that would result in detriment to the agent. The second question considered by the ECJ was whether, in calculating the indemnity payment, it was necessary to consider any benefits which accrued to other members of the group to which the principal belonged. The ECJ held that, where the principal belongs to a group of companies, the benefits accruing to other companies in the group do not necessarily have to be taken into account in calculating indemnity unless this is part of the contractual arrangement. The practical consequence of the case is that a commercial agency contract should clearly define the beneficiaries of any contract entered into by the agent.