The agreement with a commercial agent can be terminated for good cause with immediate effect by either party (Section 89a para. 1 German Commercial Code). Good cause is given if continuing the contractual relationship until the agreed end or until the end of the notice period for ordinary termination is considered unreasonable for the terminating party while taking into account the mutual interests and all circumstances of the individual case. According to a widespread opinion in the literature, it is not necessary for the terminating party to state the cause in the termination notice, rather, all causes existing at the time of termination have to be taken into account. This opinion is confirmed by a recent decision of the Higher Regional Court (OLG) Munich (Decision dated 8th February 2018 – 23 U 1932/17 – ZVertriebsR 2018, 103).
In the case at hand, an agent had filed a claim against its principal. By mutual consent, the agent activity had been carried out by the claimant’s husband for years. Immediately after the principal had prohibited the husband to enter the principal’s company premises, the husband downloaded several files from the company database onto his private computer. The files related to various past deals of the principal – they were not necessary for any agent activities of the couple. The court decided that this breach of trust constitutes a good cause and consequently considered the termination of the principal – who had not stated any causes – to be valid: “In the termination notice, it is not necessary to state the causes entitling to termination; a court needs to take into account all causes objectively existent at the time of termination when judging the validity of a termination for good cause.“
Consequently, it is permissible to state the causes after giving notice of termination or to submit subsequently further causes in addition to the causes stated in the termination notice – it is irrelevant whether or not the agent obtains knowledge of these causes only after receipt of the termination notice.
Causes that are arising only after the termination notice and that are not linked in any way to the causes stated in the notice have to be strictly distinguished. Such reasons cannot be considered for the initial termination. Instead – if these causes shall apply – it is necessary to terminate again which will result in a later termination of the contractual relationship.
While the decision generally makes it easier to terminate for good cause, we recommend carefully documenting the time of the first occurrence of any (additional) causes entitling to termination for good cause.
Thilo von Bodungen focuses on national and international trade and distribution law and the drafting and negotiating of agreements for the operational businesses with a focus on certain industries (in particular consumer goods, chemicals, automotive and industrials).