Commission Agent (Commissionnaire) vs Commercial Agent in France

What is a commission agent under French law?

Article L 132-1 of the Commercial Code (Code de commerce) defines the commission agent (commissionnaire) as a person who acts for the account of a principal (commettant) but in its own name. That single feature — acting in one's own name — is the hinge on which the whole regime turns, and the point of departure from the commercial agent, who acts in the principal's name. The commission agent contracts personally with the buyer; the principal remains behind it, often invisible to the third party. Lawyers describe the mechanism as indirect or imperfect representation, or a mandate without representation.

This opacity is not a defect but the reason the figure exists. It allows a supplier to place its products through a local contracting party without appearing itself — historically to keep a competitor from knowing who was behind an operation, and today, in international trade, where the identity or nationality of the producer might otherwise get in the way of dealing with local professional buyers or consumers. The commission agent gives the supplier a French face to the market while the goods and their proceeds remain, as we shall see, the supplier's own. The device fell into relative disuse across much of the twentieth century, as producers came to want their own brand and a direct relationship with the customer, and it has revived with the growth of international trade and of network retailing — so a foreign supplier is more likely to meet it today than a generation ago.

The three relationships a commission agent creates

Because the commission agent interposes itself, the operation generates not one relationship but three, and keeping them apart is the key to the whole subject. There is the relationship between the principal and the commission agent; the relationship between the commission agent and the buyer; and the relationship — or rather the near-absence of one — between the principal and the buyer.

Commission agent and buyer. Because the commission agent acts in its own name, it is personally and in principle solely bound to the buyer with whom it deals (Article 1154, paragraph 2, of the Civil Code). It carries the obligations and liabilities of the sale it concluded on the principal's account — payment, delivery, warranty against hidden defects — and, in return, the buyers are its clientele. Even if the commission agent later reveals the principal's identity, it remains bound to the buyer; a party cannot unilaterally convert a commission into a mandate, because the parties' consent was given to a commission, not to a direct sale by the principal, and the same holds even where it is the principal that discloses its own identity to the buyer.

Principal and buyer. Between the principal and the buyer there is no contractual link at all. The sale creates no privity between them, so neither can sue the other on the contract of sale. Only extra-contractual mechanisms — the oblique action (Article 1341-1 of the Civil Code) or unjust enrichment / the action de in rem verso (Article 1302-1) — can, exceptionally, bridge the gap. This is a sharp contrast with the commercial agent, whose every sale binds the principal directly to the customer.

Principal and commission agent. This relationship is governed, with adaptations, by the rules of mandate: the commission agent must execute its mission and render account, and the principal must furnish the means and pay the commission. The detail of these mutual obligations is set out below.

Who owns the goods: the real effects

One might expect that, because the commission agent contracts in its own name, the goods pass through its estate. They do not. It is accepted that the real effects of the operation — the transfer of ownership — take place directly between the principal and the buyer: ownership passes from the principal to the buyer without first vesting in the commission agent. The reason is that the commission agent does not exercise its own rights over the goods; it acts for another's account, so the property moves commercially straight from principal to buyer.

The practical value of this rule appears on the commission agent's insolvency. Because the goods never became the commission agent's property, the principal may reclaim, in the commission agent's insolvency proceedings, either the goods that it still owns and that the commission agent has not delivered, or their sale price where that price has not yet been paid to the commission agent. The supplier that sells through a commission agent therefore keeps a real protection over its goods that a supplier selling to a distributor — who takes title — does not have.

The commission agent's obligations: execution and account

As a mandatary, the commission agent owes two essential duties: to execute the mission and to render account. The intensity of the first depends on the mandate it was given.

Generally the commission agent bears an obligation of means — to deploy the efforts needed to place the products — without guaranteeing that they will be sold or paid for. Sometimes, however, it assumes an obligation of result, guaranteeing the proper completion of the operation; this is the effect of a del credere (ducroire) undertaking, whose reach the courts construe broadly. Where the mandate is imperative, the principal gives precise instructions — typically on the sale price — which the commission agent must apply strictly; applying the price fixed by the principal is not an anti-competitive practice, precisely because the commission agent is not a reseller, and a commission agent that sells below the fixed price must pay the principal the difference. Where the mandate is indicative, the commission agent is left to negotiate within limits, and its diligence is judged both on its search for customers and on the quality of the negotiations it conducted.

Two situations peculiar to the commission agent deserve a word, because they show how far its own-name role can be pushed. The commission agent sometimes buys the very goods it is charged with selling — it becomes, in the trade's language, a contrepartiste, acting on the operation both for the principal's account and for its own. Under an indicative mandate this self-dealing is dangerous: because of the conflict of interest between its role as counterparty and as intermediary, an undisclosed self-dealing can amount to the offence of fraud (Article 313-1 of the Penal Code) and justify annulment of the sale — but it is not an offence where the principal has authorised or ratified it, and the two capacities coexist, so the commission agent still earns its commission. The commission agent may equally hold complementary orders — selling for a supplier and buying for a client in the same operation, a marché d'application — in which case, having carried each mission to completion, it earns two commissions, provided it has no personal interest to prefer and has informed both principals.

Rendering account has a distinctive feature that protects the commission agent's position. It must inform the principal of the steps it has taken and the results obtained, and transfer to the principal the whole benefit of the operations concluded on its account — failing which it risks a charge of breach of trust. But it is not obliged to reveal to the principal the name of the third party with whom it dealt; indeed it will often take care not to, so that the principal cannot later bypass it by dealing directly with that customer. That reticence is legitimate, because the clientele is the commission agent's own — a point that becomes decisive on termination.

The principal's obligations — and the commission agent's security

The principal owes two duties in return: to facilitate the mission and to pay for it. Facilitation means providing the means to carry out the operation — chiefly by handing over the goods to be sold (in practice, a consignment) and the necessary instructions — then honouring the contract the commission agent concluded in conformity with those instructions, and refraining from hindering the commission agent, including by not competing on the market for the products, whether directly or through an intermediary.

Payment covers the commission and the outlays. The commission is fixed as a lump sum or in proportion to the value of the operation, and may be reduced by the court if it appears excessive; where the commission agent is bound by a del credere, the commission is strongly increased — often doubled — so much so that the rate can itself be evidence of such an undertaking. Beyond the commission, the principal must reimburse the expenses the commission agent advanced in performing the mission (Article 1999 of the Civil Code), which are owed whether or not the operation was concluded, and the losses it suffered in carrying out the mission (Article 2000), save where these result from the commission agent's own fault.

The commission agent's real security is the privilege that Article L 132-2 of the Commercial Code confers on it. The commission agent has a privilege over the value of the goods that are the object of its obligation, and over the documents relating to them, for all its commission claims against the principal — even those arising from earlier operations — including interest, commissions and accessory costs. This is a special movable privilege resting on the idea of a pledge: it ranks ahead of the general privileges, save court costs, tax privileges and the employees' super-privilege, and ahead of other special privileges save that of a third party who has incurred costs to preserve the goods after they were handed to the commission agent. It is a powerful protection: the commission agent that holds the goods holds, in effect, its own security for payment.

Termination: why there is no indemnity

Here the divergence from the commercial agent is at its sharpest. The commission agreement ends when the mission is complete, when it can no longer be performed, or when its term arrives; and because it is concluded intuitu personae, like a mandate, the death or incapacity of either party can bring it to an end. But — and this is the point a foreign supplier most needs to grasp — on termination the commission agent has, in principle, no indemnity analogous to the commercial agent's.

The reason lies in who owns the clientele. It was argued that the commission agent should be able to invoke the status of a common-interest mandate to claim an indemnity on the principal's unilateral termination, since it loses the commissions that continued business would have earned. The courts have rejected this. The commission agent, precisely because it masks the true seller from third parties, is itself the holder of the clientele attached to the products; the customers are its own. Only a mandate of common interest — where the intermediary develops a clientele for the principal — justifies an indemnity on the termination of an indefinite-term representation. The commission agent, having built a relationship with its own clientele, is not in that position, and no indemnity is due. This aligns with a broader principle: the termination indemnity compensates the intermediary who created a flow of business between the supplier and a clientele it brought — the commercial agent, the VRP, the common-interest mandatary — and not the operator, like the commission agent, who trades with its own customers.

There is one qualification worth noting for the drafting. Where the commission agent has accepted a post-contractual non-compete that lets the principal, or a new commission agent, recover the clientele previously attached to it, a reparation for that loss may be owed — because in that case the commission agent is, exceptionally, deprived of the customers it had made its own.

When to use a commission agent — and the requalification risk

The commission agent suits a supplier that wants a local contracting party to the market while keeping its goods, their proceeds and a real security in its own hands, and that is content for the intermediary to own the customer relationship in exchange for owing no termination indemnity. It is a natural fit for cross-border sales where the producer prefers not to appear, and it underpins a modern retail structure, commission-affiliation, in which the commission agent trades under the principal's sign while holding the principal's stock on the principal's account.

But the boundary with the commercial agent — and even with the common-interest mandatary — is delicate, and the risk runs both ways. The more tightly the principal controls the commission agent's prices, sales outlets and methods, the greater the danger. Excessive control can attract competition-law scrutiny over price-fixing, if the commission agent is treated as an autonomous operator; or it can push the commission agent towards the status of a commercial agent; or, where the principal approves the sales outlets and defines the environment, methods and prices for goods sold under its sign, towards a protective social-law status. Whether an "affiliate" was in truth a commercial agent has been much litigated. The lesson is the familiar one: the category is fixed by how the relationship actually operates, so a commission agent must be structured, and must function, as one — in its own name, on the principal's account, with genuine autonomy — if it is to keep the advantages, including the absence of an indemnity, that make it attractive.

Frequently asked questions about the commission agent

What is the difference between a commission agent and a commercial agent in France?

A commercial agent acts in the principal's name; a commission agent (Article L 132-1) acts in its own name on the principal's account. The buyer contracts with the commission agent, not the principal. The commercial agent has a mandatory termination indemnity; the commission agent, which owns its clientele, does not.

Does a commission agent get a termination indemnity?

In principle, no. Because the commission agent trades with its own clientele — it masks the true seller from third parties — the courts refuse it the commercial agent's indemnity. Only a common-interest mandate justifies such an indemnity. A reparation may be owed if a post-contractual non-compete lets the principal recover the commission agent's clientele.

Who owns the goods sold through a commission agent?

Ownership passes directly from the principal to the buyer; it does not vest in the commission agent. On the commission agent's insolvency, the principal can reclaim goods it still owns, or their unpaid price — a real protection the supplier keeps.

Can the buyer sue the principal directly?

No. There is no contractual link between the principal and the buyer, so neither can sue the other on the sale. Only extra-contractual routes — the oblique action (Article 1341-1) or unjust enrichment (Article 1302-1) — can exceptionally connect them.

What is the commission agent's privilege?

Under Article L 132-2, the commission agent has a special privilege over the goods and their documents for all its commission claims against the principal, including from earlier operations. It ranks ahead of most other privileges, giving the commission agent strong security for payment.

Can a principal fix the commission agent's sale prices?

Yes. Under an imperative mandate the principal may fix the price, and this is not resale price maintenance because the commission agent is not a reseller. A commission agent that sells below the fixed price must pay the principal the difference. Excessive control of prices and methods can, however, trigger requalification.

Key takeaways

How our French lawyers help with commission agency

This article is for general information only. It does not constitute legal advice. The classification of an intermediary as a commission agent or a commercial agent is fact-specific. Contact our French lawyers for qualified advice before appointing a commission agent or contesting a classification.