Contracts with commercial agents often include “post contractual non competition clauses”, also known as “restraint of trade clauses”. These clauses restrict the business activities of the agents after the contract ends, typically by limiting them to certain geographical areas or product categories to prevent competition with the principal. According to Italian law, an agent accepting such restrictions is entitled to an indemnity, payable when the relationship terminates.
During the contractual relationship, commercial agents are bound by a general obligation not to compete with their principal, meaning they cannot represent the principal’s competitors in the same geographical area and for the same products. However, this obligation ends once the contract is terminated for any reason, unless a “restraint of trade” clause is in place, requiring the agent to refrain for competing even after the contract ends.
The EU Directive on Commercial Agents (Directive 86/653/EEC) limits the validity of restraint of trade clauses by setting criteria on their duration, geographical scope and customer groups, but it does not provide for a compensation to the agent. Nevertheless, the Directive allows Member States to impose additional restrictions.
Italian law (Article 1751-bis of the Civil Code) goes further by stipulating that an agent who agrees to post-contractual trade restriction (with some exceptions) must receive and indemnity when the contract ends. This indemnity, which is non-commission based, is proportionate to the duration of the restrictions (which cannot exceed two years), the nature of the agency contract and the termination indemnity. If there is no agreement on the amount of the indemnity, the court can intervene to determine it. But is the provision of such an indemnity mandatory?
In a judgment dated 29 August 2024, the Italian Supreme Court addressed a case an agent sought indemnity for a two-year post-contractual non-competition obligation, as per Article 1751-bis of the Civil Code. The principal argued that the indemnity had been paid in advance during the contractual relationship as a percentatge of commissions, as specified in a clause of the agency contract. The agent, however, contended that this clause was invalid and contrary to the law. The Supreme Court ruled that it is permissible to pay the indemnity for post-contractual non-competition restrictions during the contractual relationship, in the form of a percentage of commissions. The Court stated that the relevant provisions of the Civil Code are not mandatory, as they are not required by EU legislation and do not serve a general public interest.
This recent judgment confirms previous rulings of the Supreme Court and lower courts, so that it is now clear that the parties to an agency agreement can decide, through contract regulation, that the indemnity for post-contractual restrictions is either excluded or paid during the relationship and in the form of commissions. However, special attention must be given to agency contracts governed by collective agreements (Accordi Economici Collettivi) which include specific rules on these matters.
