Commercial contracts of every kind (commercial leases, distribution agreements, franchising agreements, international trade agreements, etc.) form the legal backbone of a business’s commercial operation. The contracts most commonly encountered in business dealings are those of commercial agency and commercial distribution, which constitute the principal subject matter of commercial contract law, comprising rules that govern the relationship between a supplier of goods or services and its partner.
The commercial agent is the person who carries out commercial transactions in the name and on behalf of the supplier. Their remuneration consists of a commission on the sale of the supplier’s products or services. The commercial distributor is the person who purchases products or services from the supplier and resells them to their own customers. Their remuneration is the price differential achieved between the purchase and resale of those products or services. The termination of the relationship between such persons and the supplier gives rise to a right of compensation and, more generally, to legal and economic issues that require resolution.
However, a commercial contract or agreement is not limited to these forms. There are also commercial relationships preceding any final agreement, and overall there are several types of commercial contracts:
- Letter of Intent
- Cooperation agreement or Memorandum of Understanding (MOU)
- Non-Disclosure Agreement (NDA)
- Commercial Agency Agreement
- Commission Agency Agreement
- Distribution Agreement
- Manufacturing Agreement
- Professional or Commercial Lease Agreement
- Business Lease or Business Operation Agreement
- Hotel Lease Agreement
- Business Management Agreement
- Sales – Resale Agreement
- Commercial Sale or Order
- International Sale Agreement with Incoterms
- Asset Sales Agreement
- Share Sales Agreement
- Shareholders’ Agreement
- Current Account Agreement
- Credit Facility Agreement
- Pledge Agreement
- Documentary Credit Agreement
- Letter of Guarantee or Suretyship Agreement
- Financial Leasing Agreement
- Factoring Agreement
- Assignment of Receivables Agreement
- Trademark Assignment Agreement
- Patent Assignment Agreement
- Trademark or Distinctive Sign Licence Agreement
- Patent Exploitation Agreement
- Know-How Agreement
- Commercial Information Agreement
- Trade Secret Agreement
- Intellectual Property Agreement
- Intellectual Property Assignment or Exploitation Agreement
- Non-Compete Agreement
- Consultancy Agreement
Owing to their specialised knowledge and substantial experience, our lawyers provide legal services concerning:
- extra-judicial and advisory legal practice;
- negotiations between the parties;
- drafting of contractual terms;
- breach of contractual obligations and the legal handling thereof;
- the bringing of damages claims;
- the bringing of claims for the counterparty’s compliance with and observance of the agreed terms.
- See also article Companies
- See article Company Formation
- See article Intra-Corporate Disputes
- See article Interim Measures against Facebook/Twitter/Instagram for Advertising Accounts
- See article Cybercrime
- See also article Professional Commercial Leases
- See also article Tax Law
- See also article Intellectual Property Rights
- See also article Payment Order
FREQUENTLY ASKED QUESTIONS ON COMMERCIAL CONTRACTS – LAWYER
1. What risks does a commercial contract entail without legal review?
A commercial contract signed without prior legal review may contain terms that bind one contracting party disproportionately, particularly where the text has been drafted by the opposing side. Common pitfalls include vague exclusivity clauses, excessive penalty clauses, unilateral termination terms, automatic renewals, post-termination non-compete clauses and opaque terms regarding commission or remuneration. In commercial agency and distribution agreements, the absence of a provision for goodwill compensation upon termination of the contract may deprive a party of significant sums. Preventive review identifies the problematic points before the client becomes contractually bound.
2. What can I do if the counterparty breaches the contract?
In the event of a breach of contractual obligations, there are graduated means of response. The first step is an extra-judicial notice clearly identifying the breach and demanding compliance or remedy. If there is no response, a lawsuit is filed seeking specific performance of the contract, damages, payment of a penalty clause, or termination on grounds of the counterparty’s fault. In urgent cases, interim measures are sought to provisionally regulate the situation, or precautionary attachment is imposed. Where there exists a liquidated monetary claim arising from invoices or documents, a payment order is a swift and effective collection tool.
3. Am I entitled to goodwill compensation following the termination of a distribution agreement?
The commercial agent is entitled to goodwill compensation under Presidential Decree 219/1991 where the contract is terminated and the agent has brought new clientele or an increase in transactions to the supplier. The compensation is calculated on the basis of the commissions earned over recent years and is subject to a maximum cap. In distribution agreements, the courts as a rule apply the provisions on commercial agency by analogy, provided the distributor is integrated into the supplier’s network. However, documentation is required of the contribution to building clientele, of turnover figures and of the circumstances surrounding the termination of the contract.
4. How long does it take to draft or negotiate a contract?
The timeframe depends on the complexity of the relationship and the willingness of the parties. Standardised contracts (NDAs, letters of intent, simple sale agreements) are completed within a few days. Distribution agreements, franchising, business or share transfers typically require several weeks, as legal and financial due diligence and the negotiation of critical terms must be carried out beforehand. International contracts with Incoterms or governing-law clauses require additional time. In litigation arising from breach of contract, completion may take from a few months (payment order, interim measures) up to several years for an ordinary lawsuit.
5. What documents and information are required to handle the case?
For drafting or reviewing a contract, the corporate documents of both parties, prior commercial correspondence, any earlier agreements and a description of the commercial rationale of the cooperation are required. For pursuing a claim in the event of breach, the contract itself is needed, together with invoices, delivery records, extra-judicial notices, emails and messages evidencing the parties’ conduct, bank statements and turnover data. For goodwill compensation claims, detailed records of commissions and clientele over the last five years are required, so that the amount sought may be properly calculated.
6. What is the role of the lawyer in commercial contracts?
The firm’s lawyer intervenes at every stage of the commercial relationship. In the pre-contractual phase, they draft letters of intent, memoranda of understanding and non-disclosure agreements, and participate in negotiations to secure balanced terms. In drafting the contract, they shape the clauses so as to protect the client from future risks and to leave open avenues of exit. During the course of the cooperation they provide ongoing advice on the performance of the terms, while in a crisis of the relationship they handle termination, settlement negotiations or the judicial pursuit of damages and goodwill compensation claims.