Remuneration is an essential component of the commercial agency agreement. Without remuneration, there can be no legal commercial agency. Because remuneration is the heart of collaboration, it is also the most common source of disputes.
The Belgian legislature has recognized this and provides in Book X of the Code of Economic Law (CEL) in a detailed and largely mandatory legal framework. This framework is designed to protect the commercial agent, who is often considered the economically weaker party. It is crucial that both principal and agent understand when the right to remuneration arises, when it must be paid, and in what cases it may (exceptionally) expire.
For the commercial agent, it is important to know that the burden of proof for entitlement to remuneration is on him. The agent must show that the right to commission arose, that it is due and what the exact amount is.
The modes of remuneration (Art. X.7 CEL)
The law provides for three possible methods of remuneration that parties may freely agree upon:
- A fixed amount: A periodic, lump sum, regardless of the number of cases closed.
- A commission fee: A variable fee calculated based on cases mediated.
- A combination of both.
In practice, a combination of a small flat fee (to cover basic costs) and a variable commission fee is very common.
What is “remuneration” legally?
The term ‘remuneration’ is interpreted broadly. The law states that all elements of remuneration that vary according to the number or value of business are deemed to be commission. This therefore also includes bonuses, premiums or other variable benefits.
The agent is self-employed and, in principle, bears his own expenses (office, car, telephone, etc.). However, if the principal contractually pays a fixed expense allowance, case law often considers it (in part) as part of the ‘usual remuneration. This is crucial when calculating the termination fee and the goodwill fee.
The commission fee: the 4 key questions
Most disputes revolve around commissions. The law answers four crucial questions.
1. When am I entitled to commission (The origin)?
The right to commission may arise during or after the contract.
During the agreement (Art. X.8 CEL) The agent is entitled to commission for each case closed during the term of the contract if:
- Direct commission: The case was closed thanks to the agent's direct and active action. Merely passing on a name is not enough; the agent must have helped to close the case.
- Indirect commission (existing customers): The case is closed with an existing client who used to be brought by the agent for similar cases. Thus, the agent does not have to intervene directly in this matter. This applies to repeat or follow-up orders.
- Indirect commission (exclusivity): The agent was assigned an exclusive territory or customer group. The agent is then entitled to commission on all business concluded in that territory or with that group, even without his involvement. However, the agent must be able to prove the existence of this exclusivity.
After the termination of the agreement (Art. X.9 CEL) This is an often overlooked but crucial protection. The agent retains his right to commission for business completed after the end of the contract, in two cases:
- If the case is mainly due to the activity provided by the agent during the contract (e.g. lengthy negotiations) AND the case is closed within a period of 6 months after the end of the contract.
- If the customer's order was received by the principal or agent before the end of the contract (even if the order is not accepted and executed until after the end).
2. What about successor agents (Art. X.10 CEL)?
What if the efforts of the departed agent (Agent A) result in an order that is only brought in by the new agent (Agent B)? The law provides a priority rule: in principle, the commission accrues to the former agent (Agent A) unless the circumstances show that it is equitable to divide the commission between the two agents.
3. When is my commission due? (The due date)
A strict distinction must be made between the creation of the right to commission and its claimability (payment). The law (Art. X.11 CEL) states that the commission becomes due and payable as soon as and to the extent that:
- The principal has performed its part of the contract (e.g., delivered the goods);
- OR, the principal should have performed its part (e.g., delivery was scheduled, but the principal cancels itself);
- OR, the customer (the ‘third party’) has performed its part of the agreement (e.g., paid the price).
Parties can contractually deviate from these moments (e.g., provide that the commission is not due and payable until payment by the customer). However, the law provides a mandatory lower limit: the commission must be due and payable no later than when the customer has performed (or should have performed if the principal had delivered) its part of the transaction.
Effective payment must then be made no later than the last day of the month following the quarter in which the commission became due (Art. X.11, para. 3). This payment deadline is also of mandatory law.
4. Can my right to commission lapse? (The lapse)
What if the customer ultimately does not pay? The law largely protects the agent here. The right to commission can only lapse if the parties have expressly agreed and only in the limitative cases listed in the law (Art. X.12 CEL).
The main case is when it is established that the customer is not fulfilling its commitment (e.g., bankruptcy or final refusal to pay).
Important exception: However, the right to commission does NOT lapse if the customer's non-performance is due to circumstances attributable to the principal. For example, if the principal delivers defective goods causing the customer to refuse to pay, the agent retains its right to commission.
If a commission has already been paid, but the right to it subsequently expires (e.g., due to the customer's bankruptcy), the agent must refund the amount received.
5. Can the principal unilaterally change my commission?
Absolutely not. The legislature considers compensation an essential element of the contract. Article X.13(7) CEL therefore states unequivocally:
“Any unilateral modification of the originally agreed amount [...] is an act equivalent to breach of the commercial agency agreement.”
If the principal unilaterally reduces the commission rate - even by a few tenths - the agent may consider this an immediate and irregular breach of contract by the principal. The agent can then terminate the cooperation and claim termination and extraction fees.
This rule also applies to a unilateral change in the method of calculating commissions. The only exception is when the agent accepts the change “over a relatively long period of time without any reservations.” The court may then rule that there is tacit consent.
The del credere clause: when the agent does risk
A fundamental principle of commercial agency is that the agent does not bear the clients' insolvency risk. A del credere clause is the only contractual exception to this rule.
With this clause (Art. X.23 CEL), the commercial agent makes himself (usually partially) liable for the good faith of the customers he brings in, or in other words for the payment of invoices. Because this is so fundamentally contrary to the nature of agency, the legislature has subjected the validity of such a clause to very strict and cumulative conditions. A del credere clause that does not meet all of these conditions is void.
The 5 strict conditions of validity
- Written: The clause must be mandatorily agreed upon in writing.
- Limited to insolvency: In principle, the clause may only relate to the customer's insolvency (cessation of payment). It may only be extended in writing to other defaults, such as late payment.
- Only for its own transactions: The clause can only apply to transactions that the agent personally negotiated or concluded, not indirect transactions over which he had no control.
- No change by principal: The clause is invalid if the principal unilaterally changes the terms of delivery or payment without the consent of the agent.
- Limited to the committee (the cap): This is the most important protection. The agent's liability is limited by law to the amount of the agreed-upon commission for that particular transaction.
There are only two exceptions to this cap: liability may be higher (a) for a well-defined, specific transaction (e.g., a very large contract) or (b) when the agent had the authority to conclude the transaction itself on behalf of the principal (agent-contractor). Even in those cases, the court can still moderate the amount if there is a “manifest disproportion” between the risk and the stipulated commission.
Conclusion
Commercial agent remuneration is not a mere contractual issue; it is protected by a strong legal framework. The rules around the accrual of commissions (even after the end of the contract), the limited possibilities to void the right, and the prohibition of unilateral changes are of mandatory law.
If a principal still wants to hold the agent liable for defaulting customers, it can only do so through a del credere clause that meets strict legal requirements.
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