Is Your Intermediary Really a "Commercial Agent"? The Negotiation Test

Is your intermediary really a commercial agent? Why the question decides everything

The label on a contract does not decide whether an intermediary is a commercial agent (agent commercial). Under Article L 134-1 of the French Commercial Code (Code de commerce), a commercial agent is an intermediary instructed, on a permanent basis, to negotiate — and possibly conclude — contracts in the name and on behalf of a principal. Of the conditions in that definition, negotiation is the one most often contested, because it is the pivot on which the whole status turns: an intermediary that does not negotiate cannot be a commercial agent, and an intermediary that does can be one even where the contract calls it something else.

The stakes are high because the status carries a protective regime a principal cannot contract out of — commission, notice, and, above all, a termination compensation customarily assessed at around two years of the agent's gross commission. A principal that has, in substance, appointed a commercial agent while believing it engaged a mere "sales representative", "business introducer" or "consultant" can find, on termination, that it owes that compensation. The negotiation test is where that outcome is decided.

The status of a commercial agent is fixed by the facts, not the label

Commercial-agent status is a matter of public order (ordre public). Whether it applies depends not on the intention the parties expressed in their contract, nor on the name they gave it, but on the conditions in which the activity is actually carried out (Cour de cassation, chambre commerciale, 10 December 2003, no. 01-11.923; confirmed in 21 June 2016, no. 14-26.938, and 19 October 2022, no. 21-21.378). A relationship dressed up as a franchise, a consultancy or a simple introduction can be requalified as a commercial agency where the intermediary in fact negotiates sales in the principal's name.

Because the characterisation follows the facts, it can move in either direction, and the moment it is tested is almost always the moment the relationship ends and one side has a strong reason to argue for the reading that suits it. A contract that names the intermediary an "agent" but has it buy and resell on its own account will be treated as distribution, not agency; a contract that avoids the word "agent" but has the intermediary negotiate for the principal will be treated as an agency. Drafting cannot override the substance — but it can, and should, make the substance match the intended status.

The reach of the test is wide because the activity an agent may negotiate is itself broad. The status is not confined to selling physical goods: it extends to the purchase and rental of goods and to the supply of services, so an intermediary that negotiates service business — prospecting for an interior-designer, or finding franchisees for a franchisor — can be a commercial agent just as much as one selling products. That breadth is why so many arrangements described as "consultancy", "business development" or "representation" turn out, on the facts, to satisfy the definition. The wider the range of activities the status can attach to, the more important it is to test each relationship against the negotiation criterion rather than trust its heading.

The negotiation test: what "negotiate" means for a commercial agent

The decisive question is what "negotiate" means, and it has been contested for years. A narrow reading confines it to discussing and altering the terms of the contract — in particular the price. A broad reading extends it to the whole range of steps by which the intermediary attracts customers to the principal and induces them to deal: prospecting, presenting the products, advising, informing, and conducting the discussions that lead to a sale.

The broad reading now prevails, and it has widened the category of commercial agents considerably. The Court of Justice of the EU held that an intermediary need not have the power to alter the prices of the goods it sells in order to be "negotiating" within the meaning of the 1986 Directive: the agent's essential task is to bring in new customers and develop existing business, which can be achieved through information, advice and discussion, and a restrictive reading would only help principals engineer their way around the protective status (Court of Justice of the EU, 4 June 2020, Case C-828/18). The Cour de cassation aligned French law with that interpretation, holding that an intermediary charged with negotiating, and possibly concluding, contracts is a commercial agent even where it cannot modify the prices of the products or services concerned (Cour de cassation, chambre commerciale, 2 December 2020, no. 18-20.231). Where the contract is governed by French law under the Hague Convention, this European interpretation must be followed even if the intermediary operates outside the EU (Cour de cassation, chambre commerciale, 11 January 2023, no. 21-18.683).

This broad reading is a genuine change of position, not a restatement of the old law. It condemned the narrow conception of negotiation previously dominant in French practice, and the Cour de cassation adopted it in a reversal of its earlier case law, since confirmed in a settled line of decisions (Cour de cassation, chambre commerciale, 16 June 2021, no. 19-21.585; and 7 September 2022, no. 20-20.625). An intermediary assessed under the old, price-focused test as a mere introducer may well be a commercial agent under the test as it now stands — which is why relationships set up years ago are worth re-examining against the current law.

The power to conclude contracts is not essential either

If the power to set prices is not required, neither is the power to conclude the contract. Article L 134-1 speaks of an agent charged with negotiating "and possibly" concluding contracts. Read in the light of the Directive — which defines the agent as a person instructed either to negotiate, or to negotiate and conclude — the word "possibly" does not mean the intermediary must at least be able to conclude; it means it may, or may not, have that power. An intermediary whose task is to prospect and negotiate, leaving the principal to sign, can still be a commercial agent.

The case law is explicit. An intermediary is a commercial agent where it has the power to negotiate, even where the contract states that it cannot bind or "engage" the principal (Cour de cassation, chambre commerciale, 19 June 2019, no. 18-11.727), and even where it cannot itself conclude the contracts. What matters is the negotiating role, understood broadly, not the authority to sign. A clause reserving the conclusion of contracts to the principal is therefore no protection against the status, so long as the intermediary genuinely negotiates.

The awkward word "possibly" may be the product of an imperfect transposition. The Directive defines the agent as a person instructed either to negotiate, or to negotiate and conclude the operations — two alternatives. In transposing it, the French legislature, drawing on an earlier 1958 decree, compressed the two into the single formula "negotiate and possibly conclude". Read against the Directive, "possibly" cannot mean that the agent must be able to conclude, if only possibly; it means that the power to conclude is one the agent may or may not hold. The upshot is the same: prospecting and negotiating, without the power to conclude, is enough. A related point confirms the direction of travel — a right for the principal to withdraw from a deal (a faculté de dédit) does not contradict a power to conclude that the agent may otherwise hold.

Who fails the negotiation test — intermediaries that are not commercial agents

The breadth of the test still leaves a real category of intermediaries outside the status: those who do not negotiate at all, in even the broad sense. An intermediary whose role is purely technical, or limited to assistance and advice, to transmitting orders, or to prospecting, commercial assistance and monitoring shipments — material operations only — is not a commercial agent.

The courts have refused the status to a person merely charged with presenting products, who was not instructed to negotiate sales (Cour de cassation, chambre commerciale, 27 April 2011, no. 10-14.851); to an intermediary that only transmitted information and relayed customers' requests, without any action beyond putting the parties in contact (Cour de cassation, chambre commerciale, 10 February 2021, no. 19-13.604); and to one charged only with presenting potential investors to the principal, and not with negotiating with them (Cour de cassation, chambre commerciale, 5 October 2022, no. 19-23.508). What these have in common is the absence of any active step to attract and persuade the customer — the intermediary is a conduit, not a negotiator.

This is also where the line with a broker (courtier) is drawn. A broker merely brings the parties into contact and finds serious prospects, leaving the negotiation to the principal; a commercial agent goes further and takes the active steps that induce the customer to conclude. The difference is one of degree — both are active — but the broker "puts in contact" while the agent "persuades". An intermediary that only supplies names is a broker or introducer; one that works to convince the customer to deal is an agent.

Because the line is one of degree, the same intermediary can cross it depending on what it actually does. A contract labelled as a broking or introducer mandate has been requalified as a commercial agency where the intermediary carried out operations of information and advice, help with the decision, and preparation of the contracts, of a kind apt to favour the conclusion of the sale for the principal (Cour d'appel de Douai, 21 October 2021, no. 19/06400). Conversely, an intermediary whose role is confined to relaying information and the identity of potential customers, to allow the principal itself to introduce its products, and who cannot even issue a quotation or take an order, stays on the broker side of the line and is not a commercial agent. The test is always the same: has the intermediary taken active steps to win the customer, or only pointed the principal toward one?

Requalification runs both ways — and both are costly

Getting the characterisation wrong is expensive in either direction. The first risk is requalification up into a commercial agency: a principal that appoints a "distributor", "introducer" or "consultant" which in fact negotiates in its name discovers, on termination, that it owes the agent's protected compensation. The second risk runs sideways, into an employment or salaried-representative relationship. Where the intermediary is not genuinely independent — where it is paid a fixed, guaranteed remuneration, has its costs reimbursed by the principal, and operates under close control — the arrangement can be denied commercial-agent status and treated as employment, with the social-security and dismissal consequences that follow (Cour de cassation, chambre commerciale, 14 November 2024, no. 23-16.948).

The requalification can also reach arrangements dressed up as another network contract entirely: a relationship presented as a franchise has been examined and treated according to its true nature where, in substance, the intermediary was negotiating in the principal's name. The heading of the contract — franchise, distribution, consultancy — yields to what the parties actually did.

Two further points refine the test. A commercial agent need not carry on an itinerant activity, moving from place to place, to qualify — sedentary negotiation is enough (Court of Justice of the EU, 21 November 2018, Case C-452/17). And the parties may, if they wish, deliberately submit an intermediary to the commercial-agent regime even where all the conditions are not met; what they cannot do is escape the regime by disguising an agency as something else. The direction of the case law is to make the qualifying conditions easy to meet and the escape routes hard to use, precisely so that the protective status cannot be engineered away.

Four questions to test whether your intermediary is a commercial agent

Frequently asked questions about the commercial-agent negotiation test

Does a commercial agent have to be able to set or change prices?

No. An intermediary need not have the power to alter prices to be "negotiating" within the meaning of the Directive (Court of Justice of the EU, Case C-828/18) and of French law (Cour de cassation, chambre commerciale, 2 December 2020). A fixed price list does not defeat the status.

Does a commercial agent need the power to sign contracts?

No. The power to conclude contracts is not essential. An intermediary charged with negotiating can be a commercial agent even where the contract states it cannot bind or "engage" the principal (Cour de cassation, chambre commerciale, 19 June 2019).

Can a contract avoid commercial-agent status just by calling the intermediary something else?

No. The status depends on how the activity is actually carried out, not on the label (Cour de cassation, chambre commerciale, 10 December 2003). A "distributor", "introducer" or "consultant" that in fact negotiates in the principal's name can be requalified as a commercial agent.

What kind of intermediary is not a commercial agent?

One that does not negotiate — for example an intermediary that merely presents products, only transmits orders, or simply introduces prospects without negotiating with them. A broker that only puts the parties in contact is not an agent; an intermediary that works to persuade the customer is.

Does the agent have to travel or work in the field?

No. A commercial agent need not carry on an itinerant activity; negotiating from a fixed place is enough (Court of Justice of the EU, Case C-452/17).

Can the parties choose to be under the commercial-agent regime even if the conditions are not all met?

Yes. The parties may deliberately submit to the regime. What they cannot do is escape it by disguising a genuine agency as another kind of contract.

Key takeaways

How our French lawyers assess whether your intermediary is a commercial agent

This article is for general information only. It does not constitute legal advice. Whether an intermediary is a commercial agent is highly fact-specific. Contact our French lawyers for qualified advice before relying on the label of a contract or taking any step in a requalification or termination dispute.