Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with EU and Member State national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. In essence, the directive establishes the rights and obligations of the principal and its agents; the agent’s remuneration, and the conclusion and termination of an agency contract, including the notice to be given, or compensation to be paid to the agent. U.S. companies should be aware that the directive states that parties may not derogate certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law, to be applied in the event of a dispute, will likely be ruled invalid by European courts.
The European Commission’s Directorate General for Competition enforces legislation concerned with the effects on competition in the internal market of “vertical agreements.” Most U.S. exporters are small and medium sized companies and are exempt from the regulations because their agreements would likely qualify as “agreements of minor importance,” meaning they are considered incapable of affecting competition at the EU level. Generally speaking, companies with fewer than 250 employees and annual revenue of less than EUR 50 million are considered small and medium-sized firms. The EU has also indicated that agreements that affect less than 10 percent of a particular market are generally exempt as well.
The EU looks to combat payment delays with Directive 2000/35/EC. This covers all commercial transactions within the EU, whether in the public or private sector, primarily dealing with the consequences of late payment. Transactions with consumers, however, do not fall within the scope of this directive. In sum, the directive entitles a seller who does not receive payment for goods/services within 30-60 days of the payment deadline to collect interest (at a rate of 7% above the European Central Bank rate) as compensation.
The EU also looks to combat payment delays with Directive 2000/35/EC which was reviewed in 2010. The existing text, as amended, covers all commercial transactions within the EU, whether in the public or private sector, primarily dealing with the consequences of late payment. Transactions with consumers, however, do not fall within the scope of this Directive. In sum, the Directive – as amended - entitles a seller who does not receive payment for goods and/or services within 30 days of the payment deadline to collect interest (at a rate of 8% above the European Central Bank rate) as well as 40 Euro as compensation for recovery of costs. For business-to-business transactions a 60 day period may be negotiated subject to conditions, The seller may also retain the title to goods until payment is completed and may claim full compensation for all recovery costs.
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