(Liability of commission agent for performance of contracts)
1. A commission agent is not responsible for the performance of obligations
undertaken by persons with whom he contracts, except if at the moment of the
conclusion of the contract he knew or should have known of their insolvency.
2. Besides the cases mentioned in the previous paragraph, the commission
agent is only liable for performance of the obligations of persons with whom he
concludes contracts if such liability is expressly agreed or arises from usage.
3. A commission agent who is held liable in accordance with the previous
paragraph to a principal for performance of obligations undertaken by the
persons with whom he concludes contracts is entitled to receive, besides the
normal remuneration, a del credere commission, which, in the absence of
agreement, is determined by usage; in the absence of usage, according to equity.
(Contracts agreed under more advantageous conditions)
A commission agent who agrees a contract under conditions which are more
advantageous than those set by the principal, namely if he buys at a lower
price, or sells for a price higher than that mentioned in the principal's
instructions, is not entitled to the difference, and must deliver it to the
principal.
(Credit operations)
1. A commission agent is deemed to be authorized to sell on credit in
accordance with usage, except if the principal has instructed him to the
contrary.
2. If the commission agent sells on credit in spite of the principal's
prohibition or in breach of usage, the principal can demand immediate payment
from him; in this case the commission agent is entitled to receive interest and
other benefits deriving from the credit extended.
3. The commission agent who effects credit sales should indicate to the
principal the name or firm of the buyer and the time limit granted, under
penalty of it being considered that the sale was made against immediate full
payment; the previous paragraph shall apply.
(Endorsement of negotiable instruments)
If the object of a commission is the acquisition of negotiable instruments,
the commission agent is obliged, when endorsing them, to do so in the usual
terms and without any reservations.
(Buying from or selling to principal)
1. Except if there is an agreement to the contrary, in a commission for the
purchase or sale of merchandise, securities or currencies that have a market
price or a price determined by public authority, the commission agent can, at
such price, supply as seller the goods that he is commissioned to buy, or
purchase for himself, as buyer, the goods that he is commissioned to sell,
without prejudice to his right to remuneration.
2. Even if a price was stated by the principal, the commission agent who
purchases for himself goods that he is commissioned to sell cannot buy them for
a price lower than the market price on the day the transaction is concluded, if
the latter is higher than the price set by the principal; the commission agent
who supplies as seller goods that he is commissioned to buy cannot ask for a
price higher than the market price, if the latter is lower than the price set by
the principal.
3. In the cases mentioned in this article, if, at the moment at which he
communicates execution of the commission, the commission agent does not reveal
to the principal the name of the person with whom he contracted, it is
considered that he made the purchase or the sale for his own account.
(Obligation to mark merchandise)
A commission agent who holds merchandise of the same kind, belonging to
different owners, is obliged to take the necessary measures to mark it in order
that no doubt can arise as to the respective ownership.
(Transactions regarding merchandise belonging to different principals)
If the object of a single contract is merchandise belonging to various
principals, or to the commission agent himself and to any principal, the
commission agent must separate them in invoices, mentioning the marks that
identify the place of origin of each item, and separately enter in the books
what relates to each owner.
(Credits with different origins)
1. A commission agent who has credits against a single person, resulting from
contracts made for the account of different principals, or for his own account
and for third parties, is obliged to indicate in all deliveries that the debtor
makes, as well as in the receipts that he issues, the name of the interested
party for whose account he has received it.
2. If the indication mentioned in the previous paragraph is missing in the
receipts and in the books, calculation shall be made proportionally regarding
each credit.
(Examination of goods by principal)
The provisions of the Civil Code regarding the purchase and sale contract
shall apply to the examination, denunciation of defects, or lack of conformity,
of goods by a principal.
(Delay by principal)
If a principal does not provide for the destination of goods, being obliged
to do so in accordance with the circumstances, the commission agent can make use
of the rights granted to the seller by articles 575 and 576.
(Remuneration)
In the absence of agreement, remuneration is determined by professional fee
schedules or, in their absence, by usage; in the absence of both, in accordance
with equity.
(Acquisition of right to remuneration)
1. A commission agent acquires the right to his remuneration as soon as and
to the extent to which the third party has fulfilled the contract.
2. However, if there is a del credere stipulation, the commission agent can
claim the remuneration due as soon as the contract has been concluded.
(Expenses)
Unless there is an agreement to the contrary, a commission agent is entitled
to reimbursement of expenses he has incurred for the execution of a commission,
including compensation due for use of his warehouses and means of transport.
(Right of retention)
The commission agent has a right of retention over a principal's merchandise
under his control, regarding credits resulting from the execution of the
commission, namely if he is in possession of the documents that incorporate the
right to dispose of them.
(Commission in relation to other transactions)
The rules on the commission for purchase and sale of goods are applicable,
with the necessary adaptations, to other commissions, concluded between
commercial entrepreneurs, with an object other than purchase and sale of goods.
FORWARDING CONTRACT
(Concept)
A forwarding contract is a mandate by which a commercial entrepreneur
undertakes the obligation to conclude, in his own name and for the account of
the principal, a contract for carriage of goods and respective accessory
operations.
(Revocation)
While a forwarding agent has not concluded a carriage contract with a
carrier, the sender can revoke the order for its conclusion, reimbursing the
forwarding agent his expenses and paying him a remuneration proportional to the
service rendered.
(Obligations of forwarding agent)
1. In choosing the route, the means, and the modalities of transportation of
goods, a forwarding agent shall respect the instructions of the principal and,
in their absence or insufficiency, act in order to protect his interests in the
best possible manner.
2. The forwarding agent is not obliged to insure the goods forwarded, unless
otherwise agreed or arising from usage.
3. Premiums, rebates and cut-rates obtained by the forwarding agent shall be
credited to the principal, unless otherwise agreed.
(Rights of forwarding agent)
1. In the absence of an agreement, remuneration for services rendered by a
forwarding agent shall be in accordance with professional fee schedules or, in
their absence, in accordance with usage.
2. Expenses anticipated and compensations due for the rendering of ancillary
services by the forwarding agent are paid against the presentation of documents
evidencing them, unless an all-inclusive aggregate amount was agreed as payment.
(Assumption of liability for execution of carriage)
A forwarding agent who, with his own means or with means from a third party,
undertakes liability, wholly or partly, for execution of carriage, is also
subject to the rights and obligations of a carrier.
(Default regime)
The rules of the commission contract shall apply, with the necessary
adaptations, to all matters not especially regulated in this Title.
AGENCY CONTRACT
GENERAL PROVISIONS
(Concept and form)
1. Agency is a contract by which one of the parties undertakes to promote for
the account of the other party the conclusion of contracts, in an autonomous and
stable manner and against remuneration, possibly with the designation of a
certain zone or a certain circle of clients.
2. Any of the parties has the right, which cannot be renounced, to claim from
the other a signed document indicating the content of the contract and any
subsequent additions or amendments.
(Agent with power of representation)
1. Without prejudice to the following paragraphs, an agent can only conclude
contracts in the name of the other party if the latter has granted him, in
writing, the necessary powers.
2. However, claims and other declarations related to contracts agreed with
the intermediation of the agent can be presented to him.
3. The agent has the right to request urgent measures that may be
indispensable to safeguard the rights of the other party.
(Collection of credits)
1. An agent can only collect credits if the other party has authorized him in
writing to do so.
2. The agent to whom powers of representation have been granted is presumed
to be authorized to collect the credits resulting from contracts concluded by
him.
3. If the agent collects credits without the required authorization, article
760 of the Civil Code shall apply, without prejudice to the regime established
in article 644.
(Exclusive agent)
The concession of an exclusive right in favor of an agent, according to which
the other party is prevented from using other agents for the exercise of
activities that are in competition with those of the exclusive agent, within the
same zone or the same circle of clients, is dependent upon agreement by the
parties.
(Sub-agency)
1. Unless there is an agreement to the contrary, use of sub-agents is
permitted.
2. The norms of this Title shall apply, with the necessary adaptations, to
the sub-agency relation.
RIGHTS AND OBLIGATIONS OF PARTIES
OBLIGATIONS OF AGENT
(General principle)
In fulfilling his obligations, an agent should act in good faith; he should
safeguard the interests of the other party and undertake the activities
appropriate to the full achievement of the contractual aim.
(Enumeration)
An agent namely is obliged:
a) to respect those instructions of the other party that do not touch upon
his autonomy;
b) to provide such information as may be requested from him or is necessary
to good management, namely information on clients' solvency;
c) to clarify to the other party the market situation and perspectives of
evolution;
d) to render accounts, under agreed conditions, or whenever justified.
(Obligation of confidentiality)
Even after the termination of the contract, an agent cannot use or disclose to
third parties secrets of the principal that have been entrusted to him or that
he has gained knowledge of during the exercise of his activity, except to the
extent that the professional code of conduct may allow this.
(Obligation of non-competition)
1. An agreement creating an obligation for an agent not to exercise, after
the termination of the contract, activities that are in competition with those
of the principal, must be made in a written document.
2. The obligation of non-competition can only be agreed for a maximum period
of two years, and it shall be limited to the zone or circle of clients entrusted
to the agent.
('Del credere' agreement)
1. An agent can guarantee, by an agreement in writing, the performance of
obligations related to contracts negotiated or concluded by him.
2. Such del credere agreement is only valid if it specifies the contract, or
if the persons guaranteed are identified.
(Temporary impossibility)
An agent for whom it is temporarily impossible to wholly or partly fulfill a
contract should give immediate notice of this to the principal.
RIGHTS OF AGENT
(General principle)
An agent is entitled to demand from the principal behavior in accordance with
good faith, so as to fully achieve the contractual aim.
(Enumeration)
An agent namely is entitled:
a) to obtain from the other party elements that, according to the
circumstances, are necessary to the exercise of his activity;
b) to be informed, without delay, of the acceptance or refusal of contracts
negotiated, and of those that he has concluded without the necessary powers;
c) to receive periodically a list of contracts concluded and of commissions
due, at the latest by the last day of the month following the quarter in which
the right to the commission has been acquired;
d) to demand the provision of all information that may be necessary to verify
the amount of commissions due to him, namely an extract from the accounting
books of the other party;
e) to the payment of remuneration, under the agreed terms;
f) to receive special commissions, which can be cumulative, in relation to
the task of collecting credits and to the del credere agreement;
g) to compensation for the obligation of non-competition after termination of
the contract.
(Right to notice)
An agent is entitled to be given immediate notice whenever the principal is
in a position to conclude only a number of contracts considerably lower than had
been agreed or could have been expected, according to circumstances.
(Remuneration)
In the absence of agreement by the parties, the remuneration of an agent
shall be calculated in accordance with usage or, in its absence, in accordance
with equity.
(Right to commission)
1. An agent is entitled to a commission for contracts that he arranged and,
as well, for contracts concluded with clients that he has procured, provided
that these are concluded before the termination of the agency relation.
2. Except if there is a written agreement to the contrary, an agent who
benefits from a right of exclusive does not forfeit the right to the commission
regarding contracts concluded directly by the other party with persons within
the zone or circle of clients reserved to him.
3. The agent is only entitled to the commission for contracts concluded after
the termination of the agency relation by proving that he negotiated them or
that, having prepared them, their conclusion is due mainly to his activity,
provided that, in both cases, the contracts are concluded within a reasonable
period after the termination of the agency relation.
(Succession of agents)
An agent does not have the right to the commission while the contract is in
force if such commission is due to the preceding agent in accordance with
paragraph 3 of the previous article, without prejudice to such commission being
equitably shared by both, if circumstances justify it.
(Acquisition of right to commission)
1. An agent acquires the right to the commission as soon as and to the extent
that any of the following circumstances arise:
a) the principal has fulfilled the contract, or should have fulfilled it, in
accordance with an agreement concluded with the third party;
b) the third party has fulfilled the contract.
2. Any agreement by the parties on the right to the commission cannot prevent
it from being acquired at least when the third party fulfils the contract or
should have fulfilled it, provided that the principal has already fulfilled his
obligation.
3. The commission mentioned in the previous paragraphs shall be paid up to
the last day of the month following the quarter in which the right was acquired.
4. However, if there is a del credere agreement, the agent can claim the
commissions due after the contract has been concluded.
(Non-performance)
An agent does not lose the right to claim commission if non-performance of
the contract is due to a cause imputable to the principal.
(Expenses)
In the absence of an agreement to the contrary, an agent does not have a
right to reimbursement of expenses incurred in the normal exercise of his
activity.
PROTECTION OF THIRD PARTIES
(Duty of information)
1. An agent shall inform interested parties about the powers of
representation that he may have and whether he can collect credits or not,
namely by means of notices posted in his workplace and in every document in
which he identifies himself as the agent of another person.
2. The information mentioned in the previous paragraph shall be provided, in
writing, in one of the official languages, and be given together with a
translation if addressed to interested parties who only express themselves in
the other.
(Representation without powers)
1. Without prejudice to the following article, a contract concluded by an
agent in the name of the other party, without powers of representation, has the
effects mentioned in paragraph 1 of article 261 of the Civil Code.
2. Such contract is considered as ratified if the other party, as soon as he
gains knowledge of its agreement and of its essential content, does not
communicate to the good faith third party, within five days after such
knowledge, his opposition to the transaction.
(Apparent representation)
1. A contract agreed by an agent lacking powers of representation produces
effects towards the principal if there were strong reasons, objectively
assessed, taking into account the circumstances of the case, that justified the
trust of a good faith third party in the legitimacy of the agent, provided that
the principal has also contributed to establishing the trust of the third party.
2. The provision of the previous paragraph applies, with the necessary
adaptations, to collection of credits by a non-authorized agent.
TERMINATION OF CONTRACT
(Mutual agreement)
An agreement by which the parties decide to put an end to their contractual
relation must be made in writing.
(Lapse)
An agency contract lapses especially:
a) by the expiry of the agreed time limit;
b) if a condition to which the parties have subordinated it takes place, or
if it becomes certain that it cannot take place, depending on whether the
condition is resolutory or suspensive;
c) by the death of the agent or, if it is a collective person, by its
extinction;
d) by the bankruptcy of the agent or of the principal.
(Duration of contract)
1. If the parties did not state a time limit, the contract is presumed to be
agreed for an undetermined period of time.
2. A contract that continues to be executed by the parties after the expiry
of its time limit is deemed to have been renewed for an undetermined period of
time.
(Denunciation)
1. Denunciation is only permitted in contracts concluded for an undetermined
period of time and if communicated to the other party, in writing, with the
following minimum advance notice:
a) one month, if the contract has not lasted more than one year;
b) two months, if the contract has lasted more than one year;
c) three months, if the contract has lasted more than two years;
d) four months, if the contract has lasted more than three years;
e) five months, if the contract has lasted more than four years;
f) six months, if the contract has lasted more than five years.
2. Unless there is an agreement to the contrary, the time limit mentioned in
the previous paragraph ends on the last day of the month.
3. If the parties stipulate time limits longer than those mentioned in
paragraph 1, the time limit to be observed by the principal cannot be lower than
that of the agent.
4. In the case mentioned in paragraph 2 of the previous article, the time
elapsed before the expiry of the time limit shall also be taken into account in
order to determine the advance notice with which the denunciation must be made.
(Lack of advance notice)
1. Whoever denounces a contract without respecting the time limits mentioned
in the previous article is obliged to compensate the other party for damage
caused by the lack of advance notice.
2. Instead of this compensation, an agent can claim an amount calculated on
the basis of the monthly average remuneration paid during the previous year,
multiplied by the time lacking; if the contract has lasted less than one year,
the monthly average remuneration paid during the application of the contract
shall be used.
(Rescission)
An agency contract can be rescinded by any of the parties:
a) if the other party breaches his obligations, when, due to the gravity or
repetition of the breach, the continuation of the contractual relation cannot be
demanded;
b) if circumstances take place that seriously prejudice or render impossible
the achievement of the contractual aim, so that it cannot be demanded that the
contract be maintained until the expiry of the agreed time limit or, for the
case of denunciation, imposed.
(Declaration of rescission)
Rescission shall be done by means of a written declaration, within one month
from the knowledge of the facts that justify it, and shall indicate the reasons
on which it is based.
(Compensation)
1. Irrespective of the right to rescind the contract, any of the parties has
the right to be compensated, under general rules, for damage arising from breach
of obligations of the other party.
2. The rescission of a contract on the basis of paragraph b) of article 650
confers the right to compensation in accordance with equity.
(Compensation for goodwill)
1. Without prejudice to any other compensation that may be due in accordance
with the previous provisions, after the termination of the contract an agent has
the right to compensation for goodwill, provided that all of the following
requirements are met:
a) the agent has either procured new clients for the other party or
substantially increased the volume of business with existing clients;
b) the other party will considerably benefit from the activity of the agent
after termination of the contract;
c) after termination of the contract the agent ceases to receive any
remuneration for contracts negotiated or concluded with the clients mentioned in
paragraph a).
2. In case of an agent's death, compensation for goodwill can be claimed by
the heirs.
3. No compensation for goodwill is due if the contract was terminated for
reasons imputable to the agent, or if the agent, in agreement with the other
party, has assigned his contractual position to a third party.
4. The right to compensation for goodwill is extinguished if the agent, or
his heirs, do not communicate to the principal, within one year from the
termination of the contract, that they want to receive it; judicial proceedings
shall be initiated within one year following such communication.
(Calculation of compensation for goodwill)
Compensation for goodwill is calculated in accordance with equity, but it
cannot exceed an amount equivalent to an annual compensation, calculated on the
basis of the annual average of the remunerations received by the agent during
the last five years; if the contract has lasted less time, the average of the
period during which it was in force shall be taken into account.
(Right of retention)
An agent has a right of retention over objects and valuables that he detains
as a result of the contract, for credits resulting from his activity.
(Obligation to return)
Without prejudice to the previous article, at the end of the contract each
party is obliged to return objects, valuables, and other items belonging to the
other party.
COMMERCIAL CONCESSION CONTRACT
GENERAL PROVISIONS
(Concept, form and pre-contractual information)
1. Commercial concession is a contract by which one of the parties, in his
name and for his own account, undertakes to buy and resell goods produced or
distributed by the other party, in a certain zone and in a stable manner,
subjecting himself to a certain degree of control by the other party.
2. The commercial concession contract shall be made in writing.
3. Article 680 applies to the commercial concession contract, with the
necessary adaptations.
(Exclusivity)
1. Within the zone determined in the contract, the concessionaire can neither
sell nor promote the sale of goods in competition with those produced or
distributed by the principal, nor can the latter, directly or indirectly, sell
goods that are the object of the contract, unless there is a written agreement
to the contrary.
2. Unless there is a written agreement to the contrary, the concessionaire
can only buy goods that are the object of the contract from the principal.
(Duration of contract)
1. If the parties have not agreed a time limit, the contract is presumed to
have been agreed for an undetermined period of time.
2. If a time limit is agreed, it cannot be less than three years.
(Sub-concession)
1. Unless there is an agreement to the contrary, use of sub-concessionaires
is permitted.
2. The provisions of this Title apply to the sub-concession relation, with
the necessary adaptations.
RIGHTS AND OBLIGATIONS OF PARTIES
OBLIGATIONS OF CONCESSIONAIRE
(General principle)
In fulfilling his obligations, a concessionaire should act in good faith,
co-operating with the principal in order to fully achieve the contractual aim.
(Enumeration)
A concessionaire namely is obliged:
a) to act in accordance with the commercial policy of the principal,
respecting his instructions, namely those related to sales methods and
advertising;
b) in determining the resale price of the goods, to comply with the prices
recommended by the principal;
c) to provide post-sales assistance to clients, under the terms set by the
principal;
d) to allow the principal to inspect replacement parts and working methods
used by his auxiliaries in the provision of post-sales assistance;
e) to provide all information that may be requested from him, namely on the
market situation and perspectives of evolution.
(Obligation of minimum sale)
1. By means of a written agreement, a concessionaire can undertake to
periodically sell a minimum quantity, or to purchase a certain quota of goods,
or to reach a certain level of market share.
2. In setting a minimum sales quantity or a quota to be purchased or the
level of market share mentioned in the previous paragraph, the dimension of the
concessionaire's enterprise and of the market shall be taken into account, among
other circumstances.
(Obligation to keep the product unchanged)
A concessionaire is obliged to sell goods in the condition in which he
acquired them from the principal and, in the absence of express permission from
the principal, cannot introduce any changes, even if only in their external
appearance or packaging.
(Obligations of confidentiality and of non-competition)
Articles 629 and 630 apply to the concessionaire, with the necessary
adaptations.
OBLIGATIONS OF PRINCIPAL
(General principle)
A principal is obliged to act in accordance with good faith, in order to
fully achieve the contractual aim.
(Enumeration)
A principal namely is obliged:
a) to sell to the concessionaire goods that he produces or distributes;
b) to allow the use by the concessionaire of his distinctive marks, to the
extent to which, in accordance with circumstances, they are necessary to the
promotion of the concession;
c) to provide to the concessionaire all technical and commercial information
necessary for running the concession;
d) to render technical assistance to the concessionaire;
e) to compensate the concessionaire for the obligation of non-competition
after termination of the contract.
(Delivery and information)
1. A principal is obliged to deliver goods within stated time limits, or as
soon as he is requested by the concessionaire, as well as all information and
technical documentation relating to them.
2. The principal is also obliged to inform the concessionaire of all changes
related to the product, namely to its characteristics and composition.
(Obligation to satisfy orders)
A principal is obliged to ensure the performance of orders from the
concessionaire, within the limits of the quota or minimum quantity of goods that
the latter has undertaken to purchase.
(Warranty for quality of goods)
1. A principal guarantees to a concessionaire the quality and the good
functioning of the goods, as well as to third parties to whom the latter may
resell them.
2. The principal shall state the conditions and the time limits for the
operation of the warranty, and shall provide all elements necessary to make it
effective.
(Obligation of confidentiality)
Even after termination of the contract, the principal cannot disclose to third
parties any secrets of the other party entrusted to him, or that he gained
knowledge of in the framework of the concession contract, except to the extent
permitted by the professional code of conduct.
TRANSFER OF THE CONTRACTUAL POSITION
(Transfer of position of concessionaire)
1. A principal can oppose the transfer by an inter vivos act of the position
of concessionaire inherent in the transfer of the respective enterprise, if the
acquirer:
a) does not correspond to the standards required of his new concessionaires;
b) does not offer sufficient guarantees as to the performance of his
obligations.
2. The previous paragraph applies, with the necessary adaptations, to
temporary transfers of the enjoyment of a concessionaire's enterprise.
TERMINATION OF CONTRACT
(Reference)
The provisions on termination of the agency contract apply, with the
necessary adaptations, to the termination of the commercial concession contract,
in everything that is not especially provided for in this Chapter.
(Lapse and renewal)
1. A contract concluded for a certain period of time shall lapse at the end
of the time limit stipulated, if any of the parties communicate to the other, in
writing, the intention not to renew it with the following minimum advance
notice:
a) three months, if the time limit is less than five years;
b) six months, if the time limit is from five to ten years;
c) twelve months, if the time limit is ten years or more.
2. Absence of the communication mentioned in the previous paragraph
determines the renewal of the contract for a period of time equal to the initial
one.
3. If the contract has been renewed, all time elapsed since the conclusion of
the contract shall be taken into account in order to determine the advance
notice with which the intention not to renew the contract should be
communicated.
4. The provision of paragraph 1 does not prevent the parties from agreeing
longer advance notice periods, but the time limit to be observed by the
principal cannot be lower than that of the concessionaire.
5. A contract that has been renewed twice is considered to be renewed for an
undetermined period of time at the end of the second renewal, if none of the
parties communicates to the other the intention not to renew it, in accordance
with paragraphs 1 and 3.
(Transfer upon death or extinction of concessionaire)
A commercial concession contract does not lapse as a result of the death of
the concessionaire or, in the case of a collective person, by its extinction,
provided that the successor or the adjudicating associate continues the
operation of the enterprise.
(Denunciation)
1. Denunciation is only permitted in contracts concluded for an undetermined
period of time and cannot be exercised before three years from the conclusion of
the contract.
2. Denunciation must be communicated in writing to the other party with the
minimum advance notice mentioned in paragraph 1 of article 674.
3. Unless there is an agreement to the contrary, the expiry of the time limit
mentioned in the previous paragraph shall coincide with the last day of the
month.
4. If the contract has been renewed for an undetermined period of time in
accordance with paragraph 5 of article 674, it is necessary to take into account
all the time elapsed since the conclusion of the contract in order to determine
the advance notice with which the denunciation should be communicated.
(Rescission)
In addition to the cases mentioned in article 650, a principal also has a
right to rescind the contract if, irrespective of fault, the concessionaire does
not fulfill the minimum levels for which he is obliged, in accordance with
paragraph 1 of article 663.
(Termination of contract for reasons not imputable to concessionaire)
If a commercial concession contract is terminated for reasons not imputable
to the concessionaire, the principal is obliged to:
a) repurchase the goods not sold at the end of the contract, for the price at
which he sold them to the concessionaire, with the exception of those goods
bought by the latter after the communication to him of a declaration terminating
the contract;
b) compensate the concessionaire for expenses incurred, before the
communication of the declaration mentioned in the previous paragraph, in
promotional activities such as advertising, the effects of which extend beyond
termination of the contract.
FRANCHISING CONTRACT
GENERAL PROVISIONS
(Concept)
A franchising contract is that by which one of the parties, against a direct
or indirect payment, grants to the other, in a certain zone and in a stable
manner, the right to produce and or to sell certain goods or services under his
entrepreneurial image, according to his know-how, with his technical assistance,
and subject to his control.
(Pre-contractual information and clarification)
1. A franchiser is obliged to provide, in writing and with adequate advance,
complete and truthful information to an interested party, so that the latter can
form a balanced and informed assessment of the advantages and disadvantages of
concluding the contract, namely:
a) the identification of the franchiser;
b) the franchiser's annual accounts of the last two accounting periods;
c) any judicial proceedings in which the franchiser, the holders of
trademarks, patents and other industrial or intellectual property rights related
to the franchise are or have been involved, as well as their sub-franchisers,
which may directly or indirectly come to affect or render impossible the
functioning of the franchise;
d) a detailed description of the franchise;
e) the profile of the ideal franchisee regarding previous experience, level
of education and other characteristics that compulsorily or preferably he must
have;
f) the necessity and extent of the franchisee's personal and direct
participation in the exercise of the franchise;
g) the specifications as to the estimated sum of the initial investment
needed for acquisition, installation and entry into functioning of the
franchise;
h) the value of the periodic payments and other amounts to be paid by the
franchisee to the franchiser or to third parties indicated by him, specifying
the respective bases of calculation and what these remunerate, or the purpose
for which they are destined;
i) the composition of the franchise network, lists of franchisees,
sub-franchisees and sub-franchisers of the network, as well as of those who have
left the network in the last 12 months;
j) the profitability of the franchisees' enterprises and the incidence of
bankruptcies;
l) the professional experience gained, his know-how and entrepreneurial
methods;
m) any services that the franchiser obliges himself to render to the
franchisee for the duration of the contract.
2. The franchiser must also provide to an interested party, with adequate
advance, a model of the standard contract and, if it is the case, also that of
the pre-contract of franchise adopted, with the complete text, including the
respective annexes.
3. Without prejudice to such compensation as may fit the case, the
non-performance of the provisions of the previous paragraphs grants to the
franchisee the right to demand annulment of the contract.
(Form)
A franchise contract must be concluded in writing.
(Licenses to use industrial or intellectual property rights)
1. Concession of licenses to use the industrial or intellectual property
rights of a franchiser in the framework of a franchising contract shall be
regulated by the respective legal provisions, without prejudice to the following
paragraph.
2. The franchising contract is sufficient title as license to use the rights
mentioned in the previous paragraph connected with the franchise.
(Exclusivity)
Within the zone determined in the contract, the franchisee can neither
manufacture nor sell goods nor render services in competition with those of the
franchiser, nor can the latter, directly or indirectly, compete with the former,
except if there is a written agreement to the contrary.
(Duration of contract)
Article 659 applies to the franchising contract.
(Sub-franchise)
1. Except if there is an agreement to the contrary, the use of
sub-franchisees is not permitted.
2. The norms of this Title apply to the sub-franchise relation, with the
necessary adaptations.
RIGHTS AND OBLIGATIONS OF PARTIES
OBLIGATIONS OF FRANCHISER
(General principle)
A franchiser is obliged to act in accordance with good faith, in order to
fully achieve the contractual aim.
(Enumeration)
A franchiser namely is obliged:
a) to allow the franchisee the use of his industrial and intellectual
property rights and other elements that identify his enterprise;
b) to ensure peaceful enjoyment of the industrial and intellectual property
rights authorized, and of the know-how provided to the franchisee;
c) to ensure the constant updating of his know-how;
d) to provide training to the franchisee and his auxiliaries;
e) to ensure the advertising of the franchise network at regional and
international levels;
f) to supply or to ensure the supply of goods that, taking account of the
circumstances, are necessary to run the franchise;
g) to compensate the franchisee for the obligation of non-competition after
termination of the contract.
(Information)
A franchiser is obliged to timely inform a franchisee of all and any
alterations introduced in the composition and presentation of the goods, in the
conditions of sale, or in the rendering of the service, or any others concerning
the running of the franchise.
(Choice of suppliers of goods and services)
A franchiser cannot, directly or indirectly, forbid a franchisee from freely
choosing the equipment, the installations and the suppliers of goods or services
to be used in the assembly or in the functioning of the franchise, except to the
strict extent to which it is necessary to protect his industrial and
intellectual property rights or to maintain the common identity and reputation
of the franchise network.
(Obligations of provision and of guarantee)
Articles 669 and 670 apply to the franchiser.
(Supervision of franchise network)
A franchiser is obliged to effect a rigorous supervision of the franchise
network, namely controlling and verifying the performance, by the other
franchisees, of obligations designed to ensure the common identity and the
reputation of the franchise network.
(Compensation)
A franchiser is obliged to adequately compensate the franchisee for new
experience gained, in accordance with article 697, in the running of the
franchise.
(Obligation of confidentiality)
Article 671 is applicable to the franchiser.
OBLIGATIONS OF FRANCHISEE
(Obligations of franchisee)
In the performance of his obligations a franchisee must act in good faith and
should watch over the maintenance of the identity, image and good reputation of
the franchise and develop adequate activities in order to fully achieve the
contractual aim.
(Enumeration)
A franchisee namely is obliged:
a) to pay remuneration, on the agreed terms;
b) to use the industrial and intellectual property rights and other elements
that identify the enterprise of the franchiser;
c) to follow the instructions of the franchiser regarding the equipment and
the uniform presentation of the premises and/or means of transport mentioned in
the contract;
d) during the rendering of services, to produce, to sell, or to use
exclusively goods that satisfy the minimum objective quality specifications set
by the franchiser;
e) not to change the location of the premises mentioned in the contract
without the assent of the franchiser;
f) to observe, with the necessary adaptations, the provisions of
subparagraphs b) to e) of article 662.
(Limit upon use of know-how)
A franchisee cannot use the know-how for purposes other than running the
franchise, nor disclose its content to third parties, without the franchiser's
agreement in writing.
(Communication of experience)
A franchisee is obliged to communicate to the franchiser any new experience
gained in running the franchise that amounts to an improvement to its conditions
of functioning and efficiency, as well as to grant both authorization to use
such know-how and the right to allow its use by the other franchisees.
(Training of franchisee and his assistants)
A franchisee is obliged to attend, or to instruct his assistants to attend,
periods of training organized by the franchiser, with the frequency mentioned in
the contract.
(Advertising)
All advertising to be made by a franchisee must be previously approved by the
franchiser.
(Breach of intellectual and industrial property rights)
A franchisee must inform the franchiser of any breach to the industrial and
intellectual property rights that are the object of the franchise, which may
come to his knowledge, and take action, or support the franchiser, in any
judicial proceedings against the infringer.
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