Anyone using a commercial agent or an authorised dealer benefits from the fact that the economic risk compared to the establishment of one’s own branch is limited. The agent, who is a self-employed entrepreneur, is responsible for the development of the market and bears the risk of marketing efforts failing. On the other hand, the agent is entitled to a share of the profits resulting from his or her efforts. A commercial agent receives commission on the negotiated contracts while an authorised dealer obtains a profit by reselling the goods.

The law concerning commercial agents has largely been harmonised within the European Union by Directive 653/1986, so that the legal provisions in Finland do not essentially deviate from those in other European countries. On the other hand, legal provisions concerning authorised dealers have neither been stipulated within Europe nor nationally.

The agent or authorised dealer contemplating the development of a totally new market like Finland is logically, only likely to be ready to do this if granted exclusive rights within this territory.

For the authorised dealer, this means that the principal may neither independently nor through others sell the products in question or actively advertise them within the contractual territory. It follows from this that the commercial agent is entitled to commission upon each contract with a customer from the contractual territory, regardless of whether the agent has contributed to the conclusion of the contract or not. This comprehensive exclusivity can and should, however, be restricted in a reasonable way by contractual regulations. Thus the principal can e.g. retain deals with big customers or sales at fairs in order to avoid undue restrictions upon the freedom to contract.

Such a regulation is not anticompetitive, because it is permitted by Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices, so long as neither the market share of the supplier nor of the agent exceeds 30 %. So-called “passive selling” by the principal, i.e. sale to such customers in the contractual territory who have contacted the principal upon their own initiative, cannot, however, be forbidden in any case.

The decision as to whether it is more favourable to engage a commercial agent or an authoried dealer can only be made on a case-to-case basis. Using a commercial agent is the more flexible way of marketing and the gross proceeds for the producer are higher. On the other hand, using an authoried dealer provides more solid support in a foreign market. The producer discharges the risk of bad debts and the customer is offered a domestic contracting party, a fact that can weigh quite heavily in the decision to buy. In particular, where deals with ultimate buyers are concerned the engagement of an authorised dealer is often inevitable.

Considerations about the applicable law for each sales contract also play an important role. If a contract is negotiated by a commercial agent, the producer, as the seller, will be a contracting party. In this case it is an international sales contract and in the most cases the general UN Sales Convention is applied. When an authorised dealer is acting as seller, Finnish law is applied.

Among other facts, this influences the warranty. Finnish warranty law is especially severe, including the producer’s warranty towards the consumer, when any producer’s warranties whatsoever are given (see article “Producer’s warranty in Finland”).

Consequently, contracts for authorised dealers must be drawn up very carefully. This requirement is strengthened by the fact that, in contrast to the position regarding the commercial agent, there are no legal provisions concerning authorised dealers in Finland. As distinct from the position in Germany, in Finland it is still completely unclear as to whether some of the protected privileges of the commercial agent also apply to authorised dealers.

The most important among these protected privileges is the commercial agent’s compensatory claim for loss of clientele [at least] at the end of the contract. This claim arises if the commercial agent has acquired new customers for the principal or has achieved a marked increase in the volume of business contracted with established customers, and the principal has accrued considerable benefit from this by the end of the contract. In this connection, the overriding consideration is the extent to which the principal can continue to contract business with customers acquired by the commercial agent.

The commercial agent’s compensatory claim cannot be excluded by contract. It is, however, possible and sensible to draft the contract in such a way that enables the principal to influence whether and to what extent preconditions for the compensation claim arise. Thus, the extent to which the commercial agent must forward information about customers which that agent has acquired, to the principal and whether the principal is entitled to contact these customers independently of the agent during the contractual relationship, should be unambiguously regulated.

As there are no legal provisions concerning the authorised dealer, a contractual settlement is highly advisable.