Sales agent and competition: The principal's consent is mandatory

You work with a sales agent (agent commercial) to develop your sales. You discover (or suspect) that he also represents a competing company. Can he do so freely, on the grounds that he is independent and no exclusivity clause has been signed?

Under French law, the rule is seemingly simple: a sales agent cannot agree to represent a company that competes with one of their principals (mandant) without the latter's consent. In practice, disputes focus on three very specific questions:

• Is the company really a competitor (in economic and commercial terms)?
• Has the principal given their consent or tolerated the situation?
• What are the consequences if the contract is terminated (serious misconduct, termination indemnity, notice period)?

Purpose of this article: to provide you with a clear, actionable, and secure framework for both managers (principals) and agents.

I. The basic rule: the principal's consent is mandatory

A. A legal prohibition, even without a clause in the contract

The French Commercial Code allows commercial agents to accept new principals without authorization. However, it sets a major limitation: the representation of a competitor requires the consent of the principal concerned.

Commercial agents may accept the representation of new principals without authorization. However, they may not accept representation of a company that competes with one of their principals without the latter's consent. – Article L. 134-3 of the French Commercial Code

This rule is not a minor detail. It is linked to the very nature of the commercial agency contract: a mandate concluded in the common interest, which implies an obligation of loyalty and a reciprocal duty of information. In other words, the agent's independence does not entitle them to create a conflict of interest to the detriment of the principal.

Key point for managers: the absence of exclusivity in the contract is not sufficient to discharge the agent from this obligation. Consent is still required when dealing with a competitor.

B. Competition is assessed in real terms

In practice, the first question is often whether or not the other party is actually a competitor. Competition is demonstrated by a concrete analysis, for example:

• Substitutable products or services (the customer can choose one or the other)
• Same target customer segment
• Comparable relevant market (function, use, target, channels)
• Similar positioning, prices, and distribution channels

Conversely, products may be similar in appearance but not actually competitive (different ranges, distinct uses, separate customer bases, complementarity). This is why a factual approach is essential before any decision to terminate the agreement is made.

II. What are the risks of representing a competitor without agreement?

A. On the agent's side: serious misconduct and potential loss of compensation

In the event of termination of the relationship, the commercial agent is in principle entitled to compensation to make up for the loss associated with the termination. However, this compensation is not due if the termination is caused by serious misconduct on the part of the agent.

Case law frequently qualifies as serious misconduct the fact that an agent accepts (and a fortiori conceals) the representation of a competitor without the principal's consent. The reason is simple: this undermines the loyalty expected in a mandate of common interest and often makes it impossible to continue the relationship.

Important point: serious misconduct may be deemed to have occurred as soon as the competing mandate is accepted, even if the agent has not yet begun to actually perform the mandate for the competitor.

B. Principal's side: an ill-prepared termination can be costly

Immediate termination without compensation: this is often the goal of a principal who discovers a competing mandate.

But be careful: if serious misconduct is not solidly established, you may be exposed to the opposite effect:

• Payment of end-of-contract compensation
• Payment of compensation for lack of notice
• Order to pay costs and expenses in the event of litigation

In many cases, the principal fails not because the rule is unfavorable, but because the evidence is insufficient (poorly characterized competition, poorly managed agreement/tolerance, confusing chronology, undated documents).

III. Agreement, tolerance, waiver: when the principal can no longer complain about competition

A. The agreement: ideally written, always unambiguous

The safest situation is a written agreement: a specific clause in the contract, an addendum, a clear email, or a signed letter.

This agreement must describe the authorized scope (products/services, area, clientele, conditions for separation of activities) to avoid ambiguity.

Conversely, an “implicit” agreement is risky: it is more difficult to prove and easier to contest.

B. Tolerance: a silent danger for the principal

There are cases where, even without a formal agreement, the principal is considered to have tolerated the representation of the competitor. This can happen if:

• the principal was aware of the situation with certainty,
• they did not react for a significant period of time,
• and their behavior reflects acceptance (e.g., continuation of the relationship without reservation, renewal, absence of formal notice despite clear information).

Please note: tolerance cannot be easily presumed. However, if it is accepted, it can neutralize the argument of serious misconduct during the period of tolerance. Hence the importance, on the principal's side, of acting quickly and formalizing your position.

IV. Case law: Useful lessons for principals and agents

A. Judgment of October 8, 2013: loyalty sometimes extends beyond the contractual territory

In this ruling, the Court points out that the obligation of loyalty and the prohibition on representing a competitor can apply in general, even when the agent tries to justify their actions by pointing to a difference in zone or territory. The logic is this: the common interest of the mandate is protected, not just a map.

Reference of the decision: Cass. com., October 8, 2013, No. 12-24.064 (ECLI:FR:CCASS:2013:CO00922)

B. Judgment of November 22, 2016: acceptance is sufficient, even without actual performance

The Court of Cassation ruled that an agent who agrees to become the agent of a competing company without informing his principal is in breach of his duty of loyalty, which may constitute serious misconduct, even if the competing activity has not yet actually started before the breach.

In practice, this means that the “acceptance of the mandate” (the decision to represent) may be more decisive than the number of acts already performed.

Reference of the decision: Cass. com., November 22, 2016, No. 15-17.131 (ECLI:FR:CCASS:2016:CO00990)

C. Judgment of December 3, 2025: competition must be assessed at the appropriate level

The Court of Cassation points out that competing activity must be assessed rigorously: competition cannot be ruled out on the basis of criteria that are too narrow or inappropriate.

The analysis must focus on the relevant market and the activity of the companies concerned, and the trial judges cannot rely on a superficial or partial comparison to dismiss or uphold the existence of a competing activity.

In short: to secure a termination based on competition, the principal must methodically document the competitive link. Conversely, the agent will endeavor to demonstrate the absence of competition between the companies.

Reference of the decision: Cass. com., December 3, 2025, No. 24-16.962 (ECLI:FR:CCASS:2025:CO00616)

V. Secure the situation in 5 steps (principal and agent)

A. Verify the correct legal status

Before applying the rules of commercial agency, it is necessary to ensure that the relationship does indeed fall under the status of commercial agent (mandate, independence, power to negotiate, etc.). In litigation, the actual classification may be decisive because the judge must give the contract its correct classification (even if the contract is titled otherwise).

B. Map out the competition

Create a simple, dated fact sheet:

• Who is the other company?
• What products/services are involved?
• What customer base is targeted?
• What sales channels are used?
• How is the offer substitutable or targeting the same market?

This mapping is used to make a decision (agreement, refusal, contract adaptation) and to prove fault in the event of a dispute.

C. State your position in writing

Principal:

• If you refuse: notify the other party of your clear refusal and request written confirmation.
• If you accept: formalize a precise agreement (scope, limits, confidentiality, conflict prevention).

Agent side:

• If in doubt about competition: request an explicit agreement, ideally in writing. This is the best way to limit risks and avoid serious misconduct.

D. Regulate the contractual relationship

A few simple clauses greatly improve security:

• Declaration of other mandates (and updates)
• Confidentiality
• Organization of the separation of activities (if multiple mandates)
• Post-contractual non-competition clause if necessary (under legal conditions)

E. In the event of a breach: gather evidence before terminating the contract

Before terminating a contract for serious misconduct, gather evidence:

• dated evidence (communications, offers, supporting documents)
• proof of competition
• absence of agreement or tolerance
• chronology (the alleged facts must predate the termination)

A sudden termination without a file of evidence is the best way to turn a loyalty issue into costly litigation.

VI. Conclusion

No, a commercial agent cannot agree to represent a company that competes with one of their principals without the latter's consent.

But it all depends on your ability to demonstrate the competition and to act methodically.

‍Do you need assistance with the termination of a commercial agency contract? Contact Grelier Avocat today.

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