A period of nearly three months between the misconduct and the termination letter does not prevent a principal from relying on its commercial agent's serious misconduct (faute grave), provided it has consistently expressed its disagreement. The commercial chamber accordingly rules out the termination indemnity (indemnité compensatrice de rupture). Granting a discount on commission without the principal's express and prior consent may undermine the common purpose of the mandate of common interest (mandat d'intérêt commun).
The essentials
- A commercial agent loses the termination indemnity where the ending of the contract is caused by their serious misconduct, within the meaning of Article L. 134-13 of the French Commercial Code.
- Serious misconduct is misconduct that undermines the common purpose of the mandate of common interest and makes it impossible to maintain the contractual link.
- A period of nearly three months between the misconduct and the termination letter is not to be construed as tolerance by the principal where the principal expressed its disagreement up until termination.
- Breach of a clause prohibiting the agent from granting discounts without the principal's express and prior consent may amount to serious misconduct.
- An agent who claims to have obtained the principal's consent to the discount must prove it.
An unauthorised discount, termination three months later
The commercial chamber dismisses the commercial agent's appeal to the Cour de cassation: breach of the contractual prohibition on granting discounts without the principal's consent amounts to serious misconduct depriving the agent of the termination indemnity (Com., 3 June 2026, No. 24-14.748). The lapse of nearly three months between the misconduct and the termination letter did not amount to tolerance by the principal.
A commercial agent had entered into, on 15 September 2019, an agency mandate with a company carrying on an estate agency business. Article 9 of the contract, printed in bold, prohibited the agent from granting discounts to clients without the principal's express and prior consent. On 23 June 2020, the agent nevertheless granted a substantial discount on the amount of the commission on a sale. That same day, the company's executive asked the agent by message to renegotiate the fees upwards, then brought the agents together three days later to restate the prohibition. On 14 September 2020, the company notified the immediate termination of the contract.
The commercial agent brought proceedings against the principal company on 31 March 2021 seeking payment of the termination indemnity. The decision under appeal (CA Bordeaux, 4 March 2024, No. 22/01478) dismissed that claim, having characterised the discount granted as serious misconduct. The reasoning approved by the commercial chamber reads as follows (free translation).
In the light of these findings and assessments, the court of appeal, which made clear that the period of nearly three months between the end of June, the date on which the serious misconduct was committed, and mid-September 2020, the date of receipt of the termination letter, could not be construed as tolerance on the part of the principal depriving it of the right to rely on the seriousness of the misconduct, was entitled to hold that the ending of the contract had been caused by the commercial agent's serious misconduct, so that the agent could not receive the termination indemnity.
Does serious misconduct deprive a commercial agent of compensation?
A commercial agent loses the compensatory indemnity as soon as the ending of the contract is caused by their serious misconduct. Article L. 134-12 of the French Commercial Code gives the agent, where relations with the principal come to an end, a right to an indemnity compensating the damage suffered. Article L. 134-13 rules out such compensation where the ending of the contract results from the agent's serious misconduct. Serious misconduct is defined as misconduct that undermines the common purpose of the mandate of common interest and makes it impossible to maintain the contractual link.
The disputed clause provided that the agent "may grant discounts to clients only with the express and prior consent of the principal". The lower court judges saw in this an essential obligation of the agent, the amount of the commissions and the calculation of the fees lying at the heart of the relationship between the agent and the principal. The consequence is direct for the agent: negotiating a reduction in the principal's remuneration alone exposes them to losing their end-of-contract indemnity.
The burden of proof is divided between the parties. An agent who claims to have obtained the principal's consent must establish it, and silence is not enough: the request to renegotiate the fees upwards, sent that same day, contradicted any prior agreement. The court of appeal had recalled, for its part, that the burden of proving serious misconduct lies with the principal.
Is the principal's reaction time a decisive criterion?
The time elapsed between the misconduct and the termination does not, on its own, neutralise the seriousness of the breach: the principal's conduct during that period determines the outcome. The agent argued that continuing the relationship for nearly three months ruled out a breach making it impossible to maintain the contractual link. The commercial chamber does not accept that automatic reasoning. The principal had reacted immediately, brought its agents together three days after the events and expressed its disagreement up until termination.
The scope of the decision is therefore conditional, as the case law stands at 3 June 2026. No maximum period is laid down for notifying a termination for serious misconduct. A principal that remained passive after discovering the facts would be in a different position, which the decision does not settle. The court of appeal had also noted, in its analysis, that the principal could rely only on the breaches set out in its termination letter.
How can a termination for serious misconduct be secured?
A principal intending to rely on serious misconduct must record its disagreement as soon as it discovers the facts and maintain it until termination. The decision shows that the materiality of the breach is not enough: the absence of any reaction by the principal may be raised as tolerance. The evidence relied on was ordinary, a message sent that same day and a meeting to restate the rule, but dated and consistent.
- Identify the obligations that the parties treat as essential in the contract, in particular control over the amount of the commissions.
- React in writing as soon as the breach becomes known, expressly refusing the practice observed.
- Keep a record of the collective or individual reminders sent to the agent.
- Set out in the termination letter the breaches intended to be relied on.
Points to check before notifying termination
The characterisation of serious misconduct is prepared before it is relied on. Check that the breach concerns an obligation presented as essential by the contract itself. Make sure that every reaction to the breach is dated and in writing, so that no interval can be read as acceptance. Finally, check that the termination letter sets out all the complaints relied on, since omitted breaches cannot support the denial of the indemnity. On the commercial agent's side, the principal's consent to a discount is not presumed and should be kept in writing.
Frequently Asked Questions
Can a principal still rely on serious misconduct weeks after the events?
Yes. The passage of time does not necessarily erase the seriousness of the breach. In the case decided on 3 June 2026 by the commercial chamber, nearly three months separated the unauthorised discount from receipt of the termination letter. The principal had reacted the same day by message, held a meeting three days later to restate the rule, and maintained its disagreement until termination. Those factors ruled out any tolerance on its part.
Who must prove that the principal agreed to a reduced commission?
The commercial agent bears that burden. In the decision discussed, the Cour de cassation notes that the agent did not adduce the proof, which lay with them, of the principal's express consent. Silence or a lack of reply does not amount to prior agreement, all the more so since the principal asked, that same day, for the fees to be renegotiated upwards. The lower court judges had recalled that proving serious misconduct falls on the principal.
Does a clause banning discounts without the principal's consent carry real weight?
Yes, such a clause can justify termination without compensation. In the case decided, the judges treated the prohibition on granting discounts without express and prior consent as an essential obligation of the commercial agent. The amount of the commissions and the calculation of the fees lay at the heart of the relationship. Breaching that rule undermines the common purpose of the mandate of common interest and makes it impossible to maintain the contractual link.
What written records should be kept when a partner breaches its commitments?
Keep every dated document establishing the breach: emails, messages, meeting notes, letters of reminder. In principle, a party relying on a breach must establish that it occurred and show that it did not tolerate it. An immediate, documented reaction reduces the risk that a gap of several weeks will be read as tacit acceptance. Purely oral exchanges, by contrast, leave room for conflicting accounts.
Does a written warning prevent a later termination for the same facts?
The effect of a warning depends on its wording and on the context. A document prohibiting a practice for the future does not necessarily carry the same weight as one definitively closing the incident. In principle, judges look at what the party owed the obligation actually intended to express and whether its later conduct was consistent.