Agency and business procurement: main differences according to the Italian jurisprudence

Published on the Sole24ore newspaper on 30/05/2023 Category: Articles

Marcello Mantelli
Lawyer in Milan and Turin


In the context of commercial activity, it is often wondered on the dividing line between the agency relation and the business procurement relation, as they provide relevant differences between them in theme of relevance of business action and of economic purviews even in regard to the contributory framework.

Let’s see hereafter the principal differences between the role of the agent and the role of the broker identified within the Italian jurisprudence during the years.

The relationship between the agency and the business procurement are distinguished from one another principally mainly by the constant character of the former and the optional character of the latter and for the episodic and occasional nature of the relationship of business procurement. The activity of the broker is indeed limited to the referral of customers or the sporadic collection of orders, unlike the activity exercised by the agent, aimed at permanently promoting the performance of contracts on behalf of the principal.

The jurisprudence identifies which peculiar elements of the agency relationship:

– The autonomous organisation of the agent;

– The assumption of the risk by the same for the promotional activity carried out, which manifests itself in the autonomy of the agent in the choice the times and ways of the same, while respecting the instructions received by the principal;

– The link of collaboration between agent and principal entails that the agent is required to provide to the principal any information useful to the evaluation of convenience of business.

The Tribunal of Naples last expressed its opinion on termination for just cause from the agency contract revealing that to the means of evaluation of the seriousness of conduct giving rise to termination, it has to consider the particular intensity of the trust relationship that links agent and principal; for the legitimacy of the termination within the agency relationship, therefore, it would be sufficient a minor seriousness factor respect to the type of conduct normally required for the dismissal for just cause  of the subordinated worker.

The Tribunal of Naples last expressed its opinion on termination for just cause from the agency contract revealing that to the means of evaluation of the seriousness of conduct giving rise to termination, it has to consider the particular intensity of the trust relationship that links agent and principal; for the legitimacy of the termination within the agency relationship, therefore, it would be sufficient a minor seriousness factor respect to the type of conduct normally required for the dismissal for just cause  of the subordinated worker.

The broker is not expressly regulated by the Civil Code. The broker is generally considered a partner of the principal who collects orders (propositions of contract) from customers and merely transmits them to the principal, without disclosing of the power of representation.

According to the more authoritative jurisprudence, the relationship is atypical and subject to the discipline of the agency contract if compatible. Therefore:


-The broker has right to a commission compensation on contracts he promoted;


-The disputed regarding the relationship between business procurement are competence of the Industrial Tribunal whenever the collaboration takes the form of a continuous and coordinated work, mainly personal,  even if not of subordinate character.


The performance of the agent is characterised by being continuous and constant since he has the obligation of performing a contract promotion activity; the performance of the broker, instead, is merely occasional and not constant, in the sense that it exclusively depends on the initiative of the principal.

The qualification of the agent or broker is not merely nominal, but it reveals especially at the end of the relationship: the indemnity for the termination of the relationship is indeed due, to some grounds, exclusively to the agent and not to the broker.

In some cases, however, the broker proved to be a skilled business partner after having durably promoted in time the sales of products of the principal, may demand the status of agent and request an indemnity of termination of the relation and, whether an agency relationship was indeed, the principal will have to provide for the payment of sums not calculated in advance, with an increase in business costs.

In order to avoid such risk it is fundamental to set correctly since the beginning the contractual relationship that one wants to establish with the business partner.

If there are contractual or de facto relationships with brokers, it will be necessary to verify the actual modalities of execution of the relationship to estimate the risk of the potential claim for indemnity upon termination of the contract.

The commercial practice of commissioning a mediator that then operates de fact as agent, stipulating with him a contract of procurement contract (and leaving such situation unchanged over time) is highly unadvisable and it exposes to risk of disputes on the payment of indemnity for cessation of the relationship which will be fairly demanded by the broker who has worked as agent (de facto).

Click on the link below if you want to read the italian version of this article:

Agenzia e procacciamento d’affari: le principali differenze secondo la giurisprudenza italiana (imantelli.eu)

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Marcello

Dear Aurelia, the information you have provided are not sufficient for an answer which is subject to a professional engagement. In any case, we should study the provisions of the contract and identify governing law of the contract.If it does not provide anything on governing law then conflict law shall apply (in the most part of the countries likely the governing law will be the law of the country where the agent is domiciled). best regards Marcello Mantelli

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Aurelia

I signed a contract with a fashion agency but there were no termination clauses in the contract and decided to withdraw it before one week after signature so sent them an email but after 14 days they sent me an email and asserted that because i didnt withdraw in legal deadlines i have to perform the contract and pay whole money.Noboday told me about any deadlines and nothing was in the contract!! Why did they claim such a thing?

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