BUSINESS FINDERS “Sometimes the right of indemnity is triggered”

Marcello Mantelli
Lawyer in Turin
and Milan

In order to develop its sales abroad, the exporter may also use other intermediaries other than the agent like business finders, brokers or commercial consultants. These are atypical figures who procure business to the principal on an occasional basis for the payment of a commission.

They are often used to conclude a single deal or to commercially explore a new market or to test the capabilities of the intermediary without immediately committing to an agency relationship.

Particularly relevant is the figure of the business finder, that is, that subject who procures business to the principal on commission without, however, unlike the agent, promoting sales stably and generally without assuming specific obligations or being bound to operate within a specific territorial area.

However, in practice, especially when the procurer is charged with procuring an indefinite number of affairs, it may not be so easy to draw a clear boundary line between the two figures. In doubtful cases there will be a risk that the procurator will be qualified as an agent with the application of the most protective rules of the commercial agent, bearing in mind that in many countries (including all those in the EU) the agent is recognized the right to receive an indemnity at the end of the relationship.

In the case of the business finder, such additional compensation is not due. But a right to perceive it could well arise in favour of the subject who, although he had formally acted as a business finder, has in fact acted as an agent.

It is therefore essential, in order to avoid ambiguous situations, to make clear choices between the use of agents and finders, especially by setting the relative contracts in a complete and adequate way and according to the real operation that one wants to distribute to the intermediary in order to avoid surprises.

Another figure used in international practice is that of the broker, that is, that person who relates two potential trading partners dealing with mediating in trading. Upon successful conclusion of the deal it will get a commission from both or only one of the parties. Normally, minimum content agreements are stipulated to prevent mediation from being circumvented (to protect the payment of the commission).

In other cases, instead, we come across a figure generally called commercial consultant, which sometimes configures an independent procurator and others a broker with special agreements with the client house. Sometimes, however, it is a real consultant: for example, it is the case of the professional who is assigned a specific project to be carried out within the sending company.

In these cases, in order to avoid the risk of being qualified as an employed person, extreme contractual clarity and careful safeguarding of its independence in the execution of the contract are necessary.

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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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