❓When assessing an agent’s right to an indemnity, one of the key questions is whether the agent brought in new customers. This is a fundamental condition for entitlement to such payment. But who exactly is a “new customer”?
⚠️Intuitively, this might appear to mean someone who previously had no contract with the principal and whom the agent persuaded to enter into one.
That understanding is correct: such a person is unquestionably a new customer. However, case law and legal commentary also include other people in this category.
Customers won back
➡️ First, some legal commentators also treat so-called won-back customers as new customers, i.e. those with whom the principal previously had a business relationship, but that relationship ended, and the agent subsequently helped to renew it.
A new product for an existing customer
➡️ Second, the case law of the Court of Justice of the European Union shows that even a customer currently trading with the principal may count as a new customer acquired by the agent. This applies where, through the agent’s activities, an existing customer of the principal buys a new product that was not previously offered and whose sale required “the establishment of a specific business relationship”.
The burden of proof rests with the agent
Although legal commentary and case law adopt approaches favourable to agents, it is the agent who must prove that they actually brought in new customers for the principal during the agency agreement.
If the agent wishes to classify customers who previously had any business relationship with the principal as new customers, they must justify doing so, for example, by identifying an earlier break in the business relationship between the customer and the principal, or by showing that selling a different product required a new, specific relationship with the customer. And they will have to prove the facts supporting those circumstances.
Conclusion
When assessing an agent’s right to an indemnity, it is not enough to check whether the customers with whom the agent concluded agreements previously appeared in the principal’s customer database. The key is to determine exactly what the agent did to acquire the customer for the principal and what scope of cooperation this involved. In the event of a dispute, the burden of proving these circumstances will rest with the agent.
