Many businesses assume that if a customer does not perform a contract, the agent is not entitled to commission.
👉 Not always.
The Civil Code provides situations in which an agent retains remuneration despite non-performance by the customer, and others in which commission is not payable or must be repaid.
The reasons for non-performance are crucial.
1️⃣ Where non-performance is certain
An agent cannot claim commission, or must repay it, where it is clear that the contract will not be performed for reasons for which the principal is not responsible.
For example:
🔵 one party validly withdrew from the contract;
🔵 the contract proved invalid;
🔵 one party validly avoided the legal effects of their declaration of intent.
⚠️ However, the principal must prove that non-performance is so certain that further performance cannot reasonably be expected. Merely suspecting that the customer will not perform, or a delay in performance alone, is insufficient.
2️⃣ Who bears the risk of non-performance?
This is where the most important practical issue arises.
Not every instance of non-performance by a customer releases the principal from paying commission.
⚠️ The most common mistake?
The principal assumes that, because the contract was not performed, the agent need not be paid.
The agent nevertheless retains commission where the reason for non-performance falls within the business’s normal operating risk.
Examples include:
🔵 the customer terminating the contract because of the principal’s conduct;
🔵 insufficient staff;
🔵 poor organisation of work.
The position differs for events outside the business’s sphere of risk, such as:
🔵 a natural disaster;
🔵 a sudden, unforeseeable change in the law;
🔵 an unforeseeable loss of the customer’s financial liquidity.
The principal may then withhold commission or seek repayment of commission already paid.
3️⃣ What if the contract is performed only in part?
Commission is then payable in proportion to the extent of performance.
👉 If it has not yet been paid, it should be reduced accordingly.
👉 If it has been paid in full, the agent should repay part of it.
Typical examples include:
🔵 failure to achieve the agreed transaction volume;
🔵 early termination of a fixed-term contract.
📌 Conclusion
A customer’s non-performance does not itself mean that the agent loses commission.
For the principal, the crucial questions are why non-performance occurred and who bears the associated risk.
👉 In practice, a commission dispute often concerns the reasons why the whole transaction failed, rather than the agent’s activities.
