Distribution law in Poland

The Polish law on Agency Agreements is set out in the Polish Civil Code, Article 758 et seq. of which in particular sets out the requirements of EU law on Commercial Agents

Agency Agreements in Poland may be concluded verbally or in writing. There are no special requirements regarding the form in which such agreements should be concluded. 

However, for evidentiary purposes, we recommend concluding Agency Agreements in writing. Please note that each party may demand a formal, written confirmation of the content of an Agency Agreement concluded verbally. This right cannot be limited/excluded in the agreement.

Polish law only requires written form for an Agency Agreement if the parties wish to restrict the Commercial Agent’s competitive activities (non-compete clause) for the period after the contract is terminated.

Polish law does not provide for any specific information obligations when concluding an Agency Agreement. 
However, like most European legal systems, Polish law provides a general obligation to negotiate the content of the agreement in accordance with good customs. A violation of this obligation may result in liability for damages (the culpa in contrahendo doctrine).

Under the Polish Civil Code, an Agency Agreement may only be concluded in B2B relations. This means that a vast number of limitations and pitfalls regarding the protection of the more fragile party (e.g. a consumer) are not applicable in the case of Agency Agreements. This broadens the range of freedom of contract.

Under Polish law, agreements may be concluded through individually agreed agreements, as well as standard terms and conditions. A party using standard terms and conditions should be aware that such standard terms are binding provided that they were delivered to the other party before the contract was concluded. Also, if the substance of standard terms and conditions differs from the individually negotiated agreement, the parties are bound by the individually negotiated agreement. 

In addition, if the parties use different standard terms and conditions, provisions of these terms and conditions that are contrary to each other will not be binding.

Apart from this, despite the general rule of freedom of contract, the parties are bound by the mandatory provisions of law, which cannot be modified either by standard terms and conditions or by individually negotiated agreements.

The Principal and the Commercial Agent are entitled to freely define the scope of the Commercial Agency. Furthermore, it is highly advisable to specify such scope in detail in order to avoid any ambiguity and risk of acting without authorisation. 

The Polish Civil Code states that if the Commercial Agent concludes a contract on behalf of the Principal while not being authorised or exceeds the scope of authorisation, the contract is considered to be confirmed if the Principal does not declare otherwise immediately after receiving information that the contract has been concluded. In other words, the law creates a certain presumption regarding the validity of a contract concluded without authorisation.

The Commercial Agent is mostly obliged to:

•  submit all significant information to the Principal, including about the conclusion of contracts on behalf of the Principal, received proposals to contract, customer preferences, etc.;
• follow the Principal’s instructions that are justified in the given circumstances; 
• perform any necessary acts to protect the Principal’s rights. The scope of such acts is confined to the Commercial Agent’s business activity.

On the other hand, the Principal is obliged to:

• submit to the Commercial Agent all documents and information required for due performance of the contract;
• pay the Commercial Agent, if this was agreed;
• notify the Commercial Agent (within a reasonable time) of its acceptance or rejection of a proposal to conclude a contract and/or of the non-performance of such contract;
• notify the Commercial Agent that the number of contracts to be concluded or their value will be much lower than the Commercial Agent could normally expect. Such notification should be delivered within a reasonable time. 

Apart from this, both parties are legally bound to be loyal to each other. This obligation is mandatory and should be respected, regardless of any attempts to limit it. 

The Parties to the agreement may freely negotiate the remuneration method.

If the parties did not expressly agree upon the method and amount of the remuneration, the Commercial Agent is entitled to commission. Its amount will depend on the number or value of contracts concluded. 

If the agreement does not specify the amount of the said commission, it will be due in the amount customarily accepted in relations of such kind, at the place where the Commercial Agent conducts its business activities. 

It is also possible to insert a del credere clause in the Agency Agreement, provided that the agreement is concluded in written form. In such a case, the Commercial Agent may be entitled to separate remuneration associated with its responsibility for the performance of the client’s obligations.

After termination, the Commercial Agent is entitled (unless it was agreed otherwise) to commission if:

•  the transaction is mainly attributable to the Commercial Agent’s efforts made during the term of the agreement and the transaction was entered into within a reasonable period after such agreement terminated, or
• the proposal to conclude the agreement (submitted by the client) reached the Principal or the Commercial Agent before the Agency Agreement expired.

There are no statutory rules on the term of the Agency Agreement. It is for the parties to decide how long they would like to cooperate for. 

However, it should be noted that, under Polish law, an Agency Agreement of definite duration is converted into an agreement of indefinite duration if the parties continue to perform it after the fixed term.

The Polish Civil Code states that if an Agency Agreement was concluded for an indefinite period, each party may terminate the agreement by notice. Statutory notice periods are set and they depend on the actual duration of the agreement. 

During the first year of the agreement, a one-month notice must be given. During the second year, a two-month notice is necessary. During the third and each subsequent year, a three-month notice is required. 

It should also be noted that parties are not entitled to contractually shorten the afore-mentioned periods, although they may be prolonged. If the parties wish to extend the notice period, they must bear in mind that the period given for the Principal cannot be shorter than the period given for the Commercial Agent.

The notice is presumed to be given at the end of the month in which the notice was received.

Apart from that, the rules provide an immediate termination of the Agency Agreement if one of the parties did not perform as was agreed (in a significant way) or if extraordinary circumstances occurred. The agreement may be terminated without notice even if it was concluded for a definite period.

If the Agency Agreement has been entered into for a fixed term, it may only be terminated extraordinarily for good cause, provided that such cause was agreed by the parties and stated in the agreement itself.

Indemnity is the main consequence of terminating an Agency Agreement. The law considers that the Commercial Agent is entitled to indemnification if during the agreement it acquired new clients or led to a significant increase in turnover with existing clients and the Principal still benefits considerably from those contracts. 

The claim is admissible as long as - taking into account all the circumstances (especially the loss of commission) - it is considered to be justified and equitable.

The amount of the indemnity cannot exceed the equivalent of one year’s average remuneration over the preceding five years. If the agreement goes back for less than five years, the indemnity should be calculated on the average for the term of the agreement. 

The indemnity is not due if the Principal terminated the contract because of default attributable to the Commercial Agent. Default is considered to be factor that would justify immediate termination. The indemnity will also not be granted: (i) if an agent terminated the agreement himself, unless it was due to his age, infirmity, but most importantly, if it was justified by circumstances attributable to the Principal; (ii) if the Commercial Agent, with the consent of the Principal, has assigned its rights and obligations under the agreement to third party.

The Commercial Agent may also seek damages, regardless of claiming indemnification.

If the parties decide to limit the Commercial Agent’s activity due to competitive reasons, the Principal will be obliged to pay the Commercial Agent an appropriate amount throughout the entire duration of such non-compete period. This rule will not apply if the parties decided otherwise or if the contract was terminated due to default attributable to the Commercial Agent. If the amount of the compensation was not stipulated in the agreement, it should be calculated based on the benefits derived by the Principal as a result of the non-compete obligation and the Commercial Agent’s lost income.

The restriction of competitive activity will only be valid if it applies to a group of clients or a geographical area covered by the Commercial Agent and the type of goods or services that are the subject of the terminated contract. 

The non-compete obligation can be agreed upon in writing and for a maximum period of two years from the termination of the agreement. 

Finally, the statute of limitation of 3 (three) years applies to claims resulting from performance of the Agency Agreement.

<<<< Go to the top

Polish civil law does not provide for special formal requirements when concluding Distribution Agreements. However, for evidentiary purposes, such agreements are mostly concluded in writing. 

Polish law does not provide any specific information obligations for concluding Distribution Agreements. 

As already mentioned above, Polish law provides a general obligation to negotiate the content of the agreement in accordance with good customs. A violation of this obligation may result in liability for damages (the culpa in contrahendo doctrine).

Distribution Agreements may only be concluded in B2B relations. In this case, the limitations and pitfalls regarding the protection of the more fragile party (e.g. a consumer) are not applicable in Distribution Agreements. In the light of freedom of contract, such agreements can be constructed in various ways.

However, due to the fact that a Distribution Agreement is an innominate contract and is not precisely regulated in statutory law, the doctrine proposes using a reasonable analogy to the provisions governing respective denominate contracts (like sale agreements, contracts of mandate, agency agreements). 

As already mentioned above, agreements in Poland may be concluded through individually agreed agreements, as well as standard terms and conditions. The party using standard terms and conditions should be aware that such standard terms are binding, provided that they were delivered to the other party before the contract was concluded. Apart from that, if the substance of standard terms and conditions differs from the individually negotiated agreement, the parties are bound by the individually negotiated agreement. 

If the parties use different standard terms and conditions, provisions of these terms and conditions that are contrary to each other will not be binding.

Under Polish law, the Principal and the Distributor are entitled to freely define the scope of the Distribution Agreements, provided that the agreement is not in breach of mandatory provisions of law.

The aforementioned mandatory rules derive, in particular, from competition law, which plays a significant role when it comes to limiting the scope of Distribution Agreements. Thus, a Distribution Agreement should always be reviewed whilst taking into account specific rules resulting from competition law. For example, such specific rules exist regarding: (i) the geographic scope of the Distributor’s activity within the agreement; (ii) non-compete clauses; or (iii) exclusivity obligations.

As under Polish law a Distribution Agreement is an innominate contract, the law does not directly specify the obligations of the Distributor and the Principal arising from such agreements. The parties to the agreement are free (within the limits of the law) as to how they shape their mutual rights and obligations.

Usually, the parties provide for the following obligations on the part of the Distributor:

• Distributing products in its own name;
• Providing the Principal with any relevant information regarding the distribution, customers and products;
• Diligently safeguarding the Principal’s interests;
• Promoting and advertising, collecting orders, and running consignment warehouses, unless it was agreed otherwise.

Usually the parties provide for the following obligations on the part of the Principal:

• Delivering products of the type, quantity and within the time limits agreed;
• Updating and delivering in due time all information necessary in the light of the Distribution Agreement, especially about a decrease in production or supply capacity;
• Supporting the Distributor in various ways, also by maintaining the reputation of its own products.

Apart from the above, both parties have a duty to act confidentially, cooperate in the performance of the agreement and be loyal to each other. 

In most cases, the Distributor is not provided with specific remuneration. Usually, the Distributor generates profits from purchasing products from the Principal with a discount and selling them to its customers at a higher price.

There is no statutory law in Poland regarding the term of the Distribution Agreement. Nonetheless, it is within the nature of this type of legal relation to strive to stabilise the contract. Concluding it for a short period of time or for a one-off transaction would be contrary to the core motive of distribution. The possibility of conducting a stable activity, as well as of having “privileged” and permanent access to certain products, is an important feature of every Distribution Agreement that pays off in the long run. 

Also, unlike in the Agency Agreement, the law does not stipulate that a Distribution Agreement of definite duration will be automatically converted into an agreement of indefinite duration if the parties continue to perform it after the fixed term. Still, the parties often insert such a clause in the agreement.

Distribution Agreements of definite duration end upon the expiry of their term, without prior notice, unless it was explicitly agreed otherwise in the agreement.

Agreements of indefinite duration, where no notice period was agreed upon, may be terminated by either party immediately (for good cause, set out in the agreement) or after an appropriate notice period. The doctrine suggests that the rules regarding the notice period applicable to Agency Agreements should also apply to Distribution Agreements.

It is also worth noting that in the light of general Polish civil law rules, if an agreement was concluded in writing, termination must also be made in writing. 

In general, there are no statutory rules entitling the Distributor to compensation or goodwill indemnity upon termination of the Distribution Agreement. 

However, there are voices among scholars that in the case of Distribution Agreements, the same rules should apply as for Agency Agreements with regard to goodwill indemnity. Thus, the Distributor should have the right to claim for such indemnity after the termination of the Distribution Agreement (especially if it was strongly integrated into the distribution organisation of the Principal). The above, however, has not yet been confirmed by court rulings.

If the contract is terminated unlawfully, the Polish Civil Code provides a general rule of compensating for all damage that is a consequence of fault. 

Finally, the statute of limitation of 3 (three) years applies to almost all claims resulting from the performance of the Distribution Agreement.

As regards: (i) the Principal's claims for the sale of goods to the Distributor, and (ii) the Distributor’s claims for remuneration for activities performed and reimbursement of expenses and advances – the statute of limitations of 2 (two) years applies.