Commercial Agents in Denmark

The Danish Commercial Agent Act (No. 272 of 2 May 1990) is based on EU Directive 86/653/EEC of 18 December 1986, ensuring harmonised protection for commercial agents across all EU Member States. As a result, the fundamental legal rules governing commercial agents are similar throughout the Union, subject to certain national variations. Unlike exclusive distributors, commercial agents in Denmark cannot be contractually bound in ways that place them in a worse position than the Act provides. This limitation particularly affects commission rights, meaning that contract clauses which reduce the agent’s statutory protections may be invalid. In practice, a commercial agent may therefore enjoy stronger legal rights than what appears in the written agreement.

Under Danish law, contracts can be concluded orally, in writing, implicitly, or through the conduct of the parties. According to §3 of the Danish Commercial Agent Act, both the principal and the commercial agent may demand a written agreement. A refusal to enter into a written contract may, in some cases, constitute a breach; however, invoking such remedies early in the relationship is often impractical and may damage future cooperation. Despite Denmark’s broad contractual freedom, agency contracts must still comply with mandatory rules in the Commercial Agent Act.

Under Article 17, Member States may choose between two termination-protection systems: the German model of compensation and the French model of damages. Both systems safeguard commercial agents when an agency agreement ends, but they differ in methodology, calculation principles and the nature of the rights granted.

Confusion often arises between the roles of commercial agents, exclusive distributors, intermediaries, commissionaires and other sales representatives. The classification depends not on the title used in the contract but on how the parties actually operate. Under §2 of the Danish Commercial Agent Act, a commercial agent is defined as a self-employed person who, on behalf of a principal and for remuneration, sells or purchases goods by obtaining orders or concluding agreements in the principal’s name. The agent typically operates within a defined territory, meets customers, collects orders and sends them to the principal, who handles delivery and payment. The Act applies only to the sale of goods, not services, which may be regulated under other legal frameworks.

Commercial agents who merely negotiate or conclude agreements on behalf of the principal generally fall outside Danish and EU competition law, as they are considered part of the principal’s sales organisation. In such cases, the principal—not the agent—competes on the market. However, agents who assume significant economic risks, such as financing stock or bearing market exposure, may fall within the scope of competition rules, requiring a case-by-case assessment.

Commercial agents operating in Denmark must register with the Central Business Register (CVR), whether they operate as limited companies (ApS, A/S) or personal liability companies (I/S). VAT registration is normally unnecessary because the principal—not the agent—concludes sales agreements and receives customer payments. The principal is responsible for collecting and settling VAT.

Customers may submit complaints to the commercial agent, who must promptly pass them on to the principal. The agent is generally not authorised to evaluate or resolve complaints unless explicitly empowered to do so.

Unless otherwise agreed, the commercial agent is not responsible for product distribution or storage. The usual arrangement is that the agent sends orders to the principal, who then delivers goods directly from their own warehouse to the customer.

The agent must inform the principal not only of orders and agreements but also of other significant commercial circumstances. What qualifies as “significant” depends on the contract and industry practice. The principal must provide the agent with all information necessary to perform the job, including market data, product updates, pricing information and procurement conditions. The principal must also promptly communicate acceptance or rejection of orders—typically once a month unless another frequency is agreed.

A commercial agent must safeguard the interests of the principal while also maintaining loyalty to customers. The agent is expected to actively promote sales, and the agency contract should ideally specify performance requirements to avoid disputes. Overly ambitious sales targets can later be used by the principal to terminate the contract, especially where the agent has exclusive rights to a territory. When exclusivity is granted, higher performance requirements may reasonably be imposed because the principal is prevented from using alternative sales channels.

Sections 4 and 5 of the Danish Commercial Agent Act outline the mutual obligations between the agent and the principal. The agent must act loyally and in good faith, promote the principal’s interests, make reasonable efforts to obtain orders, notify the principal of relevant circumstances and follow reasonable instructions. The principal must likewise act loyally, provide necessary tools, information and instructions, and notify the agent within a reasonable time of the acceptance, rejection or cancellation of orders. These broadly formulated rules emphasise cooperation and mutual support in advancing the principal’s sales efforts.

If the parties do not agree on remuneration, the agent is entitled to the customary commission for the relevant business sector and geographic area. Commission typically ranges from 8–15% of turnover. The commission becomes due when the customer pays, the goods are delivered or should have been delivered. Payment must occur no later than the last day of the month following the quarter in which the entitlement arose, and a later payment date cannot be agreed.

If a fixed-term agency agreement is terminated prematurely, the commercial agent may be entitled to damages equal to the commission that would have been earned had the agreement run its full course. More importantly, upon termination of any agency agreement, the agent is generally entitled to goodwill compensation if they have brought new customers to the principal or significantly increased business with existing customers. Compensation is payable only if it is reasonable—meaning the customers in question are expected to continue ordering from the principal and the agent loses future commission as a result. The agent must notify the principal of their intention to claim compensation within one year of termination; otherwise, the right is forfeited.

If the agency agreement is not for a fixed term, either party may terminate it with one month’s notice during the first year. The notice period increases by one month for each subsequent year, up to a maximum of six months unless otherwise agreed. These rules ensure stability while allowing flexibility in long-term business relationships.