The Court of Appeal in Gdansk (the court of second instance) issued a judgment upholding the verdict of the court of first instance dismissing the agent’s suit for payment against the principal; the agent had filed the suit due to the principal’s termination of the agency agreement without notice. One of the reasons for the dismissal of the suit was that the agent had represented products competing with the principal’s products during the term of the agency agreement.
The courts of both instances have made a clear assessment (with which I personally fundamentally disagree) that Article 760 of the Civil Code, according to which each of the parties shall be obliged to remain loyal to the other party, provides for the obligation of the agent to refrain from competitive activities. The Appeal Court in Gdańsk emphasized that “this leads to a breach of the duty of loyalty, as the conduct of competitive activities can clearly jeopardize the economic interests of the principal.” Although the court noted that the prohibition of competition during the term of an agency agreement is not directly regulated by the provisions of the Civil Code regulating the agency agreement, it held that it should be derived from Article 760 of the Civil Code, cited above, taking into account the normative template of the agency agreement and the nature of the agency relationship resulting thereof.
It is worth noting that so far Polish courts have not had such a conservative approach to the issue of prohibition of undertaking competitive activity by an agent.
Olga Sztejnert-Roszak, IDI Country Expert for agency & distribution in Poland
