Merchants and Trade - Act No 103/1992 respecting Commission Sales Transactions -
The present Act applies to commission sales transactions occurring between Iceland and other States. In the Act a commission salesman denotes a self-employed intermediary having continuing authority to negotiate the purchase or sale or goods and services rendered in that connection on behalf of another party - a principal - in accordance with an agreement between them.
Validity and Definitions
In the interpretation of the present Act a party is not considered a commission salesman if he is on account of his work commissioned to obligate the firm or Company for which he works or of which he is an owner, or a partner authorized to conclude binding obligations for his partners. A probate administrator of a bankruptcy estate is not either considered a commission salesman in the interpretation of the present Act.
The Minister may by means of Regulations exempt specific sectors of commission sales transactions from the provisions of the present Act when the individuals concerned discharge commission salesmanship as a job on the side.
Rights and Obligations in Commission Sales Transactions.
a. make applicable efforts to negotiate and establish transactions,
b. communicate to the principal all available information of importance,
c. comply with legitimate instructions from his principal.
a. furnish a commission salesman with requisite data,
b. grant a commission salesman necessary information concerning the commission sales agreement, specifically so advising him within normal time-limits if he can foresee that the business will be considerably less than the commission salesman may be assumed to have provided for.
A principal shall also advise a commission salesman within normal time limits in case he contemplate approving, rejecting or ceasing transactions which have been established by the latter.
That part of the remuneration which varies with the number or value of business contracts shall be deemed to be commission according to the present Act.
The provisions of Arts. 7 - 12 will apply only if a commission salesman's remuneration is in part or in full in the form of commission.
A commission salesman shall also be entitled to commission on transactions concluded during the period of validity of a commission sales agreement in case such business has been concluded in a geographical area or with a group of customers he has been charged with serving and if the business has been concluded with a customer from this area or of this group.
a. the principal has finalized a transaction,
b. the principal should have finalized a transaction in conformity with an accord with a third party,
c. a third party has already finalized the transaction.
A claim for commission is established at the latest when a third party has finalized his part of the transaction or should have done so if the principal had stood by his part of the transaction as was agreed.
Commission shall be paid no later than on the last day of the month following the quarter during which it fell due.
It is not permissible to derogate by means of contracts from paras. 2 and 3 of the present Article to the detriment of a commission salesman's terms as specified therein.
Commission which a commission salesman has received shall be refunded to the principal if the right thereto has been dropped.
It is not permissible to derogate by means of contracts from the provisions of para. 1 of the present Article to the detriment of a commission salesman's terms as specified therein.
A commission salesman may require to be furnished with all information on account of the transaction concerned which is available to the principal, including transcripts from book-keeping, in order to verify that commission be correctly calculated.
It is not permissible to derogate by means of contracts from paras. 1 and 2 of the present Article to the detriment of a commission salesman's terms as specified therein.
Conclusion and Termination of Commission Sales Agreements
In case an alternative arrangement be not agreed the notice of termination shall be one month if an agreement has been valid for a year or less and the notice shall be extended by one month in respect of each validity of the agreement in excess of one year. Notice of termination shall, however, not exceed six months.
In case parties negotiate a longer respite than that specified in para. 2 a principal is not permitted to reserve the right to a shorter advance notice of termination than a commission salesman.
In case there be no alternative agreement notice of termination is based on the turn of the month.
The provisions of the present Article shall apply to commission sales agreements in accordance with Art. 14. Provisions relating to notice of termination shall be based on the term of validity of the original agreement.
In case a commission salesman or a principal neglect his duties in accordance with a commission sales agreement he may become subject to liability for damages. A party desiring to claim compensation shall give the counter-party notice of the claim without undue delay after he knows or should know about the negligence. In case this be not done the right to damages is dropped. This does, however, not apply if the counter-party has worked in a dishonest manner or shown gross negligence.
The amount of payment on account of breach of contract shall not exceed the equivalent of one year's commission based on the average thereof at fixed prices during the last five years of the term of agreement. In case an agreement between the parties has remained in force for less than five years regard shall be had for the average commission at fixed prices during the term of the validity of the agreement.
A commission salesman will not forfeit his right to take legal action for compensation on account of financial loss by receiving payment from a principal due to breach of contract.
A commission salesman is entitled to damages on account of the financial loss he sustains due to a principal's notice of termination of a commission sales agreement. In this interpretation financial loss principally constitutes lost commission earnings which a commission salesman would have obtained by conscientiously meeting the provisions of the commission sales agreement and also by considerably improving the position of his principal. Furthermore when a commission salesman is left with unpaid and badly utilized investments of his on account of the commission sales business in consultation with a principal.
The right to payment on account of breach of contract according to para. 1 and to damages due to financial loss under para. 4 will be established although the present agreement be terminated as a result of the commission salesman's death.
A commission salesman will forfeit the right to payment due to breach of contract and to damages because of financial loss if he does not notify the principal within one year as of breach of contract that he intend utilizing this his right.
A commission salesman is not entitled to payment on account of breach of contract if he has himself terminated the agreement. This does, however, not apply if the reasons for the notice of termination may be traced to the principal or to the fact that the commission salesman cannot continue his work due to age or illness.
Neither is a commission salesman entitled to payment due to breach of contract if he conveys the commission sales agreement to another commission salesman with the principal's approval.
Such a restriction of a commission salesman's trade may not remain in force for more than two years following upon the expiry of the term of validity of the agreement.
Entry into force.
The present Act enters into force on 1 January 1993. As of that time all new commercial agreements concerning commission sales shall be concluded in conformity with the provisions of the present Act. The provisions of older agreements shall be amended prior to 1 January 1994 and as of that time the provisions of the Act apply to all commission sales agreements.
Given at Reykjavik on 28 December 1992