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Commercial /sales/ representative according to the Bulgarian commerce law

According to Article 32 of the Bulgarian Commercial code, the sales representative is a person that is engaged independently and by occupation for the business of another merchant. Deriving from the term, the sales representative must be a natural person or a legal entity. Depending on the mandate, he may be entitled to procure commercial transactions resp. to effect transactions in the name and on the behalf of the merchant or in his own name and on the behalf of the merchant. A combination of these activities may be possible as well.

The sales representative is acting independently and outside the merchant’s enterprise. The representing authority derives from an agency agreement between the sales representative and the merchant. This way, he may be authorized to procure the conclusion of commercial transactions or to represent the merchant when concluding commercial transactions.

Article 42 of the Commercial Code provides two exceptional cases that create representative authority without an explicit authorization by the merchant – first, if the sales representative acts as representative of the merchant outwardly and second if it is about the acceptation of acts performed by third parties or securing of evidence. Any said restrictions are ineffective towards third parties that acted bona fide.

According to Article 43 of the Commercial Code, the sales representative may as well conclude contracts without authorisation. In this case, the contract is deemed to be concluded if the merchant does not reject it upon being notified.

The prohibition of competition applies also to the sales representative if the merchant and the sales representative agreed upon such exclusivity. This non-competition clause may also apply on actions that are not able to compete. Article 41 of the Commercial Code provides a special provision regarding the restrictions of the sales representative’s activities following the termination or cancellation of agency agreement. Such restrictions must be agreed upon expressly and in writing; the restrictions may not be for longer than 2 years after the termination. In return, the merchant owes a respective compensation unless the agreement has been terminated through a fault of the merchant. In this case, the sales representative may discharge himself from the said restrictions by a unilateral declaration of will.

Another special obligation of the sales representative is the so called Del Credere obligation – the sales representative’s obligation to be personally liable for the performance of obligations under effected transactions. In return, the sales representative is entitled to an additional commission.

Other obligations of the sales representative are as follows:

  • He must follow the merchant’s instructions;
  • He must keep secret all information related to the business of the merchant;
  • He must inform the merchant immediately about each contract that he concluded.

The sales representative is entitled to commission for all transactions effected by him or through his assistance and to compensation of the costs that derived from the commissioning. Further, the sales representative is entitled to a one-time compensation if the merchant benefits of the transactions effected by the sales representative later on. The sales representative may not be entitled to this compensation if he did not request it within one year after the termination of the representation relationship, if the representation contract has been cancelled due to a mistake of the sales representative or if the sales representative transferred his rights to a third party.

The cancellation of the trade agency depends on the type of the contract. If the contracting parties agreed upon a time period, the agency relationship is terminated with the expiry of the time period or may be tacitly renewed. If there was no agreement upon a time period, each contractual party is entitled to cancel the contract unilaterally until the expiry of the third year after the conclusion of the contract. Regardless of this, the sales representative is, even after the cancellation, entitled to commission for all commercial transaction that he effected or concluded during the term of the contract.