Termination for Just Cause in Agency Agreements: The Supreme Court's Stance with Ordinance No. 16802 of 2025

The agency agreement is a fundamental pillar in the Italian commercial landscape, regulating the relationships between principals and agents, key figures for the promotion and conclusion of business. However, like any contractual relationship, an agency agreement can also come to an end, and this often occurs through termination. But what happens when one of the parties decides to terminate for "just cause"? And what criteria must a judge adopt to assess the legitimacy of such a decision? The Court of Cassation, with Ordinance No. 16802 of 23/06/2025, offers important clarifications, outlining an interpretative path that deserves the utmost attention.

The Agency Agreement and Just Cause: A Regulatory Framework

The agency agreement is governed by Articles 1742 et seq. of the Civil Code. It is an agreement in which the agent undertakes, on a stable basis, to promote, on behalf of the principal and in return for remuneration, the conclusion of contracts in a specific territory. The termination of this relationship can occur for various reasons, including termination for just cause, which allows for the immediate dissolution of the contractual bond, without notice or indemnity. This mechanism finds its root in Article 2119 of the Civil Code, a provision originally intended for subordinate employment but applicable, with appropriate adaptations, also to agency agreements.

"Just cause" is traditionally understood as a cause that does not allow for the continuation, even provisional, of the relationship. In the context of an agency relationship, the Court of Cassation has repeatedly emphasized the need for careful and specific assessment, taking into account the peculiarities of this type of contract, which is profoundly different from a subordinate employment relationship.

The Court of Cassation's Interpretation: A Breach "Not of Minor Importance"

Ordinance No. 16802 of 2025 of the Supreme Court (President: A. Manna, Rapporteur: F. Buffa), in rejecting the appeal filed by G. against P., reiterated a cardinal principle, already expressed in previous rulings (see No. 1376 of 2018 Rv. 646888-01). The Court emphasized that the rule of Article 2119 of the Civil Code must be applied taking into account the "different nature of the relationship compared to subordinate employment, as well as the different capacity for resilience that the parties may have in the overall economy of the same." This means that the trial judge must conduct an in-depth analysis, weighing the economic dimensions of the contract and the actual impact of the breach on the contractual balance.

In agency agreements, the rule set forth in Article 2119 of the Civil Code must be applied taking into account the different nature of the relationship compared to subordinate employment, as well as the different capacity for resilience that the parties may have in the overall economy of the same; in this context, the judgment regarding the existence, in the specific case, of a just cause for termination must be made by the trial judge, taking into account the overall economic dimensions of the contract and the impact of the breach on the contractual balance, with relevance, in this regard, only to the existence of a culpable and not minor breach that significantly harms the agent's interest, to the point of not allowing the continuation, even provisional, of the relationship.

This maxim is of fundamental importance. It clarifies that not every breach, however serious, can automatically justify termination for just cause. The breach must be:

• **Culpable**: it must be attributable to the party that committed it.
• **Not of minor importance**: reiterating the general principle of Article 1455 of the Civil Code regarding contract rescission, the breach must have a significance that significantly alters the trust and contractual balance.
• **Considerably harmful**: it must harm the other party's interest (in the case of the maxim, the agent) to such an extent that the continuation, even temporary, of the relationship becomes unsustainable.

The judge must therefore conduct a case-by-case analysis, not limiting themselves to an abstract assessment of the breach, but placing it within the specific context of the agency agreement, considering the volume of business, the duration of the relationship, the parties' expectations, and the overall economic impact.

Practical Implications for Agents and Principals

This ruling by the Court of Cassation offers crucial insights for all operators in the sector. For principals, it is a warning to assess the existence of just cause with extreme caution before proceeding with immediate termination, to avoid litigation and potential damages awards. The breach must be objectively serious and such as to undermine the continuation of the relationship. For agents, the judgment strengthens their protection, ensuring that their relationship cannot be arbitrarily terminated, but only in the face of contractual violations of actual and significant gravity.

The requirement of a breach "not of minor importance" and that "considerably" harms the counterparty's interest necessitates more careful and transparent management of contractual relationships. Both parties should accurately document any violations and attempt, where possible, to reach an amicable resolution before resorting to drastic measures such as termination for just cause.

Conclusions

Ordinance No. 16802 of 2025 of the Court of Cassation reaffirms the complexity of the regulation of termination for just cause in agency agreements. It emphasizes the importance of rigorous and personalized analysis, taking into account the specificities of the relationship and the actual seriousness of the breach. Jurisprudence continues to move towards a balanced protection of the parties' interests, avoiding automaticity and promoting a substantive assessment of contractual conduct. For agents and principals, the message is clear: caution and correct interpretation of the rules are essential to successfully navigate the complex world of agency agreements, making recourse to qualified legal advice indispensable in case of doubt.