Section 1 of the Law defines a "commercial agent" as "a person engaged in locating customers or in an activity, the purpose of which is to bring about an engagement in a contract between a customer and a supplier in connection with the purchase of goods marketed by the supplier". These definitions differentiate between a vendor-agent relationship and a vendor-distributor relationship. The main characteristic of a "Distributor" is that it is an independent legal entity that purchases the goods from the manufacturer or supplier at its expense and sells them in its own name. In contrast, a commercial agent does not purchase the products himself, but rather acts to locate customers and create a direct contractual relationship between the supplier and the customer, sometimes using a power of attorney on behalf of the supplier. This issue was addressed by the Supreme Court in other municipal applications 442/85 Moshe Zohar & Co. v. Travenol Laboratories (Israel) Ltd., 44(3) 661 (1990), when it ruled at p. 679:
"The distributor is an independent dealer with legal independence, who buys the products from the manufacturer (or supplier) at his own expense and sells them under his own name. Its profit (or loss) is the difference between the purchase price (which it receives at a discount) and the selling price. He bears the financial risk of the distribution business. An exclusive distributor is a distributor who has been granted the right to be the exclusive in a defined geographical area. By definition, therefore, the distributor is not an "agent" in the sense of the Courier Law, 5725-1965. A distributor differs from the commercial agent in that the latter does not buy the products and sell them in his name and at his expense, but sells them in the name of the manufacturer (or supplier)."
- A cursory examination of the agreement entered into between the parties shows that it was agreed that the engagement with the customers, who would purchase products in a store managed by the respondent, would be directly with the appellant. The purchases will be recorded in the appellant's books and not in the respondent's books. In addition, it was agreed that the inventory in the store belonged to the appellant. All of these are characteristics of an agency agreement under the law, and therefore I believe that the law applies to these relationships.
Eligibility for advance notice fees:
- Although the law applies to the relationship between the parties, I am of the opinion that the respondent is not entitled to advance notice fees by virtue of it. Section 4 of the Law provides for a notice fee, only in the event that the agreement is an indefinite agreement (in this regard, see: Uri Ben Uliel, "The Agency Contract Law and its Partial Protection of Commercial Agents," Laws 9, 51, 56 (2017)). In my opinion, the logic behind this is that if the cancellation of an agreement for a fixed period by a supplier is done unlawfully, then the agent will be entitled to compensation for loss of profit, at least until the agreed termination date. The trial court reached the conclusion that the agreement was extended for an indefinite period and my company confirmed this determination. My opinion on the matter is different.
- I believe that the option was exercised through the conduct of the parties. After the expiration date for the exercise of the option, the parties continued in the same contractual framework and under the same conditions. The respondent claimed in response to the cancellation notice that the agreement was supposed to end in March 2023. His entire claim is based on the fact that the extension is in accordance with the option, and he demanded damages until March 2023. The respondent also claimed in paragraph 5 of the counterclaim that in a conversation between him and Mr. Yoram Winbar, the appellant's CEO and owner, it was agreed that the respondent would continue the contractual engagement for an additional 5 years. The appellant denied in her statement of defense against this section but did not present any version regarding the specific factual claim. In any event, since the appellant did not object at the time to the continuation of the contractual relationship, and in fact the agreement between them on its terms continued to apply, this should be seen as the exercise of the option by conduct (for the exercise of an option by conduct, see, for example: Civil Appeal (Tel Aviv District) 1297/97 Karsenty v. Or (Nevo, May 19, 2002)). In view of this, the respondent is not entitled to advance notice fees, since the agreement between him and the appellant is for a fixed period.
The result:
- If my opinion were heard, I would suggest that the judgment given by the trial court be annulled, with respect to the charge for the advance notice fees and expenses awarded to the appellant, and the claim on top of this damage be dismissed. In addition, I propose that the respondent bear the appellant's expenses in the sum of ILS 15,000.