The contracting parties are allowed to determine the law applicable to the contract themselves in accordance with Art. 3 of EU Regulation No. 593/2008. In the absence of a choice of law, which is generally the case for oral contracts, the law applicable to the agency contract is the law of the country in which the commercial agent has his habitual residence. Thus, if a commercial agent resident in Germany works for an Italian company, the agency agreement is in principle subject to German law. The same principle also applies to authorised dealers: In the absence of a choice of law, distribution contracts are governed by the law of the state in which the distributor has his habitual residence.