[Xietor]

I think the 2 rules conflict.

One says if you take damage you take a morale check, the other that he will not retreat in a friendly territory.

I think the new rule applies, and he can retreat if hit. But I am not certain. But I have seen commanders flee, when they commanded undead that were still on the field, and the commander had not suffered any damage. And it was not that far into the fight. Shrug.