ARGENTINA: A relevant case on damages on commercial agency under the Argentine new Civil and Commercial Code.

Osvaldo Jorge MARZORATI | ARGENTINA | 2017-01-18

Osvaldo Jorge MARZORATI

View CV

The First Instance Court judged partially in favor of the claimant but the Court of Appeals, chamber D, rejected the claim insofar also the plaintiff claimed unpaid and pending accrued commissions, deemed subject to the statute of limitations and admitted only the compensation for clientele and the partial compensation of funds advanced by Cellurnet under a lease agreement. Such outcome reduced the original amount granted by the first instance court, based on the fact that the court was limited by the original estimation of damages claimed by plaintiff.

The Court of Appeals established that the term for the statute of limitations under the derogated Commercial Code, Section 851, was of two years, that were elapsed when the action was filed, and not of ten years (the general provision) applied by the first instance judge. In fact the Court of Appeals interpreted that such section of the old Code was applicable despite that it refers to brokers in general, but it should applied by extension to other intermediate operations payable under commission, like agents. It considered that the applicable legislation was the old Code and not the new CCU, and rejected the claim in such regard.

However, on the other hand, it declared that the rescission notified by Telecom was unjustified because the new law does not change the provisions of the special bankruptcy law and the anticipated termination of an agency on grounds based on:

– provisions of the contract cannot change the mandatory norms of the bankruptcy law;

– Telecom cannot avail itself of a contractual provision that the law does not contemplate as a valid cause for terminating an agency agreement in case of a receivership, where payments are only suspended. This does not permit to certain common creditors to collect their credits without privilege, but pari passu with others.

Notwithstanding the above, it admitted that the compensation for clientele should be granted, because it was proven that the agent activity increased the operations of the principal, and such activity shall continue to produce substantial advantages for principal through other new agents or intermediaries. However it did not apply the provision of the new Code, because the case was tried under the old Civil and commercial legislation then, in effect, but selected old precedents, applicable to that effect.

Moreover , it declared that the clientele compensation is due in any case of extinction of the agency contract, not as a reward for the negligence or the willful intent in the fulfillment of the agency agreement, but based on the doctrine of unjust enrichment of principals ( applying the old doctrine created by some precedents during the validity of the previous Civil and Commercial codes).

Finally, it established that section 1497 of the new Civil Code, which provides for an indemnity for clientele not to exceed one year of income net of expenses ,as agreed by the parties or fixed by the court – was not the basis for the judgement, but it reached similar conclusion than in foreign countries and some local precedents giving legal certainty for the claimant.

Thus, it reduced the First Instance award from USD$ 320.000 to approximately USD $ 100.000 ( composed by the clientele compensation and the damage for loss of the lease. Moreover, it limited the recovery of the agent for the anticipated termination of the agency agreement without cause to the original claim, which was USD $ 80.000 as requested by claimant, stating that the Court cannot give more to the claimant in excess of his original claim, plus the compensation for the lack of use of the lease, which was paid in advance, despite that the expert reported that the average income of Cellurnet was much higher.

The reason to disregard such expert opinion was based that the claimant made an error in law estimating the damage on the basis of the compensation corresponding to the lack of adequate notice, which is different from the compensation for clientele based on a sum not to exceed one year of income net of expenses., as decided by the Court ,quoting prior decisions in favor of this interpretation. We are uncertain whether the claimant or his lawyer has attacked such holding as arbitrary to the Argentine Supreme Court. The Court normally vacates this type of pleadings and do not take the case for revision because it does not involve constitutional issues.


Osvaldo Marzorati, IDI country expert for Argentina


Print this article