Article 4 of the Agency Act establishes that except for goodwill compensation and damages claims all other claims in agency agreements are governed by the general prescription terms applicable to contracts provided by the Commercial Code. Given that the specific claim for unpaid commissions is not foreseen in this Code, it is necessary to examine the general principles stated in the Civil Code where two different prescription periods are mentioned: a general one of 15 years and a specific one of 3 years for specific professions.
Mr. Pedro Enrique (the Agent) rendered his services to SHARP since February 1987 and the termination notice was sent in July 31st 2001 and was received in August 6th 2001. The claim was presented by the Agent in July 31st of 2002 before the First Instance Court nº 2 of Caceres. The Agent asked for the payment of the unpaid commissions within the period between January 1998 and July 2001, as well as the goodwill compensation and the damages for earlier termination. SHARP made opposition to such claims. The Court of First Instance accepted partially the Agent’s arguments and stated that he was entitled to ask for the payment of the unpaid commissions and the goodwill compensation, but not for damages.
SHARP appealed the sentence before the Provincial Court of Caceres arguing that it was applicable article 1967.1 of the Spanish Civil Code in relation to the unpaid commissions. This article establishes that the action to ask for the payment of fees of some professionals prescribes in three years. These professionals are, amongst others, the ‘agents’. In this sense, SHARP defended that the word ‘agent’ covered also those professionals who manage business on behalf of third persons, as for example, commercial agents. So, by applying this Article, SHARP defended that it was not applicable in the current case the general rule of 15 years prescription (according to article1964 of the Spanish Civil Code), but the specific one of 3 years and according to this the Agent was only entitled to ask for the payment of commissions between July 31st 1999 and July 31st 2001 (date of the termination notice or August 6th 2001 date of its reception).
The Provincial Court of Caceres (judgment nº 190/2004 of May 18th) rejected the appeal arguing that the professions mentioned (and particularly the ‘agents’) were characterized by rendering a specific service with a payment fast and immediate, while the relation between the principal and his commercial agents is characterized by being stable in time. Furthermore, the Provincial Court explained that the application of the ‘short’ prescription term has to be restrictive and for this reason, in case of doubts, it has to be applicable the longer period of time.
SHARP appealed the decision before the Supreme Court who confirmed his interpretation i.e. the application of the three years’ prescription to the professionals who render services on behalf of third persons, independently if the relationship is sporadic or stable and particularly to commercial agents. The Supreme Court then reduced the unpaid commissions from the initial figure accepted by the Provincial Court (123.381,78 euro for the whole contractual period) to the definitive and proportional one (68.629,92 euro limited to the last three years).
Ignacio Alonso, agency & distribution Country Expert for Spain.
