The amendment affects the distribution of automobiles and industrial vehicles and extends some of the principles of the Agency Agreement to these Distribution Agreements including some specific regulation.
The following are the governing principles of the modification.
1. The modification affects the distribution agreements of automobiles and industrial motor vehicles. Distribution agreements in this case are defined as those in which a party (the distributor) is obliged before another party (the supplier) in a continuous or permanent basis and in exchange of a remuneration, to promote commercial activities as an independent dealer, assuming the risks of the transactions.
2. In the absence of a specifically applicable law to these contracts and independently of their name, the principles of the Agency Act will be of application.
3. Pacts permitting the supplier to unilaterally modify the contents of the contract will be null and void. This will be applicable particularly for the complete products range, business plan, investments and amortisement delays, remunerations, product prices, general conditions of sale and post-sale, commercial indications and criteria to select distributors.
4. Distributor will only be obliged to make investments specifically mentioned in the agreement and only in case the term to be amortized is also established.
5. In case the supplier obliges the distributor to have a minimum stock according to the commercial goals, the distributor is authorised to send back to the supplier those products when not purchased by the clients. The supplier will be obliged to repurchase those products at the same purchasing conditions.
6. In case of termination of the agreement by any reason, the distributor will have the right to receive the following compensations:
- Investments not amortized.
- Goodwill compensation (clientele). This compensation cannot be lower than the annual average of the sales made by the supplier to the distributor during the last five years or during the term of the agreement if its duration was less than five years.
- Indemnities for the dismissal of staff.
- To purchase all the items at the distributor’s premises, at the same price they were sold.
- The corresponding prejudices in case of breaching of the agreed conditions.
7. The transfer of the distribution agreement will be permitted and the supplier will not be able to oppose if the transferee agrees to maintain the organization, structure and resources needed for the activity.
8. Competent court for distribution issues will be the one of the domicile of the distributor. Agreements modifying this condition will be null and void.
Ignacio Alonso, IDI agency & distribution Country Expert for Spain.
The text of the law, together with the relevant legislation on agency, distribution and franchising, can be found in the Legislation Section of the Website.