In a judgement issued by the Provincial Court of Badajoz in September 1st 2010, the court has considered that the Agent was obliged to reimburse the commissions and the goodwill indemnity previously received because of his infringements.
The parties had signed an agency agreement in January, 12, 2007 that was terminated by the Agent’s decision.
During the relationship, the Agent had intermediate in some operations that, in fact, none of the clients had really asked and, for that reason, goods were not really delivered to such inexistent client but to the Agent who signed the orders and the receipts of the goods. All the merchandises were, in fact, returned to the Principal once the agency agreement had terminated. The Court has considered this behaviour relevant enough to ask for the reimbursement of the commissions received for these sales.
The Principal also asked for an indemnity because of the lack of previous notice for the termination of the agreement by the Agent. The Court accepted as indemnity the benefits the Principal would have obtained for the sales during the period of the inexistent previous notice.
On the other hand, and considering that it was not proved a serious breach of the agreement by the Principal and that the infringement was due to the Agent activity, the Agent was condemned to reimburse the goodwill indemnity previously received.
Agent acting on behalf of several competitors.
In a judgement of the Provincial Court of Alicante issued in June 10, 2010 the court has analysed the circumstance that an Agent was acting for two Principals that allegedly were competitors.
The agreement was signed between the Agent and the Principal and affected the market of ‘children shoes’. The agreement was terminated by the Principal without a previous notice to the Agent considering that the Agent had breached the agreement because he acted also for a presumed competitor without the Principal’s consent. The Principal argued that this circumstance permitted him to terminate the agreement without any notice and without any goodwill indemnity to the Agent.
Article 7 of the Spanish Agency Act permits the Agent to represent other principals except in cases in which the activity is related to goods or services of identical or analogous nature and in competition with them. In this case, an express authorisation of the first Principal is needed.
The Court has analysed the mentioned article of the Agency Act and the special relationship of both parties concluding that the Agent had not breached the agreement and, therefore, the previous notice was necessary and the goodwill indemnity due.
The Court has considered that there were not evidences enough to consider both markets and products as ‘competitors’. In fact, although the alleged market was the ‘children shoes’, the Court has stated that usually undertakings have an ample and extended sort of products and that the market should be analysed in a global and integral way comparing, as far as possible, articles commercialised. In this case, considering that the products were not described more than a mere ‘children shoes’, without showing the sort of concrete products and that within the general ‘children shoes’ market a wide category of products could be included (sport shoes, dress shoes, either for boys and girls, different categories and prices and for different kind of clients), the Court has decided that it was not proved enough that both markets were competitors. In this sense, the fact that the Agent had previous knowledge of this particular market and that this circumstance was already knew by the Principal and was crucial to sign the agreement has also be an essential element to consider that there was not breaching of the agency contract for this reason.
Ignacio Alonso, agency & distribution Country Expert for Spain.