A new impulse has been given to this Draft in the recent National Congress for Distribution Contracts promoted by the King Juan Carlos University and held in Madrid in December 2008. The State Secretary for Justice, at the initial communication, has announced that the Spanish Government is proposing a better regulation for the commercial distribution with this Draft. He has also underlined the technical difficulty of a legal text valid for a wide range of very different distribution activities such as, for instance, the car, press or the information technologies distribution.
The Draft is focused on what it defines as the ‘integrated distribution’, whose essential characteristics are the participation of the ‘dealer-reseller’ in the distribution structure of the principal in order to place its goods or services, with a specific trade mark, in the market. Although this ‘integrated distribution’ includes the purchase and resell as the basic contract between the parties, it also includes other kind of obligations for the parties which modify the nature of the relationship.
The Draft wants to take into account some abusive situations in case of an unbalanced relationship between the parties, to avoid situations of uncertainty and conflicts and to discharge the Courts of the task of definition and determining the effects of the relationships. These are some of the more relevant aspects of the Draft:
First Title of the Draft includes general aspects for the application of the Act. In this Title, six different kinds of distribution agreements are defined: (i) exclusive purchasing, (ii) exclusive selling, (iii) authorised distribution, (iv) selective distribution, (v) commercial concession and (vi) franchising.
Second Title contains aspects related to the conclusion of the distribution contracts. The written form is not compulsory but is favoured. The obligations of the parties are also contained in this Title, particularly in the pre-contractual phase, obliging both parties to inform the other party about all the relevant elements for the conclusion of the contract and to do this, at least, one month before its signature. In case of lack of respect to this obligation, a responsibility for damages could be claimed.
Third Title concerns the contents of the contract. The intention of the Draft is to include a sort of conduct elements considering only those that are usually more conflictive. Special attention is granted to the exclusivity clause, paying attention to the freedom of the Distributor, freedom of the market and avoiding a prejudice for future clients.
The Supplier will be obliged to provide to the Distributor commercial and technical information enough permitting the latter a wider distribution. The Distributor will need an independent organisation and will be obliged to distribute products or services without affecting the image, trademark, presentation and distribution system of the Supplier. The right for the Supplier to verify the Distributor’s accounting books is also included in this Title.
Fourth Title contains specific dispositions affecting different kind of distribution contracts such as the exclusive distribution (including provisions for the ‘parallel trade’ and the ‘sales to relevant customers’); selective distribution (including aspects related to the selection of the distributors and prohibition of non authorised sales to retailers); and franchising (incorporating what is already foreseen in the Retailing Commerce Act).
Fifth Title concerns the termination of the agreement. The main element concerning the duration of the agreement is the respect to the parties’ decision being possible a contract for a fixed period that could be transformed in an agreement for indeterminate period.
The previous notice has also been considered as a way to terminate the contract and its duration will depend on the duration of the contract: one month per year with a minimum of one month and a maximum of six months. Some other dispositions affect the termination of the agreement, and particularly, the liquidation and destination of the exceeding merchandises.
The termination of the agreement does not imply necessary goodwill compensation but it could be considered under some exceptional circumstances or because of the existence of some exclusivity clauses. Judges or arbitrators should decide whether these circumstances exist or not.
Ignacio Alonso, IDI Country Expert for Spain.