SPAIN: Recent decisions on agency and distribution.

Ignacio ALONSO | SPAIN | 2008-06-17

Ignacio ALONSO

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1 – The sentence of the Supreme Court n° 506/2007, of 16th May.




The parties have agreed a ‘representation agreement’ in 1986 that has been considered as an Agency Agreement by the Court. In 1996, the Principal (QUESERÍAS BEL ESPAÑA, S.A.) decided to terminate this agreement giving to the Agent (PUCHADES DISTRIBUCIÓN DE ALIMENTACIÓN S.L.) a previous notice of 30 days for the termination, respecting and according to what was foreseen in the contract. The Agent decided to contest the unilateral termination by the principal asking for the payment of an indemnity clientele and for damages for not respecting the legal previous notice (one month for each year with a maximum of six months).



Concerning the previous notice, the Supreme Court has established in this sentence that, although the notice given (30 days) could be considered correct between the parties when the contract was signed because it respected what both of them have agreed, since the coming into force of the Agency Contract Act and from January 1st 1994 the Act is also applicable to contracts signed before the existence of the Act and therefore it prevails to the Contract. The prior notice period, the indemnity for damages and the indemnity for clientele should respect what is foreseen in the Agency Contract Act although the contract says otherwise.



The supreme Court has therefore considered that «the non respect of the prior notice [according to what is foreseen in the Agency Act] is a breach of contract ope legis and, in consequence, the obligation to indemnify according to the general rules for contractual liability is born» including the indemnity for damages.



The Court has also considered that «the indemnity obligation for the clientele and for the expenses that can be amortized is an obligation established by the Agency Contract Act, and have their ‘raison d’être’ in the existence of an unjustified enrichment or in an enrichment without cause of the Principal when he terminates the contract.»



The Court reminds that the indemnity for damages includes (according to the Agency Contracts Act (article 29)) expenses that can be considered as investments or that could have been amortized. According to this sentence, it is also necessary:

  1. to justify that these expenses are linked to the fulfilment of the contract,
  2. to justify that they are in accordance with the instructions given by the Principal to the Agent and
  3. to consider the terms for amortization generally fixed by economic and financial criteria.


The Court has not refused that the expenses for reorganizing for the employees could be considered as a part of the expenses that should be covered by this indemnity.


Other concepts different to the investments or expenses that can be amortized cannot be covered by the damages compensation foreseen in the Agency Contract Act but can be considered, eventually, following the general rules of contractual fulfilment (particularly the necessary justification of such damages). The Court has accepted that the lost of commissions during the not respected prior notice has also to be covered by this indemnity.


According to this Sentence, the indemnity for clientele is due to the unjustified enrichment of the Principal because of the Agent’s previous activity and its calculation can be based on the potential appreciation of a reasonable forecast for the Principal to use the clientele with economic positive results.


In order to appreciate the indemnity for clientele, the Court sets that, according to the Agency Contract Act, it is necessary a relevant increasing of the business and the possibility that the previous Agent’s activity could still produce substantial benefits for the Principal in the future. In this sense, and in order to determine the amount of this indemnity, the Court has also underlined and added other important criteria not expressly foreseen in the Act. These criteria are:

  1. the notoriety of the commercialised products and
  2. the existence of important publicity campaigns by the Principal.


These two jurisprudential criteria should be considered to decrease the importance of the previous activity of the Agent in the creation of the clientele and therefore to decrease the amount to be paid to him in case of a termination of the contract.





2 – Sentence of the Audiencia Provincial of Las Palmas nº28/2007 (4th Section) of January 25th.




STARPACK HISPANIA (Principal) signed a distribution contract with ALMACENES CANARIOS DE PERFUMERÍA, S.A. (Distributor). The contract had an initial term of one year but after the expiration of this term both parties continued executing it for several years. Both parties did not agree in the contract special conditions or a previous notice for its termination. The Principal decided to terminate the agreement and the Distributor claimed for a compensation for damages suffered.


The court considers these facts and in its resolution summarises the principal lines followed by the jurisprudence for this kind of distribution agreements deciding that the Distributor had not proved enough the damages claimed.



The case-law accepts the unilateral resolution for the following distribution contracts:

  1. Distribution contracts for an undetermined period of time;
  2. Distribution contracts without period of time or,
  3. Distribution contracts whose initial agreed term had expired but that parties have continued in its execution.


For this reason, in the present case, a contract without term and with no agreement of prior notice for its termination, the Court has admitted the unilateral resolution made by the Principal.


The termination of this kind of contracts will, nevertheless, produce compensation for damages for the non terminating party under some circumstances:

  1. if the damages can be proved and
  2. if the termination was decided without a fair reason or with abuse of right.


In case of unilateral termination of these kinds of distribution contracts decided by the Principal, like in the present case, the Distributor claiming the compensation for damages has to prove:

  1. that the termination was decided against the commercial good faith or that there was an abuse of right or it was decided in an arbitrary way,
  2. that the termination produced damages for him and
  3. the amount of such damages.


Considering that in this case the Distributor has not been able to justify none of the previous requisites, the Court has denied the compensation claimed.



Ignacio Alonso, IDI Country Expert for Spain.



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