SPAIN: two interesting case law about goodwill compensation in agency and distribution contracts.

Ignacio ALONSO | SPAIN | 2014-07-15

Ignacio ALONSO

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Agency agreements: relevant period to calculate goodwill compensation

The Supreme Court in a judgement of June 27 2013 has considered that in order to calculate goodwill indemnity, the relevant period has to include the entire relationship between the parties.

The parties, Ramon Areses SL. (the Agent) and Repsol Butano (the Principal) entered in several successive agency agreements with determinate duration. The practice amongst them consisted in a first agency agreement with determinate duration, a second agreement in which the parties terminated the first one and declared not to have anything to claim to the other party; then, immediately after, the signature of a new agency agreement again with determinate duration. And this was repeated several times during several years.

Once the relationship terminated, the agent claimed for a goodwill compensation for 976.651 euros including not only the last agency agreement with determinate duration but the entire relationship (including, therefore, all the linked agreements and although the “nothing to claim” clause was signed at each termination).

First Instance Court refused partially the claim and reduced the compensation to 13.477 euro. High Provincial Court (Court of Appeal) of Pontevedra decided to increase the amount to 473.676 euro.

The Supreme Court decided that the only way to interpret this procedure between the parties in accordance with article 28 of the Agency Act (which foresees the goodwill compensation) was that in order to calculate the compensation the “nothing to claim” clause did not prevent to take into account all the contractual period. A different approach (i.e. that only the last agreement was relevant for purposes of compensation -as pretended by Repsol Butano-) was contrary to the imperative application of article 28.

Distribution agreements. breaching of the agreement due to changes in the distributor: no goodwill compensation

The High Provincial Court (Audiencia Provincial) of Jaén in a judement of January 30, 2014 has considered that the structural changes in a Distributor could be considered a breaching of the agreement and a justification for the Supplier to terminate it without goodwill compensation.

The parties Automóviles Familia Lendínez SLL (distributor) and Japemasa Automoción SA (supplier) entered into an agreement for the distribution of (amongst others) spare parts of automobiles. The agreement was signed by the distributor with a previous company name “De la Chica Lendínez Automóviles SL”. Then the company changed its name, its nature (different kind of undertaking), its shareholders, administration and directors and one of its shareholders left the company.

First Instance court considered, although the distributor pretended otherwise, that the agreement was not an agency but a distribution agreement. This was confirmed by the High Provincial Court: the distributor accepted to be part of the Service Network as independent dealer for the maintenance, repairing and selling of spare parts.

High Court also considered that distribution agreements are based in trust and in the essential (“intuitu personae”) personality of the dealer. This said, the mentioned modifications in the distributor were to be considered a substantial modification and a breaching of the agreement. The information sent by the distributor to the supplier only referred to the change of its company name but without giving other information about the rest of the modifications, was not enough to consider that the supplier had accepted it. Because of this breaching of the agreement, the distributor had not the right to any goodwill compensation.

Ignacio Alonso, IDI agency & distribution Country Expert for Spain.

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