SPAIN: two interesting updates on agency and distribution contracts

Ignacio ALONSO | SPAIN | 2014-09-16

Ignacio ALONSO

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Draft on a new Spanish Commercial Code

In June 20, 2013 it was presented by the General Codification Commission the new Proposal for a completely new Spanish Mercantile Code. The Proposal contained regulations on a wide range of different commercial matters including a complete regulation on collaborative contracts: agency agreements (already regulated in Spain) but also distribution, franchise and consignment agreements which were not regulated by our internal law.

The Ministry for Justice, however, presented last May 30, 2014 the Draft (Anteproyecto de Ley) on Mercantile Code without including all the collaborative contracts previously mentioned. This Draft includes the regulation on agency agreement (with no substantial modifications of the current Agency Act) and incorporates other collaborative contracts such as consignment agreement and commercial mediation but no regulation on distribution or franchise agreements. The Government has, therefore, renounced to grant to these agreements (distribution agreements including franchise agreements) a new legal regulation.

Other relevant matters affecting distribution and agency agreements are, nevertheless, included in the Draft. For instance: unfair competition, defence of competition and restrictive practices, some dispositions on trademarks and patents, and general principles for commercial contracts (some dispositions on payments default in commercial relationships, new technologies in commercial transactions, general conditions, vending machines and confidentiality and non-competition clauses, amongst others).

The Draft will now start the legislative procedure and is intended to be transformed in a definitive Act by the end of 2015.

Commercial Agency: Sub-Agents and Employees

Spanish Agency Act states in its article 5 that an agent has to act personally or with its employees. The agent can also appoint sub-agents but, in this case, the agent needs the express authorisation of the principal.

In this procedure, the principal argued that the agent had appointed two sub-agents without his express authorisation and, therefore, he had breached his legal obligations. The agent, on his side, considered that these two persons were not sub-agents but employees. The High Provincial Court of Burgos in a judgement issued in June 13, 2014 has specified some elements to take into account in order to distinguish “sub-agents” from “employees”.

According to the Court, the principal knew and accepted that the agent was helped by two persons but nothing in the procedure proved that these persons had an independent organization from the agent’s and evidences showed, instead, that they were part of the agent’s commercial organization: some mails included these persons as members of the agent’s commercial department and according to some witnesses they acted as employees of the agent.

The Court has stated, therefore, that in order to verify if a person is acting as a sub-agent instead of as a employee, it should be verified if this person has an independent organization or if this person is acting as a part of the agent’s commercial structure.

Ignacio Alonso, IDI agency and distribution country expert for Spain

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