Spanish Law 12/1992, governs the regulation of commercial agents’ contracts. These are contracts where either an individual or a company works for a principal, securing contracts in a specified territory for remuneration. The agent acts always on behalf of the principal, as an independent mediator, and takes no risks himself.
The agent may work for several principals, although he needs the consent of each principal where the goods or services provided are similar.
However, these provisions may be waived by agreement between the parties.
The applicable law may be chosen by the parties but this rule is subject to public policy considerations and mandatory law for certain aspects of agency agreements.
The parties cannot agree to waive the indemnity provisions to the detriment of the agent.
The agent’s remuneration might be a fixed sum, a commission or a combination of both. A commission is any remuneration which varies depending on the number or value of the contracts or operations secured or the agreements reached through the agent’s activity.
Commission becomes due once the principal has completed the agreements that the agent concluded.
Law 12/1992 includes a specific regulation regarding the termination of the commercial agents contract:
If the contract is concluded for a fixed term, it shall expire on the due date provided that an effective termination of the agent’s activities occurs. Contracts for a fixed term that are continued by the parties after the term has expired are considered contracts for an indefinite period of time.
If the contract is concluded for an indefinite period of time, any of the parties will be entitled to give unilateral written notice of its termination, with a minimum advance notice of one month (which can be extended) per each year of the contract, with 6 months being the maximum notice required. In the event of a breach of the contract or bankruptcy of any of the parties, the duty of giving advance notice of termination does not apply.
Indemnity or compensation on termination
Indemnity for goodwill: The principal must pay an indemnity for goodwill to the agent upon termination of the agency contract in any of the following circumstances:
If the agent has secured new customers for the principal or significantly developed business with existing customers;
If the activity of the agent will continue to create positive consequences for the principal in the future; or
If the payment of the indemnity is fair , aving taken into account any possible lost commissions, non-competitive limitations and all the relevant circumstances.
The indemnity cannot exceed the equivalent of an agent's average annual remuneration calculated over the preceding five years. If the duration of the contract is less than five years, the average annual remuneration is calculated according to the duration of the agreement, i.e. two months for two years' duration.
Compensation for damages. The payment of a goodwill indemnity does not prevent the agent from seeking compensation for damages if the loss sustained was by reason of the improper termination by the principal.
The principal does not have to pay an indemnity for clients or for damages to the agent if any of the following circumstances occurs:
If the principal terminates the agency contract due to a breach of legal and contractual obligations by the agent;
If the agent terminates the contract, unless such termination is due to the acts of the principal, or because the age, disability or illness of the agent make it impossible for him to continue with the agency activity; or
When the agent, with the principal’s consent, assigns his rights and duties under the contract to another third party.
Under Spanish law on commercial agency contracts, it is not possible to devise alternatives to avoid the provisions regarding the obligations of the parties, the remuneration of the agent, and the termination of the contract.
The Spanish legal system has several alternative legal persons with similar characteristics to the commercial agent, such as employees or distributors, which in practice, are rarely distinguished from agents.
By way of analogy, Spanish Jurisprudence applies the imperative rules of the commercial agents contracts to all the distribution contracts.