Indemnities for agents and
distributors in Spain: the
calculation criteria by the
courts
Ignacio Alonso
ADVOCATIA ABOGADOS
MADRID
Advocatia Abogados - Madrid
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Indemnities in Agency and
Distribution Contracts
 Agency contracts
 Goodwill compensation
 Distribution Contracts
 Goodwill compensation
 Some recommendations
Advocatia Abogados - Madrid
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Agency agreements
 The existence of the compensation: Article
28.1 Agency Act
 Termination of the contract (for determinate or
indeterminate period)
 New clients or sensibly increased operations with
previous ones
 Still substantially benefit the Principal
 Other elements
 Limitation of competition
 Loss of commissions
 Other circumstances (exclusivity)
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Agency agreements
 The amount of the compensation (legal and
case-law criteria)
 Not automatic. Compulsory (contrary agreement not
valid)
 Maximum legal amount (one year / five years)
 The remunerations (subventions, prices, bonuses)
 Other circumstances
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Reasonable moderation (increasing of commissions)
Possible sales in last period
Well-known products
The clients fidelity
Habitual clients
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Agency agreements
 Some examples by courts (1)
 2 years and 9 months contract:
 Total Commission 93.707,93 €
 Compensation of 33.734,56 € (98,99% of the
legal maximum)
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Agency agreements
 Some examples by courts (2)
 One year contract
 Total commissions 17.552,51 €
 compensation: 10.000 €
 In case of advertising paid in a 50% by the
principal
 compensation reduced in 20%
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Agency agreements
 Some examples by courts (3):
 Long term contract (two cases):
 (a) Last five years commissions: 26.085,84 €
 compensation: 5.217,19 € (legal maximum);
 (b) Last five years commissions: 195.189,13 €
 Compensation: 39.037,83 € (legal maximum)
 Two years and five months: annual average
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Agency agreements
 First conclusions
 Maximum vs. usual compensation
 Freedom and moderation of Courts
 Some specific recommendations
 Special clause including compensation
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Distribution agreements
 The existence of the compensation: no
specific applicable law. The analogy.
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Termination of the contract
New clients or increased operations
Still benefit the Principal
Other elements :
 exclusivity;
 exclusion if there is not bad faith
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Distribution agreements
 The amount of the compensation (case-law
criteria). The analogy
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Not compulsory. Parties can exclude it.
Maximum amount. Analogy.
The remunerations. Difficulties and criteria proposed
Other criteria followed by the courts
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Circumstances of each case
Freedom for the First Instance Judge
Moderation
Analogy
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Distribution agreements
 Some examples: courts decisions (1/5)
 More than two years contract.
 Distributor: 58.299,29 €,
 FIC: 58.064,44 €
 High Court (confirmed by Supreme Court):
23.917,13 €
 Short duration contract (-)
 Not exclusive contract (-)
 Distribution had not excessive importance in distributor
(9.5%) (-)
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Distribution agreements
 Some examples: courts decisions (2/5)
 Exclusive 10-year contract
 Distributor asked 75.842 €
 FIC: not accepted (other reasons)
 High Court : 50.000 €:
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Long term duration (+)
Exclusivity (+)
Near relationship Distributor-final client (+)
But: Reduction of sales (-)
Distributor also sold other materials (-)
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Distribution agreements
 Some examples: courts decisions (3/5)
 13-year contract
 Distributor asked 90.851,69 €
 FIC: only 18.170,32 due to the number of clients
 High Court : 36.340,63 €:
 The number of clients was higher (+)
 But : The clientele was due to the prestige of the
products (-)
 The sales had not increased during the contract (-)
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Distribution agreements
 Some examples: courts decisions (4/5)
 Exclusive long term contract (six months
previous notice)
 FIC: 308.039,10 €
 High Court confirms:
 Calculation on the possible benefit the distributor would
have obtained
 Reduction according its capacity of moderation
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Distribution agreements
 Some examples: courts decisions (5/5)
 Exclusive 10-year contract
 Distributor: 180.000 € (Principal’s sales increased
from 54.000 to 216.000 € during the contract)
 FIC: annual average of gross margin in the last
five years
 High Court: confirms criterion
 Supreme Court (January 2008): confirms criterion
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Common
recommendations
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Respect to the law and contract
Exclusive (+) or not (-)
The creation of clientele
Well-known products
The publicity made by the Principal
Evolution of sales by the intervention of Agent or
Distributor
 The importance of the distribution in the activity or the
Agent or Distributor
 Other elements
 Disregard of Agent or Distributor obligations
 Incidence of the Principal in the distribution of products
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Thank you
Ignacio Alonso
Partner
Advocatia Abogados - Madrid
Advocatia Abogados - Madrid
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