Agency and distribution agreements in Spain. Termination. Indemnity for new customers

Spanish regulatory framework

The agency contract in Spain is regulated by a 1992 law that implementing the EU Directive on the subject.

The distribution agreement has no specific legislation and is governed by and doctrine that comes from the law of the Spanish courts.

Termination

The agency or distribution agreements with a fixed duration elapse, of course, at the end of the duration period, provided neither party becomes non-compliant. In this case, the other party may terminate the contract immediately without notice.

The agency or the distribution agreements of indefinite duration, however, ends with the granting of a compulsory notice of one month for each year of duration of the contract, with a maximum of six months.

The only exception is, of course, in case of the breach of contract by either party, in which case the rule given above applies.

Indemnity

Provided that the principal has not terminated the contract for breach of contract by the agent or the distributor, the latter are entitled to be indemnified for the increase in customers.

The Spanish law establishes an indemnity equivalent to the average compensation of the agent (or distributor) during the last five years of the contract, or of the whole duration if it was less than five years.

The agent or distributor in Spain will have to demonstrate that they have brought new customers or that they have increased sales with existing customers, provided that they can still provide substantial benefits to the principal.

Do not hesitate to get in touch with us if you have any questions about the resolution or indemnity in contracts of agency or distribution in Spain.

Photo by jk5854 under Creative Commons.