Law of Spain on Agency Contracts
| Chapter I. General provisions
Article 1. Agency contract
Through the agency contract, an individual or corporate body known as the agent is obliged, with regard to another party, in a continuous or stable manner, in return for remuneration, to promote commercial acts or operations on someone else?s behalf, or to promote and conclude these for and on someone else?s behalf, as an independent intermediary, without assuming, unless otherwise agreed, the risk involved in these operations.
Article 2. Independence of the agent
Those sales agents and representatives who are dependent and, in general, those persons who are bound by an employment relationship, either common or special, to the contractor on whose behalf they are acting shall not be regarded as agents.
It shall be presumed that dependency exists where the individual or corporate body involved in promoting commercial acts or operations on someone else?s behalf, or in promoting and concluding these for and on someone else?s behalf, cannot organise their professional activity or the time involved in this according to their own criteria.
Article 3. Scope of the Law and compulsory nature of its rules
In the absence of a law which is expressly applicable thereto, the various forms of agency contract, whatever their name, shall be governed by the provisions of the present Law, whose rules are compulsory unless otherwise stipulated therein.
The present Law shall not apply to agents who are acting in official or regulated secondary equity markets.
Article 4. Limitation of actions
Unless otherwise stipulated in the present Law, the limitation on the actions deriving from the agency contract shall be governed by the rules established in the Commercial Code.
Chapter II. Content of the contract
SECTION 1. ACTIONS OF THE AGENT
Article 5. Exercise of the agency
The agent must carry out, himself or through his employees, the promotion and, where applicable, the conclusion of the commercial acts or operations which have been entrusted thereto.
The actions carried out through sub-agents shall require the express authorisation of the contractor. Where the agent appoints a sub-agent, he shall be responsible for the management of the sub-agent.
Article 6. Conclusion of commercial acts and operations on behalf of the contractor
The agent is authorised to promote the acts or operations which are the subject of the agency contract, but he may only conclude these on behalf of the contractor when he has been given this power.
Article 7. Actions carried out on behalf of several contractors
Unless otherwise agreed, the agent may carry out his professional activity on behalf of several contractors. He shall always need the consent of the contractor with whom he has concluded an agency contract in order to carry out, on his own behalf or on behalf of another contractor, a professional activity connected with goods or services which may be of the same or a similar kind and which may be in competition with those whose sale he is obliged to promote.
Article 8. Acknowledgement and deposit of the goods sold
The agent is authorised to demand, at the time of delivery, the acknowledgement of the goods sold, and to carry out the judicial deposit of said goods in the event that the third party refuses or delays their receipt without just cause.
SECTION 2. OBLIGATIONS OF THE PARTIES
Article 9. Obligations of the agent
In the exercise of his professional activity, the agent must act loyally and in good faith, protecting the interests of the contractor or contractors on whose behalf he is acting.
In particular, the agent must:
Take charge, with the diligence of an ordered dealer, of the promotion and, where applicable, the conclusion of the acts or operations with which he has been entrusted.
Send the contractor all the information which he has available, where this is necessary for the proper management of the acts or operations with whose promotion and, where applicable, conclusion he has been entrusted, and, in particular, the information relating to the solvency of the third parties with which there are operations pending conclusion or implementation.
Carry out his activity in accordance with the reasonable instructions received from the contractor, provided that these do not affect his independence.
Receive on behalf of the contractor any type of complaint from third parties regarding faults or defects in the quality or quantity of the goods sold and of the services provided as a result of the operations promoted, even where he has not conclude these.
Keep independent accounts of the acts or operations relating to each contractor on whose behalf he is acting.
Article 10. Obligations of the contractor
In his relations with the agent, the contractor must act loyally and in good faith.
In particular, the contractor must:
Make available to the agent, sufficiently in advance and in an appropriate quantity, the sample collections, catalogues, tariffs and other documents needed by the agent for the exercise of his professional activity.
Provide the agent with all the information needed for the performance of the agency contract and, in particular, warn the agent, whenever the contractor becomes aware of this, when the latter foresees that the volume of the acts or operations will be significantly lower than what the agent might have expected.
Pay the remuneration agreed.
Within a period of fifteen days, the contractor must notify the agent of the acceptance or refusal of the operation notified. In addition, he must notify the agent, as quickly as possible, in view of the nature of the operation, of the implementation, partial implementation or lack of implementation of this operation. 4.
SECTION 3. REMUNERATION OF THE AGENT
Article 11. Systems of remuneration
Remuneration of the agent shall consist of a fixed amount, a commission or a combination of the above two systems. In the absence of agreement, the payment shall be fixed in accordance with commercial practice in the place where the agent carries out his activity. If this commercial practice does not exist, the agent shall receive the payment which is reasonable bearing in mind the circumstances involved in the operation.
Any element of the remuneration which varies according to the volume or value of the acts or operations promoted, and, where applicable, concluded by the agent is considered commission.
Where the agent is paid totally or partially by means of commission, the provisions of the following articles in this section shall be observed.
Article 12. Commission for acts or operations concluded during the term of the agency contract
For the acts and operations which have been concluded during the term of the agency contract, the agent shall be entitled to commission where one of the following circumstances in involved:
Where the commercial act or operation has been concluded as a result of the professional intervention of the agent.
b) Where the commercial act or operation has been concluded with a person with whom the agent has previously promoted and, where applicable, concluded an act or operation of a similar nature.
Where the agent holds the exclusive right for a geographical area or for a certain group of people, he shall be entitled to the commission whenever the commercial act or operation is concluded during the term of the agency contract with a person belonging to said area or group, even though the act or operation may not have been promoted or concluded by the agent.
Article 13. Commission for acts or operations concluded subsequent to the termination of the agency contract
For the commercial acts or operations which have been concluded after the termination of the agency contract, the agent shall be entitled to commission where one of the following circumstances is involved:
Where the act or operation is due principally to the activity carried out by the agent during the term of the contract, provided that this act or operation has been concluded within three months of the termination of said contract.
Where the contractor or the agent has received the request or order prior to the termination of the agency contract, provided that the agent would have been entitled to receive the commission as a result of having concluded the commercial act or operation during the term of the contract.
The agent shall not be entitled to the commission for acts or operations concluded during the term of the agency contract if this commission is due to a previous agent, except where, in accordance with the applicable circumstances, it is fair to distribute the commission between both agents.
Article 14. Accrual of the commission
The commission shall be accrued at the moment when the contractor has implemented or should have implemented the commercial act or operation, or when this has been totally or partially implemented by the third party.
Article 15. The agent?s right to information
The contractor shall provide the agent with a list of the commission amounts accrued for each act or operation on the last day of the month following the calendar quarter in which they were accrued, in the absence of an agreement which establishes a shorter period. The list shall indicate the essential elements based on which the commission amounts have been calculated.
The agent shall be entitled to ask that he be shown the contractor?s accounts in respect of the necessary details in order to check everything relating to the commission amounts due thereto and in the form fixed in the Commercial Code. He shall also be entitled to be provided with the information which the contractor holds and which is needed to verify the amounts.
Article 16. Payment of the commission
The commission shall be paid no later than the last day of the month following the calendar quarter in which this was accrued, except where it has been agreed to pay this within a shorter period.
Article 17. Loss of the right to the commission
The agent shall lose the right to the commission if the contractor proves that the act or operations concluded through the mediation of the agent between the contractor and the third party have not been implemented due to circumstances not attributable to the contractor. In this case, the commission which the agent has received for the act or operation pending implementation must be immediately returned to the contractor.
Article 18. Reimbursement of expenses
Unless otherwise agreed, the agent shall not be entitled to the reimbursement of the expenses which he has incurred in the exercise of his professional activity.
Article 19. Guarantee of the operations under the responsibility of the agent
The agreement under which the agent assumes the risk of one or several or all of the acts or operations promoted or concluded on behalf of a contractor shall be null and void if this is not drawn up in writing and does not state the commission to be received.
SECTION 4. BAN ON COMPETITION
Article 20. Contractual limitations on competition
Among the stipulations of the agency contract, the parties may include a restriction or limitation on the professional activities to be carried out by the agent once this contract has terminated.
The agreement limiting competition may not have a duration greater than two years from the termination of the agency contract. If the agency contract has been agreed for a shorter period of time, the agreement limiting competition may not have a duration greater than one year.
Article 21. Requirements for the validity of the agreement limiting competition
The agreement limiting competition, which must be formalised in writing in order to be valid, may only cover the geographical area or this area and the group of people entrusted to the agent and may only apply to the class of goods or services which are the subject of the acts or operations promoted or concluded by the agent.
SECTION 5. FORMALISATION OF THE CONTRACT
Article 22. Right to formalisation in writing
Each of the parties may require from the other, at any time, the formalisation in writing of the agency contract, which shall contain the amendments which, where applicable, have been introduced therein.
CHAPTER III. Termination of the contract
Article 23. Term of the contract
The agency contract may be agreed for a fixed or indefinite term. If a fixed term has not been established, it shall be understood that the contract has been agreed for an indefinite term.
Article 24. Termination of the fixed-term contract
The agency contract agreed for a fixed term shall terminate on the expiry of the agreed term.
Notwithstanding the provisions of the above number, the fixed-term agency contracts which continue to be performed by both parties after the period initially fixed has elapsed shall be regarded as having been converted into contracts with an indefinite term.
Article 25. Termination of the agency contract with an indefinite term: prior notice
The agency contract with an indefinite term shall be terminated by the unilateral termination by either of the parties by means of prior notice in writing.
The period of prior notice shall be one month for every year of validity of the contract, up to a maximum of six months. If the agency contract has been valid for less than one year, the period of prior notice shall be one month.
The parties may agree to longer periods of prior notice, without the period for the prior notice of the agent being able to be less, under any circumstances, than that established for the prior notice of the contractor.
Unless otherwise agreed, the end of the period of prior notice shall coincide with the last day of the month.
In order to determine the period of prior notice of fixed-term contracts which have been converted through the operation of the law into contracts with an indefinite term, this shall be calculated by adding the original fixed term of the contract to the time which has passed since this contract was converted into a contract with an indefinite term.
Article 26. Exceptions to the above rules
Either of the parties to an agency contract agreed for a fixed or indefinite term may terminate the contract at any time, without the need for prior notice, in the following cases:
Where the other party has failed to comply, fully or partially, with the obligations legally or contractually established.
Where the other party has been declared bankrupt or when its request for suspension of payments has been accepted for consideration.
In these cases, it shall be understood that the contract shall terminate on receipt of the written notification indicating the desire to terminate the contract and the cause of the termination.
Article 27. Termination due to death
The agency contract shall be terminated due to the death or declaration of death of the agent. It shall not be terminated due to the death or declaration of death of the contractor, although the latter?s heirs in the company may terminate this with the appropriate prior notice.
Article 28. Compensation in respect of clients
Where the agency contract is terminated, whether this contract has a fixed or indefinite term, the agent who has supplied new clients to the contractor or significantly increased the operations with the pre-existing clients shall be entitled to compensation if his prior activity may continue to produce substantial benefits for the contractor and if this is appropriate in terms of fairness, due to the existence of agreements limiting competition, due to the commission which he is losing or due to other circumstances involved.
The right to compensation in respect of clients also exists in the case where the contract is terminated due to the death or declaration of death of the agent.
The compensation may not, under any circumstances, exceed the annual average amount of the remuneration received by the agent during the last five years or throughout the whole period of the contract if this is less than five years.
Article 29. Compensation for damages
Without prejudice to the compensation in respect of clients, the contractor who unilaterally terminates the agency contract with an indefinite term shall be obliged to give compensation for the damages which, where applicable, have been caused to the agent due to the early termination, provided that this does not allow the repayment of the expenses which the agent, as instructed by the contractor, has incurred in the performance of the contract.
Article 30. Cases where the right to compensation does not exist
The agent shall not be entitled to compensation in respect of clients or for damages:
Where the contractor has terminated the contract due to the agent?s failure to comply with his obligations which are legally or contractually established.
Where the agent has terminated the contract, except where the termination is caused by circumstances attributable to the contractor or is based on the age, disability or illness of the agent who cannot reasonably be required to continue his activities.
Where, with the consent of the contractor, the agent has transferred to a third party the rights and obligations which he held under the agency contract.
Article 31. Limitation
Actions to claim compensation in respect of clients or compensation for damages must be brought within one year of the termination of the contract.
The court covering the domicile of the agent shall have jurisdiction to hear the actions arising from the agency contract, with any agreement to the contrary being null and void.
Until 1 January 1994, the rules of the present Law shall not apply to the agency contracts concluded prior to the date of its entry into force.
1. The incorporation into Spanish law of the regulatory contents of Directive 86/653/EEC, of 18 December 1986, on the co-ordination of the Member States with regard to independent commercial agents, poses two basic problems: the first, in respect of the legislative technique, relates to whether this incorporation should be implemented by reforming the Commercial Code or, on the other hand, by passing a special law; the second problem, in respect of legislative policy, relates to the contents of the transposing regulation.
2. The choice between reforming the Commercial Code and passing a special law must necessarily be based firstly on the fact that there is no legal category for agency contracts, although there are partial regulations on some special agencies. As with other Codes of its generation, the only collaboration contract regulated by the Spanish Code of 1885 is the commission contract, in the guise of a commercial mandate. However, the common root of the commission contract has been giving rise to many other collaboration contracts, prompted by new economic and social requirements resulting from the changes in the goods and services distribution system. In this way, the new commercial contracts have been taking shape in the current social situation under several, and frequently imprecise, names, with the courts being given the delicate task of clarifying the category limits and the regulatory contents.
In this context, the agency has remained until now on the fringes of the Code, as a contract created and developed by practice. In contrast to the isolated and sporadic collaboration in contracting which is characteristic of the commission agent is the stable or durable collaboration specific to the agent, by which the latter promotes or promotes and concludes, for and on behalf of the principal, contracts of the most varied nature. In fact, the agent is sometimes limited to just finding customers, whereas, at other times, the agent also signs contracts with customers on behalf of the represented contractor. The incorporation of Directive 86/653/EEC seems therefore to constitute an auspicious occasion to fill this gap in the commercial legislation, by legally regulating the agency contract in accordance with the needs of the time and the Community requirements.
In legal codes which have a dual contractual discipline, such as the Spanish code, the commercial nature of this contract is unquestionable. However, this commercial nature does not provide the solution to the problem of the legislative technique. The inclusion or exclusion in the Code of the legal rules for the agency must therefore be assessed using criteria of opportunity.
From this point of view, the inclusion of the agency rules within the Commercial Code of 1885 does not seem appropriate. In addition to other considerations of a methodical nature, it is necessary to bear in mind that, in recent years, the very important reform implemented in the commercial legislation has basically been carried out through the approval of separate laws and not by the amendment of the contents of the first commercial law.
The second problem indicated, that of legislative policy, is also caused by the lack of legal categorisation of the agency which has been mentioned previously. Directive 86/653/EEC aims to harmonise the State laws with regard to certain aspects, which it considers fundamental, of the law on independent commercial agents, using the German model for this purpose. The model followed explains the subjective criterion on which the Directive is based, which begins specifically by delimiting the figure of the commercial agent. However, in order to adopt an approach which is at least minimally in keeping with the Spanish legal system, this regulation must be translated in formally objective terms, by regulating the agency contract.
However, the Law on Agency Contracts cannot be composed solely of the contents of said Directive. In the Spanish case, the incorporation of the Community solutions cannot lead to the harmonisation of non-existent laws without, in reality, the regulation claiming to be „ex novo“ of the agency contract.
For this reason, it is not advisable to limit the content of the special law to the rules contained in Directive 86/653/EEC; in fact, it seems more judicious to provide sufficient legal rules for the agency contract.
Chapter 1 contains the general provisions, the first of which is concerned with delimiting the subject of the regulation. The unavoidable reference has been, as is logical, Directive 86/653/EEC and, in order to preserve a certain continuity of terminology, which is otherwise very expressive, the regulation in force on sales agents.
In the definition of the agency, the nature of the agent as an independent intermediary is highlighted. The fundamental difference between the sales agent and the commercial agent lies specifically in this independence or autonomy, which the former does not have. This basic characteristic, which appears in the title of the Directive and in its defining article, is also contained in the first of the articles of the Law; this only and exclusively regulates those agents which merit the description of independent intermediaries. The next article determines when this independence is presumed to be non-existent. The agent, either an individual or a corporate body, must be independent with regard to the person on whose behalf he or it is acting. In order not to create confusion with other methods of collaboration, it is avoided calling this person a principal.
The agent may be a mere negotiator (i.e. someone involved in promoting commercial acts and operations) or he may also assume the role of concluding the acts and operations promoted thereby. Instead of the word „negotiate“, the more precise word „promote“ has been preferred which, in addition to seeming more correct, is the word used by Royal Decree 1438/1985, of 1 August.
One particularly important aspect is that relating to the delimitation of the object of this business promotion activity. The directive fixes this as the sale or purchase of goods. However, this criterion seems too narrow, which is why this reference to the activity of selling or purchasing has been replaced by a much wider reference: the agent is obliged to promote, or to promote and conclude, commercial acts or operations. The tradition behind this expression (which is used by our Commercial Code in dealing with commission) contributes to a much clearer and much more categorical inclusion of the agency within commercial collaboration contracts.
Furthermore, it is not necessary for this commercial act or operation to in turn involve goods. The commercial act or operation which the agent promotes can be aimed at the movement of goods or, more specifically, at the movement of movables and even services.
The commercial agent does not act on his own behalf, but on someone else?s behalf (either on behalf of one or several contractors: an exclusive right is not included as a defining characteristic), and when he concludes commercial acts and operations, he must do so on behalf of the principal. However, the Law does not give consideration to the source of the representative action for the conclusion of the commercial acts and operations promoted by the agent, a subject which is entrusted to the general principal on representation.
The agency contract requires permanence or stability: it is a long-term contract. The Directive indicates that the agent is permanently responsible for promoting contracts or for promoting and concluding contracts on someone else?s behalf. The Law retains this characteristic, but, in order to eliminate ambiguities in respect of the meaning of stability, it gives a specific definition of this by clarifying that the term of the contract can be fixed or indefinite. An agency agreed for an indefinite period is as "„permanent" as an agency agreed for one year or more.
The last element of the definition is the salaried nature of the agent. The definition offered by the Directive does not contain a precise reference to this point, but is expressly deduced from this by excluding non-salaried agents from its scope. It seemed preferable to include this characteristic in the first article of the Law. Furthermore, the absence of an express stipulation in the contract on this point does not mean that the agent works for no charge, but that the remuneration has to be fixed in accordance with practice. 9. The legal rules for the agency contract are shaped according to the general principle of the compulsory nature of the rules of the Law, unless expressly specified to the contrary.
With regard to its scope, it has been considered appropriate to expressly exclude agents who act in official or regulated secondary equity markets. However, the most significant aspect of the legal solution is that it establishes a common right applicable to any type of commercial agency, thereby filling a major gap and, at the same time, harmonising its different contractual forms.
10. Chapter II, on the content of the contract, is divided into five sections. The first deals with the actions of the agent; the second regulates the obligations of the parties; the third is specifically concerned with the remuneration; the fourth considers the temporary agreement on the limitation of competition by the agent once the contract has terminated; and the fifth deals with the contract documentation.
Prominent among the terms of the first section is the determination of the powers of the agent, with the express stipulation of the option of carrying out the professional activity on behalf of several contractors, except where the goods or services are identical or similar, in which case the consent of the contractor with whom the first contract was concluded is required.
The legal rules on the obligations of the parties, which are contained in the second section, are determined according to the listing criterion followed by the Directive.
The regulation of the contractor?s obligation to offer remuneration for the agent?s activity forms the content of the third section. This reproduces, with slight alterations in the methodical arrangement of the rules, Chapter III of the Directive, to which two articles have been added, one on the reimbursement of expenses and the other on the agreement of risk.
The fourth section deals with the ban on competition which, by agreement between the parties, may be imposed on the agent.
Finally, the fifth section includes the discipline relating to the contract documentation. This establishes its consensual nature, which is defined as the general rule in law to require from the other party the formalisation in writing of the contractual agreements and their amendments.
11. Chapter III is concerned with the termination of the contract, distinguishing between the cases in which this contract has been concluded for a fixed term of for an indefinite term. In the first case, it stipulates that the contract shall terminate on the expiry of the term. The fixed-term contracts which continue to be performed by the parties after the period initially fixed has elapsed are converted into contracts with an indefinite term.
In the case of agency contracts concluded for an indefinite term or which, having been agreed for a fixed term, have been converted or transformed through the operation of the law („ministerio legis“) into this other form, it has been established that unilateral termination by one of the parties shall require prior notice.
When establishing the length of the period of prior notice, use has been made of the power recognised by the directive of extending the legal maximum from three to six months, depending on the effective validity of the contract, and of the power of prohibiting that, by agreement between the parties, the legal minima may be reduced.
The Directive leaves to the legislation of the Member States the determination of the causes for termination of the contract without the need for prior notice. It has been considered advisable to establish that the only cases in which the termination may take place without prior notice are the failure to comply with the obligations on the one hand, and the bankruptcy and suspension of payments of the other party on the other hand.
A subject which is of particular importance is the one relating to the compensation due to the agent in the event of termination of the contract. In order to clearly distinguish between the various cases, the compensation due in respect of clients and the compensation for damages have been regulated separately.