Agency and Distribution Agreements in Spain
If you are selling goods and services in Spain, it is important to understand the legal implications of agency and distribution agreements.
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An agency agreement is a contract between two legal entities or persons whereby the agent carries out transactions on behalf of the principal.
Protection for Agents
Agency agreements in Spain are regulated by the Agency Agreements Law 12/1992. There are a number of protections for agents under the law, including:
- a minimum notice period of one month for every year that the agreement is in place (up to a total of six months),
- right to an indemnity for client growth or increase in sales with existing customers over the duration of the agreement, and
- rights concerning the payment of commission.
A distribution agreement is a contract between a distributor and manufacturer in which the distributor agrees to purchase goods from the manufacturer and resell them. Distribution agreements are not specifically regulated in Spain, therefore Civil Code general contract regulations apply.
Protections for distributors
The distributor (also known as the reseller) assumes the risk of the sale and therefore exclusivity provisions are commonly found within distribution agreements, these may be:
- Exclusive distributorship: the manufacturer agrees only to sell the goods to one distributor within a specified territory
- Non-exclusive distributorship: the manufacturer can sell to more than one distributor or end user in the agreed territory
How are disputes handled?
Disputes involving distribution agreements are based on the terms of the contract and when deciding a case, the Spanish courts may apply the Commercial Agency regulations to the contract by analogy in respect of the calculation of the indemnity payable by the manufacturer or the period of notice of termination.
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