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Law on Agency Contracts

Law 12/1992, of 27 May, on Agency Contract, BOE No. 129, 29 May 1992, Entry into force 18 June 1992, Reference: BOE-A-1992-12347, Juan Carlos I, King of Spain.

(Last amendment: 12 April 2011)

To all who shall see and understand this document,

You are hereby informed: That the Parliament have approved and I hereby approve the following Act:

Explanatory Memorandum

1.

The transposition into Spanish law of Directive 86/653/EEC of 18 December 1986 on the coordination of Member States regarding self-employed commercial agents raises two fundamental problems: firstly, of legislative procedure, it is a question of whether this transposition should be carried out through a reform of the Commercial Code or through a special law; secondly, of legislative policy, it concerns the contents of the transposition rule.

(1) The choice between the reform of the Commercial Code and the approval of a special law must start from the fact that the agency contract lacks legal categorisation, although there are partial regulations of some special agencies. Similar to other codes of that era, the Spanish Code of 1885 does not govern any collaborative contracts other than the commission contract, which is structured as a commercial mandate. However, from the common branch of the commission contract, many other collaborative contracts have emerged, driven by new economic and social needs resulting from the changes in the distribution of goods and services. Thus, the new commercial contracts have been taking shape in the commercial landscape under various and often imprecise names, leaving the Courts with the task of defining the categorical limits and the regulatory contents.

In this context, agency contracts have so far remained outside the Code as contracts which are created and expanded by practice. The isolated and sporadic cooperation in entering contracts, characteristic of the commission agent, is opposed to the stable or lasting cooperation characteristic of the agent, through which he promotes and concludes diverse contracts in the name and on behalf of the principal. Sometimes the agent merely seeks out clients, sometimes he enters contracts with them on behalf of the entrepreneur he represents. Therefore, the transposition of Directive 86/653/EEC seems to provide an opportunity to fill this gap in commercial legislation by giving the agency contract a legal framework that meets current needs and EU requirements.

In legal systems with a dual contractual discipline, such as the Spanish one, the commercial nature of this contract is beyond any doubt. But this commercial nature does not affect the solution to the problem of legislative practice. The inclusion or exclusion of the legal regime of agency in the Code must therefore be assessed using the criteria of appropriateness.

From this perspective, the inclusion of the agency regime in the Commercial Code of 1885 seems inappropriate. In addition to other systematic considerations, it should be noted that, in recent years, commercial legislation has been reformed through the approval of separate laws and not by amending the articles of the first commercial law.

(2) The second problem mentioned, namely that of legislative policy, also arises as a result of the absence of a legal definition of agency. Directive 86/653/EEC seeks to harmonise the laws of Member States on certain fundamental aspects of the law governing self-employed commercial agents and is based on the German model. The model followed explains the subjective criterion on which the Directive is based, which defines the concept of commercial agents. However, a minimally coherent approach with the Spanish legal system makes it necessary to translate this legislation into formally objective terms, thereby governing the agency contract.

However, the agency contract legislation cannot be limited to the contents of the aforementioned Directive. In the Spanish case, the incorporation of the EU solutions cannot entail the harmonisation of non-existent legal rules but rather calls for the regulation of the agency contract. Therefore, it is inadvisable to limit the contents of the special law to the rules of Directive 86/653/EEC: it would seem more appropriate to provide the agency contract with an adequate legal regime.

2.

Section I contains the general provisions, the first of which is concerned with defining the subject matter of the regulation. The obligatory reference is to Directive 86/653/EEC and, to preserve a certain continuity of terminology, which is otherwise very expressive, to the current legislation on commercial representatives.

(1) The definition of agency emphasises the agent’s status as an independent intermediary. The fundamental difference between a commercial representative and a commercial agent lies precisely in this independence or autonomy, which is lacking in the former. This basic feature, which appears in the title of the Directive and its defining article, is also contained in the first of the articles of the Act: only and exclusively agents who deserve to be described as independent intermediaries are regulated. The following article determines when such independence is presumed to be non-existent. The agent, whether a natural or legal person, must be independent of the person on whose behalf he is acting, who, to avoid confusion with other forms of cooperation, is not referred to as the principal.

(2) The agent may be a negotiator, i.e. a person dedicated to promoting commercial acts and transactions, or also assume the function of concluding those promoted by him. Instead of the term “negotiate”, the more precise term of “promote” has been preferred, which, in addition to appearing more correct, is the one used by Royal Decree 1438/1985 of 1 August 1985.

A particularly important aspect concerns the definition of the object of this business promotion activity. The Directive defines it as the sale or purchase of goods. However, this criterion seems too narrow, which is why this reference to the sale or purchase of goods has been replaced by a broader one: the agent undertakes to promote, or to promote and conclude, commercial acts or transactions. The use of this term in the Spanish Commercial Code when dealing with commission contributes to a clearer and more definitive definition of agency in the collaborative commercial contracts.

The act or transaction is not required to relate to goods. The commercial act or transaction that the agent promotes may focus on the circulation of goods or, more generally, the circulation of personal goods or services.

(3) The commercial agent does not act on his own behalf, but on behalf of others, whether on behalf of one or more entrepreneurs: exclusivity is not included as a defining feature, and when the commercial agent completes commercial acts and transactions, he must do so in the name of the principal. However, the Act does not consider the source of the representative action for the completion of the commercial acts and transactions promoted by the agent, a matter that is left to the general principles of representation.

(4) The agency contract requires permanence or stability: it is a contract of duration. The Directive states that the agent is permanently responsible for promoting contracts or for promoting and completing them on behalf of others. The Act retains this feature, but, to eliminate misunderstandings about the meaning of stability, it specifies the definition by clarifying that the duration of the contract may be fixed or indefinite. An agency contract for an indefinite period is the same as an agency contract for one year or for several years.

(5) The last element of the definition is the agent’s remuneration. The definition given in the Directive does not contain a precise reference to this, but it is expressly implied by the exclusion of unpaid agents from its scope. It seemed preferable to include this feature in the first article of the Act. On the other hand, the absence of an express stipulation in the contract on this point does not mean that it is free of charge, but that the remuneration must be fixed according to usage.

3. 

The legal regime of the agency contract is governed by the general principle of the imperative nature of the provisions of the Act unless expressly provided otherwise.

Regarding its scope of application, it has been considered appropriate to expressly exclude agents acting on official or regulated secondary securities markets. However, the most significant aspect of the legal solution is that it establishes a common law applicable to all types of commercial agencies, thereby filling an important gap and at the same time bringing together their different contractual formats.

4. 

Title II, which deals with the contents of the contract, is divided into five sections. The first deals with the agent’s performance; the second establishes the obligations of the parties; the third deals specifically with remuneration; the fourth focuses on the incidental contract on the limitation of the agent’s authority after the end of the contract; and the fifth deals with the documentation of the contract.

The wording of the first section emphasises the definitions of the agent’s powers. It expressly provides for the option of carrying out the professional activity on behalf of different entrepreneurs, unless the goods or services are identical or similar, in which case the consent of the entrepreneur with whom the contract was first entered into is required.

The legal regime of the obligations of the parties, which is contained in the second Section, is subject to the listing criterion followed by the Directive.

The entrepreneur’s obligation to remunerate the agent’s activity is dealt with in the third section. It restates, with slight changes to the structure of the provisions, Title III of the Directive, to which two articles have been added, one on the reimbursement of expenses and the other on the risk and uncertainty.

The fourth section deals with the prohibition of competition which, by agreement of the parties, may be established at the agent’s expense.

Finally, the fifth section includes the disciplinary provisions relating to the contract’s documentation. It establishes its consensual nature, which is the general rule in Spanish contract law. However, each of the parties is entitled to require the other party to execute the contracts and their amendments in writing.

5. 

Title III deals with the termination of the contract, distinguishing between cases in which the contract has been agreed for a fixed or an indefinite term. In the first case, it provides that the contract will be terminated on the expiry of the term. Fixed-term contracts that are executed by the parties after the expiry of the initially agreed term are transformed into contracts of indefinite terms.

In the case of agency contracts concluded for an indefinite period or which, having been agreed for a fixed term, have been converted into this other type of contract, it provides that unilateral termination by the parties shall require prior notice.

In establishing the notice period, the power recognised by the Directive to extend the legal maximum from three to six has been used, depending on the actual duration of the contract, and to prohibit the parties from reducing the legal minimums by contract.

The Directive leaves it to the legislation of the Member States to determine the grounds for termination of the contract without notice. It has been considered appropriate to establish that the only cases in which termination without notice can take place are non-performance of obligations, bankruptcy, and the suspension of payments of the other party.

A particularly important issue concerns the compensation due to the agent in the event of termination of the contract. To distinguish between the different cases, customer indemnity and indemnity for loss and damage have been addressed separately.

Title I - General Provisions

Art. 1. Agency contract

Under an agency contract, a natural or legal person, known as an agent, undertakes to promote commercial acts or transactions on behalf of others, or to promote and conclude them on behalf of and in the name of others, as an independent intermediary, without assuming, unless otherwise agreed, the risk and uncertainty of such transactions, on a continuous or stable basis in exchange for remuneration.

Art. 2. Independence of the agent

(1) Employed representatives or travelling salespersons or, in general, persons who are linked by an employment relationship, whether ordinary or special, with the entrepreneur on whose behalf they are acting shall not be considered agents.

(2) A dependent relationship shall be presumed to exist when a person who is engaged in promoting commercial acts or transactions on behalf of others, or in promoting and concluding them for the account and on behalf of others, is unable to organise his professional activity or the time devoted to it according to his own criteria.

Art. 3. Scope of application of the Act and the mandatory nature of its rules

(1) In the absence of any law expressly applicable to them, the different types of agency contracts, whatever they may be called, shall be governed by the provisions of this Act, the terms of which are mandatory unless expressly provided otherwise.

(2) This Act shall not apply to agents acting on official or regulated secondary securities markets.

Art. 4. Limitation of actions

Unless otherwise provided for in this Act, the limitation period for actions arising from agency contracts shall be governed by the regulations established in the Commercial Code.

Title II - Contents of the contract

Section 1. Performance of the agent

Art. 5. Exercise of agency

(1) An agent shall carry out, either by himself or through his employees, the promotion and, where appropriate, the conclusion of the commercial acts or transactions entrusted to him.

(2) Action through sub-agents shall require the express authorisation of the entrepreneur. When the agent appoints the sub-agent, he shall be responsible for his management.

Art. 6. Conclusion of commercial acts and transactions on behalf of the entrepreneur.

The agent is authorised to promote the acts or transactions that are the object of the agency contract but may only conclude them in the name of the entrepreneur when he has this power.

Art. 7. Acting on behalf of several entrepreneurs

Unless otherwise agreed, the agent may carry out his professional activity on behalf of several entrepreneurs. In any case, he shall require the consent of the entrepreneur with whom he has entered into an agency contract to carry out on his own behalf or on behalf of another entrepreneur a professional activity related to goods or services that are the same or similar and are concurrent or in competition with those he is obliged to promote.

Art. 8. Recognition and deposit of the goods sold

The agent is authorised to demand, at the time of delivery, the acknowledgement of the goods sold, as well as 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

Art. 9. Obligations of the agent

(1) In the exercise of his professional activity, the agent shall act loyally and in good faith, looking after the interests of the entrepreneur or entrepreneurs on whose behalf he is acting.

(2) In particular, an agent shall:

    1. Exercise the diligence of an orderly businessman in promoting and, where appropriate, concluding the acts or transactions entrusted to him.
    2. Communicate to the entrepreneur all the information at his disposal, when this is necessary for the proper promotion and conclusion of the acts or transactions entrusted to him, as well as, in particular, information relating to the solvency of third parties with whom there are outstanding transactions.
    3. Carry out his duties in accordance with reasonable instructions received from the entrepreneur, provided that these do not affect his independence.
    4. Receive on behalf of the entrepreneur any claims from third parties regarding flaws or defects in the quality or quantity of the goods or services provided as a consequence of the transactions promoted, even if they have not been concluded.
    5. Keep independent accounts of the acts or transactions relating to each entrepreneur on whose behalf he acts.

Art. 10. Obligations of the entrepreneur

(1) In his relations with the agent, the entrepreneur shall act loyally and in good faith.

(2) In particular, the entrepreneur shall:

  1. Make available to the agent, in good time and in appropriate quantities, sample books, catalogues, price lists and other documents necessary for the exercise of his professional duties.
  2. Provide the agent with all the information necessary for the performance of the agency contract and, in particular, warn him, as soon as he is aware, when he expects the volume of the acts or transactions to be appreciably lower than that which the agent could have expected.
  3. Pay the agreed remuneration.

(3) Within fifteen days, the entrepreneur shall inform the agent of the acceptance or rejection of the transaction communicated. He shall also inform the agent, within the shortest possible time, taking into account the nature of the transaction, the execution, partial execution or non-execution of the transaction.

Section 3. Remuneration of the agent

Art. 11. Remuneration systems

(1) The remuneration of an agent shall consist of a fixed sum, commission or a combination of the two. In the absence of any contract, the remuneration shall be fixed in accordance with the accepted business practice in the place where the agent carries on his business. If these do not exist, the agent shall receive such remuneration as is reasonable having regard to the circumstances of the transaction.

(2) Any element of remuneration which is variable according to the volume or value of the acts or transactions promoted and, where appropriate, concluded by the agent shall be deemed to be commission.

(3) Where the agent is remunerated wholly or partly on commission, the provisions of the following articles of this Section shall be observed.

Art. 12. Commission for acts or transactions concluded during the term of the agency contract

(1) For acts and transactions concluded during the term of the agency contract, the agent shall be entitled to commission where:

  1. The commercial act or transaction was concluded as a result of the professional intervention of the agent.
  2. The commercial act or transaction was concluded with a person in respect of whom the agent had previously promoted and, where appropriate, concluded an act or transaction of a similar nature.

(2) Where the agent has exclusive rights for a geographical area or a particular group of persons, he shall be entitled to commission, provided that the act or transaction is concluded during the term of the agency contract with a person belonging to that area or group, even if the act or transaction was not initiated or concluded by the agent.

Article 13. Commission for acts or transactions concluded after the termination of the agency contract.

(1) For acts or transactions concluded after the termination of the agency contract, the agent shall be entitled to commission where:

  1. The act or transaction is mainly due to the activity carried out by the agent during the term of the contract, provided that it was concluded within three months of the termination of the said contract.
  2. The entrepreneur or agent received the order before the termination of the agency contract, provided that the agent would have been entitled to receive the commission if the commercial act or transaction had been concluded during the term of the contract.

(2) The agent shall not be entitled to commission for acts or transactions concluded during the term of the agency contract if such commission was due to a previous agent, unless, having regard to the circumstances, it would be equitable to divide the commission between the two agents.

Art. 14. Accrual of commission

The commission shall accrue at the time when the entrepreneur has executed or should have executed the act or transaction, or when these have been executed in whole or in part by the third party.

Art. 15. Agent’s right to information

(1) The entrepreneur shall deliver to the agent a statement of the commissions due for each act or transaction on the last day of the month following the quarter in which they are due, in the absence of a contract providing for a shorter period. The statement shall contain the elements used to calculate the amount of commission.

(2) The agent shall be entitled to demand the production of the accounts of the entrepreneur to the extent necessary to verify all matters relating to the commissions due to him and in the manner provided for in the Commercial Code. He shall also be entitled to be provided with such information as is available to the entrepreneur and is necessary to verify the amount thereof.

Art. 16. Payment of commission

The commission shall be paid no later than the last day of the month following the quarter in which it has accrued unless it has been agreed to pay it in a shorter period.

Art. 17. Loss of entitlement to commission.

The agent shall lose the right to the commission if the entrepreneur proves that the act or transactions concluded through his intermediation between the agent and the third party were not carried out due to circumstances not attributable to the entrepreneur. In such circumstances, the commission received by the agent for the act or transaction still to be performed shall be immediately refunded to the entrepreneur.

Art. 18. Reimbursement of expenses

Unless otherwise agreed, the agent shall not be entitled to reimbursement of expenses incurred in the exercise of his professional activity.

Art. 19. Guarantee of the transactions for which the agent is responsible

The contract under which the agent assumes the risk of one, several or all of the acts or transactions promoted or concluded on behalf of an entrepreneur shall be null and void if it is not recorded in writing and with an explanation of the commission to be received:

Section 4. Prohibition of competition

Art. 20. Contractual limitations on competition

(1) The parties may include in the provisions of the agency contract a restriction or limitation on the professional activities to be carried out by the agent after the termination of the agency contract.

(2) A covenant to limit competition may not last for more than two years from the termination of the agency contract. If the agency contract has been concluded for a shorter period, the duration of the covenant to limit competition may not exceed one year.

Art. 21. Requirements for the validity of the covenant to limit competition

The covenant to limit competition, which must be executed in writing to be valid, may only extend to the geographical area, or to such area and the group of persons entrusted to the agent, and may only affect the type of goods or services that are the object of the acts or transactions promoted or concluded by the agent.

Section 5. Execution of the contract

Art. 22. Right to execution in writing

Each party may at any time require the other party to execute the agency contract in writing, stating any amendments made to the contract.

Title III - Termination of the contract

Art. 23. Duration of the contract

The agency contract may be agreed upon for a fixed or indefinite term. If no fixed term has been established, it shall be understood that the contract has been agreed for an indefinite term.

Art. 24. Termination of the fixed-term contract

(1) An agency contract agreed for a fixed term shall terminate on the expiry of the agreed term.

(2) Notwithstanding the provisions of the preceding paragraph, agency contracts for a fixed term that continue to be performed by both parties after the expiry of the initial term shall be deemed to have been converted into contracts of indefinite term.

Art. 25. Termination of the agency contract for an indefinite period: notice

(1) An agency contract of indefinite term shall be terminated by the unilateral termination by either party by written notice.

(2) The notice period shall be one month for each year of the term of the contract, with a maximum of six months. If the agency contract has been in force for less than one year, the notice period shall be one month.

(3) The parties may agree on longer notice periods, but the notice period for the agent may in no circumstances be shorter than the notice period for the entrepreneur.

(4) Unless otherwise agreed, the end of the notice period shall be the last day of the month.

(5) To determine the notice period of fixed-term contracts which have been converted into indefinite contracts by legislation, the duration of the fixed-term contract shall be calculated by adding to it the time elapsed since the conversion into an indefinite contract.

Art. 26. Exceptions to the above rules

(1) Either party to a fixed-term or indefinite agency contract may terminate the contract at any time, without notice, where:

  1. The other party has failed to perform, in whole or in part, the obligations established by law or contract.
  2. The other party has been declared bankrupt.

(2) In such cases, the contract shall be deemed to be terminated upon receipt of written notice stating the intention to terminate the contract and the grounds for termination.

Art. 27. Termination due to death

The agency contract shall be terminated by the death or the declaration of the agent’s death. It shall not be terminated by the death or the declaration of the entrepreneur’s death, although it may be repudiated by his successors in the company with the appropriate notice.

Art. 28. Compensation for clients

(1) When the agency contract, whether for a fixed or indefinite term, is terminated, the agent who has brought new clients to the entrepreneur or has significantly increased the transactions with the pre-existing clients, shall be entitled to compensation if his previous work can continue to produce substantial benefits for the entrepreneur and it is justified due to the existence of contracts limiting competition, the commissions lost or the other circumstances that may arise.

(2) The right to customer indemnity also exists in the event that the contract is terminated by the death or the declaration of the agent’s death.

(3) The indemnity shall under no circumstances exceed the average annual amount of the remuneration received by the agent over the last five years, or for the duration of the contract, whichever is shorter.

Art. 29. Compensation for loss and damage

Without prejudice to compensation for clients, an entrepreneur who unilaterally terminates an agency contract of indefinite term shall be obliged to compensate the loss and damage which, where applicable, the agent has suffered due to the early termination, provided that the termination does not allow for the repayment of the expenses which the agent, instructed by the entrepreneur, has incurred in the performance of the contract.

Art. 30. Cases of the non-existence of the right to compensation

The agent shall not be entitled to compensation for clients or for loss and damage where:

  1. The entrepreneur has terminated the contract due to the breach of the obligations legally or contractually established as the agent’s responsibility.
  2. The agent has terminated the contract, unless the termination is due to circumstances attributable to the entrepreneur, or is based on the agent’s age, disability or illness and he cannot reasonably be required to continue his activities.
  3. With the consent of the entrepreneur, the agent has assigned to a third party the rights and obligations which he held under the agency contract.

Art. 31. Limitation periods

Any claim for compensation for clients or compensation for loss and damage shall be time-barred after one year from the termination of the contract.

First additional provision

(1) Until the adoption of legislation regulating distribution contracts, the legal regime of the agency contract provided for in this Act shall apply to distribution contracts for motor vehicles and industrial vehicles, whereby a natural or legal person, known as a distributor, undertakes to promote acts or transactions in these products on behalf of and in the name of his principal, as an independent trader, assuming the risk of such transactions, on a continuous or stable basis and in return for remuneration, to another person, the supplier.

(2) In the absence of expressly applicable legislation, the different types of motor vehicle and industrial vehicle distribution contracts, irrespective of their type, shall be governed by the provisions of this Act, the terms of which are mandatory.

(3) Any agreement to the contrary whereby the supplier reserves the right to unilaterally amend the essential contents of these contracts and, in particular, the full range of contractual products and services, the dealer’s business plan, the investments and amortisation period, the fixed and variable remuneration, the prices of the products and services, the general conditions of sale and after-sales guarantee, the commercial guidelines and the criteria for the selection of dealers shall be null and void.

(4) The distributor shall only be obliged to make the specific investments necessary for the performance of the contract which are expressly listed individually in the contract or its amendments, and only if the period within which they are deemed to be amortised is established for each of them.

For these purposes, specific investments shall be deemed to be those which cannot be actually and effectively used for purposes other than the performance of the distribution contract.

(5) Where the supplier requires the distributor to make a minimum purchase of contract products in order to have a stock calculated on the basis of commercial objectives, the distributor may return the products supplied and not ordered by customers within sixty days of their purchase. In this case, the supplier shall be obliged to repurchase the returned products from the distributor in the same condition in which they were purchased.

(6) In the event of the termination of the contract, whether due to the expiry of its term or for any other reason, the distributor shall be entitled to receive the following amounts by way of compensation or indemnity for the items provided:

  1. The amount corresponding to the value of the specific investments outstanding at the time of termination of the contract.
  2. Compensation for customers, which under no circumstances may be less than the average annual amount of sales made by the supplier to the distributor during the last five years of the contract, or during the entire duration of the contract, whichever is less.
  3. The indemnities of the employees that the distributor has had to make redundant as a result of the termination of the contract.
  4. Furthermore, in any case of termination of the contract, the supplier shall be obliged to purchase from the distributor all those goods that are in the latter’s possession, at the same price for which they were sold.

The above forms of compensation are established without prejudice to the right of indemnity in favour of the corresponding party for the damages caused by the contractual breaches which the other party may have incurred, any agreement to the contrary being null and void.

(7) The supplier may not withhold his consent to the total or partial assignment of the motor vehicle and commercial vehicle distribution contract if the assignee company undertakes in writing to maintain the organisation, structure and resources that the assigning company maintained for the distribution activity.

(8) Jurisdiction for hearing claims arising from the commercial distribution contract for motor vehicles and commercial vehicles shall correspond to the courts in the distributor’s domicile, and any agreement to the contrary shall be null and void.

Second additional provision

Jurisdiction to hear actions arising from the agency contract shall correspond to the courts in the agent’s domicile, any contract to the contrary is null and void.

Transitional provision

Until 1 January 1994, the provisions of this Act shall not apply to agency contracts concluded before the date of its entry into force.

Therefore,

I hereby order all Spaniards, both individuals and authorities, to keep and enforce the observance of this Act.

Madrid, 27 May 1992.

JUAN CARLOS I

King of Spain

FELIPE GONZÁLEZ MÁRQUEZ

The President of the Government

The Spanish version of the Law on Agency Contracts is accessible via this link.

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