Compensation after termination of the Agency Contract
Agency Contract: The compensation of the agent after the termination of the contract and its main aspects
The Law 12/1992 of May 27 regulates the so-called agency contract, delimiting the concept of agent and distinguishing it from other related figures such as the commercial distributor.
The first article of the regulation defines the agency contract establishing that:
“by the agency contract, a natural or legal person, called an agent, is obliged to another in a continuous or stable manner in exchange for remuneration, to promote commercial acts or operations on behalf of others, or to promote them and conclude them on behalf of others, as an independent intermediary, without assuming, unless otherwise agreed, the risk and chance of such operations.”
The defining elements of an agency contract that allow it to be distinguished from other similar contractual figures are the following:
The agent is an independent broker
Especial importance is the independence of the agent, determining in article 2 of this Law that those persons who are “related by employment relationship with the employer for whose account they act”, not assuming the agent, unless otherwise agreed, the risk and chance of the operations that he carries out, being able to organize his professional activity according to what he deems most convenient. It must also be taken into account that the agent may act on behalf of one or more businessmen simultaneously, unless there is an exclusivity agreement in favor of only one.
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Duty of loyalty and commercial scope of the agency contract
The agency contract It occurs exclusively within a commercial sphere since the main task of the agent is the distribution of the products and services of the businessman whom the agent represents, the latter frequently being required to have a duty of loyalty towards the businessman, committing himself to the agent to act with the diligence of an orderly businessman and in good faith.
Freedom of form
No formalities are required when drawing up and formalizing the contract, without prejudice to the fact that the interested party may demand what it deems most convenient from the opposing party in terms of generating a greater security or efficiency around the contract.
Result and onerous contract
The Agent performs its services, of course, in exchange for remuneration that can be received in various ways: by commission, fixed amount, or a combination of both.
The agent will not be entitled to receive the agreed remuneration, called commission, until he effectively promotes the business or enters into the contract entrusted to him. That is, the agent will only be remunerated once the expected result of his services has been obtained.
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Term of contract: indefinite or fixed-term
In the agency contract, both parties are subject to obligations and their duration is usually determined (including the provision of annual extensions) and, even, indefinite both by express agreement of the parties as for lack of specific provision in this regard.
For fixed-term agency contracts, the expiration of the term occurs unless there is an extension.
In the event that the term of the contract is indefinite, it will remain in force until neither party urges its termination, in which case art. 25 Agency Contract Law that provides for a minimum notice period for its resolution, specifically, one month for each year of validity of the contract, regardless of whether the period of validity has been less than one year, in which case the notice period it will be one month.
Such prior notice requirement derives from the necessary observance of the duty of loyalty, whose singular importance in commercial traffic is highlighted by article 57 of the Commercial Code , requiring that the party that intends to withdraw unilaterally without cause give prior notice to the contrary even when it is not expressly provided for (the article 1258 of the Civil Code).
The need for prior notice to terminate contracts of indefinite duration is inspired by the principle of contractual good faith with which one’s own rights must be exercised and the principle of loyalty that must prevail in commercial relations, since it is understood that a surprising exercise of the resolving power and without giving the counterparty room for reaction can be considered an abusive exercise of rights or unfair conduct in the exercise of rights.
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