Compensation to which the commercial agent is entitled after the termination of his contract of indefinite duration
At the time of to terminate an agency contract, on many occasions commercial agents find themselves in the circumstance that their principal or employer intends to terminate the contract without making the corresponding liquidation of compensation in favor of the agent and , on many occasions, without respecting the required notice period. It also usually happens that the agent, in such a scenario, is not aware of the rights that assist him and the different amounts that, for one reason or another, he has the right to claim from the employer.
Through this article we will try to shed some light on the matter, focusing our efforts on breaking down the concepts that must be compensated to the commercial agent who, within the framework of a agency relationship of indefinite duration (either because it was set up that way from the beginning, or because the contract has become indefinite by continuing the relationship after the expiration of the initial agreed duration), the relationship with the employer is terminated at the request of the latter without any prior breach. Likewise, we will analyze what options the agent has when the employer requests such resolution without respecting the obligations that the Law 12/1992, of May 27, on Agency Contracts.
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Termination of the agency contract of indefinite duration at the initiative of the principal
First of all, we must start from the premise that the principal has the power, free, sovereign and unconditional, to terminate the agency contract that binds him/her to each agent. It is a right that assists you but, like any right, the exercise of it is not free or indiscriminate but has to adhere to a series of requirements and obligations.
Thus, when terminating the agency contract of indefinite duration, the principal must:
- Liquidate and pay the agent the so-called compensation for clients regulated in art. 28 of the Agency Contract Law. The reason or sense of such compensation is to remunerate the agent for the new clients or increase in operations with pre-existing clients that the principal has obtained thanks to his work if it can (even if only potentially) continue to produce substantial benefits for the employer after the departure of the agent.
- Compensate the commercial agent for the damages that such resolution causes as a consequence of the impossibility of amortizing the expenses in which, instructed by the employer, the commercial agent has made for the execution of the contract (art. 29 Agency Contract Law).
- Give advance notice to the commercial agent, giving one month’s notice for each year of validity of the contract, with a maximum of six months.
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It must be insisted, due to the confusion that usually exists in this regard, that the compensation and prior notice described are accrued without the need for one or the other party, employer or agent, to have breached any of his obligations. These are compensations that have a liquidation nature and allow the agency contract to be terminated in such terms that neither party perceives unfair enrichment or economic damage that, as a good fulfiler of the contract, they have no obligation to assume.</p >
Options available to the commercial agent in the event of breach by the employer of his obligations at the time of terminating the contract: absence of notice and payment of legally provided compensation
If the employer chooses to terminate the commercial agent’s contract without respecting the requirements established in the Agency Contract Law, the agent has the possibility of filing the corresponding claim (including judicial ) in which you can claim not only the compensation already described (for clientele and non-amortized expenses) but also, under the protection of art. 1,101 and 1,106 of the Civil Code, consequential damages and lost profits derived from the breach by the employer of his obligations already described. </ P>
The concept of lost profits would include the profits that, as a consequence of the lack of notice, the agent has stopped receiving, and his claim It is compatible and complementary to both the consequential damages of art. 1,101 and 1,106 of the Civil Code as those specifically provided for in art. 29 of the Agency Contract Law.
This compatibility has been sanctioned by jurisprudence, in a more or less tangential way, by Ruling No. 356/2016 of the Supreme Court, of May 30 and, much more specifically, by the minor jurisprudence of the Provincial Courts such as that of Granada which, in its Judgment of July 21, 2014, No. 197/2014, rec. 323/2014, states exhaustively that:
“The right to compensation for lost profits must be maintained in the terms indicated, there is no incompatibility and there is no compensation for the same damages twice.”
In this case, the commercial agent must prove that the profits he has stopped obtaining as a result of the lack of notice are not “hypothetical benefits or imaginary dreams of fortune” (Judgment of the Honorable Provincial Court of Álava, Section 1, of February 10, 2020, nº 74/202), but rather a real patrimonial loss suffered by the agent as a consequence of the illegality committed by the businessman, namely , do not give advance notice.
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Maria Olivares Sánchez
Commercial Law Department
02/13/2023
