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Distribution contract

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Distribution Agreement

Contrato de distribución

1 – Concept

In the distribution contract, one of the parties, called the distributor, undertakes to acquire from the other, called the supplier, goods or services to market them in a lasting and stable manner, acting as an entrepreneur independently and assuming the risk and venture of such operations, the supplier agreeing not to supply within the agreed territory the products or services for resale other than to the distributor or a limited number of companies in the distribution network.

2 – Regulations

2.1 – International

There is no international agreement on this regulation to which the Spanish state is a party.

2.2 – European Union

Regulation (EU) 330/2010 of the Commission of April 20, 2010 on the application of art. 101.3 of the Treaty on the Functioning of the European Union to certain categories of vertical agreements and concerted practices.

Guidelines regarding vertical restraints approved by the European Commission for the application of Regulation 330/2010 published on May 10, 2010.

Council Regulation (CE) 44/2001 of December 22, 2000, on jurisdiction, recognition and enforcement of judicial decisions in civil and commercial matters in regarding the determination of international judicial jurisdiction.

Regulation (EC) 593/2008 of the European Parliament and of the Council of June 17, 2008 on the law applicable to contractual obligations (Rome I).

2.3 – National

There is no specific positive regulation of the distribution contract in our Law.

Civil Code and Commercial Code in terms of general regulations on obligations and contracts.

Law 2/2001, of March 4, on Sustainable Economy (Additional Provision 16).

Act 12/1992 of May 27 on Agency Contracts (applicable by analogy to automobile and industrial vehicle distribution contracts).

Law 7/1998 of April 13 on General Contracting Conditions.

Royal Legislative Decree 1/2007, of November 16, which approves the Consolidated Text of the General Law for the Defense of Consumers and Users and other complementary laws.

Law 15/2007, of July 3, on the Defense of Competition.

Competition Defense Regulations (R.D. 261/2008 of February 22)

2.4 – Autonomous Communities

The Compilation of Foral Civil Law of Navarra (Law 1/1973 of March 1) contains general provisions on obligations (Title VIII) and contracts (Title IX).</p >

The other regional regimes do not contain general provisions on obligations and contracts.

2.5 – Local

Does not exist.

3 – More interesting questions

3.1 – Termination of the distribution contract

In the case of contracts for an indefinite period of time, the supplier has the right to terminate the contract without the obligation to indemnify the distributor unless the resolution is made in bad faith or with abuse of rights (Judgment of the Supreme Court 03/22/07).

3.2 – Compensation to the distributor for clientele at the end of the contract

The indemnity exclusion agreement is valid as it is not contrary to morality, law or public order (Supreme Court Judgments of 03/18/04, 26/ 04/04).

There is no obligation to indemnify customers in case of contractual resolution justified by the distributor’s breach of obligations (Supreme Court Judgments of 02/15/01, 05/16/01, 05/20/04, 12/16/05, 05/31/06, 06/26/08).

According to the Judgment of the Supreme Court of the 1st Chamber in Plenary of 01/15/08, the analogical, automatic and mimetic application of the Agency Contract Law is not applicable to grant the compensation for clientele. It may be granted to the distributor, even if it is not agreed upon in a contract, if it proves an effective contribution of customers and its potential use by the grantor, the courts weighing the circumstances of the case, such as the integration or not of the concessionaire in a commercial network that approximates its position to that of the agent (in the same sense Rulings of the Supreme Court of 07/09/08, 01/21/09, 05/13/09, 11/6/12).

The limitation period of the action for compensation for clientele is 15 years (art. 1,964 CC), not proceeding the analogous application of art. 31 LCA (Supreme Court Judgment of 07/22/08.)

3.3 – Compensation for damages for failure to give notice when terminating the contract

Not respecting the notice period to terminate the distribution contract is a breach of contract that creates the right to compensation for damages (Supreme Court Judgment 02/10/04 )

Recognizes compensation to the distributor in case of abuse or bad faith by the grantor in the termination of the relationship, consisting of the lack of prior notice or a short time frame thereof (Court Judgment Supreme Court 04/22/02, 12/16/03, 02/9/04)

If the advance notice has not been agreed, this does not mean that no term must be observed, since it enters the nature of the legal relationship itself for an indefinite period of time that is informed in advance on the other party the termination of the relationship. In the absence of an agreement, the notice periods provided for in the Agency Contract Law (Supreme Court Judgment 11/21/05) may be applied by analogy.

3.4 – Other issues

The supplier has no obligation to repurchase stock upon expiration of distribution if it has not been agreed upon in a contract (Supreme Court Judgment 05/17/99).

Difference between the damages caused by not complying with the notice period when terminating the contract, which are compensable, and the termination damages that are not, since the concessionaire should have foreseen the precariousness of their legal situation due to the indefinite term of duration (Supreme Court Judgment 11/21/05).

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