Contrato de Agencia: without objectives there is no breach

contrato de agencia

 

Is a drop in sales enough to terminate an agency contract?

 

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In order to solve the agency contract for agent breach, the company must prove that the agent has acted unfairly and against good faith. It is not enough to claim a decrease in sales, to avoid being sentenced to pay the compensation for clientele.  If the agency contract does not include Sale objectives, the company may be in for a nasty surprise when the contract is terminated.

In this post we review the recent ruling of the Section 1 of the Provincial Court of Girona of 18 May 2020 (Resolución 511/2020),  that partially upheld the appeal filed by ESPADRILLES BANYOLES S.L., condemning the appellant to pay 1.800.000 € for accrued and unpaid commissions and the payment of 600.000 € for compensation for customers to D. Arthur, confirming the sentence appealed in everything else, after terminating the agency contract.

Fact background,,es,Juan Alberto and Paulina filed suit against FTA,,es,Asset Securitization Fund,,es,requesting the declaration of nullity for abusive of the floor and ceiling clauses contained in the novation contract of the mortgage loan of,,es,with the corresponding refund of amounts unduly collected,,es,The Securitization Fund Management Company,,es,Beech,,es,acting on behalf of FTA, he responded to said claim alleging that he lacked passive legitimacy since the entity had no legal personality and that it constituted only a private and open fund and that therefore the passive legitimization corresponded to BBVA as successor of Catalunya Banc that was the Company fund constituent,,es

Between ESPADRILLES BANYOLES S.L., y D. Arturo signed an agency contract on 15 July 2012, for the sale of footwear and bags of the brand "Castañer".

Through three letters, of 14 January, 11 April 1 July 2016, ESPADRILLES BANYOLES S.L., terminated the agency contract for contractual breach of D. Arthur. In those letters, justified the resolution of the same.

D. Arturo filed a lawsuit against ESPADRILLES BANYOLES S.L.. Requested the fulfillment of the agency contract, claiming the amount of 1.822.405,80 € for the concept of accrued and uncollected commissions and compensation for termination of the contract consisting of 1.126,96 € as compensation for lack of four days' notice and 605.208,74 € compensation for clients.

Primera Instancia

The Court of First Instance No. 5 Girona gave judgment on 30 April 2019, estimating part application filed by D. Arthur. Condemned ESPADRILLES BANYOLES S.L., turn out 605.285,74 € in compensation for clients, 1.126,96 € as compensation for lack of four days' notice and 1.822.405,80 € for accrued and uncollected commissions, in addition to interest at the legal interest rate of money.

Provincial Court

ESPADRILLES BANYOLES S.L., interpuso recurso de apelación.

Alleged prescription of claims for commissions accrued and not collected, inadmissibility of said claim, the breach by D. Arturo who justified the termination of the contract and challenged the amount of compensation for clients.

Termination of the agency contract

ESPADRILLES BANYOLES S.L., justified in the letters of termination of the contract that it was resolved by contractual breach by D. Arthur, due to reduced turnover in Italy.

However, Section considered in the agency contract there was no clause on the number of sales, customer visits, increase in clientele, etc., not being able to be sustained as a cause of contractual breach loss of clientele. It was unthinkable to think that D. Arturo produced the decrease in sales, when your remuneration or commissions depended on the sales you made.

For this, after referring to art. 9 LCA, Indian:

"The decrease in sales does not in itself generate non-compliance, not even, although such a decrease is attributable to the agent for carrying out an incorrect management policy from a business point of view. (…) It is not enough to attribute a decrease in sales to the agent due to incorrect business management, but it should be imputed, the of having acted unfairly and against good faith. The agent must act with the diligence of an orderly entrepreneur in promoting the entrepreneur's products and must follow a series of reasonable instructions, but it maintains its autonomy. "

For Section it was not proven that D. Arturo breached the agency contract, since a decrease in sales did not imply a default, as well as having refused to visit all the clients. In fact, D. Arturo presented several reports on the causes that could be influencing the decline in sales. In this case, was at ESPADRILLES BANYOLES S.L., who was responsible for proving that visiting customers was the essential instrument to maintain or increase customers.

Claim for unpaid commissions

This reason was rejected by the Section, because in the sentence handed down in the first instance, the test performed was thoroughly analyzed, concluding that there were commissions that, must have been paid, they were not. Certain amounts were rejected, such as commissions for orders not shipped or for sales not received, or for sales in an outlet. The Court relied not only on the expert evidence provided by the plaintiff, but also in the testimony of Mrs.. Adelina.

The burden of proof was not reversed, because the expert presented focused on demonstrating that the commissions to which he was entitled had not been paid. That the appellant did not agree with the evidence, did not signify an alteration of the burden of proof.

Prescription

The appellant alleged prescription of the commissions not received prior to the 20 April 2014, based on the arts. 121-123 CCivil.

On the other hand, He also brought up to found his resource, that according to art. 15.2 LCA, which says that "The agent will have the right to demand the display of the business owner's accounting in the individuals necessary to verify everything related to the commissions that correspond to him and in the manner provided in the Commercial Code. Equally, You will have the right to be provided with the information available to the employer and that is necessary to verify its amount. "

For Section,  it was strange that now the appellant alleged that D. Arturo could have requested said documentation at the time, when extra-procedurally requested for other matters, and ESPADRILLES BANYOLES S.L., he refused, therefore he did not admit this reason either. The calculation of the term did not begin to count until the plaintiff was not aware of the information for his claim.

Compensation for customers

The appellant requested that the amount set in the first instance be lowered because it considered it inappropriate to include the commissions accrued from sales of lost customers.

However, Section considered, “An equitable reduction of the compensation could be accepted if the loss of clientele and income were attributable exclusively to the agent, but it was not sufficiently credited. "

Established the amount in 603.000 €.

Conclusion

It is the agent's obligation to act in the exercise of his professional activity loyally and in good faith, with the diligence of an orderly businessman. However, a decrease in sales is not sufficient reason to terminate the contract for breach of contract. The uncertainty of sales objectives in the contract is beneficial to the agent and detrimental to the company.

 

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