Agency contract and resolving significance of breaches

contrato de agencia

 

When are defaults serious enough to resolve an agency contract?

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Article 1124 of C. Civil provides for the possibility of terminating contracts in case of breach of obligations. It is common for the parties to default, but When are these serious enough for the contract to be terminated?

In this post we review one of these cases, on a agency contract, resuelto por la Section nº 8 de la Audiencia Provincial de Valencia en sentencia de 9 March 2020, with No Resolution 141/2020.   Was dismissed the appeal filed by J. GARCÍA CARRIÓN, S.A. (onwards, JGC, S.A.), and partially estimated that of EUROPRIME NAVARRÉS, S.L. (onwards, “EN S.L.”). It confirmed the sentence handed down in the first instance by the Court of First Instance nº 1 from Xátiva, the 5 March 2019, clarified by Auto de 21 March 2019.

The agency contract is regulated by Law 12/1992, of 27 May, on Agency Agreement. Article 26.1.a) states "Each of the parties (…) You can terminate the contract at any time, without notice, (…) when the other party has failed, total o parcialmente, the legally or contractually established obligations”. Two types of compensation may be derived from it: for customers and for damages.

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

EN S.L.era agente de “JGC” desde el año 2013. Les ligaba un contrato verbal de agencia. Entre 2013 and 2017 a series of breaches by the company occurred that led the agent to request the termination of the contract.

“IN” She filed a complaint, requesting Resolution of the agency contract by understanding breached legal and contractual obligations by JGC, S.A.

Primera Instancia

By the Court of First Instance No. 1 de Xátiva sentenced the 5 March 2019, partially estimating the demand filed by EN, S.L. Condemned JGC, S.A. to pay EN, S.L., 154.000 € as compensation for customers and 29.000 € for commissions owed, statutory interest.

Provincial Court

So much for JGC, S.A., as by EN, S.L., I was appealed. We will focus on the defendant's allegations. The reasons alleged by JGC, S.A., fueron los siguientes:

first plea: errors of appreciation of the evidence by the Court of First Instance.

The first reason for JGC's appeal, S.A., was dismissed in its entirety. The Section considered that in the appeal, the infraction of procedural norms or guarantees could be invoked in the first instance, should have cited the rules that would have been considered violated and allege, in his case the helplessness suffered. On the other hand, it must be proven if he had a procedural opportunity to report the violation (art. 459 LECivil). It brought up reiterated jurisprudence of the TC, on violation of a procedural rule, derived from negligent action where the affected party did not find protection, "When the person who could defend his rights and legitimate interests through the means offered by the legal system did not make use of them in a timely manner, or when the party invoking the offense cooperates with its conduct in its production ” (SSTC 41/88 of 16 February; 138/88 of 8 July; 166/89 of 16 October; 8/91 of 17 January; 64/92 of 29 April; 373/93 of 13 December).

For Section, if in the first instance a procedural violation was committed, should have been reported at the appropriate procedural moment.  And if there was a decrease in their constitutional rights, the appealing party should have made a request for annulment of proceedings, requesting that the procedure be brought back to the procedural moment in which said infraction was committed. However, the doctrine established by the TS, specifically, on STS 19/07/1989, already established that, "Although the appeal allows the second-degree court to examine the process in its entirety, does not authorize the former to resolve questions or problems other than those raised in the first instance. ” And this is what had happened in this case.

Regarding the error in the evaluation of the evidence, the Section reiterated that "The judgment made by the Judge of all the test carried out cannot be replaced by the evaluation made by the appellant, corresponding function, solely and exclusively to the Judge a quo and not to the parties (SSTS 18 May 1990, 4 May 1993, 29 October 1996 and 7 October 1997). (…) the Appeal Court can verify whether the Judge a quo has acted illogically in the joint assessment of the evidentiary material, arbitrary, contrary to the maxims of experience or the norms of sound criticism or if, On the contrary, the joint assessment of the test is the one due to its adequacy to the results obtained in the process, a la postre, the scope of the jurisdictional control implied by the second instance, as to the legality of the evidence production, observance of the guiding principles of charging, and the rationality of reasoning, it cannot extend to the greater or lesser degree of credibility of the evidentiary elements. ” In this case, the Section considered that the allegations presented by JGC, S.A., they did not distort the considerations of the judgment handed down in the first instance.

The STS 5/10/1998, established in this regard that “(…) if the first instance resolution is correct, the appeal, that confirms it, it does not have to repeat or reproduce the arguments of that, well enough, for the sake of procedural economy, the only correction of what, if, was necessary, as this Chamber has repeatedly stated regarding the justification of the judgment by reference (SSTS 16 October 1992, 5 November 1992 and 19 April 1993)”.

Regarding the assessment of the testimony, the art. 376 LECivil He established that "The courts will assess the probative force of the statements of the witnesses according to the rules of sound criticism, taking into account the reason of science that they would have given, the circumstances that occur in them and, if, the offenses formulated and the results of the test that has been carried out on them. ”

Last, regarding the evaluation of documentary evidence, the art. 326.1 LECivil expressed that "Private documents will make full proof in the process, in the terms of the article 319, when its authenticity is not contested by the party who is harmed. ”

Ultimately, the Section rejected all the allegations of the first reason for the appeal. Ratified all the conclusions reached by the Court of First Instance, Regarding the breaches by JGC, S.A., justified the termination of the contract by the agent.

second reason: errors of law or infringement of legal norms and jurisprudence that interpreted it as improper application.

Infringement art. 1124 CCivil; improper application of Arts. 28 and 30 b) LCA; improper application of Arts. 1100 and 1108 CCivil in matters of interest; improper application of art. 394.2 LECivil on taxation of costs.

For the defendant, the breaches were not relevant enough to resolve the agency contract. El incumplimiento se ceñía a “only” a 3.2% of the orders and continued working with 8 of the 11 clients with whom there had been incidents.

The plaintiff alleged that the breaches were not mere punctual incidences, but defaults insostenibles que ocurrían habitualmente. There was a continuous loss of major customers.

The Section also dismissed this second ground of appeal., because the breaches on their part justified the termination of the contract, with the consequent compensation for customers to be paid to EN, S.L. not infringing the articles of the LCA. About the valuation of the relevance of contractual breaches to resolve the contract, cited the STS 18 July 2012:

Para facultar la resolución unilateral en las obligaciones recíprocas, at the request of the person who did not or justifiably failed to comply, the law requires that the breach has a certain entity, and so the sentence 210/2008, of 14 March, requires serious breach, of “una obligación principal dentro de la economía del contrato”; and, on 223/2011, of 12 April, by appointment from numerous previous, que se trate de un incumplimiento caracterizado comotrue and proper“, “serious“, essential“, “que tenga importance and significance for the economy of the interested parties or sufficient entity to prevent the financial satisfaction of the parties or generate frustration at the end of the contract“, “thea frustration of legitimate expectations or aspirations or bankruptcy of economic purpose or frustration of practical end“”…, puntualizando que “Now, the identification of the facts on which the breach is based contractual, corresponds to the court of instance and although its decisive significance is a legal concept that, as the question of the law (question of law), is reviewable on appeal, en tanto se trata de determinar la trascendencia o significación jurídica de los actos que constituyen su presupuesto” -(in this sense, sentence 80/2008, of 31 January)- and your assessment, insofar as it involves a factual value judgment, should be respected in cassation except in cases of obvious error, Given the, in another case, turn it into a third instance.

The Chamber reviewed the evidence and ratified the conclusions reached by the first-degree judge., considering that what was reported were not mere specific incidents but serious breaches or with decisive significance, de tal entidad que hacnían peligrar el prestigio y la credibilidad del agente. Además se trataba de un agentemulticarteraque suministraba otras marcas a sus clientes con lo que el perjuicio era todavía mayor.

The defendant also alleged that the requirements of the articles were not met 28 and 30 LCA for compensation for customers. For the Board, the defendant's breaches are justified,  said articles were not infringed and the mentioned compensation was confirmed.

Regarding the improper application of Arts. 1100 and 1108 CCivil in matters of interest, The Section also dismissed it because there was a prior out-of-court claim when the agent terminated the agency contract on 11/07/2017. In the partial acquiescence to the demand, it was expressly recognized that a certain amount was owed. The art. 1108 CCivil stated that "If the obligation consists of the payment of an amount of money and the debtor is in default, the compensation for damages to which it gives rise, by applying the art. 1100 CCivil, will consist, in the absence of an express agreement, in the payment of legal interests. ”

Last, regarding the improper application of art. 394.2 LECivil in the matter of sentence in coasts, the Section also dismissed it because the claim was partially estimated at first instance.

Conclusion

The assessment of the seriousness of the breaches that allow the resolution of an agency contract corresponds to the court of instance,  attending to the circumstances and the tests practiced. It is not a valuable issue in the appeal before the Supreme Court.

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