Issue of exclusive distribution contracts

distribution agreement


What is the compensation for unilateral termination of a contract exclusive distribution?

In our legal system, we do not have a specific regulation for distribution contracts, although it is a question that has been considering for some time. It was even published in the B.O.E. a Bill on the Distribution Agreements 29 June 2011, however, He not failed to materialize.

Consequently there will be to freely set by the parties, with supplementary application of the rules of the Commercial Code and the Civil Code, a lo que habrá que añadir la aplicación analógica de la Ley sobre el Contrato de Agencia de 1992.

So things, It is especially important analysis of the jurisprudence of the Supreme Court relapse on such conflicts.

The High Court has ruled on one of these cases Judgment 16 March 2016.

Felipe Borras S.A., marketer of agricultural machinery (hereinafter FB) and "Campagnola Iberian of Agricultural Supplies S.L." (Spanish subsidiary of an Italian manufacturer of agricultural machinery, hereinafter CISA) They arrived in May 2005 yet verbal distribution agreement with the following content:

a) FB market a machine called "Toro" manufactured by Campagnola.

b) Campagnola manufacture a new "electric shaker" with the name "Alice" and FB granted market exclusivity in Spain, except Valencia and Catalonia, where it will be shared.

c) FB will not renew the agreement he had with the company "Volpi" for marketing the "electric shaker" called "Giulivo", to date, He came marketed exclusively for all Spain.

FB performed the distribution of CISA, vendiendo los productos citados, going to fairs and solving the problems that emerged.

However, on April 2009, the Italian Campagnola de matriz, submitted several emails and letters, requiriendo a FB para que retirase de su web la publicidad relativa a los productos “Toro” y “Alice”. Ante dichas comunicaciones, FB sent a burofax seeking clarification of the distribution agreement and warning that if no response, understand unilaterally terminated the contract.

Campagnola did not respond and the next fair, May 2009 He said the products "Bull" and "Alice" were distributed directly by it.

FB interpuso demanda contra CISA reclamando una indemnización de 901.687 euros for the unilateral termination of exclusive distribution agreement que ligaba a ambas. De dicha cantidad, 778.980€ corresponded to declining revenue, 97.487 expenses for promotion and improvement nonamortizable and 25.219 to accrued expenses unforeseen.

The Court of First Instance No. 5 Granollers gave judgment on 29 May 2011, refusing the application FB for lack of passive legitimacy of CISA. It was considered that the agreement with the Italian parent, Campagnola Srl and not with its subsidiary in Spain (CISA).

FB appealed and the Provincial Court of Barcelona gave judgment estimating demand and condemning CISA to pay 901.687 euros. For Hearing, there was confusion of legal personalities between the Italian parent and subsidiary in Spain. FB had been distributing the product in Spain from 2005 and there was no breach by you, with what resolution was unilateral and therefore, FB was entitled to compensation.

So CISA filed an extraordinary appeal for procedural infringement and appeal to the Supreme Court

The Chamber dismissed the extraordinary appeal for procedural infringement, on the following reasoning:

1.- Quantification of lost profits: La Sala desestima el motivo, for the assessment of expert evidence is sovereign and can not verify casacionalmente (except manifest error, ostensible o notorio o se efectúen apreciaciones arbitrarias o irracionales).

2.- Quantification of damage: It is dismissed by the same reasoning the previous point.

3.- Indemnización por daños y perjuicios del 1.101 C.C.: The Board can not make a new assessment of the evidence, that part of respect for the facts found and declared instance.

And on the applicative Article valuation correction 1.101 the C.C not fit the extraordinary appeal for procedural infringement.

4.- Sued: For the Board, There is an obvious confusion between the Italian parent and the Spanish subsidiary, rather it is acting as a branch of Campagnola Srl, so the plea is dismissed.

As to appeal, CISA claimed as grounds infringement of case law on compensation and lost profits, requirements to compensate direct damages and "unfair delay" in the claim brought by FB.

The High Court indicates that its doctrine on unilateral termination of exclusive distribution contract and compensatory consequences are reflected in the judgment of the plenary session 15 January 2008: In cases of termination of a distribution agreement, compensation for customers and applying Article 28 of the Law of Agency Agreement may not obey automatic criteria or mimetic: We will have to prove the actual contribution of clientele and their potential use by the grantor.

The termination of the concession contracts or distribution gives rise to a right to financial compensation, by customers won by the effort of the distributor, and you can take advantage of the supplier. Article 28 de la Ley del Contrato de Agencia, it can be applied analogically the absence of provisions governing the consequences of the termination of the contract. But in cases of termination of a distribution agreement, compensation for clientele is not automatic but the distributor must prove the effective contribution of clientele and their potential use by the grantor.

The judgment does not collect this criterion, but grants compensation equivalent to the gross margin FB for four years, without adequately justify the criteria to calculate the loss of earnings, as set out in Article 1.106 CC. Therefore the plea is estimated.

The expert reports, it concludes that the compensation for clientele It should be through 103.377 euros. Los gastos “no amortizables” se considera que eran inherentes a las ventas, and to not sell products, will not incur them, therefore discarded.

As to lost profits, the Chamber considers applicable criteria of Article 25 of the LCA, equivalent to one month per year of contract, which results in a compensatory amount of 53.413 euros.

En total, compensation is estimated 156.790 euros, by unilateral termination of the distribution contract.

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