There are many other important legal or contractual aspects that are convenient to consider when a foreign Principal is appointing an Agent in Spain. We can mention the most common of them as permitted or foreseen in the Act.
It is also important to underline that a foreign Principal shall be aware of the general obligations included in the Act and applicable to the agreement (when ruled by Spanish law) if the parties do not agree in a different way.
A. Authority to conclude agreements on behalf of the Principal
According to our legal system, the Agent does not necessarily have the power to conclude contracts on behalf of the Principal.
A foreign Principal shall take into account that the Act accepts both possibilities: (i) an Agent only promoting the Principal’s products or services or (ii) an agent also being authorized to conclude such operations on behalf of the Principal (art. 1).
In order to permit the Agent to conclude contracts on behalf of the Principal it will be necessary to include a specific and express clause in the contract (art. 6).
B. Appointment of sub-agents and employees
General rule (art. 5) is that in order to appoint sub-agents, the Agent needs the express authorization of the Principal. In this case the Agent will be liable for the sub-Agent activities.
Agent’s activity through his/her own employees does not need the Principal’s authorization. Agent will also be liable for the activity carried out by his employees.
C. Non-competition obligations
According to Agency Act (art. 7) the Agent is free to act on behalf of more than one Principal unless differently agreed in the contract. This includes promotion or even concluding transaction on behalf of a different Principal.
Notwithstanding, the Agent will need the consent of the Principal in order to act on his own behalf or on behalf of another party whose products or services are of similar or in competition with the Principal’s. If this was the case, and if the Agent has represented several competing parties, he will be obliged to prove the Principal’s consent.
According to the Agency Act it is also possible to agree a non-competition obligation after the termination of the contract. In order to be valid some conditions are necessary (arts. 20 and 21):
- its maximum duration will be two years since the termination of the agency con-tract or one year if the duration of the contract was for less than two years;
- it has to be agreed in writing;
- its geographical extension should be the same of the agency contract or it has to be limited to the same group of persons the Agent was in charge of;
- it will only affect the products or services promoted or transactions concluded as in the object of the Agreement.
D. Exclusivity and territory
Exclusivity cannot be implied from the Agency Act but needs to be agreed expressly.
Exclusivity is not a natural characteristic of the commercial agency agreements so as it seems to appear in the Preamble of the Agency Act (Para II.3). And this includes both possibilities: The Principal having several agents and the agents being authorized to represent several Principals.
The necessity of an express agreement for the exclusivity does not imply that this needs to be in writing. Oral pact on exclusivity is also valid provided it is proved enough in case of discrepancies.
The correct delimitation of the territory in which the Agent has been appointed or the kind of clients he is authorized to deal with, is also a relevant element to consider in the agreement. The Principal is free to forbid the Agent the promotion of sales outside that territory.
On the other hand, there is a reference in the Agency Act to commissions to be received by the Agent for sales within his exclusive territory. If this was the case and the Agent was appointed for an exclusive territory, he would have the right to commissions although the sales were not promoted nor concluded by him in such territory (art. 12.2).
Parties are free to agree upon the remuneration that can consist in a percentage on sales (commission), a fix amount or a combination of both systems.
Remuneration is an essential element of the agency contract and if the parties do not agree it, it will be fixed according to the commercial usages or, in their absence, on the reasonable amount considering the circumstances of each case (art. 11).
The Act also establishes that the remuneration is due (art. 14) from the moment in which the Principal has enforced or shall have enforced the commercial transaction or has been carried out, even partially, by the third party.
Remuneration shall be paid not later than the last day of the following month to each natural quarter in which it was due (art. 16).
The Agent will lose the right to the commission if the Principal proves that the operations were not executed due to circumstances not attributable to the Principal (art. 17).
According to the general provisions of the Act, and unless otherwise agreed by the parties, the Agent has not the right to be reimbursed for the expenses of his activity (art. 18).
G. Information obligations
Agency Act states (art. 9) a general obligation for the Agent to inform the Principal on all the necessary elements for the correct carrying out of the commercial transactions he is in charge of. Particularly, the Agent has to inform on the solvency of the third parties with whom there were transactions to be concluded or executed.
These obligations are compulsory according to the Agency Act although there is no provision on the way, the periodicity, the contents, the Agent has to provide them. It is there-fore advisable for a foreign Principal to set all these elements in the agency agreement.
Other than court or arbitral procedures, international conflicts in Agency agreements can also be resolved by mediation. An international conflict is when at least one of the parties has his domicile in a country different to the other.
According to Spanish Act 5/2012 on Mediation on civil and commercial matters (this act incorporates the Directive 2008/52/CE) parties can solve their conflicts with mediation provided it affects rights or obligations that can be disposed by them.
The Mediation Act regulates mediation as an alternative to the recourse to judicial or arbitral procedures. It allows the parties to solve their discrepancies with the help of a media-tor and to reach an agreement on how regulate the situation. The duration of such procedure will be as brief as possible. Foreign agreements coming from mediation abroad are also enforceable in Spain according to the Act 29/2015 of July 30 on International Cooperation in civil matters provided it is not against the Spanish public Order.