Furthermore, the distributor undertook to purchase a specific minimum volume of goods for resale in the agreed territory, with such minimum volume increasing by 20% each year. If the actual volume purchased fell 30% or more short of the agreed minimum volume, the company was entitled to terminate the contract or withdraw the exclusivity right granted.
Usually, when the breach of minimum purchase is concerned, the Spanish Supreme Court has to rule on the legality of the termination of the contract in light of a possible indemnity for acquired customer (compensación por clientela). However, in this case, the company had demanded the fulfilment of the minimum purchase commitment for the previous contractual years, claiming for the distributor to pay the gross margin for the minimum volume of goods not purchased.
Both the Court of First Instance and the Provincial Court of Madrid found for the company and ordered the distributor to pay damages for breach of contract. The Spanish Supreme Court also upheld this decision.
In the case at hand, the contract stipulated that the distributor had to make every effort to reach the agreed minimum purchase volume. In other words, they were (only) obliged to use the necessary means and to create the conditions to achieve the minimum purchase volume, such as having a sufficient sales and after-sales organisation and their own warehouse.
This alone would not have been sufficient for an (enforceable) obligation to purchase a certain volume of goods. However, the contract also established the obligation for the distributor to actually purchase the agreed minimum volume of goods, an obligation defined as an essential part of the contract. In the eyes of the court, this obligation to purchase a minimum volume of goods was justified by the exclusive distribution right granted to the distributor.
In light of this, the court understood that such a clearly formulated contractual clause was not limited to a minimum purchase target, entitling, when violated, the company to early termination of the contract or withdrawal of the exclusive distribution right. Instead, such a clause gave the company the right to claim compliance with the minimum purchase commitment, manifesting, in this particular case, in compensatory damages for the gross margin lost by the company for the goods not ordered by the distributor.
The ruling demonstrates once more that, due to the lack of specific legal regulations of the authorised distributor and the corresponding freedom of contract, the structure of the contract and the wording of the individual clauses of a distribution agreement is of much greater importance than in the case of a commercial agent.