The prerequisite for a claim for compensation is the termination of the underlying contract. A contract is not necessarily terminated, however, if, despite the company not formally renewing a fixed-term contractual relationship, the parties continue the existing business relationship. In such a case, the fixed-term relationship could even be converted into an indefinite relationship.
Nevertheless, not every continuation of a business relationship automatically results in the continuation of a distribution contract with the corresponding consequences in terms of compensation.
For example, in a recent case decided by the Provincial Court of Barcelona (Audiencia Provincial de Barcelona), a distributor lodged a claim for compensation for the customer base acquired arising from an ‘extended’ contractual relationship. In this particular case, the company had declared to not renew the annually renewable distribution contract, according to the terms stipulated in the said contract. However, the contracting parties continued their business relationship, albeit with new conditions: the former distributor lost their status as authorised distributor with exclusive distribution rights but continued to be supplied by the company under particularly favourable purchasing conditions. In this way, the distribution contract turned into a supply contract with successive deliveries (contrato de suministro sucesivo), which the parties maintained for several years until it was terminated by the company.
In its ruling, the Provincial Court of Barcelona held that the terminated distributor was not entitled to compensation for the entire duration of the contractual relationship. It reasoned that with the distribution contract not being renewed and thus terminated at the time, the relationship was now solely ruled by a supply contract with successive deliveries. Such supply contract did not entitle the distributor to compensation for the acquired customers.
In its decision, the court also addressed another, albeit in this case not relevant issue: while the distributor might well have been entitled to compensation for the duration of the original distribution contract, they had neither lodged the claim for this period, nor had they made the claim in the moment of the non-renewal of the distribution contract. Accordingly, during the continuation of the business relationship the 5-year limitation period for such compensation claims went by. This circumstance could also have made the distributor equally loose the right to compensation. For this reason, it is crucial for the distributor to claim their compensation at the moment of the termination of the distribution contract.