Such agreements provide that the commercial agent of contract territory A may also work in contract territory B of the other commercial agent and rely on the latter’s sales network. Typically, commercial agent A pays a “fee” to commercial agent B for his/her support and for being allowed to operate in the latter’s territory. Such an agreement benefits both commercial agents: commercial agent A generates additional commission income while the transactions concluded in commercial agent B’s territory count towards reaching his/her sales targets agreed with the company.
In a case recently ruled on by the Audiencia Provincial (Court of Appeal) of Vizcaya, the claimant and defendant were commercial agents who had entered into a cooperation agreement as described above. The claimant sued for compensation for the customer base as well as for damages, contending that the defendant had terminated the contractual relationship without just cause and without giving notice. The claimant alleged that the agreement in question was a sub-agency contract, as a result of which he acted as a sub-agent for the defendant in the latter’s designated territory and was therefore entitled to customer-based compensation in application, by analogy, of the Spanish Agency Contracts Law (Ley sobre el Contrato de Agencia Comercial).
A sub-agency contract is a separate legal relationship from the agency contract in which one commercial agent instructs another to act on his/her behalf as an intermediary for the business assigned to him/her by the company. In other words, he/she appoints a second agent, the sub-agent, who has the task of arranging contracts on behalf of the (main) commercial agent in the latter’s territory and in accordance with the latter’s instructions. A sub-agency can only be assigned with the company’s permission. While the main commercial agent is authorised by the principal to conclude contracts with third parties, the sub-agent is limited to negotiating the conclusion of such contracts; in other words, the sub-agent merely represents the main commercial agent and has no direct contractual relationship with the principal. In the event of termination of the contractual relationship, a sub-agent is in principle entitled to the same rights vis-à-vis the main commercial agent as the latter vis-à-vis the company, inter alia the right for compensation for the customer base, provided that the legal requirements are met.
In this particular case, the Audiencia Provincial dismissed the claimant’s argument that the compensation regulations contained in the Spanish Agency Contracts Law should be applied by analogy. Instead, it held that the content of the cooperation agreement was not sufficient to show the existence of a commercial agency agreement.