Introduction
Goodwill compensation is the compensation that may be payable to the agent when an agency agreement ends and, by extension, also in distribution agreements, where the courts have applied this regime by analogy.
The Spanish Supreme Court has again weighed in on its scope, restating an increasingly clear line of case law. When an agency relationship comes to an end, one of the most common disputes is no longer just whether compensation is due, but whether the judge may reduce the final amount when it is considered high or in certain circumstances.
This issue is addressed in Supreme Court Judgment No. 1209/2025 of 3 September, and Judgments No. 1776/2025 and 1777/2025, both of 3 December.
Legal framework
The starting point is Spanish Law 12/1992 of 27 May on Agency Agreements (the “Agency Act”). Article 28.1 recognises the agent’s right (and, by analogy, the distributor’s right) to goodwill compensation when, upon termination of the contract, the agent has brought new customers to the principal, the agent’s activity may continue to generate substantial benefits for the principal, and the compensation is deemed equitable. Paragraph 3 of that provision adds that such compensation may not, in any event, exceed the average annual remuneration received by the agent during the last five years or, if the relationship lasted for a shorter period, during the entire term of the contract.
This compensation regime is mandatory by virtue of Article 3(1) of the Agency Act. On that basis, the Supreme Court has repeatedly emphasised that the statute already builds its own internal balance: it sets the conditions for entitlement, requires a fairness assessment, and also establishes a maximum cap. For that reason, once that legal framework has been satisfied, there is no room for judicial adjustment.
Supreme Court doctrine
That is, in essence, the core of the doctrine settled by the three 2025 judgments. In them, the Supreme Court rejects the idea that goodwill compensation may be judicially adjusted once the agent’s entitlement has been recognised and the amount has been determined in accordance with the statutory criteria. Judgment No. 1777/2025 states this particularly clearly: given the mandatory nature of the rule, if the requirements of Article 28(1) of the Agency Act are met, the amount due to the agent under Article 28(3) of the Agency Act cannot be reduced by the courts.
What is significant is that the Supreme Court does not merely decide an isolated case; it expressly rejects the arguments that some lower courts had been using to reduce the final amount. These include sector volatility, the reputation or reach of the brand, the principal’s promotional efforts, and even the length of the contractual relationship. For the Supreme Court, these factors cannot become an additional corrective mechanism once the law has already set out the applicable regime and the maximum compensation cap.
Practical implications
From a practical point of view, this settled doctrine strengthens legal certainty in an area where disputes typically focus precisely on quantification. It also narrows the scope for both courts and the parties themselves because the mandatory rule already embodies its own balancing act. For that reason, once the right has been recognised and the compensation calculated within the statutory framework, there is no basis for reducing the amount on grounds not expressly provided for by law.
For businesses and agents, the implications are straightforward. The real issue will continue to be whether the requirements of Article 28(1) of the Agency Act are met and whether the cap under Article 28(3) of the Agency Act has been correctly calculated. But, once those points are established, there should be no room for the amount to be adjusted. In other words, the dispute should focus on whether the right arises and how it is calculated under the law, not on whether it should be then reduced.
In short, Judgments No. 1209/2025, 1776/2025 and 1777/2025 consolidate the case law on a matter that should no longer give rise to any doubt: the agent’s goodwill compensation is not open to judicial reduction on grounds of expediency. If the statutory requirements are met and the amount is set within the cap laid down by law, the judge may not reduce it by relying on external factors or equitable adjustments that are not contemplated in the applicable legal framework.
Julio González
Vilá Abogados
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12th of June 2026