One of the most common issues in general practice regarding distribution contracts is understanding that the waiver of compensation for a clientele base, which the distributor has a right to receive upon the completion of the contract, is perfectly agreeable between the parties, in accordance with extensive case law, if no contractual provision has been made in this respect. Case law establishes that such compensation is not intended to indemnify the distributor for income to be received no longer (impoverishment), but rather for the effort dedicated to the creation of a business asset (goodwill), which, as from the moment of termination of the contract would be exploited by the manufacturer.
Such waiver, however, has been shown by the courts in recent times to be neither immovable nor indisputable, however much the principle of independence is sustained by the parties, pursuant to article 1255 of the Spanish Civil Code.
This has been made clear by the judgments from the Provincial Court of Barcelona dated 18th June 2015 and 2nd February 2018, which ruled on both cases, wherein, although having expressly agreed upon a waiver of compensation for a clientele base, the court finally grants compensation to the distributor on that basis.
The first of the aforementioned cases deals with an exclusive supply and distribution contract between a telephone operator and a distributor, which accepted said waiver through one of the clauses of the contract.
We must stress that clauses allowing the termination of a contract unilaterally by either party are not abusive, neither are they contrary to law, moral or public order, when a certain advance notice is given, without entitlement to any compensation for any of the parties. However, in this specific case, the Provincial Court reaffirms the criteria of the court of first instance on the understanding that given that the contract was a standard-form agreement employed by a telephone operator for all of its distributors, with no room for the negotiation of the terms and conditions contained therein, the waiver is inadmissible in the case in question.
On the other hand, in the second case mentioned above, an exclusive distribution contract established that:
a) the termination of the contract shall be without prejudice to any rights which the manufacturer may have against the distributor under the law in force.
b) the distributor expressly waived any type of claim against the manufacturer for the purposes of compensation arising from “the loss of contractual benefits, the loss of resale rights, the loss of goodwill, the loss of profits or any other loss” derived from the termination. Likewise, it waived “all and any rights set forth by the law for any indemnification or compensation from the manufacturer” on the occasion of the termination.
In view of this scenario, the Court considers that the nature of the exclusion is such that it implies that compliance of the contract is left to the discretion of one of the parties, in violation of Article 1.256 of the Spanish Civil Code, in such a way that it confirms the criteria adopted by the judgment of first instance, which granted an indemnification to the distributor for the clientele base, in the terms evaluated in said judgment, considering the corresponding clause to be null and void.
It thus remains patently clear, that not all waivers to compensation for clientele base are completely valid, as it is necessary to ensure that minimum requirements required by case law are met.
Even so, the court fully reaffirms that, without prejudice to the foregoing, the waiver of the right to compensation for clientele within the framework of a distribution contract is perfectly admissible, stressing, however, the dismissal of the automatic and analogue application, as a general rule, of such compensation provided for in the agency contract.
Andreas Terán
Vilá Abogados
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14th February 2020
