Termination of distribution contracts in Spain
By Jordi Pallarès Vinyoles, Grup Vilar Riba
Key legal aspects to be taken into account by a manufacturer that wants to terminate the relationship with a local Spanish distributor:
1. The parties are bound by an oral distribution contract: even if no written contract was ever drafted, the existence of oral distribution contracts is admitted to be legally binding on a regular basis by courts, provided that the existence of the relationship between the parties can be proven by other means (through faxes/emails, invoices, witnesses, etc.).
2. Exclusivity is not presumed: even if the local distributor has been the sole distributor throughout the years of the relationship, it does not automatically follow that they have had exclusivity. Other circumstances/evidence will be taken into account.
3. A contract with no term of validity can be unilaterally terminated at any time: however, if termination of the contract is not bona fide, the party that terminates the contract might have to compensate the other party for damages. To that effect, it is advisable to give prior notice of termination well in advance (the longer the relationship, the longer the prior notice period). Additionally, it might be sensible for the manufacturer to offer to the distributor that they repurchase any remaining stock that the latter might have (both to minimise damages to the distributor and to effectively control the entry of products to the market).
4. The distributor might be entitled to compensation for the clientele: this is not an automatic consequence. It has to be proven that the clientele base for the manufacturer's products was created by the distributor and that the manufacturer will be able to continue benefiting from that clientele base.
Jordi Pallarès Vinyoles, Partner
Grup Vilar Riba, Vic, Spain
T: +34 93 883 32 12
Jordi Pallarès Vinyoles is a partner of Grup Vilar Riba. He is a lawyer whose main areas of expertise are litigation, criminal law, bankruptcy law and private international law. Jordi is a member of the Board of Vic's Bar Association. He has been appointed arbitrator for several proceedings and is a lecturer in the Universities of Girona and Vic.
GRUP VILAR RIBA is a multidisciplinary firm with over 80 professionals who provide a wide range of services, to both companies and individuals. The Group provides tax & accounting services, legal services, auditing services and business consultancy services. It has offices in Barcelona, Vic and Puigcerdà.
published: August 2013