In the matter at hand, at the end of 2011, two companies orally concluded an agency (distribution) agreement for the Autonomous Region of Madrid, according to which one company would distribute the wines produced by the other. For five years, this agreement was being fulfilled without a specified minimum quantity, and the agent acted with commercial autonomy. In December 2016, however, the wine producer unilaterally terminated the agreement without notice and commissioned a third party to distribute the wines, resulting in a claim for damages by the agent.
The agent argued that an oral agreement on exclusive distribution had existed since 2012 and that the termination had been made without just cause and without sufficient notice. For this reason, he demanded damages equivalent to six months’ average turnover. The wine producer acknowledged the existence of an oral agreement but disputed its exclusivity, arguing that the agent sold products from other brands and that the termination was due to different business perspectives. The wine producer challenged the obligation to pay compensation to the agent for failure to give notice, as the latter had not suffered any damage.
The Supreme Court upheld the appeal lodged by the wine producer, who had been convicted in the second instance, and confirmed the judgment of the court of first instance, which had acquitted the wine producer. The Spanish Supreme Court stated that although termination without notice could violate the principle of good faith, compensation was only payable if the suffered damage was proven.
In this case, given the low turnover and the rapid replacement of the wine distribution, the agent had not proven any economic damage caused by the termination without notice. Accordingly, the court rejected the claim for compensation on its merits.
The Supreme Court also rejected compensation for acquired customers, arguing that such compensation was not automatically granted but required revision of each individual case as well as actual proof of unjust enrichment.
The ruling clarifies that in indefinite agency agreements, termination without notice does not automatically entitle the terminated party to compensation, rather the damage they have suffered must effectively be proven. Furthermore, the Court confirms that the compensation provisions of the commercial agency agreement must be applied with caution and taking into account the circumstances of each individual case.