Distribution contract.
Distribution agreement in Spain is not governed by specific legislation. In the absence of express legal regulation, it has been up to the courts to define the essential elements of this commercial contract. Among these, the exclusivity clause and the termination indemnity have been the most elaborated by Spanish courts.
Applicable (Direct or Analogous) Legislation:
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Regulation (EU) No. 330/2010: covers block exemption for certain vertical agreements and concerted practices, limited to competition within the EU market.
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Agency Law: applied analogously to regulate the relationship between the principal and distributor.
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Specific legislation for car and industrial vehicle dealers: recently enacted to protect Spanish dealers from the contract terminations being imposed by major car manufacturers due to low sales volumes. This law seeks to impose significant termination indemnities on manufacturers.
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Draft Law on the Distribution Contract: not yet debated in the lower house of Parliament. It presents the distributor as the weaker party in the relationship and follows the trend of establishing significant indemnities in case of termination by the principal.
Legislative Trends and Reform Philosophy:
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The Spanish economy is primarily composed of small and medium-sized enterprises (SMEs).
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The prevailing model is production abroad and distribution through local SMEs.
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Future legislation is expected to protect distributors as the weaker party in the contractual relationship.
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Termination indemnities will likely follow objective criteria similar to those established for commercial agency agreements.
Key Aspects of the Distribution Agreement:
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Exclusivity is accepted in Spain even if not formalized in a written agreement.
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Termination indemnity: there is no clear standard. The Supreme Court has stated that only proven and precisely quantified damages can be compensated. However, case law continues to accept objective criteria, often similar to those used in calculating goodwill indemnity under the Commercial Agency Directive.
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Current trend: moving from a gross margin criterion to a net margin one, significantly reducing the financial risk for the principal.
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In the event of termination without just cause while the distributor still holds inventory, the principal may be obliged to repurchase saleable stock.
Distributor’s Responsibility in Packaging Waste Management
Under Spanish environmental regulations and transposed European directives (such as Directive 94/62/EC on packaging and packaging waste), the distributor may be subject to specific environmental obligations:
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Registration in the Integrated Product Producer Register (REI-RAP), especially if acting as an importer.
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Joining a collective extended producer responsibility scheme (SCRAP) or implementing an autonomous waste management system.
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Obligation to inform customers about proper collection and disposal procedures.
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Traceability and reporting of packaging placed on the market and quantities recovered or recycled.
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In the case of importation, the distributor may be considered a “producer” and therefore directly responsible for managing the end-of-life of the packaging.