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Agency Agreement

     Possibility of the Company to claim damages agianst the Agent:

Spanish Court of Cassation ruling on the possibility of claiming damages from an Agent for failure to promote sales.

     Warranty from the Agent:

​Warranty from the Agent in case of insolvency of the customer: this possibility is sustained by Spanish law, provided it involves identifiable transactions with specific commissions for the Agent.

     Possibility of setting the jurisdiction in the Principal's head office:

Even if Spanish law deems invalid a choice of court clause nominating the Principal’s head office as the applicable jurisdiction, according to the Rome I Regulation a choice of court clause nominating the Principal’s head office as applicable jurisdiction is valid, provided the Principal is a resident of an EU Member State other than Spain.

     Compensation upon termination:

Compensation to Agents upon termination of their agency relationship: except in the event of proven negligence or inefficiency by the Agent, Spanish courts award a maximum compensation of 1 year of commissions based on the average commissions earned over the last five years.

The Court of Appeal of Madrid orders payment to a marketing agency even when clients cancel

It is common for companies to subcontract marketing agencies to attract customers on their behalf, with the precaution of adding a clause to the outsourcing contract stipulating that if any client cancels within a certain period (normally between three and six months) the agency must reimburse the commission.

However, the Provincial Court of Madrid has limited the practical legal effect of this clause by clarifying that for it to be applicable, the subcontracting company must be able to prove that the client did not cancel for any cause attributable to the company.

So if a customer cancels due to a delayed installation or poor service, the company must pay the agency and cannot apply the content of the clause. However, if the company can prove that the cancelation was not due to any reason attributable to itself, the clause will continue to apply and there will be no obligation to pay the agency.