If an agency agreement is resolved due to the agent being declared insolvent, the business owner must compensate the agent for clientele if the requirements under the Agency Act are met (the agent brought new clients or clearly increased transactions with existing clients, and the previous activity is still beneficial for the business owner).
This confirms that agency, as an intuitu personae agreement, can be resolved based on declaration of insolvency (contrary to the general rule of article 61 of the Insolvency Act). We highlight that under article 26 of the Act on Agency Agreements, contract resolution is permitted if the other party is declared insolvent.
Judgment 457/2016 of July 5, by the Supreme Court confirms the appeal judgment.
In its appeal judgment of January 17, 2014, the Provincial Court of Madrid classifies as an agency agreement the business relationship (in relation to the promotion and marketing of mobile telephones) the parties had called “distribution agreement with exclusive relationship.” It states that the business owner’s reporting of the agreement because of the agent’s declaration of insolvency does not deprive the agent of its right to claim compensation for clientele. In this case, the court considers proved that the agent’s incompliance was not serious enough to prevent the agent from receiving compensation for clientele (particularly, interpreting the agreement, it considers that the closure of sales points did not breach the agreement) and that the requirements necessary for payment had been met.