Customer indemnity is based on the possible unjust enrichment of the employer. This is provided that, without a justified reason for the termination of the contract, the entrepreneur takes over the clientele that the agent's efforts have created or consolidated while the agent ceases to receive the commissions corresponding to them. But what are the requirements for an indemnity for clientele in an agency contract? 

Customer severance payments are regulated by the article 28 of Law 12/1992 of 27 May 1992, on Agency Contract. However, it does not arise automatically, but a series of requirements are necessary in order to be entitled to it. 

What are these requirements? 

Guided by the aforementioned Agency Contract Law, we conclude that they are: 

  • The agent brings new customers to the entrepreneur or substantially increases the pre-existing ones.. However, in this case, new customers are considered to be all those who have been obtained expressly through the agent's personal work.
  • Its previous activity is likely to continue to produce substantial advantages for the entrepreneur.. These advantages must be understood as a real and demonstrable increase in the profits produced by the activity carried out by the agent. In this sense, a one-off or residual increase in profits is not sufficient, but must show relevant quantitative variations over time.
  • The exclusivity pact between the agent and the employer must be scrupulously respected.. That is, the agent may not work for the competition either directly or indirectly. 

“... compliance with the requirements laid down by the art. 28 LCA in order for compensation to be awarded “presupposes, in addition to the termination of the contractual relationship, that the claimant's professional activity has brought new clients to the employer or significantly increased the business with the employer's pre-existing clientele; that it is reasonably possible that the activity carried out by the former will continue to produce substantial advantages for the latter in the future; and that the payment of compensation is equitable in view of the circumstances”.”

It should also be said that these requirements are cumulative, The lack of any one of them is sufficient reason to preclude compensation for clientele. Therefore, it is necessary to prove the existence of the advantage and to have the concrete data that will allow the judgement to be in favour of the plaintiff. 

At Martínez-Sanz Lawyers we can advise you on client indemnity in agency contracts. If you need help, please do not hesitate to contact us.