{"id":13158,"date":"2026-01-13T13:15:12","date_gmt":"2026-01-13T11:15:12","guid":{"rendered":"https:\/\/martinezsanzabogados.com\/?p=13158"},"modified":"2026-01-13T13:16:59","modified_gmt":"2026-01-13T11:16:59","slug":"customer-compensation-in-distribution-contracts","status":"publish","type":"post","link":"https:\/\/martinezsanzabogados.com\/en\/customer-compensation-in-distribution-contracts\/","title":{"rendered":"Customer Compensation in Distribution Contracts: Requirements and Quantification"},"content":{"rendered":"

The customer compensation in distribution contracts<\/strong> does not arise automatically when the contractual relationship ends. Unlike the agency agreement, the distribution contract lacks specific legal regulation, which has led Spanish case law to recognise, under certain requirements, the analogical application of the principle underpinning Article 28 of the Commercial Agency Contract Act (Ley del Contrato de Agencia, \u201cLCA\u201d).<\/p>\n\n\n\n

The Supreme Court has acknowledged that, in certain circumstances, the distributor may be entitled to customer compensation, provided that the required conditions are strictly proven<\/strong> and that such compensation is deemed equitable.<\/p>\n\n\n\n

Requirements for a distributor to claim customer compensation<\/h2>\n\n\n\n

It is well known that a commercial agent is generally entitled to customer compensation upon termination of the contract, in accordance with Article 28 of the Commercial Agency Contract Act. art\u00edculo 28 de la Ley sobre Contrato de Agencia<\/strong>.<\/p>\n\n\n\n

In the case of a distributor \u2013 an atypical figure without specific statutory regulation \u2013 such entitlement is not automatic. However, Spanish case law has held that, under certain conditions, the principle underlying that provision may be applied by analogy, so that, upon termination of a concession or distribution agreement, the distributor may also claim customer compensation.<\/p>\n\n\n\n

This conclusion results from a long-standing doctrinal and jurisprudential debate.<\/p>\n\n\n\n

Supreme Court doctrine on customer compensation for distributors<\/h2>\n\n\n\n

Particularly relevant is Supreme Court Judgment No. 1392\/2007 of 15 January 2008<\/strong> (RJ 2008\/1393), issued by the Full Civil Chamber (Sala Primera de lo Civil) for the specific purpose of unifying doctrine<\/strong>, having acknowledged that prior case law was inconsistent.<\/p>\n\n\n\n

In that judgment, the Supreme Court held that:<\/p>\n\n\n\n

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\u201cThis Chamber maintains its doctrine recognising the possible entitlement to customer compensation upon termination of concession or distribution contracts,\u201d although \u201cthe analogical application of the principle underlying Article 28 of the Commercial Agency Contract Act cannot be based on mimetic or automatic criteria; rather, in each case, the distributor must prove both the effective contribution of clientele and its potential future use by the grantor.\u201d<\/em><\/p>\n<\/blockquote>\n\n\n\n

From this judgment\u2014and subsequent case law\u2014it follows that the Supreme Court recognises customer compensation in distribution contracts<\/strong>, but not automatically: only where the necessary prerequisites have been previously proven.<\/p>\n\n\n\n

The basis for this entitlement lies both in the analogical application of the principle inspiring Article 28 LCA and in the requirement to perform contracts in accordance with good faith<\/strong>, usages, and the law under Article 1258 of the Civil Code<\/strong>. This criterion has been reiterated in numerous subsequent decisions.<\/p>\n\n\n\n

Essential requirements for customer compensation in distribution contracts<\/h2>\n\n\n\n

According to established case law, customer compensation for distributors has the following characteristics:<\/p>\n\n\n\n

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  1. It does not arise upon every termination of a distribution contract.<\/strong>
    It is not an automatic or imitative consequence of any termination.<\/li>\n\n\n\n
  2. It requires proof of an effective contribution of clientele.<\/strong>
    The distributor must demonstrate that, as a result of their activity, they have generated or increased clientele for the grantor.<\/li>\n\n\n\n
  3. The future benefit of such clientele must be proven.<\/strong>
    It is necessary to show that the manufacturer or grantor will be able to benefit from that clientele after termination of the contract, which requires a reasonable forecast.<\/strong>.<\/li>\n\n\n\n
  4. A high standard of proof is required.<\/strong>
    The Supreme Court has repeatedly emphasised the need for strong and sufficient evidence of both elements.<\/li>\n\n\n\n
  5. The compensation must be equitably justified.<\/strong>
    Even where the above requirements are met, the compensation must be fair in light of the specific circumstances of the case, a matter to be determined by the court.<\/li>\n\n\n\n
  6. Wide scope for freedom of contract.<\/strong>
    In distribution contracts, contractual freedom is far greater than in agency agreements, and the parties may expressly exclude customer compensation, provided that this reflects their genuine contractual intent.<\/li>\n<\/ol>\n\n\n\n

    How to calculate customer compensation in distribution contracts<\/h2>\n\n\n\n

    Under an agency contract, the amount of customer compensation may not exceed the equivalent of one annual average of commissions earned<\/strong> during the last five years of the contract, in accordance with Article 28.3 LCA<\/strong>.<\/p>\n\n\n\n

    In the case of a distributor, this rule does not apply directly<\/strong>, since the distributor does not earn commissions but obtains profit through a commercial or resale margin<\/strong>\u2014that is, the difference between the purchase price of the product and the selling price to the end customer.<\/p>\n\n\n\n

    This structural difference initially led to some inconsistency among courts when quantifying customer compensation for distributors.<\/p>\n\n\n\n

    Established jurisprudential criterion: net profit, not gross margin<\/h3>\n\n\n\n

    The Supreme Court has settled this issue by establishing that, when customer compensation is applicable in distribution contracts, it must be calculated by reference to the net profit<\/strong> of the distributor, not the gross margin.<\/p>\n\n\n\n

    This was expressly stated in Supreme Court Judgment 356\/2016 of 30 May (RJ 2016\/2293), which held that the guiding criterion of Article 28 LCA should be applied to the net profits obtained by the distributor\u2014that is, the portion of profit remaining after deducting expenses and taxes\u2014and not to the gross commercial margin.<\/p>\n\n\n\n

    To this end, the judgment considers:<\/p>\n\n\n\n