Types of trade agreements in Spain

Trade agreements in general

In Spain, like in many other countries of the European Union, the party autonomy, which ensures the contractual freedom of the parties is one of the most basic principles in respect to trade agreements. Aside of this principle exist several other mandatory legislations, which can not be modified by the contractual parties and unfold effects in prevalence. Especially trade agreements are interpreted and construed by these mandatory legislations and therefore shall receive consideration by the parties to a contract.

In general it is not necessary in Spain that trade agreements are made in writing. Therefore it is possible to conclude effective contracts only by the use of verbal arrangements. However, to adduce evidence in the case of legal proceedings it is advisable only to conclude contracts in written form. But there are also agreement categories, which require the written form for the validity of the transaction, like the consumer credit contract.

If the parties therefore decide to make an agreement in writing, the significant rights and duties of the contract partners shall be included. All legal bearings of the case, which have not been settled in the written contract, will be judged according to the applicable law like the code civil (Código Civil) in particular.

At any rate it is advisable that the parties settle the following rules in the contract:

  • Agreement on jurisdiction, in which it is possible to choose the ordinary or the arbitral court jurisdiction in the case of legal proceedings
  • Determination of the applicable law in case of a cross-border contract
  • Fixation of the duration of the contract with the option to extend the length of term

Types of trade agreements in the Spanish Law

Purchase contracts

In Spanish Law the purchase contract can be divided in two several types. The commercial purchase contract, in which a mobile object is gained with the intention to resell it with profit and the purchase contract according to civil law, which adjust every other case of acquisition. Both types have in common, that they constitute the same responsibilities in respect to the major achievements. Therefore the vendor has always the obligation to provide the purchaser with the sold object and the purchaser the duty to pay the purchase price and to receive the sold good.

However, there are also differences between those two types which are a result of the respectively applicable law. The normal purchase contract is executed after the rules of the civil law. The commercial purchase contract mainly follows the rules of the commercial law (Código de Comercio) and only secondary the rules of the civil law. Therefore there are often deviations between them. To mention in particular are here differences in questions of the passing of the risk, the notice of defects and the prescription. The parties should at least make an agreement in respect to these points.

Agency Agreement

Most describing feature of the agency contract is that the Agent compared to his signatory accepts the liability to arrange purchase contracts with his clients in the name and on risk of his contractual partner. This type of contract has its origin in an act of the European Union. That is why the contractual partners have to consider several disposable regulations. The regulations mainly have the purpose to protect the Agent.

Therefore it is not disposable for the parties to exclude the right of the Agent to gain a commission for his agitation, so that a foreclosure is not possible. Furthermore the Agent has the not executable right to seek damages from his contractual partner after the termination of the contract, which contains the compensation for the client base. Also the Agent has a right to seek damages in case of an unlimited agreement, if the contract is dissolved before maturity. The domicile of the agent is invariably decisive for the jurisdiction.

If the parties agreement contains a non-competition clause after the termination of the contract, this agreement has to be made in written form for its validation. Furthermore this non-competition clause can not be arranged for more than two years after the termination of the contract. The non-competition clause has to be limited to that effect, that it contains only the subject matter of the contract regarding the client base and the specific merchandise and that it is only effective in the business operating area of the agent.

Franchise Agreement

The perception of franchise can only hardly be explained. Basically franchise agreements have in common, that there is one franchisor and one or more franchisee. The franchisee gains the right to achieve a business concept which the franchisor has designed for him and, if applicable, for others. The rest of the contract can be negotiated by the parties. However, there are several rules and regulations which have to be considered. The parties have to observe that the limitation of non-competition clauses always are a disadvantage for the franchisee and therefore should only be limited for an appropriate period of time and for a certain area.

For the enforcement of such a franchise agreement in Spain the registration in the register of franchisors is necessary, as long as the employment shall be effected in several autonomic regions. Furthermore the franchisor has to provide the franchisee with information at least twenty days before the signing of the contract regarding his association and the terms and conditions of the contract.

Distribution Agreement

The distribution agreement is characterized by the feature that one of the parties assumes the obligation to buy specific goods in order to sell these goods afterwards on his account and on his name but among utilisation of the label of the producer. For this kind of agreement no specific rules exist in the Spanish Law. However, the jurisdiction tries to close these gaps by, as an example, giving specific claim for damages which are very similar to the agency agreements.

General terms and conditions

General terms and conditions are terms of a contract which are already prepared for a plurality of different agreements. They are proposed one-sided in the contract by only one of the parties. However, these conditions will only be part of the contract if:

  • The counterparty agrees with their inclusion
  • The user explicit advises the counterparty of their inclusion
  • The user has to give over a copy of the general terms and conditions
  • The terms and conditions have to be unmistakable and clearly

If some of the terms are inexplicit in account of the counterparty these terms will be void by law. The review of the general terms and conditions can take place by the courts and by the Register for General terms and conditions, which is accessible for everybody.

This article is not considered as legal advice

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