Article 28 of the Agency Contracts Act (LCA) recognizes, provided certain conditions are met, the right of agents to receive goodwill compensation upon termination of the agency agreement. The purpose of this mechanism is to compensate the agent for the value generated for the principal through the acquisition and consolidation of clients.
- Upon termination of the agency contract, whether for a fixed or indefinite term, the agent who has brought new clients to the principal or has significantly increased business with existing clients shall be entitled to compensation if the agent’s previous activity may continue to generate substantial benefits for the principal and if such compensation is equitable, taking into account non-compete agreements, the commissions the agent loses, or any other relevant circumstances.
- The right to goodwill compensation shall also exist where the contract is terminated due to the death or legal declaration of death of the agent.
- In no case may the compensation exceed the average annual remuneration received by the agent over the last five years, or over the entire duration of the contract if it is shorter.
In a recent judgment, the Supreme Court (Tribunal Supremo, Sala Primera, de lo Civil, en su sentencia número 1777/2025) has once again addressed the scope and nature of this compensation, reinforcing its protective character in favor of the agent.
In particular, the Court has established that:
- – Goodwill compensation is mandatory in nature, meaning that the parties cannot freely dispose of this right. Furthermore, the law sets a maximum limit on the amount that may be awarded, thus providing a clear framework of reference.
- – Any contractual clause that limits or excludes the agent’s right to such compensation is invalid. These types of provisions are considered contrary to the law and, therefore, have no legal effect.
- – Courts may not reduce or adjust the amount of the compensation once it has been determined in accordance with the legal criteria, as doing so would violate the mandatory nature of the rule, as established in Article 3.1 of the LCA.
In conclusion, this ruling reinforces the protection of commercial agents and highlights the importance of respecting legal limits in the drafting and termination of agency agreements, thereby enhancing legal certainty in this area.
