Agency and Distribution: When the Classification of the Contract Determines the Consequences of Its Termination

There are contracts whose true legal significance is not apparent while the relationship is functioning normally, but only when the time comes to terminate it. Agency and distribution contracts are a good example.

Both are common instruments for organizing the marketing of products and services. They may involve exclusivity, sales targets, use of the trademark, promotional obligations, or territorial restrictions. They may even involve the intermediary’s deep integration into the supplier’s commercial strategy.

However, they are governed by different legal frameworks. This difference, which may seem secondary while the relationship is in effect, takes on special importance upon its termination.

Agency and Distribution: Two Different Contractual Approaches

In an agency contract, governed by Law 12/1992 of May 27 on AgencyContracts, the agent, acting as an independent intermediary, undertakes to promote—or to promote and conclude—commercial acts or transactions on behalf of another party, without assuming, unless otherwise agreed, the risk and uncertainty of such transactions.

The distributor, on the other hand, typically acts on their own account: they purchase products from the supplier to later market them and derive their profit from the margin between the purchase price and the resale price, assuming the business risk of their activity.

The distinction seems straightforward in the abstract. The contractual reality can be more complex. In long-term commercial relationships, it is common to find elements that bring the two roles closer together: territorial exclusivity, commercial instructions, sales targets, use of distinctive signs, common marketing policies, or integration into a commercial network.

Therefore, when a dispute arises, the name the parties have given to the contract is relevant, but it does not necessarily determine its legal classification. One must consider the obligations assumed and the way in which the relationship has developed in practice.

And it is precisely upon termination that this classification gives rise to some of its most significant economic consequences.

Compensation for clientele: an essential distinction

One of these is compensation for clientele.

Article 28 of the Agency Contract Act grants the agent, upon termination of the contract, the right to compensation when the agent has brought in new clients for the principal or significantly increased business with existing clients, the agent’s prior activity may continue to generate substantial benefits for the principal, and the compensation is equitable given the prevailing circumstances. The Act also establishes a maximum limit linked to the remuneration received by the agent.

Supreme Court Ruling 532/2026, dated April 9, provides a good opportunity to revisit the scope of this regime.

In the case at hand, while the entitlement to compensation was recognized, the amount had been reduced by the court by 50%. Among the factors considered were the principal’s advertising, promotional, and marketing activities, as well as the prestige and image of its brand.

The Supreme Court rejected this reduction. Once the conditions for the right to compensation were deemed established and its calculation basis determined in that litigation, the Court did not allow it to be reduced based on those criteria, nor on others such as market volatility or the duration of the contractual relationship. The ruling once again emphasizes the mandatory nature of the agency regime.

The decision does not establish this doctrine; it reaffirms it. But it also raises a different question: What happens when the party claiming compensation for clientele is not an agent, but a distributor?

Distribution: Neither Automatic Application Nor Automatic Exclusion

Here, the analysis changes.

Unlike agency, the distribution contract lacks general legal regulation equivalent to that of Law 12/1992. The case law of the Supreme Court has therefore played a significant role in defining the consequences of its termination and, in particular, in the possible analogical application of the compensation for clientele provided for agents.

The premise is clear: Article 28 of the LCA does not apply to distribution contracts automatically or by analogy. The mere termination of the relationship is not sufficient to give rise to a right on the part of the distributor to such compensation.

Supreme Court Ruling 712/2018, dated December 19, illustrates both the possibility and the limits of analogy. In the case examined, the Supreme Court considered it justified to apply Article 28 of the LCA by analogy because the distributor’s activity had contributed to introducing the brand into the market and to generating and maintaining a customer base that could potentially be exploited by the supplier.

However, it ultimately did not award the compensation. There was a lack of reliable data on the distributor’s profits that would allow for its calculation using an objective and verifiable parameter. Proving the contribution of a customer base did not obviate the need to prove the economic basis for the compensation claimed.

It is not, therefore, a matter of simply transferring all the consequences provided for in agency law to distribution. Rather, it is a matter of determining whether the circumstances of the relationship provide sufficient grounds for the analogy and whether the claim for compensation can be supported by adequate evidence.

Analogy also has its limits

Supreme Court Ruling 317/2017, dated May 19, is particularly illustrative.

In a dispute concerning an exclusive distribution contract of indefinite duration, the Supreme Court upheld the application by analogy of Article 28 of the Commercial Agency Act (LCA), taking into account, among other circumstances, the customer loyalty derived from the distributor’s activity.

The ruling also incorporates a decisive nuance: applying certain consequences of the agency contract by analogy does not mean ignoring the economic differences between the two types of contracts.

An agent may receive a fixed amount, commissions, or a combination of both. A distributor, on the other hand, purchases goods for resale and bears the costs inherent in its own business structure. Therefore, when using Article 28 of the LCA as a guiding criterion to quantify compensation for the distributor’s clientele, the relevant reference is net profit—after deducting the corresponding expenses and taxes—and not simply the margin between the purchase price and the resale price.

The distinction is significant. Analogy requires identifying what brings the relationships closer together, but also preserving what sets them apart. Applying Article 28 of the LCA by analogy does not turn the distributor into an agent.

When the contractual issue becomes a matter of evidence

From a litigation perspective, the distinction between agency and distribution takes on its full practical significance here.

When a long-standing business relationship ends, the dispute can rarely be resolved by an isolated reading of the contract. It is necessary to reconstruct how the relationship actually unfolded:

Who bore the economic risk of the transactions?
What degree of autonomy did the intermediary have?
Who set the essential terms of sale?
Who maintained the relationship with customers?
Who acquired them and helped build their loyalty?
Can the supplier continue to benefit, after the termination, from the customer base generated or expanded during the relationship?
If compensation is sought, what data allows for its verifiable calculation?

These questions cease to be merely conceptual when they must be proven in court. The contract and its amendments will be relevant, but so too will the communications exchanged over the years, customer databases, sales trends, investments made, the cost structure, and the commercial activities carried out by each party.

For this reason, the litigation strategy in this type of dispute begins long before the complaint is filed. The legal characterization determines the framework under which the termination is examined; the proven facts support that characterization and the economic consequences being claimed.

The Reality of the Relationship Beyond Labels

A comparison between agency and distribution agreements demonstrates that contractual categories cannot be analyzed in isolation from the economic reality they serve.

Supreme Court Ruling 532/2026 reaffirms the mandatory nature of the compensation regime for an agent’s client base and, in the case at hand, rejects any reduction in the compensation amount based on the principal’s promotional activities or the prestige of its brand.

In distribution, Supreme Court Rulings 712/2018 and 317/2017 require a different analysis: neither does termination in and of itself give rise to compensation, nor does any possible analogy with agency relationships eliminate the need to prove the customer base contributed, its potential use, and a calculation basis appropriate to the distributor’s economic circumstances.

The contractual label matters less than the relationship actually developed. And when that relationship terminates, it is just as important to correctly classify it as it is to be able to prove the economic consequences claimed to arise from it.