Agency agreements in Argentina

Agency agreements in Argentina have been legislated by the Civil and Commercial Code of the Nation (Código Civil y Comercial de la Nación, or CCCN), effective on 1 August 2015.

The main features of agency agreements in Argentina are the following:

(i) The agent has an organization of its own, acts in its name and on its account, and is independent of the principal. There exists no labor relationship between the principal and the agent;

(ii) The purpose of the agency is to promote the business of the principal. Unless expressly granted, the agent lacks power of attorney to close transactions on behalf of the principal;

(iii)    The agent may promote the business for more than one principal, with the only limit of not accepting transactions from the same branch of business or in competition with those of one of its principals;

(iv) Exclusivity is granted in relation to the branch of business, geographical area, or group of people, expressly determined in the contract;

(v) There may be contracts with fixed terms agreed by the parties, or without any term. Unlike other commercialization contracts, the CCCN does not impose any minimum term for agency agreements;

(vi) When it is the case of agency agreements entered into without any term – or those continued after the expiration of its original term -, any party wishing to terminate the agreement must give a duly prior notice of one month per each year the contract has been in force. Lack of proper prior notice entitles the non-terminating party to compensation for lost profits;

(vii) Irrespective of the term of the contract, the principal may terminate the agreement in case of a significant decrease in the agent’s turnover, with the sole obligation of serving the agent with a prior notice as explained in (vi). When the agent has reduced its turnover during two consecutive years, in no case may the prior notice be longer than two months;

(viii) The agent has the right to compensation for clientele as long as its work during the contract has significantly increased the principal´s operations and can continue to produce substantial advantages to the principal after termination. Failing to provide for the clientele compensation, it will be judicially fixed, but may not exceed the amount equivalent to one year of compensation, net of expenses, averaging the value of those received by the agent during the last five years, or during the entire period of duration of the contract, if it is shorter;

(ix) In the absence of parties’ stipulations, the agent´s compensation is a variable commission according to the volume or value of the promoted acts or contracts. The agent´s right to compensation for the transactions promoted is accrued when the collection of their price takes place; and

(x) The parties may agree on the agent not competing after termination of the contract, for a maximum period of one year, in relation to a reasonable territory or group of people, and as long as the agent has been granted exclusivity in the principal’ s business branch.

Together with distribution[1] and franchising[2] contracts, agency agreements are one of the most important systems for marketing and commercialization of products and services in Argentina.

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time.

Mario E. Castro Sammartino

[1] For distributions agreements in Argentina, see the following post on our Legal Blog: http://cspabogados.com.ar/en/distribution-agreements-in-argentina/.

[2] On franchising in Argentina, please, review the following posts: http://cspabogados.com.ar/en/franchising-in-argentina/; http://cspabogados.com.ar/en/franchising-in-argentina-clauses/; http://cspabogados.com.ar/en/franchising-disclosure-in-argentina/.

Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer or may contact us at your convenience. If you liked the article, please, share it.

 

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