By Gabriela Mancero
July 2007
Last March, the arbitration award was issued in relation to existing commercial agency between two Colombian companies: Rich Food and Distributor Marwill Limited, which is urged to first pay his former agent more than 30 million pesos compensation for the unilateral termination of contract without just cause, although it has not signed a commercial agency, and instead, a distribution agreement in which Marwill renounced his legal right to request any compensation for unilateral termination been established the contract.
The companies had signed a distribution agreement in April 2002 for marketing products Food Rich in the city of Villavicencio, contract responsibility also provided by the distribution company to market and open market only to products of its main .
After more than two years of work, Groceries Rich refused requests for sending your items until certain accounts and applications are not clarified with wrong amounts thereof to a recognized chain of stores, which the company finally decided grocery and unilaterally terminate the said contract.
After requesting a call of the arbitration tribunal by the Marwill Distribuidora, as was agreed in the contract signed by both companies in the event of any disagreement between the parties, it held the conciliation hearing without the concerned reach an agreement.
For this reason, the distributor filed a complaint before the same court, which eventually encourage it by accessing the request of the applicant. According to the arbitration award, Distribuidora Marwill should receive from its principal, damages for loss of income.
This was caused by the fact of having to bear the costs of advertising invested in products Rich Food, settlement staff at your service and the cost of the components used for warehousing and distribution, among other expenses not recognized by the company defendant.
The court’s decision was decisive in the sense of declaring the clause in the distribution contract exonerating the company demanded the payment of compensation for unilateral termination of contract without just cause zero. The arbitration tribunal also decided to declare the nature of the contract between the parties as a commercial agency contract, governed by the parameters set out in Article 1324 of the Commercial Code.
It was for this reason that the court established the payment of fair compensation, plus equivalent to one twelfth of the average of the benefit throughout the contract period to Marwill Limited, in accordance with the provisions of subsections first commercial unemployment and second of that Article.
The award is relevant because the arbitration Court dismissed recent trends where the parties to a commercial agency agreement may, in certain circumstances, agree to waive or otherwise in connection with provisions of the Commercial Code on commercial agency.
Such is the case, for example, the possibility that the agent to give up his commercial severance pay once the agency contract terminated. In this case the Court held that the rules on commercial agency are public and therefore prevail over the will of the parties and, therefore, any waiver would have no legal validity