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Do you work on commission? If so, you should know that the legal status of a commission agent is often confused with that of a sales agent, as they share some similarities. We’ll explain the main differences between these two concepts, according to current legislation, so you can determine which contract is best for you.
The Commercial Code, Royal Decree of August 22, 1885, addresses the figure of the commission agent in Articles 244 et seq. These articles state that a commercial commission contract is a mandate to carry out a commercial act or transaction and is executed between two agents or between an agent and another person.
The commission agent, that is, the person in charge of carrying out the commercial act, may perform the operation by contracting in his own name or in the name of his principal (businessman), this specification must be indicated in the contract.
When a commission agent contract is in their own name, they are directly liable as if the business were their own. This means they are responsible to the parties they contract with, who have no recourse against the principal, and therefore they are responsible for any defects, errors, or damage to the goods delivered.
The remuneration or form of payment must be paid by bank transfer or cheque. The principal will be obliged to reimburse the agent, by means of a supporting document, the amount of all expenses incurred, plus legal interest from the date on which they were incurred until their full reimbursement.
The principal may revoke the commission granted to the commission agent at any time, but will always be obliged to pay the commissions incurred up to the date of the communication.
In contrast, the Agency contract is regulated by Law 12/1992 of May 27, and its initial articles clearly define the concept by stating that it obligates a natural or legal person, called the Agent, to promote commercial acts or transactions on behalf of another party on a continuous basis, in exchange for remuneration. In other words, the agent works on behalf of the principal, as an independent intermediary, without assuming the risk of the transactions.
Dependent people will not be considered agents nor those who are linked by an employment relationship with the employer. Dependency will be understood to exist when someone who promotes commercial acts on behalf of another cannot organize their own professional activity or the time dedicated to it according to their own decisions.
The principal will provide or facilitate the agent’s access to the necessary resources to carry out their assigned professional activities. Furthermore, the principal and agent may enter into an exclusivity agreement, establishing the agent as the sole agent authorized to perform the work within a specific geographic area. Exclusivity is more common in agency contracts than in commission agreements, which typically do not include such arrangements.
An agent’s compensation will consist of a fixed amount, a commission, or a combination of both. In the absence of an agreement on this matter, the remuneration will be understood to be in accordance with the customs and practices of the market in the place where the activity is carried out.
The duration of the agency contract may be fixed or indefinite. If no duration is specified, it will be presumed to be for an indefinite period.
The main differences between these two legal figures are thus outlined, so if you find yourself in either of these situations and have any further questions, do not hesitate to contact RUIZ BALLESTEROS Lawyers and Tax Advisors to draw up the contract that best suits your situation and needs, thus legally covering your liability in accordance with the reality of the relationship between employer and commission agent or the agent.
