The Supreme Court of Justice, in Ruling SC1426-2024, M.P. Augusto Tejeiro Duque, Confirms the Jurisprudential Line on the Elements Leading to a Commercial Agency Relationship

By ruling SC1426-2024 on July 10, 2024, presented by Magistrate Dr. Octavio Augusto Tejeiro, the Supreme Court of Justice reaffirmed the jurisprudential line that it has followed for approximately five years, reiterated in multiple prior judicial pronouncements. According to this line, the following elements are determined for the configuration of a commercial agency relationship:

• The mandate to promote or exploit business, whereby the agent is obligated to acquire, expand, or reclaim a market for the goods and services produced or provided by the entrepreneur.
• Independence, under which the agent performs their duties as an autonomous merchant, without implying that they should not act “in accordance with the instructions received” and provide “information related to market conditions in the assigned area, and other information useful for the entrepreneur to assess the feasibility of each business.”
• Stability, emphasizing the continuity or permanence over time of the agent’s activities through the management of multiple commercial acts.
• Remuneration, meaning the compensation received in exchange for the work performed, which can take various forms, with commission being one of the most common.
• Acting on behalf of another, the essence of which lies in the benefit or detriment falling exclusively on the entrepreneur’s assets, who ultimately becomes the owner of the clientele.

Of particular note in the Supreme Court’s definition of the commercial agency relationship is the clarification that the presence of the following elements, strongly associated with the configuration of a commercial agency relationship, is not necessary:

• The representation of the entrepreneur may or may not be agreed upon in the commercial agency contract, but it is not considered an essential element of the relationship.
• Geographical demarcation. Although Article 1317 of the Commercial Code establishes geographical delimitation of the agency as an essential element of such a contract, the Supreme Court indicated that if no geographical delimitation is agreed upon, the entire national territory will be considered as the development area for the commercial agency. In other words, the geographical delimitation of the commercial agency does not need to be explicitly agreed upon in the commercial agency contract for such a relationship to be established.

This allows the entrepreneur to more clearly structure relationships with various intermediaries, identifying in which cases the commercial agency figure is configured, necessitating the recognition of commercial severance payments and, if applicable, equitable indemnity under Article 1324 of the Commercial Code.

Please do not hesitate to contact Brick Abogados if you have any concerns or would like further information on the topic discussed above.

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This document is for informational purposes only and does not constitute legal advice, nor does it commit the responsibility or professional opinion of Brick Abogados.