Commercial Contracts in Spain

The Framework for Commercial Contracts in Spain

Commercial contracts in Spain are primarily governed by:

• Código de Comercio (CCom, 1885): Applies to commercial transactions between traders (actos de comercio). Largely outdated but still in force for areas not covered by special legislation.
• Código Civil (CC, 1889): General contract law for all contracts not specifically covered by commercial legislation. The principles of contract formation, validity, interpretation, and breach in the CC apply subsidiarily to commercial contracts.
• Specific laws: Numerous modern laws govern specific contract types — the Agency Law (Ley 12/1992), the Law on Late Payment in Commercial Transactions (Ley 3/2004), the General Conditions of Contract Law (Ley 7/1998), the Franchise Regulation (RD 201/2010), and EU-derived legislation (GDPR as implemented in Spain, e-commerce directive, etc.).

Key Principles

Freedom of contract (libertad de contratación): Parties are generally free to agree any terms, provided they do not violate mandatory law, public policy (orden público), or good morals (buenas costumbres).

Pacta sunt servanda: Contracts are binding on the parties and must be performed in good faith. Spanish courts generally give effect to agreed terms and are reluctant to rewrite commercial contracts between sophisticated parties.

Good faith (buena fe): An overarching obligation at formation, performance, and termination stages. It is a substantive (not merely interpretive) obligation under Article 7 CC and Article 57 CCom.

Relativity of contracts (efecto relativo de los contratos): Contracts bind only the parties and cannot impose obligations on third parties, subject to specific exceptions (assignment, novation, benefit of third parties).

Contract Formation

Under Spanish law, a contract is formed when there is:

1. Consent (consentimiento): Offer and acceptance meeting (including electronic signature, verbal agreement, or implied conduct).
2. Subject matter (objeto): Lawful and possible subject matter.
3. Cause (causa): Legitimate basis for the obligation.

Spain does not require consideration (unlike English law). Once agreed, an oral contract is legally binding in most circumstances — written form is not required for general commercial contracts (exceptions: real estate, guarantees, certain financial agreements).

Form Requirements

Most commercial contracts have no mandatory written form requirement under Spanish law. However, written contracts are essential in practice for:

• Evidence of agreed terms (preventing disputes about what was agreed)
• Tax treatment (some tax deductions require written documentation)
• Specific contract types that require notarial deed (escritura pública): real estate transfers, mortgage deeds, share pledge agreements, certain company acts
• International contracts (governing law and jurisdiction clauses require written evidence)

Key Commercial Contract Types

Distribution Agreement (Contrato de Distribución)

Spain has no specific distribution law. Distribution agreements are governed by the CC and CCom principles. Key issues:

• Exclusive vs. non-exclusive distribution rights
• Territorial restrictions: Subject to EU competition law (Vertical Block Exemption Regulation — the 2022 VBER applies)
• Termination: The indemnización por clientela (customer list indemnity, analogous to the indemnity under the EU Commercial Agents Directive) is not mandatory for distributors under Spanish law (it is for agents). However, if the contract is silent, abusive termination may give rise to damage claims.

Commercial Agency (Contrato de Agencia)

Strictly regulated by Ley 12/1992 (implementing EU Commercial Agents Directive 86/653). Key features:

• Indemnity on termination: An agent who has significantly developed the principal’s customer base is entitled to an indemnity on termination (maximum: one year’s average annual commission over the last 5 years).
• Notice periods: Minimum statutory notice (1–6 months depending on duration of the agency).
• Competition clauses: Post-contractual non-compete valid for up to 2 years; must be limited by territory and by type of goods/services.

The agent/distributor boundary is commercially significant: getting the classification wrong can result in unexpected indemnity obligations on termination.

Franchise Agreement (Contrato de Franquicia)

Governed by Royal Decree 201/2010. The franchisor must:

• Register in the Registro de Franquiciadores (franchisors’ registry) with the MEIC
• Provide the franchisee with a pre-contractual information document at least 20 working days before signing
• Disclose all material information about the network

Service Agreement (Contrato de Prestación de Servicios)

The general service contract framework in the CC (arrendamiento de servicios) is supplemented by sector-specific rules (professional services, IT contracts, construction services contracts). Key issues:

• Scope and change control: Define deliverables, acceptance criteria, and procedures for scope changes
• Liability caps: Spanish law does not impose statutory liability caps for commercial contracts; contractual caps are generally enforceable between commercial parties (but not for fraud or gross negligence)
• IP ownership: See the IP entry — assignment must be explicit

Non-Disclosure Agreement (NDA) / Confidentiality Agreement

Spanish law protects trade secrets under Ley 1/2019 de Secretos Empresariales (transposing EU Directive 2016/943). An NDA formalises confidentiality obligations. Key drafting points:

• Define “confidential information” broadly but precisely
• Specify permitted uses
• Duration of confidentiality obligation
• Exclusions (publicly available information, independently developed)
• Return/destruction on termination
• Governing law and jurisdiction/arbitration clause

Share Purchase Agreement (SPA)

Spanish SPAs follow international M&A practice but must be adapted for:

• Spanish stamp duty (AJD): Transfers of unlisted shares are subject to 1.5% Impuesto de Transmisiones Patrimoniales if the company holds real estate
• Notarial requirements: Share transfers in SLs (sociedad limitada) require notarisation
• Anti-money laundering identification obligations

Late Payment Law (Ley 3/2004)

Spain implemented the EU Late Payment Directive through Ley 3/2004, which imposes mandatory maximum payment terms in commercial transactions:

• Businesses to businesses: Maximum 60 calendar days from invoice delivery
• Public bodies to businesses: Maximum 30 calendar days
• Statutory default interest: EU reference rate + 8 percentage points
• Creditor entitled to claim at least EUR 40 flat-rate debt recovery costs per unpaid invoice

These rules are mandatory and cannot be contracted out in standard B2B commercial agreements. Clauses providing for longer payment terms may be declared null as cláusulas abusivas (abusive clauses) where one party has significantly stronger bargaining power.

Governing Law and Choice of Forum

Choice of Law

Parties to international commercial contracts with a Spain connection may choose any national law as governing law under EU Rome I Regulation (593/2008), provided the choice is made expressly or clearly demonstrated. A choice of non-EU law does not preclude application of mandatory rules of the otherwise applicable law.

Choice of Forum/Jurisdiction

For international B2B contracts, parties may agree on:

• Spanish courts (specifying the competent city/region)
• Courts of another EU country (enforceable under Brussels I Recast Regulation 1215/2012)
• International arbitration (see arbitration entry)

For entirely domestic Spanish contracts, jurisdiction is determined by civil procedure rules — generally the defendant’s domicile or the place of performance.

Frequently Asked Questions

Are verbal commercial contracts legally binding in Spain? Yes, in most cases. Absence of writing does not make a contract invalid. However, proof of a verbal contract (and its exact terms) in litigation is difficult. Always use written contracts in commercial relationships.

What language must a commercial contract in Spain be in? There is no general requirement that contracts be in Spanish (or in any other official language). Contracts between commercial parties may be in any language. However, contracts with consumers must be in the language of the consumer’s country if the consumer is in Spain. Labour contracts and some public-law regulated agreements have language requirements.

Can Spanish law be excluded entirely by choosing foreign law? For contracts with an international element, yes — choice of foreign law is broadly respected under Rome I. However, overriding mandatory provisions (normas de aplicación necesaria) of Spanish law apply regardless of choice of law: consumer protections, employment law, competition law, anti-money laundering, certain public procurement rules.

What is the statute of limitations for commercial contract claims? General commercial claims: 5 years from when the action becomes exercisable (Article 1964 CC as amended in 2015). Specific shorter periods apply to some contract types (e.g., claims for transport services, insurance). The Código de Comercio sets even shorter periods (3 years) for some specific commercial claims.

Can a Spanish court rewrite a contract if it is unfair? Not in general B2B contracts between sophisticated parties. Spanish courts respect freedom of contract. However, courts may void clauses that are contrary to mandatory law, or apply the lesión enorme doctrine in very limited circumstances. For consumer contracts, broad unfair terms protection applies under the LGDCU (consumer protection law) and EU Unfair Contract Terms Directive.