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The New Commercial Agency Contract for
Goods Bill: Complying with the Requirements of
the U.S.-Colombia Trade Promotion Agreement
Juan David Alzate Peña focuses his practice on civil law,
commercial contracts, real estate transactions, business and
corporate law.
Guillermo León Ramírez Torres focuses his practice on civil law,
commercial law and bankruptcy procedures.
Pinilla, Gonzalez & Prieto Abogados
Av. Street 72 # 6-30, 14 Floor
Bogotá - Colombia
(+57 1) 210 1000 Phone
(+57 1) 211 9465 Fax
Juan David Alzate Peña
Guillermo León Ramírez Torres
The Commercial Agency Contract is
regulated in Chapter V, Articles 1317 to
1331, of the Colombian Commerce Code
"CCO" (Decree 410 of 1971).
The Commercial Agency Contract
concept includes services and goods and
is defined in Article 1317 of the above-
mentioned Code, as follows: "Through
the agency contract, one businessmen
assumes in an independent and steady
way, the obligation to promote or exploit
business in a specific commercial branch
and within a prefixed zone in the national
territory, as the representative or agent
of a domestic or foreign principal or as
a manufacturer or distributor of one or
more of the principal's products. The
person assuming such an obligation is
generally known as the agent."
On the other hand, the most impor-
tant and critical aspects of the actual
Commercial Agency Contract are related
to the (i) justified and (ii) unjustified
termination of the contract, which are
regulated in the Articles 1324, 1325 and
1327 of the CCO.
According to these rules, in the first
event, the principal will have to pay to
the agent for each year of the contract
period, an amount equal to one-twelfth of
the average commission, royalty or profit,
received by the agent during the previ-
ous three years of the contract (or the
average based of all the remuneration if
the contract is shorter). This payment has
been named by the Colombian Doctrine
as "Cesantía Comercial."
In the second event, the agent, based
on his efforts to improve and upgrade
the market position and goodwill of the
brand, products and services subject of
the contract, has the right to demand,
in addition to the sum aforementioned,
compensation from the principal. In
this case, to determine the amount of
compensation, it's necessary to consider
the duration, importance and volume of
the business and commercial activities
held by the agent during the contractual
Notwithstanding, it is important to
mention that the same rule applies when
the agent finishes the contract with
justification attributable to the business-
men, and that the agent loses his right to
demand compensation from the principal
if the contract terminates due his fault.
The Precedents of the
Supreme Court of Justice
regarding the Commercial
Agency Contract
In Colombia, during the 1980s and early
1990s, the Commercial Agency Contract
was subject to an intense debate in the
High Courts, especially regarding the
subject of the existence of Commercial
Agency Contract on parallel with a Dis-
tribution Contract.
In the 1980s, the Colombian in-
dustry was deeply concerned by the
possibility that their distributors
could come back to them claiming the
existence of a Commercial Agency
Contract and thus the payment of the
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