Portugal

  1. Decree-Law 178/86 of July 3, 1986, as amended by Decree-Law 118/93, of April 3, 1993 (implementing Directive 86/653/CEE).
  2. No.
  3. Goodwill compensation: upon termination of the agency agreement, the commercial agent is entitled to goodwill compensation only if the following requirements are jointly met:
    (i)         The agreement is terminated for any cause other than agent´s breach.
    (ii)        The agent has not transferred the agency agreement to a third party.
    (iii)        The agent has also met the following requirements:

    1. attracted new customers for the principal or substantially increased the volume of business with the existing customers.
    2. the principal will benefit considerably, after the termination of the agreement, from the activity carried out by the agent.
    3. agent evidence that s/he will cease to receive any remuneration for contracts negotiated or concluded after the termination of the agreement with customers referred to in paragraph a) above.

    Goodwill compensation is set on equitable terms; may not exceed an amount equivalent to one year’s compensation, calculated based on the annual average of the remuneration received by the agent over the past five years; if the agreement lasted less, the average for the period during which it was in effect shall be used.

    In practice, upon termination of the agreement, the parties will try and calculate this compensation in amicable terms to avoid litigation.

    Compensation for lack of prior notice:  if a party gives notice of termination of the agency agreement without respecting prior notice periods (one, two or three months, depending, respectively, if the agency agreement lasted less than one year OR entered its second year of duration OR more), such party is hold liable to compensate the other party by any damages (instead of this compensation, the agent may elect to receive an amount calculated on the basis of his preceding year  monthly average remuneration multiplied by the missing prior notice period). This compensation, if applicable, is added to goodwill compensation.

    Compensation for non-compliance with contractual obligations: either party is entitled to compensation, in accordance with general terms embedded in our domestic civil code, in case of non-compliance (by the other party) with its contractual obligations. This compensation, if applicable, is added to goodwill compensation.

    Non-competition compensation: if parties have agreed, in writing, that the agent is impaired from engaging in post contractual competing activities (maximum duration of non-competition undertaking being 2 years, limited to agent´s customers), the agent will be entitled to a reasonable compensation (in addition to goodwill compensation).

  4. Right to goodwill compensation shall lapse if the agent or his or her heirs fail to notify the principal, within one year of the termination of the agreement, that they intend to claim it; any legal action must be filed within the year following such notification.
  5. Rita Nina (rnina@afma.pt); Mrs. Sofia Belard (sbelard@afma.pt)
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