Implementing legislation
Cabinet Decree No. 344 of October 31, 1969, which regulated and protected the activities of representation, distribution and/or agency in Panama was declared unconstitutional by the Supreme Court on August 2, 1989. Since then, all distribution and/or agency agreements are governed by general commercial law (the Commercial Code), which includes the freedom to contract rule, as explained below.
In Panama there exists the contractual choice of law and jurisdiction whereby the parties are free to establish the agreements, clauses and conditions that they may consider convenient, as long as they do not contravene the law, moral or public order. (Article 1106 Civil Code). Moreover, the parties may choose the laws that will govern the essence, effects and manner of performance of their acts of commerce. (Article 6 of the Commercial Code).
Furthermore, the Commercial Code stipulates that commercial contracts are not subject to any special formality in order to be valid. Notwithstanding the form, manner and language in which the contract is executed, the parties thereto shall be bound in the terms and the conditions in which they appeared to be willingly bound.
Definition of Commercial Agent
There are no laws in Panama that regulate the activities of representation, distribution and/or agency and consequently there does not exist in Panama a definition of commercial agent.
In Panama, the definition of commercial agent depends on the meaning that the parties stipulate in the respective agreement.
Proper notice
Depends on the Freedom to contract rule.
Indemnity or compensation or both
As above.
Calculation of indemnity/compensation
As above.
Pre-termination commission
As above.
Post-termination commission
As above.
Back commission
As above.
Restrictive Covenants
1) Is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
In Panama there exists the Freedom to Contract Rule affording the parties the right to have a restraint of trade clause during the agency agreement.
2) Is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?
Pursuant to the Freedom to Contract Rule, the parties can have a restraint of trade clause after the termination or expiry of the agency agreement.
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