Failure to comply with clauses in franchise agreements can have legal consequences, as indicated by a 2024 Supreme Court ruling. Our commercial lawyer, Victoria Alonso, analyzes this ruling and its similarity to another ruling involving the same company in 2021 for VPC Magazine.
In this case, our expert analyzes the ruling resulting from several lawsuits and appeals between the company DISBOPER and one of its franchises, Doña Milagrosa, claiming penalties and breaches of clauses in the franchise agreement. The Supreme Court ultimately ruled in favor of the franchisor DISPOBER.
Why? Our lawyer comments that the rule provides that “if the object of a contract is unlawful due to a single contracting party, the other party may claim what it has given, without any obligation to fulfill what it has offered.”
In other words, in this case, "the unlawful act would be the violation of competition rules by imposing prices. The general rule would be that whoever creates the distortion of competition must compensate the other party for the damages caused. With the application of this provision, what Ms. Milagrosa was trying to obtain was for DISBOPER to return her initial investment because she had suffered the consequences of DISBOPER's violation of competition law, without her having anything to return to DISBOPER."
Therefore, Alonso concludes that the “Supreme Court confirms the principles already established over the years in its case law, maintaining a uniform criterion” on breach of franchise agreements.
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