Only does not mean exclusive for purposes of the Sales Representative Act 21

In American Paper v. Clearwater Paper, 2025 WL 3687940 (D.P.R. Dec. 19, 2025) (Arias, J.), the court granted a Rule 12(b)(6) motion to dismiss a complaint alleging a Law 21 claim for termination of a verbal sales representative agreement without just cause. Unlike Law 75, Law 21 requires exclusivity. Although the statute does not define the meaning of exclusivity and could be ambiguous (e.g., is exclusivity a restriction on the supplier from appointing another agent or a restriction on the agent not to represent competing products?), what the cases have often understood exclusivity to mean is that a restriction on the supplier’s right to appoint another agent or sell directly can be derived from the terms of a contract or the course of dealings of the parties. According to the federal court, being the only agent or receiving commissions does not rise to the level of exclusivity from a course of dealings without some corroborating evidence of conduct by the supplier that it is so. Such conduct, according to the court, would be a document evidencing exclusivity or other conduct by the supplier from which exclusivity can be inferred. If the principal did not retain its right to sell to others or restricted its ability to do so in its relationship with the agent, such conduct would permit an inference of exclusivity from a course of dealings. I surmise that had the principal proposed a draft of an exclusive agreement to memorialize the verbal agreement or the course of dealings, even if not signed, that evidence would qualify to prove intent. What failed in this case were the agent’s naked allegations of exclusivity without stating facts to make a Law 21 termination claim plausible. It did not help the agent in that case that there was no corroborating evidence with factual content, verbal or written, of an exclusive agreement. The court also dismissed the claim for breach of duty of fair dealing in the absence of an actionable Law 21 claim or a contract of fixed duration.