1. Implementing legislation
Law no. 4886 of December 9, 1965, as amended by Law no. 8420 of 1992.
Law no. 10406 of January 10, 2002 (Brazilian Civil Code of 2002).
2. Definition of Commercial Agent
Commercial agent is defined in Article 1 of Law no. 4886/65, which reads as follows:
“The stand-alone commercial representation is carried out by a legal entity or an individual without any employment relationship, acting - on a non-occasional basis and at the account of one or more persons – as an intermediary for performance of commercial business, through agency of tenders, proposals or requests in order to transmit them to the parties they represent, whether or not performing acts relating to the implementation of the business.”
3. Proper notice
4. Indemnity or compensation or both
5. Calculation of indemnity/compensation
Agreements for an indefinite term: if the agreement is terminated without cause by the principal, the indemnity amount due to the agent cannot be less than one twelfth (1/12) of the total compensation earned while the agent carried out his/her activity, pursuant to article 27 ‘j’ of Law no. 4886/65.
As regards restatement of the indemnity upon termination of the agreement for an indefinite term, article 46 of Law no. 4886/65, as amended by Law no. 8420/92, establishes that:
“The amounts referred to in article 27 ‘j’, paragraph 5 of article 32 and article 34 of this Law shall be adjusted for inflation by reference to the variation in the Brazilian Treasury Bonus (BTNs) or by another index that may supersede it, and subsequent legislation applicable to the matter.”
Article 46 was inserted into the Trade Agent Law in May 1992, by way of Law no. 8420, yet the BTN index for monetary restatement (adjustment for inflation) had already been abolished by Law no 8177/91.
In view of the extinguishment of the above index, the most appropriate – and currently used - index has been the INPC – Brazil’s National Consumer Price Index, as calculated by Fundação Getulio Vargas (FGV).
Agreements for a certain period: The indemnity will correspond to an amount equivalent to the average monthly compensation earned through the date of termination, multiplied by half of the months resulting from the contractual term (article 27, paragraph 1).
Legislation is silent on the restatement of amounts in the event of early termination of agreements for a certain period. However, the understanding currently prevailing is that these amounts should also be duly restated under the same terms applied to agreements for an indefinite term.
6. Pre-termination commission
7. Post-termination commission
8. Back Commission
9. Is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
10. 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?
agentlaw.co.uk wishes to thank Miguel Neto Advogados Associados of São Paulo for its contribution to this page