Implementing legislation
Venezuela does not have modern legislation or regulations governing the matter of commercial agents and their principals. The only express norms with respect to this are to be found in the Commercial Code in the case of commission agents (Arts. 376 to 409, inclusive; Código de Comercio, published in Official Gazette Extraordinary No. 475 of December 21, 1955) and in the Civil Code in the case of attorneys-in-fact, which norms supplement those of the Commercial Code (Arts. 1684 to 1712, inclusive; Código Civil, last published in Official Gazette Extraordinary No. 2.990 of July 26, 1982). Aside from these express, basic norms, the norms on contracts and commercial relations are also applicable as general rules of jurisprudence.
Historically, the figure of commercial agent was common in Venezuela, especially in the context of international manufacturers selling technical goods to Venezuelan companies. In the post WWII era there were many European and U.S. companies, in particular, that sent or contracted especially European or American citizens to represent their products, which arrangements often lasted for many years. However, in the last couple of decades this practice has become less frequent, in part due to the legal complications that have arisen by the expansion of the concepts of Venezuelan employment law, thus questioning whether the commercial agent/principal relationship is of a commercial/contractual nature or rather is an employment relationship. By virtue of the fact that Venezuelan employment law is paternalistic, granting generous termination benefits to the ex-employee, and due to the aggressiveness of both the labour courts and attorneys, contracts with individuals as commercial agents are increasingly less frequent, having been replaced by commercial agency relationships with local companies, but even then provided that the local companies pass the test of being legitimate corporate entities as opposed to mere corporate shells deemed to disguise what Venezuelan law would consider to be a true employment relationship (characterized by dependency, adherence to instructions, lack of other clients, and so forth). (For further information, see the Venezuelan employment law, which is the Ley Orgánica del Trabajo, last published in Official Gazette Extraordinary No. 6.024 of May 6, 2011.)
Notwithstanding the complications caused by the employment law, legally it is possible to have commercial agent contracts in Venezuela. Accordingly, the information provided hereinbelow is with respect to either individuals or companies as commercial agents.
Definition of Commercial Agent
The Commercial Code defines a commission agent, ergo a commercial agent, as a person (but by jurisprudence extensive to a legal entity) who carries out commercial acts in his own name on behalf of a principal (Art. 376). Similarly, the Civil Code defines a power of attorney as a contract whereby one person commits to undertake one or more business transactions for another, who has so required of the former (Art. 1684).
Proper notice
The Venezuelan norms on the concept of commercial agent do not contain any provisions regarding notice upon termination. Rather this matter, as indeed many others in the absence of modern regulations on the matter of commercial agents, is for the parties to establish in accordance with the agreement between them. In essence, the parties have wide latitude for establishing the contractual terms of their relationship unhindered by express regulatory norms.
Indemnity or compensation or both
Likewise, there are no norms under Venezuelan law that expressly require any form of post-termination indemnity or compensation, which is rather a matter of any contractual stipulations to this effect. At the same time, the Commercial Code does presume and, thus, generally require that in the case of a commercial agency relationship the agent be compensated. Normally this would be established by the contract between the parties, but in the absence of any contractual stipulation the law provides that the level of compensation is to be in accordance with customary commercial practice. Additionally, there is a general principle in the Civil Code to the effect that the principal is to indemnify the agent for any losses the agent might suffer in carrying out the mandate of the principal, provided that the agent is not responsible for having caused the losses.
Calculation of indemnity/compensation
There are no normative provisions on the calculation of any indemnity or compensation, other than the general legal principles referred to above.
Pre-termination commission
There are no express norms on any pre-termination commission, which in the absence of provisions in the contract between the parties would rather be governed by general legal principles, such as the presumption of compensation for the efforts of the agent, the rule against unjust enrichment on the part of the principal, and so forth.
Post-termination commission
The situation would be the same as in the case of a pre-termination commission.
Back commission
The situation would be the same as in the case of pre and post-termination commissions.
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?
Yes, it is possible. Provided that such provisions are established in the contract between the parties they will generally be upheld by the courts. However, in order to be deemed to be valid the restrictions must be directly related to the object of the agency relationship and they must be reasonable in the context thereof. This is based on the general jurisprudence that has developed in this area as there are no applicable express legal norms regulating this.
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?
Again, there are no specific legal norms in Venezuela on this aspect in the case of commercial agents. In principle, it is possible to have post-termination restraints of trade type restrictions that are applicable to the ex-agent. However, the courts tend to be conservative in the enforcement of such restrictions, with a view to limiting their effect in time, and geographic and product reach to the minimum that is justifiable under the circumstances. In general, the tendency is to favor the ex-agent as usually the weaker party and in accordance with the view that the agent, if an individual, is entitled to be able to work using the skills that he has developed even at the expense of the ex-principal, albeit without directly harming the ex-principal.
agentlaw.co.uk wishes to thank De Sola Pate & Brown of Caracas for its contribution to this page.
