Sales representation agreements in Brazil are ruled by the Brazilian Commercial Representation Law (Law 4.886/65 as amended by Law 8.420/92), which covered all the aspects of the contractual relationship between the parties regarding such commercial representation.
The new Civil Code introduced to our legislation a "new" figure and named it as "Agent".
As the new Civil Code is in force for only few years, there are some discussions whether this new "Agent" encompasses the existing figure of the Commercial Representation ruled by the above described law, or if it is a new kind of service agreement, whereby the "agent" (who in fact should be viewed as a service provider) would promote the client's business and trademarks, without making any sales intermediation nor issuing any kind of orders related to the sale of certain goods.
This is so because there is a difference between a commercial representative and a mere services provider. According to our understanding, no commercial representation is typified where the contractor does not take/submit orders, nor intermediate the sales themselves, an essential element to typify sales agency agreements
Kindly note that once the actual scope of an agreement is characterized as a commercial representation, it will be ruled by a specific law in Brazil (Law 4.886/65 as amended by Law 8.420/92), and will make the principal ("representee") obliged to observe certain provisions and obligations, including indemnification obligations upon termination of the agreement without cause.
Hence, an contractual relationship under which the contractor does not encompass the obligation to intermediate anyhow the sales of products or services, nor taking order in favored or on behalf of "contracting party", should be viewed and analyzed under the laws related to rendering of services and not under the Commercial Representation Law above mentioned.
If it is possible, in such case, the parties should structure the draft to refers to as promoter figure ("Service Provider" as defined under the relevant agreement) of company's, business, trademarks and products which, in principle, does not intertwine with the ordinary sales agent figure. Under the contract it shall be cleared defined that principal will be solely responsible for conducting negotiations with the customers, and that the role of the "service provider" in its relationship with the customers will be that of mere promoter (marketing and publicizing) of the brand and products sold by principal, and contractor shall not place orders or act as an intermediary in any sale.
Although some deem such figures as the same, our understanding is that the promoter/service provider differs from the agent, as the former does not take orders nor perform sales, an essential element that characterizes the agency, but rather acts only as a promoter of the other party's business. Please note that such distinction will be cleared contained in the agreement.
However, this does not mean that our understanding shall prevail in the event the agent claims in court its characterization as a commercial representative contractual relationship ( specially in the event that, in fact, the "promoter" takes orders or perform sales), for purposes of enjoying the legal benefits of the law mentioned above, mainly as regard to indemnity rights deriving from agreement termination or expiration without cause by principal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
