Brazil
- Commercial agency in Brazil is primarily governed by Law No. 4,886/1965, which specifically regulates independent commercial representatives and commercial representation agreements.
In addition, Articles 710 to 721 of the Brazilian Civil Code (Law No. 10,406/2002) provide general rules on agency and distribution agreements.
Although the statutes use different terminology (commercial representation under Law No. 4,886/1965 and agency agreement under the Civil Code), both regulate the professional intermediation of business transactions performed by an independent agent on behalf of a principal.
Commercial agents may act as individuals or legal entities and must perform their activities on an autonomous and non-occasional basis, without an employment relationship.
Such activity generally involves promoting business opportunities, obtaining orders or commercial proposals, and transmitting them to the principal. Depending on the contractual arrangements, the agent may limit its role to bringing the parties together or may also follow up on stages related to the performance of the transactions intermediated.
A key element of this relationship is the agent’s autonomy. The commercial agent performs its activities independently and is not subject to the legal subordination typical of employment relationships. Accordingly, the relationship between agent and principal is of a civil and commercial nature and is not governed by labor law provisions.
- Independent commercial agents are generally not subject to collective bargaining agreements in Brazil, as their relationship with the principal is of a civil and commercial nature rather than an employment relationship.
The contractual terms governing the agency relationship are therefore mainly determined by the commercial representation agreement itself, subject to the mandatory provisions of Law No. 4,886/1965 and the Civil Code.
Commercial agents must, however, be registered with the Regional Councils of Commercial Representatives (CORE), supervised by the Federal Council (CONFERE), which regulate and oversee the professional practice of the activity.
- Under Brazilian law, a commercial agent is entitled to a statutory indemnity upon termination without cause by the principal.
Pursuant to Law No. 4,886/1965, such indemnity cannot be lower than one-twelfth (1/12) of the total remuneration earned during the entire term of the agency relationship. This statutory minimum indemnity is intended to compensate the agent for the promotion of business and for the development of commercial relationships that benefit the principal.
Agents are also entitled to receive outstanding commissions relating to transactions concluded or pending completion at the time of termination, provided that such transactions were intermediated during the term of the agreement.
No indemnity is due where termination occurs for just cause attributable to the agent, as defined by law. These include negligence in the performance of contractual obligations, conduct capable of harming the principal’s commercial reputation or credit, breach of duties inherent to the representation, and a final criminal conviction for a dishonorable offence. In such cases, the law allows termination of the agreement without payment of the indemnity applicable to termination without cause.
- Brazilian law does not require the agent to notify the principal within a specific period after termination in order to claim indemnity.
Claims for indemnity and other contractual amounts are generally subject to a five-year limitation period under the Civil Code.
Therefore, the agent does not automatically forfeit the right to indemnity merely because it does not immediately notify the principal after termination. The right remains enforceable within the applicable statutory limitation period.
- Mrs. Maristela SA Rossetti (mar@rraa.com.br)
