With the high dollar in Brazil, Brazilian exports are on the rise. It is also time to think about international commercial agency contract for your company in Brazil.
Many entrepreneurs want to export their products, they want to reach new consumer markets. For this, today we have many different forms of dissemination and exportation.
The international commercial agency contract is the contract by which an exporter appoints a commercial representative in the country where he wants to sell his products, in order to increase his sales.
It is also one of the different export modalities that a company can take advantage of to reach the international market.
The commercial representative, a natural person or a legal entity, offers the product in Brazil, the country chosen by the exporting company, under the terms defined contractually between him and the exporter.
Table of Contents
Commercial Agency Contract under Brazilian Law
Article 1 of Law 4.886/65:
Art . 1º Exerce a representação comercial autônoma a pessoa jurídica ou a pessoa física, sem relação de emprego, que desempenha, em caráter não eventual por conta de uma ou mais pessoas, a mediação para a realização de negócios mercantis, agenciando propostas ou pedidos, para, transmití-los aos representados, praticando ou não atos relacionados com a execução dos negócios.
(Translation) Art . 1 Exert the autonomous commercial representation the legal entity or the individual, without employment relationship, which performs, on a non-incidental character on behalf of one or more people, the mediation for the realization of mercantile business, agencying proposals or orders, to, transmit them to the represented, practicing or not acts related to the execution of business.
Therefore, in Brazil, both individuals and legal entities can be commercial representatives of foreign companies.
Compliance with the law of each country
As far as the contract with the sales representative is concerned, each country has its own law on the subject.
What should be emphasized here is the importance of respecting the law of the country where the commercial representative is appointed. Because what is applied in Brazil (Law 4886-65) is not applied in other countries.
Many times the laws may be similar. But it is worth checking thoroughly.
The international commercial agency contract
The relationship between the two needs to be established through a contract between the parties.
The international commercial representation contract must be in writing.
Failure to do so may result in damages. The contract cannot be oral.
And why can it not be oral?
The verbal contract is very difficult to prove. Imagine if you verbally agree with someone from China that you will work with him in Brazil. The implications, in this case, are countless. How will you (the representative in Brazil) explain to the Brazilian government the receipt of an international commission? What if problems arise with this contract? One party is going to make a claim in the Judiciary, and the other party can make a different claim, which will have to be proven by evidence. What proof?
Description of Goods
The goods that will be represented must be written in details, containing information regarding the unit and wholesale price, packaging, product quantity, technical specifications of the product, delivery time, among others.
Applicable law
In a contract, the choice of applicable law is very important. According to the Law of Introduction to Brazilian Law, in article 9, to qualify and govern the obligations, the law of the country in which they are constituted will apply.
Because it is the applicable law that is used in everything concerning the application and interpretation of the contract.
One should always analyze the law of Private International Law of the country chosen to govern the rules of the contract.
For example, if the commercial representation takes place in Brazil (where the contract is executed), the country will be the competent one, according to the Law of Introduction and the doctrine.
Choice Forum
If there is any conflict, the choice of Choice Forum (chosen place) to solve the conflict by the local Judiciary or by Arbitration if chosen by the parties. Attention here, we will often choose both the Judiciary of one country and the arbitral tribunal of the same or another country. Because we have public law norms that are handled by the Judiciary of Brazil, for example, arbitration does not.
It is important to emphasize here that if the parties choose arbitration in the contract, choose which arbitral tribunal and arbitrators, values, and everything in advance so there are no surprises.
The place chosen will apply the law that governs the contract, regardless of whether it is from another country.
Contractual term
The parties need to establish the term of durability of the relationship between them because if this clause is absent, the contract is for an indefinite term.
Remunaration of Agent
In the contract, the form of remuneration of the agent must be explicit and detailed.
Including whether he will receive commissions on sales made or whether he will only receive commissions.
Agent’s territory of operation
The contract also needs to specify the territory where the representative will work, the costs of travel within the territory, and how they will be paid.
Exclusivity Clause
The exclusivity clause must be written into the contract if the parties so desire, otherwise the representative may work for other companies as well. In this case, there may be a conflict of interest.
Contract Termination clause
The contract can be terminated by default of one of the parties or by force majeure.
The duties and obligations of the parties to the contract also need to be written down in detail.
If you have any questions and/or need to contact me, please send an email to contact@anainternationallawyer.com.br