Brazil: Commercial Representation X Promotion Services X Distribution Under The Brazilian Law

Last Updated: 31 January 2014
Article by Cláudio Mattos

Agreements providing for the three types of activities are not rare although such activities are fully distinct and treated by the Brazilian legislation as such.

It is important that the purpose of an agreement be very clear and well defined in order to prevent the application of other specific rules or laws as, for instance, agency rules and laws under which the contracting party has obligations different from those inherent to the rendering of services.

Commercial representation agreements (common called "Sales Agency Agreement") 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.

In spite of the necessity of meeting the requirements of the mentioned Law 4.886/65 (which we will mention below), it is extremely important to observe the legal formalities applied by the Law. One important legal formality is the registration of the independent sales agent with the Regional Council of Independent Sales Agents.

As mentioned, the Brazilian Commercial Representation Law imposes several obligations on principal such as indemnification for termination by principal without cause. In case said sales agency agreement is terminated unilaterally by Principal, without just cause, the agent will be entitled to legal benefits regarding indemnity rights deriving from such termination as provided for by the Brazilian Agency Law. If the principal terminates a determinate-term agreement, before its expiration and for no just cause, it must indemnify the sales agent for the amount corresponding to the average monthly commissions paid up to the termination date, multiplied by half the number of months remaining for the agreement expiration. If the agreement is for an indefinite term, Principal is obliged to give at least a prior written notice to the agent (30 days under the Brazilian Agency Law) and pay a statutory compensation corresponding to at least 1/12 of the earnings obtained by the agent during the entire period the agent provided services to Principal.

Another issue which we consider the most relevant under the Brazilian Commercial Representation Law is that any changes in the commercial representation which directly or indirectly result in a reduction in the average commission paid to agent for the last six months are forbidden. Therefore, any modification of the contract conditions/basis (even though agreed by the parties) may be considered null and void if directly or indirectly result in a reduction in the average commission paid to agent for the last six months.

The aspects mentioned above in a summarized manner are some among others imposed by the Brazilian Commercial Representation Law that must be necessarily provided for in a commercial representation agreement to prevent risks to principal.

Concerning promotion activities or services, the new Brazilian Civil Code introduced to our legislation a "new" figure and named it as "Agency Agreement".

As the new Civil Code is in force for only few years, there are some discussions whether this new "Agency Agreement" 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" 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.

Although some deem such figures (Representation and new "Agency Agreement" as defined in the Civil Code) as the same, our understanding is that the promoter/service provider differs from the old agent/sales representative, 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.

it is possible to structure a 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.

As a general rule, and as per our opinion, this kind of contractual relationship may fall into the type of services agreements which are regulated by the Civil Code, especially, by Chapter VII thereof, articles 593 through 609.

However, this does not mean that our understanding shall prevail in the event the Brazilian company claims in court its characterization as a commercial representation 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.  

Regarding distribution contractual relationship, we noticed that until de promulgation of the new Civil Code, there were no specific rules governing the Distribution Agreements, although it is largely used to regulate commercial transactions in our country.

The new Civil Code, named as distribution the activity performed by the individual/entity that is in possession of the goods to be distributed to the consumer market. Said Code regulates the distribution by establishing certain provisions that attributes to the supplier some responsibilities, among them; a) to circumscribe the geographic area of the distributor's operation; b) grant or not exclusivity (including as to the area/territory, because in the event of failure to address such matter, the distributor will be entitled to the remuneration corresponding to the deals carried out by third parties within its operation area, even if without its involvement); and c) grant a minimum term of 90 days (which may be changed in the event the distributor goes to court) for termination of an open-ended agreement

Considering the above comments, in our opinion, it is not advisable that one single contract establishes, simultaneously, distribution, promotion and/or sales agency activities, to the extent that the lawmaker assigned to each of said activities legal regime fully different. For instance, mixing up the two concepts (commercial representation and distribution in the same agreement) will create the risk of confusing them under a same regime, so that the represented company (principal) will run higher risks such as, increase in the indemnity amount for unilateral termination of the contractual relationship as we commented in the commercial representation part of this article. There are great risks of the other party using those mixed up legal concepts (agency and distribution) to consider that the indemnity calculation (when applicable) should include or take into account the amounts involved due to the acquisition of products for the distribution, which would increase the basis for the calculation of the indemnity for sales agency.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.