Brazil: Exclusivity Of The Sales Agent Area Under The Brazilian Sales Agency Law

Exclusivity of the operation area of the sales agent has always been a controversial subject in the Brazilian legislation, due to inaccuracy in the wording of the Sales Agency Law (Law 4886/65, amended by Laws 8420/92 and 12246, of 2010).

The Law that regulates this matter establishes, in its article 27, letter "d," that the sales agency agreement is required to indicate, in addition to the standard elements and others at the interested parties' discretion, the region or regions in which the agency will be exercised. Such article, in its letter "e," states that the agreement must establish whether the exclusivity of region or region sector is guaranteed, partially or fully, or for a definite term.

According to article 31 of the Sales Agency Law, if the agreement provides for exclusivity of region or regions, or if the agreement is omissive, then the sales agent will be entitled to commission for the business deals negotiated in such region or regions, even if those were directly negotiated by the principal or through a third party. It is worth mentioning that according to this same article, if there is a written agreement, even if it does not establish any exclusive region or regions, it is legally presumed that the sales agent performs his/her activity in the area subject matter of the agreement, with exclusivity.

Pursuant to the sole paragraph of the above-mentioned article 31, the agency exclusivity is not presumed in the absence of express provisions – and we find that express provisions mean the execution of a written agreement, otherwise there would be an obvious contradiction between the head provision of article 31 and its sole paragraph. Therefore, such Law sets forth that, there being a written agreement, the area exclusivity is presumed even if not expressly established. However, for oral agreements (which are provided for in the legislation), there is no such presumption.

In fact, we find that the Law is contradictory already; as said before, theoretically, under article 27, the exclusivity issue must be provided for in the sales agency agreement and not presumed, as set forth in the head provision of article 31.

However, our prevailing judicial decisions have established that the exclusivity is presumed in written sales agency agreements that do not provide for exclusivity, but it is not presumed in oral agreements; in such case, the exclusivity may be acknowledged, if it is proven by any evidence provided for in law, indelibly, even testimonial evidence. Further, our courts find that although article 27 of Law 8420/92 lists the mandatory elements to be established in the written agreement, there is no legal provision or precedent impositing a specific form, prohibiting an oral agreement between the parties.

Therefore, with regard to oral agreements, the clauses agreed between the parties may be proved through all evidence under the law. In this regard, the opinion of jurists and judicial decisions also admit the exclusivity clause in oral agreements.

Finally, the line of interpretation of the opinion of jurists and judicial decisions was consolidated with the advent of the Civil Code of 2002 which, in its chapter on "Agency and Distribution Agreement," specifically article 711, provides that "except if agreed between the parties, the principal cannot engage more than one agent in the same region, at the same time, with identical task". In other words, such article of the New Civil Code establishes that the agency exclusivity is presumed, except if otherwise provided. Although the article provides for the Agency agreement, the opinion of jurists and the judicial decisions on sales agency agreements understand that article 711 may be valid for the sales agency agreement as well, by analogy1.

In a nutshell, the Sales Agency Law clearly sets forth that, there being a written sales agency agreement, the area exclusivity is presumed even if the agreement does not expressly provides for it. On the other hand, if the agreement is oral, the exclusivity clause is admitted, provided that it has to be proved by undeniable evidence through all means provided for in law, so there is no pure and simple presumption.

Footnotes

1 In this concern, it is important to explain that under international legislation there are only Agency Agreements, Brazilian legislation discriminates Agency Agreements for Sales Agency Agreements.

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.

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