Therefore, a well-developed agreement, adapted to the Brazilian legal environment and which respects its conditions throughout the Agency`s relationship, will significantly reduce the exposure of the client to undesirable risks. The exclusivity granted to distributors or commercial agents is generally intended to avoid conflicts of interest when selling two or more brands, since in some cases distributors or commercial agents may give rights to one trademark at the expense of another brand. Exclusiveness is presumed in distribution and agency relationships (Article 711 BCC and Section 31 of Act 4,886/65). If the parties do not wish to have a mutually exclusive relationship, the agreement must state this clearly and explicitly. In this case, direct sales by the supplier or through another distributor or agent are permitted. Entering into a sales contract can be an effective way to expand your business there. You don`t have to spend the resources to hire a whole new sales team, you don`t need to go back and forth frequently and you don`t have to trust the success of your business with a single representative. If you are thinking about entering into a distribution contract, first make sure that the distributor in Brazil is serious and prosperous. You should also first take it slowly and avoid sending too much inventory at once until you understand the distributor`s capabilities. If you want to know more about a single distributor, seek advice from a Brazilian lawyer.
There are two main special provisions for certain distribution and agency agreements. The waiver of protection laws is permitted in limited cases for agency and distribution agreements, while it is not valid for public policy reasons for distribution agreements. For example, Brazil`s sales representation law prohibits changes that, directly or indirectly, mean a reduction in the average salary of the salesperson in the last six months. Under what circumstances can a distribution or agency agreement be considered a transaction subject to reporting in accordance with the rules of merger control and requires authorization from the competition authority? What are the standards used to evaluate such a transaction? Oral agreements are enforceable, but are not recommended because of the complexity of the relationship and the potential difficulties of obtaining evidence in the event of a dispute. It is important to note that while Brazil`s sales representation law expressly requires that sales representation contracts be entered into in writing, the courts consider a verbal agreement to be enforceable if their existence can be proven by any form of evidence authorized by law. If the parties opt for an arbitration procedure as a single method of settlement, the compromise clause must be clearly and visibly provided for in the contract in order to avoid any doubt. This is particularly the case for detention contracts in which the party that respects the other`s terms and conditions is considered a more vulnerable party. In accordance with Article 4, paragraph 2, of the Arbitration Act, the compromise clause is effective only if that party initiates arbitration proceedings or expressly consents to arbitration, provided that the respective arbitration agreement is written in bold letters and signed individually, regardless of the signature part at the end of the agreement.