Significant aspects of agency agreements
An agency agreement is a kind of collaborative contract which allows the wide dissemination of products or services by the companies without fixed costs. It is a contract in which the agent acts as a mediator for the sales of products or services and receives payment over the transactions accomplished.
Brazilian Civil Code and Sales Representation Law Nr. 4.886/65 (SRL) discipline the subject and establish the minimum requirements for this kind of contract. Despite being considered a typical business relationship, it has to be stated that several articles of the law are similar to the Consolidation of Labor Laws and therefore protect the sales representative (agent).
It should be emphasized that an agency agreement differs of an employment relationship due to the absence of subordination between the parties. Consequently, the activities shall be developed by the agent with autonomy, without definition and control of working hours and emission of commands and orders.
The law establishes that the sales representative can be a private individual or a legal entity. However, in order to mitigate the risks of employment relationship it is recommended that the contracts are entered in between the represented company and an agent registered as a legal entity as well as under the Regional Council of Sales Representatives.
Besides, contractual amendments shall be negotiated with caution. The SRL prohibits the reduction of the average income received by the agent. Therefore, this type of agreements shall be thoroughly discussed by the parties.
In order to avoid the reduction of the referred commissions, it is important that the represented companies examine their commercial policy and provide the commissions calculation with the most variable manner possible, by product, area, client, etc.
Another relevant aspect refers to the indemnification for contract termination without just cause. The SRL determines that it cannot be inferior to 1/12 (one twelfth) over the total amount of the commissions received by the agent during the term of the contract.
Considering the business nature of the relationship, it is understood that the parties are in equal condition to develop their activities. As a result, it shall be comprehended the possibility of revision of the terms originally negotiated. Nevertheless it is advisable the celebration of agreement through a legal or arbitration court, in order to demonstrate the lack of intent defects.
Saeki Advogados has been advising its clients in several matters related to sales representation and agency agreements, in preventive aspects as well as in dispute resolutions and remains available for any further clarifications.