Mário Conforti
Lawyer at Marcos Martins Advogados
In Brazil, the activity of commercial representative is regulated by Law 4.866/65. Although commercial representation is a widespread activity, not everyone who hires a commercial representative is aware of the particularities of this type of contract and its termination is often the source of legal disputes.
The commercial representative is hired with the aim of generating sales in a certain area, with or without exclusivity, and is paid a commission (a percentage of the value of each sale made).
Commercial representation can be contracted in writing or verbally.
The individual who carries out commercial representation, under the terms of the law, has no employment relationship with the represented party, just as those who are hired by the legal entity providing the commercial representation service have no employment relationship with the represented party. The absence of a relationship is fundamental to the autonomy of the exercise of the activity and removes the jurisdiction of the Labor Court to resolve any dispute between the representative and the represented. The analysis of the scope of the commercial representative’s activities and the correct form of remuneration (how and in what form the commission should be paid) involves the efficient management of the contract.
Likewise, defining the length of the contract based on the commercial objectives of the person hiring the commercial representative is important to avoid setbacks when it comes to renewing or terminating the relationship with the representative. This is because the law has different consequences for the termination of a fixed-term contract than an indefinite-term contract.
Efficient contract management will indicate the best way of contracting commercial representation in line with the needs and business strategy of the contractor, which will allow for the most efficient allocation of risks.
Those who contract commercial representation also need to be aware of the particularities surrounding the termination of the relationship with the representative. In this sense, the representative needs to be aware of their duties, as well as their rights, because the commercial representative’s breach of obligations laid down by law and/or in the contract can lead to the contract being terminated for just cause. As the end of the contract must be formalized, the definition of the sums and the calculation of the amounts to be paid or charged by the representative should also go through efficient management in order to minimize risks for the contractor.
The sales representative, whether an individual or a company, must be registered with the relevant regional council in their region.
Efficient management of the commercial representation contract requires legal intelligence and advice from a lawyer with knowledge of the subject.
