Mário Conforti
Lawyer at Marcos Martins Advogados
The activity of independent commercial representation is governed by a special law, in this case 4.886/65, as amended by 8.420/92. This is old and outdated legislation in the context of technological and economic-commercial development.
This law – it should be repeated, out of context – has a clear paternalistic character, since it treats the self-employed commercial representative as being hypo-sufficient in relation to the represented party, even though the relationship between the parties is eminently commercial.
From the outset, the law, which is extremely protective of one of the parties to the relationship, disregards the risk factor of the business/entrepreneur under the pretext of safeguarding “the freedom of the parties as much as possible, giving greater clarity to reciprocal rights and duties, with the result that the proper conduct of commercial business, in a climate of harmony and cooperation, will have much to gain”, as can be seen from the explanatory memorandum No. 355 of 1965, published in the National Congress Gazette on November 18 of that year.
Contrary to what the legislator intended in 1965, the law does not guarantee the freedom of the parties, much less give greater clarity to the obligations, which, although reciprocal, are not equivalent in our opinion. You only have to look at the infamous 1/12th indemnity provided for in Article 27(j) to conclude that instead of balancing the relationship between the parties, the law promotes imbalance, especially at the end of the contract, and brings significant legal uncertainty to the market.
The aim of the law is at odds with practice and it is common to come across million-dollar lawsuits filed by former sales representatives against the companies that hired them. If, in 1965, the commercial practice of representation was limited to small businesses, managed and executed by the representative himself, this activity has long since become more professional, with the establishment of commercial representation companies operating in various segments of the economy, in all sectors (agro-industrial, industrial and services), and handling thousands of reais in business brokered for their clients.
That’s why it’s high time for a bold reform of the commercial representation law, in order to bring it into line with the new times, providing legal certainty and greater predictability for both parties in the relationship.
There was a bill , No. 1128/2019, pending in the Chamber of Deputies. This bill was authored by Deputy Alexis Fonteyne and was withdrawn at the request of the author himself.
Despite its good intentions, Bill 1128/2019 is very timid in its proposed changes to commercial representation law, as it has limited itself to establishing a minimum level for the compensation provided for in cases of termination of the contract without just cause by the representative, as well as reducing the limitation period, from 5 to 2 years from the end of the contract, for the commercial representative to sue for compensation and any amounts due (unpaid commissions, for example).
There are a number of other points that the reform of the commercial representation law should cover, such as adjusting the basis for calculating the indemnity provided for in point j of art. 27, how to regulate the payment of this indemnity , giving the parties greater contractual freedom to dispose of their eminently patrimonial rights, as well as prior notice, the conditions for the commercial representative to be entitled to receive his remuneration (commission), the possibility of the represented party competing with the representative, as well as the latter’s non-competition with the represented party, for a certain period, after the relationship between the parties has ended.
In short, we have the opportunity to make a lot of progress in this discussion, including with examples brought from laws that regulate the activity of commercial representation in other countries, in the wake of the Economic Freedom Act, sanctioned in 2019.
The Marcos Martins law firm is attentive to discussions involving changes to laws that may directly impact economic activities, in order to provide adequate and effective advice to all clients.
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