It is important to explain that, unlike the ordinary distribution agreement, a commercial agreement may prohibit the sale of new automobiles from other manufacturers. However, dealers may negotiate new auto parts manufactured or delivered by third parties, as long as “loyalty levels” are met. Loyalty levels are defined as the minimum quantity of additional parts or goods from the manufacturer that the distributor must acquire. These are defined between trade unions and companies. There are no specific restrictions on the distribution contract. As a general rule, parties to an agreement can choose the laws of any country to regulate the agreement as long as an arbitration clause is inserted into the document. Nevertheless, disputes arising from commercial agent contracts must be resolved by Law No. 4.886/65, in accordance with that Law, are resolved by the courts of the agent`s jurisdiction (Article 30). This law, which could be interpreted as part of Brazilian public order, is generally used as a protective measure for agents. Are restrictions on the distribution of competing products applicable in distribution agreements, either for the duration of the relationship or after? If you plan to create an international agency, a contract for the representation of distribution or distribution in Brazil, please note that the Brazilian rules of conflict of laws are in Decree-Law No. 4.657/1942 (Law of Introduction to Brazilian Standards (LINDB).
If the treaty remains silent or if the legislation in force is not clearly applicable, the treaty is subject to Brazilian law, since its creation and execution took place in Brazil (Article 9 of the LINDB). Brazilian courts may apply foreign law in the settlement of contractual disputes, but the application may vary from court to court in practice, as there is no uniformity in this case. To terminate distribution contracts for reasons of convenience, each party, in the case of a contract of indefinite duration, must inform the other party at least 90 days in advance, in accordance with Article 720 BCC. The period for prior notification must also be compatible with the nature and extent of the investments made by the trader or representative under the agreement. If the parties do not reach a consensus on the duration and volume of the investments, this decision will be decided in the courts or in arbitration proceedings. Do the antitrust or competition laws in your jurisdiction otherwise restrict the relationship between suppliers and their distributors? How are these laws enforced and by which authorities? Can individuals take legal action in respect of anti-competitive or competition law enforcement? What are the remedies? Brazilian distribution agreements usually contain a confidentiality clause, in particular to offer increased protection in cases where there is an exchange of expertise and business practices. Agreements generally provide that these confidentiality obligations will remain in effect even after the agreement is terminated, usually for a new year. As a general rule, the courts shall respect and implement these provisions in accordance with the conditions laid down in the Treaty. By forming a new distribution contract, we can use our existing models for distribution agreements in Brazil.
This can save you insolenable hours and also help incorporate best practices into distribution agreements into your document.. . . .