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Representation and Commercial Concession in the New Civil Code: Regulation or Confusion?

by Cândida Ribeiro Caffé

June 01, 2005

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Upon the promulgation of the new Civil Code, specific regulation for "agency and distribution" contracts were introduced, through article 710 and subsequent ones.

After more than one year of the new Code in effect, much controversy has emerged about these articles, with allegations that they regulate not only the "agency contract" but also the traditional commercial concession contract, which also could be called distributorship or resale agreement.

A basic distinction about the contracts must be made. The commercial concession is based upon the reselling of merchandise; that is, the reseller acquires the product and resells it at his own risk, with compensation deriving from the margin obtained in the sale. For its part, the agency represents mediation for conducting commercial deals, with compensation of the agent based upon a commission on the sales that are made. The "distributor," in the concept of the new Code, is an agent who has at his disposal the product to be transacted, through payment of a deposit or on consignment, without the merchandise being his property, as occurs in the case of the reseller (concessionaire).

In part, the confusion is due to the new terminology, with the adoption of a different name to designate the same contract (agency, referring to what previously was normally called "commercial representation") and equal names to identify different types of contracts (distribution to designate a type of "agency" and not the traditional "distribution at own risk, "that now is called "commercial concession," so as not to make the confusion worse).

Thus, it can be concluded that the new Code only and exclusively contemplates the agency, which previously had already been regulated by Laws 4.886/65 and 8.420/92.

In this sense, the commercial concession contract continues to be atypical within the Brazilian legal system, except in the specific case of the concession for the sale of automotive vehicles, which is regulated by the Ferrari Law (Law 6.729/79).

It should be noted, furthermore, that the conditions foreseen in special laws cannot be used analogically by commercial concession contracts for specific and differentiated contracts, since a special and exceptional rule cannot be applied to different situations based upon analogical reasoning. The analogy is only possible when the situations are similar in their essence and their effects, which is not the case of the commercial concession regarding the agency or the contracts that are the subjects of the Ferrari Law. The impossibility of this analogy already has been confirmed by the STJ, in a decision in March 1994.

Thus, similarly, analogy also cannot be used for the new conditions of the Civil Code regarding agency contracts for the application of rules that clearly limit the freedom of the parties to contract commercial concession relationships.

 

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Cândida Ribeiro Caffé

Partner, Lawyer, Industrial Property Agent

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