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Distribution Agreements in Brazil

If your company is doing well in its country of origin, you may have considered investing in a foreign branch. By bringing your business to another country, you can work with a new, unsaturated market of customers and garner unique interest in your product or service. Many companies are expanding their business by offering their products or services in Brazil. Brazil is the ideal place for investments and business ventures right now.

Expanding to Brazil

If you do decide to expand to Brazil, you’ll need to make a decision about how your product or service will be sold there. Your first option is to hire a new sales force and send them there. This option is obviously costly and will take a lot of time to be implemented. Another option is to hire a commercial representative to act as a third party. This representative can make decisions on behalf of your company and bind you to contracts in Brazil. This option is great for smaller businesses, but does not work as well on a larger scale.

Get a Distribution Agreement in Brazil

For businesses that are large and unwilling to hire an entirely new sales force, distribution agreements are one of the best options. Unlike in a commercial representation agreement, you will actually sell your goods to a distributor under a distribution agreement. When you enter a distribution agreement, you give the distributor sole rights to resell your goods in a certain territory and agree not to sell your goods to any other distributors in that area. In Brazil, distribution agreements are separated into two different categories:

  • Commercial Distribution Agreements – You would only enter into a commercial distribution agreement if you were selling automobiles or automobile parts. In addition to automobiles, trucks, busses, motorcycles, and agricultural tractors are all part of commercial distribution agreements. Any other type of product should be distributed under an ordinary distribution agreement.
  • Ordinary Distribution Agreements –Under ordinary distribution agreements, there is no specification of what can or cannot be distributed or resold. The distributor and producer can define their relationship solely on the contract they have entered.

We can draft a new Distribution Agreement for you...

By drafting a new distribution agreement we can take advantage of our already existing templates for distribution agreements in Brazil. This can save you billable hours and it can also help incorporate the best practices in distribution agreements into your document. Of course that every business is different, so even if we use one of our distribution agreement templates to start with, a good number of hours would be required for customization.

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+55-11-4349-1915 Brazil
+1-212-300-7174 USA
Get a quote today!

...or we can review your existing Distribution Agreement!

Many of our clients are already actively engaged with distributors in other countries. In this case, we can use your favorite distribution agreement already in place as a start-point for your distribution agreement in Brazil. Every company engaging with a distributor in Brazil must have their distribution agreement reviewed by a lawyer. Brazil has specific laws dictating how contracts involving parties from different countries should be interpreted. You should not assume that just because your agreement says the law of a specific country should be adopted the Brazilian courts will automatically support such choice of law. While Brazilian laws allow some of the provisions to be freely chosen by the parties, other provisions will be ignored if contradicting the rules of law related to contract performance enacted by the Brazilian legislation.

Make sure you don't have big problems in the future due to a distribution agreement poorly drafted or not consistent with what the Brazilian law requires!

Terminating an Agreement

Distribution agreements can be terminated for the following reasons in Brazil:

  • A defect that renders the contract void
  • Fulfillment of all duties outlined in the contract
  • Non-performance on behalf of either party that breaks the terms of the contract
  • Mutual agreement of termination
  • Lawful termination

Entering into a distribution agreement can be an efficient way to expand your business there. You don’t have to spend the resources on hiring an entirely new sales team, you won’t have to make frequent trips back and forth, and you won’t have to trust your business’ success with a single representative. If you are thinking of entering into a distribution agreement, you should first make sure that the distributer is reputable and successful in Brazil. You should also take it slow at first and avoid sending too much inventory all at once until you understand the capabilities of the distributor. If you’d like to learn more about a single distributor, you should consider seeking advice from a Brazilian attorney.

Phone: 212-300-7174