Differences Between Commercial Representation and Commission Agreements

Key Differences Between Commercial Representation and Commission Agreements

Commercial representation agreements and commission agreements are essential instruments in commerce, each with distinct characteristics and purposes. This article covers the main differences to ensure a clear understanding and effective use of each.

1. Commercial Representation

Governed by Law No. 4,886/1965, the commercial representation agreement provides that a representative (an individual or a legal entity) promotes commercial transactions on an ongoing basis and without an employment relationship. Orlando Gomes describes this agreement as a subtype of agency, specific to “commercial transactions.” The representative acts in accordance with the principal's guidelines, while retaining autonomy and without hierarchical subordination.

Main characteristics:

- Regular brokering of commercial transactions.

- Promotion of sales of goods and services.

- Autonomy and independence in its activities.

- Specific rights and duties, including the definition of territory and exclusivity.

2. Commission

The commission agreement, governed by the Brazilian Civil Code (arts. 693 to 709), involves a commission agent who buys or sells goods in its own name, but for the benefit of the principal (comitente). Gomes defines it as a “mandate without representation,” in which the commission agent is directly liable to third parties.

Main characteristics:

- Acting in its own name, but in the principal's interest.

- Direct liability in contracts with third parties.

- Possible inclusion of a del credere clause, under which the commission agent guarantees the debtor's solvency.

3. Key Differences

Type of Representation: In commercial representation, the representative acts on behalf of the principal. In a commission agreement, the commission agent acts in its own name, but in the principal's interest.

Scope of Activity: Commercial representation covers both goods and services, while commission is limited to transactions involving goods.

Applicable Law: Commercial representation is governed by a specific statute with detailed obligations, such as registration with the Regional Councils of Commercial Representatives. Commission, on the other hand, is governed by the Brazilian Civil Code and local practices, which allows greater flexibility.

Termination: Law No. 4,886/1965 provides for specific indemnities when a commercial representative is terminated without cause. The commission agreement follows the general rules applicable to civil contracts, with no specific termination provisions.

Conclusion

Although both agreements aim to promote business, their differences in liability, autonomy and scope are significant. The commercial representation agreement is broader, covering the promotion of both goods and services. The commission agreement, in turn, is limited to goods, with the commission agent assuming direct liability. These distinctions are crucial when choosing the most suitable agreement for each type of business.