Recent Decision of the Brazilian Superior Court on Distribution.

Silvia BORTOLOTTI | BRAZIL | 2005-12-14


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In the case at issue, the supplier, after a 27-year period contract, notified the distributor his intention not to renew the distribution agreement. He notified his intention one year and a half before the expiration date, in compliance with the agreement. The distributor sued the supplier claiming loss and damages on the basis of the termination of the contract: he alleged that the supplier’s decision was based only on economic speculation, aiming at profit.

The Brazilian Superior Court considered that in the Brazilian system of law, there wasn’t any law obliging the parties to renew a contract. Moreover since the parties were in a commercial relationship, it wasn’t strange at all to aim at profits: on the contrary, one of main features of the commercial contracts is the pursuance of profits.
The behaviour of the supplier was deemed therefore in compliance with the law.

The Brazilian Superior Court deemed that the supplier acted perfectly in compliance with the agreement, too: according to said agreement, the intention to terminate the contract had to be notified at least one year and a half before its expiration date.

Since the supplier’s behaviour was to be considered as lawful, it could not imply any obligation to indemnify.

Moreover the Court deemed the period of notification long enough to allow the distributor to reorganize his activity and reduce any possible economic dependence from the supplier.


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