In order to terminate either an agency or distribution agreement, according to the Brazilian Civil Code, there are matters to be taken into consideration.
A contracting party may terminate an agency agreement without the payment of any form of indemnification with an agent, in the event (i) said agent is negligent in complying with the obligations set forth in the agreement; (ii) the agent´s actions harms the reputation of the contracting party; (iii) the agent fails to comply with any obligations intrinsic to the agency Agreement; or (iv) by mutual agreement between the contracting party and the agent.
As for the agent, it may terminate the agreement if one or more of the following events occur:
(1) decrease in the agent´s activities unforeseen in the agreement;
(2) price fixing considered to be abusive in the agent´s territory, with the intent to compromise the agent´s regular activities;
(3) breach with regards to the agent´s exclusivity;
(4) consistent failure to pay the agent?s commissions by the contracting party; or
(5) due to force majeure. In case of an unjustified termination by the contracting party of an agency agreement, or in the event the agent justifiably terminates said agreement, the latter shall be entitled to the following compensations: (a) an indemnification payment varying according to the term set forth in the agreement; (b) unpaid commissions; and (c) compensations for any services rendered to the contracting party which has not been settled.
Specifically with regards to the distribution agreement, the forms of termination may be negotiated by the contracting parties, as well as the effects of said termination. If the term of the distribution agreement is not fixed, then it may be unjustifiably terminated upon prior written notice without any type of penalties, fines, and/or indemnifications, as long as said provision in set forth in the agreement.
In the event the term specified in the agreement is fixed, the early termination notice by the contracting to the distributor party shall be within a reasonable period of time, usually thirty 30?90 days. However, if the distributor demonstrates it has suffered actual losses and/or damages due to the early termination, it may still seek for an indemnification by the contracting party.