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New Rules for Distribution Agreements - International Law Office

International Law Office

Company & Commercial - Angola

New Rules for Distribution Agreements

February 09 2004

Definitions
Key Characteristics
Governing Law and Dispute Resolution
Comment


Law 18/2003 approved the statutory regime applicable to agency, commercial concession and franchising agreements. Prior to the introduction of the new statute, agency and commercial concession agreements were not specifically regulated by Angolan law, although parties tended structure them on the basis of the rules on mandate and commission, which are set out in Articles 231 and 266 of the Commercial Code.

Definitions

The new law defines an 'agency' as a contract through which an individual or legal entity (the agent) undertakes to promote the business of another party (the principal) on a permanent and autonomous basis, in exchange for remuneration. The agent thus acts in the name and on behalf of the principal.

A 'commercial concession' is defined as a contract through which an individual or legal entity (the grantor) awards to another party (the concessionaire) the right to distribute and promote the resale of certain products manufactured by the grantor, within a given area. The parties must share the results and the concessionaire acts in his own name.

Although they have different characteristics, both types of commercial distribution contract involve the economic dependence of the agent or concessionaire with respect to the principal or grantor, respectively.

Key Characteristics

Form
Agency and concession agreements must be executed in writing.

Scope
Agency
Typically, under an agency agreement, the agent merely promotes the execution of sales agreements between the principal and third parties. However, the agent may execute contracts in the name and on behalf of the principal where this is expressly permitted in the agreement.

Commercial concession
The object of the commercial concession agreement is the purchase and/or sale by the concessionaire of goods that have been manufactured, distributed and/or acquired by the grantor.

Property in goods
Agency
Under the agency agreement, the principal is always the owner of the goods.

Commercial concession
Under the commercial concession, the concessionaire owns the goods. However, the grantor may reserve property in the goods until such time as the concessionaire has fully paid the amounts due.

Remuneration
Agency
The agent is entitled to remuneration for his work as the promoter of the principal's business. If the method for calculating the remuneration is not set out in the agreement, the remuneration must be determined according to usual market practices.

Commercial concession
The concessionaire's remuneration is usually calculated as a percentage of the value of the signed contracts.

Exclusivity
Agency
Except where the parties have agreed otherwise, the agent is not allowed to carry out any activities that compete with those of the principal. Likewise, the principal cannot use other agents to act in the same sector, within the defined area or with the same clientele.

Commercial concession
Except where the parties have agreed otherwise, the grantor and the concessionaire have reciprocal obligations of exclusivity: the concessionaire must buy goods from the grantor only and sell them to third parties, while the grantor must sell its goods exclusively to the concessionaire within the defined area.

Governing Law and Dispute Resolution

In both types of agreement the parties are free to choose the law which governs the contract. However, the choice of law must reflect a serious interest of the parties or have a relevant connection with an element of the deal, such as the residency of the parties, the place of execution or the place of performance.

Except in cases where the Angolan courts may have exclusive jurisdiction, the parties are also free to choose the courts before which future disputes will be resolved, or alternatively to subject such disputes to arbitration.

Comment

The recently enacted statute establishes a new legal framework that is intended to fill a regulatory gap which was keenly felt in Angola for many years. Parties that decide to structure their transactions on this basis will benefit from increased legal certainty, which is expected to translate into an increase in business.


For further information on this topic please contact Alberto Galhardo Simões at Miranda Correia, Amendoeira & Associados' Lisbon office by telephone (+351 21 781 4800) or by fax (+351 21 781 4802) or by email (Alberto.GalhardoSimoes@mirandalawfirm.com).


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