News April 3, 2019

Company Uses Non-Fulfilment of Contract Exception to Deny Compensation Claim

A sales representative of an Argentine food sector company had her claim for compensation and payment of commissions denied due to breach of contractual exclusivity.

The companies entered into a contract in which the plaintiff in the action would exercise the commercial representation with exclusivity in the state of Rio de Janeiro of the food company’s products, provided that she did not serve certain specific clients, as well as those that were already being served by another commercial representative or directly by the defendant company.

 

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One of the clauses also provided for the non-intermediation of sales of products manufactured and sold by third parties that competed with the company’s product line. Finally, the contract also provided that the food company could not carry out the direct sale of its products in the territory served by the representative.

In her request, in addition to claiming unpaid commissions, the sales representative alleges that the food company also sold the products at below-market prices to its clients. Therefore, breaching one of the clauses of the contract, and motivating the claim for compensation.

However, the food company justified in the case records, by means of documentary and testimonial evidence, that the direct sale occurred due to a breach of contract on the part of the representative. During the term of the contract, the plaintiff in the action also marketed similar products of competing companies. Therefore, the defendant resorted to the defense of non-performed contract, provided for in article 476 of the Civil Code.

According to attorney Glauber Ortolan, partner at Lassori Advogados, the firm representing the food company, “the contract entered into between the parties provided that the commercial representative could not intermediate any product that competed directly or indirectly with the food company’s product line, under penalty of having its contract terminated for just cause, which culminated in the dismissal of the claim made and the absence of the obligation to pay the compensation of 1/12 (one twelfth) provided for in the commercial representation law.”

The attorney further considered that “the claim for compensation on the part of the representative violates the principle of the defense of non-performed contract, since there is no way for the plaintiff to demand performance of the contract on the part of the defendant if the plaintiff herself did not perform her contractual obligations.”

The judge ruled the request unfounded and further sentenced the plaintiff in the action to the payment of court costs and attorney’s fees in the amount of 20% of the value of the case. An appeal may still be filed against the judgment.

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