Law 6729 English

ACT N 6.729, as of November 28,1979 RENATO FERRARI ACT (Containing amendments by Act n 8.
132, as of December 26, 1990) Providing for the trade concession between manufacturers and distributors of land automotive vehicles. THE PRESIDENT OF THE REPUBLIC Be it enacted by the National Congress I hereby ratify the following law: Article 1 The distribution of land automotive vehicles shall be effective through the trade concession between manufacturers and distributors regulated by this Act, notwithstanding anything herein to the contrary, conventions herein provided and contract clauses. Article 2 Whereas: I manufacturer means the business manufactures or assembles automotive vehicles; enterprise that
II distributor means the business enterprise that belongs to its respective economic category and that sells automotive vehicles, new implements and components, and also is responsible for the technical support of such products and performs other activities related to said category; III land automotive vehicle means automobile, truck, bus, tractor, motorcycle and similar ones;
Federao Nacional da Distribuio de Veculos Automotores Av. Indianpolis, 1967 CEP 04063-003 So Paulo SP PABX (55 11) 5582-0000 Fax (55 11) 5582-0001 fenabrave@fenabrave.org.br www.fenabrave.org.br www.tela.com.br
IV implement means the machine or accessory that is intended to couple an automotive vehicle; V component means the part or set of parts that is a part of an automotive vehicle or original implement; VI agricultural machinery means harvesters, threshers, threshing machines and other similar ones intended for the agriculture, either automotive or tractor-driven, or any other external drive or source; VII agricultural implement means ploughs, harrows, scythes and other implements intended for the agriculture; VIII authorized service means the business enterprise that renders maintenance services to automotive vehicle owners, as well as that business enterprise that sells parts and components. 1 For the purposes of this Act: a) a manufacture also means concessor and distributor also means concessionaire; =/ =/ b) tractor means that machine intended for agricultural use, also capable of performing other activities, excluding crawler tractors, power graders and other road machinery intended for other activities; c) automotive vehicle classes shall be classified pursuant to the economic categories of their manufacturers and distributors, and products, distinguished by trademark, shall be classified pursuant to their manufacturer and distribution network, as a whole. economic categories 2 those agricultural implements and agricultural machinery, provided in this article, paragraphs VI and VII, that are not manufactured by that manufacturer mentioned in the paragraph I, are excluded from this Act.
Article 3 The object of this concession: I the commercialization of automotive vehicles, implements and components manufactured or provided by the manufacturer; II the rendering of maintenance service to such manufacturers, including services under warranty or overhauling periods; III the free use of the concessors trademark, for the purposes of identification. 1 The concession may, as the case may be: a) be established to one or more classes of automotive vehicles; concession b) prohibit the commercialization of new automotive vehicles manufactured or provided by another manufacturer. 2 As to the products launched by the concessor: a) if they belong to the same class of those included in this concession, they shall automatically be included; concession concession b) if they belong to a different class, the concessionaire shall have preference to commercialize them, if such concessionaire meets the requirements set by the concessor. concession 3 The concessionaire is allowed, in its discretion, to take part in auxiliary sales types that the concessor may promote or
adopt, such as consortia, raffles, commercial leasings and financing plans. consoria Article 4 The concessionaires entitled to commercialize: I new implements and components manufactured or provided by others, as long as the established provision in the article 8 is respected in relation to components; II goods of any nature that are intended for an automotive vehicle, implement or the activities of such concession; III used implements and automotive vehicles of any trademark. Sole paragraph The concessionaire may also commercialize other goods and render other services as long as they are in accordance to the concession. Article 5 The following is inherit to the concession: concession I the concessionaire shall be responsible for the operational area intended for its business activities; II minimal distances between concessionaires shops of the same network, which shall be set according to potential market criteria. 1 - There can be more than one concessionaire of the same network in an area. 2 The concessionaire undertakes to commercialize land automotive vehicles, implements, components and agricultural machinery and to render services inherit to these ones, pursuant to
the conditions provided by the trade concession agreement, and the concessionaire is also entitled to perform such activities, directly or through employees, out of the established area. 3 The consumer, in his/her sole discretion, may buy goods and services from any concessionaire, as provided by this Act. 4 In a trademark convention, the criteria and conditions to reimburse a concessionaire or authorized service shall be established, whenever a concessionaire renders obligatory maintenance services pursuant to the manufacturers warranty, and any limit provision as provided in the above paragraph is prohibited. trademark convention Article 6 The concessor may contract a new concession: I if the market for new automotive vehicle of its trademark, inside the established area, presents the conditions, which have been agreed upon between the manufacturer and its distribution network, that justify a contracting; II to fill a concession vacancy. 1 - In the case of the paragraph I hereof, the concessionaire that is in such area may be a bidder along with other competitive bidders under equal conditions. 2 The new contracting shall not be made under conditions that somehow harm the trademarks concessionaires. Article 7 The quota of automotive vehicles under the concession terms shall be established pursuant to the following:
concession terms quota I the concessor shall estimate its production, based on different products and pursuant to its trademarks market expectations, intended for the domestic market for the subsequent year; II the quota shall correspond to a part of the estimated production, which is composed of products that are different and independent of one another, including their respective quantities; Quota III both the concessor and the concessionaire shall set na applicable quota, pursuant to concessionaires respective business and sales performance capacities and also pursuant to the market capacity of its established area. quota 1 the quota adjustment, regardless of the inventory kept by the concessor, shall be made according to this Act. quota 2 The quota shall be reviewed yearly and it may be readjusted according to the provided in the paragraphs of this Act and to the concessionaires inventory turnover. Quota 3 The quota of automotive vehicles shall be readjusted as a result of eventual differences between the actual production and the estimated production. quota 4 The automotive vehicles that have been sold through auxiliary sales types, according to the article 3, paragraph 3, may be included in the quota.
consortia, raffles, commercial leasings and financing plansquota Article 8 The fidelity index of automotive vehicle component purchases constitutes a part of the concession, and the trademarks convention may set percentages of the concessionaires obligatory purchases. concessiontrademarks convention Sole paragraph The purchases that a concessionaire makes shall not be subject to the purchasing fidelity to the concessor according to the following: a) automotive vehicle components; b) implements of any nature and agricultural machinery. Article 9 The concessionaires orders and the concessors supplies shall correspond to the automotive vehicle quotas and shall comply with the component fidelity index. quotacomponent fidelity index. 1 The concessors supply shall be limited to the orders placed in written and shall respect the limits mentioned in the article 10, paragraphs 1 and 2. 1012 2 The concessor shall execute orders within the established period, and if its not so, the concessionaire may cancel it. 3 If the concessor does not execute component orders, the concessionaire shall have no obligation to meet the fidelity index as provided in the paragraph 8, proportionally to the notexecuted service.
8 fidelity index Article 10 The concessor may require the concessionaire to keep its inventory proportional to the new product turnover, which is the object of the concession, and also keep the inventory adequate to the customers nature, observing the limits provided in the following paragraphs 1 and 2. 1 The concessionaire may limit its inventory: a) of automotive vehicles in general to sixty five per cent (65%) and trucks to thirty per cent (30%) of the monthly attribution of the respective yearly quotas for different products, except the provided in the following paragraph b; 65% b) of trucks, to four per cent (4%) of the yearly quota for each different product; c) of implements, to five percent (5%) of the value of the respective effective sales during the last twelve months; d) of components, to a value not over the price by which it purchased the same ones that were sold in retail during the last three months. 2 For the purposes of limits as provided in the paragraph above, in the subparagraphs a e b, the quota shall be compared with the concessionaires market reality every six months, pursuant to its commercialization, and reduce such limits proportionally to an eventual smaller difference in sales in relation to its monthly attributions, in accordance to the criteria set by the manufacturer and its distribution network. Quota6 3 The concessor shall reimburse the concessionaire for the component inventory value that the concessor may change or fail to supply, and shall repurchase such components for the then current prices from its distribution network, or substitute, or from
others that are appointed by the concessionaire, and such reimbursement shall be made in one year as of the occurrence of such fact. Article 11 The payment for goods supplied by the concessor shall not be required, partially or completely, before their due invoicing, except otherwise agreed between the concessor and its distribution network Sole paragraph If the payment for goods is made before they are sold, they shall then be sold until the subsequent sixth day as of such payment. 6 Article 12 The concessionaire shall sell automotive vehicles directly to consumers only, commercialization for the purposes of reselling is prohibited. Sole paragraph The following is excluded from the provided in this article: a) operations among concessionaires of the same distribution network, pursuant to their respective quota, that are not over fifteen per cent (15%) of trucks and ten percent (10%) of other automotive vehicles; b) sales that the concessionaire makes for the domestic market. Article 13 The sales rates the concessionaire charges from the consumer is control-free, concerning goods and services that are the object of the concession.
1 The freight rates, insurance and other variable charges as to goods shipment to the concessionaire and from this one to the respective buyer shall individually be set forth in the respective invoices. 2 The concessor shall set the sales rates to the concessionaires, maintaining its uniformity and payment terms for its entire distribution network. sales rates Article 14 Revoked by Act 8.132/90 Article 15 The connector may make direct sales of automotive vehicles: I Regardless of the concessionaires performance or orders; a) to the Public Administration, directly or indirectly, or to the Diplomatic Corps; b) to other special buyers, within the limits that were previously agreed upon with its distribution network; II Through its distribution network: a) to the persons indicated in the paragraph I, subparagraph a, sending the order to the concessionaire that holds such attribution; b) to automotive vehicle fleet owners, as expressly provided, and the concessionaire is the only one that is entitled to make sales of this nature; c) to other special buyers, and any authorized to place an order of this nature. concessionaire is
1 - In direct sales, the concessionaire is entitled to receive consideration concerning any overhauling service it may render, in the case of paragraph I, or the value of the margin of commercialization, which shall correspond to the goods sold, in the case of the paragraph II hereof. 2 The incidence of direct sales through a concessionaire on the respective quota of automotive vehicles shall be agreed upon between the concessor and its distribution network. quota Article 16 The concession also requires the maintenance of the good name of the trademark and the concessors collective interests and its distribution network, and the following is prohibited: concession I concessors activities that subject the concessionaires to an economic, legal or administrative subordination or interfere with its business management; II a requirement between the concessor and the concessionaire for an obligation that has not been provided in written or for warranties above the value and duration of the contracted obligations; III different treatment between the concessor and the concessionaire as to financial charges and obligation terms that may be compared; Article 17 The relationships, which are the object of this Act, shall also be governed by conventions that, upon manufacturers request, or upon request of any entity hereinafter mentioned, shall be entered as act of law between:
I the economic categories of automotive vehicles manufacturers and distributors, each of them represented by a respective civil entity or, if any, by other authorized entity, all of them of national competence, under the name of economic category conventions; II each manufacturer and its respective distribution network, which is represented by a civil entity of national competence, under the name of trademark conventions. 1 Any one of the subscribers of the acts herein mentioned is authorized to register them with a competent notary public of the Federal District and also cause their publication on the Federal Official Gazette for them to be effective against other parties all over the country. 2 Regardless of conventions, the entity that represents the economic category or the distribution network of the respective trademark is authorized to settle doubts and disputes concerning the relationship between the concessor and the concessionaire. Article 18 Trademark conventions shall be held: Trademark conventions I to clear out automotive vehicle manufactures and distributors principles and interest rules; II to introduce the civil entity that represents the distribution network; III to settle, through arbitral award, matters that are submitted by the manufacturer and the entity that represents the distribution network; IV to regulate, through declaratory judgement, matters concerning trademark conventions, upon request made by the
concessor or the entity that represents the respective distribution network. trademark conventions Article 19 Trademark conventions shall be held to establish norms and procedures concerning: Trademark conventions I the service rendered with respect to automotive vehicles under warranty or overhauling periods (article 3, paragraph II); 32 II the free use of the concessors trademark (article 3, paragraph III); 33 III the inclusion of products launched during the effective period and auxiliary sales types in the concession (article 3, 2, subparagraph a; 3); IV commercialization of other goods and services (article 4, sole paragraph); V establishment of areas and minimal distances, openings of new branches and other facilities (article 5, paragraphs I and II; 4; in reference to this text); VI component sales in a different established area (article 5, 3; in reference to this text); VII new concesions and market environment for such new concessions or termination of an existing concession (article 6, paragraphs I and II); VIII automotive vehicle quotas, yearly readjustments, applicable adjustments, inclusion of auxiliary sales types (article 7, 1, 2, 3, 4) and direct sales incidence (article15, 2);
IX order and goods supply (article 9); X concessionaires inventory (article10 and 1 and 2); XI alteration of payment time (article 11); XII collection of charges for the goods price (article 13, sole paragraph, in reference to this text); XIII margin of commercialization, including its alteration in special cases (article 14 and sole paragraph), the percentage attributed to a concessionaire domiciled in the same area of the purchaser (article 5, 2, in reference to this text); XIV direct sales, specifying special buyers, and sales limits by established the concessor without any participation of a concessionaire, authorizations for the concessionaire to sell to the Public Administration or Diplomatic Corps, specification of automotive vehicle fleet owner, value of the commercialization margin and considerations for overhauling and other procedure rules (articles 15, 1); XV system of progressive penalties (article 22, 1); XVI specification of other indemnification (article 24, paragraph IV); XVII contractings intended for maintenance service and component commercialization (article 28); XVIII other matters as herein provided and others that the parties think necessary. Article 20 The trade concession between automotive vehicle manufacturers and distributors shall be entered in a contract that shall comply with written standards for each trademark and shall specify the concessionaires products,
established areas, minimal distances and automotive vehicle quotas, as well as conditions concerning financial requirements, administrative and accounting organization, technical capacity, facilities, equipment and skilled labor. Article 21 The trade concession between automotive vehicle manufacturer and distributor shall be effective for na indefinite time and shall only terminate as provided herein. Trade concession Sole paragraph Such contract may initially be effective for a definite time, not shorter than a five-year period, and shall automatically become effective for an indefinite time if theres no communication of the parties thereof to extend it, one hundred eighty days (180) before its termination date, upon duly evidenced written notice. /5 180 Article 22 The rescission of contract shall occur: I upon mutual agreement between the parties or due to force majeure; II due to expiration of a definite time established at the beginning of the concession, except extensions pursuant to the article 21, sole paragraph; 21 III on the innocent partys initiative, due to a breach of any provision of this Act, conventions or agreement, and if the contracting party closes down its business activities. 1 The resolution provided in this article, paragraph III, shall be preceded by imposition of progressive penalties. 3
2 In either case of rescission of contract, the parties shall have some time that is necessary to terminate their relationships and the concessionaires operations, never shorter than one hundred twenty days (120), as of the rescission date. 120 Article 23 The concessor that does not extend the contract pursuant to the terms of this article 21, sole paragraph, shall be bound to: 21 I repurchase from the concessionaire the automotive vehicle inventory and new components, in their original package, for the then current price usually used between the concessor and its distribution network; II purchase from the concessionaire, for the market price and on an as-is basis, equipment, machinery, tools and facilities intended for the concession. The concessor shall not immediately and documentally oppose such purchase, which was either determined by the concessor or by the fact that the concessor was informed about it through written notice. The concessionaires real estates are excluded from this obligation. Sole paragraph The initiative not to extend the contract shall be taken by the concessionaire and thus the concessionaire shall have no obligation to indemnify the concessor. Article 24 If the concessor causes the rescission of na indefinite time contract, the concessor shall indemnify the concessionaire by:
I repurchasing its new automotive vehicle inventory and implements and components for the consumer sales price that is then current at the time of the rescission of contract; II making the purchase as provided in the article 23, paragraph II; 232 III indemnifying for loss and damages at the rate of four percent of the projected income for a period corresponding to the sum of an invariable part of eighteen months and a variable part of three months for each period of five years of the effective concession, and such projection shall be based on the value adjusted to the price levels concerning the goods and service income earned by the concessionaire as a result of the concession during the last two years before the rescission of the contract. 4%*(18+3) 18+3 IV paying other indemnifications that may be agreed upon between the concessor and its distribution network. Article 25 If a concessors breach causes the rescission of a definite time contract, as provided in the article 21, sole paragraph, the concessionaire shall be entitled to the same indemnifications as provided in the above-mentioned article, whereas: 21 I as to the paragraph III, such indemnification shall be computed on a projected income basis until the contract termination and if the concession has not completed a two-year duration, such projection shall be based on the income earned up to that moment;
3 II as to the paragraph IV, all the payable obligations shall be satisfied until the termination date of the rescinded contract. 4 Article 26 If the concessionaire causes the rescission of contract, the same shall indemnify the concessor on a five per cent basis of the total value of the goods that the concessionaire acquired during the last four months of the contract. 45% Article 27 Payable values, in the case of the articles 23, 24, 25 and 26, shall be paid in sixty days as of the concession termination date and, if any delays occur, the same payable values shall be subject to a price-level adjustment and interest rates to the extent permitted by law, as of the maturity date. 23242526 60 Article 28 The concessor may contract contractors such as a vehicle maintenance company or a component selling company to render support services or commercialization services, excepting the new vehicle distribution, under the name of authorized service. / Sole paragraph The contractings mentioned in this article shall be subject to the provisions of this Act and in its scope. 28 Article 29 The provisions of the article 66 of the Act n 4.728, as of July 14, 1965, pursuant to the Decree-Law n 911, as of October 1, 1969, shall not apply to goods purchasing operations made by the concessionaire for the purposes of commercialization.
1965714472866 1969 101911 Article 30 This Act shall apply to existing situations between the concessor and the concessionaire, and any clause to the contrary of a contract in force shall be deemed as null and void. 1 The distribution network and concessionaires shall individually maintain the rights and guarantees that are asserted by the respective manufacturers in relation to adjustments of any nature, especially concerning established areas and automotive vehicle quotas, except the competence of the trademark convention as to alter such adjustments. 2 The civil entities that are mentioned in the article 17, paragraph II, that are existing on the date this Act takes effect, shall represent the respective distribution network. Article 31 Pursuant to the article 21, the contractual relationships between automotive vehicle manufacturers and distributors that have been in force for three years as of the date on which this Act takes effect shall become indefinite time relationships. 21 3 Article 32 If the relationship is not three years old, as provided in the above article 31, the distributor may opt: 31 3 I for an extension of the then in force contract for na additional period of five years as of the date on which this Act takes effect; 5 II for maintaining the term of the contract in force.
1 The option this article refers to shall be made in ninety days as of the date on which this Act takes effect or until the contract expiration date, if a shorter term is left. 90 if a shorter term is left. 2 If such option is not made, the term of the contract in force shall prevail. 3 Pursuant to the article 21, the contract that is extended until one hundred and eighty days before the termination of the five-year period, in the case of the paragraph I, or until the date of its termination, in the case of the paragraph II or 2 of this article, shall become an indefinite time contract. 21122 5180 4 The provision of the article 23 shall apply if the contract is not extended according to the terms mentioned in the above paragraph. 23 Article 33 This Act shall take effect on the date of its publication, hereby revoking any other provision to the contrary.
Braslia, November 28, 1979. 158 of the Independence and 91 of the Republic. JOO FIGUEIREDO

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ACT N 6.729, as of November 28,1979 RENATO FERRARI ACT (Containing amendments by Act n 8.

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