In the case submitted to the Court, the agent proceeded against the principal in order to obtain the indemnity in compliance with Article 27, J of Federal Law n. 4886/65, modified by Federal Law n. 8420/92. According to said Article, the amount of the indemnity due to the agent in case of unjustified termination by the principal of an agency agreement concluded for an indefinite period shall not be less than 1/12 (one-twelfth) of the total compensation earned during the period of time in which the contract occurred.
The principal rebutted the claim of the agent, maintaining, on the contrary, that the calculation of the indemnity should be based only on the last five years of the contractual period in which the agent performed his activity. He supported his claim on the ground of the sole paragraph of Article 44 of the above mentioned law, which states that: ‘The state of limitation is five years for the agent to claim compensation owed thereto and other rights guaranteed thereto under this law’.
The decision issued by the Brazilian Superior Court of Justice stated that the amount of the indemnity due to the agent in such a case must be based, in compliance with Article 27, J, on the full contractual period in which the agent performed his activity and not on the last five years of the contractual period, as mentioned in Article 44 of the same law.
The Court explained that the five-year term mentioned in Article 44 is meant as a limitation of action and, consequently, shouldn’t be considered as the period upon which calculate the indemnity due to the agent. In stating so, the Court clarified a controversial issue concerning the interpretation of Article 44 of Federal Law n. 8420/92.
