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Ecuador - International Agency and Distribution Law - 2nd Edition

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Originally from:

International Agency and Distribution Law - 2nd Edition - Looseleaf

International Agency and Distribution Law - 2nd Edition - Electronic

 

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Ecuador
Jorge Cevallos J and Rodrigo Jijon L
Pérez Bustamante & Ponce
Quito, Ecuador

General Environment for Agents
Relevant Terminology
In most agency contracts executed in Ecuador, agents are referred to as ‘agents’ or
‘commission agents’, because, according to local custom, an agency relationship implies
that one party undertakes to promote for another’s account, for compensation, and on a
stable basis, the conclusion of contracts in a specific territory. The agency relationship
does not imply, and this makes it different from distribution, that the agent becomes the
owner of the goods or services which he will be selling on behalf of a third party, and
which will pass directly from the principal to the buyer, even if the principal has granted
power of attorney to the agent to enter into contracts on his behalf.
At present, the agent-principal relationship is governed by the relevant contracts, that is,
by the free will of the parties involved.
Under the Commercial Code of Ecuador, the following are acts of commerce: commission
or commercial agencies, and brokerage operations. In Ecuador’s civil or commercial
legislation, no express provision defines, delimits, or regulates agency contracts. However,
this activity may be likened to that of an agency for commercial
purposes, that is, the
conduct of acts of commerce by a commission agent on behalf of the commissioning party,
to whom the provisions of the Civil Code relative to commission
contracts shall apply in
a subordinate manner (as set forth in article 377 of the Commercial Code).
Notwithstanding this, and in a fully protectionist environment that was hostile to foreign
companies, the Law on the Protection of Representatives, Agents, or Distributors of Foreign
Companies, Decree Number 1038-A, was enacted in 1976. This law was amended
and interpreted in July 1996 and was finally derogated in September 1997.
The original text of the law referred to both agents and distributors of foreign companies.
Subsequently, and as interpreted by the Congress of Ecuador, the implementation of this
law excluded contracts involving any type of industrial processing by the distributor.
The law established a number of obligations and prohibitions for foreign companies,
including the prohibition of terminating a contract or of refusing to renew a contract
on the expiry thereof. In the case of a foreign company, infringement of the provisions
of this law required the principal to pay large indemnities to the national agent. Some

 

Jorge Cevallos J and Rodrigo Jijon L, Pérez Bustamante & Ponce, Quito, Ecuador

 


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