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COMMERCIAL CODE

^ ] Commercial Code - Table of Contents ] Commercial Code - Table of Article ] Decree-Law no. 40/99/M ] Commercial Code - Art. 1 - 100 ] Commercial Code - Art. 101 - 200 ] Commercial Code - Art. 201 - 300 ] Commercial Code - Art. 301 - 400 ] Commercial Code - Art. 401 - 500 ] Commercial Code - Art. 501 - 600 ] [ Commercial Code - Art. 601 - 700 ] Commercial Code - Art. 701 - 800 ] Commercial Code - Art. 801 - 900 ] Commercial Code - Art. 901 - 1000 ] Commercial Code - Art.1001 - 1100 ] Commercial Code - Art. 1101 - 1200 ] Commercial Code - Art. 1201 - 1268 ]


Article 601

(Liability of commission agent for performance of contracts)

1. A commission agent is not responsible for the performance of obligations undertaken by persons with whom he contracts, except if at the moment of the conclusion of the contract he knew or should have known of their insolvency.

2. Besides the cases mentioned in the previous paragraph, the commission agent is only liable for performance of the obligations of persons with whom he concludes contracts if such liability is expressly agreed or arises from usage.

3. A commission agent who is held liable in accordance with the previous paragraph to a principal for performance of obligations undertaken by the persons with whom he concludes contracts is entitled to receive, besides the normal remuneration, a del credere commission, which, in the absence of agreement, is determined by usage; in the absence of usage, according to equity.

Article 602

(Contracts agreed under more advantageous conditions)

A commission agent who agrees a contract under conditions which are more advantageous than those set by the principal, namely if he buys at a lower price, or sells for a price higher than that mentioned in the principal's instructions, is not entitled to the difference, and must deliver it to the principal.

Article 603

(Credit operations)

1. A commission agent is deemed to be authorized to sell on credit in accordance with usage, except if the principal has instructed him to the contrary.

2. If the commission agent sells on credit in spite of the principal's prohibition or in breach of usage, the principal can demand immediate payment from him; in this case the commission agent is entitled to receive interest and other benefits deriving from the credit extended.

3. The commission agent who effects credit sales should indicate to the principal the name or firm of the buyer and the time limit granted, under penalty of it being considered that the sale was made against immediate full payment; the previous paragraph shall apply.

Article 604

(Endorsement of negotiable instruments)

If the object of a commission is the acquisition of negotiable instruments, the commission agent is obliged, when endorsing them, to do so in the usual terms and without any reservations.

Article 605

(Buying from or selling to principal)

1. Except if there is an agreement to the contrary, in a commission for the purchase or sale of merchandise, securities or currencies that have a market price or a price determined by public authority, the commission agent can, at such price, supply as seller the goods that he is commissioned to buy, or purchase for himself, as buyer, the goods that he is commissioned to sell, without prejudice to his right to remuneration.

2. Even if a price was stated by the principal, the commission agent who purchases for himself goods that he is commissioned to sell cannot buy them for a price lower than the market price on the day the transaction is concluded, if the latter is higher than the price set by the principal; the commission agent who supplies as seller goods that he is commissioned to buy cannot ask for a price higher than the market price, if the latter is lower than the price set by the principal.

3. In the cases mentioned in this article, if, at the moment at which he communicates execution of the commission, the commission agent does not reveal to the principal the name of the person with whom he contracted, it is considered that he made the purchase or the sale for his own account.

Article 606

(Obligation to mark merchandise)

A commission agent who holds merchandise of the same kind, belonging to different owners, is obliged to take the necessary measures to mark it in order that no doubt can arise as to the respective ownership.

Article 607

(Transactions regarding merchandise belonging to different principals)

If the object of a single contract is merchandise belonging to various principals, or to the commission agent himself and to any principal, the commission agent must separate them in invoices, mentioning the marks that identify the place of origin of each item, and separately enter in the books what relates to each owner.

Article 608

(Credits with different origins)

1. A commission agent who has credits against a single person, resulting from contracts made for the account of different principals, or for his own account and for third parties, is obliged to indicate in all deliveries that the debtor makes, as well as in the receipts that he issues, the name of the interested party for whose account he has received it.

2. If the indication mentioned in the previous paragraph is missing in the receipts and in the books, calculation shall be made proportionally regarding each credit.

Article 609

(Examination of goods by principal)

The provisions of the Civil Code regarding the purchase and sale contract shall apply to the examination, denunciation of defects, or lack of conformity, of goods by a principal.

Article 610

(Delay by principal)

If a principal does not provide for the destination of goods, being obliged to do so in accordance with the circumstances, the commission agent can make use of the rights granted to the seller by articles 575 and 576.

Article 611

(Remuneration)

In the absence of agreement, remuneration is determined by professional fee schedules or, in their absence, by usage; in the absence of both, in accordance with equity.

Article 612

(Acquisition of right to remuneration)

1. A commission agent acquires the right to his remuneration as soon as and to the extent to which the third party has fulfilled the contract.

2. However, if there is a del credere stipulation, the commission agent can claim the remuneration due as soon as the contract has been concluded.

Article 613

(Expenses)

Unless there is an agreement to the contrary, a commission agent is entitled to reimbursement of expenses he has incurred for the execution of a commission, including compensation due for use of his warehouses and means of transport.

Article 614

(Right of retention)

The commission agent has a right of retention over a principal's merchandise under his control, regarding credits resulting from the execution of the commission, namely if he is in possession of the documents that incorporate the right to dispose of them.

Article 615

(Commission in relation to other transactions)

The rules on the commission for purchase and sale of goods are applicable, with the necessary adaptations, to other commissions, concluded between commercial entrepreneurs, with an object other than purchase and sale of goods.

TITLE V

FORWARDING CONTRACT

Article 616

(Concept)

A forwarding contract is a mandate by which a commercial entrepreneur undertakes the obligation to conclude, in his own name and for the account of the principal, a contract for carriage of goods and respective accessory operations.

Article 617

(Revocation)

While a forwarding agent has not concluded a carriage contract with a carrier, the sender can revoke the order for its conclusion, reimbursing the forwarding agent his expenses and paying him a remuneration proportional to the service rendered.

Article 618

(Obligations of forwarding agent)

1. In choosing the route, the means, and the modalities of transportation of goods, a forwarding agent shall respect the instructions of the principal and, in their absence or insufficiency, act in order to protect his interests in the best possible manner.

2. The forwarding agent is not obliged to insure the goods forwarded, unless otherwise agreed or arising from usage.

3. Premiums, rebates and cut-rates obtained by the forwarding agent shall be credited to the principal, unless otherwise agreed.

Article 619

(Rights of forwarding agent)

1. In the absence of an agreement, remuneration for services rendered by a forwarding agent shall be in accordance with professional fee schedules or, in their absence, in accordance with usage.

2. Expenses anticipated and compensations due for the rendering of ancillary services by the forwarding agent are paid against the presentation of documents evidencing them, unless an all-inclusive aggregate amount was agreed as payment.

Article 620

(Assumption of liability for execution of carriage)

A forwarding agent who, with his own means or with means from a third party, undertakes liability, wholly or partly, for execution of carriage, is also subject to the rights and obligations of a carrier.

Article 621

(Default regime)

The rules of the commission contract shall apply, with the necessary adaptations, to all matters not especially regulated in this Title.

TITLE VI

AGENCY CONTRACT

CHAPTER I

GENERAL PROVISIONS

Article 622

(Concept and form)

1. Agency is a contract by which one of the parties undertakes to promote for the account of the other party the conclusion of contracts, in an autonomous and stable manner and against remuneration, possibly with the designation of a certain zone or a certain circle of clients.

2. Any of the parties has the right, which cannot be renounced, to claim from the other a signed document indicating the content of the contract and any subsequent additions or amendments.

Article 623

(Agent with power of representation)

1. Without prejudice to the following paragraphs, an agent can only conclude contracts in the name of the other party if the latter has granted him, in writing, the necessary powers.

2. However, claims and other declarations related to contracts agreed with the intermediation of the agent can be presented to him.

3. The agent has the right to request urgent measures that may be indispensable to safeguard the rights of the other party.

Article 624

(Collection of credits)

1. An agent can only collect credits if the other party has authorized him in writing to do so.

2. The agent to whom powers of representation have been granted is presumed to be authorized to collect the credits resulting from contracts concluded by him.

3. If the agent collects credits without the required authorization, article 760 of the Civil Code shall apply, without prejudice to the regime established in article 644.

Article 625

(Exclusive agent)

The concession of an exclusive right in favor of an agent, according to which the other party is prevented from using other agents for the exercise of activities that are in competition with those of the exclusive agent, within the same zone or the same circle of clients, is dependent upon agreement by the parties.

Article 626

(Sub-agency)

1. Unless there is an agreement to the contrary, use of sub-agents is permitted.

2. The norms of this Title shall apply, with the necessary adaptations, to the sub-agency relation.

CHAPTER II

RIGHTS AND OBLIGATIONS OF PARTIES

SECTION I

OBLIGATIONS OF AGENT

Article 627

(General principle)

In fulfilling his obligations, an agent should act in good faith; he should safeguard the interests of the other party and undertake the activities appropriate to the full achievement of the contractual aim.

Article 628

(Enumeration)

An agent namely is obliged:

a) to respect those instructions of the other party that do not touch upon his autonomy;

b) to provide such information as may be requested from him or is necessary to good management, namely information on clients' solvency;

c) to clarify to the other party the market situation and perspectives of evolution;

d) to render accounts, under agreed conditions, or whenever justified.

Article 629

(Obligation of confidentiality)

Even after the termination of the contract, an agent cannot use or disclose to third parties secrets of the principal that have been entrusted to him or that he has gained knowledge of during the exercise of his activity, except to the extent that the professional code of conduct may allow this.

Article 630

(Obligation of non-competition)

1. An agreement creating an obligation for an agent not to exercise, after the termination of the contract, activities that are in competition with those of the principal, must be made in a written document.

2. The obligation of non-competition can only be agreed for a maximum period of two years, and it shall be limited to the zone or circle of clients entrusted to the agent.

Article 631

('Del credere' agreement)

1. An agent can guarantee, by an agreement in writing, the performance of obligations related to contracts negotiated or concluded by him.

2. Such del credere agreement is only valid if it specifies the contract, or if the persons guaranteed are identified.

Article 632

(Temporary impossibility)

An agent for whom it is temporarily impossible to wholly or partly fulfill a contract should give immediate notice of this to the principal.

SECTION II

RIGHTS OF AGENT

Article 633

(General principle)

An agent is entitled to demand from the principal behavior in accordance with good faith, so as to fully achieve the contractual aim.

Article 634

(Enumeration)

An agent namely is entitled:

a) to obtain from the other party elements that, according to the circumstances, are necessary to the exercise of his activity;

b) to be informed, without delay, of the acceptance or refusal of contracts negotiated, and of those that he has concluded without the necessary powers;

c) to receive periodically a list of contracts concluded and of commissions due, at the latest by the last day of the month following the quarter in which the right to the commission has been acquired;

d) to demand the provision of all information that may be necessary to verify the amount of commissions due to him, namely an extract from the accounting books of the other party;

e) to the payment of remuneration, under the agreed terms;

f) to receive special commissions, which can be cumulative, in relation to the task of collecting credits and to the del credere agreement;

g) to compensation for the obligation of non-competition after termination of the contract.

Article 635

(Right to notice)

An agent is entitled to be given immediate notice whenever the principal is in a position to conclude only a number of contracts considerably lower than had been agreed or could have been expected, according to circumstances.

Article 636

(Remuneration)

In the absence of agreement by the parties, the remuneration of an agent shall be calculated in accordance with usage or, in its absence, in accordance with equity.

Article 637

(Right to commission)

1. An agent is entitled to a commission for contracts that he arranged and, as well, for contracts concluded with clients that he has procured, provided that these are concluded before the termination of the agency relation.

2. Except if there is a written agreement to the contrary, an agent who benefits from a right of exclusive does not forfeit the right to the commission regarding contracts concluded directly by the other party with persons within the zone or circle of clients reserved to him.

3. The agent is only entitled to the commission for contracts concluded after the termination of the agency relation by proving that he negotiated them or that, having prepared them, their conclusion is due mainly to his activity, provided that, in both cases, the contracts are concluded within a reasonable period after the termination of the agency relation.

Article 638

(Succession of agents)

An agent does not have the right to the commission while the contract is in force if such commission is due to the preceding agent in accordance with paragraph 3 of the previous article, without prejudice to such commission being equitably shared by both, if circumstances justify it.

Article 639

(Acquisition of right to commission)

1. An agent acquires the right to the commission as soon as and to the extent that any of the following circumstances arise:

a) the principal has fulfilled the contract, or should have fulfilled it, in accordance with an agreement concluded with the third party;

b) the third party has fulfilled the contract.

2. Any agreement by the parties on the right to the commission cannot prevent it from being acquired at least when the third party fulfils the contract or should have fulfilled it, provided that the principal has already fulfilled his obligation.

3. The commission mentioned in the previous paragraphs shall be paid up to the last day of the month following the quarter in which the right was acquired.

4. However, if there is a del credere agreement, the agent can claim the commissions due after the contract has been concluded.

Article 640

(Non-performance)

An agent does not lose the right to claim commission if non-performance of the contract is due to a cause imputable to the principal.

Article 641

(Expenses)

In the absence of an agreement to the contrary, an agent does not have a right to reimbursement of expenses incurred in the normal exercise of his activity.

CHAPTER III

PROTECTION OF THIRD PARTIES

Article 642

(Duty of information)

1. An agent shall inform interested parties about the powers of representation that he may have and whether he can collect credits or not, namely by means of notices posted in his workplace and in every document in which he identifies himself as the agent of another person.

2. The information mentioned in the previous paragraph shall be provided, in writing, in one of the official languages, and be given together with a translation if addressed to interested parties who only express themselves in the other.

Article 643

(Representation without powers)

1. Without prejudice to the following article, a contract concluded by an agent in the name of the other party, without powers of representation, has the effects mentioned in paragraph 1 of article 261 of the Civil Code.

2. Such contract is considered as ratified if the other party, as soon as he gains knowledge of its agreement and of its essential content, does not communicate to the good faith third party, within five days after such knowledge, his opposition to the transaction.

Article 644

(Apparent representation)

1. A contract agreed by an agent lacking powers of representation produces effects towards the principal if there were strong reasons, objectively assessed, taking into account the circumstances of the case, that justified the trust of a good faith third party in the legitimacy of the agent, provided that the principal has also contributed to establishing the trust of the third party.

2. The provision of the previous paragraph applies, with the necessary adaptations, to collection of credits by a non-authorized agent.

CHAPTER IV

TERMINATION OF CONTRACT

Article 645

(Mutual agreement)

An agreement by which the parties decide to put an end to their contractual relation must be made in writing.

Article 646

(Lapse)

An agency contract lapses especially:

a) by the expiry of the agreed time limit;

b) if a condition to which the parties have subordinated it takes place, or if it becomes certain that it cannot take place, depending on whether the condition is resolutory or suspensive;

c) by the death of the agent or, if it is a collective person, by its extinction;

d) by the bankruptcy of the agent or of the principal.

Article 647

(Duration of contract)

1. If the parties did not state a time limit, the contract is presumed to be agreed for an undetermined period of time.

2. A contract that continues to be executed by the parties after the expiry of its time limit is deemed to have been renewed for an undetermined period of time.

Article 648

(Denunciation)

1. Denunciation is only permitted in contracts concluded for an undetermined period of time and if communicated to the other party, in writing, with the following minimum advance notice:

a) one month, if the contract has not lasted more than one year;

b) two months, if the contract has lasted more than one year;

c) three months, if the contract has lasted more than two years;

d) four months, if the contract has lasted more than three years;

e) five months, if the contract has lasted more than four years;

f) six months, if the contract has lasted more than five years.

2. Unless there is an agreement to the contrary, the time limit mentioned in the previous paragraph ends on the last day of the month.

3. If the parties stipulate time limits longer than those mentioned in paragraph 1, the time limit to be observed by the principal cannot be lower than that of the agent.

4. In the case mentioned in paragraph 2 of the previous article, the time elapsed before the expiry of the time limit shall also be taken into account in order to determine the advance notice with which the denunciation must be made.

Article 649

(Lack of advance notice)

1. Whoever denounces a contract without respecting the time limits mentioned in the previous article is obliged to compensate the other party for damage caused by the lack of advance notice.

2. Instead of this compensation, an agent can claim an amount calculated on the basis of the monthly average remuneration paid during the previous year, multiplied by the time lacking; if the contract has lasted less than one year, the monthly average remuneration paid during the application of the contract shall be used.

Article 650

(Rescission)

An agency contract can be rescinded by any of the parties:

a) if the other party breaches his obligations, when, due to the gravity or repetition of the breach, the continuation of the contractual relation cannot be demanded;

b) if circumstances take place that seriously prejudice or render impossible the achievement of the contractual aim, so that it cannot be demanded that the contract be maintained until the expiry of the agreed time limit or, for the case of denunciation, imposed.

Article 651

(Declaration of rescission)

Rescission shall be done by means of a written declaration, within one month from the knowledge of the facts that justify it, and shall indicate the reasons on which it is based.

Article 652

(Compensation)

1. Irrespective of the right to rescind the contract, any of the parties has the right to be compensated, under general rules, for damage arising from breach of obligations of the other party.

2. The rescission of a contract on the basis of paragraph b) of article 650 confers the right to compensation in accordance with equity.

Article 653

(Compensation for goodwill)

1. Without prejudice to any other compensation that may be due in accordance with the previous provisions, after the termination of the contract an agent has the right to compensation for goodwill, provided that all of the following requirements are met:

a) the agent has either procured new clients for the other party or substantially increased the volume of business with existing clients;

b) the other party will considerably benefit from the activity of the agent after termination of the contract;

c) after termination of the contract the agent ceases to receive any remuneration for contracts negotiated or concluded with the clients mentioned in paragraph a).

2. In case of an agent's death, compensation for goodwill can be claimed by the heirs.

3. No compensation for goodwill is due if the contract was terminated for reasons imputable to the agent, or if the agent, in agreement with the other party, has assigned his contractual position to a third party.

4. The right to compensation for goodwill is extinguished if the agent, or his heirs, do not communicate to the principal, within one year from the termination of the contract, that they want to receive it; judicial proceedings shall be initiated within one year following such communication.

Article 654

(Calculation of compensation for goodwill)

Compensation for goodwill is calculated in accordance with equity, but it cannot exceed an amount equivalent to an annual compensation, calculated on the basis of the annual average of the remunerations received by the agent during the last five years; if the contract has lasted less time, the average of the period during which it was in force shall be taken into account.

Article 655

(Right of retention)

An agent has a right of retention over objects and valuables that he detains as a result of the contract, for credits resulting from his activity.

Article 656

(Obligation to return)

Without prejudice to the previous article, at the end of the contract each party is obliged to return objects, valuables, and other items belonging to the other party.

TITLE VII

COMMERCIAL CONCESSION CONTRACT

CHAPTER I

GENERAL PROVISIONS

Article 657

(Concept, form and pre-contractual information)

1. Commercial concession is a contract by which one of the parties, in his name and for his own account, undertakes to buy and resell goods produced or distributed by the other party, in a certain zone and in a stable manner, subjecting himself to a certain degree of control by the other party.

2. The commercial concession contract shall be made in writing.

3. Article 680 applies to the commercial concession contract, with the necessary adaptations.

Article 658

(Exclusivity)

1. Within the zone determined in the contract, the concessionaire can neither sell nor promote the sale of goods in competition with those produced or distributed by the principal, nor can the latter, directly or indirectly, sell goods that are the object of the contract, unless there is a written agreement to the contrary.

2. Unless there is a written agreement to the contrary, the concessionaire can only buy goods that are the object of the contract from the principal.

Article 659

(Duration of contract)

1. If the parties have not agreed a time limit, the contract is presumed to have been agreed for an undetermined period of time.

2. If a time limit is agreed, it cannot be less than three years.

Article 660

(Sub-concession)

1. Unless there is an agreement to the contrary, use of sub-concessionaires is permitted.

2. The provisions of this Title apply to the sub-concession relation, with the necessary adaptations.

CHAPTER II

RIGHTS AND OBLIGATIONS OF PARTIES

SECTION I

OBLIGATIONS OF CONCESSIONAIRE

Article 661

(General principle)

In fulfilling his obligations, a concessionaire should act in good faith, co-operating with the principal in order to fully achieve the contractual aim.

Article 662

(Enumeration)

A concessionaire namely is obliged:

a) to act in accordance with the commercial policy of the principal, respecting his instructions, namely those related to sales methods and advertising;

b) in determining the resale price of the goods, to comply with the prices recommended by the principal;

c) to provide post-sales assistance to clients, under the terms set by the principal;

d) to allow the principal to inspect replacement parts and working methods used by his auxiliaries in the provision of post-sales assistance;

e) to provide all information that may be requested from him, namely on the market situation and perspectives of evolution.

Article 663

(Obligation of minimum sale)

1. By means of a written agreement, a concessionaire can undertake to periodically sell a minimum quantity, or to purchase a certain quota of goods, or to reach a certain level of market share.

2. In setting a minimum sales quantity or a quota to be purchased or the level of market share mentioned in the previous paragraph, the dimension of the concessionaire's enterprise and of the market shall be taken into account, among other circumstances.

Article 664

(Obligation to keep the product unchanged)

A concessionaire is obliged to sell goods in the condition in which he acquired them from the principal and, in the absence of express permission from the principal, cannot introduce any changes, even if only in their external appearance or packaging.

Article 665

(Obligations of confidentiality and of non-competition)

Articles 629 and 630 apply to the concessionaire, with the necessary adaptations.

SECTION II

OBLIGATIONS OF PRINCIPAL

Article 666

(General principle)

A principal is obliged to act in accordance with good faith, in order to fully achieve the contractual aim.

Article 667

(Enumeration)

A principal namely is obliged:

a) to sell to the concessionaire goods that he produces or distributes;

b) to allow the use by the concessionaire of his distinctive marks, to the extent to which, in accordance with circumstances, they are necessary to the promotion of the concession;

c) to provide to the concessionaire all technical and commercial information necessary for running the concession;

d) to render technical assistance to the concessionaire;

e) to compensate the concessionaire for the obligation of non-competition after termination of the contract.

Article 668

(Delivery and information)

1. A principal is obliged to deliver goods within stated time limits, or as soon as he is requested by the concessionaire, as well as all information and technical documentation relating to them.

2. The principal is also obliged to inform the concessionaire of all changes related to the product, namely to its characteristics and composition.

Article 669

(Obligation to satisfy orders)

A principal is obliged to ensure the performance of orders from the concessionaire, within the limits of the quota or minimum quantity of goods that the latter has undertaken to purchase.

Article 670

(Warranty for quality of goods)

1. A principal guarantees to a concessionaire the quality and the good functioning of the goods, as well as to third parties to whom the latter may resell them.

2. The principal shall state the conditions and the time limits for the operation of the warranty, and shall provide all elements necessary to make it effective.

Article 671

(Obligation of confidentiality)

Even after termination of the contract, the principal cannot disclose to third parties any secrets of the other party entrusted to him, or that he gained knowledge of in the framework of the concession contract, except to the extent permitted by the professional code of conduct.

CHAPTER III

TRANSFER OF THE CONTRACTUAL POSITION

Article 672

(Transfer of position of concessionaire)

1. A principal can oppose the transfer by an inter vivos act of the position of concessionaire inherent in the transfer of the respective enterprise, if the acquirer:

a) does not correspond to the standards required of his new concessionaires;

b) does not offer sufficient guarantees as to the performance of his obligations.

2. The previous paragraph applies, with the necessary adaptations, to temporary transfers of the enjoyment of a concessionaire's enterprise.

CHAPTER IV

TERMINATION OF CONTRACT

Article 673

(Reference)

The provisions on termination of the agency contract apply, with the necessary adaptations, to the termination of the commercial concession contract, in everything that is not especially provided for in this Chapter.

Article 674

(Lapse and renewal)

1. A contract concluded for a certain period of time shall lapse at the end of the time limit stipulated, if any of the parties communicate to the other, in writing, the intention not to renew it with the following minimum advance notice:

a) three months, if the time limit is less than five years;

b) six months, if the time limit is from five to ten years;

c) twelve months, if the time limit is ten years or more.

2. Absence of the communication mentioned in the previous paragraph determines the renewal of the contract for a period of time equal to the initial one.

3. If the contract has been renewed, all time elapsed since the conclusion of the contract shall be taken into account in order to determine the advance notice with which the intention not to renew the contract should be communicated.

4. The provision of paragraph 1 does not prevent the parties from agreeing longer advance notice periods, but the time limit to be observed by the principal cannot be lower than that of the concessionaire.

5. A contract that has been renewed twice is considered to be renewed for an undetermined period of time at the end of the second renewal, if none of the parties communicates to the other the intention not to renew it, in accordance with paragraphs 1 and 3.

Article 675

(Transfer upon death or extinction of concessionaire)

A commercial concession contract does not lapse as a result of the death of the concessionaire or, in the case of a collective person, by its extinction, provided that the successor or the adjudicating associate continues the operation of the enterprise.

Article 676

(Denunciation)

1. Denunciation is only permitted in contracts concluded for an undetermined period of time and cannot be exercised before three years from the conclusion of the contract.

2. Denunciation must be communicated in writing to the other party with the minimum advance notice mentioned in paragraph 1 of article 674.

3. Unless there is an agreement to the contrary, the expiry of the time limit mentioned in the previous paragraph shall coincide with the last day of the month.

4. If the contract has been renewed for an undetermined period of time in accordance with paragraph 5 of article 674, it is necessary to take into account all the time elapsed since the conclusion of the contract in order to determine the advance notice with which the denunciation should be communicated.

Article 677

(Rescission)

In addition to the cases mentioned in article 650, a principal also has a right to rescind the contract if, irrespective of fault, the concessionaire does not fulfill the minimum levels for which he is obliged, in accordance with paragraph 1 of article 663.

Article 678

(Termination of contract for reasons not imputable to concessionaire)

If a commercial concession contract is terminated for reasons not imputable to the concessionaire, the principal is obliged to:

a) repurchase the goods not sold at the end of the contract, for the price at which he sold them to the concessionaire, with the exception of those goods bought by the latter after the communication to him of a declaration terminating the contract;

b) compensate the concessionaire for expenses incurred, before the communication of the declaration mentioned in the previous paragraph, in promotional activities such as advertising, the effects of which extend beyond termination of the contract.

TITLE VIII

FRANCHISING CONTRACT

CHAPTER I

GENERAL PROVISIONS

Article 679

(Concept)

A franchising contract is that by which one of the parties, against a direct or indirect payment, grants to the other, in a certain zone and in a stable manner, the right to produce and or to sell certain goods or services under his entrepreneurial image, according to his know-how, with his technical assistance, and subject to his control.

Article 680

(Pre-contractual information and clarification)

1. A franchiser is obliged to provide, in writing and with adequate advance, complete and truthful information to an interested party, so that the latter can form a balanced and informed assessment of the advantages and disadvantages of concluding the contract, namely:

a) the identification of the franchiser;

b) the franchiser's annual accounts of the last two accounting periods;

c) any judicial proceedings in which the franchiser, the holders of trademarks, patents and other industrial or intellectual property rights related to the franchise are or have been involved, as well as their sub-franchisers, which may directly or indirectly come to affect or render impossible the functioning of the franchise;

d) a detailed description of the franchise;

e) the profile of the ideal franchisee regarding previous experience, level of education and other characteristics that compulsorily or preferably he must have;

f) the necessity and extent of the franchisee's personal and direct participation in the exercise of the franchise;

g) the specifications as to the estimated sum of the initial investment needed for acquisition, installation and entry into functioning of the franchise;

h) the value of the periodic payments and other amounts to be paid by the franchisee to the franchiser or to third parties indicated by him, specifying the respective bases of calculation and what these remunerate, or the purpose for which they are destined;

i) the composition of the franchise network, lists of franchisees, sub-franchisees and sub-franchisers of the network, as well as of those who have left the network in the last 12 months;

j) the profitability of the franchisees' enterprises and the incidence of bankruptcies;

l) the professional experience gained, his know-how and entrepreneurial methods;

m) any services that the franchiser obliges himself to render to the franchisee for the duration of the contract.

2. The franchiser must also provide to an interested party, with adequate advance, a model of the standard contract and, if it is the case, also that of the pre-contract of franchise adopted, with the complete text, including the respective annexes.

3. Without prejudice to such compensation as may fit the case, the non-performance of the provisions of the previous paragraphs grants to the franchisee the right to demand annulment of the contract.

Article 681

(Form)

A franchise contract must be concluded in writing.

Article 682

(Licenses to use industrial or intellectual property rights)

1. Concession of licenses to use the industrial or intellectual property rights of a franchiser in the framework of a franchising contract shall be regulated by the respective legal provisions, without prejudice to the following paragraph.

2. The franchising contract is sufficient title as license to use the rights mentioned in the previous paragraph connected with the franchise.

Article 683

(Exclusivity)

Within the zone determined in the contract, the franchisee can neither manufacture nor sell goods nor render services in competition with those of the franchiser, nor can the latter, directly or indirectly, compete with the former, except if there is a written agreement to the contrary.

Article 684

(Duration of contract)

Article 659 applies to the franchising contract.

Article 685

(Sub-franchise)

1. Except if there is an agreement to the contrary, the use of sub-franchisees is not permitted.

2. The norms of this Title apply to the sub-franchise relation, with the necessary adaptations.

CHAPTER II

RIGHTS AND OBLIGATIONS OF PARTIES

SECTION I

OBLIGATIONS OF FRANCHISER

Article 686

(General principle)

A franchiser is obliged to act in accordance with good faith, in order to fully achieve the contractual aim.

Article 687

(Enumeration)

A franchiser namely is obliged:

a) to allow the franchisee the use of his industrial and intellectual property rights and other elements that identify his enterprise;

b) to ensure peaceful enjoyment of the industrial and intellectual property rights authorized, and of the know-how provided to the franchisee;

c) to ensure the constant updating of his know-how;

d) to provide training to the franchisee and his auxiliaries;

e) to ensure the advertising of the franchise network at regional and international levels;

f) to supply or to ensure the supply of goods that, taking account of the circumstances, are necessary to run the franchise;

g) to compensate the franchisee for the obligation of non-competition after termination of the contract.

Article 688

(Information)

A franchiser is obliged to timely inform a franchisee of all and any alterations introduced in the composition and presentation of the goods, in the conditions of sale, or in the rendering of the service, or any others concerning the running of the franchise.

Article 689

(Choice of suppliers of goods and services)

A franchiser cannot, directly or indirectly, forbid a franchisee from freely choosing the equipment, the installations and the suppliers of goods or services to be used in the assembly or in the functioning of the franchise, except to the strict extent to which it is necessary to protect his industrial and intellectual property rights or to maintain the common identity and reputation of the franchise network.

Article 690

(Obligations of provision and of guarantee)

Articles 669 and 670 apply to the franchiser.

Article 691

(Supervision of franchise network)

A franchiser is obliged to effect a rigorous supervision of the franchise network, namely controlling and verifying the performance, by the other franchisees, of obligations designed to ensure the common identity and the reputation of the franchise network.

Article 692

(Compensation)

A franchiser is obliged to adequately compensate the franchisee for new experience gained, in accordance with article 697, in the running of the franchise.

Article 693

(Obligation of confidentiality)

Article 671 is applicable to the franchiser.

SECTION II

OBLIGATIONS OF FRANCHISEE

Article 694

(Obligations of franchisee)

In the performance of his obligations a franchisee must act in good faith and should watch over the maintenance of the identity, image and good reputation of the franchise and develop adequate activities in order to fully achieve the contractual aim.

Article 695

(Enumeration)

A franchisee namely is obliged:

a) to pay remuneration, on the agreed terms;

b) to use the industrial and intellectual property rights and other elements that identify the enterprise of the franchiser;

c) to follow the instructions of the franchiser regarding the equipment and the uniform presentation of the premises and/or means of transport mentioned in the contract;

d) during the rendering of services, to produce, to sell, or to use exclusively goods that satisfy the minimum objective quality specifications set by the franchiser;

e) not to change the location of the premises mentioned in the contract without the assent of the franchiser;

f) to observe, with the necessary adaptations, the provisions of subparagraphs b) to e) of article 662.

Article 696

(Limit upon use of know-how)

A franchisee cannot use the know-how for purposes other than running the franchise, nor disclose its content to third parties, without the franchiser's agreement in writing.

Article 697

(Communication of experience)

A franchisee is obliged to communicate to the franchiser any new experience gained in running the franchise that amounts to an improvement to its conditions of functioning and efficiency, as well as to grant both authorization to use such know-how and the right to allow its use by the other franchisees.

Article 698

(Training of franchisee and his assistants)

A franchisee is obliged to attend, or to instruct his assistants to attend, periods of training organized by the franchiser, with the frequency mentioned in the contract.

Article 699

(Advertising)

All advertising to be made by a franchisee must be previously approved by the franchiser.

Article 700

(Breach of intellectual and industrial property rights)

A franchisee must inform the franchiser of any breach to the industrial and intellectual property rights that are the object of the franchise, which may come to his knowledge, and take action, or support the franchiser, in any judicial proceedings against the infringer.


^ ] Commercial Code - Table of Contents ] Commercial Code - Table of Article ] Decree-Law no. 40/99/M ] Commercial Code - Art. 1 - 100 ] Commercial Code - Art. 101 - 200 ] Commercial Code - Art. 201 - 300 ] Commercial Code - Art. 301 - 400 ] Commercial Code - Art. 401 - 500 ] Commercial Code - Art. 501 - 600 ] [ Commercial Code - Art. 601 - 700 ] Commercial Code - Art. 701 - 800 ] Commercial Code - Art. 801 - 900 ] Commercial Code - Art. 901 - 1000 ] Commercial Code - Art.1001 - 1100 ] Commercial Code - Art. 1101 - 1200 ] Commercial Code - Art. 1201 - 1268 ]


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