Business Opportunities and Contractual Obligations for an Australian Exporter in Brazil

This paper discusses the business opportunities and contractual obligations for an Australian exporter in Brazil. It covers the food and beverage industry in Brazil, contractual obligations, legal compliance, and more.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Executive Summary
 Australia’s food industry is well-known in the international market due to its ‘clean
and green’ approach, good regulatory framework and their primary emphasis on
sustainability. Such business and consumer friendly approach gives it an edge among
its international competitors, especially in the exporting countries where the food and
beverage industry in still blooming.
 XYZ Co is an Australian food and beverage exporter in Brazil. It is an individual
producer company that grows its produce, package and sell some of its produce to the
local retailers and exports a bulk to its clients in Brazil at a premium rate as the
produce is tagged as ‘clean and green’ as they are grown organically.
 The food and beverage industry in Brazil is an essential part of its economy, for it is
one of the largest contributors to the Brazilian economy. In spite of being a good
producer of food products, Brazil require certain products like alcoholic beverages,
foreign origin fruits and dairy products which it source from various countries;
Australia being one of them. XYZ Co, being the manufacturer of in dairy products,
meat products and alcoholic beverages, and grower of organic fruits and vegetables
and certain plant based products can see a growing opportunity in the Brazilian
market.
 There are certain types of contracts that an Australian exporting business would be
required to enter into to in order to carry out its business operation internationally,
that is beyond the borders of Australia. The parties to a contract are supposed to
specify the terms and conditions of the contract, along with the arrangement of
settling disputes, if one arises.

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 This paper strives to lay down the business opportunities of XYZ Co, an Australian
exporter company carrying out export operations in Brazil, along with the essential
contractual obligations that it needs to comply with.

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Table of Contents
Introduction....................................................................................................................4
Discussion......................................................................................................................5
Business Opportunity in Brazil..................................................................................5
Contractual obligations..............................................................................................7
Source of Contract Law in Brazil...........................................................................8
Legal requirement for creating a valid contract in Brazil......................................8
Remedies of breach of contract..............................................................................9
Necessity of appointing an agent in Brazil............................................................9
Free Trade Agreement..........................................................................................10
Legal Compliance................................................................................................10
Conclusion....................................................................................................................11
References....................................................................................................................12

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Introduction
For the purpose of this paper, the chosen Australian company (XYZ Co) is a food
and beverage exporter in Brazil. It is a multinational enterprise dealing in Brazil with the
help of an agent who looks after the business dealings between the principal and the third
party. Australia’s food industry is well-known in the international market due to its ‘clean
and green’ approach, good regulatory framework and their primary emphasis on
sustainability. Such business and consumer friendly approach gives it an edge among its
international competitors, especially in the exporting countries where the food and beverage
industry in still blooming. In such growing markets, there are two types of buyers; one that is
open to pay for premium quality products and one that looks for budget-friendly options. As a
result, Australia’s food and beverage industry has seen a significant growth and business
opportunity, especially in African and Asian countries (Austorganic.com, 2019).
XYZ Co is an individual producer company that grows its produce, package and sell
some of its produce to the local retailers and exports a bulk to its clients in Brazil at a
premium rate as the produce is tagged as ‘clean and green’ as they are grown organically.
The process of exporting its products by XYZ Co to its selected clients at Brazil goes through
a number of steps like logistics, licensing, branding and marketing. By the global population
growth report, there will be 2.4 billion more people by 2050 which indicates that 60-70%
more production of food would be required. Therefore, food and beverage industry could be
presumed to be growing with the passage of time, thereby increasing the revenue of the
companies involved in food and beverage industry (Austorganic.com, 2019).
The business analysts have laid down that Brazil can be a complex market to carry on
business in for a country like Australia due to its volatile economy that was hit by the menace
of recession recently. However, the demographics and the outlook of growth of Brazil gives
hope and assurance to the exporting companies of Australia. Even though Brazil saw a

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recession in the recent years, yet it has a promising market that embrace export due to its
large population with a sizable agriculture industry. The per capita income of Brazil has
doubled in the last 10 years which has made it a country of the upper-middle income status
(Austorganic.com, 2019). In addition, several ongoing partnership business between
Australia and Brazil pertaining to agriculture, food and beverage and bio-security has made
Brazil a ready market with good business opportunities.
Discussion
Being the fifth largest country in the world, Brazil has an approximate population of
210 million people as recorded in 2018 which clears all doubt that it would have one of the
highest grossing food markets in the world, amounting to around 105 billion US dollars
(Agriculture.gov.au, 2019). In spite of being a good producer of food products, it needs to
import certain food and beverages of premium quality and the ones native to Australia for its
premium retailers and customers. XYZ Co is well known as an exporter of premium food
and beverage products in Brazil that exports organically grown produce to a wide range of
premium clients. The XYZ Co ensures that the food and beverages comply with the export
laws of Australia along with the required standards of import of Brazil. It follows the
regulations of the export-import laws pertaining to the quality of the food and beverage
products along with the obligations that an exporting company needs to adhere to while
exporting regulated products, like diary.
Business Opportunity in Brazil
The food and beverage industry in Brazil is an essential part of its economy, for it is
one of the largest contributor to the Brazilian economy. In spite of being a good producer of
food products, Brazil require certain products like alcoholic beverages, foreign origin fruits
and dairy products which it source from various countries; Australia being one of them. XYZ
Co, being the manufacturer of in dairy products, meat products and alcoholic beverages, and

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grower of organic fruits and vegetables and certain plant based products can see a growing
opportunity in the Brazilian market (Agriculture.gov.au, 2019). Even though the country
went through a steep recession between 2014 and 2016 where its GDP fell by 3.6% along
with a reduction in revenue collection across every sector in the country, Brazil has coped up
and undergone a drastic development and change in its food and beverage industry due to the
inflow of its own export business along with foreign direct investment (Investinbrazil.biz,
2019).
XYZ Co has build a strong client base in Brazil over years of its business in the
country where it holds a long list of premium clients who require a steady supply of products
from the company, like:
 Dairy products like toned milk, exotic cheese, milk powder, condensed milk,
flavoured butter
 Dairy based beverages like flavoured milk, bottled milkshakes, and milk based
protein shakes.
 Meat and meat products like sausages, salami, cold cuts, and lean steaks.
 Fruits native to Australian sub-continent like the Australian apples, mandarins,
nectarines, oranges, plum and kiwi from New Zealand.
 Native Australian vegetables like bush tomato, Davidson’s plum, lemon aspen,
riberry.
 Alcoholic beverages like Australian Wine and beer.
The regular clients of the company are mostly from the food and beverage industry as
well, some are retailers while some run renowned restaurant serving continental cuisine. With
the growing trend of dining out and ordering in, restaurants and cafes around the globe are
growing and thus catering to the different taste buds around them. Different cuisines are
being experimented with, which are gladly welcomed by the adventurous and risk-taking

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youths of today, thereby making the gastronomy industry grow by leaps and bounds
(Business.gov.au, 2019). This is the biggest opportunity and advantage for the company to
spread its wings further deep inside Brazil and capture a wider clientele.
The company has made tremendous progress in terms of revenue collection and
overall annual turnover over the last couple of years of its business operation in Brazil, which
is almost double from what it was initially. Such progress and development of the business
operation boosts the confidence of the company to experiment with its exporting products
and launch newer products in Brazilian market. Therefore, it could be held that XYZ Co has
made tremendous progress as an exporting company, dealing in food and beverage, thereby
signifying and highlighting the vast business opportunity food and beverage industry has in
Brazil.
Contractual obligations
Contractual obligations are primary to all business concerns as it helps to form the
rights, liabilities, duties and obligations of the company towards its contracting party, along
with the rights and duties of such contracting party as well. There are certain types of
contracts that an Australian exporting business would be required to enter into to in order to
carry out its business operation internationally, that is beyond the borders of Australia. The
parties to a contract are supposed to specify the terms and conditions of the contract, along
with the arrangement of settling disputes, if one arises, by way of arbitration or conciliation,
or by way of any other alternative dispute resolution method. In this context, XYZ Co would
be required to specify the particular form of alternative dispute resolution system it would
like to adopt in case of resolving dispute with its clients in Brazil, along with the applicability
of law of either Australia or Brazil in any legal matter. Such contractual terms and conditions
would help both the parties to broaden their business relationship along with narrowing down
the issues between them. The exporting company and the importing country can enter into

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contract in order to choose their choice of court or tribunal in order to resolve disputes
between them. For this matter XYZ Co would be suggested to choose Australian Courts to be
its appropriate forum in case any dispute arises with its Brazilian clients.
In addition, in order to carry out international trade, XYZ Co would be required to
comply with several International conventions that word created to remove barriers between
countries pertaining to international trade and commerce. For example, UN Convention on
Contracts for international Sale of Goods (CISG) asks its member countries to adhere to the
guidelines of the conventions while making contracts between each other pertaining to
building trade relationships among themselves.
Source of Contract Law in Brazil
The contract law of Brazil is highly influenced from the contract law followed in the
United States. The Brazilian contract law refers to the Brazilian Civil Code as well as the
Consumers’ Code into account, thereby protecting the end user of the product. Therefore as
the Brazilian contract law operates under a civil code and not as per the common law, the
specific requirements pertaining to contractual obligations and regulations could be found
written for various types of contracts like contracts establishing business relation, lease
agreement, insurance contract, contracts related to copyright, patent or trademark, et cetera.
Legal requirement for creating a valid contract in Brazil
Under Brazilian contract law the legal requirements for creating a valid
contract is as follows:
 A valid offer either explicit or implicit along with an acceptance of such offer
 Capacity of the parties to form a legal/contractual relation between themselves
 Lawful purpose for entering into the contract
 Agreement or meeting of minds on goods and price

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However under Brazilian law a contract has no specific form to be valid and binding
unless expressly provided by law. Therefore contracts created in electronic forms are also
considered to be valid agreements in the eye of law, except for cases where it is expressly
exempted.
Remedies of breach of contract
In a contractual obligation, the breaching party would be held liable to compensate the
aggrieved party who has sustained certain loss or damage due to the breach caused by the
breaching party, as per Articles 402 to 407 of the Brazilian Civil Code. The aggrieved party
has the right to request the court to give an order of specific performance to the breaching
party, which would require the breaching party to complete the contractual obligation that it
had breached on the first place. However under Brazilian law there is no particular rule that
impose an obligation on the parties to the contract to resolve contractual disputes between
them, yet it is the Civil law of the land that expects the contracting parties to have a civilized
contractual relationship thereby acting in good faith in order to cooperate and achieve a
common goal.
In case specific performance of contract becomes irrelevant in a particular situation,
the aggrieved party can request for the termination of the contract before the adjudicating
Court in order to bring the contract to an end and release both the parties from their
contractual obligation. In case both specific performance and termination of the contract
cannot be e applied in order to provide a remedy to the aggrieved party, then in that case the
aggrieved party shall be awarded compensation for the loss sustained by him.
Necessity of appointing an agent in Brazil
In most International or overseas business transactions, companies appoint an agent in
the foreign country who is given the responsibility to handle all kinds of business transaction
and operations between the principal and the third party. However there is no mandate or

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legal obligation pertaining to the appointment of an agent, yet companies find it easier and
more convenient to carry out its business operation with the help of an agent or sometimes
with the help of franchise. Search appointment of agent is beneficial for the company in order
to stay in direct touch with its clients and subsequently provide after sale services and also for
accepting feedbacks and complaints in order to improve its quality
Free Trade Agreement
Free trade agreements (FTAs) are a type of treaty between two or more countries,
thereby benefit them in terms trade relationship among them, trade like import, export,
production, foreign investment, et cetera (Department of Foreign Affairs and Trade, 2019). In
this case, Australia does not have a Free Trade Agreement policy with Brazil which signifies
that the two countries do not enjoy free and relaxed trade regulations among them, by
reducing or removing the trade barriers in the international trade and investment scenario
(Department of Foreign Affairs and Trade, 2019).
Legal Compliance
XYZ Co is registered under the Australian Department of Agriculture and complies
with all the regulations laid down by the Department. It adheres to the regulatory standards of
Food Standards Australia New Zealand Act 1991. This Act helps the company to maintain
uniformity in the food products and beverages, irrespective of where or to whom it is selling.
In addition, the company also adheres to the provisions of the Australian Competition &
Consumer Act 2010 (previously known as the Trade Practices Act 1974) which helps the
company to steer clear of false, misleading and deceptive activities which is extremely
essential in the food and beverage industry, for the products must meet the quality standards
that are essential for human consumption. XYZ Co adheres to the guideline provided by the
Australian Competition and Consumer Commission (ACCC). Through ACCC the company
takes guidance pertaining to assisting people who are involved with the food and beverage

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industry, in order to comply with its obligation as a producer and wholesaler in Australia and
an exporter in Brazil. In addition, XYZ Co complies with the provisions of the Export
Control Act 1982 and other associate legislation and the requirements of the importing
country, which is Brazil in this case. The Department of Agriculture keeps a track of the
exporting company by the help of the Manual of Importing Country Requirements (MICoR)
which acts as a resource for the Australian exporter companies (Business.gov.au, 2019).
Conclusion
Therefore, it could be concluded that XYZ Co, being a multinational Australian
exporter, carrying out its major business operations in Brazil, has immense business
opportunity in the ever-so growing Brazilian food and beverage industry. It has not only
doubled its annual turnover, but also increased its long list of clientele by providing quality
and premium products that are ‘clean and green’. By the help of it agent in Brazil, it has
facilitated a good customer service policy by which it derives feedbacks, suggestion as well
as constructive criticism from its clients so that it could improve its service from better to the
best. It strives to supply the freshest of the produce which is also the motto of the business
and one of its contracting terms with all its clients. A thorough and detailed contract with the
clients helps the company to steer clear of unnecessary legal disputes, along with deciding its
dispute resolution mechanism and the choice of law that would be followed in case of legal
dispute. Thus, it could be held that XYZ Co is a fully functional and successful Australian
exporter, operating in the Brazilian food and beverage industry.

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References
Agriculture.gov.au. (2019). Exporting from Australia. Retrieved 19 July 2019, from
http://www.agriculture.gov.au/export/from-australia
Austorganic.com. (2019). Growing Australia's food & beverage exports. Retrieved 19 July
2019, from https://austorganic.com/wp-content/uploads/2019/03/Efic-Building-
Australias-food-and-beverage-exports-eBook-002.pdf
Australian Competition & Consumer Act 2010
Brazilian Civil Code
Business.gov.au. (2019). Importing and exporting. Retrieved 19 July 2019,
from https://www.business.gov.au/products-and-services/importing-
and-exporting
Department of Foreign Affairs and Trade. (2019). Australia's free trade agreements (FTAs).
Retrieved 19 July 2019, from https://dfat.gov.au/trade/agreements/pages/trade-
agreements.aspx
Export.gov. (2019). Brazil - Market Opportunities | export.gov. Retrieved 19 July 2019, from
https://www.export.gov/article?id=Brazil-Market-Opportunities
Food Standards Australia New Zealand Act 1991
Investinbrazil.biz. (2019). Food and Beverage Industry | Invest in Brazil. Retrieved 19 July
2019, from https://investinbrazil.biz/industry/food-and-beverage/food-and-beverage-
industry
UN Convention on Contracts for international Sale of Goods