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Act 194/1993 was adopted together with the amendments thereto pursuant to Decree Number 7,dated March 1991. This Act, as amended, establishes specific provisions for representation, agencyand distribution agreements.The Act foresees representation, agency and distribution agreements between foreign firms ormanufacturers and real or legal persons domiciled in Paraguay. Any other type of distribution, agencyor representation agreement remains subject to the general provisions of the Civil Code.The Act establishes that any party of one of the above mentioned types of contracts may cancel,revoke, modify or refuse to grant the renewal of such agreement without the need to prove causethereto; however, said party will be obliged to pay and indemnify the other party within three monthsof cancellation, revocation or non-renewal. The amount of indemnity is to be set according to twomain factors: the length of the contractual relationship and the average of all annual gross profitobtained under the representation, agency or distribution agreement. The Court or the ArbitralTribunal will use these factors to establish the minimum amount that will be required as an indemnity.In the event the contract is terminated, canceled, revoked, modified or not renewed, therepresentative, agent or distributor holds the option of selling back to the other party the stock orinventory merchandise, under the terms and conditions of the agreement, at a price at which normalprofit would be performed in conformity with current prices established in the market place.The Act also states that any type of foreign firm or manufacturer that is a party to a representation,agency or distribution agreement may cancel, revoke, modify or deny renewal of such agreement ifjustified reasons set forth by the Act are caused. In the event justified cause for cancellation exists, theforeign firm shall not pay any type of indemnity.Justified reasons must be proved before the competent Judge or Arbitror, if so agreed. Otherwise, itshall be shall be assumed that the termination, revocation, amendment or denial of extension isunjustified.According to the Act, the above-mentioned provisions may not be waived. Moreover, the Act requiresthat the parties submit themselves to the jurisdiction of Paraguayan Courts. Finally, as from the date ofenactment of this Act, the documents and agreements referred must be recorded at the PublicRegistry of Commerce.11. PHARMACEUTICAL AND HEALTH PRODUCTSAct 1119/1998 introduces important innovations as well as an integral system regulating healthproducts. The Act not only offers a more adequate consumer protection but also provides national andforeign companies with more legal assurance as to what the norms related to authorization, registry,inspection, laboratory analysis, liability, quality control, and applicable sanctions, among others, are.17Berkemeyer Attorneys and Counselors | Asunción - Paraguay