Do You Really Have a Contract in Brazil?

You signed a contract in Brazil, but is it really enforceable? Depending on the circumstances, the Brazilian Civil Code may suggest otherwise.

Article 166 of the Brazilian Civil Code lists seven circumstances that could potentially nullify a legal agreement. These range from deals involving illegal activities to contracts that don’t adhere to statutory requirements. Also included are contracts that are too vague or ambiguous, or are impossible for the parties to perform, as well as transactions where one of the parties lacks sufficient legal capacity.

For example, an agreement to rob a bank would fall under Article 166. So too would the sale of a property that doesn’t exist. And if the property does exist but no deed is signed, or the buyer is a minor or someone who is mentally impaired, the deal risks being invalidated.

Article 167 of the Brazilian Civil Code includes a separate ground for invalidating legal transactions - simulation. This includes deals that are premised on misrepresentations, have backdated or post-dated agreements, or otherwise disguise the true intention of the arrangement.

A transaction that falls within the scope of Article 166 or 167 isn’t automatically considered invalid. In these circumstances, only a Brazilian judge has the authority to render a transaction null and void.

Before you sign a contract in Brazil, make sure it complies with the Brazilian Civil Code.  Otherwise, you risk a court terminating the transaction by deciding that it’s null and void. The onus of ensuring a contract is enforceable is on you.