Plan For Contingencies in Your Contracts

The job of your lawyer is to help minimize risk. While every deal has some uncertainty, there are a variety of ways that things can go wrong. This is particularly true for foreigners doing business in Brazil. Yet through careful contract drafting, your legal team can better protect you should the unexpected arise.

Imagine that you’re buying a house in São Paulo and the contract says that payment is due by February 1. What if the day before you discover that your bank can’t send money to Brazil? What if the international wire transfer doesn’t go through? Or what if the seller’s bank can’t accept US dollars?

The same goes for company transactions. Say your business has a contract that requires your articles of incorporation be amended by a certain date. You file, but the trade board rejects your filing and makes you file again. This means you don’t have the filed copy by the date stipulated in the contract.

In each scenario, you risk breaching the contract because you didn’t think ahead. It may not be your fault. Often it isn’t. But that usually isn’t an excuse. Your lawyer should help you through the “what ifs” and, to the extent possible, prepare for them.

Before you sign a contract in Brazil, make sure you’ve read it, understand it, and considered contingency plans if something goes wrong. When unforeseen challenges arise, your best protection is the contract itself. Just make sure it’s well drafted and takes into account the “what ifs.”