Civil Law: contracts, collection and civil liability in Brazil

The Brazilian Civil Code (Law No. 10,406/2002) requires contracts to respect good faith and social function. We work on drafting, interpretation, contract review and performance of contracts, such as:

• purchase and sale and service agreements;
• leases and loans;
• suretyship and guarantees;
• settlements and releases.

In a review, the following are examined: the parties' obligations, deadlines, price, penalties, guarantees and the way disagreements are resolved. Reviewing before signing is usually simpler than arguing afterwards.

As a rule, civil liability requires conduct, damage and a link between the two (causation), and in many cases also fault. It can arise from a breached contract or from an act that causes loss to a third party. To assess compensation for damages, the following are examined:

• whether there is material damage, non-material (moral) damage or both, and how to prove it;
• who is responsible and to what extent;
• the deadlines for claiming compensation, which vary depending on the case;
• the evidence available and what can still be gathered.

There is no guarantee of compensation: it depends on the legal requirements being present and being proven.

There is default when a party does not perform, or performs poorly or late, what it undertook to do. Depending on the contract and the law, the other party may demand performance, claim a penalty and losses and damages or request termination. In long-term contracts, it is also assessed whether there was a relevant breach of contract or only a remediable delay.

Document analysis is often decisive. Gathering these early helps:

• the contract and its amendments;
• proof of payment and delivery;
• message and e-mail exchanges;
• notices sent and received.

We work on property disputes between individuals, between companies and between individuals and companies, such as:

• collection and disputes over amounts, including when the amount is contested;
• disagreement over the interpretation of a contract;
• disputes over ownership and possession of assets;
• protection of assets in the face of a risk of damage.

Before a court collection action, notification, negotiation and the strength of the evidence are usually assessed. A contested debt requires checking the instrument, the amount and the limitation periods, which vary depending on the nature of the credit.

Depending on the case, the best solution may lie outside court proceedings. We assess, in an informational way:

• direct negotiation and out-of-court notification;
• mediation, regulated by Law No. 13,140/2015 (in Portuguese);
• arbitration, when provided for in the contract and suitable for the right in dispute.

The choice considers costs, deadlines, evidence and the relationship between the parties. These routes generally depend on the willingness of everyone involved.

When a solution is not possible outside court, or there is a risk of losing a right (such as the expiry of limitation periods), a lawsuit is one of the options. In an informational way, a civil proceeding usually involves:

• a complaint stating the facts, the law and the claims;
• the other party's response and the production of evidence;
• the possibility of an attempt at conciliation during the proceeding;
• a judgment and possible appeals.

Deadlines and results depend on the evidence and the particulars of the legal relationship. There is no guarantee of winning the case.