Law and regulation of force majeure in Brazil

Yes, it is contained in Article 393 of the Brazilian Civil Code. 

Article 393 of the Brazilian Civil Code states: “The debtor shall not be liable for damages resulting from chance events (caso fortuito) or force majeure (força maior), if it is not expressly responsible for them. 

Sole Paragraph: chance events or force majeure, are where the effects of the act were unavoidable and not preventable”.

It is not mandatory. Parties are free to regulate their contractual relationships, including the consequences of force majeure, within the limits of the social function of the contract (defined below), so as long as the purpose of the contract is licit. (This is the principle of party autonomy). 

Parties are free to regulate force majeure clauses based on the principle of party autonomy, but within the limits of the social function of the contract. The concept of a contract’s social function, is that the interests of the parties in the enforcement of their bargain is subjugated to the social interest in the enforcement of the contract, and can be invoked in certain situations to allow state control over the acceptability of contract terms.

Enforcement of force majeure clauses will also take into account the principle of good faith. This requires the parties to act correctly, before, during and after performance of the contract; e.g. not concealing their motivations, intentionally misleading one another or abusing a contractual right to achieve an ulterior purpose.

The principle of economic equilibrium will also be considered. This allows a party to request the revision or termination of a contract, where one party is unduly burdened by a radical, extraordinary and unpredictable change in economic conditions during the performance of the contract. 

Article 393 of the Brazilian Civil Code does not specifically define chance events (caso fortuito) and force majeure (força maior), however, jurisprudence has interpreted these to mean as follows:

1. Chance event (caso fortuito): a human act, which is unforeseeable and beyond the parties’ control, which prevents the performance of an obligation (e.g. strikes, war, acts of state authorities); and
2. Force majeure (força maior): an event resulting from the forces of nature, foreseeable or not, but beyond the parties’ control (e.g. lightning, storms, earthquakes).

In a Brazilian contract, if the term “force majeure” is used, we understand this to include both caso fortuito and força maior, as it would be understood in a common law contract.  However, that could be disputed in a Brazilian court, so it would be advisable to refer expressly to both caso fortuito and força maior.

Yes, there are differences. 

In B2B transactions, the contract is usually based on the Brazilian Civil Code which has an express provision that establishes exclusion of liability based on force majeure (Article 393 and its Sole Paragraph). 

In B2C transactions, the contract is governed by the Consumer Code, which does not expressly provide for force majeure events. However, the Superior Courts’ view is that force majeure may be claimed even in consumer relationships. Nonetheless, consumers will have the benefit of the protections set out in the Consumer Code, including protection against abusive or disproportionately burdensome clauses. These protections could prevent the enforcement of a one-sided or a manifestly unfair force majeure clause. 

The provisions of a force majeure clause may be given more weight if set out in a contract, as opposed to T&Cs, as the parties are usually considered to have more freedom to negotiate the former. 

N/A

N/A

The principle of economic equilibrium may provide an alternative remedy in certain circumstances.  In bilateral contracts requiring ongoing performance, a party may invoke this principle to require the contract’s revision or termination where a radical, extraordinary and unforeseeable change in economic conditions creates an excessive burden for one of the parties and exaggerated benefit for the other.  

Considering the economic volatility the Coronavirus crisis is causing, including rapid shifts in currency valuations, commodity prices and potential unavailability of resources and manpower, this right may be commonly invoked.

The consequences of Coronavirus may be treated as force majeure in Brazil, to the extent that they prevent the performance of a specific contractual obligation. However, it will be necessary to consider the cause and effect in each case. It is not sufficient to show that performance has become more expensive, for example, or that Coronavirus requires performance in a different manner to that originally contemplated, but not specified in the contract.