BRAZIL Trends and Developments
Contracts, Risk and Economic Freedom in Brazil: A Comparative Perspective and Practical Outlook This article explores the modernisation of Brazil - ian contract law through the lens of Article 421-A of the Civil Code, introduced by the Economic Freedom Act (Law 13.874/2019). It analyses how legal professionals can proactively man - age uncertainty in commercial relations, focus - ing on risk allocation, asymmetry correction, and good faith principles. Drawing parallels with common law and international practices, including International Federation of Consult - ing Engineers ( Fédération Internationale Des Ingénieurs-Conseils , or FIDIC), National Electri - cal Code (NEC) and International Institute for the Unification of Private Law ( Institut International pour l’Unification du Droit Privé , or UNIDROIT) standards, it presents a forward-looking and practical approach to contractual design in a risk society. In recent years, businesses have had to confront increasingly unpredictable scenarios: global sup - ply chain breakdowns, remote work reshaping property contracts, and cybersecurity breaches disrupting public services. These events high - light what sociologist Ulrich Beck famously called the “risk society”, whereby scientific and technological progress brings not only solutions but also new – often global – threats. Within this context, Brazilian institutions have struggled to respond effectively. Legislative and executive powers face gridlock, while the judiciary has become overburdened with novel and complex disputes. As a result, the task of identifying, managing and allocating legal and operational risks has increasingly shifted to pri - vate actors – especially companies and their legal advisers.
In corporate practice, this shift is most evident in contract law. Contracts are now expected not only to regulate relationships but also to antici - pate and manage uncertain, high-impact events. Against this backdrop, Brazil enacted the Eco - nomic Freedom Act, which introduced Article 421-A into the Civil Code – a significant develop - ment reinforcing the binding nature of contracts while recognising that some review may be nec - essary, albeit in exceptional and limited cases. Article 421-A states: “Civil and commercial con - tracts are presumed to be negotiated between equal and symmetrical parties, unless there is concrete evidence to rebut this presumption. This is without prejudice to the legal regimes established by special laws, and it is also ensured that: • the contracting parties may establish objec - tive parameters for interpreting the contrac - tual clauses and the assumptions for their revision or termination; • the allocation of risks defined by the parties must be respected and upheld; and • contract revision shall occur only in an excep - tional and limited manner.” Since its enactment, Brazilian courts – particu - larly the Superior Court of Justice ( Superior Tri- bunal de Justiça , or STJ) – have progressively applied Article 421-A, reinforcing contractual autonomy and limiting judicial intervention. What follows concerns one such case. “Civil procedure. Special appeal. Claim for pay - ment. Parity contract. Economic balance. Private autonomy. Specific legislation. Abusive clause. Not established. Good faith. Social function of the contract. Parties’ legitimate expectations.
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