Government measures in key jurisdictions 3rd edition final - Flipbook - Page 20
Brazil
Notwithstanding the above, according to the courts’ and jurists’ prevailing understanding and the
Brazilian law, especially in business relations, the extent of the court interference in contractual
relations should (i) be restricted and (ii) take into consideration the particularities of the case when
assessing the (un)foreseeability and the disproportion between the obligation of the parties, as well
as any other circumstances which require their interference. This understanding has gained
significant support with the enaction of Provisional Measure No. 881/2019 (“Economic Freedom
Act”) in May 2019, which was then converted into Federal Law No. 13,874/2019 (“Economic
Freedom Law”) later in October of the same year.
Article 421 and Article 421-A of the Brazilian Civil Code, as amended by the Economic Freedom Law
provide that:
•
(i) in private contractual relations, there should be minimum State interference, and
contractual revision by external agents should be an exception;
•
(ii) the allocation of risk agreed between the Parties should be preserved;
•
(iii) in business relationships, the parties are presumed to be equally equipped.
•
Hence, although Brazilian civil law does allow for court interference to restore the balance of
the contract, in business transactions, such interference should be minimum and the parties,
which are considered to be sophisticated entities with equal bargaining power, should have
their agreements enforced as provided for in the contract.
•
Given that the COVID-19 pandemic (and its effects on contractual relations) is an extraordinary
and recent event, it is important to assess its impacts on each contract, as well as other
circumstances of any particular case and of the contract, in order to determine whether or not
COVID-19 can lead to the rebalance of a contract
Property
Have any changes
been made to
the laws around
property, rent and
enforcement?
During the Covid-19 pandemic, several bills of law were presented before the National Congress in an
effort to counterbalance adverse effects of the pandemic to lease agreements. Some of them aimed
to rule suspension of rent enforcement as well as reduction of rental values. None has been
effectively approved, except for the measure that prohibits the eviction of lessees in causes filed
from March 20th, 2020, amending items of the Article 59, § 1º of the Law No. 8,245 of 1991 (the
Lease Law), until October 30th, 2020.
There is no official understanding from the Brazilian courts about the adverse effects of the pandemic
to lease agreements. Courts are ruling the matters taking into consideration the particularities of
each specific contractual relationship.
There is an effort of the Courts to protect both the lessor and the lessee, assuming that both parties
have suffered the impacts of the Covid-19 pandemic, as well as to prevent opportunistic behaviors
from the parties.
Upon the analysis of approximately 160 decisions of the Courts of São Paulo and Rio de Janeiro, it is
possible to verify that, in cases which Courts decided to reduce the rental values, the discount varied
from 30 up to 70 percent for a certain period of time (usually for the period of the lockdown). Most
common decisions granted 50 percent discount in the rental values
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Government measures in key jurisdictions