Expanding your business into Brazil can be an exciting opportunity, but before you sign a contract with a Brazilian company or agree to have your contract governed by Brazilian law, there are key things you should know.
Brazil has a legal system rooted in the civil law tradition, and its contract laws can be quite different from those in common law countries like the U.S., Canada, or the U.K. Misunderstandings or poor contract drafting can lead to costly disputes. This guide will walk you through the must-know aspects of contracting in Brazil, helping your business avoid pitfalls and protect its interests.
1. Is Your Contract Legally Binding in Brazil?
Before entering into a business agreement in Brazil, ensure that your contract meets the basic legal requirements for enforceability:
- Offer and Acceptance – Both parties must clearly express their agreement to the terms.
- Capacity – The person signing must have the authority to bind their company.
- Lawful Purpose – The contract must comply with Brazilian laws and not go against public policy.
- Consideration – There must be a clear exchange of value between the parties.
💡 Tip: Some contracts, like real estate transactions, must be notarized and registered. Always check if your contract falls into this category.
2. The Language of Your Contract Matters
While you can draft contracts in English, Brazilian authorities and courts will only accept Portuguese versions or sworn translations in case of disputes. If you're contracting with a Brazilian counterparty, it's best to have a bilingual contract (Portuguese + English) to avoid translation discrepancies.
💡 Tip: If your contract is only in English, ensure both parties confirm in writing that they fully understand the language to prevent future disputes.
3. Choosing the Right Governing Law and Jurisdiction
Many foreign businesses assume they can choose their home country’s law to govern their contracts. While this is sometimes possible, if there’s no arbitration clause, Brazilian courts may apply Brazilian law instead.
- With Arbitration Clause: You can freely choose any foreign law to govern your contract.
- Without Arbitration Clause: If the contract is negotiated face-to-face, the law of the location where the contract was signed applies. If negotiated remotely, the law of the offeror’s country applies.
💡 Tip: If you want to enforce your contract outside of Brazil, adding an international arbitration clause is a smart move.
4. How to Enforce a Contract in Brazil (And Avoid Disputes)
Brazil’s court system can be slow, and litigation is often time-consuming. That’s why many businesses opt for arbitration or mediation.
- Litigation – Courts are the traditional route, but expect delays and potential bureaucratic hurdles.
- Arbitration – A preferred alternative that is faster, confidential, and more efficient.
- Mediation – Useful for resolving disputes amicably before they escalate.
💡 Tip: Clearly define the jurisdiction and dispute resolution method in your contract to avoid surprises.
5. Contract Formalities and Signing Authority
Brazilian contracts tend to be formalistic, meaning you may need to follow extra steps to make your contract fully enforceable:
- Signatures must be notarized in many cases.
- Each page should be initialed by all signatories.
- Two witnesses may be required to sign certain contracts.
- Company representatives must have explicit legal authority to sign.
💡 Tip: If a Brazilian company’s representative signs a contract, ensure they have a valid power of attorney (procuração) to bind the company.
6. Brazilian Business Culture & Negotiation Tactics
Understanding Brazilian business culture can help avoid miscommunication:
- Building relationships is key – Brazilians prioritize trust and personal connections over rigid legal formalities.
- Negotiations take time – Be patient; business discussions often involve lengthy negotiations.
- Use an intermediary – Having a local business contact or lawyer can help smooth negotiations.
- Brazilians prefer flexibility – Contracts are often viewed as living documents, meaning amendments or adjustments might be expected over time.
💡 Tip: Win trust by showing commitment and respect for hierarchy—sending senior representatives can make a big difference.
7. Payment Terms & Avoiding Non-Payment Risks
Payment delays can be a challenge in Brazil, so clearly defining payment terms is critical.
- Advance payments – Request a deposit or partial payment upfront.
- Late fees & interest – Specify penalties for overdue payments (Brazilian law caps late payment interest rates).
- Bank guarantees or insurance – Consider financial protections if you’re dealing with a new counterparty.
💡 Tip: If selling goods, consider Incoterms (DAP or DPU instead of DDP), as Brazil has strict import tax rules.
8. Termination & Breach of Contract: What to Include
A well-drafted termination clause helps prevent costly legal battles. Your contract should outline:
- Valid reasons for termination (e.g., breach of contract, force majeure).
- Notice period required before termination.
- Penalties or compensation if one party terminates without cause.
💡 Tip: Brazilian law often implies force majeure and hardship clauses, meaning a party may renegotiate or even terminate the contract if unforeseen events make performance excessively difficult.
9. Protecting Your Business from Legal Risks
Brazil has strict anti-corruption laws (aligned with the FCPA and UK Bribery Act). If your contract involves Brazilian companies, ensure that compliance with anti-bribery laws is included as a clause.
Also, Brazil is a party to the Vienna Convention on Contracts for the Sale of Goods (CISG), meaning international sales contracts are subject to specific legal provisions unless explicitly excluded.
💡 Tip: Work with a vetted Brazilian lawyer to ensure your contract aligns with both local and international legal standards.
Final Thoughts: Get It Right from the Start!
Signing contracts with Brazilian counterparties can be a smooth and profitable experience—as long as you understand the legal landscape, business culture, and potential risks.
- Use clear, well-structured contracts (preferably bilingual).
- Specify governing law, jurisdiction, and dispute resolution methods upfront.
- Ensure signing authority and contract formalities are correctly followed.
- Plan for payment security and enforceability before signing anything.
A little preparation goes a long way in ensuring successful business relationships in Brazil.
Need Legal Help with Contracts in Brazil?
Trustiics connects you with vetted, experienced lawyers who specialize in Brazilian business contracts. Get expert advice from top professionals, including:
✅ Andrea Fontes – 17 years of experience in Curitiba, specializing in litigation and contract negotiations. Learn More and Get a Free Quote from Andrea.
✅ Graziella Oliveira – 16 years of experience in Curitiba, with deep expertise in commercial contracts and business policies. Learn More and Get a Free Quote from Graziella.
✅ Allex Estolano – 12 years of experience in São Paulo, focusing on business and corporate law. Learn More and Get a Free Quote from Allex.
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