Contract Law: Force Majeure and Hardship in Brazil

Force Majeure and Hardship under Brazilian Law: a Practical Guide

Quick read:

• Brazilian law may protect parties that are unable to perform contractual obligations because of force majeure, fortuitous events or hardship.
• Depending on the circumstances, the available relief may include exemption from damages, delayed performance, termination, judicial adjustment of price, or renegotiation of contractual terms.
• These principles may be relevant in a range of situations, including pandemics, supply-chain disruptions, government restrictions, natural disasters and other extraordinary events beyond the parties’ control.
• Parties should seek legal advice promptly once they realise that performance may be affected, because delay in giving notice or taking protective steps may prejudice the relief otherwise available.

Introduction

Many companies doing business with Brazilian counterparties operate under contracts governed by Brazilian law. In agreements drafted under Anglo-American practice, force majeure and hardship are often dealt with expressly. In contracts drafted under Brazilian practice, however, parties frequently rely in whole or in part on the protections already provided by Brazilian law.

Brazilian law contains rules that may protect a party that becomes unable to perform its contractual obligations, or for whom performance becomes excessively onerous, because of extraordinary events. The COVID-19 outbreak is one example of the kind of disruption that may trigger these principles, but the rules discussed below are broader and should be understood as part of Brazil’s general law of contractual disruption.

Force Majeure under the Brazilian Civil Code

The Brazilian Civil Code applies to local contracts and to international contracts that are neither governed by the UN Convention on Contracts for the International Sale of Goods (the “Convention”) nor by the Consumer Protection Code, which is not addressed here.

Article 393 of the Civil Code sets out the rule applicable to contracts governed by the Code. It provides:

“The obligor is not liable for damages resulting from fortuitous cases or force majeure if he is not expressly responsible for them.

Sole paragraph. The fortuitous case or force majeure occurs in a necessary event whose effects were not possible to be avoided or prevented”.

This provision allows a party bound to do, or refrain from doing, something under a contract to avoid liability for damages where a fortuitous event or force majeure occurs. But what do those terms mean?

Brazilian courts and commentators have generally interpreted “fortuitous case” as an unforeseen event arising from human action, while “force majeure” is usually associated with events originating in nature. In either case, the event must be external, irresistible and such that it prevents performance. Importantly, the impossibility of performance must result from a fact outside the party’s control.

In functional terms, force majeure under the Civil Code is broadly analogous to doctrines such as frustration, impossibility and frustration of purpose found in other legal systems, although the concepts are not identical.

Force Majeure under the Convention

Where an international contract involves the sale of goods between parties located in countries that are members of the Convention, the Convention will apply unless the parties have expressly excluded it.

The Convention contains its own force majeure-type rule. Article 79 provides:

“(1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences.

(2) If the party’s failure is due to the failure by a third person whom he has engaged to perform the whole or a part of the contract, that party is exempt from liability only if:

(a) he is exempt under the preceding paragraph; and

(b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.

(3) The exemption provided by this article has effect for the period during which the impediment exists.

(4) The party who fails to perform must give notice to the other party of the impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non-receipt”.

Differences between the Civil Code and the Convention

There are important differences between the relevant provisions of the Civil Code and the Convention:

Issue	Civil Code	Convention
Definition	More general with greater discretion given to the courts.	More specific.
Scope and elements required to be proved	Covers any event that the party is not capable of avoiding. The party must prove that the event was unforeseen and outside of its control.	The reason for not performing the contract must be: (a) beyond the control of the party; and (b) the party could not reasonably have expected to: (b.i) take the impediment into account at the time of the conclusion of the contract; or (b.ii) have avoided or overcome the impediment or its consequences.
Performance by third parties	Falls under the general rule.	Both the party bound to perform the obligation and the third party must prove the elements for not performing as set out above.
Notice requirements	Falls under the general obligation to act in good faith throughout the performance of the contract, hence timely notice is likely to be required.	The notice must be given to the other party: (a) setting out the impediment and its effect on the party’s ability to perform; and (b) within a reasonable time after the non-performing party knows or ought to have known about the impediment.

Hardship

Under articles 478 to 480 of the Civil Code, where performance by one party becomes “exceedingly onerous” and at the same time extremely advantageous to the other party because of extraordinary and unpredictable events, the burdened party may seek termination of the contract.

The party required to perform may also propose adjustments to the contract, including changes to the manner of performance, so that the obligation is no longer excessively onerous.

However, if the other party offers to adjust the contract on terms that are reasonable in the circumstances, including by offering an increased price where appropriate, the contract may still need to be performed.

In addition, article 317 of the Civil Code provides that, where unforeseen reasons cause a “manifest disproportion” between the value of the obligation as agreed when the contract was entered into and its value at the time of performance, the court may adjust the amount payable.

These rules form part of Brazil’s broader framework for dealing with hardship, contractual imbalance and judicial rebalancing in exceptional cases.

Examples and Court Decisions

Force majeure and hardship may arise in a variety of situations, and each case must be assessed on its own facts. By way of illustration:

• if a service provider was required to perform services in Brazil but could not do so because its staff were subject to a government-ordered lockdown or similar compulsory restriction, there may be a fortuitous case under the Civil Code, with the consequence that the provider may not be liable for damages;
• if a manufacturer was required to deliver products by a certain date but could not do so because its factories were shut down due to an unforeseen and severe shortage of raw materials, including as a consequence of a pandemic such as COVID-19, there may be force majeure under the Civil Code and, where applicable, under the Convention, so that the manufacturer may not be liable for damages; and
• if a manufacturer suffers major supply-chain disruption causing input costs to rise substantially and making performance excessively onerous, the hardship provisions of the Civil Code may support termination or judicial or negotiated adjustment of the contract. The counterparty may, however, offer a reasonable price increase or other reasonable adjustment, in which case performance may still be required.

The COVID-19 outbreak provides a useful example of how Brazilian courts have applied these principles in practice. During that period, courts granted temporary relief in cases such as the following:

• In VBR Gastronomia v Costa, a restaurant operator (lessee) sought a reduction in the rent payable. As the lessee was only able to operate on a takeaway basis, the court granted interim relief reducing the rent by 70%.
• In Turqueza v Paulo Octavio, the plaintiff, a lessee in a shopping centre, sought interim relief against payment of minimum rent and the marketing fund levy. The court relied on article 317 of the Civil Code and held that the lessee was not required to pay the minimum rent and marketing fund levy on an interim basis.

Final Remarks

Brazilian law may provide relief to parties that are unable to perform contractual obligations, or for whom performance has become excessively onerous, because of extraordinary events. Depending on the facts, that relief may support exemption from damages, termination, renegotiation or judicial adjustment of contractual obligations, including price and payment terms.

Parties should seek legal advice as soon as they realise that performance may be affected, because delays in notifying the counterparty or in taking protective steps may impair the ability to rely on the protections available under Brazilian law.

American law Anglo-American law Brazil Brazilian Civil Code Brazilian Contract Law Brazilian law CISG Contract Law Contractual hardship coronavirus Covid-19 doctrine of frustration doctrine of impossibility doctrine of unpredictability English law Force Majeure frustrated contract frustration Hardship impossibility

Last modified: 4 April 2026