Price Increases in Commercial Contracts in Brazil

No, the supplier is not permitted to unilaterally increase prices if the agreement does not contain an explicit price adjustment clause. However, the supplier does have the right to request judicial correction when, due to unforeseen reasons, the value of the obligation owed becomes manifestly disproportionate to the value at the time of its performance (Article 317 of the Law No. 10.406/2002 namely Civil Code).  

To explain further, in the absence of an explicit agreement regarding price adjustments in the private sector, payment must be made in legal tender and at its nominal value, according to Article 315 of the Civil Code. Thus, the principle of nominalism prevails in the Brazilian legal system for the private sector: since the monetary debt is an obligation of nominal value, the creditor assumes the risk of currency depreciation (for information about the position in the public sector, see Question 2(c) below). 

Therefore, the parties are advised to anticipate the occurrence of inflation and position themselves regarding this risk through the agreement; if the parties do not do so, they agree that the instalments will be fixed, even in the face of possible currency depreciation, as a normal business risk, except in the case of a manifest disproportion between the value of the obligation owed and the value at the time of its performance, due to unforeseen reasons, subject to judicial request.  

In this case, upon judicial request, the judge may correct it, provided that the requirements of manifest disproportionality and unforeseen reasons are present. Please note the need for the creditor to make a specific request to the judge and demonstrate that the legal requirements for the requested revision are present in order to have the revision of the originally contracted instalments granted. 

Yes, according to Article 478 of the Civil Code, the customer has the right to terminate the agreement in the event of (extreme) price increases, provided that: 1. the agreement relates to continuous or deferred performance, and 2. the obligation of one party becomes excessively burdensome, resulting in an extreme advantage for the other party, due to extraordinary and unforeseeable events. The resolution of the agreement can be avoided if the defendant offers to equitably modify the contract's conditions. 

It is important to note that, depending on the activity and the market involved, the jurisprudence of the Superior Court of Justice (STJ) has established criteria for determining what qualifies as an extraordinary and unforeseeable event. For instance, as long affirmed by the STJ's jurisprudence, it is not reasonable to consider inflation as an extraordinary occurrence in Brazil that would lead to an imbalance in the economic equation of the agreement. Likewise, fluctuations in the price of agricultural products or production inputs, pest attacks on crops (such as the specific case of Asian rust), or an increase in labour costs due to a salary adjustment set forth in a collective bargaining agreement do not constitute unforeseeable events capable of justifying contractual renegotiation. 

Yes, according to Article 316 of the Civil Code, it is permissible to agree on a progressive increase of successive instalments. Furthermore, although not explicitly stated, the parties are also free to mutually agree on the adjustment of a monetary obligation with a future due date, regardless of whether it is successive or not. Price adjustment clauses are commonly included in contracts, typically based on official monetary indices (such as the General Price Index - Market and Consumer Price Index) or through the application of specific criteria aligned with market practices specific to the supplier's activities (e.g., agreements related to transportation and construction). 

It is important to note that in B2B agreements, a presumption of balance and symmetry exists unless concrete elements justify deviating from this presumption, except in cases where specific legal regimes provided for in special laws apply. The allocation of risks defined by the parties must be respected and observed, and contractual revision should only occur in exceptional and limited circumstances. Additionally, negotiating parties have the ability to establish objective parameters for the interpretation of contractual clauses, including price adjustment clauses, as well as their assumptions for revision or resolution, provided that the requirements outlined in Question 1(b) above are met. 

Price adjustment clauses that fall into the following categories are considered null and void: 

1. Clauses intended to compensate for the difference between the value of gold and foreign currency and the national currency, except in cases provided for by special legislation. 

2. Clauses expressed in or linked to any type of monetary unit of account. 

3. Clauses with a periodicity of less than one year. In the event of a contractual revision, the initial term of the monetary correction period or adjustment, or a new revision, shall be the date on which the previous revision occurred, while also respecting a periodicity of at least one year. 

4. Clauses that, in determining the adjustment index, produce financial effects equivalent to adjustments with a periodicity of less than one year. 

The key legislation governing these matters includes the Civil Code, Law No. 9,069/1995, and Law No. 10,192/2001. 

Law No. 14,133/2021 regulates only public bidding and admistrative contracts. In the case of agreements entered into by the Public Administration, Law No. 14,133/2021 establishes that the initial term for calculating the minimum periodicity for adjustments is the date of the estimated budget and makes it mandatory to include an adjustment clause in contracts concluded by the Public Administration, regardless of their duration. This requirement is particularly different from the private sector (as explained in Question 1(a) above) and important for agreements with a term of less than 12 months, such as construction contracts, which may experience delays in execution and extensions that exceed the periodicity required for adjustments. Furthermore, Law No. 14,133/2021 explicitly allows for the inclusion of more than one specific or sectoral index “in accordance with the market reality of the respective inputs” (Article 92, paragraph 3). It states that the adoption of multiple indexes for strict adjustments within the same agreements, in accordance with the market reality of the respective inputs, is expressly allowed. 

In contracts for the sale of real estate, general real estate financing, commercial lease agreements, as well as in the securities and financial instruments derived from them, with a minimum term of thirty-six months, the inclusion of an adjustment clause is permitted. The adjustments can be made on a monthly basis, based on sectoral or general price indexes or the basic remuneration index of savings deposits, in accordance with Law No. 10,931/2004

Consumer protection is a fundamental principle in B2C relationships. As stated in the Consumer Protection Code (Law No. 8,078/1990), it is crucial to interpret B2C agreements in a manner that favours the consumer when there are ambiguous or contradictory clauses, to ensure contractual balance is maintained. Price adjustment clauses should be prominently displayed and easily understandable. If a B2C agreement is unilaterally established by the supplier, without the consumer being able to discuss or substantially modify its content, written price adjustment clauses must be clear, conspicuous, and legible, with a font size of at least twelve points, facilitating consumer comprehension. Accurate and clear information about the price, as well as any adjustment to the price, must be provided. The offer and presentation of price adjustment clauses should include precise, clear, conspicuous, and Portuguese language information about their features, composition, and basis for adjustment, among other relevant details. Suppliers are strictly prohibited from raising prices of products or services without just cause. Clauses that allow suppliers, either directly or indirectly, to unilaterally vary the price are considered null and void. It is considered an abusive practice to apply a formula or adjustment index that differs from what is legally or contractually established. 

In cases where products or services are subject to price control or regulation, suppliers must adhere to the official limits. Failure to do so may result in the supplier being liable for refunding any excess amount received, subject to monetary adjustment. Specific rules exist for price adjustments in certain sectors regulated by the federal government, such as health plans, insurance, telecommunications, and cable TV services. Consumer civil entities, consumer associations, or economic category syndicates may establish written agreements to regulate consumer relationships, including provisions related to price conditions and price adjustment rules.