Brazil: Limiting Liability Under Brazil's Civil Code

Knowing the rules of the game is essential when dealing with contractual liability in Brazil, where the legal system is based on the Napoleonic Code. Godofredo Mendes Vianna, partner in Rio de Janeiro law firm Kincaid, and senior associate Paula Roberta Campos, unravel the intricacies 

Brazil operates under civil law – its civil and commercial codes inspired by the French Napoleonic Code – which means the Brazilian legal regime differs in substance from the Anglo Saxon case law system. It is something that should be borne in mind when doing business in Brazil.

Most of the contracts adopted by the tug and OSV industries have been developed within the Anglo Saxon framework. For example, the well-known BIMCO standard forms, such as Supplytime and Towcon, refer to English or US law and jurisdiction, with Singapore included recently as a third option.

Needless to say, whenever tug and OSV owners are contracting with Brazilian counter parties or operating in Brazilian jurisdictional waters, accurate analysis and special attention should be given to the liability clauses.

According to the Brazilian civil code, any party who causes damages to another is obliged to indemnify, in totum, such damages. Damages immediately and directly caused by the damaging act shall be compensated by the offender, including immediate material damage, loss of profits and, in some cases, moral and punitive damages.

In circumstances where the activity normally carried out by the party who caused the damage entails, by its nature, risk to the rights of others, civil liability will arise regardless of fault. The same applies to the liability of the employer due to the acts or omissions of its representatives, employees or subcontractors. However, despite the broad spectrum of the above general proviso, the Brazilian civil code also provides for the freedom of the parties to contract.

Therefore, under Brazilian law, parties can agree on limitations of liability and provide for different apportionment of liability (as in a knock for knock regime, for example) as long as the object of the agreement is a disposable patrimonial right and parties voluntarily and freely agreed to such a condition.

In this sense, it is not possible, for example, to agree on a limitation of liability towards third parties in a case of environmental damage, since the environment is considered a public policy matter. However, parties can agree under the contract how they will apportion liability between themselves should environmental damage occur.

By the same token, one can have difficulties before a Brazilian court in upholding a limitation of liability clause inserted in adhesion contracts where one of the parties, affected by the limitation proviso, has not had the opportunity to negotiate its terms and conditions. There are precedent cases at the Brazilian Superior Courts declaring null and void limitation clauses, which are not only inserted in adhesion contracts but also, if applicable, would entail a severe burden to the damaged party, denying its right to recover losses.

This is unlikely to occur when the matter at hand is an offshore and towage contract, since the parties involved in the agreement usually have a more open and reciprocal capacity for negotiating the contractual conditions. Therefore, Brazilian courts should not consider a limitation of liability clause, or a knock for knock provision, unfair due to a lack of bargaining strength of the contracting party.

The Brazilian offshore market usually works with two main contractual regimes: the one adopted by the IOCS and provided in the traditional BIMCO standard forms, which usually incorporate the knock for knock regime and the exclusion of consequential damage, and the one provided by the Brazilian state oil company, Petrobras.

It is worth mentioning that Petrobras adopts a tailor-made contract for the chartering of supply vessels. Being a quasi-public company, the award of any charter agreement is preceded by a public bid, where the main conditions of the future agreement are presented in advance by Petrobras. The possibility of negotiating the provisions of the agreements is, therefore, close to zero.

Petrobras' contracts do not usually embrace the knock for knock regime. However, they do incorporate the provisions of the Brazilian civil code (ie, the party which caused the damage is liable for its reparation), adopting caps for the parties' contractual liability, as well as excluding liability for loss of profit and indirect damages.

The general provisions of Brazilian law in respect of civil liability may seem odd to an international player in the OSV and tug sectors, since usual conditions – such as knock for knock and the comprehensive liability of the tow toward the tug – are not incorporated in the legal framework.

However, it is important to bear in mind that, although such conditions are not provided by Brazilian law, parties are not prevented from agreeing to them, as long as such agreement is made voluntarily.

Therefore, when operating in Brazil or under Brazilian law, it is important to be aware that it is possible to contract, for example, on a knock for knock basis and to contractually limit liability. However, this needs to be written into the contract, and parties need to have voluntarily agreed on such terms, since the general rule provided by the Brazilian Civil Code is of full reparation by the party who caused the damage.

As in any other jurisdiction, the Brazilian legal system has its particularities – but these need not undermine the chances of a successful operation, as long as the players know the rules of the game.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions