Contract Review with Brazilian Companies: Legal Risks Foreign Businesses Should Assess Before Signing

Willian Nunes

Many international business disputes involving Brazil do not start when a contract is breached.

They begin when a contract is signed without proper legal review.

Foreign companies entering the Brazilian market often focus on pricing, delivery schedules, technical specifications and commercial opportunities. Legal clauses frequently receive attention only after a dispute arises.

At that stage, the contract may already contain provisions that increase litigation costs, complicate enforcement, create jurisdiction conflicts or expose the foreign company to avoidable risks.

A legal review before execution can help identify these issues before they become expensive problems.

Why contracts with Brazilian companies require specific legal analysis

Brazilian law contains rules that may affect how a contract is interpreted, enforced and litigated.

Even when a contract is written in English and signed by parties located in different countries, certain provisions may still interact with Brazilian law if:

The Brazilian company is a party.
The contract is performed in Brazil.
Goods are delivered in Brazil.
Payments are made through Brazil.
Brazilian assets are involved.
Litigation may occur in Brazil.

The legal framework governing contractual obligations is primarily found in the Brazilian Civil Code.

For foreign companies, understanding how contractual provisions interact with Brazilian law is often more important than simply translating the agreement into Portuguese.

Common mistakes foreign companies make

Several recurring issues appear in contracts signed with Brazilian companies.

Using generic international templates

Many businesses use standard templates developed for transactions in the United States, Europe or Asia.

While these documents may be useful starting points, they often fail to address Brazilian procedural realities, enforcement issues and local legal requirements.

Failing to identify the correct legal entity

A foreign company may negotiate with one group company while the contract is executed by another entity.

Before signing, it is important to verify:

Corporate name.
Trade name.
CNPJ.
Registered address.
Corporate authority.
Ownership structure.

The Federal Revenue Service’s CNPJ guidance provides the official framework for corporate registration in Brazil.

Ignoring authority to sign

Not every employee, manager or commercial representative has authority to bind a Brazilian company.

Reviewing corporate documents before execution helps confirm whether the signatory possesses sufficient legal authority.

Assuming that a foreign forum clause solves everything

Many contracts designate courts outside Brazil without analyzing practical enforcement issues.

Even when a foreign judgment is obtained, additional procedures may be required before it can produce effects in Brazil.

The Superior Court of Justice (STJ) is responsible for recognizing foreign judgments before they may be enforced in Brazil.

A forum clause should therefore be reviewed not only from a drafting perspective, but also from an enforcement perspective.

Key clauses foreign companies should review

Governing law

The contract should clearly identify which legal system governs the agreement.

This affects:

Interpretation.
Remedies.
Limitation periods.
Damages.
Contract termination.
Evidence.

Jurisdiction and dispute resolution

The dispute resolution clause deserves particular attention.

Options may include:

Brazilian courts.
Foreign courts.
Arbitration.
Multi-step dispute resolution procedures.

The Brazilian Arbitration Act provides the legal framework for arbitration agreements and recognition of foreign arbitral awards.

The chosen mechanism should be evaluated according to:

Location of assets.
Cost.
Enforceability.
Speed.
Complexity.

Payment terms

Many disputes arise because payment provisions are unclear.

The contract should address:

Currency.
Due dates.
Bank charges.
Taxes.
Interest.
Late payment penalties.
Exchange rate provisions.

Delivery and performance obligations

Particularly in international trade, delivery obligations must be clearly allocated.

The agreement should identify:

Delivery location.
Inspection rights.
Acceptance procedures.
Risk transfer.
Responsibility for delays.
Incoterms, when applicable.

Termination rights

A contract should clearly state:

Grounds for termination.
Notice periods.
Cure periods.
Post-termination obligations.
Return of materials.
Confidentiality obligations.

Poorly drafted termination clauses frequently become litigation triggers.

Distribution and reseller agreements

Foreign companies entering Brazil often use:

Distributors.
Resellers.
Commercial agents.
Strategic partners.

These relationships create additional legal concerns.

A distribution agreement should address:

Territory.
Exclusivity.
Sales targets.
Marketing obligations.
Trademark use.
Inventory.
Customer information.
Termination rights.

Failure to regulate these topics can lead to significant disputes after market entry.

Intellectual property considerations

Many foreign companies allow Brazilian partners to use trademarks, software, technology or confidential information.

The contract should clearly regulate:

Ownership.
Licensing rights.
Restrictions.
Confidentiality.
Non-compete obligations.
Trademark usage standards.

The National Institute of Industrial Property (INPI) administers trademark protection in Brazil and may become relevant depending on the transaction.

A contract review should assess whether additional registrations or protections are advisable.

Supplier and manufacturing agreements

When Brazilian suppliers manufacture products or components, contractual review becomes even more important.

The agreement may need provisions covering:

Technical specifications.
Quality standards.
Audit rights.
Intellectual property ownership.
Product liability.
Delivery schedules.
Recall procedures.
Insurance requirements.

A manufacturing relationship often creates risks beyond ordinary commercial sales.

Import and export contracts

International trade contracts involving Brazil should also consider regulatory aspects.

Relevant issues may include:

Import licenses.
Customs requirements.
Regulatory approvals.
Technical certifications.
Export restrictions.

Official information is available through the Portal Siscomex and the Federal Revenue Service’s customs and foreign trade portal.

A contract that ignores regulatory obligations may expose both parties to delays, penalties and commercial disputes.

Documents commonly reviewed

A contract review may involve:

Draft agreement.
Corporate documents.
Purchase orders.
Commercial proposals.
Technical specifications.
Invoices.
Distribution arrangements.
Licensing agreements.
NDAs.
Supplier agreements.
Manufacturing contracts.
Commercial correspondence.

The required documentation depends on the transaction.

Benefits of reviewing the contract before signing

A legal review cannot eliminate all commercial risks.

However, it can help identify:

Unclear obligations.
Weak enforcement mechanisms.
Problematic jurisdiction clauses.
Authority issues.
Intellectual property concerns.
Payment risks.
Regulatory exposure.
Supplier-related risks.

Correcting these issues before execution is usually less expensive than litigating them later.

How Willian Nunes Advogados can assist

Willian Nunes Advogados assists foreign companies reviewing contracts with Brazilian counterparties before execution.

The firm’s work may include contractual analysis, jurisdiction review, dispute resolution assessment, corporate verification, supplier-related risk evaluation, intellectual property considerations and strategic review of agreements involving Brazilian parties.

The firm is based in Curitiba, Brazil, and supports international companies dealing with contracts, suppliers, distributors, investments and commercial relationships in Brazil. Foreign companies may request a document-based legal assessment through the contact page of Willian Nunes Advogados.