Pacheco Neto Sanden Teisseire Advogados (PNST) prepared the following info due to frequent doubts arising from the Covid-19 crisis about the renegotiation and extension of contracts.
The Covid-19 pandemic can be a “force majeure” event. It is possible to invoke article 393 of the Civil Code that exonerates from losses and damages those who did not settle their obligations due to force majeure, except when they did not, specifically, assume responsibility for this.
- Check the text of the contract that you wish to renegotiate.
- Even if the text is not favorable, always seek an agreement with the other side – judicial deadlines are suspended and in a renegotiation both parties decide what they will do.
- If the other party in the contract does not respond, notify them proving your diligence and goof faith,
- Only take the matter to court if you need a guardianship injunction and have not reached an agreement.
The chances of success in a negotiation and in a judicial process increase when:
- There are evidences that the debtor took the necessary steps available for the mitigation of losses arising from the pandemic.
- There are evidences that the business and the payment capacity have been affected.
- The debtor was compliant until the force majeure event.
Abuse of rights:
- Certainly, the wide majority of sectors and individuals have been affected but the pandemic, in itself, cannot be used as an excuse for not meeting obligations.
- It is also abuse of rights for the creditor to insist on an obligation that has undeniably become exacerbated.
Renato Pacheco e Silva Bacellar Neto is partner at Pacheco Neto Sanden Teisseire Law Firm.