Since the onset of the Covid-19 pandemic, amounts for lease, services and general commercial agreements have often been renegotiated. The General Market Price Index (IGP-M), published from time to time by Fundação Getúlio Vargas (FGV), has served as a common index of amounts in agreements, particularly those related to leases.
However, in the last 12 months, the IGP-M amounted to an increase of 31%, as disclosed in March 2021. In the previous year, the index had risen 1.24% and amounted to an increase of 6.81% in 12 months. This increase caused individuals and companies with the obligation to pay amounts subject to this adjustment to seek to negotiate with the owners the replacement of the indexer, since the inflation determined by other indexes, also usual in commercial agreements, was significantly lower.
The most used examples were the Extended National Consumer Price Index (IPCA), at 6.10%, and the National Consumer Price Index (INPC), at 6.93%, both published by the Brazilian Institute of Geography and Statistics (IBGE).
However, when there is no consensus between the parties, one can choose to resolve the matter resorting to the State’s judicial relief. In fact, Brazilian law provides for specific articles of the Civil Code that, in the event of an excessive burden in fulfilling obligations arising from an unforeseeable event, one of the parties to the agreement may request the document to be reviewed.
The basis for requests for review is that the sharp adjustment of the IGP-M has become an unpredictable event, liable to overburden the debtors to which they are subject. Accordingly, requests for review of agreement at the judiciary level have escalated.
The Court of Appeals of the State of São Paulo (TJSP) has granted, in recent preliminary injunctions for the replacement of the IGP-M by the IPCA for the purpose of determining the annual adjustment of agreed rentals while the economic crisis caused by the Covid-19 pandemic continues.
In the opposite direction, in another recent decision by the TJSP, the Court decided for the legality of the debt update of the agreement by the IGP-M index for agreements for purchase and sale of real estate plots. The main argument in this case was that the application of a common index to this type of agreement would not represent an increase in the debt, but only the adjustment of the currency value and change thereof, placing a burden on the creditor.
The topic is still controversial, with solid arguments for both parties. The Superior Court of Justice (STJ) still does not have a consolidated understanding about the consideration of inflation or the abrupt change of indexes. In addition, FGV itself is studying the replacement of this indexer for a new one, which better reflects what is aimed.
While nothing is defined, an accurate assessment of the risks and costs involved in each relationship and a negotiation of common sense between the parties is recommended to avoid running into conflicts between precedents. This is the highest rate since 1994, and the contractual review will be necessary for all business owners, from small- to large-sized, so that the adjustment does not cause further conflicts and losses.
Juliana G. Meyer Gottardi is partner at Pacheco Neto Sanden Teisseire Law Firm.