Credit Documents - Chapter 10 - Doing Business in Brazil
Have a question? Email us about this product!
Doing Business in Brazil - Looseleaf
Doing Business in Brazil - Electronic
1. The Credit System in Brazil
10.101 The following are the essential elements of credit:
(a) confidence; confidence need not reside exclusively with the
debtor, but may also relate to the guarantees, whether personal
(aval or fiança) or in rem (pledge, mortgage, etc.), which the
debtor offers as security; and
(b) time; the time element is reflected in the term of the operation and
the timing between repayments.1
1 João Eunápio Borges, Títulos de Crédito, 1971 ed., p. 7; Theóphilo de Azeredo
Santos, Manual dos Títulos de Crédito, 1975 ed., p. 15.10.l02
There are various categories of credit arrangements. For instance,the arrangements may be public or private, depending on whether the debtor is the State or a private individual or corporation. From the point of view of the guarantees given, a private credit arrangement is either personal
or in rem. A personal arrangement is based only on the reputation and
credit rating of the debtor. An arrangement in rem is based on guarantees
consisting of movable property (pledge) or immovables (mortgage).
10.103 The legislation relating to credit documents in Brazil is basically
contained in the Civil and Commercial Codes. Supplementary material is
also contained in the Bills of Exchange Law. This legislation has been
amended in relation to certain credit documents as a result of the Uniform
Law adopted by the international conventions at Geneva which was
promulgated in Brazil by Decrees Nos. 57595 of January 7, 1966 (checks)
and 57663 of January 24, 1966 (bills of exchange and promissory notes).1
On September 2, 1985, Law No. 7357 was enacted dealing with checks,
based on the Uniform Law of Geneva.
1 After lengthy discussions as to whether the Uniform Law of Geneva is effective
within the context of the Brazilian legal system, it is now uncontested that the Uniform
Law on both bills of exchange and promissory notes, and checks are part of our internal
laws on credit instruments. See RE 70356, Fed. Sup. Ct., May 19, 1971, RT 58/744; RE
71154, STF, August 4, 1971, RT 58/70.
10.104 A credit document is a formal written document, signed by the
debtor. Its contents are largely prescribed by law.1 When credit documents
are in bearer form they are transferable by delivery. They may also be in
registered form: i.e., issued in favor of a named person, but not transferable
by endorsement (e.g., registered shares and other instruments expressly
stated to be “not negotiable”). Documents may also be “to order”, i.e.,
transferable by endorsement. Bearer credit instruments are no longer
prohibited in Brazil, but the issuance of bearer credit instruments is
conditional on authorization given by special law.2
1 Decree-law No. 2044 of Dec. 31, 1908.
2 New Civil Code (Law No. 10406 of Jan. 10, 2002), arts. 904 through 909.
Pinheiro Neto - Advogados, established in 1942, is Brazil's leading commercial law firm with offices in Sao Paulo, Rio de Janeiro and Brasilia. The founding Editor of this publication, the late J.M. Pinheiro Neto, was the Legal Advisor to the British Chamber of Commerce in Brazil.
J.M. Pinheiro Neto, K.B.E. Law degree, University of São Paulo, class of 1938; State
Attorney for taxes, 1945-1955; worked for the BBC during 1940-41 in England;
awarded the Medal for Services to the Cause of Freedom in 1945; President of the
Anglo-Brazilian Cultural Society, São Paulo, since 1965; Member of the Council of the
British Chamber of Commerce in São Paulo and of the American Chamber of
Commerce, for many years; Director of numerous Brazilian companies; Senior
partner of the firm.
Aleksas Juocys. Law degree, University of São Paulo, class of 1958; Specialized in
tax matters, and head of the tax section of the firm.
Hélio Nicoletti. Law degree, Catholic University, São Paulo, class of 1963,
Postgraduate course in business administration, Fundação Getulio Vargas, São
Paulo, 1967; Head of one of the mergers and acquisitions groups, corporate work,
of the firm.
Antonio Mendes. Law degree, University of Franca, São Paulo class of 1964; Master
of Comparative Law, Duke University, Durham, North Carolina, U.S.A.; Head of the
banking and finance group of the firm.
Celso Cintra Mori. Law degree, University of São Paulo, class of 1968; Head of the
litigation group of the firm.
José Roberto Pisani. Law degree, University of São Paulo, class of 1972; postgraduate
courses in tax law, Catholic University, São Paulo. Head of one of the tax groups of the
Antonio J. Peres Picolomini. Law degree, Catholic University, Campinas, class of
1968; Head of the labor and labor litigation group of the firm.
Noemia C.M. de Oliveira Novaes. Law degree, University of São Paulo, class of
1971; Specialization in International Law, University of Geneva, Switzerland; Partner
with Pinheiro Neto-Advogados; Experience in the computer science, technology
transfer, and trademark and patent areas.