If you are going to import products from Brazil, please, do a written contract.
As I am a lawyer in Brazil, I can tell for every international company (or person) only to buy any kind of products from Brazil to do always a written contract.
It’s hard to believe that until nowadays we saw a lot of oral contracts still in 2022.
Believe me! This is a very common theme in Brazil and that is why I decided to write about it. It is extremely important to talk about this subject.
Imports and exports of low values and some of very high values (up to US$ 28 million) are still made without written contracts!
Many chambers of commerce receive complaints frequently from people who have had problems with oral international contracts, who call to know what to do in case a problem occurred.
Portuguese version here.
Table of Contents
1- Can you make an oral contract?
Of course you can make an oral contract! We make verbal agreements every day.
A small agreement, the kind you make when you go to buy bread at the bakery. It is a simple contract.
A simple contract is what we do in our daily lives to buy food, clothes, drinks and other products.
These types of contracts can and should always be verbal to speed up our daily lives.
2- Disadvantages of oral contract
The oral contract has disadvantages when it is made in larger values, contracts of greater complexity such as, for example, foreign trade contracts, the international purchase and sale.
Exports, for example, of agribusiness whose value is R$150 million reais without a contract. The party will have to hire a lawyer in the country where this problem occurred for him to try to solve it.
Contracts of greater complexity are those that are more complex because they involve several steps until the contract is concluded.
In an international negotiation of an agribusiness commodity, for example, the parties enter into a negotiation that can last months and then start to put together the written contract, with information about the means of payment, the chosen freight (INCOTERM), details about the goods, shipment date, etc.
Imagine a contract of this level verbally! In Brazil, there are still many businessmen who export through a verbal agreement.
Although the oral contract is valid, the difficult thing is to prove it. The level of difficulty is immense.
And when the problem occurs, how to discuss with the other party? What if the party doesn’t remember what was agreed?
Several problems then exist if you make a complex contract verbally.
3- Advantages of making an international written contract
The international contract is the one made between a part (individual or legal entity) and a foreigner (individual or legal entity).
The international commercial contract is that of foreign trade, of purchase and sale of goods, international distribution of goods or international representation.
It is made between two contracting parties, the seller exporter and the buyer importer, and vice-versa (import).
To arrive at a written international contract, many negotiations take place.
The parties discuss and agree on various points of an export contract, for example. And it is impossible to keep in the field of the mind and not write down what has been agreed, because we don’t have a photographic mind and it is natural for human beings to forget some things. That is why we always recommend that the contract be written.
With a written contract, if there is a problem, it will be related only to the product or service. The problem will not be related to issues of applied law, form, etc.
4- The written international contract
In the international contract written after many negotiations between the parties, they will include in the instrument everything that they discussed about the contract itself.
Therefore, the instrument written by a lawyer will be exactly the way the parties want it to be, with their choices and with the ones that the lawyer suggests and that are not known by the Brazilian party, for example.
When does this happen?
When a new exporter arises!
A new exporter must hire a lawyer and other professionals to make its contract and, therefore, the risk of the operation will be much lower.
5- Conclusion
When in doubt between a verbal agreement and a written contract with a Brazilian, always stick with a written contract!
It is very important to have written proof of what was agreed upon, because if you need to enforce it, the contract in hand is a sufficient instrument to be analyzed.
As for the verbal agreement, if it was made over the phone, how can you easily prove it?
Yes, I want the day to come when we will see more exporters in Brazil making export contracts in writing and not having so many problems like those reported in the Chambers of Commerce.
If you need to contact me, send an email to contato@anainternacionallawyer.com.br