Defects of Legal Transactions in Brazilian Civil Law
Dolo (Fraud/Deceit)
Dolo: Occurs when a person uses trickery to gain an advantage over another. It involves a deceptive factor, implying an intent to do something. This deception is not a spontaneous error. For example, buying a necklace whose salesman said it was gold, and then you find that it is not.
Main Fraud (Dolo Principal)
This is a situation where deception exists, and the mistake is caused or induced by one of the parties or even a third party (as Brazilian law admits fraud caused by third parties). It involves a person using a ruse to deceive the other party regarding a condition essential to concluding the deal. An example is intentionally misleading advertising, which some authors call dolus malus. This type of fraud, which vitiates the legal transaction, should not be confused with dolus bonus, which refers to legitimate propaganda techniques used to influence a person to buy goods. Dolus bonus does not nullify the legal transaction.
Dolo by Omission
This also nullifies the transaction. Instead of a commissive act (doing something), one party omits essential information regarding the object’s quality or a factor about their personality or health, with the purpose of inducing the other party into error.
Reciprocal Fraud (Dolo Recíproco)
Occurs when both parties attempt to deceive each other. This type of fraud does not nullify the legal transaction.
Important Note on Accidental Fraud
In cases of merely accidental fraud (dolo acidental), the legal transaction is not nullified, but the injured party may claim damages.
Duress (Coercion)
Duress (Coercion): In the Civil Code, duress is a defect characterized by the promise of future harm to the coerced person or their relatives. Note: Coercion leads to the nullity of the transaction within four years. Unlike other defects, this period does not count from the date of the deal’s conclusion, but from the moment the coercion ceases.
Absolute Coercion (Vis Absoluta)
Physical coercion is controversial. However, as it involves physical torture, the majority view is that it leads to the non-existence of the legal transaction (another view considers it a case for revocation).
Moral Coercion (Vis Compulsiva)
This is the type of duress addressed by the Civil Code. It is a defect characterized by the promise of future harm to the coerced person and/or their family.
Social Vices of Legal Transactions
Fraud Against Creditors (Fraude Contra Credores)
This is an act performed by the debtor in bad faith to harm a creditor entitled to receive payment. Doctrine typically states that for fraud against creditors, the debtor must be insolvent or about to become insolvent, or lack sufficient assets to pay obligations. A key principle of contract law here is that the debtor’s patrimony is liable for their debts. Examples include debt forgiveness, renunciation of gratuitous inheritance, sale of assets to third parties, or prepayment of debts. The legal action to annul an act of fraud against creditors is the Paulian action (or revocation action). Brazilian law protects third parties who act in good faith, meaning those who, at the time of the contract, had no way of knowing the debtor’s insolvency.
Exceptional Vices of the Civil Code of 2002
Lesion (Lesão)
To understand lesion, it’s important to know that every contract implies a balancing of benefits. Lesion occurs precisely at the moment of conclusion of the contract, when one party, taking advantage of the other’s situation of need or inexperience, demands an excessively expensive provision. This leaves one party with a significant advantage and the other with a disproportionately high burden, thus harming the contractual balance.
It is important to remember that the Civil Code stipulates that if the balance of the contract can be restored, the court cannot annul the contract.
State of Peril (Estado de Perigo)
This defect is characterized by a situation where a person needs to save themselves or a family member from imminent danger. To characterize this defect, it is necessary that the other party is aware of the peril and acts with the intent to exploit this situation, leading the other party to accept an excessively burdensome benefit. For example, depositing a check for R$1,000,000.00 to a hospital where one’s father is being treated in a life-or-death situation.