There are many instances in which a party of an abortive contract has initiated proceedings in Brazil, trying to prove that there was a binding obligation of the other party to execute the final agreement, as a result of a valid offer, or a valid preliminary agreement, or even as a result of terms proposed or accepted during initial negotiations.
The Brazilian case law in this respect is vast and includes disputes against foreign companies. However, so far, all the existing case law is based on the former Civil Code which was in force until the beginning of January 2003.
The new Civil Code introduced a small improvement in determining that preliminary contracts must have all the essential requirements of the intended final contract, as mentioned above. However, during the negotiations, it is possible that the parties somehow discuss possible final terms and conditions and/or it is possible that possible final terms and conditions may otherwise be implied from similar business with third parties (especially, for instance, in the case of standard non-exclusive patent license agreements). In fact, even an offer for a contract may constitute a preliminary contract as referred to above.
Should a preliminary contract be characterised, unless it expressly allows the parties to subsequently decide not to enter into the final agreement, if the final contract is not eventually executed, any of the parties shall be entitled to demand execution of the final contract or to claim loss and damages. In the first case, depending on the circumstances, the judge may determine that the preliminary contract be considered as the final contract . The possibility of the preliminary contract being considered as a final contract was also an innovation introduced by the new Civil Code, which has been very controversial because in many cases it would be far better to keep only the previously existing possibility of specific performance of the preliminary agreement, with the resulting forced execution of a separate final agreement.
Thus, it is always advisable, whenever possible, to conduct the negotiations with the assistance of a Brazilian lawyer, who can consider, in view of the particulars of the case, which would be the most effective measures to mitigate the risk of possible claims for non-performance of obligations undertaken during the negotiations.