Doing Business in Brazil | Brazilian President Issues Freedom Act to Improve Business and Legal Environment

On April 30th, the Brazilian President issued the Executive Order (Medida Provisória) n. 881 instituting the Freedom Rights Declaration Act (“Freedom Act”) aiming to provide free market guarantees for anyone willing to do business in Brazil.

The Freedom Act will have direct impact over many legal areas related to doing business, from contractual relationships, financial and capital markets, tax, labor, litigation/arbitration, environment, real estate, among others.

From business contracts standpoint, they were affected positively. The Freedom Act stablishes two fundamental principles to improve legal certainty in Brazil, which are (i) presumption of good faith by the signatories, and (ii) the guaranty that the parties shall have free will set contractual obligations (except for regulated sectors).

By the Freedom Act, business contracts now are considered “law between the parties”, following the concept of developed economies. Until nowadays, contractual instruments were seen with relative value given they were subject to regular review by Brazilian courts.

The Freedom Act is effective as of April 30th, but it has to be confirmed by the Congress within 120 days. It is a major improvement for the Brazilian business and legal environment, as the terms and condition to be negotiated in business contracts – from investments, distribution, commercial representation, supply, finance, corporate, among others, will have real biding effect between the parties.


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