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Pacta Sunt Servanda Versus the Social Role of Contracts: the case of Brazilian agriculture contracts
Author Christiane Leles Rezende e Decio Zylbersztajn
Year 2012
This study explores the instability created by contradictory court decisions related with contract breaches. Forward marketing contracts represent an important source of resources to finance Brazilian agriculture, however a large number of contract breaches were observed during a period of marked increase in soy prices. The study analyzed 161 judicial appeal decisions and a survey was carried with 70 farmers. The results show the difference of judgesâ interpretation and the existence of second order effects. The effects of court decisions were more requirements of guarantees and the reduction in the number of contracts. Those soybean farmers who did not breach their contracts have also been negatively affected by the strategic reactions of trading and processing companies. The concept of âsocial function of the contractâ introduced in Brazilian civil code led to a higher degree of instability in contracts, raising transaction costs and motivating private economic sanctions.
Publisher RESR, Piracicaba-SP, Vol. 50, Nº 2, p. 205-220, Abr/Jun 2012 – Impressa em Março de 2012
Keywords agribusiness, contracts, judicial decisions, soybean.