Credit Instruments: Duplicata, Promissory Note, and Check

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Duplicatas, promissory notes, and checks are essential credit instruments in Brazilian commercial relationships, and each has its own rules for issuance, transfer, and collection in court.

Duplicata: the credit instrument of Brazilian commerce

The duplicata (a trade receivable instrument issued on a sale of goods or services) is a credit instrument unique to Brazil. It is governed by Law 5.474/1968 and is tied to a commercial sale or a provision of services. Unlike other instruments, a duplicata always has an underlying cause: a sales invoice or a service invoice. This link to the underlying commercial transaction is its most distinctive feature.

Issuing a duplicata is optional for the seller. Once it is issued, however, it must be sent to the buyer for acceptance within 30 days. Acceptance can be ordinary (a signature on the instrument itself), by communication (when the buyer keeps the duplicata without refusing it), or by presumption (when there is proof that the goods were received and no formal refusal).

A duplicata can be protested for non-acceptance, non-return, or non-payment. Protest by indication, which applies when the drawee keeps the duplicata and does not return it, is a peculiarity of the Brazilian system. It allows the creditor to protest the instrument without having it in hand, simply by giving the registry office the invoice details and proof that the goods were delivered.

The virtual duplicata, widely used in e-commerce and banking, is issued and stored electronically, with no need to print it on paper. Law 13.775/2018 confirmed the validity of book-entry duplicatas, providing that electronic records in systems authorized by the Central Bank of Brazil have the same effect as physical instruments.

Promissory note: a promise to pay

The promissory note is governed by Decree 57.663/1966, which incorporated the Geneva Uniform Law into Brazilian law. It is an unconditional promise to pay made by the issuer (the debtor) in favor of the payee (the creditor). Unlike a duplicata, a promissory note is not tied to any specific commercial transaction and can represent any financial obligation.

The essential requirements of a promissory note are: the words “promissory note” in the text of the instrument, a simple and unconditional promise to pay a fixed amount, the due date, the place of payment, the payee’s name, and the issuer’s signature. If any of these elements is missing, the instrument may be invalid as a promissory note, although it may still serve as proof of a debt. Learn more about starting a business

Promissory notes are commonly used in loans, financing, real estate sales, and as security in business contracts. When a note is issued in blank (with no due date or amount filled in), the holder may complete it according to the terms of the original agreement, in keeping with the principle of good faith. Learn more about judicial reorganization

Issuing a duplicata is optional for the seller. Once it is issued, however, it must be sent to the buyer for acceptance within 30 days.

The limitation period for collecting on a promissory note is three years, counted from the due date, for an action against the issuer. For recourse actions against endorsers and their guarantors, the period is one year from the protest. These deadlines cannot be extended, and missing them turns the enforceable instrument into a mere unsecured debt instrument (quirógrafo), which requires a collection action under the ordinary procedure. Learn more about articles of incorporation

Check: a payment on demand

The check is governed by Law 7.357/1985 and is an order to pay on demand, drawn on a bank where the issuer holds a checking account. Despite the popularity of Pix (Brazil’s instant payment system) and cards, checks are still widely used in business transactions, especially for larger amounts and as security.

The postdated check is a well-established practice in Brazilian commerce. Although the law provides that a check is always an order to pay on demand, the courts recognize the validity of an agreement between the parties to postdate it. Presenting a postdated check early creates civil liability for moral damages, under Súmula 370 of the Superior Court of Justice.

The deadline for presenting a check to the bank is 30 days for checks issued in the same place (municipality) and 60 days for checks issued in a different place. After those deadlines, the check can still be presented to the bank as long as it has not become time-barred (six months after the presentation period ends). However, the issuer can stop payment, and the holder loses the right to enforce the check against endorsers.

A check becomes time-barred six months after the presentation period ends. Once the limitation period has run, the holder loses the right to direct enforcement. What remains is an action for unjust enrichment (two-year period) or a collection action under the ordinary procedure (five-year period). That is why creditors must watch the legal deadlines closely to preserve the instrument’s enforceability.

Endorsement, aval, and protest: how instruments circulate and are secured

Endorsement is the act by which the holder of a credit instrument transfers its rights to a third party. It can be special (naming the endorsee) or blank (naming no beneficiary, so the instrument passes by simple delivery). Unless there is an express clause to the contrary, the endorser guarantees payment of the instrument to the endorsee and is secondarily liable if the principal debtor does not pay.

The aval (a personal guarantee of payment given by a third party on a credit instrument) makes the guarantor, or avalista, independently and jointly liable with the party being guaranteed. The creditor can collect directly from the avalista without first pursuing the principal debtor. This independence is what distinguishes the aval from suretyship (fiança), which is accessory and secondary. The avalista‘s spouse must consent to the aval, except under a regime of absolute separation of property, under article 1.647 of the Civil Code.

Protest is the formal act that proves the debtor’s default, carried out at a Protest Registry Office (Cartório de Protesto de Títulos). It is a required step to exercise the right of recourse against endorsers and guarantors on a duplicata and a promissory note. Under Law 9.492/1997, a protest can be made on any document evidencing a debt, not only on credit instruments.

For guidance on collecting credit instruments and protecting your rights as a creditor or debtor, we recommend a consultation with a specialized attorney. See our practice areas for more information.

Frequently Asked Questions

What is the deadline to protest a duplicata for non-payment?

A duplicata can be protested starting the day after the due date. To preserve the right of recourse against endorsers and their guarantors, the protest must be made within 30 days after the due date. Against the drawee (the buyer) and the buyer’s guarantor, protest is not required for enforcement, but it is advisable as proof of default. A protested duplicata accompanied by proof that the goods were delivered is an out-of-court enforceable instrument.

Does a check returned for insufficient funds create criminal liability?

Issuing a check without sufficient funds can constitute the crime of fraud (estelionato) under article 171, paragraph 2o, item VI, of the Penal Code, punishable by one to five years of imprisonment (reclusão) and a fine. However, Súmula 554 of the Supreme Federal Court provides that paying the check before the criminal charges are accepted by the court extinguishes criminal liability. In addition, a postdated check presented before the agreed date is not a crime, because there is no intent in issuing it.

Can a promissory note be collected in court even without a protest?

Yes. A promissory note can be enforced in court against the issuer and the issuer’s guarantor without a protest, because they are the principal debtors on the instrument. Protest is necessary only to exercise the right of recourse against endorsers and their respective guarantors. Even so, protest is advisable in every case, because it serves as proof of default and can be a way to pressure the debtor into paying voluntarily.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.