Unfair Contract Terms: How to Identify and Void Them

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

Unfair contract terms (cláusulas abusivas) are provisions that put the consumer at an excessive disadvantage. Under the Consumer Defense Code, they are null and void by operation of law.

What Are Unfair Contract Terms?

Article 51 of the Consumer Defense Code (Law 8.078/1990) lists examples of contract terms considered unfair. These are provisions that, regardless of their form or label, impose iniquitous obligations, place the consumer at an exaggerated disadvantage, or conflict with good faith and contractual fairness.

Unfair terms are null and void by operation of law. This means they have no legal effect even if the consumer signed the contract voluntarily. A judge may declare them void on the court’s own motion, without any request from a party. Signing the contract, ratifying it later, or letting time pass does not cure the defect.

Unfair contract terms are null and void by operation of law and do not bind the consumer, even if he or she signed the contract.

The Civil Code (Law 10.406/2002) also protects contracting parties in Articles 421 to 426. These articles establish the social function of contracts and objective good faith as limits on freedom of contract. These principles apply to consumer relationships as well as to civil and commercial contracts, which broadens protection against contractual abuse.

The Most Common Examples of Unfair Contract Terms

Unfair terms commonly found in consumer contracts include: disproportionate penalties for early termination (above 10% of the contract value); excessive lock-in periods in phone plans (beyond 12 months); clauses that exempt the supplier from liability for defects in the product or service; permission to change prices unilaterally without objective criteria; mandatory arbitration; full retention of amounts paid when the consumer withdraws; and the shifting of responsibility to third parties without justification.

In banking contracts, the most frequently challenged terms are: capitalization of interest (compounding) without specific legal authorization; fees not disclosed to the consumer in advance; tying arrangements (venda casada) that bundle insurance and capitalization bonds with a loan; and the so-called comissão de permanência (a bank charge on overdue debts) combined with other late-payment charges. The STJ (Brazil’s Superior Court of Justice) has well-settled case law prohibiting the combination of comissão de permanência with late-payment penalties and default interest.

In real estate contracts, charging buyers a SATI fee (a charge for brokerage-related legal advisory services) and a brokerage commission on off-plan properties has been held abusive in many court decisions. A clause that lets the developer delay delivery of the property for an indefinite period is also considered abusive under the prevailing case law.

How to Identify and Fight Unfair Contract Terms

To spot unfair terms, read the entire contract carefully before signing. Pay special attention to the clauses on penalties, termination, price adjustments, liability, and forum selection. Be wary of provisions that seem to favor the supplier one-sidedly or that limit your rights disproportionately.

When you identify an unfair term, you may: refuse to comply with it and seek a court declaration that it is void; report the practice to Procon (Brazil’s consumer protection agency), which can impose administrative sanctions on the supplier, including significant fines; file a complaint with the Public Prosecutor’s Office (Ministério Público) to protect collective interests; and file a lawsuit in the Small Claims Court (Juizado Especial Cível) for claims of up to 40 minimum wages. For more on consumer rights, see our firm’s article on improper charges and double refunds.

Adhesion Contracts and Special Protection

Adhesion contracts are those whose terms the supplier drafts in advance, leaving the consumer no real opportunity to discuss or substantially change them. They receive special protection under the CDC (Brazil’s Consumer Defense Code). Article 54 requires that clauses limiting consumer rights be written in a way that makes them stand out, so they can be understood immediately and easily. Under Article 47 of the CDC, ambiguous clauses are always interpreted in the consumer’s favor.

The main examples of adhesion contracts are phone service contracts, health plans, insurance policies, bank financing, and contracts for digital services. In these contracts, protection against unfair terms is even stricter, because the consumer had no chance to negotiate the contract conditions.

Even in contracts freely negotiated between businesses, the Civil Code bars clauses that violate the social function of contracts or objective good faith. The difference is that protection between businesses is narrower than in consumer relationships, and the harmed party must show that the contract is unbalanced.

Frequently Asked Questions

Does one unfair term invalidate the entire contract?

Not necessarily. Article 51, paragraph 2 of the CDC provides that voiding an unfair term does not invalidate the whole contract, unless, despite efforts to fill the gap, removing the term would impose an excessive burden on either party. In most cases, the unfair term is simply disregarded, and the rest of the contract remains valid and in force.

Is there a deadline to challenge an unfair term?

Unfair terms are null and void by operation of law, and absolute nullity is not cured by the passage of time. This means that, in theory, there is no limitations period for having the term itself declared void. However, a claim to recover amounts paid under an unfair term is subject to the Civil Code’s 10-year statute of limitations, counted from the improper payment.

Can Procon force a company to remove an unfair term?

Procon can impose administrative sanctions on the supplier, such as fines, seizure of products, and temporary suspension of activities. It cannot declare a term void, because that power belongs exclusively to the courts. Even so, Procon’s involvement pressures the supplier to bring its contracts into compliance and can serve as strong evidence in a later lawsuit.

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