Contracting on the internet

Contract formation

Is it possible to form and conclude contracts electronically? If so, how are contracts formed on the internet? Explain whether ‘click wrap’ contracts are enforceable, and if so, what requirements need to be met?

In general, agreements executed by electronic means are valid and enforceable, as long as they involve capable parties and a legal and determined or determinable object, and unless the law requires specific formalities. Owing to the pandemic, Law No. 14,063/2020 was enacted to ease electronic signatures’ specific formalities with the aim of enhancing efficiency despite physical distancing and isolation. Also, the Brazilian Civil Procedure Code acknowledges the validity of electronic documents as proof. Exceptions may apply, for instance, for the acquisition of real estate, which depends on the execution of a written real property public deed. Physical contracts signed by the parties and two witnesses may be subject to a fast-track enforcement procedure, the applicability of which to electronic contracts that lack the witnesses’ signatures is being debated in court. General contractual law rules of offer and acceptance apply equally to the electronic formation of contracts. Terms offered electronically in general bind the proponent and the contract is formed when the offer is accepted. Electronic contracts may be executed by several means (by ticking a tickbox, clicking an acceptance button, replying to an email or including an electronic signature). Click-wrap contracts may be characterised as adhesion contracts and, as such, must be worded clearly and in easily read print. When entered into with consumers, agreements must be written with a font size not smaller than 12 point and clauses limiting consumer rights must be prominently displayed.

Applicable laws

Are there any particular laws that govern contracting on the internet? Do these distinguish between business-to-consumer and business-to-business contracts?

General contractual law rules and several diverse laws may apply to online contracts. Business-to-consumer contracts are mainly governed by consumer protection rules, which, in general terms, recognise consumers as vulnerable parties and prevent abusive action from suppliers. These contracts shall not bind consumers if they have not been given the opportunity to have advance cognisance of the terms, or if they are worded in such a way as to make understanding difficult. Contractual clauses must be interpreted favourably to consumers and all suppliers that take part in the supply chain are held jointly liable. In business-to-consumer contracts, provisions are held null when they:

  • exonerate or reduce the supplier’s liability for defects of any kind in the products and services;
  • entail a waiver of rights;
  • transfer liability to third parties; or
  • establish inequitable obligations that place the consumer at an unreasonable disadvantage, or that are incompatible with good faith or equitable practices.

 

Consumers have a seven-day statutory trial period when retaining products or services through the internet.

Business-to-business contracts are not presumed unbalanced and, therefore, are not regulated so as to protect one of the parties. As a general rule, limitations of liabilities are accepted in business-to-business contracts, provided that it is not an adhesion agreement, and the Civil Code applies.

In addition to the general consumer protection rules above, e-commerce is further regulated by the e-Commerce Decree, which sets out certain rules on how to contract online, particularly in relation to disclosure of information to consumers.

Electronic signatures

How does the law recognise or define digital or e-signatures?

Provisional Measure No. 2200-2 of 2001 (PM 220-2/01) created the Brazilian Public Key Infrastructure with the purpose of ensuring the authenticity, integrity and validity of electronic documents, as well as the performance of secure electronic commercial transactions. It is based on three essential elements: asymmetric cryptography, digital signature and certification. ICP-Brazil is charged with setting out the rules for the offering of electronic certification services. Documents executed using certificates homologated by ICP-Brazil are presumed authentic and true, unless proved otherwise, allowing the parties to resort to the fast-track collection procedure in the case of default. Owing to the pandemic, Law No. 14,063/2020 was enacted to ease electronic signatures’ specific formalities with the aim of enhancing efficiency despite physical distancing and isolation. In that sense, e-signatures are now classified as: simple e-signature, advanced e-signature and qualified e-signature (as defined by PM 220-2/01). All of these e-signatures are valid, although qualified e-signatures have a higher level of reliability. Documents certified by other means, or not certified, are still valid, but not presumed authentic, not allowing the fast-track collection procedure, unless the parties previously agreed that they would accept other means of certification for that specific agreement.

Data retention

Are there any data retention or software legacy requirements in relation to the formation of electronic contracts?

There are no rules applicable to data retention or software legacy requirements relating to the formation of electronic agreements. It is advisable to retain the contract for the statute of limitations of 10 years from the contract termination.

Law No. 12,965 (the Internet Act), however, provides that ISPs must store records of users’ access to their platforms for six months. Decree No. 7,962/2013, applicable to business-to-consumers agreements, also requires the supplier to provide a copy of the agreement that may be preserved and allows the parties to evidence the agreement’s authenticity.

Lastly, the Brazilian Data Protection Authority (ANPD) might provide data retention or software legacy requirements in the following two years. However, the ANPD’s regulatory agenda defined wide priorities, thus there is no specific mention regarding the formation of electronic contracts’ regulation.

Breach

Are any special remedies available for the breach of electronic contracts?

There are no special remedies available for the breach of electronic contracts. The same remedies applicable for the breach of physical contracts apply, except that physical contracts signed by the parties and two witnesses may be subject to a fast-track enforcement procedure. Brazilian courts’ current understanding regarding the application of such fast-track enforcement procedure for electronic contracts is not unanimous, since electronic contracts typically lack the witnesses’ signatures.

Law stated date

Correct on

Give the date on which the information above is accurate.

1 July 2020.