Volume 6, Number 14, Page 2

Y2K in Brazil: Recent Administrative Rulings and Statutory Liability

Ronaldo Lemos da Silva Jr.

Brazil’s legal plans for resolving the Y2K crisis were recently outlined in two recent administrative rulings. The first was enacted by the Ministry of Justice (Portaria nr. 212, May 14, 1999). The second Resolution was issued by the Department of Consumer Defense and Protection, which is also a branch of the Ministry of Justice. Both rules descend directly from the broad legal protection granted to consumers with regards to products and services, decreed by Statute 8.078, dated September 11, 1990 (Consumer Code).

By enacting the administrative rules mentioned above, the Ministry of Justice made clear the legal parameters regulating relations between consumers and suppliers with regards to Y2K problems. In this sense, the rules seek to systematize and disseminate among public and private entities the applicable statutory provisions which parties may claim before Brazilian Courts for damages arising out of Y2K.

First, the Ministry of Justice instructed governmental entities responsible for consumer protection, the so-called “National System of Consumer Protection,” to increase Y2K vigilance, in order that consumer’s rights be enforced and secured. It should be noted that Brazilian law designates certain governmental and non-governmental organizations as legally qualified to sue for consumer rights, following a model somewhat similar to the US “class action.”

Moreover, the Ministry of Justice, in accordance with the applicable statutes, has stated that suppliers of services or products which might be affected by Y2K phenomena are bound to inform their customers of any possible threats to their health or security, as well as any deficiencies and limitations in the use of said services or products in terms of Y2K compliance1. Costs involved in dessiminating such information shall be bourn exclusively by the supplier. As general rule, this responsibilty is connected to the broad obligation of suppliers to provide adequate and necessary information regarding their products and services. Per the Brazilian Commercial Code, a supplier of industrial products is bound to provide complete information in writing to consumers2. The supplier shall be liable for failing to comply with any aspect of this obligation.

It should be noted that any liability applicable to suppliers is derived directly from statutory provisions. The administrative rules enacted by the Ministry of Justice do not revise such provisions but instead provide a specific interpretation about how such statutory provisions shall be applied to Y2K cases. Accordingly, it is the Consumer Code (Statute 8.078) which provides that suppliers shall be strictly liable in the case of any damages to the health or safety of consumers arising out of the use of products and services. Such liability is applicable to damages originating from products or services failing to meet Y2K compliance, as expressly interpreted by the previously mentioned Administrative Rulings.

An example of the interpretative role played by the rulings, Administrative Rule 212 explicitly makes reference to liability for malfunctioning computers, medical equipment, telephones, means of transportation, telecommunication systems, electricity, safety devices, industry etc., resulting from Y2K phenomena. Accordingly, strict liability shall apply to suppliers in the case of damages arising out of defective products, assuming that the year 2000 inadequacy had not been previously and clearly expressed in writing.

Defining the limits of civil actions, the Brazilian Consumer Code sets forth that the right to sue elapses five years after the service or product is rendered. Therefore, the Ministry of Justice has decreed in Article 4 of the aforementioned Administrative Rule 212 that provisions contained therein shall only be applicable to contracts executed after January 1, 1995. Contracts executed before such time would be excluded from protection against Y2K damages, with regards to strict liability (product liability).

However, since the Consumer Code is not the only statute providing liability for damages (Brazilian Civil Code is also applicable), damages connected to contracts executed before January, 1, 1995 are also bound to be indemnified. The general statute of limitation for civil actions in cases of liability derived from the Civil Code provisions is 20 years. Notwithstanding, Civil Code liability (applicable to damages arising out of contracts executed before January 1, 1995) is not configured as strict liability. Consequently, negligence or lack of due care must be made evident before the Courts by the plaintiff in order to render the supplier liable.

Finally, the Brazilian Consumer Code adopts a broad definition for the term ‘supplier.’ According to said code, the supplier shall be considered any and all natural persons or legal entities, incorporated or not, public or private, national or foreign, who support activities of production, assemblage, creation, construction, importation, exportation, distribution or commercialization of products or rendering of services3. Therefore, strict liability in the abovementioned terms shall be applicable to persons or entities comprised in the legal definition of supplier, including persons or entities abroad.

Furthermore, the Consumer Code also adopts a broad definition for ‘consumer,’ which entitles a multitude of persons or entities to enjoy consumer rights. A consumer is defined as any and all natural persons or legal entities which acquire or use a product or service as the final beneficiary, individually or collectively considered4. Any person or entity comprised in the definition of consumer is entitled to claim for the connected rights provided by the Consumer Code or to be assisted by the private and governmental entities qualified to protect consumer rights.

Ronaldo Lemos is an attorney with Suchodolski Advogados Associados in Sao Paulo, Brazil. The Inter-American Trade Report is pleased to welcome Suchodolski Advogados Associados as new members of its Editorial Board.

1 Resolution of the Department of Consumer Defense and Protection, Article 3, Item 4. Brazilian Consumer Code (Statute 8.078), Article 10, Paragraphs 1st and 2nd.

2 Brazilian Consumer Code (Statute 8.078), Article 8, sole Paragraph.

3 Brazilian Consumer Code (Statute 8.078), Article 3

4 Brazilian Consumer Code (Statute 8.078), Article 2 its sole Paragraph.

The complete test of the above cited statutes may be found at the following