Selling software to Brazilian companies: what your contract needs

Brazil is one of the largest software markets in Latin America, and many foreign technology companies first reach it the simplest way, by licensing a product or selling a subscription directly to a Brazilian customer from abroad. The commercial terms often come from a standard global template, which is reasonable, but Brazilian law has a specific statute for software, Law 9,609/1998 (the “Software Law”), and a few of its rules apply whatever the template says, so it pays to check them before the first deal is signed.

This article goes through the points we review most often when a foreign vendor sells software, whether on-premises or as a service, to companies in Brazil.

Use of software in Brazil rests on a license

The Software Law states that the use of a computer program in Brazil is the object of a license agreement (art. 9), and that, where there is no written license, the invoice for the purchase or licensing of the copy serves as proof that the use is lawful (art. 9, sole paragraph). In practice this means that the license terms, and not only the order form or the invoice, should be part of the deal, because if they are missing the customer’s rights will be read from the tax document and from general contract law, which rarely matches what the vendor had in mind.

It is therefore worth making sure that the Brazilian customer actually accepts the license terms (click-through acceptance or electronic signature both work in business-to-business deals), that the order form refers to them expressly and that it is clear which document prevails if they conflict.

Technical validity and the duty to support

Two rules of the Software Law are often overlooked by foreign vendors. The license, the invoice or the packaging must state, in a way that is easy for the user to read, the period of technical validity of the version being sold (art. 7), and whoever markets software in Brazil, whether the rights holder or the holder of the commercial rights, must ensure that users receive the technical services needed for the program to work properly during that period of technical validity (art. 8).

The duty continues even if the program is withdrawn from the market during that period, unless fair compensation is paid to those harmed (art. 8, sole paragraph). Since the vendor defines the period, the sensible approach is to state it clearly, tie it to the version or release, and describe the support levels that apply during and after it, so that a customer running an old version cannot argue that support was promised indefinitely.

Reseller and distribution agreements

When the foreign company does not sell directly but grants a Brazilian partner the right to commercialize its software, the agreement is what the law calls a license of commercialization rights for software of foreign origin. For these agreements, the Software Law requires the contract to state who is responsible for the applicable taxes and charges and to set the remuneration of the foreign rights holder (art. 10).

The same article declares null two kinds of clauses: those that limit production, distribution or commercialization in breach of the rules in force (art. 10, § 1, I) and those that exempt either party from liability for third-party claims arising from flaws, defects or copyright infringement (art. 10, § 1, II). A reseller agreement in which the vendor disclaims all responsibility for infringement claims against the distributor, for example, is likely to fail in Brazil on that point, so it is better to negotiate a balanced indemnity, with a procedure for notice, defense and cooperation, than to rely on a blanket exclusion.

Risk allocation and good faith

Outside these specific rules, business-to-business software contracts in Brazil enjoy considerable freedom. The Civil Code presumes that civil and business contracts are negotiated between equal parties and provides that the allocation of risks they define must be respected (art. 421-A), which supports caps on liability, exclusions of indirect damages and service levels with predefined credits, as long as they are written clearly.

Brazilian law also requires the parties to act with probity and good faith both when concluding and when performing the contract (Civil Code, art. 422), and courts use this principle to read ambiguous clauses and to curb conduct that surprises the other side, so a suspension of service without prior notice or a unilateral change of essential terms tends to be viewed with suspicion even when the contract seems to allow it.

Currency, governing law and disputes

As a rule, payments due in Brazil must be stated in Brazilian reais (Civil Code, art. 318), but Law 14,286/2021 allows payment in foreign currency when the creditor or the debtor is a non-resident (art. 13, II), so a foreign vendor contracting directly with a Brazilian customer may invoice in dollars or euros. The customer will still have to handle the foreign exchange transaction and the taxes on the remittance, which is why the contract should say who bears them, as art. 10 of the Software Law already demands for distribution agreements.

Governing law, choice of forum and arbitration deserve their own analysis, which we cover in Contracts with Brazilian companies: governing law, forum and arbitration. If the vendor may one day need to enforce a foreign judgment or award against a Brazilian customer, see also Enforcing foreign judgments and arbitral awards in Brazil.

Data and intellectual property

If the software processes personal data of people in Brazil, the Brazilian General Data Protection Law (Law 13,709/2018, known as the LGPD) will usually apply, and the contract should define each party’s role and the security measures adopted. The contract should also say clearly who owns customizations, integrations and other work developed for the customer, because without such a clause each side may believe it owns the result.

Checklist before signing

• License terms accepted by the customer and referred to in the order form, with a rule on which document prevails
• Period of technical validity of the version stated in the license or on the invoice
• Support obligations described for that period and for older versions
• In reseller deals, taxes, remuneration and a balanced infringement indemnity
• Liability caps and exclusions written clearly, without exempting third-party claims
• Currency of payment and who bears exchange costs and withholding taxes
• Governing law, forum or arbitration chosen with Brazilian enforcement in mind
• Data protection roles and ownership of customizations

A global template can work well in Brazil, provided these points are adjusted before the first signature rather than discovered during the first dispute.