Construction Law 2026 Comparisons

In Brazil, the legal regime governing construction is spread across several statutes, and a structural distinction separates private-sector contracts from those in the public sector.

Private construction projects are governed primarily by the following.

• The Brazilian Civil Code – Law No 10,406/2002, in particular Articles 610 to 626, which regulate contracts for works (empreitada). These rules are largely supplementary, save for mandatory provisions – most notably Article 618, the contractor’s non-waivable five-year warranty for the solidity and safety of the works, held to be a rule of public order. They also apply on a subsidiary basis to atypical complex contracts (EPC, EPCM, turnkey and alliance), admitted under Article 425 of the Code.
• The Condominium and Real Estate Development Law – Law No 4,591/1964, which provides for real estate projects, the alternative of construction by administration (construção por administração), under which the acquirers bear the actual cost of the works on an open-book basis plus an administration fee.

Public construction projects are governed by the following.

• The New Public Procurement Law – Law No 14,133/2021, which establishes the rules on competitive bidding, risk allocation and contract management. Public contracts are additionally subject to administrative law prerogatives, including the unilateral amendment or termination of the contract.
• The State-Owned Enterprises Law – Law No 13,303/2016, which provides a more flexible, commercially oriented procurement framework for state-owned enterprises and their subsidiaries engaged in economic activities.
• The Concessions Law – Law No 8,987/1995, under which the concessionaire designs, builds, finances and operates a public asset, recovering its investment through user tariffs.
• The Public-Private Partnerships Law – Law No 11,079/2004, which regulates long-term concession arrangements through which private parties finance, build and/or operate public infrastructure or services in exchange for public payments, user fees or a combination of both.

The following apply to both sectors.

• The technical standards issued by the Brazilian Association of Technical Standards (ABNT – www.abnt.org.br), which are voluntary in principle but acquire binding force when incorporated by legal or regulatory provisions, such as Article 39, VIII, of the Consumer Defence Code (Law No 8,078/1990) and Article 5 of Law No 14,133/2021.
• Laws No 5,194/1966 and No 12,378/2010, which regulate the engineering and architecture professions and mandate the registration of technical responsibility (the ART or RRT).
• Decree No 10,306/2020, which established the BIM-BR Strategy, making Building Information Modelling mandatory for federal projects in successive phases.

The arbitration framework is set out in the Brazilian Arbitration Law (Law No 9,307/1996, amended by Law No 13,129/2015 to expressly authorise arbitration involving the public administration).

In Brazil, international standard form contracts are not generally used as the default basis for construction contracts. Most construction contracts are bespoke or based on owner-specific templates, and public works are usually procured under Brazilian statutory procurement regimes and standard administrative forms. However, international forms have become more visible in large infrastructure, EPC, turnkey, and project finance transactions, particularly when foreign sponsors, concessionaires, lenders or investors are involved.

Considering international forms, FIDIC is the most commonly seen. The Red, Yellow and Silver Books may be seen, with the Silver Book being particularly attractive for projects with price and time certainty and a single point of responsibility. The typical relationship is between employer and contractor. Often, a project company, concessionaire or foreign-controlled company acts as the employer with a Brazilian or Brazil-based contractor. Designers and subcontractors are usually engaged by the contractor, rather than having a direct contractual relationship with the employer.

In public procurement, compliance with Brazilian procurement legislation is mandatory, and, where applicable, so is the use of public-sector standard documents or justification for not using them. In projects financed by multilateral development banks or international agencies, Brazilian law authorises the use of FIDIC-based conditions, which may become mandatory under the financing or procurement rules.

In the private sphere, employers are typically large industrial conglomerates, real estate developers (incorporadoras) and special purpose vehicles (SPVs) incorporated for project-financed infrastructure. In the public sphere, they comprise direct and indirect administration entities, as well as state-owned enterprises. In concessions and public-private partnerships (PPPs), the construction employer is the private concessionaire.

In private contracts, the employer’s main rights are:

• to receive the works completed, on time and in accordance with the agreed scope and specifications; and
• to inspect the works and reject those performed with defects or in breach of the applicable technical rules, benefiting from the contractor’s non-waivable five-year warranty for the solidity and safety of the works.

The employer is, in turn, responsible for:

• paying the contract price on time;
• handing over the site free of impediments;
• providing the design, basic information and licences allocated to it; and
• co-operating in good faith with the contractor throughout execution.

In public contracts, the public employer additionally holds exceptional prerogatives (cláusulas exorbitantes), which are unilateral modification within statutory limits, supervision, application of penalties and unilateral termination on grounds of public interest, counterbalanced by the constitutional duty to preserve the contract’s economic-financial equilibrium.

The relationship between the employer and the contractor is bilateral and direct, with no privity between the employer and subcontractors. Subcontracting may require the employer’s express authorisation in private contracts and, in public contracts, must comply with legal requirements, including limits on the scope of subcontracting and qualification requirements. In project-financed transactions, the relationship with financiers is channelled through direct agreements that usually grant lenders step-in rights, assignment of receivables, and consent rights over material contractual amendments.

The Brazilian construction market comprises a diverse pool of contractors. Large Brazilian construction companies operate alongside a growing presence of European contractors and Asian groups, particularly Chinese state-owned enterprises, especially in transmission lines, ports and railways. Specialised EPC contractors operate in the oil and gas, infrastructure, mining and power generation segments, while mid-sized regional contractors and real estate construction companies (construtoras) supply the building and urban infrastructure markets. Contractors frequently bid and execute large projects through consortia (consórcios), which preserve the individual legal personality of the consortium members but typically impose joint and several liability towards the employer.

The rights and obligations of the contractor in private contracts are governed by the Civil Code. The contractor’s main rights are:

• to receive the contract price under the agreed conditions;
• to be granted access to the site and to the basic design information, when applicable; and
• to claim the restoration of the economic-financial equilibrium in cases of extraordinary and unforeseeable events under the doctrine of unforeseeability.

The contractor is, in turn, responsible for:

• executing the works in accordance with the technical specifications, applicable Brazilian technical standards (ABNT NBRs), construction permits, and project schedule; and
• complying with safety, environmental and labour regulations.

The contractor also bears the statutory, non-waivable five-year guarantee for the solidity and safety of buildings, as well as professional liability, evidenced by the Anotação de Responsabilidade Técnica (ART) registered with the relevant Regional Engineering Council (CREA). In public contracts, the contractor is additionally subject to the regime of Law No 14,133/2021, including performance bonds, sanctions and supervision powers exercised by the public employer.

The contractor’s relationship with the employer is direct and bilateral. In project-financed transactions, the contractor typically enters into direct agreements with lenders that usually address step-in rights, restrictions on contract amendments, and, in some cases, the assignment of receivables or security interests related to the project structure.

In Brazil, subcontracting is a structural feature of complex construction projects, particularly in EPC and EPCM arrangements, in which the main contractor retains overall responsibility while allocating specialised scopes (engineering packages, equipment supply, logistics and finishing trades) to a chain of subcontractors.

The rights and obligations of subcontractors are governed primarily by the Civil Code, the subcontract being structured as an autonomous empreitada or as a service contract. The subcontractor is mainly entitled to payment under the terms agreed with the main contractor and must execute the contracted scope in accordance with the project specifications, the applicable ABNT standards and health, safety and environmental requirements, issuing the corresponding ART and answering for the five-year warranty for the solidity and safety of the works within the limits of its scope.

Generally, the subcontractor does not have a direct relationship with the employer, and its claims must be channelled through the main contractor, which remains solely responsible to the employer for the subcontracted works. Even so, Brazilian law imposes statutory joint liability in specific areas, particularly labour obligations, social security contributions and environmental liability.

In public contracts, subcontracting requires express contractual authorisation, may limit its scope, and demands that the subcontractor possess equivalent technical qualifications. As regards financiers, subcontractors are not normally parties to the direct agreements, but the financing structure may reach them indirectly through step-in clauses, vendor-approval lists, performance bonds and parent company guarantees.

A common arrangement in the Brazilian market is direct invoicing (faturamento direto), in which the subcontractor issues invoices directly to the employer, while the contractual relationship remains with the main contractor. The mechanism is often used to reduce the tax burden on successive transactions along the production chain.

The financing landscape of Brazilian construction and infrastructure projects is multi-sourced and has undergone significant transformation in recent years, with capital markets progressively complementing and, in several segments, substituting traditional bank financing. The principal financiers include:

• public development banks, led by BNDES;
• private commercial banks, which play a central role in working capital, bridge financing and syndicated loans;
• multilateral institutions and export credit agencies, in cross-border transactions; and
• capital markets, which have gained particular relevance through infrastructure debentures.

Financiers are not, as a rule, parties to the construction contract itself. Their position is typically projected onto the construction relationship through direct agreements (acordos diretos or contratos tripartites) executed among the lenders, the borrower (typically a project SPE) and the relevant contracting counterparties.

Their core obligations remain those of the financing agreements, chiefly the disbursement of funds upon satisfaction of conditions precedent and the occurrence of milestone-linked drawdowns.

The financiers’ relationship with the employer/borrower is the principal credit relationship and is governed by extensive covenants regarding indebtedness, distributions and operational performance. With the contractor, the relationship is indirect but contractually formalised through the direct agreement, which provides lenders with the legal basis to interact with, monitor and, if necessary, replace the contractor.

The Brazilian design market features a heterogeneous combination of multidisciplinary engineering consultancies, specialised national engineering firms, boutique architecture practices and academic-linked technical institutes. The role of the designer (projetista) varies substantially depending on the contractual model adopted (if traditional design-bid-build structures, EPC, EPCM or turnkey arrangements).

The rights and obligations of the designer flow from the contractual regime governing the provision of services or, when the deliverable encompasses the integrated production of a complete design for a fixed price, from the rules of empreitada de lavor under the Civil Code. The designer is entitled to:

• receive the agreed-upon remuneration;
• preserve their authorship; and
• be informed of substantial modifications made by the employer or the contractor.

Its principal duties are to:

• deliver the design in compliance with the technical specifications, applicable ABNT standards and regulations; and
• be liable for design defects pursuant to general civil liability rules under the Civil Code, and the non-waivable five-year warranty to the designer when the deficiency affects the solidity and safety of the works.

The relationship between the designer and the employer is direct in design-bid-build models and indirect in EPC models, where the contractor assumes all design-related responsibilities towards the employer and bears the risk of design errors and interface defects between design and construction. With the contractor, the designer interacts contractually only in integrated regimes; in segregated regimes, their relationship is operational, mediated by the employer and limited to clarifications, site visits and supervision of conformity (acompanhamento de obra), without a direct relationship that could trigger direct contractual claims between them.

Typically, the scope is defined by a combination of the basic design (projeto básico), the detailed design (projeto executivo), technical specifications, bills of quantities (planilhas orçamentárias), descriptive memoranda, engineering drawings, the physical-financial schedule and the applicable ABNT standards. The specific combination and level of detail vary with the type and complexity of the project. Defining scope accurately matters because the Civil Code ties the contractor to the design accepted by the employer and allows additional remuneration for modifications only where they result from the employer’s written instructions.

In private contracts, the parties enjoy broad freedom to structure the scope of the contract according to the contract model. In traditional design-bid-build arrangements, the employer delivers a fully developed executive design, and the scope is detailed in drawings and specifications. In EPC, EPCM and turnkey models, the employer provides functional and performance-based criteria, typically structured as the employer’s requirements (a concept aligned with the FIDIC Yellow and Silver Books), and the contractor assumes responsibility for converting them into basic and executive designs.

In public contracts, the definition of scope is rigorously regulated by Law No 14,133/2021. The statute expressly defines and prescribes their respective minimum technical contents: the preliminary design (anteprojeto), basic design (projeto básico) and the detailed design (projeto executivo). Law No 14,133/2021 codifies a closed list of project delivery systems, each of which entails a distinct standard of design completeness, a specific allocation of design and quantity risks between the parties, and a particular logic for price formation and variations.

The treatment of variations in Brazil depends primarily on the contractual regime. In private contracts, the matter is governed supplementally by the Brazilian Civil Code. Generally speaking:

• when the variation is requested by the employer in private contracts, scope and price are determined by the agreed valuation mechanism or, in its absence, by judicial or arbitral assessment of the reasonable value of the additional works; and
• when the variation is requested by the contractor, it is not entitled to additional payment for design modifications unless these were instructed in writing by the employer, or the employer, present at the site, could not ignore them and failed to object.

In sophisticated EPC, EPCM and turnkey contracts, however, the parties typically modify this regime with detailed change order clauses that establish the formal procedure for instructing variations, the valuation methodology and notification deadlines.

In public contracts, variations are regulated by Law No 14,133/2021, which authorises both unilateral modifications by the public administration: qualitative, to better adapt technical specifications, and quantitative, to adjust contracted volumes. Bilateral modifications may be agreed upon by the parties. The Law also imposes mandatory limits which are rigorously enforced: the contractor is obliged to accept additions or suppressions of up to 25% of the updated initial contract value for works, services and purchases, and up to 50% for the renovation of buildings or equipment. New or modified items are priced using official cost databases (SINAPI and SICRO) and prevailing market prices, preserving the original BDI (Bonificação e Despesas Indiretas) and the contractor’s profit margin. A contractor in a public contract may not unilaterally vary the works; it may only request modifications, which must be technically justified and formalised through a written amendment, and is entitled to the restoration of the economic-financial equilibrium when unforeseeable events alter the contractual balance.

Where a variation extends the works, the contractor is, as a rule, entitled to the associated time-related (prolongation) costs; the treatment of these costs is addressed in 5.2 Delays.

In Brazil, the allocation of design responsibilities is defined by the project delivery system adopted. In the traditional design-bid-build model, the employer engages the designer directly and delivers a developed executive design to the contractor, and design liability primarily rests with the designer. In integrated models, design and construction responsibilities are consolidated in the contractor under a single-point responsibility regime. The contractor assumes the design risk, the interface risk and, customarily, an enhanced fitness-for-purpose obligation, with the designer operating as its subcontractor.

In public contracts, Law No 14,133/2021 allocates design risk based on the degree of integration between design and construction.

• In the ordinary regimes of empreitada por preço unitário, empreitada por preço global and empreitada integral, the public administration is generally responsible for preparing the basic design (projeto básico), and often also the executive design (projeto executivo), while the contractor is engaged primarily for execution.
• Under contratação semi-integrada, the administration provides the basic design, but the contractor becomes responsible for developing the executive design and executing the works. Under contratação integrada, the administration provides only a preliminary design (anteprojeto), transferring responsibility for preparing both the basic and executive designs, as well as for construction itself, to the contractor.

Regardless of the model, the non-waivable five-year warranty reaches design defects that compromise the solidity and safety of the works, and the dominant view extends this liability to the designer. That allocation is not definitively crystallised by the contractual model: under the Civil Code, the subsequent conduct of the parties may reallocate it, so that a contractor formally engaged only to build that, in practice, reviews the design, proposes alterations or implements modifications without referring the decision back to the employer may attract design liability irrespective of the contract wording.

In both private and public systems, the construction contract is generally characterised as an obligation of result: performance is based on completion and delivery of the works in conformity with the agreed time, quality and safety standards.

In private contracts, party autonomy prevails: the parties are free to select any interface management model (concentrating all activities in a single contractor or distributing them among several parties), and Brazilian practice favours a pragmatic allocation of risks to the party best placed to manage them.

Subcontractors maintain a direct contractual relationship only with the main contractor. Crucially, subcontracting does not relieve the contractor, which assumes the risk of the entire operation and remains liable to the employer and to third parties for the works as a whole.

In public contracts governed by Law No 14,133/2021, the contractor executes the works while the Public Administration retains responsibility for the general management and interface co-ordination of the project, exercising supervisory prerogatives through a formally designated contract manager and inspector. Third parties may be engaged to manage specific activities, but they remain jointly liable with the Administration.

Regardless of the system or delivery model, the non-waivable five-year warranty for the solidity and safety of the works extends to the contractor and the professionals in the chain, serving as an irreducible floor of responsibility.

On the contractual plane, Brazilian practice favours a pragmatic allocation of site-condition risks (including geotechnical conditions, the release of areas and environmental licensing) to the party best placed to manage them. In private contracts, this allocation rests on party autonomy, and EPC and turnkey contracts typically transfer site-condition risk to the contractor. In public contracts, the matter is governed by the risk matrix of Law No 14,133/2021, which is mandatory for contratação integrada and semi-integrada, as well as for concessions and PPPs.

The Civil Code makes the contractor liable for the solidity and safety of the works “in respect of the soil”, and the prevailing view derives from it a duty of the contractor to verify the adequacy of the ground, even where soil investigations were procured by the employer.

Underground obstacles and other unforeseen physical conditions are not the subject of a specific statutory regime equivalent to FIDIC Sub-Clause 4.12. In private contracts, in the absence of a contractual provision, their treatment is channelled through the suspension and price-review mechanism and the doctrine of unforeseeability in the Civil Code. In public contracts, genuinely unforeseeable physical conditions may justify a rebalancing of the contract, depending on the applicable regime and the adopted risk matrix. The contractor’s duty of technical diligence and the unconditional acceptance of the tender notice nonetheless narrow the room for such claims.

Pollution and pre-existing contamination are governed by mandatory environmental law. Liability for environmental damage is objective and joint and several. Contractual allocation of contamination risk is therefore valid only on the internal plane, regulating indemnities between the parties, without affecting the liability owed to the State and to third parties.

Archaeological finds are likewise governed by mandatory law. A discovery triggers a non-derogable duty to notify the Instituto do Patrimônio Histórico e Artístico Nacional (IPHAN) and to suspend the affected works. Here, too, the contract cannot override the regulatory obligation. It may only allocate, typically through the risk matrix or change-in-law and unforeseen-conditions clauses, the cost and delay consequences of the find.

The permitting of construction projects in Brazil is a matter of mandatory and regulatory law: the obligation to obtain the relevant permits cannot be waived by the parties, and building without them exposes the project to administrative embargo, fines and even demolition. What the parties may freely agree upon is the contractual allocation of the burden of obtaining each permit, subject to the limitation that certain permits, by their nature, can only be held by the land owner or the project proponent.

The permits typically required fall into three main groups.

• Environmental licensing (licenciamento ambiental), in three successive stages: the preliminary licence (licença prévia), the installation licence (licença de instalação) and the operation licence (licença de operação). Activities of significant impact require an environmental impact study (EIA/RIMA).
• Urban and building permits issued by the municipality under its building code and master plan (plano diretor): chiefly the construction permit (alvará de construção) and, upon completion, the certificate of occupancy (habite-se).
• Sectoral and ancillary authorisations, which vary with the nature of the project.

In private contracts, allocation of responsibility for permits follows party autonomy and is typically defined in the risk matrix. As a general rule, the employer secures the preliminary environmental licence and the urban approvals that are intrinsically tied to the property. In EPC and turnkey arrangements, however, it is common for the contractor to assume responsibility for the installation-stage licence and for the permits associated with the design it develops.

In public contracts governed by Law No 14,133/2021, the burden rests primarily on the Public Administration: the statute requires the tender documents to address environmental licensing where the object so demands. Under contratação integrada and semi-integrada, the contractor may nonetheless assume the obligation to develop the licensing process at the installation and operation stages, in line with the broader transfer of design responsibility characteristic of those regimes.

Maintenance must be distinguished from the contractor’s post-completion liability. Once the works are completed and accepted, maintenance becomes the employer’s responsibility, and the contractor is liable only for defects, under the five-year statutory warranty for the solidity and safety of the works.

Maintenance is, as a rule, regulated in instruments separate from the construction contract, typically operation and maintenance (O&M) or facilities management agreements, which may be entered into with the same contractor or with third parties, and whose terms the parties are free to define. The position differs regarding concessions and public-private partnerships (Laws No 8,987/1995 and 11,079/2004), in which the operation and maintenance of the infrastructure throughout the concession term is a core obligation of the concessionaire, embedded in the concession contract itself.

In ordinary private and public works contracts, the employer’s instructions to the contractor are generally confined to design (where applicable), procurement and construction. Financing is usually arranged separately with lenders, and operation, maintenance and transfer may be bundled into the construction contract depending on the nature of the project.

The Civil Code does not regulate completion tests. In private contracts, the parties establish a detailed testing sequence that the contractor carries out, with the contractor bearing the burden of demonstrating conformity, while the employer, frequently assisted by an owner’s engineer or an independent verifier, witnesses and approves the results. Successful testing is, as a rule, the contractual condition precedent to the employer’s takeover of the works. In public contracts, conformity of the works with the design and the technical specifications is verified by the public authority through a designated official or commission as part of the acceptance procedure.

In private contracts, once the works are completed in accordance with the contract or local custom, the employer is obliged to receive them, and may reject works performed in breach of the technical rules or accept them at a reduced price. Takeover is customarily structured in two stages: provisional and definitive, the latter following a verification period. Public law provides for provisional and definitive acceptance (recebimento provisório e definitivo) by a designated official or commission. Takeover is the decisive milestone, transferring risk, releasing part of the guarantees and starting the running of the defect-notification, liability and warranty periods.

The core rule is that the contractor who supplied materials and performed the execution answers for the solidity and safety of the construction for a non-waivable period of five years from delivery. This is a public-order rule: the parties may extend it but may not reduce or exclude it. The parties commonly agree, in addition, on contractual defect-notification and defect-liability periods, which operate alongside, but cannot override, the statutory five-year warranty.

The remedies available to the employer are the repair or redoing of the defective works, a proportional reduction of the price and compensation for damages, with termination available for serious breach. Where the defect originates in the design, the claim lies against the designer and, under the chain of responsibilities, may also reach the contractor. These remedies are not extinguished by takeover: acceptance attests only apparent conformity and does not discharge the contractor from liability for latent defects or for the solidity and safety of the works.

As to notification, the Civil Code imposes a mandatory term of 180 days, counted from the appearance of the defect, within which the employer must bring the corresponding action. Once that term lapses, the specific claim is barred.

The contract price is typically established using three methods: lump-sum (preço global), unit price (preço unitário) and cost-plus or reimbursable arrangements, the latter increasingly adopted in the form of guaranteed maximum price (preço máximo garantido – PMG) structures.

In public contracts, these correspond to the execution regimes set out in Law No 14,133/2021. The price is generally composed of direct costs (labour, materials and equipment) and of indirect costs and profit, conventionally consolidated in Brazilian practice under the BDI (Bonificação e Despesas Indiretas).

Indexation is commonly used. Construction contracts typically include price-adjustment clauses (reajuste) tied to official indexes, notably the INCC (construction cost index), the IPCA or sectoral indices. Law No 10,192/2001 prohibits price adjustments at intervals shorter than one year.

Extraordinary and unforeseeable fluctuations may instead trigger a revision of the contract under the doctrine of unforeseeability or, in public contracts, the restoration of the economic-financial equilibrium.

Construction contracts manage late or non-payment primarily through default interest, monetary updating, contractual penalties and payment guarantees. The contractor may also withhold its own performance: in private contracts under the defence of the owner’s non-performance and, in public contracts, by suspending the works once payment is delayed beyond the threshold set by law. Periodic interim payments are standard practice. Advance payments are freely agreed in private contracts, but, in public contracts, are exceptional and admitted only under restrictive conditions.

Invoicing follows the periodic measurement of the works: in unit-price contracts, the measurement records the quantities actually executed, whereas in lump-sum contracts it records the physical progress against the contractual physical-financial schedule. The contractor submits periodic statements of the executed works, which are verified and approved by the employer or its supervisor before the corresponding invoice is issued. It is formalised through the mandatory electronic tax invoice, which triggers the withholding of the applicable taxes. In public contracts, the issuance of the invoice and the release of payment are tied to the measurement attested by the designated contract inspector.

Planning is typically organised around a baseline construction programme, the physical-financial schedule, which constitutes a core contractual document. It is typically prepared by the contractor and submitted to the employer for approval. In public contracts, it forms part of the tender and the contract. The contractor is responsible for executing and updating the programme, while the employer, frequently through a supervisor, monitors progress against it. Planning is safeguarded through periodic progress reporting, contractual milestones and penalties for delay. Milestones are commonly used as control points and are frequently linked to payment, and completion and acceptance certificates are used to evidence the achievement of contractual stages.

In the event of a delay, the contract typically requires the affected party to give prompt notice. The contractor is, in any event, bound by a duty to mitigate arising from objective good faith. Time-related costs follow causation: where the delay is attributable to the employer, the contractor may recover prolongation costs, on the basis of the employer’s default and the principle of full reparation. EPC contracts customarily regulate this through extension-of-time clauses and agreed daily rates. In public contracts, compensation for stoppage is channelled through the restoration of the economic-financial equilibrium. Brazilian law contains no specific regime for concurrent delays. The matter is, as a rule, addressed contractually and, in the absence of provision, resolved by apportionment according to causation and the parties’ respective fault.

In the event of delay attributable to the contractor, the employer may claim liquidated damages or a contractual penalty, which may not exceed the value of the main obligation and is subject to equitable reduction by the court, and, where the loss exceeds the agreed amount, compensation for the actual damage and lost profits. Persistent or material delay also entitles the employer to terminate the contract.

In public contracts, delay exposes the contractor to statutory sanctions, such as a warning, fines, suspension of the right to tender, and a declaration of unfitness to contract, and may ground the Administration’s unilateral termination of the contract.

The contractor typically requests an extension of time by serving a written notice and claim within the period stipulated in the contract, supported by documentary and technical evidence. An extension is granted for delay events not attributable to the contractor: the employer’s acts or omissions, variations, force majeure, unforeseen conditions, changes in law or delayed site access.

In private contracts, the Civil Code does not regulate the extension of time as a specific institution, but it affords the injured party the broader remedies of demanding performance or terminating the contract, and it shields the contractor from liability for delay not attributable to its fault. In public contracts, where the works are impeded, suspended or subject to a suspension order, the execution schedule is automatically extended by the corresponding period, and the contractor remains entitled to the preservation of the economic-financial equilibrium.

Quantification depends on demonstrating the event’s impact on the work’s critical path. Well-drafted contracts prescribe a delay-analysis methodology. In its absence, the extension is established by technical evidence, often through an expert examination in litigation or arbitration.

Force majeure is defined as a necessary event whose effects could not be avoided or prevented, with irresistibility as the defining trait. The parties may freely allocate force majeure risk, and construction contracts commonly define, expand or narrow the list of qualifying events. As a consequence, the party affected by force majeure is, as a rule, released from liability for the resulting non-performance and entitled to an extension of time. Where performance becomes permanently impossible, the obligation is extinguished.

The financial consequences, however, differ between the two regimes: under the Civil Code’s default rule, each party bears its own losses, whereas in public contracts force majeure entitles the contractor to the restoration of the contract’s economic and financial equilibrium.

Unforeseen circumstances are governed by both statutory and contractual rules. In private contracts, the Civil Code’s doctrine of unforeseeability allows the revision or termination of the contract when extraordinary and unforeseeable events render performance excessively onerous. Sophisticated parties usually allocate such risks in advance through risk matrices and hardship clauses, which prevail over the statutory regime. In public contracts, the position differs: the restoration of the economic-financial equilibrium in the face of unforeseeable events is constitutionally protected and regulated by law.

Brazilian law does not employ disruption as an autonomous legal category, but the underlying claim, the loss of productivity caused by interference attributable to the other party, is recognised under the general rules of contractual liability and full reparation. Where the disruptive event also affects the critical path, it may ground an extension of time. In all cases, the resulting loss of productivity, if attributable to the employer, grounds a claim for compensation. Disruption is among the most evidence-intensive claims; it must be established through technical and accounting evidence demonstrating both causation and quantum, typically through comparative or measured-mile analyses, and is frequently confirmed by expert examination.

Brazilian law treats certain liabilities as matters of public order that cannot be excluded by contract, even between sophisticated parties. The principal ones are:

• the contractor’s non-waivable five-year warranty for the solidity and safety of the works;
• liability for wilful misconduct and gross negligence;
• liability for the non-performance of the principal obligation of the contract; and
• liability for damage to the life and physical integrity of persons, protected by the constitutional principle of human dignity.

Liabilities arising from other public-order regimes – notably environmental liability, which is objective and joint and several, and labour and social security obligations – likewise cannot be excluded.

Both concepts exist under Brazilian law. Civil liability is founded on fault, which the Civil Code grades into wilful misconduct and negligence. Brazilian doctrine and case law traditionally classify negligence by its severity, depending on the extent of the deviation from the standard of care expected in the circumstances.

These concepts are governed primarily by mandatory law. Under the Civil Code, a party that causes damage through intentional misconduct or fault incurs liability.

In construction and infrastructure projects, these concepts frequently appear in limitation-of-liability clauses, indemnity regimes and exclusions from liability caps, especially in EPC and concession agreements. In public contracts, liability limitations are subject to stricter scrutiny in light of the principles governing public administration and the protection of public interests.

It is possible, and common, for the parties to limit their liability by contract. Limitation and exclusion clauses are not expressly regulated by the Civil Code but are recognised as valid expressions of contractual autonomy, and the Superior Court of Justice has confirmed their validity in parity contracts between sophisticated companies. In construction contracts, it is the contractor’s liability, and, where engaged directly, the designer’s, that is most often limited, typically through an aggregate liability cap fixed as a percentage of the contract price, the exclusion of indirect and consequential damages and lost profits, and caps on liquidated damages.

Although Brazilian law already provides for full reparation of damages, parties typically resort to indemnity and hold-harmless clauses to define in advance which party bears specific exposures. Typical subjects of indemnity are:

• third-party claims for bodily injury and property damage;
• environmental liability and pre-existing contamination;
• labour and social security claims relating to the contractor’s and subcontractors’ workforce;
• tax liabilities;
• infringement of intellectual property rights; and
• breach of contractual representations and warranties.

Cross-indemnities between the parties are also frequent in interface-intensive projects.

The guarantees most commonly used are the performance bond, the advance-payment guarantee, retention amounts, the warranty bond, and, in tenders, the bid bond, frequently complemented by parent company guarantees from the contractor’s sponsors. They may be provided as a cash deposit, a bank guarantee or a bond.

In public contracts, guarantees are governed by mandatory law. The Administration may require a performance guarantee of up to 5% of the contract value, which may be increased to 30% for large, high-complexity engineering works. In private contracts, guarantees are not mandatory but are standard practice and freely agreed upon. They are, as a rule, provided by the contractor, and their scope covers the due and timely performance of the works, the repayment of advance payments and the contractor’s obligations during the defects-liability period.

The insurance typically taken out in construction contracts is construction all-risks (engineering-risks) insurance, covering physical loss of or damage to the works, materials and equipment during the construction period, and third-party civil liability insurance, covering bodily injury and property damage to third parties. Cover for equipment in transit and, in some projects, decennial or defects insurance may be added. In public contracts, the tender documents may require additional insurance, and in concessions and PPPs the concessionaire is typically required to maintain civil liability and catastrophic-risk cover throughout the concession term.

Construction contracts commonly treat the insolvency, bankruptcy or judicial reorganisation of a party as an event of default, conferring on the other party rights of termination and, where applicable, step-in. Brazilian courts interpret these clauses flexibly, not allowing termination solely on the grounds of insolvency or the filing for judicial reorganisation, prioritising the preservation and continuity of the business, especially if the party demonstrates the feasibility of performance of the contract. However, if there is an uncured contractual default, the non-defaulting party may regain the right to seek termination, subject to the procedural rules and jurisdiction of the insolvency or bankruptcy court.

Risk sharing is an established and growing approach. Good practice favours the use of a risk matrix, allocating each risk to the party best placed to manage it and reserving a residual category of genuinely shared risks. The risks most commonly shared are geological and ground conditions, changes in law, force majeure, and inflation and currency fluctuation. In public contracts, this is formalised through the risk matrix (matriz de alocação de riscos) of Law No 14,133/2021, mandatory in contratação integrada and semi-integrada and in concessions and PPPs. Collaborative and alliance contracts go further, adopting pain-share/gain-share mechanisms. Shared and retained risks are priced into the contingency component of the contract price: risks assumed by the contractor are reflected in its contingency provisions, while risks allocated to the employer correspondingly reduce the contractor’s contingency pricing.

Construction contracts typically require the contractor to appoint a qualified technical professional as responsible for the works (responsável técnico), evidenced by the ART or RRT, and frequently identify key personnel who may not be replaced without the employer’s consent. The contracts confirm that the contractor is the sole employer of its workforce, with no employment relationship arising towards the employer, and that the contractor bears the corresponding labour, social security and occupational health and safety obligations, notably compliance with the applicable regulatory standards (NRs). It is also common for the employer to reserve the right to require the removal of personnel whose conduct or performance is unsatisfactory.

Subcontracting in the Brazilian construction industry operates on two levels: the outsourcing of labour and the subcontracting of works.

As regards the outsourcing of labour (terceirização de mão de obra), Laws No 13,429/2017 and No 13,467/2017 amended Law No 6,019/1974 to permit the outsourcing of any activity, including the company’s core activity (atividade-fim), and the Federal Supreme Court confirmed the constitutionality of that regime in 2018 (ADPF 324 and RE 958.252). The taker of the services nevertheless bears subsidiary liability for the labour and social security obligations of the outsourced workforce.

The design produced for a construction project is protected as an intellectual creation under the Copyright Law (Law No 9,610/1998) and the professional statutes governing engineers and architects (Laws No 5,194/1966 and No 12,378/2010). Such protection extends to the original literary, artistic and architectural expression embodied in the design (including its layout, aesthetic and functional arrangement), rather than to purely technical or scientific content as such (such as engineering methods, calculation procedures or technical solutions considered in isolation).

A key distinction applies to the contractual provisions: the author’s moral rights, including authorship and the integrity of the design, are non-transferable and remain with the designer, whereas the economic rights may be freely assigned or licensed. Construction contracts, therefore, typically provide for the assignment to, or licensing in favour of, the employer of the economic rights over the design, for the purpose of constructing, operating and maintaining the works, frequently limiting that use to the specific project. Contracts increasingly also address the ownership of BIM models, software and technical data generated during the project.

Under Brazilian law, remedies for breach of a construction contract derive mainly from the general law of obligations in the Civil Code, supplemented by the specific rules on empreitada and, where the employer is a public authority, by the public procurement and administrative contracts regime. In practice, however, Brazilian construction contracts usually regulate remedies in greater detail than the Civil Code.

In private projects, the employer may seek specific performance, cure of defects, performance by a third party at the defaulting party’s expense, termination, damages and, where contractually agreed, penalties or liquidated damages. Brazilian law recognises contractual penalties, including liquidated damages for delay, but the court may reduce them if they are manifestly excessive or if the obligation has been partially performed.

The innocent party may elect between specific performance and termination, in both cases with damages.

The Code of Civil Procedure also supports specific relief, including orders that produce an equivalent practical result, daily fines and coercive measures.

For the contractor and the designer, the usual remedies against the employer are payment of the contract price or fees, which may be pursued by enforcement proceedings where the creditor holds an enforceable instrument. Claims for variations, prolongation costs, employer-caused delay, prevention and wrongful termination may also be brought before the courts or, where agreed, in arbitration.

In public contracts, the employer’s remedies are broader. The Administration may supervise performance, require correction of defects, apply contractual and administrative sanctions, call on guarantees and terminate the contract in legally defined circumstances. Sanctions include a warning, a fine, an impediment to bidding or contracting with the public sector, and a declaration of ineligibility. They must be imposed through an administrative process observing the contractor’s right of defence.

In Brazilian private construction contracts, it is common for parties to limit or structure the remedies available for breach. Contracts may include caps on liability, exclusions of indirect losses, exclusive remedies for delay or defects, notice requirements, cure periods, liquidated damages, performance bonds and specific termination regimes. These clauses are generally enforceable in commercial contracts, subject to mandatory law, good faith, public policy and the nature of the obligation.

There are, however, limits to the exclusion of liability. Brazilian law generally does not allow a party to contract out of mandatory duties, statutory warranties, or liability arising from wilful misconduct or bad faith. Particular care is also required where the limitation would deprive the contract of its essential purpose or conflict with a mandatory statutory remedy.

In public contracts, the parties have significantly less freedom to limit remedies. Public contracts allocate risks through a risk matrix, which is central to defining responsibility and economic balance. However, the statutory powers of the Administration, including supervision, sanctions, calling on guarantees and termination in legally defined circumstances, cannot be waived or neutralised by contract.

Sole remedy clauses are used in Brazilian construction contracts, especially in EPC, infrastructure and industrial projects, but they require careful drafting. They are typically used to channel the consequences of a specific breach into an agreed contractual mechanism, such as delay, liquidated damages, rectification of defects, replacement of defective works, price reduction, calling on performance security, or termination after a cure period. In commercial contracts between sophisticated parties, Brazilian law generally respects this allocation of remedies.

A sole remedy clause cannot safely exclude liability for wilful misconduct, bad faith, mandatory statutory duties or remedies that Brazilian law treats as non-waivable.

The notion that the innocent party may choose between specific performance and termination is deeply rooted in Brazilian law. For that reason, a sole remedy clause should not, as a rule, eliminate the right to terminate the contract in the event of a material breach.

It should also be noted that Brazilian courts may equitably reduce contractual penalties if they are manifestly excessive or if the obligation has been partially performed. This reflects a logic similar to that found in the UNIDROIT Principles.

Typical exclusions in Brazilian construction contracts may include indirect losses, loss of profit, loss of revenue, loss of production, loss of use, loss of business opportunity, reputational damage and financing costs.

Care is required with terminology. Brazilian law does not draw exactly the same distinction between “direct”, “indirect” and “consequential” losses as in common law systems. Under the Civil Code, recoverable damages generally comprise actual loss and loss of profit, but only to the extent that they are a direct and immediate consequence of the breach.

In major EPC, infrastructure and industrial projects, parties often combine these exclusions with an overall cap on liability. Delay damages are also commonly treated as the agreed remedy for delay, subject to any express contractual exceptions.

In public works and administrative contracts, the contract and its risk matrix may allocate responsibility for defined events, but they cannot remove mandatory statutory duties, the Administration’s supervisory and sanctioning powers, or liabilities provided by statutory law.

Retention and suspension rights are not generally excluded altogether in Brazilian construction contracts, but they are often regulated and limited. In private contracts, the Civil Code recognises the defence against non-performance under which a party to a bilateral contract may refuse to perform while the other party has not performed its own obligation. Contracts may therefore set conditions for suspension, such as prior notice, a cure period, minimum payment default thresholds and a requirement that suspension be proportionate to the breach.

In practice, employers often seek to restrict the contractor’s right to suspend works, particularly in EPC, infrastructure and industrial projects, where continuity of performance is critical. Brazilian law is not receptive, however, to unilateral self-help measures that amount to enforcement without judicial or contractual authority, such as retaining equipment or materials beyond the agreed security arrangements, taking over labour or otherwise assuming control of resources allocated to the works.

Retention rights are usually a matter of contract rather than a broad self-help remedy. Employers may partially retain payment as security for performance, defects or completion obligations, subject to release upon provisional acceptance, final acceptance or expiry of the defects liability period.

In public contracts, the contractor is generally expected to continue performance and pursue administrative or judicial remedies, but Law No 14,133/2021 allows suspension and termination in certain cases, including prolonged suspension ordered by the Administration or payment delay exceeding two months.

Termination of a private construction contract may arise by agreement between the parties, for default, or for convenience, where expressly provided in the contract. Under the Civil Code, in the event of non-performance, the innocent party may seek termination of the contract and damages. Construction contracts usually regulate this more specifically by providing cure periods, notice requirements and termination events, such as material breach, insolvency, abandonment of the works, failure to meet milestones, persistent defects, non-payment, failure to provide access to the site or prolonged suspension.

If termination results from contractor default, the employer may typically claim the additional costs of completing or rectifying the works, delay damages, other direct losses, contractual penalties and recourse to performance security, subject to the contract. The contractor will usually remain entitled to payment for works properly performed and accepted, subject to set-off for the employer’s losses.

If termination results from employer default, the contractor may claim unpaid amounts, demobilisation costs, and damages. Brazilian law treats loss of profit as a recoverable head of damages. However, compensation for the loss of the unperformed part of the contract may raise more complex issues of certainty and quantification and, in some cases, be analysed by reference to loss of chance.

In public works and administrative contracts, termination is governed by law and by the contract. The Administration may terminate in legally defined circumstances, including contractor default, public interest reasons and other statutory grounds. The consequences may include payment for the portion properly performed, retention or calling of guarantees, fines and administrative sanctions, including debarment from contracting with the public sector in serious cases. Compensation for losses will normally depend on whether termination is attributable to the public authority. The contractor may also seek termination or compensation in statutory situations, including prolonged suspension or payment delay, but the process is more formal and subject to administrative procedure.

In Brazil, construction disputes are generally adjudicated by state courts, unless a federal public entity is involved and the dispute falls within the federal courts’ jurisdiction. Each state may organise the internal jurisdiction of its courts differently, with specialised courts for certain matters. However, there are no specialised construction courts in Brazil. The federal courts broadly follow the same procedural structure as the state courts, but have jurisdiction when a federal public entity is a party.

A construction dispute is usually heard by a single first-instance judge and will often involve extensive document production and court-appointed expert evidence. Interim measures are generally available, including orders to preserve evidence, suspend enforcement of penalties, compel or restrain specific acts and preserve assets. A judgment at first instance is ordinarily subject to appeal to the relevant Court of Appeal, decided by a panel of three appellate judges and, in certain cases, by a larger panel. Questions of federal law or constitutional law may, exceptionally, reach the Superior Court of Justice or the Federal Supreme Court in Brasília.

The parties may choose the forum, meaning the city or judicial district in which the dispute will be heard. Forum selection clauses are generally recognised under the Code of Civil Procedure. However, their effectiveness may be challenged, particularly where the chosen forum is not connected to the parties’ domicile or the place of performance of the obligation.

Court proceedings in complex construction disputes can be lengthy.

Arbitration is widely used in major construction, EPC, infrastructure, energy, mining and concession projects. Under the Brazilian Arbitration Law, arbitration is well established and may be chosen by both private parties and public entities. Brazil is a mature arbitration market, and the higher courts give proper deference to arbitration agreements and arbitral awards. The grounds for setting aside an award are limited and include, for example, violation of due process, breach of the arbitrator’s duty of impartiality, or an award rendered outside the scope of the arbitration agreement. In public contracts, arbitration is common in PPPs, concessions and major infrastructure projects, but it remains less widespread in ordinary public construction contracts.

The leading institutions administering construction disputes – notably the CAM-CCBC, the CBMA, the CAM-FIESP/CIESP and the ICC’s regional office – operate under modern rules consistent with international best practice and routinely handle large EPC, infrastructure and concession arbitrations.

Mediation and dispute boards are also available and regulated. Their use has been increasing, including in public construction contracts.

Brazilian courts may grant interim measures before the arbitral tribunal is constituted, enforce arbitral awards, hear annulment actions on limited statutory grounds, and decide disputes not covered by the arbitration agreement. For smaller projects, litigation before the state courts remains the usual route.