Relational Consumer Contracts: New Challenges for Brazilian Consumer Law
| DOI | 10.1177/096466390301200102 |
| Published date | 01 March 2003 |
| Date | 01 March 2003 |
| Subject Matter | Articles |
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 27
RELATIONAL CONSUMER
CONTRACTS: NEW
CHALLENGES FOR BRAZILIAN
CONSUMER LAW
RONALDO PORTO MACEDO JR
Universidade de São Paulo, Brazil
ABSTRACT
This article outlines the main features of relational contracts, and argues for their
importance in modern service-oriented societies. It then examines the Brazilian
Consumer Protection Code, suggesting that it opens up prospects for the legal
acknowledgement of relational characteristics of contracts in general and of consumer
contracts in particular. The article also examines the impact of the Code on private
pension fund contracts and banking contracts. Finally, the article discusses the
importance for consumers of the duty to inform in the context of market defects, and
the extent to which the duty to inform is advanced in the Brazilian Code.
INTRODUCTION
THENEOCLASSICALcontractual paradigm that dominates Brazilian law
is increasingly demonstrating its deficiencies and limitations in describ-
ing and regulating relational or long-term contracts, which are becoming
more frequent in post-Fordist production. This article discusses the elements
for a relational contract theory (developed by Ian Macneil and others), which
are able to provide a new description and new normative principles for contract
law, such as the principles of solidarity, cooperation, participation and balance.
These principles are examined through the example of private pension fund
contracts. The article shows the importance of the relational approach for
contract theory in general and for consumer contracts in particular, in a world
where the roles of trust, cooperation and solidarity have been gaining import-
ance. It is very likely that this trend will gain momentum as the post-Fordist
characteristics of the Brazilian economy increase.
SOCIAL & LEGAL STUDIES 0964 6639 (200303) 12:1 Copyright © 2003
SAGE Publications, London, Thousand Oaks, CA and New Delhi,
www.sagepublications.com
Vol. 12(1), 27–53; 030843
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 28
28
SOCIAL & LEGAL STUDIES 12(1)
The barriers to the acknowledgement of the relational characteristics of the
contract phenomenon are still numerous, especially in the traditional formal-
ist liberal and individualist Brazilian legal culture. Nevertheless, one can
identify a current trend towards their recognition in Brazilian law. Within
this perspective the Brazilian Consumer Protection Code (hereafter the
CDC) certainly represents an important milestone, given that it introduces a
new concept of social private law. Furthermore, there is some indication that,
following what has been seen in other western countries, legislation for
contractual protection of consumers will end up having a generalized effect
in other branches of private law, such as contracting among companies them-
selves. In Brazil, for example, its influence can be seen in areas such as fran-
chising, leasing contracts, banking law and private pension funds. However,
the future of, and limits to, this greater importance and fecundity of the
relational approach still remain little evident, and to state that we are going
in a well-defined direction is still premature. It does not seem an exaggera-
tion, however, to state that the CDC has started a new era by acknowledging
the importance of relational aspects in contracts from the legal-normative
structure that supports its practice.
In order to analyse these aspects of relational consumer contracts, the
article supports the idea that the duty to inform in relational consumer
contracts includes both the precontractual situation and the contractual
performance. In addition, the consumer in a relational consumer contract
must be adequately informed about the basic features and risks involved,
including those derived from the risks of capital investment in cases such as
private pension funds and popular savings. The disclosure of adequate and
relevant information to the consumer (especially that which concerns the
risks, quality and nature of products and services) should include mandatory
publication of economic reports on risks, management quality and the
soundness of the pension funds and bank trustees (a rating system). Further-
more, the adequacy of the information made available to the consumer in the
marketplace must be defined based on normal transaction costs and
consumer-bounded rationality. Finally, the article argues that the judicial
inversion of the burden of proof in favour of the consumer is acceptable
whenever any relevant information may frustrate consumers’ reasonable
expectations and interests.
RELATIONAL CONTRACTS AND THE SERVICE SOCIETY
We live in a society of mass consumption increasingly oriented towards
service providing (Macedo Jr, 1999b: 225). One of the characteristics of this
new service society is certainly the expansion of the relational nature of
consumer contracts relative to discrete contracts. This has brought about
important changes in the question of the protection of the consumer’s right
to information. Although this is not the appropriate place to discuss and
explain what and which are the characteristics of relational contracts, it is
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 29
MACEDO: CONSUMER CONTRACTS
29
important to establish some of their basic features in order to develop the
central argument of this thesis.
In general, relational (long-term) contracts tend to create continuous and
enduring relationships, in which the terms of exchange are increasingly open,
and the substantive clauses are replaced by constitutional clauses or clauses
that regulate the process of continual renegotiation, determined as much by
promissory relationships as by non-promissory bonds that are established de
facto between the various parties, as, for example, status (for example, vulner-
ability, indigence), trust and economic dependence. In this sense, relational
contracts (for example, health plan contracts, pension plan contracts and
some types of banking contracts), in contrast to discrete contracts, are long-
term contracts based on the very dynamic established in the course of the
contractual relationship.
As Ian Macneil (2000: 877) defines them, relational contracts are contracts
that are developed in a complex relationship, in which non-promissory
elements of the contract related to its context are taken significantly into
consideration in its definition. This is particularly evident and clear in
contracts that extend over time, in long-term contracts.
In this article, I intend to accomplish the following tasks: in this part, to
present in general terms the characteristics of relational contracts and the
theoretical consequences of the relational approach in the application of the
principle of good faith to relational consumer contracts; in the next part, to
present some of the consequences of this same approach for the re-evaluation
of the duty to inform in banking contracts and pension fund contracts,
especially with regard to the risks to which consumers are exposed.
Despite the fact that the terminology of relational contracts increasingly is
being adopted by a large portion of the legal and economic literature about
contract theory, especially in Europe and the United States, its introduction
in Brazil is relatively recent. For that reason, it seems opportune to present
some of its characteristics. For this task, I take advantage here of the distinc-
tion proposed by Ian Macneil (1974: 691) between discrete contracts and rela-
tional contracts (Macedo Jr, 1997: 105; 1999a: 103).
Discrete contracts’ basic characteristics lie in the fact that they are imper-
sonal, ‘presentifying’, i.e. they tend to bring the future into the present; they
involve a bargain between the instrumentally oriented parties and require the
mutual consent of the two parties. They are discrete and constitute a separate
entity, in as much as they plan a transaction that is separate from all previous,
contemporary or subsequent transactions. Each contractual act is considered
an isolated, independent and autonomous act, for it contains within it all of
its essential constituting elements. Thus, for example, a contract, according
to the 1917 Brazilian Civil Code, as long as it includes free will, a licit object,
a capable agent and does not violate the form prescribed by law, is considered
a perfect legal business act and a generator of legal consequences, in particu-
lar, of binding and enforceable consequences.
It is also impersonal, for it defines the transaction in terms of a simple
exchange of goods, that is, in terms of description, price, quantity and
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 30
30
SOCIAL & LEGAL STUDIES 12(1)
delivery date of the goods. In it no importance is conferred on the quality of
the contracting parties, their class, status, group, family or social rank. It
suffices that a party complies with the overall abstract concept of a creditor
(sujet de droit).
It is presentifying in that it seeks to plan, in the immediate present, all of
the actions to be carried out in the future. All of the essential elements and
constituting terms of the contract are established in the present, no import-
ance or substantive relevance being assigned to the parties’ performance in
defining the consequences of breach or failure to perform. Furthermore, little
or no importance is attributed to precontractual communications, such as
preparatory dialogues. According to this conception, the predominant idea
is that the contract must be upheld, based on the pacta sunt servanda prin-
ciple,...
RELATIONAL CONSUMER
CONTRACTS: NEW
CHALLENGES FOR BRAZILIAN
CONSUMER LAW
RONALDO PORTO MACEDO JR
Universidade de São Paulo, Brazil
ABSTRACT
This article outlines the main features of relational contracts, and argues for their
importance in modern service-oriented societies. It then examines the Brazilian
Consumer Protection Code, suggesting that it opens up prospects for the legal
acknowledgement of relational characteristics of contracts in general and of consumer
contracts in particular. The article also examines the impact of the Code on private
pension fund contracts and banking contracts. Finally, the article discusses the
importance for consumers of the duty to inform in the context of market defects, and
the extent to which the duty to inform is advanced in the Brazilian Code.
INTRODUCTION
THENEOCLASSICALcontractual paradigm that dominates Brazilian law
is increasingly demonstrating its deficiencies and limitations in describ-
ing and regulating relational or long-term contracts, which are becoming
more frequent in post-Fordist production. This article discusses the elements
for a relational contract theory (developed by Ian Macneil and others), which
are able to provide a new description and new normative principles for contract
law, such as the principles of solidarity, cooperation, participation and balance.
These principles are examined through the example of private pension fund
contracts. The article shows the importance of the relational approach for
contract theory in general and for consumer contracts in particular, in a world
where the roles of trust, cooperation and solidarity have been gaining import-
ance. It is very likely that this trend will gain momentum as the post-Fordist
characteristics of the Brazilian economy increase.
SOCIAL & LEGAL STUDIES 0964 6639 (200303) 12:1 Copyright © 2003
SAGE Publications, London, Thousand Oaks, CA and New Delhi,
www.sagepublications.com
Vol. 12(1), 27–53; 030843
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 28
28
SOCIAL & LEGAL STUDIES 12(1)
The barriers to the acknowledgement of the relational characteristics of the
contract phenomenon are still numerous, especially in the traditional formal-
ist liberal and individualist Brazilian legal culture. Nevertheless, one can
identify a current trend towards their recognition in Brazilian law. Within
this perspective the Brazilian Consumer Protection Code (hereafter the
CDC) certainly represents an important milestone, given that it introduces a
new concept of social private law. Furthermore, there is some indication that,
following what has been seen in other western countries, legislation for
contractual protection of consumers will end up having a generalized effect
in other branches of private law, such as contracting among companies them-
selves. In Brazil, for example, its influence can be seen in areas such as fran-
chising, leasing contracts, banking law and private pension funds. However,
the future of, and limits to, this greater importance and fecundity of the
relational approach still remain little evident, and to state that we are going
in a well-defined direction is still premature. It does not seem an exaggera-
tion, however, to state that the CDC has started a new era by acknowledging
the importance of relational aspects in contracts from the legal-normative
structure that supports its practice.
In order to analyse these aspects of relational consumer contracts, the
article supports the idea that the duty to inform in relational consumer
contracts includes both the precontractual situation and the contractual
performance. In addition, the consumer in a relational consumer contract
must be adequately informed about the basic features and risks involved,
including those derived from the risks of capital investment in cases such as
private pension funds and popular savings. The disclosure of adequate and
relevant information to the consumer (especially that which concerns the
risks, quality and nature of products and services) should include mandatory
publication of economic reports on risks, management quality and the
soundness of the pension funds and bank trustees (a rating system). Further-
more, the adequacy of the information made available to the consumer in the
marketplace must be defined based on normal transaction costs and
consumer-bounded rationality. Finally, the article argues that the judicial
inversion of the burden of proof in favour of the consumer is acceptable
whenever any relevant information may frustrate consumers’ reasonable
expectations and interests.
RELATIONAL CONTRACTS AND THE SERVICE SOCIETY
We live in a society of mass consumption increasingly oriented towards
service providing (Macedo Jr, 1999b: 225). One of the characteristics of this
new service society is certainly the expansion of the relational nature of
consumer contracts relative to discrete contracts. This has brought about
important changes in the question of the protection of the consumer’s right
to information. Although this is not the appropriate place to discuss and
explain what and which are the characteristics of relational contracts, it is
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 29
MACEDO: CONSUMER CONTRACTS
29
important to establish some of their basic features in order to develop the
central argument of this thesis.
In general, relational (long-term) contracts tend to create continuous and
enduring relationships, in which the terms of exchange are increasingly open,
and the substantive clauses are replaced by constitutional clauses or clauses
that regulate the process of continual renegotiation, determined as much by
promissory relationships as by non-promissory bonds that are established de
facto between the various parties, as, for example, status (for example, vulner-
ability, indigence), trust and economic dependence. In this sense, relational
contracts (for example, health plan contracts, pension plan contracts and
some types of banking contracts), in contrast to discrete contracts, are long-
term contracts based on the very dynamic established in the course of the
contractual relationship.
As Ian Macneil (2000: 877) defines them, relational contracts are contracts
that are developed in a complex relationship, in which non-promissory
elements of the contract related to its context are taken significantly into
consideration in its definition. This is particularly evident and clear in
contracts that extend over time, in long-term contracts.
In this article, I intend to accomplish the following tasks: in this part, to
present in general terms the characteristics of relational contracts and the
theoretical consequences of the relational approach in the application of the
principle of good faith to relational consumer contracts; in the next part, to
present some of the consequences of this same approach for the re-evaluation
of the duty to inform in banking contracts and pension fund contracts,
especially with regard to the risks to which consumers are exposed.
Despite the fact that the terminology of relational contracts increasingly is
being adopted by a large portion of the legal and economic literature about
contract theory, especially in Europe and the United States, its introduction
in Brazil is relatively recent. For that reason, it seems opportune to present
some of its characteristics. For this task, I take advantage here of the distinc-
tion proposed by Ian Macneil (1974: 691) between discrete contracts and rela-
tional contracts (Macedo Jr, 1997: 105; 1999a: 103).
Discrete contracts’ basic characteristics lie in the fact that they are imper-
sonal, ‘presentifying’, i.e. they tend to bring the future into the present; they
involve a bargain between the instrumentally oriented parties and require the
mutual consent of the two parties. They are discrete and constitute a separate
entity, in as much as they plan a transaction that is separate from all previous,
contemporary or subsequent transactions. Each contractual act is considered
an isolated, independent and autonomous act, for it contains within it all of
its essential constituting elements. Thus, for example, a contract, according
to the 1917 Brazilian Civil Code, as long as it includes free will, a licit object,
a capable agent and does not violate the form prescribed by law, is considered
a perfect legal business act and a generator of legal consequences, in particu-
lar, of binding and enforceable consequences.
It is also impersonal, for it defines the transaction in terms of a simple
exchange of goods, that is, in terms of description, price, quantity and
40P 02 Macedo (JS/D) 20/1/03 11:08 am Page 30
30
SOCIAL & LEGAL STUDIES 12(1)
delivery date of the goods. In it no importance is conferred on the quality of
the contracting parties, their class, status, group, family or social rank. It
suffices that a party complies with the overall abstract concept of a creditor
(sujet de droit).
It is presentifying in that it seeks to plan, in the immediate present, all of
the actions to be carried out in the future. All of the essential elements and
constituting terms of the contract are established in the present, no import-
ance or substantive relevance being assigned to the parties’ performance in
defining the consequences of breach or failure to perform. Furthermore, little
or no importance is attributed to precontractual communications, such as
preparatory dialogues. According to this conception, the predominant idea
is that the contract must be upheld, based on the pacta sunt servanda prin-
ciple,...
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