Abstract
This paper is a case study of the final decision taken in the case M & F × Bank Santander, et al. (RE n°1.555.202-SP/Brazilian Superior Court of Justice). It intends to answer two questions: whether it is reasonable to repudiate—as the Court did—the termination written clause of the contract signed by the Parties in the light of good-faith principle; and, assuming Bank Santander violated such principle when trying to terminate the contract, what the proper remedy due is. Our findings demonstrate that the Court did a good job by repudiating the termination written clause on good-faith grounds, but failed to stipulate a correct indemnity.
Highlights
In March 2017, the Brazilian Superior Court of Justice for federal law interpretation held that an opt-out clause is not a blank check to a party that wants to put an end to a contract
This paper is a case study of the final decision taken in the case M & F × Bank Santander, et al (RE n1.555.202-SP/Brazilian Superior Court of Justice)
Even if we overcome the uncertainty about the parties’ intent and assume it was possible to infer that the opt-out clause—as stated—could cover the circumstance the Bank called it for, the general rule of good faith connected to the parties’ performance would impose to the Bank a different course of action
Summary
In March 2017, the Brazilian Superior Court of Justice for federal law interpretation held that an opt-out clause is not a blank check to a party that wants to put an end to a contract It ruled that this right must be performed in accordance with the general principle of good faith, which calls for a highly context-specific understanding of honesty and reasonableness. In Part 2, I provide the main information regarding the case study In accordance to such a decision under analysis, I argue in Part 3 that the duty of acting in good-faith—which is a matter of law in Brazil—is enough to refrain the Bank from taking advantages of the vulnerabilities created by the sequential character of the contractual performance.
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