Changes to the Civil Code regarding monetary restatement and interest

Law No. 14,905 of June 28, 2024, resulting from Bill 06233/2023, was published on July 1, 2024, bringing important changes in relation to monetary restatement and interest. One of the main changes is the determination that, in the event of default on an obligation, in the absence of a definition of the monetary restatement index, the Broad National Consumer Price Index (IPCA), calculated by the IBGE, or another index that replaces it, will be applied.

With regard to default interest, when not agreed or determined by law, it will be set according to the legal rate, which will be based on the SELIC reference rate, less the monetary restatement index (the calculation and application methodology will be defined by the National Monetary Council and published by the Central Bank). In addition, if the legal rate results in a negative value, it will be considered as zero when calculating interest.

Another important point is the removal of the limitation on the amount of interest on loans for economic purposes, which are loan agreements involving a person or entity (lender) that lends a sum of money or fungible goods to another person or entity (borrower), with a view to obtaining a profit or economic advantage. Now, in cases of loans for economic purposes in which the interest rate has not been agreed, the legal rate will be applied (pending disclosure of the calculation methodology by the Central Bank).

With the changes, it is essential to review existing contracts to check whether there is a provision for the monetary correction index and default interest to be adopted, so that they have precise and predictable clauses regarding financial adjustments, to avoid adverse interpretations and ensure balanced negotiations between the parties.

These changes will take effect 60 (sixty) days after the date of their publication, i.e. on 30/08/2024.