Berkeley Program in Law and Economics

The purpose of this paper is to describe the current status in Brazilian legal scholarship with regard to the interpretation of Section 421 of the new Civil Code that provides for respect of the social function of contracts. This is normally identified with the paternalist model of contract law and its idea of distributive justice, typical from the Welfare State legislation and policy. Second, the paper suggests a critical reading of this quasi consensus that is coming up among Brazilian jurists through an economic analysis of law and its emphasis on efficiency and the consequences of paternalism. The discussion in Brazil is contextualized with the debate of paternalism versus efficiency in contract law in the United States.