arras

There are two types of "arras" under Brazilian law: i) "arras confirmatórias" (sections 418 and 419 of the Brazilian Civil Code): earnest money that is paid to bind the parties to the agreement and prevent the parties from withdrawing from it. If the party who paid the earnest money withdraws from the contract, the other party can keep the money. If the party who received the earnest money withdraws from the contract, it must return to the other party twice the amount received. In either case, the injured party has the right to claim further damages; ii) "arras penitenciais" (section 420 of the Brazilian Civil Code): earnest money that serves as punishment in case of nonperformance of the contract. If the party who paid the earnest money withdraws from the contract, the other party can keep the money. If the party who received the earnest money withdraws from the contract, it must return to the other party twice the amount received. In either case, the earnest money that was paid serves as preliquidated damages, so no further damages can be claimed.