Abstract: The development of the soybean agribusiness complex in Brazil took place, in part, as a consequence of credit alternative forms, such as the soybean anticipated sale by contracts. The problems which have motivated this study were the contractual breaches during an expressive increase of price and their judicial decisions. Descriptive and econometric analysis (PROBIT) have been carried out on 161 appeal judicial decisions of Goiás Court of Justice (Brazil) and a quantitative survey was done with 70 farmers. The study has supported the hypothesis that a weak judiciary increases transaction costs. A large dispersion of court decisions was found between the first and appeal decision, as well inside the same level. However, the probability of the contract maintenance in the second level decision increased year by year, the influence of High court decisions favoring the contract maintenance was significant. The effects of judicial insecurity could be realized such as more requirements of warranties and the reduction in the number of contracts. Those soybean producers who did not breach their contracts also have been negatively affected by the strategic reactions of trading and industries. The use of the concept of social role of contract inserted a high degree of instability in contracts. Therefore, the transaction costs have been increased for all the agents and the importance of economic sanctions has increased as well.

Download the paper