A used car that catches fire six months later is presumed to have been non-conforming at delivery
The Supreme Court considered the case of a consumer who bought a used vehicle from a dealer and who, some six months after delivery, suffered the total destruction by fire of the car while driving on a motorway, seeking termination of the contract and damages. The seller argued that the cause lay in modifications made by the buyer, namely replacement of the exhaust system. The Supreme Court placed the situation under Decree-Law No. 84/2021, stressing that safety in use is an objective requirement of conformity and that spontaneous ignition of the vehicle, nothing further being proved, reflects the manifestation of a lack of conformity already existing at the time of purchase, the burden falling on the trader to show that the event is attributable to a circumstance arising after the sale. It further clarifies that proof of an alteration made by the buyer does not in itself rebut that presumption: it would be necessary to show the causal link between that alteration and the fire, which did not happen. The appeal was dismissed, upholding termination of the contract, refund of the price and compensation for pecuniary and non-pecuniary damage. Ref.: Supreme Court of Justice (1st Chamber), 07/07/2026, case No. 277/23.3T8MTA.L1.S1, Reporting Judge Jorge Leal.
Construction contracts: a clause forfeiting the balance of the price on delay is valid — and reduction must be requested
In a construction contract marked by successive delays attributable to the contractor, the parties agreed a final, peremptory deadline, stipulating that if the works were not completed by that date nothing further would be owed to the contractor and, in return, the owners would not claim compensation for the earlier delays. The Supreme Court classified the stipulation as a penalty clause within the meaning of Article 810 of the Civil Code, at once coercive and compensatory in nature, and affirmed its validity in the light of Articles 405 and 406, as the regular exercise of private autonomy between professional operators. The point of greatest practical weight concerns equitable reduction: as the contractor did not request, or even raise in its pleadings, reduction under Article 812, nor plead the facts justifying it, the court could not order it of its own motion, the burden of proving serious grounds lying with the interested party. Abuse of rights by the owners was likewise rejected. For construction firms and owners, this confirms that any defence against enforcement of such clauses is built in the pleadings. Ref.: Supreme Court of Justice (6th Chamber), 13/07/2026, case No. 13041/23.0T8LSB.L1.S1, Reporting Judge Luís Espírito Santo.
Mortgage lending: informal negotiations do not replace the statutory arrears procedure, and enforcement brought without it is dismissed
The Supreme Court ruled on an opposition to enforcement brought by two consumer borrowers against enforcement proceedings instituted by a credit institution on the basis of a mortgage loan, the question being whether the out-of-court procedure for the regularisation of arrears (PERSI), provided for in Decree-Law No. 227/2012, had actually been complied with. It was proved that the notice of inclusion in the procedure had been sent to only one of the debtors and that, as regards the other, only the notice of closure was shown, from which prior inclusion cannot be presumed. The court further held that informal negotiations dragging on for some four years after the closure notice do not meet the requirements of Articles 15 and 16 of that instrument. It was settled that proof of the consumer inclusion in the procedure is a specific precondition of enforcement, comparable to the existence of an enforceable instrument, whose absence constitutes an unnamed dilatory objection to be raised of the court own motion, leading to dismissal. The enforcement was dismissed. Ref.: Supreme Court of Justice (6th Chamber), 13/07/2026, case No. 3448/24.1T8PRT-A.P1.S1, Reporting Judge Maria Olinda Garcia.
This newsletter is provided for information purposes only and does not constitute legal advice. For an analysis of your specific situation, please contact us.