Looplex Liabilities Calculator
Calculation of Obligations and Disputes
Looplex offers an automated calculation service for updating civil and labor obligations, whether arising from contracts, civil or labor lawsuits, or legal acts (non-contractual liability).
The service can be consumed as a function (an Action) within a Legal App, whether it’s a Case, Document, Dashboard1, or even a Workflow. For instance, you can use it to determine the updated values of a dispute for accounting contingency purposes, to draft a calculation memory in an initial execution or enforcement petition, or to obtain real-time adjusted values of a contractual obligation or the global value of a contract.
The calculation service can be queried multiple times to return different calculation scenarios, such as estimated, contingent, or declared values. You can also make additional adjustments and context allocations.
This article will address the following: (a) calculation objects, (b) calculation factors, (c) parameters of calculation factors, (d) certainty classification (risk) of object materialization, (e) valuation criteria based on classification for provisioning allocation, and (f) calculation simulation scenarios.
Calculation Objects
The service can calculate the values of the following objects, using specific legal terminology that is fully compatible with CPC 25 / IAS 37:
- Obligation (claim)
- Fine (accessory obligation)
- Success Fees
Obligation – An obligation is a bilateral transient relationship describing an action one or more subjects must perform, whose execution can be demanded by other subjects.
In a dispute context, an obligation is called a claim.
Each obligation can be classified as a liability2, contingent liability3, or provision4. If the provision or contingent liability cannot be calculated due to an uncertain value, it is possible to send a “simulated” or “virtual” value explicitly to the calculation service.
The service can also calculate unformalized obligations5 (“constructive obligations”), but as with other classifications, the classification of such an obligation type will not be performed by the service. The calculation’s view within the Document, Dashboard, Case interface, etc., will define this information.
When calculated in a dispute (i.e., if the obligation is being litigated), an obligation will always be referred to as a claim, regardless of whether it is classified as a provision, contingent liability, or liability6, and irrespective of whether it is a legal, conditional, potential, or unformalized obligation.
The claim is always defined or expressed by the potential holder of the right; in other words, the active subject of a dispute is the one who formulates claims against the passive subject of a dispute, and the passive subject becomes the potential or effective debtor of a claim. The creditor of an obligation is the active subject or the claimant of a claim, while the debtor of an obligation is the passive subject or debtor of a claim7.
Thus, we may have different labels for the same thing, depending on whether we are discussing the calculation in a dispute or a contract, and whether we are considering the subject’s position concerning the obligation (as creditor or debtor).
The likelihood of an obligation being materialized can be assessed as “certain,” “probable,” “possible,” or “remote”8.
When an obligation is “certain,” there is no uncertainty about whether it will materialize; it ceases to be a provision, contingent liability, or contingent asset and becomes a liability or asset.
For conservatism, since the creditor in a dispute does not have control over the value until it is actually received, in contentious Cases, an obligation/claim only becomes a liability or asset if a reduction occurs, which may result from payment, forgiveness, or guarantee deduction. Therefore, you will never see a claim labeled “certain,” only “probable,” “possible,” or “remote.”
In a contract (or consultative Case), however, it is possible to identify an obligation classified as a “certain” liability or asset if the event triggering it has occurred, and only the time between the materialization of the condition and the event’s completion remains (e.g., “10 days after possession transfer of the asset”).
Claim, Forecasted, and Contingency Values
In Looplex, you can indicate three different values for a dispute: the claim value, the forecasted value, and the contingency value. In a contract, only the forecasted and contingency values are available.
The claim value is the value declared in dispute according to the calculation criteria of the Code of Civil Procedure. It is a unique value in the interface, with the calculation’s breakdown done directly on the originating legal object.
For example, the “claim value” in an execution action or an eviction action is processed during the initial petition’s construction or the objection to the claim value, depending on the party you represent.
After being declared (or “re-declared” if an objection is successful and adjusted), the historical value remains unchanged or undergoes only monetary correction based on criteria defined by the court or body handling the dispute.
The forecasted and contingency values are different. These contain all the elements mentioned above, such as success or loss classification labels, detailed calculation factors, and parameters involved in the calculation.
The difference is that the forecasted value represents the total economic estimate for the dispute or contract, irrespective of risk assessment, while the contingency value is the actual provision amount, with the estimated disbursement or receipt amounts for the contract or dispute’s outcome.
The respective percentages of success or loss can differ. For instance, if you follow CPC 25, for loss (contingent liability), the provision is 100% if probable, 0% if possible (but with footnotes in the financial statements), and 0% if remote. For success (contingent asset), it’s 0% for probable, 0% for possible, and 0% for remote. You can indicate any percentages in between.
Obligations to perform, obligations to deliver, and declaratory claims (with indirect impact on other obligations) with forecasted, contingency, and/or effective values do not represent the obligation itself but the calculated or estimated economic impact of their execution on the debtor (if a liability or contingent liability) or the creditor (if an asset or contingent asset).
In the concrete dispute or contract, only the forecasted value of each claim or obligation needs to be indicated. The contingency value will be automatically calculated based on the success or loss probability classification, and the effective value will be determined when the obligation becomes “certain.”
Forecasted values can be entered by the user during document mapping or construction or while registering a case. These values can also be automatically entered by Looplex’s artificial intelligence service, which extracts them from contracts or other external documents it analyzes, or statistically calculated based on the history of similar cases. In these cases, the interface will indicate the input’s origin as being from an automation agent.
Illiquid Values
It may not be possible to estimate a forecasted value for an obligation or claim. In this case, you must indicate that the value is illiquid. However, even then, a value can be assigned in the forecasted value field, but the value indicated will be arbitrary, entered only to allow calculations for obligations that have not yet been formalized or liquidated.
Joint Liability Values
According to CPC/25 accounting standards, when an entity is subject to a contingent obligation where it would be jointly responsible for the materialized liability, the portion of the obligation expected to be settled by other parties should be treated as a contingent liability and, therefore, is recommended to be excluded from the forecasted value.
Global Values
It is possible to assign a global forecasted value for contracts or disputes. This value cannot be less than the sum of individual claims or obligations but can be greater because not all claims may have been registered, or it might not be possible or desirable to assign values to all claims. However, the global forecasted value for the legal business, lawsuit, or administrative process still needs to be indicated. If no manual global forecasted value is assigned, it will automatically reflect the sum of individual claim or obligation values in the case or contract.
Allocation of Success or Loss
It is necessary to indicate in each dispute or contract who the active subject (creditor) and the passive subject of the obligation or claim are. To simplify data entry, the system assumes that the “contracting” or “active party” is the creditor and the “contracted” or “passive party” is the debtor.
If there is more than one contracting or active party, the system will mark all as “creditors” (without indicating solidarity or proportional rights to the obligation), and vice versa for debtors. The user can adjust and correct this information within the context of reviewing it (e.g., drafting a petition, filling out a case form in the interface, etc.).
[Lawsoft-Looplex Transition]
Former Lawsoft users (cases registered in LawOffice pre-2022)
The identification of who is the active subject (creditor) and who is the passive subject (debtor) of the claim or obligation—whether the expectation is for the subject to disburse or receive values—is not explicitly indicated in the LawOffice Classic interface and reports.
As such, the system made a mass determination using the following criterion: it will classify as “loss” or “success” depending on the client’s procedural position in the dispute. If the client is in the passive role, the system assumes the risk is a loss; if the client is in the active role, it assumes the prospect is “success.”
For cases where the client has filed claims against the other party, even as a defendant (counterclaim or double claim), their position must be adjusted to “creditor” or “active subject” of the claim so the requested assessment changes to “success.”
To inform users that this allocation of credit position was done by a machine without human review, each obligation or claim will be accompanied by the label “provisional allocation,” and whenever the user reviews something in that case, they will be prompted to confirm or adjust the allocation.
Fines
Fines encompass both penalty clauses in a contract and procedural or administrative penalties provided by law.
Fine is the pecuniary sanction imposed on those who violate laws, regulations, or contracts (penalty clause). It can aim to compensate for the act deemed reprehensible or simply to impose a punishment or penalty.
A fine can be calculated on a group of specific obligations (“only”) or globally on the value of all obligations/claims in a contract or dispute (“any” & “all”).9
Additionally, you must indicate whether it is moratory (imposed for non-performance within the implementation period of an obligation) or compensatory (stipulated as an alternative for the creditor to replace the original obligation).10
When the fine is compensatory, conceptually it is treated by the system as an alternative obligation. The only difference is that the option to demand the fulfillment of the compensatory penalty clause instead of the original obligation will only be enabled for the creditor after the obligation’s non-compliance under the established terms and conditions.
The compensatory penalty clause or alternative obligation will receive the same calculation factors and parameters as the original obligation unless otherwise specified.
On the other hand, when the fine is moratory, the percentage in relation to the obligation’s value (or group of obligations) must be indicated. The percentage of the fine will always be based on the updated value, including compensatory and moratory interest11.
Fees
Although fees are a type of accessory obligation (penalty clause and/or fine), we separate contractual, success, and appeal fees from fines because they establish obligations in favor of a third party—usually a lawyer—and not the creditor of the obligation.12
Thus, they can be accumulated with fines without constituting a double penalty (double penalty clause in favor of the same creditor over the same obligation). However, this does not always occur, and therefore the nature of the fees must be indicated as contractual13, legal14, success15, or appeal16.
Fees can be calculated on the total value of the dispute or contract but may not include other charges. Hence, they must be established as a percentage of the updated value, which may or may not include compensatory interest, moratory interest, and fines.
Calculation on Multiple Obligations
Each obligation will have its own set of calculation factors (updates, compensatory interest, and moratory interest), but fine and fee criteria will be established for the set of obligations and claims.
Compound Obligations
An obligation can consist of an aggregation of obligations of the same nature. For example, a debt payable in 10 installments is represented as a global obligation (loan debt of R$ 1,000), which can be broken down into 10 obligations for each installment.
Similarly, continuous obligations, such as rent payments or a software subscription, also represent a global obligation composed of smaller obligations (e.g., each monthly rent or subscription installment).
When we have a compound obligation, each individual obligation will be adjusted in the calculation as deductions or additions to the general obligation, using the same mechanics as an accounting ledger.
Merger, Split, Transformation, and Alteration of Obligations
Just like legal entities, obligations and claims can undergo merger, split, transformation, alteration, and assignment.
A merger combines two or more objects into a new one, a transformation changes the nature or properties of an obligation (e.g., a claim that becomes an agreement in a dispute, payment in kind, etc.), an alteration retains the nature but makes changes to parameters and factors, an assignment changes the active or passive role of an obligation, and split occurs, for instance, when a part of the claim is acknowledged as uncontested, and the discussion continues over the contested value.
In a split, the uncontested part is highlighted as a “deduction”17, creating a new obligation or claim with a new ID, while maintaining the reference ID linking it to the parent obligation. Conversely, in a merger, this happens in reverse, with an addition applied to another obligation.
Multiple Calculation Scenarios
Although the interface displays only a primary calculation scenario, it is possible to register other forecasted and contingency value scenarios for the same contract or obligation, based on different criteria, factors, and/or calculation parameters.
In this situation, the user can visually extract different calculations in reports or other smart documents, even comparing different scenarios to generate spreadsheets and/or graphical views for each situation.
Calculation Factors
For each obligation or claim, the following calculation factors can be applied, either in isolation or interactively18:
- Monetary adjustment
- Compensatory interest
- Moratory interest
- Deductions or additions
- Exchange rate variation
Each calculation factor has parameters, such as calculation period, assessment, validity, rate or percentage, among others.
You can establish pre-standardized calculation criteria through Calculation Templates, which can be created via the Looplex interface or directly within the Legal Engineering development environment, according to the Legal Data Model JSON specification for calculations.
The Calculation Template will use the concrete calculation elements of each case (e.g., “rent” obligation, monetary adjustment by “IGP-M,” start date “07/03/2021,” etc.), which will be defined in the specific Case, Contract, or Document.
Semantic Models. The calculation elements indicated in this article represent entities in our Legal Semantic Reference Model. The service can receive any string or representative argument of a claim (potential obligation or contingent liability) or materialized obligation (from a contract or court decision), but if the calculation element is not an entity in the Model, the calculation result cannot be automatically transferred to standardized templates.
For non-specified entities in the model, personalized adjustments will be required in each calculation instance for their results to be included in dashboards, case data, or equivalent legal documents.
Monetary Adjustment
You can select an adjustment index to apply to each obligation or claim. The options available at the service’s launch19 are as follows, but new indexes can be added at any time:
- INPC
- IPCA
- IPCA-E
- TJSP Practical Table (civil obligations)20
- TJSP Practical Table (precatories)21
- IGP-M
- TR
- Selic
- Savings
- INCC
Some of these indexes (Selic, Savings) contain a combination of inflation and interest and, therefore, usually should not be accumulated with an additional interest factor (e.g., SELIC+5%), though there are cases where this behavior is desired. Other indexes are not proper monetary adjustment indexes since their variation is determined by decree (e.g., TR). The user creating the calculation must evaluate the appropriateness or legal applicability of each index to the specific situation being analyzed.
Custom indexes. You can create custom indexes at any rate or alternative value, such as UFESP or UFM, or even composite index results (e.g., the average of IPCA and IGP-M). However, in this case, the calculation treatment must be done within the context of your Application and outside the service, with adjusted values for each obligation or claim sent based on the chosen criterion and indicating the adjustment index for that period as a calculation parameter.
Compensatory Interest
Remunerative interest, also known as compensatory interest, is owed to the creditor to compensate for the loan of capital. It is the remuneration due as compensation for using another’s capital.
Assessment period. The assessment period respects the interval defined in the calculation’s general configuration. If you want the service to compute interest for smaller periods, i.e., within the last unclosed assessment period, indicate that you want to see the pro rata result, but the service will never capitalize interest within an unclosed assessment period. The assessment period intervals can be daily, monthly, or annual.
Interest capitalization. Compensatory interest can be simple when it never incorporates into the obligation’s principal or compound when it incorporates into the capital at each assessment period. The capitalization period can be daily, monthly, or annual, and it will match the assessment period.
Caution: If you indicate daily capitalization, the interest will be capitalized weekly; if annual, the interest will only be capitalized annually, and so on.
Pro rata calculation. You can determine that interest be calculated pro rata (proportional to the period). Thus, if an obligation has 1% monthly interest, and the debt has been outstanding for 42 days, and you wish to see the pro rata calculation for this debt, the service will calculate 1% for the closed assessment period plus 12/30 (twelve-thirtieths) of 1% for the unclosed assessment period22.
The pro rata calculation will always be based on the smallest calculation time unit, which is daily updating. Even if the interest period is annual and you determine it updates pro rata, in the fifth month of the annual assessment period, it will calculate the number of days concerning a fraction of 365 days, not months or weeks.
Moratory Interest
Moratory interest is owed for delay (default) or failure to pay a credit title, contract, other obligation, or unlawful act within a certain period. Default interest is thus a penalty imposed on the debtor for late fulfillment of their obligation.
Assessment period. The moratory interest assessment period and its calculation interval (daily, monthly, or annually) may differ from the compensatory interest or monetary adjustment assessment periods. Each calculation will consider the interval between each assessment anniversary. Thus, if the moratory interest has a start date of the 18th of a month, it will be computed on the 18th of the subsequent months23, even if the compensatory interest has a different computation or anniversary date.
Interest capitalization. As with compensatory interest, the calculation of moratory interest can be simple or compound. The capitalization determination for each type of interest is independent of the capitalization determination for other types of interest.
Moratory interest on moratory interest. Moratory interest can be calculated on the balance of the principal obligation updated or on the balance of the principal updated plus compensatory interest, without constituting the “anatocism” prohibited for civil obligations involving non-financial institutions. Regardless, it is possible to set a composite interest rate for both indexes and still mark the moratory interest to apply to the compensatory interest; otherwise, each interest will have its capitalization, but the balances will mutually ignore each other.
Pro rata. The pro rata calculation is similar, with the caveat that if moratory interest is calculated on compensatory interest, in the final pro rata period for each interest, this incorporation will not occur since the assessment period has not yet ended.
Data Unavailability in a Period
If the calculation data is unavailable until the end date of the calculation (e.g., inflation index not provided), the system will calculate everything (pro rata or not) up to the nearest defined data date, noting in the service response whether it had the data until the final date for each element, so the user can be alerted by the calculation’s authoring agent. For example, updating until date X, interest until date Y, final date Z.
Simulations. If specific programming exists for this purpose (likely due to a contractual provision), it will be possible to complement the calculation with market-projected values for future indexes, such as those published by ANBIMA.
Calculation Parameters
The calculation factors (adjustment, compensatory interest, and moratory interest) have configuration parameters that need to be defined by the user, such as assessment period, interval, and simple or compound capitalization.
Additions and deductions, as well as exchange rate variation, are not strictly calculation factor parameters but elements that alter the final or partial calculation result as a whole.
Calculation Period
The calculation period contains the start and end dates for the entire calculation.
The start date is defined as the first date of the first calculation event. For example, for calculating the value of a claim arising from a lease eviction obligation, the start date would be the date of the first unpaid rent, or for a civil reparation action, the date of the harmful act, and so forth.
The end date is the point until which you want the calculation to progress (or regress; if you indicate a date earlier than the start date, for example, to equalize (deflate or inflate) the value of credits in a bankruptcy for the creditors’ schedule to be ascertained).
Validity Periods
Just as a calculation can have multiple obligations or claims and multiple accessory obligations, each of these objects may have different start dates and different end dates for each element of its calculation.
For example, each unpaid rent in a lease agreement has a different start date for the calculation, and success fees in case of condemnation only arise at a later date, with each of these elements possibly having its own interest and adjustment calculations.
Additionally, different factors may apply to an object of calculation over time. For example, in an obligation where compensatory interest applies, the rate may be 6% per annum until January 2003, and then from February 2003 onwards, it changes to 12%; or the monetary adjustment may be by IPCA from March 2001 and then by IGP-M from April 2015 onwards.
This defines the validity of the parameters within the calculation periods for each calculation object.
Calculation with different validity periods in different parameters
You can only indicate one adjustment index or interest rate per validity period for the selected calculation parameter. The interface has implemented some logical locks, but when parameters and calculation factors are sent via API call, the service will return an error message about the selected parameterization.
An error will also be returned when divisor events for validity periods and/or calculation periods are inconsistent, such as:
Overlapping validity periods
An “end” event occurring before a “start” event
Calculation periods missing defined criteria
Nonexistent data for a parameter in a selected period*
*For example, selecting the validity of IPCA in a calculation with a start date before 1991, when the index was created. This rule does not apply to the calculation’s end period (e.g., if an index has not yet been provided), but developers or users can verify this in a report as the system will indicate where each calculation element ended and the different criteria for each validity period.
Intervals
The time interval or cycles for each calculation factor must be informed. Thus, if you indicate the moratory interest’s assessment period as monthly, the service will calculate and compute the interest at the variation rate indicated month by month; if the assessment period is annual, the service will calculate and apply the factor to an annual cycle only.
The assessment periods are daily, monthly, and annual. By default, the system assumes you want a monthly application for each factor (adjustment, compensatory interest, moratory interest).
Incomplete intervals and pro rata calculation. If you want a proportional value calculated even in an incomplete period, you must indicate that you wish the calculation to be done pro rata.
This will result in a proportional calculation of the indicated factor for broken or incomplete periods, which will then be assessed day by day, the smallest time interval admitted by our automated calculation service24.
For example, if you wish to calculate 1% monthly moratory interest pro rata, with a start date of June 14 and an end date of October 10, the system will calculate 16/30 of 1% in June, 1% monthly in July, August, and September, and 10/31 in October.
Pro rata periods always occur at the beginning or end of a calculation.25 If a factor has more than one validity period, the initial and final periods can also occur between validity periods.
For example, if the STJ decides that compensatory interest on expropriations will be 12% until June 10, 1999, then 6% until March 24, 2001, and then returns to 12%, a calculation starting on February 5, 1982, and ending on July 10, 2022, will have one validity period with an initial pro rata interval in February 1982 and another from 06/01/1999 to 06/10/1999; then in another validity period, an initial pro rata interval between 06/11/1999 and 06/30/1999 and a final pro rata interval between 03/01/2001 and 03/24/2001, and so on.
The pro rata calculation within an assessment period does not consider other factors within the period unless they have a daily assessment interval. If a calculation assesses adjustment by the daily SELIC rate, it could apply moratory interest pro rata to the adjusted amount until the nearest available SELIC data date. However, if the SELIC has a monthly assessment period, moratory interest pro rata will only apply to the principal amount.
Events
You must inform the start and end dates of each calculation and validity period. The start date can be a standardized pre-determined date in another entity, such as a previous Case or Document (e.g., filing date, citation date, act or legal transaction date, etc.), or it can be entered by the user. These “standardized” dates according to a model are events.
In legal engineering and Legal App design, an event is an action or occurrence recognized by software, often originating asynchronously from an external environment or system26.
In calculating obligations and claims, events define the calculation framework for validity dates, assessment periods, start dates, and end dates.
Looplex’s Legal Semantic Reference Model contains references to several events that may have a determined or determinable date, so dates do not need to be entered manually for each specific calculation by users, saving effort and reducing input errors.
For example, you indicate in the model that default interest starts accruing only after the “citation,” and if a dispute already contains this date mapped in its timeline, the user will not need to provide this date to the service when generating the calculation; it will be retrieved automatically.
Some examples of commonly used events27 (and therefore recommended) for Template construction are:
- Constitution of legal act - date of the act or legal transaction that gave rise to the obligation to be calculated, the object of the calculation.
- Maturity (default) – date from which the debtor of the obligation began to be considered delinquent with the obligation. If the non-performance of the obligation within the established period does not result in automatic default, it may depend on notification for the constitution of default. The maturity date can be used to calculate accessory obligations like default interest and fines, or as the start date of a new obligation (when a creditor can convert a previous obligation into another).
- Notification – date on which one of the parties is formally notified of a decision or event; if the context is a judicial or administrative process, it is called notification, if external to a dispute, simply notification.
- Filing – filing or lodging date of a dispute.
- Citation – date when the passive subject is formally notified of the case, summoned to comply or defend themselves. Citation is a special type of notification.
- Decision – ruling or resolution of a judge, arbitrator, or authority resolving an issue in judicial (judicial decision), administrative (administrative decision), or arbitral (arbitral decision) proceedings. A decision can be interlocutory or a judgment/ruling.
Of course, other events defining dates can be mapped and used, such as the effective start or validity of a Law28 or the suspension of the effectiveness of an accessory obligation by a decision made in another judicial process, such as an ADI or repetitive appeal. You can create a specific event list per client in a corporate account, invoking models from your private library of entities, or invoking Looplex’s semantic models.
In addition to defining the framework for calculation dates, events can also trigger additions or deductions in the obligation value and transform, split, merge, or even extinguish obligations and claims. First, we’ll discuss events as date determinants for validity and then events as modifiers of an obligation’s or claim’s attributes and properties.
Validity Dates and Event Dates
Legal acts can have existence, validity, and effectiveness. For calculation purposes, besides the event’s occurrence date, it is necessary to indicate when the calculation’s effective period for the obligation or contingency begins.
In other words, to define the factor calculation dates and obtain the validity, it may be necessary to indicate in the calculation template that the calculation factor’s validity begins on a date not concurrent with the event’s occurrence: “[x] business/ordinary days after event [Event Name].”
Even if an event is not referenced in a standard Looplex model, the calculation can still proceed, but this may result in incompatibility when synchronizing and automatically feeding information into different Legal Apps from the same data source. For instance, a judicial decision not identified with a model would not automatically generate the calculation memory in a petition, a notice of provision change, etc.
Deductions and Additions
During an obligation, partial payments (amortizations) may occur; a court decision or party act may partially recognize amounts; part of an obligation may be forgiven (civil remission) or waived (tax amnesty) by the creditor, or even offset or replaced with another obligation.
This is reflected in the calculation service and the obligation amounts view as deductions.
Similarly, new violations or defaults on a contract may continue over time, adding new values to an obligation. These are additions.
Recurring Deductions and Additions
The posting of future installments for deductions can be done for an asset or liability. In other words, if an obligation originated in past events but is only due in the future (subject to a term), it will be an asset or liability.
However, if it also depends on future uncertain events, it will not be a contingent liability since contingent liability does not depend on certain events.
In the case of claims in a dispute (contingent liabilities or assets), it is possible to indicate that an obligation or claim is recurring, so the system progressively adds new installments at each interval until a determined date, after a defined number of occurrences, or indefinitely.
A schedule for future installment recurrence is similar to a calendar event
Payment Imputation
Payment imputation. It should be indicated in deductions whether the deduction will follow the payment imputation order of Article 354 of the Civil Code or if a specific rule was established for deducting that obligation. If nothing is defined in the calculation object’s context, the system will assume Article 354 of the Civil Code applies to the obligation.
Future Obligations Calculation
It is not necessary to manually and individually fill in all future installment deductions or additions. When a series of deductions contains a pre-defined rule, an amortization rule for an obligation with due installments can be created.
Similarly, additions from continued service obligation postings (e.g., monthly rent for a property or a software subscription) can be outlined in an add periodicity rule for future forecasted values for that obligation until its anticipated end date.
For example, in a settlement (transaction)29, where installments for amortization are outlined in the Case and/or legal transaction, the obligation is no longer contingent and has become an asset or liability.
The definition of future due obligations depends on the same elements as an open liability/asset or contingent obligation: interval and period, adjustment, compensatory interest (simple or compound), moratory interest, fines, accessory obligations, and fees30.
For automated rules for future value postings and deductions, amortization can be defined as interest-free, with simple interest, or compound interest. If with compound interest, amortization can be performed using the Constant Amortization System (SAC)31 or Price Table32.
Exchange Rate Variation
Obligation or claim values may be referenced in foreign currency. In this case, the system will calculate only the conversion of final calculation values to the selected foreign currency, but the reference will always be the Brazilian Real (BRL).
For instance, you may specify the visualization of a value in USD (US dollars) or BTC (Bitcoin), and the system will show each installment or value adjusted by the conversion rate on the reference date of each obligation. However, the calculation will always be based on the BRL currency.
Thus, even if you indicate you want the value visualized in USD and there was 20% inflation in USD, while the adjustment index for BRL recorded 5%, the system will state that a R$100 obligation became R$105 or (assuming a R$5/USD conversion rate) USD 20, which became USD 21—not USD 24.
Footnotes
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If the number of calculations is very high (e.g., dynamic updates for thousands or tens of thousands of simultaneous judicial cases), consider creating a local calculation matrix method in the App you are creating. This service automatically runs outside peak hours to update daily (or longer periods, such as weekly) the Case portfolio for each account, and it can also run on-demand via API in a specific context. ↩
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Concept of Liability under CPC 25: “a present obligation of the entity arising from past events, whose settlement is expected to result in an outflow of resources from the entity capable of generating economic benefits” and whose obligation arises from “legal obligation” (“contract, legislation, or other lawful action”) or “unformalized obligation.” ↩
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Contingent liability is “(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity’s control; or (b) a present obligation that arises from past events, but is not recognized because: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (ii) the obligation amount cannot be measured reliably.” ↩
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Provision, on the other hand, “is a liability of uncertain timing or amount.” Any contingent obligation is a provision, but accounting standards differentiate names to indicate something uncertain that needs to be recognized as a liability as a provision, and “contingent liability” as something uncertain that does not need to be recognized. The degree of uncertainty of this potential obligation (whether “probable,” “possible,” or “remote”) determines, in our model, the indication of whether we are dealing with a contingent liability or a provision, which is why these two elements are treated here as interchangeable. ↩
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Examples of unformalized obligations may include: guarantee obligations; legal or social obligations to clean contaminated land or restore facilities; obligations caused by a retailer’s policy of offering refunds or exchanges beyond legal obligations. ↩
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A claim, for instance, can become a liability when its value can be immediately demanded after a definitive condemnation ruling, or it can be a contingent liability when the events and situations making the obligation valid and enforceable are being disputed, without a definitive ruling. ↩
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If there is a double claim or counterclaim, it must be indicated which party made the claim to allocate who the creditor and debtor of the obligation are. ↩
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It is recommended to use these labels consistently with the concepts defined in CPC 25 or IAS 37. ↩
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In version 1 of the calculation service, it is not possible to establish a fine calculation for an obligation or group of obligations. It will always be calculated on all obligations sent to the service. However, this specialization can be indicated in the contract or case context and sent in multiple calculation blocks. The calculation service also does not limit the penalty or fine clause size, as despite the limitation of Article 412 of the Civil Code, the parties may agree on an invalid obligation, or the calculation may refer to tax obligations that can exceed the 100% limit. The accumulation or not of a penalty clause and damages (Civil Code, Article 416, Sole Paragraph) should also be considered in the contract, decision, or document requesting the calculations. ↩
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Civil Code: “Art. 409. The penalty clause stipulated jointly with the obligation, or in a subsequent act, may refer to the total non-performance of the obligation, to a specific clause, or simply to delay. Art. 410. When the penalty clause is stipulated for the case of total non-performance of the obligation, it will become an alternative to the creditor’s benefit.” ↩
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If adjustments are necessary in a specific case, modifications to calculations should be made in the “local” description of the penalty clause in the smart contract or case. ↩
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If the primary obligation’s creditor is indicated as the fees’ creditor, it is presumed that this was through subrogation or assignment of the rights by the lawyer (or group of lawyers, law firm) to the primary obligation’s creditor or claimant of the resisted claim in the dispute. ↩
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Civil Code, Article 389: “If the obligation is not fulfilled, the debtor is liable for damages, plus interest and monetary adjustment according to regularly established official indexes, and attorney fees.” ↩
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Fees defined by law (but not success fees) in favor of a subject or entity. Examples might include fees for the inventory taker in an inventory deed. ↩
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Fees owed by the losing party (“loser pays rule”) resulting from representation in judicial or administrative disputes (if legally provided). Code of Civil Procedure, Article 85 and following. ↩
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Similarly, they are additional success fees, applying to loss in an act (appeal). ↩
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A split is not a payment (partial extinction) but a type of transformation, which reduces that obligation while adding something to a new obligation or increasing another existing obligation. ↩
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Incorporation or incidence of one factor over another, such as default interest calculated on compensatory interest, for example. ↩
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The options marked with an asterisk may not necessarily be available at the service launch date. The indexes calculated will be those reported by the government (dados.gov.br), and BCB.gov.br (Central Bank) or other official repositories or private data sites indicated in our API documentation. Looplex, Lawsoft, or any of their affiliates are not responsible for errors caused by incorrect or outdated information in API-provided indexes. ↩
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Table prepared by DEPRE. ↩
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Table prepared by DEPRE. ↩
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If the pro rata period is 31 days, it will be 12/31, and if a leap year, the pro rata calculation will be based on a ratio of 366 days. ↩
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If the 29th, 30th, or 31st is indicated, the anniversary date will be moved to the last day of the month that does not have 31 or 30 days. ↩
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The Code of Civil Procedure allows the possibility of hourly fines and deadlines. In this case, the current service version (July 2022) will not be able to compute the interval value. ↩
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The pro rata of an initial period will only apply if the calculation parameter’s date does not match the cycle or interval anniversary. For example, a monthly monetary adjustment index such as IPCA could be adjusted pro rata only for the days of the initial month until the first day of the subsequent month. Default interest and compensatory interest only apply pro rata at the end since they will respect the cycle start date as the validity start date. ↩
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Events can be generated or triggered by the system, user, automation agents, or other means (external systems, timers, etc.). Events are processed synchronously with the program flow or asynchronously, depending on what occurs in a Case or Document’s lifecycle. Looplex has more than one area dedicated to event processing or event loops, referred to as Looplex Flow. ↩
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Events can be external to the case or contract being calculated. For example, in calculating the execution of an arbitration award in court, the default interest calculation could start after the arbitration decision (arbitration award). In this case, the arbitration decision preceding the execution needs to be referenced as the calculation trigger event. ↩
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The validity of a Law is a concept slightly different from the validity we are discussing here; a Law may have diverging validity and effectiveness, and the effectiveness of a Law may be modified by a judicial decision (e.g., by the Supreme Court). Here, “validity” will be understood as the period during which a criterion or parameter applies, established for the calculation of an obligation. ↩
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Or, for instance, in the case of a debtor manifesting their intent to pay the execution amount in a 30% signal plus six equal installments, as provided in Article 916 of the CPC. ↩
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These elements (default interest, penalty, etc.) obviously only apply in case of default. ↩
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By opting for SAC, the loan installments will be recorded in a decreasing constant. That is, the value of the first installment will be higher than the second and so on until the last installment. The monthly amortization of the debt, due to the interest rate applied to the remaining balance monthly and not just the initial amount, explains this mechanism. ↩
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Unlike SAC, the PRICE method provides fixed installments throughout the contracted period. What varies is the amortization of interest, which is spread over time in favor of higher initial principal amortization or may have interest capitalized into the principal. ↩