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PRIVATE LAW > Chapter 2: basics of contract law > Flashcards

Chapter 2: basics of contract law Flashcards

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1
Q

What is a contract?

A

binding legal relationship between two or more persons to do something, not to do something, or to deliver something in the future

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2
Q

contract law

A

part of private law pertaining to contracts

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3
Q

freedom of contract/ party autonomy as a general principle

A
  • wheter to enter into a contract
  • terms and conditions of contract
  • freedom to modify the terms of a contract or to put an end to a contract

(contracting parties are lefislators of their own, can freely deviate rules)

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4
Q

exceptions to freedom of contract

A
  • Infringing fundamental principles of law (: illegal, no guarantee of freedom for both parties)
  • Infringing mandatory legal rules (: protected party can waive protection(post factum))
  • discrimination
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5
Q

kinds of discrimination and meaning

A
  • direct discrimination: one person is treated less favourably than another person would be treated in a comparable situation
  • indirect discrimination: neutral provision/ criterion/ places one group of persons at a particular disadvantage when compared to a different group of persons
  • harassment: unwanted conduct which violates a persons dignity
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6
Q

pre-contractual duties

duty to …

A
  • disclose the other person information concerning the product to be supplied so that person can reasonably expect
  • not provide misleading info
  • inform about price and changes
  • inform about address, id if bussines
  • …

one person has the duty to actively gather info that he needs to take an informed transactional decision

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7
Q

negotations

A
  • when you break off the negotiation contrarty to good faith and fair dealing= culpa in contrahendo liability for loss caused and incurred
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8
Q

contract agreement

A

a contract is based on offer and acceptance

  • idea of meering of the midns
  • real intentions to enter binding legal relationship
  • reach sufficient agreement on terms already determent
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9
Q

who has and has not the capacity to make and or accept an offer ? (by national law)

A

yes generaly: every adult

not: a minor, mentally handicapped, drunken/ not able to fromulate an offer

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10
Q

(def) offer

A
  • proposal to make a contract
  • intention to result into a contract if other party accepts it
  • containing sufficiently definite terms to form a contract
  • must be communicated to one or more specific persons or to the public
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11
Q

offer to the public (example, exeptions, when)

A

treated as offers it they show an intention to be binding if they are accepted.
- exceptions: when the personal qualities of the other party are a detemining factor.

e.g., advertisements, auctions,…

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12
Q

revocation of offer (which law?, why important?)

A
  • domestic laws:
    for german/ swiss: no revocation
    for french: allowed, but not for certain exceptions
    common law: allowed
  • important because:
    interests of stakeholders, protection
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13
Q

revocation of offer DCFR (?, exception, offer to public)

A

in general allowed if it reaches the offeree before he or she has dispatched an acceptance.

  • exception:
    offer is irrevocable, has a fixed time for its acceptance, offeree has acted in reliance on the offer (onw reasons to rely on it)
  • to the public: can be revoked by the same means as were used to make the offer
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14
Q

late acceptance

A

ineffective -> no contract

  • but: “regularisation” is possible: when offeror informed offeree that late acceptance will be treated as effective acceptance -> contract
  • but: delay in transmission of late acceptance, it will in due time reach the offeror. -> contract
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15
Q

modified acceptance

A

is reejection and counteroffer (=new offer)

  • exception: acceptance, if reply contains a definite consent to the offer, but alters the terms in a non-material way -> new terms become part of the contract
  • exception: rejection, if reply alters the terms in material way, if offer expressly limits acceptance to the terms of the offer, if the offerer objects to the new terms without undue delay
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16
Q

standard terms to form a contract

A

generally: terms of contract negatiated by informed and equally powerful parties
def: a term which has been formulated in advance for several transactions involving different parties and which has not been individually negotiated by the parties.

(standard term becomes part of contract if brought to attention of other party before conclusion of contract)

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17
Q

knock out rule

A

standard terms form part of the contract to the extent that thay are common in substance, the conflicting terms knock out each other

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18
Q

form of a contract

A
  • no form required except for when expressly required (for certain contracts)

a contract is concluded, without any further requirement when both parties are happy (def: the document comprising Section 1 of the Contract signed by or on behalf of the Parties confirming their willingness to enter into and be bound by the terms of the Contract)

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19
Q

when is a promise/ contract serious? (problem)

- Roman law in antiquity

A
  • different types of contracts in roman law
  • STIPULATIO (= a form of contract based upon a simple question and answer.) .with formal requirements
  • seldom: contracts based on mere consent
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20
Q

when is a promise/ contract serious? (problem)

- Roman law in the Middle Ages:

A
  • PACTUM NUDUM (‘nude contract’): imperfect obligation, (=an agreement or promise that is made without consideration and hence unenforceable)
  • PACTUM VESTITUM (‘vested contract’): allowed to sue the other party (= an informal agreement made legally enforceable by an official act.)
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21
Q

when is a promise/ contract “serious”? (problem)

- canon law

A
  • no difference between a ‘simple promise’ and a ‘sworn promise / corroborated with an oath
  • breaking a promise is a sin - therefore, every contract is binind, not only the “vested contract”
  • CAUSE required to ensure seriousness
  • > practice accepted the idea developed in canon law (pacta sunt servanda - treaties are to be kept)
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22
Q

when is a promis/ contract serious? (problem)

- french law

A
  • CAUSE (reason) required to indicate seriousness
  • “four resuisites are essential for the validity of an agreement. The consent of the party who binds himself,; His capacity to contract; A definity object which forms the subject matter of the undertaking; a lawful cause in the obligation.”
  • “an obligation without cause or with a false cause, or with an unlawful cause, may not have any effect.”
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23
Q

When is a promise/ contract serious? (problem)

- Common Law

A
  • CONSIDERATION (= something in exchange for the promise, e.g., another promise or an actual act) required
  • consideration must have some real value or at least tepresent a detriment to the person who contributes it
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24
Q

When is a promis/ contract serious? (problem)

- German Law

A
  • no consideration, no cause necessary

- “seriousness” discussed when considering the intention to conclude a legally binding relationship

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25
Q

When is a promise/ contract serious? (problem)

- DCFR3

A
  • No consideration, no cause necessary

- “seriousness” discussed in term “intention to enter into a legally binding relationship”

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26
Q

no-oral midification clause

A

clause (=a particular part of a written legal document) in a contract stating that all midifications must be in writing

-> established in Austria, Germany, DCFR

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27
Q

representative (agent)

A

a person who has authority to affect directly the legal position of another person (= the principal) in relation to a “third party” by acting on behalf of the principal.

when they act in the name of the principal within the scope of authority granted (= determened by authorisation) : it is as if done by the principal

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28
Q

representaiton problems

A

1) Representative acting in own name

2) Representative acting “in the name of” but without authority
- > solution: protaction of purported principal (your not bounded), protaction of third party (no contract), representative might be held liable for damages (except when third party knew)

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29
Q

invalidity of the contract can be based on

A
  • mistake, fraus, coercion or threats, unfair exploitation ->” vitiated consent”
  • infringement of fundamental principles or mandatory rules or lack of capacity - supra
  • unfair contract terms -> partial invalidity= invalidity of the unfair term
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30
Q

avoidance of the contract is possible if

A
  • party would not hace concluded the contract or would have entered it on fundamentally different terms
  • other party: cause/ knew mistake, breached pre-contractual duties
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31
Q

no avoindance of the contract if

A
  • mistake was inexcusable in the circumstances (= own fault of mistaken party)
  • mistaken party took the risk
32
Q

fraudulent, avoidance possible if

A

misrepresentation (by words or conduct) in full knowledge of the fact that the representation is fals or

  • non- diclosure of any information which good faith and fair dealing required that party to disclose taking into account …
33
Q

(fraud) bottom line

A

= party is normally not allowed to remain silent with the deliberate intention of deceiving the other. Yet, national legislation may differ and may not include a general duty to disclose infromation!

34
Q

content of contract is based on

A
  • express or tacit agreement of parties
  • rules of law
  • practices established between parties
  • usage
35
Q

implied term

A
  • what the parties would probably have agreed upon, if they had thought about it

(a term which the courts imply into a contract because it has not been expressly included by the parties.)

36
Q

pre-contractual statements as contract terms? (problem) 22

A

generaly: just termss of contract in force

exceptions:

  • if both parties understood it as part of the contract.
  • if a statement about the specific characteristics is made by a professional supplier is part of the contract.
  • if a public statement by or on behalf of the producer is part of business-to-consumer contract.
37
Q

determination of price (how?)

A
  • on basis of the agreed terms
    otherwise: price normally charged in comparable circumstances/ a reasonable price/ price unilaterally determined by one party (except if unreasonable)
38
Q

quality of goods (how?)

A
  • on the basis of the agreed terms

- otherwise: quality that recipient can reasonably expect

39
Q

(contractual) obligation

A
  • duty of the debtor to perform what he owes to the creditor
    “I give so that you give”
40
Q

priciples of interpretation

A
  • SUBJECTIVE: perspective of the parties prevails = common intention of the parties
  • OBJECTIVE: perspective of an external person prevails = what is reasonable or in line with good faith

(DCFR: prevails-> subjecive | no result-> objective)

41
Q

criteria to interpret a contract

A
  • circumstances of conlusion
  • conduct of the parties
  • previous interpretation of terms and expressions
  • commonly given interpratation
  • nature and purpose of the contract
  • usages
  • good faith and fair dealing
42
Q

(interpretation of terms against supplier)

contra proferentem rule

A

party who drafted a clause/ contract, should regularly bear the risk of any defect in the drafting.

43
Q

perfomance of the contract must be

A
  • in accordance with good faith and fair dealing
  • co-operative
  • non-discriminatory
44
Q

performance in accordance with good faith and fair dealing

A
  • duty to act in accordance with good faith and fair dealing
  • def: conduct characterised by honesty, openness and consideration for the interests of the other party
45
Q

obligation to co-operate

A
  • debtor and creditor are obliged to co-operate with each other
  • when and to the extent that this can reasonably be expected for the performance of the debtor’s obligation
46
Q

performance by third person

A
  • may not be refused by creditor
  • if personal performance by debtor is not required (and act with asset of debtor, debtor has not performed and will not perform) performance by third person discharges the debtor
47
Q

payment (in contract)

A
  • method used in ordinary course of business
  • currency and payment according to contract
  • if currency different from that place of payment: payment can be made in the currency of the place where payment is due (“right of conversion”)
48
Q

Non- acceptance of performance (2)

A

in case of:
monetary obligation
- debtor can deposit money to the order of the creditor and notify to creditor

obligation to delivery or return of property

  • preserving property/ depositing the property wity a third person
  • selling the property (in case of rapid deterioration or preservation expensive)
49
Q

SUMMA DIVISIO: non performance and remedies when…

A

not excused:
- specific performance, withholding performance of a reciprocal obligation, termination of contract, price reduction and damages

excused:
- withholding performance of reciprocal obligation, termination of contract and price reduced

50
Q

Non- performance excused

A
  • due to an impediment beyond the debtor’s control and debtor could not reasonable be expected to have avoided or overcome the impediment or its consequences.
51
Q

permanent impediment

A

obligation extiguishes + any reciprocal agreement is also extinguished -> mutual restitution

52
Q

temporary impediment

A

-> relieves the debtor from liability as long as it last

no order for specific performance and no damages allowed; but withholding counter-performance possible

53
Q

notice fixing additional period for performance

A
  • delay of performance = non-fundamental non-performance
  • creditor may by notice to the debtor allow an additional period of time for performance
  • during this period the creditor may withhold his reciprocal obligation and claim damages
  • if upon expir of that period, performance has not been made, this amounts to fundamental non-performance
54
Q

1 ) Right to ensure performance

A
  • of monetary obligations
  • of non-monetary obligation: “specific performance”:
    exception: performance impossible, unlawful; unreasonably burdensom / expensive
55
Q

2 ) withholding performance

A
  • in case of reciprocal obligations:
    witholding performance is aimed at protecting
    withholding party from having to having advance credit to non-performer
  • creditor has right to withhold performance until the debtor has tendered performance / has performed
56
Q

3 ) Termination

- in case of fundamental non-performance

A
  • if non-performance substantially deprives the creditor of what the creditor was entitled to expect, unless the debtor did not foresee and could not reasonably be expected to have foreseen that result
  • or, it is intentional or reckless and gives the creditor reason to believe that the debtor’s performance cannot be relied on
57
Q

3) Termination

- termination for “anticipated” non-performance (= before performance id due) is possible if:

A
  • debtor has declared that he will not perform / otherwise clear that there will be a non-performance
  • non- performance would have been fundamental
58
Q

what are the practicalities of termination

A
  • notice of termination to debtor
  • given in any form (writting, oral, particular words or expressions not necessary)
  • within reasonable time
59
Q

effect of termination

A
  • brings an obligation / legal relationship to an end for the future (ex nunc)
  • > restitution of benefits received (can be reciprocal)
60
Q

remedies in case of no-performance

A 
1 ) Right to ensure performance
2 ) withholding perfomance 
3 ) termination
4 ) price reduction
5 ) Damages
61
Q

4 ) price reduction

A
  • creditor who accepts a performance not conforming to the terms is entitled to price reduction
  • reduction must be proportionate to the decrease in the value (comparison of what was received and what should have been received)
62
Q

5) damages

A
  • creditor is entitled to damages for “loss” caused by non-performance
  • creditor is to be put in position in which he wold have been if performance had been duly performed
63
Q

damages for “loss”

A
  • economis loss: loss of income or profit, burdens incurred, reduction in the value of property
  • non-economic loss: pain, suffering, impairment of the quality of life

(- only for “loss” which the debotr forsaw or could reasonably be expected to have foreseen,
unless: non-performance intentional, rechless or grossl negligent)

64
Q

sales contract

A
  • transfer of ownership in return for payment of price

- rules on sales agreement apply even if good are to be manufactured / produced

64
Q

sales contract

A
  • transfer of ownership in return for payment of price

- rules on sales agreement apply even if good are to be manufactured / produced

65
Q

sales contract

- obligations of seller

A
  • transfer of ownership
  • delivery of the goods
  • conformity of goods with contract
66
Q

sales contract

- obligations of buyer

A
  • payment of price

- taking delivery of the goods

67
Q

conformity of:

A
  • the quantity, quality and description required by the contract.
  • contained or packages in the manner required by the contract.
  • supplied along with any accessories, intstallation instructions or other instructions required by the contract
  • possessing the qualities and performance capabilities hald out in an statement on the specific characteristics of the good made by producer or earlier links of the business chain
  • free from any right or claim of a third party
68
Q

practicalities for non-conformity

A
  • examination of the goods within a short reasonable period

- notification of the non-conformity

69
Q

remedies for non-conformity

A
  • generally: fundamental non-perforamce necessary

- in favour of consumer: any non-performance

70
Q

passing of risk

- who takes the risk (of loss or damage) of sold object? generally:

A
  • until the risk passes -> seller

- after passing of risk -> buyer

71
Q

when does risk pass?

A
  • generally: risk passes when the buyer takes over the goods
  • exception 1: risk also passes if buyer does not fulfil obligation to take over goods
  • exception 2: risk does not pass before goods clearly identified (in case of bulk products)
72
Q

Incoterms

A

(“international commercial terms”)
-def: are a set of internationall recognized, per-defined 3-letter standard terms, defined as usages by the ICC.

purpose: each summarising obligation of the parties in relation to 10 typical points

73
Q

lease of goods (def + obligations)

A
  • provision of temporary right to use goods in exchange for rent

obligations of

  • lessor: make available leased goods at start of and during entire lease period + conformity of goods with contract.
  • lessee: payment of rent
74
Q

when there are unfair terms

A
  • transparency requirement (= terms should be drafted in plain language)
  • general prohibition of unfair terms
  • specific prohibitions of certain unfair terms
  • exclusion of unfainess test (: main subject adequacy of price, drafted in plain language)
  • are non-binding on consumer
75
Q

consumer sales

A
  • non- conformity which exists at the time of delivery (one year presumtion period)
  • two year legal guarantee period
  • hierarch of temedies (repair or replacement, termination or price reduction)
76
Q

right of “withdrawal” / “cancellation”

A
  • in case of B2C distance contracts + contracts concluded outside of business premises
  • right to terminate contract in period of 14 days without reason to why or any liability

PRIVATE LAW (5 decks)

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