Chapter 7 intro - Law of obligations

Question 1

Contract

Answer 1

an agreement between two or more parties, debtor (SA) and creditor (SE), in which the
contracting parties promise to do, give, or not do sth. in exchange for sth. else.

Question 2

The requirements for a contract are that two legal actions are necessary.

Answer 2

• the offer : has to be specific enough. Otherwise it’s an invitation for doing business.
• the acceptance of the offer. It has to be unconditional.

Question 3

Legal rules regarding a contract

Answer 3

• The offer is revocable until accepted. BUT damage compensation can be claimed
  when it’s revoked before expiring. This is only in case the recipient of the offer can
  prove that they would’ve entered the contract, shouldn’t it have been revoked.
• Time must be specified, if not the offer will be valid for a reasonable time. This will
  be valued from case to case by the courts and tribunals.

Question 4

Types of contract

Answer 4

● Simple contract (most common)
● Solemn contract (exception)
● Unilateral contract
● Synallagmatic contract (reciprocal contract)
● Contract as a gift
● Contract for consideration

Question 5

Simple contract (most common)

Answer 5

a contract where the evidence of it is merely oral, or in writing, not under seal, nor of
record and without special formalities having to be observed. No notary has to be
involved.

Question 6

Solemn contract (exception)

Answer 6

a contract that requires a special form or method of formation (creation) in order to
be enforceable. Notary has to be involved.

Question 7

Unilateral contract

Answer 7

a contract in which only one party is bound by obligations under the contract.

Question 8

Synallagmatic contract (reciprocal contract)

Answer 8

a contract in the civil law where reciprocal obligation exists. Each party to the
contract is bound to provide something to the other party. Ex. sales agreement.

Question 9

Contract as a gift

Answer 9

a contract by means of which property is transferred or a performance is promised
by the obligor with nothing given in return by the obligee.

Question 10

Contract for consideration

Answer 10

a contract that benefits both parties to the contract. All synallagmatic contracts are
formed as contracts for consideration.

Question 11

Parties have the responsibility to deal with each other in an honest and fair way.

Answer 11

• the obligations should be fulfilled in good faith towards one another.
• principle is widely accepted in common and civil law.

Question 12

Contractual freedom

Answer 12

• Regarding the content : as long as the mandatory law is not violated, contractual
  freedom is absolute. This principle is recognized in all EU Member States. However,
  there are some nuances.
• Regarding the form : oral contracts have the same legal weight as written contracts.
  However, there’s less practically since it’s hard to find evidence.

Requirements concerning delivering evidence in Belgium are lower in business law than in
civil law. In BE written evidence with formal requirements are necessary if the contract is
higher than €3500.

Question 13

Binding force of contracts

Answer 13

Parties are bound to perform all the obligations arising from it, whether they have been
expressly laid down or not. A contract may only be cancelled on specific grounds.
- revocation of the contract by mutual consent.
- termination grounds provided under the law.

=> Breach of contract leads to contractual liability, which differs from contracts that are null
and void.

An exception is a force majeure provision or clause.

Question 14

Consensualism (‘occurrence of wills’)

Answer 14

The contract is concluded by the agreement of the parties without any further requirement.
Contracts are formed by the manifestation of intention by way of offer and acceptance.

Question 15

Genuineness of consent

Answer 15

• For a contract to be valid, all contracting parties have to agree on the same matter. All
  European legal systems acknowledge that consent can be defective.
• => Defects of consent concern the formation of the contracts. The main categories are
  mistakes, duress and fraud, but variations exist in the different legal systems.
• => A contract has to be valid before it’s acted on. The absence of defects should be checked
  before considering whether or not the contract has been performed satisfactorily. A causal
  relationship between the defect of consent and entering into the contract is required.

Question 16

Mistake or error

Answer 16

One party errors in the interpretation of the contract. There is a wrong assumption, which
led the mistaken party to enter into a contract.
- the party was not aware of all material information when concluding the contract.
- would the party have known something at the time of the contract, he would not
have concluded it or with at least one very different term.
=> Criterium : is it a reasonable or excusable error (bonus pater familias)? If not, can’t argue
that there’s been a defect in consent.
The result is voidability. The contract may be rescinded by the disadvantaged party or
parents / legal guardians and can be set aside.

Question 17

Duress

Answer 17

A person enters an agreement as a result of threats. The result is voidability. Abuse of
circumstances leads to voidability or damage compensation.

Question 18

Fraud

Answer 18

Can affect the contract only if it is exerted by the contracting party. It’s an untrue assertion
made with knowledge of falsity and the intent to deceive. The result is voidability or damage
compensation.

Question 19

Legal capacity to contract

Answer 19

= for both natural and legal people. The ability to understand the meaning of one’s actions
depends on the mental status of the person, and their intellectual capacity.
A person who enters into a transaction needs to have reached a certain minimum level of
intelligence and mental maturity.
Capacity is the rule, incapacity is the exception. Only if a statute or a judgment argues
otherwise, a person is incapable of contracting.
- problem for minors, mentally disabled ppl, those under influence of alcohol or drugs.
- these people cannot engage in transactions.
Minors are exempt from this when concerning transactions that relate to their daily needs.
=> The result is voidability.= for both natural and legal people. The ability to understand the meaning of one’s actions
depends on the mental status of the person, and their intellectual capacity.
A person who enters into a transaction needs to have reached a certain minimum level of
intelligence and mental maturity.
Capacity is the rule, incapacity is the exception. Only if a statute or a judgment argues
otherwise, a person is incapable of contracting.
- problem for minors, mentally disabled ppl, those under influence of alcohol or drugs.
- these people cannot engage in transactions.
Minors are exempt from this when concerning transactions that relate to their daily needs.
=> The result is voidability.

Question 20

Object of the transaction

Answer 20

= the subject matter of the obligations created by the contract.
=> Criterium : does the object violate criminal law or the basic principles of our society? The
result is a null and void contract. A public prosecutor can initiate criminal proceedings.

Question 21

Cause

Answer 21

= the concrete and decisive motives and objectives of the parties to enter into a contract.
The motives and objectives become legally relevant if they…
- are known or ought to have been known by the other party.
- are accepted, albeit implicitly, by the other party.
=> Criterium : does the cause violate criminal law or the basic principles of society? The
result is a null and void contract, it has never existed by law. A public prosecutor can initiate
criminal proceedings.

Question 22

Substance

Answer 22

B2B Sales contract
- the UNIDROIT principles of international commercial contracts.
- the UN Convention on Contracts for the International Sales of Goods (CISG) or
Vienna Convention.
The rules regulating the liability between sender and receiver during international
transport in a B2B contract are called the INCOTERMS or the International
Commercial Terms.

Question 23

Form

Answer 23

The international chamber of commerce adopted ICC model contracts. These are
single formats that can be used in different kinds of B2B settings, if the contracting
parties choose to use it.

Question 24

Culpa in contrahendo

Answer 24

= precontractual liability, praetorian doctrine. Negotiators have to act as reasonable ppl in
the precontractual stage, according to the principle of good faith.
If they act negligently, they are liable on the grounds of tort law.
=> Information provided during negotiations must be correct. Unlawful termination of
negotiations implies tortious liability.

Question 25

Common law and Civil law interpret key elements of a contract differently.

Answer 25

• Civil law : interpretation of the contract on the basis of the will theory. Working out
  the true intention rather than sticking to the literal meaning of the declaration.
• Common law : when interpreting an act under the law, it’s not so much a question of
  what the parties wanted but what they declared.

Question 26

Common law and Civil law interpret key elements of a contract differently.

Answer 26

The contract is the law between the parties and should include all that they are supposed to
have agreed upon. The general principle of conduct in good faith is recognised in most EU
legal systems.

There is a remedy for all contracts in case of breach.
- specific performance
- damages

Specific remedies for reciprocal contracts include…
- cancellation of the contract.
- Exceptio Non Adimpleti Contractus : an exception in a contract action involving
mutual duties or obligations. The plaintiff may not sue if their own obligations
haven’t been performed.
- right of retention : the possessor of a movable can hold it until satisfied for his claim,
either against the movable or the owner of it.

Question 27

Consequences for third parties.

Answer 27

Relativity of contract. The contract shall not harm the interests of third parties and may
benefit them only in specific circumstances under European continental civil law.

Question 28

Concept of porte-fort

Answer 28

= undertaking by the agent initiating a promise that the principal (i.e. third party) will
confirm the act.

(Party A promises Party B that third Party C will perform to the benefit of party B)

Question 29

Stipulation for the benefit of a third party

Answer 29

Party A makes Party B engage to perform to the benefit of third Party C

Question 30

Direct action

Answer 30

an action of the obligee against the obligor of his own obligor.

(Third party C, obligee in the relation with obligor A, has a direct action against party B, obligor in the relation with obligee A

Question 31

Termination and suspension of the contract

Answer 31

These are payment, novation, set-off, merger of
debts, debt forgiveness and extinctive prescription.

Question 32

Payment

Answer 32

the performance of a duty, promise, obligation; or discharge of a debt or liability, by
the delivery of money or other value. It’s paid to the creditor by the debtor or a third
party. The creditor is not obliged to accept anything that hasn’t been agreed upon.

Question 33

Novation

Answer 33

either replacing an obligation to perform with a new one, adding an obligation, or
replacing a party to an agreement with a new party.

Question 34

Set-off

Answer 34

a person can use a right to performance held against the other to extinguish, in
whole or in part, an obligation owed to the creditor.

Question 35

Merger of debts

Answer 35

the attributes of debtor and creditor are united in the same person in the same
capacity.

Question 36

Debt forgiveness

Answer 36

the full or partial cancellation of a debt by a creditor.

Question 37

Extinctive prescription

Answer 37

in relation to the right to performance of an obligation, it’s the legal effect whereby
the lapse of a prescribed period of time entitles the debtor to refuse performance.