Chapter 7 intro - Law of obligations Flashcards
Contract
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.
The requirements for a contract are that two legal actions are necessary.
- 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.
Legal rules regarding a contract
- 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prove that they would’ve entered the contract, shouldn’t it have been revoked.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.
Types of contract
● Simple contract (most common)
● Solemn contract (exception)
● Unilateral contract
● Synallagmatic contract (reciprocal contract)
● Contract as a gift
● Contract for consideration
Simple contract (most common)
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.
Solemn contract (exception)
a contract that requires a special form or method of formation (creation) in order to
be enforceable. Notary has to be involved.
Unilateral contract
a contract in which only one party is bound by obligations under the contract.
Synallagmatic contract (reciprocal contract)
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.
Contract as a gift
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.
Contract for consideration
a contract that benefits both parties to the contract. All synallagmatic contracts are
formed as contracts for consideration.
Parties have the responsibility to deal with each other in an honest and fair way.
- the obligations should be fulfilled in good faith towards one another.
- principle is widely accepted in common and civil law.
Contractual freedom
- 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.
Binding force of contracts
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.
Consensualism (‘occurrence of wills’)
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.
Genuineness of consent
- 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.
Mistake or error
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.
Duress
A person enters an agreement as a result of threats. The result is voidability. Abuse of
circumstances leads to voidability or damage compensation.
Fraud
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.
Legal capacity to contract
= 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.
Object of the transaction
= 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.
Cause
= 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.
Substance
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.
Form
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.
Culpa in contrahendo
= 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.
Common law and Civil law interpret key elements of a contract differently.
- 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.
Common law and Civil law interpret key elements of a contract differently.
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.
Consequences for third parties.
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.
Concept of porte-fort
= 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)
Stipulation for the benefit of a third party
Party A makes Party B engage to perform to the benefit of third Party C
Direct action
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
Termination and suspension of the contract
These are payment, novation, set-off, merger of
debts, debt forgiveness and extinctive prescription.
Payment
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.
Novation
either replacing an obligation to perform with a new one, adding an obligation, or
replacing a party to an agreement with a new party.
Set-off
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.
Merger of debts
the attributes of debtor and creditor are united in the same person in the same
capacity.
Debt forgiveness
the full or partial cancellation of a debt by a creditor.
Extinctive prescription
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.
