Introductory Provisions Flashcards
Art. 1101
– A contract is a concordance of wills of two or more persons intended to create, modify, transfer or extinguish obligations..
Limited company (Société de capitaux) and Unlimited companies (Société des personnes) .
Limited liability. This means that the liability of the owners or investors of a company is limited to the total amount of money which they have invested in the business.
Unlimited it’s the opposite of limited companies. In this case, the liability that the owners and investors might have is not limited to the amount that they have contributed.
The risk is higher in International business :
- International business : In general, there’s no common language, the law also differs, the outcome is less certain than in domestic business. Therefore, the risk is higher.
- National business : The same language is spoken and it’s the same legal system (Ex. Because we know what French law says, it’s much easier for us and the risk is lower).
There are 4 different functions in a contract :
1) Creating new obligations (main function)
2) Modifying existing obligations
3) Using the contract to transfer to someone else the existing obligations
4) Extinguishing existing obligations
Freedom of contract is defined in art. 1102 of the Civil Code.
Art. 1102. – Everyone is free to contract or not to contract, to choose the person with whom to contract, and to determine the content and form of the contract, within the limits imposed by legislation.
This freedom of contract concerns 4 elements :
1) Concluding or not the contract
2) Everyone or anyone is free to choose the contractor
3) We are all free to determine the content of the contract
4) Freedom to determine the form of the contract
There are only two forms, the written and oral form :
- Simple written form (= acte sous-seing privé). This form is only stipulated between A and B.
- Written contract by a notary public : if the parties want to add more formalism, they may very well have a legal professional (a notary) draft their contract, this it has of course a cost.
In an oral form, the proof can nevertheless be established by witnesses.
A contract is an agreement. There are two ways of reaching an agreement : what we’ll call the old way
and the standard contract.
1) Old way
Person to person meeting and discussion of each clause
2) Standard contract
These are contracts written by someone else (ex. FIDIC). It’s a standard contract, which means, that it should satisfy the majority of wills. Any company may use this standard contract, and if they don’t find it sufficient, the parties may add clauses.
Why so many companies have this standard terms ?
Because they need uniformity, that is, they need to know that all the contracts they conclude lead to the same conclusion, the same effect.
art. 1102 is crucial
if we didn’t have it, there would be no freedom of contract : no company, nor individual could conclude contracts in order to optimize it’s economic situation
In French law of sale
the buyer becomes the owner of the sold item at the time of conclusion of the contract.
French law requires only an agreement on the price and on the subject delivered.
Art. 1583.
The sale is perfect between the parties as soon as they have agreed on the item and the price, although the item has not yet been delivered nor the price paid
this art. 1583 is a non-mandatory provision.
the rule it establishes is no longer mandatory. That is, if the parties want, they can organize the transfer of property differently. They can insert in the contract a title retention clause (clause de réserve de propriété) under which the seller remains the owner of the object as long as he isn’t fully paid.
Art. 1103 is another major provision of French law which is crucial to economy.
Art 1103. – Contracts which are lawfully formed have the binding force of legislation for those who have made them.
Art. 1103 This provision is crucial
crucial because it’s the provision making all contracts that are valid legally binding between the parties. It’s what we call the binding force of contracts (= l’effet juridique obligatoire du contrat).
