Week 3: Contract Law Pt.1

Question 1

Freedom of a contract.

Answer 1

!The general idea of a contract is based on the freedom of a contract!
Freedom of a contract implies:
*Freedom to enter the agreement or not.
*Freedom to choose contracting parties.
*Freedom to determine the content of a contract.

However, there are some exceptions:
1. Rules related to validity of a contract.
2. Mandatory law
3. Order public
4. Conflicting fundamental rights

Question 2

Freedom of contract exceptions

Answer 2

1. Rules related to validity of a contract.
   *Lack of consent
   *Formal requirements- we need formal doc. to constitute legal act.
   *Personal capacity-
   ex. minors (apart from “necessaries” and “employment contract in their interest”
   ex. Insanity- if known to the other party
   ex. Legal persons- connected to relevant transaction.
2. Mandatory law
   Priority is always given to the national or supernational law.
3. Public order
   *Evolving over time (e.g., gambling)
   *Can never be waived
   E.g., rules on compound interest
   E.g., invalidity of penalty clauses under common law
   E.g., rules against corruption
   E.g., Embargo’s / contracts restraining trade
   Trading with the enemy
   Agency: post-contractual competition
   E.g., financial enslavement (usury)
4. Conflicting fundamental rights
   No discrimination based upon race, age, gender… (insurance, ECJ)

Question 3

When do we have an offer?

Answer 3

*It is intended to result in a contract if the other party accepts it, and it contains sufficiently definite terms to form a contract.

*Even if it’s for free
(>< UK law: consideration is needed)

*An offer may be made to one or more specific persons or to the public

*A offer to supply goods or services at stated prices made by a professional supplier in a public advertisement or a catalogue, or by a display of goods, is presumed to be an offer to sell or supply at that price until the stock of goods, or the supplier’s capacity to supply the service, is exhausted.

> < under common law: invitation to offer

Question 4

Can you revoke your offer?

Answer 4

An offer becomes effective when it reaches the offeree.
An offer can be revoked if the revocation reaches the offeree before its acceptance. In cases of acceptance by conduct, before the contract has been concluded.

NOTE: An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer

However, a revocation of an offer is ineffective if:
*the offer indicates that it is irrevocable; or
*it states a fixed time for its acceptance; or
*it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer

Question 5

When an offer is accepted?

Answer 5

When a declaration by the offeree reached the offerer within a reasonable time.

Declaration by the offeree can be any form of statement or conduct by the offeree is an acceptance if it indicates assent to the offer.

!!!Silence or inactivity does not in itself amount to acceptance!!!

The period of acceptance begins from the time the offer has been dispatched.

Specific case: if a reply to an offer has acceptance, BUT it contains any modifications–> counts as rejection and continues as counter-offer.
Only if the modification does not materially alter the terms of the offer it can be counted as acceptance!!

Question 5

When is the contract concluded?

Answer 5

When the acceptance reaches the offeror. (in case of acceptance)

If the acceptance happens by conduct, the contract is concluded when notice of the contract reaches the offeror.

Question 6

Is a verbal agreement possible? (Contract formulation)

Answer 6

Yes, verbal agreement is possible, but there needs to be a form signed, and ability to be a valid agreement.
3 types of agreements:
1. Consensual agreement- general rule.
2. Formal agreements- formal requirements needed (ex. civil law mortgage requires a deed)
3. Real agreements- by delivery (ex. deposit agreement); the agreement is constituted when an asset is being handed over to the other party.

These types can be Unilateral vs. Reciprocal.
->Unilateral- one part has obligation
ex. gift, donation.
->Reciprocal- both parties have legal obligations; commitment. Ex. sales agreement. (majority of contracts)

Example: Contract is a multilateral legal act, but it can be unilateral or reciprocal agreement depending on obligations.

Question 7

Relativity/privity of a contract

Answer 7

One of the main consequences of a contract.

Contractual obligations and rights are only for parties involved. The only exception is legal claims of third parties.
You can give rights to the third parties but NOT obligations!!!
Third parties only have to respect the ‘existence’ of a contract, not know its content!!

Once contract is concluded, both parties should strictly comply with it.
Otherwise the contract is breached
–>sanctions apply:
Formal notice needs to be given (Sanctions do not apply automatically- need to give a formal notice!)
*Force performance
*Termination of a contract- (requires fundamental breach)
*Replacement
*Repair

Can the contracting party in breach be excused:
Was there an event of “force majeure” (acts of God) or “hardship” (under common law: frustration)

Question 8

Personal agreement

Answer 8

Types of agreements: personal agreements (“Intuitu personae”)

Agreements stand or fall with the person of one of the contracting parties

Namely, closely linked to the person of the debtor. The contract can only be performed by the debtor (not a representative, replacement…)

!!!If the debtor dies, the contract is terminated!!!

It is like another cause that can be tied to 3 types of agreements or normal agreement overall (contract, not verbal agreement).