4. Interpretations, Integration, Effectiveness, and Ineffectiveness of Contracts

Question 1

Rules of interpretation (8)

Answer 1

1. Literal interpretation
2. Searching for the real interpretation.
3. Doubtful terms and words.
4. Clauses subject to different interpretations.
5. Systematic interpretation.
6. Ambiguous clauses.
7. Obscure clauses.
8. Closing rule

Question 2

Literal interpretation

Answer 2

When the terms are clear, the literal sense prevails.

Question 3

Searching for the real interpretation

Answer 3

The intention shall prevail over the literal meaning. Acts at the time of, before, and subsequently to the contract shall be taken into account.

Question 4

Doubtful terms and words

Answer 4

Take into account the meaning which is most in accordance with the nature and object of the agreement.

Question 5

Clauses subject to different interpretations

Answer 5

The meaning most suitable to produce effects (“principle of conservation of the contract”).

Question 6

Systematic interpretation

Answer 6

Clauses must be interpreted in accordance with the sense of the whole contract.

Question 7

Ambiguous clauses

Answer 7

Usages or customs of the country shall be taken into account, standing in for the omission of clauses. Parties shall know and accept the usages.

Question 8

Obscure clauses

Answer 8

The interpretation must not favour the party who caused the obscurity.

Question 9

Closing rule

Answer 9

Impossible to solve the doubts.

Question 10

If the doubts are about incidental matters in gratuitous contracts, the doubts are solved in favour of…

Answer 10

the smallest transfer of rights.

Question 11

If the doubts are about incidental matters in onerous contracts, the doubts are solved in favour of…

Answer 11

the greatest reciprocity of interests.

Question 12

Integration of contracts

Answer 12

Complete the contract, as the usual case is that they are not perfectly complete.

Question 13

Ways to integrate a contract:

Answer 13

1. Auto-integration: It shall prevail because it relies on the will of the parties which was the origin of the contract, and determines its purpose as well as the kind chosen.
2. External resources: By law > Usages > Good faith.

Question 14

What is clause rebus sic stantibus?

Answer 14

Whenever there is an unpredictable and exceptional change in the circumstances under the contract was concluded, provoking an unfair harm to the contracting party, such clause can be asked to be applied in order to modify or invalidate the contract if any balance can no longer be achieved (e.g. crisis, war…).

Question 15

Effectiveness of contacts:

Answer 15

· Contracts bind the parties (pacta sunt servanda, contracts are made to be performed).
· Extended effects of contracts: performance and consequences.
· Contracts cannot be left to the will of one party: only mutual agreements can modify or revoke the contract (exceptions in consumer law).
· Principle of relativity of contracts: only parties involved are bind. However there are exceptions.

Question 16

Exceptions to the principle of relativity of contracts:

Answer 16

1. Assignments of rights and obligations. All rights acquired pursuant to an obligation are transferable subject to law.
2. Stipulations in favour of a third party.
   If it were to contain any, the third party may demand performance thereof, provided that he made known his acceptance to the obliged person before such stipulation is revoked.
3. Effects for third parties if certain degree of publicity is given.
   a) public deed = evidence against the contracting parties and even against third parties.
   b) date of a private document = effective ONLY against 3rd parties from the date on which it should have been entered in or registered with a public registry OR from the date of death of any person who signed it OR from the day on which it should have been delivered to a public officer in an official capacity.
   c) assignment of a credit, right or action shall not be effective against 3rd parties until the dare in which it is considered certain.
   In the case of immovable goods, it shall be effective from the day of registration in the Registry.

Question 17

Nullity - absolute nullity

Answer 17

Null and void contracts.

It is definitive: it cannot be enforced.
Considered as never executed –> no effects at all (neither obligations nor rights).
Null from the moment of execution. Null contracts cannot be cured (confirmed).

No judicial decision needed (operates ipso iure).
No deadline for seeking it.
Any party can seek for it.

Question 18

Causes for nullity:

Answer 18

1. Lack of essential elements.
2. Unlawful or non-determined object (e.g. impossible things).
3. Unlawful or non-real consideration.
4. Lack of required form in formal contracts.
5. Contracts contrary to mandatory laws (unless such law provides for a sanction different than nullity).

Question 19

Consequences of a false clause (nullity):

Answer 19

It shall entail nullity, unless it should be proved that they were based on another true and lawful cause.

Question 20

Consequences of unlawfulness of the clause; if it constitutes a criminal offence or misdemeanour:

Answer 20

a) If common to both contracting parties: they shall have no action against each other, and a criminal acton shall be brought against them, and, further, the objects and price which constituted the subject matter shall have the application provided in the Criminal Code.

b) Only one of the contracting parties: the party who was nor guilty may claim what he has given, and shall not be obliged to perform what he promised.

Question 21

Consequences of unlawfulness of the clause; if it DOES NOT constitute a criminal offence or misdemeanour:

Answer 21

a) If both parties are at fault: none of the may recover what he has given, or claim the performance of what the other has offered.

b) If only one contracting party is at fault, the one who was foreign to the unlawful cause may claim what he has given, without the obligation to perform what he had offered.

Question 22

Definition voidability:

Answer 22

The contract has a defect but is valid as long as it is not challenged by it.

Question 23

Causes:

Answer 23

1. Vices of consent.
2. Lack of legal capacity.
3. Lack of consent.

Question 24

The action for the declaration of voidability has a term of expiration of … years, which start to run…

Answer 24

Of 4 years.

a) in cases of intimidation or duress, from the day on which they have ceased.
b) in cases of dolus, error or false consideration, from the moment they enter into it.
c) in cases with minors or incapacitated ppl, from the moment they turn 18 or the incapacitation is over.
d) in cases in which one of the spouses entered the contract without the necessary consent of the other, from the date of dissolution of marriage, unless the other spouse has had sufficient earlier knowledge of such contract.

ALSO extinguished when the thing constituting their subject matter should have been lost pursuant the wilful misconduct or negligence of the person entitled to exercise it.

Question 25

Confirmation of the voidable act:

Answer 25

Declaration of the will of the party who could ask for the voidability making valid and effective the act which was affected by a cause of voidability.

Question 26

Requisites for the confirmation of the voidable act:

Answer 26

· Only the affected person can confirm it.
· It does not require the agreement of both parties.
· The vice must be known but no longer exist.
· The action of annulment shall be extinguished when the contract is validly confirmed.
· Confirmation purifies the contract of defects.
· Confirmation can be expressed or tacit.

Question 27

Consequences of ineffectiveness:

Answer 27

To reciprocally return to the one another things with their fruits, and the price paid with interests.

Question 28

Consequences of ineffectiveness (if the thing is lost):

Answer 28

To return any fruits received and the value of the thing at that time plus the interest from the same date.

Question 29

Consequences of ineffectiveness (if the thing is destroyed):

Answer 29

The obligation to return the goods is turned into a monetary obligation.

Question 30

Consequences of ineffectiveness (in case of minors and incapacitated):

Answer 30

They don’t need to return the money unless they have enriched from it.

Question 31

Definition recession:

Answer 31

A valid act turns to be ineffective because it produces a prejudice that is considered to be unfair.

Question 32

Causes of recession:

Answer 32

1. Injury: more than 1/4 of the value of things which constitute the matter.
2. Fraud: of creditors. They have the power to go to court to undo such fraudulent acts. The effect of such action is to rescind the fraudulent contract in as much as it is required to pay the credit.
3. Goods subject to litigation: without the knowledge and approval of litigators.
4. Other: contracts celebrated by tutors without judicial authorisation.

Question 33

Effects of recession:

Answer 33

· Return of things traded with fruits and paid with interest.
· Compensate the creditors if it is impossible to return the acquired things.

Question 34

Deadline for recession:

Answer 34

4 years that can’t be interrupted.

· In the case of absentees: time starts when his domicile is known.
· In the case of guardianship: from the moment the incapacity of the former had ceased.