Legal Unit 8

Contract definition

Contracts as Consumer Transactions: contracts allow consumers to

buy goods and services, which are essential for daily activities and

satisfaction of personal needs.

Contracts Help Business Operations: they help businesses organize

themselves and facilitate the trading of goods and services, ensuring

operational efficiency and profitability.

Formation Methods of Contracts:

o By Written Documentation: formalized through written

documents prepared by the involved parties, public notaries, or

solicitors, providing a clear legal record.

o Orally: This means that the contract is made through spoken

words rather than written down. Parties agree verbally to the

terms of the contract.

o By Conduct: the actions of the parties imply an agreement. Even

without spoken words or written documents, their behavior

demonstrates a mutual understanding and acceptance of

contractual terms.

Contracts in Civil Law

o Roman Law Context: The term originates from Roman law where

"Cum-trahere" means "to bind," emphasizing the binding nature of agreements where parties are tied to their commitments.

o General Definition: In civil law jurisdictions, a contract is broadly

defined as an agreement between parties.

o Inclusivity of Donations: donations are considered contracts in

civil law, highlighting a more inclusive approach to what

constitutes a contract compared to common law systems

Contracts in Common Law

o General Definition: a contract represents a bargain, meaning it fundamentally involves an exchange in which each party receives something of value.

o Key Exclusions.

 Gratuitous Promises: These are commitments made without receiving anything in return. In common law, such promises are typically not enforceable as contracts unless they are formalized through a deed under seal.

 Gratuitous Bailments: Involves the transfer of possession of an item from one person (bailor) to another (bailee) without any form of payment or benefit. This type of transfer does not qualify as a contract because it lacks the mutual exchange of value.

o Consideration:

 Definition: something of value that each party agrees to give or do for the other in order to form a binding contract. It's essentially the exchange of benefits and detriments between parties, like paying money in return for goods, or providing services in exchange for compensation.

 Legal Function: Consideration serves as a critical mechanism in common law to differentiate enforceable promises from those that are not legally binding.

Contracts in European Legal Systems:

o DCFR: According to the Principles of European Contract Law, a Contract is an agreement which is intended to give rise to a binding legal relationship or to some other legal effect. It is a bilateral or multilateral juridical act.

o Italian Civil Code: Art. 1321 of the Italian Civil Code describes a a contract is an agreement between two or more parties to establish, regulate, or extinguish their patrimonial
legal relationship

o French Civil Code: Art. 1101 of the French Civil Code (amended in 2016) sees A contract is a concordance of wills of
two or more persons intended to create, modify, transfer or extinguish obligations.

Binding Force of Contracts in French law:

o Principle: article 1103 of the French Civil Code establishes that contracts lawfully formed are binding in the same way as legislation for the parties involved.

o Implication: once a contract is agreed upon and meets all legal requirements, it must be honored by the parties as if it were a law. This underscores the serious commitment and obligation that contracts impose on the parties.

Contracts as Obligations:

Contracts serve as a foundational source of obligations in legal and business dealings. They formalize the duties and rights of the parties involved, ensuring structured and enforceable interactions.

 Example, Contract of Sale: A contract of sale specifically entails the agreement to transfer ownership of goods or rights in exchange for payment. It outlines specific obligations for both the buyer and the seller to fulfill their parts of the deal.

o Seller’s Responsibilities:

-to deliver the thing to the buyer

-to warrant the buyer against eviction and defects in the thing sold

o Buyer’s Responsibilities:

 Payment: the buyer must pay the agreed price at the time and place specified in the contract, fulfilling the financial obligation of the agreement.

Sources of Obligations:

 Primary Source: Contracts

 Secondary Source, Torts: torts involve obligations that arise from non- contractual wrongs. These occur when a party's actions cause harm or loss to another, leading to liability without a pre-existing contractual relationship.

 Other Minor Sources: such as unjust enrichment, undue payment, and statutory duties. These are less common but can impose legal responsibilities in specific circumstances.