6. Law of Obligations

Flashcards on Contract Law and Obligations

What is the Law of Obligations?

A branch of private law under the civil law legal system that organizes and regulates the rights and duties arising between individuals.

Define 'Obligation'

A legal bond (vinculum iuris) by which one or more parties (obligants) are bound to act or refrain from acting.

Who is an 'Obligor'?

A person who is contractually or legally committed or obliged to providing something to another person.

Who is an 'Obligee'?

A person who is to receive the benefit of someone else's obligation.

What are the types of obligations?

Civil (enforceable by law) and natural (moral duties, unenforceable unless the obligor consents).

What are the sources of obligations?

Obligations derived from contract, quasi-contract, and tort.

What is a contract?

An agreement between two or more parties to do/give/not do something in exchange for something in return, creating obligations enforceable by law.

What are the two necessary legal actions in forming a contract?

The offer (specific enough) and the acceptance of the offer.

Is an offer revocable in Belgium (Civil Law)?

Revocable until accepted, but damage compensation may be claimed if revoked before it expires.

List types of contracts.

Simple, solemn, unilateral, synallagmatic (reciprocal), as a gift, and for consideration.

What is a Simple contract?

A contract evidenced merely orally or in writing, not under seal, and without special formalities.

What is a Solemn contract?

A contract requiring a special form or method of formation to be enforceable.

What is a Unilateral contract?

A contract where only one party is bound by obligations.

What is a Synallagmatic contract?

A contract where reciprocal obligation exists; each party is bound to provide something to the other party.

What is a contract as a gift?

A contract where property is transferred or performance is promised with nothing given in return.

What is a contract for consideration?

A contract benefiting both parties; almost all synallagmatic contracts are formed as contracts for consideration.

What are the basic principles of contract law?

Performance of the contract in good faith, contractual freedom, binding force of contracts, and consensualism.

Explain 'good faith' in contract law.

Parties must deal with one another in an honest and fair way; obligations should be fulfilled in good faith, even during negotiations (culpa in contrahendo).

Explain 'Contractual freedom'.

As long as mandatory law is not violated, contractual freedom is absolute. Oral contracts have the same legal weight as written contracts but evidence is important.

Explain 'Binding force of contracts'.

Parties are bound to perform all obligations, and a contract may only be cancelled on specific grounds like mutual consent, termination grounds provided under the law, or breach of contract, Force Majeure is an exception.

Explain 'Consensualism'.

The contract is concluded by the agreement of the parties without any further requirement (offer and acceptance).

What are the legal requirements for a valid contract?

Genuineness of consent, legal capacity to contract, object of the transaction, and cause.

What are the main categories of defect of consent?

Mistake, duress, and fraud.

What is 'Mistake or error' in contract law?

One party errs in the interpretation of the contract, unaware of all material information; criterium: reasonable or excusable error.

What is the result of 'Mistake or error' in contract law?

Voidability (contract may be rescinded by the disadvantaged party).

What is 'Fraud' in contract law?

An untrue assertion made with knowledge of falsity and the intent to deceive exerted by the contracting party.

Duress

Entering an agreement as a result of threats; Result: voidability

What is 'Legal capacity to contract'?

The ability to understand the meaning of one’s actions, which depends on the mental status and intellectual capacity of the person. Minors and mentally disabled people may have issues.

What is the 'Object of the transaction' in contract law?

The subject matter of the obligations created by the contract; does the object violate criminal law or basic principles of society? Result: contract is null and void.

What is the 'Cause' in contract law?

The concrete and decisive motives and objectives of the parties to enter into a contract. Does the cause violate criminal law or basic principles of society? Result: contract is null and void.

What is the aim of International contract law?

To overcome the differences between legal systems and to facilitate international trade.

Examples of instruments of International contract law

The UNIDROIT principles of international commercial contracts, the UN Convention on Contracts for the International Sales of Goods (CISG), INCOTERMS, ICC Model Contracts

What is the first step if the counterparty is unable/unwilling to perform in Belgium?

A default notice (registered).

What are the subsequent steps if the counterparty is unable/unwilling to perform in Belgium?

ENAC (suspend obligation) or retention right, initiate court proceedings (in natura payment or by equivalent payment).

What is a solution for 'justice backlog, reputation management, no guaranteed expert knowledge, appeal possibility'?

Waterproof contractual clauses; arbitration proceedings (e.g. ICC, Cepani in Belgium).

What is Culpa in contrahendo?

Negotiators have to act as reasonable persons in the precontractual stage (according to the principle of good faith). Information provided during negotiations must be correct; unlawful termination implies tortious liability.

How does Civil law interpret a contract

Interpretation of the contract on the basis of the “will theory”: ascertain the true intention rather than adhering to the literal meaning of the declaration

How does Common law interpret a contract

When interpreting an act under the law, it shall not so much be a question of what the parties wanted but of what they declared

What are the consequences between contracting parties?

The contract is the law between the parties and should include all the things they are supposed to have agreed upon

What is Exceptio Non Adimpleti Contractus?

An exception in a contract action involving mutual duties or obligations, to the effect that the plaintiff may not sue if the plaintiffs own obligations have not been performed

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

What is the

A keeper of an animal is accountable for the causation by the animal of personal injury and consequential loss, loss suffered by third persons as a result of another’s personal injury or death, and loss resulting from property damage

European legislation protects consumers against damage caused by defective products

Injured persons can therefore seek compensation with regard to products put into circulation in the internal EU market