CH

NATURE AND DEFINITION OF CONTRACT A contract is the agreement of two or more parties to establish, regulate or extinguish a legal relationship having patrimonial content => any agreement capable of economic evaluation is a contract There are essential requirements, whose absence determines the nullity of a contract

1. agreement 2. causa 3. subject-matter 4. form (necessary only when prescribed by law)

EFFECTS OF CONTRACT

- Contracts shape and regulate all aspects of economic life, setting reciprocal rights and obligations of persons involved in a transaction.

- A contract has the force of law between the parties (but no effect on third parties) => law reserves to persons the freedom to set legally binding rules in the pursuit of economic interests

=> A contract is an agreement establishing between the parties a certain set of rules w.r.t. their economic interests. Contracts produce 2 types of effects:

- Generate obligations - Transfer ownership or transfer/establish other rights in property

Some contracts produce both effects There’s a distinction between entering into the contract (reaching an agreement) and the relationships (rights and obligations) that flow from it

So, a contract can be considered as a legal act. This is important to consider additional stages, requirements for validity and rules of interpretation to its formation.

CONTRACT AS A LEGAL ACT - The contract requires agreement between the parties - This agreement is not only abstract, as the convergent wills of the parties are

expressed and rules for the achievement of common interests are stated - So, a contract is also a legal fact, as it can be observed and ascertained

PLURALITY OF PARTIES AND INTERESTS The agreement implies a plurality of parties => existence of centres of interest

=> contracts are distinguished from unilateral acts A contract involves min. 2 parties, with their own (often conflicting) interests

=> rules are established to equally protect the interests of both parties Rules for contracts in general are extended to unilateral acts inter vivos having patrimonial content, to the extent that they are compatible (considered the absence of parties in unilateral acts) GOOD FAITH The concept of good faith (fairness) must preside over the general conduct of the parties

- it consists in the duty to inform the other party of the existence of any reason for invalidity of the contract

- according to law, such duty arises in the moment the two parties enter a negotiation - the violation of good faith doesn’t itself affect the validity of the contract, but the

party violating rules of fairness is liable for damages suffered by the other parties -> pre-contractual liability

Good faith arises also w.r.t. the interpretation of the contract => No party may ascribe to the content of the contract a meaning favorable to his views unless it coincides with an interpretation an honest person would attribute to it in good faith CONTRACTUAL AUTONOMY AND ITS LIMITS The parties can freely determine the content of the contract within the limits imposed by law => the State only sets the rules and provides for their non-infringement Over time, mainly 3 matters have interested the evolution of those rules:

- protection of specified interests over the “free market”: Freedom in economic initiative may not conflict with interest protected by law, such as safety, freedom…

- protection of free competition: in free-market capitalism, the role of law is to ensure fair competition between businesses, mainly using antitrust rules (especially in some sectors of public interest)

- protection of the weaker parties in the market: not all the economic actors in the market have the same strength. Not providing assistance to the weaker persons can be a benefit for the market (businesses are pushed towards efficiency and optimization), but some persons and interests are protected by law, such as prices of basic commodities and services or the rights of workers

BINDING FORCE OF A CONTRACT

- Every person may dispose of his interests at will within the limits laid down by the legal system

- Every person may dispose solely of his own interests - Disposing of another person’s interests is admissible only where the latter expressly

consents to it or where the law enables or directs it

-> “Negotiorum gestio” has to be carried out until its completion - Not even an economic advantage may be forced upon another person without the

latter’s consent DUTIES TO STIPULATE A CONTRACT There are situations where parties are under the duty to stipulate a contract 2 possible sources:

- law -> produces a legal obligation (ex businesses benefiting from legal monopolies) - precedent contracts -> characterized by voluntary obligation, so-called because

the parties choose to enter a contract that implies the submission of another one. -> if such duty is violated, the law grants to the compliant party to obtain a judgment producing the same effects of the contract which has not been made TYPICAL AND ATYPICAL CONTRACTS

- typical contracts: contracts for which law has provided a framework and specific regulations.

- atypical contracts: “new” types of contracts for which law hasn’t provided a specific regulation; atypical contracts are subject to the rules for contracts in general

- mixed contracts combine features of separate and distinct types of typical contracts