Contract Interpretation and Performance Quiz

Contract Interpretation

• Interpreting in favor of the debtor is the general rule, in accordance with Amharic proverb "if your friend is honey do not take it all" (Art. 1739).
• Exceptions exist in contracts of adhesion (Art. 1738(2)), where the contract is interpreted against the party who prepared it.
• A stipulator in an adhesion contract (usually a large entity) cannot benefit from ambiguous language in a contract, which they drafted.
• The aim is to protect the other contracting party.

Performance of Contracts

• Contract performance involves fulfilling obligations as agreed.
• "Do" obligations mean performing actions exactly as specified in the contract.
• "Not do" obligations mean refraining from forbidden actions.
• "Give" obligations involve delivery of goods on the agreed date and place, along with any accessories.
• Key questions during performance: Who performs? To whom is it performed? What is to be performed? When and where should it be performed?

Who Performs Contracts

• Contracts can be performed by the debtor, their agent, court-authorized individuals (trustees, liquidators, etc.) or people authorized by law.
• A third party, not authorized by the debtor or the court, cannot perform the contract.
• The creditor may insist on performance by the debtor personally (Art. 1740(1)).
• Personal performance is essential if the obligation is professional (e.g., lawyer, doctor, artist etc).

Who Receives Payment

• Normally, payment is made to the creditor or their agent (Art. 1741).
• Payment can also be made to a tutor, liquidator, or trusted person.
• Failure to perform a contract with a liquidator or trustee is considered non-performance.
• If the creditor is a minor or incapacitated person, payment should be made to their legal guardian (tutor). (Art 1742).
• In the case a person doesn't specify or doesn't meet the conditions mentioned, the payment should be made to the responsible party or the capable party(Art. 1743).

Payment to Unqualified Creditor

• Payment to an unqualified person is generally invalid.
• Payment is valid if it benefits the actual creditor.

Payment to a Person with a Valid Title

• Payment to an apparent creditor is valid even if the document is later invalid or if the creditor is not the actual creditor, as long as the debtor doesn't know.
• A principal may revoke their agent's authority, but if the document isn't collected the agent's action is valid, however if the agent has the document the action is not valid.

Doubt as to Creditor

• When there is dispute about the real creditor the debtor should deposit the debt with the court (Art. 1744)
• Debt can be deposited by the creditor if there isn't an exact creditor

What to Perform (Definite Thing)

• The debtor must deliver the agreed thing (Art. 1745).
• The creditor may accept a different thing if agreed (Art. 1745).
• The quality of an alternative thing offered should meet the contract's requirements).
• The parties' consent is crucial.

Fungible Goods

• Fungible goods (e.g., grains, etc.) are described generically.
• The debtor can choose the quality if not specifically defined(Art 1747).

Money Debts

• Payment should be made in the local currency of the payment location.
• The exchange rate must be determined based on market in the location agreed.

Time of Performance

• If there is no specified time, performance should be given when reasonably requested by other party.
• Parties can choose the time, if it isn't specified.

Anticipatory Breach of Contract

• When a party announces beforehand they won't perform, the other party can claim damages.
• The party who announces they won't perform must've been in default(Art. 1757(2))

Insolvency

• When a person is declared bankrupt, their future debts come due immediately.

Breach of Contract

• Any deviation from the terms results in a breach.
• A breach of contract doesn't automatically result in another party's right to file a complaint or file a claim of breach if there is a counter-claim(Art. 1757(1)).

Transfer of Risk

• Transfer of risk is relevant when ownership is transferred by contract.

Cost of Payment

• Court should determine costs given the circumstances of each case(Art 1760)

Debtor's Right to Receipt

• Debtor has the right to request a receipt for payments, and the creditor is obliged to provide it (Art. 1761).
• Documentation for the payment is essential to prove payment.

Variation of Contracts

• Contracts can be modified by the parties, a judicial order or legislation.
• Significant circumstances may necessitate a variation or change to a contract.
• A court can modify a contract due to undue influence or lesion.

Judicial Variation

• Courts can modify contracts when there's a change in circumstance, undue influence or lesion.

Contract with Public Administration

• The government can change obligations in contracts for public works projects due to policy changes.

Partial Impossibility of Performance

• If a part of an obligation becomes impossible AFTER a contract is formed, the court may adjust the performance.
• The party's obligation is to be assessed under Art. 1813 if performance is impossible.
• Time of performance of party can be extended by the court in the time of breach up to 6 months.

Test your knowledge on the principles of contract interpretation and performance. This quiz covers the rules regarding the interpretation in favor of debtors, exceptions for adhesion contracts, and the various obligations involved in contract performance. Challenge yourself with key questions about who, what, when, and where regarding contract fulfillment.