Private Law (Module 1) - Summary & Questions PDF

**1**┃**INTRODUCTION** ====================== **Why do we need law?** We need law because, as a society, we need **order**: order is made of rules, and rules are provided by law. After the industrial revolution the needs of people became more relevant, so society has to evolve and set up rules to...

**1**┃**INTRODUCTION** ====================== **Why do we need law?** We need law because, as a society, we need **order**: order is made of rules, and rules are provided by law. After the industrial revolution the needs of people became more relevant, so society has to evolve and set up rules to fulfill their needs, and it still does. **Diritto** itself is a term that can be referred to from: - - ***diritto* →** the etymology of the word comes from *ius*, which is part of *iussum* or *what has been ordered*. In fact, there is a latin motto that translates to *where there is a society, there is law*. *What's the difference between **public** and **private** law?* The reason behind the need to distinguish them is the fact that the **common interest is more important than the individual one.** This distinction began with Napoleon after the French Revolution. This difference is unknown to most countries, such as England --there, everything that has to do with law comes from its history, where the medieval system remained, contrary to what happened to the rest of Europe, where the said revolution changed everything. **PUBLIC LAW** has to do with: 1. 2. 3. *Ex. constitutional law, tax law, criminal law...* **PRIVATE LAW** has to do with: 1. 2. 3. 4. *Ex. if an acquisition of a piece of land takes is needed, the public entity can do that:* *a) by an act of expropriation for public interests, governed by public law* *b) through a sale-purchase contract, governed by private law (CC)* Still, it's important to note that some rules of public war are applied to private interests, especially to mitigate them when in conflict. Moreover, sometimes, companies and other legal persons might acquire such dimensions that they start to involve public interests, while public entities can play economic activities similar to those undertaken by private individuals. **The State** A state is an organised **community**, spread on a **territory**, that is supposed to be **sovereign** on its soil (it does not recognise another superior authority), organised under a **legal system**. The general concept of state was born in *1648*, during the peace of Westphalia, but in Italy obviously in *1861*. An organised community, to be defined as one, must involve: - - - All the rules of public and private law of an organised community together form a **legal system**, which is a system of rules. **The political society** The political society is the fundamental **organised community**, and it aims not to directly fulfil personal needs, but to create the conditions to let individuals achieve them. Some of its basic goals are, in fact, *to avoid the use of force among individuals, to strengthen its defence against external dangers, and to promote development and welfare.* Italy is also part of **bigger organisations**, such as the EU, as explained by article 10 of the Italian Constitution. The EU can regulate its members through *regulations* (that each state has to implement in its own legal system) and *directives* (where it's up to states how to reach certain goals). However, to be accepted, both of them have to not be against the Constitution┃**art. 10 cost** **Contracts** A contract is an **agreement** between two or more **parties** to set up, govern or terminate a **legal financial relationship** amongst them. The most basic one is the sale-purchase contract. A company, though, can't be ruled by a single contract, because it wouldn't be able to adapt to constant changes and the members would have to create a new one each time: that's why, instead, they become a legal person, an over-structure made of the individual persons. **Orders and rules of law** An **order** (*norma giuridica*) is a ***general*** and ***abstract*** rule: it applies to everyone and they refer to an abstract situation, since the judge can just imagine the situation they're going to solve. We shouldn't confuse it with the regulation of a single legal fact, for example the judgement of a judge. That's not considered a rule of law (*norma giuridica*) in our legal system, contrary to what happens in England-- also, in England judges can enact a law (that's why common law exists!), while here only the parliament can and the judges just interpret it. A **rule of law** is a general rule relevant in the field of law of an organised legal community. It is authoritative, because it binds all members of the community. **Some differences...** between: - - between: - - between: - - **Precetto, fattispecie and the remedies** A **precetto** is the text of the rule interpreted by a single person for a single situation--since the rule itself is abstract. A **norm****remedies** attached to it. *Ex. f a contract terminates due to non-performance/inadempimento (fattispecie) by one of the parties, they must pay the damages/risarcimento (legal consequence)* ┃**art. 1463** a *factispecie* can be: a\) simple -- the succession opens up at the time of death, and in the place of the last domicile of the deceased (art. 456) b\) complex, meaning a sum up of two or more legal acts, so we have to check different rules of law to solve the situation -- in order to sell the assets of a minor, the authorisation of a court and the assistance of parents are due c\) progressive -- when signing a contract under a condition, we must look at the rules of law of the condition, which is a future and uncertain event that could bring future legal consequences (that's why it's progressive, it regards the future). **Legal consequences** can **take** the form of: - - - - Sometimes rules of law involve benefits subject to specified conditions, for instance that is what happens with *contratti atipici*, which do not have a particular discipline but are allowed as long as they aim to achieve interests worthy of protection according to the legal system. **Mandatory and dispositive rules of law** **Mandatory rules** are rules of law that cannot be derogated by the parties. *Ex. every contract has 4 mandatory elements--agreement, causa, subject matter/oggetto and form--and without one of them the contract is void.* **Dispositive rules** are "*default*" rules of law that can be derogated by the parties, so applicable only if the parties don't decide to proceed in a different way. However, they are still rules of law because they are part of the legal system. *Ex. in contractual autonomy the parties can freely determine the content of the contract, but within the limits imposed by the law ( art. 1322). They can also complete atypical contracts.* The use of **force** is residual in our legal system, and obedience is the basic rule. **Obedience** to legal rules generally comes from: \- acceptance of rules themselves \- habit \- moral suasion \- need for authority so a legal system cannot be defined just as a complex of remedies/sanctions, since this vision would be too simplistic! **2**┃**SOURCES OF LAW** ======================== The sources of italian laws are placed in a **hierarchy**: 1. 2. 3. 4. 5. There are the so-called ***extra-ordinem* sources**, like community law, where EU regulations and directives come from. There is a hierarchy amongst those sources of law because every ordinary law must respect the constitution, regional law must be enacted within the limits of the fundamental principles established by the state (art. 117), regulations are valid only if not against the law, and custom on subject matters governed by laws or regulations are relevant only when called in by laws or regulations. If an ordinary law is said to go against the constitution, it will be judged by the constitutional court (corte costituzionale). Those sources are listed in **art. 1 PRELEGGI**--which stands for *provisions on the law in general*. However, the article is slightly different from today's system, because it talks about corporate provisions, which are now cancelled, and it doesn't mention regional laws. **The Constitution** The constitution is the fundamental law of the italian legal system. This topic is actually covered by public law, as it is relative to the organisation of the state. Its content are: 1\. the fundamental principles of the legal system 2\. the rules of organisation of the state 3\. the rights and duties of citizens and social groups 4\. the relationship between citizens - state 5\. the relationship amongst citizens (so we could say it contains the fundamental rules of private law) for example article 30 on duties of parents to their children. If the state must change a rule of the constitution, it must follow a much more complex procedure than the ordinary one. **Art. 2 PRELEGGI** contains the procedural rules for the enactment of the rules of law themselves. **Repelling of laws** **Art. 15 PRELEGGI** talks about the repelling (abrogazione) of laws, saying that laws can only be repealed by: - - - **Regional laws** **Art. 116** **Cost** makes a distinction between the ordinary regions and the 5 special regions, which are granted legislative power and autonomy (in terms of legislation): Sardegna, Sicilia, Trentino Alto Adige, Friuli Venezia Giulia, Valle d'Aosta. In 2001 there was a major reformation and now we have **art. 117**, which talks about - - - **Regulations** Regulations are a secondary source of law and it\'s not only up to the government to enact them, they could be enacted by other **authorities** too, such as the Parliament, within the limits of their competences, as established by the law. When the minister enacts a regulation, he should follow the specific procedure written in the Constitution┃**art. 3 PRELEGGI** Regulations are generally distinguished by the subject matter and the competent authority in charge, and they can't be against the provisions of law. ┃**art. 4 PRELEGGI** Important ones are the **regulations for executions** of State or regional laws, enacted to complete and specify the law of the case. **Customs** They are developed by way of a **constant practice** of the interested parties of the case. However, they become **legally relevant--**hence**,** a source of law--only if mentioned in the laws and regulations. ┃**art. 8 PRELEGGI** *An example is **art. 892 CC**, that establishes that to plant trees near the border one should follow distances established by the regulations and, if they are not governed by regulations, by **local customs**. Same goes for **art. 1326 C** Con the completion of a contract, which can be completed (accepted) within the time limit established by the parts or according to **customs**.* Customs can *become* **law**, but this happens rarely, only when two requirements are fulfilled: 1. 2. It happened with maritime law and agricultural law, which were developed by customs and now they are law. It cannot happen the other way around, a law can't become a custom. Customs that are registered in **official books** (of entities and bodies allowed to do so, for instance the one of camera di commerce) are presumed to exist until proven otherwise. So if something happens and one of the parties states a custom doesn't exist anymore, it has to prove it ┃**art. 9 preleggi** **The judicial activity** The subject matter of an order can be a general rule (so legal rules) but also a concrete fact (the judgement of a judge). However, in our legal system judges of the court are in charge of just interpreting the law, contrary to what happens in the common law countries. More precisely, they have to: 1. 2. 3. **Interpreting** a rule of law means making it concrete, so the judge must understand what's the problem and how it is related to the rule. Each part, when before court, must be represented by a lawyer---someone who knows the law and will act in the part's name---but there are situations where the lawyer is not able to insert the issue inside a certain rule of law, so everything will be up to the judge, under the principle jura *novit curia* - the judge will FOR SURE find the law related to the fact. The legal reasoning of the judges follows the technique of a **syllogism**: - - - The major rule for judges is contained in **art. 12 preleggi** and says that in applying the law: - - There is an [exception]: *analogias* don't work with **criminal laws**! They cannot be applied outside the specific cases and no one can be punished for committing a "criminal" activity unless there is a rule that explicitly says that is a crime, and the judge cannot pick norms governing similar subject matters. Criminal and exceptional laws are only applied in the cases mentioned by law.**┃art. 14 preleggi** **Exceptionality** of a law can be a logical one, like the one mentioned above, or a legal one--for instance laws in time of war are exceptional to laws in time of peace. **General Clauses** Sometimes the law dictates **general directives** and no more, and those are called general clauses, for example: - - - - Here, it is up to the judge to identify the rule of law to be applied for the case, but this does not mean that there is discretion per se by the judge (he can't choose freely). ***Aequitas*** *Aequitas* is opposed to the "rigidity" of the rules flaw and establishes the ideal of justice appropriate to the circumstances of the case. The closest translation is **equity***autonomia patrimoniale perfetta;* partnerships, on the other hand, have a **partial financial autonomy****community over ownership** (or other rights in rem) on goods. A co-ownership happens when the right of ownership or another right in rem belongs to more than one person, and it has **no financial autonomy**.┃art. 1100 and following ones for dispositions below *Ex. the condominio, which is a co-ownership of an immovable property because there are common areas that everyone co-owns and single apartments owned by who lives there (palazzi etc.).* The participations of the members are premsumed to be **equal**. Each member can dispose of his right and transfer the enjoyment of the thing to others, obviously within the limits of his participation. Each participant must contribute to the **expenses** due for maintenance of the common thing, he can renounce only if he has not approved such expense. **How does it work with creditors?** As for common debts, since there are no unified and distinct assets from the ones of co-owners, a creditor of the community can act on the common goods or those of the individual co-owner to satisfy his interests. On the other hand, a creditor of an individual co-owner has the right to make claims against the assets of the co-owner as well as against the share of the common thing that pertains to him. When a creditor of an individual co-owner makes a claim, he competes with the creditor of the community on equal grounds, and there is no preference between the two. *Ex. in case of a contract for the execution of repairs of a common thing, the* *contractor's credit can be raised against each individual participant in the community.* **attention! Community for the purpose of enjoyment** A community for the purpose of enjoyment happens when physical persons create a company *not* to run an entrepreneurial activity but for the sole **purpose of enjoyment** of the assets--or maybe other reasons such as paying debtors or skipping rules of law. It is illegal and the company is **void**, because the purpose must always be an economic activity or others related (*agricultural, holdings with other companies under...*). **Imperfect/partial financial autonomy** It is an intermediate position between no financial autonomy and full financial autonomy. Here the assets of the collective legal organization of the case are not entirely insensitive to the personal financial events of the participants of the case. Partnerships have partial financial autonomy. - - However, there is still separation of funds, aimed at ensuring the destination of the partnership's assets to the pursuit of the common purpose; the personal creditor of a partner cannot act directly against the partnership itself (only liquidation of participations is Allowed, but the assets are meant to be destined for the preferential satisfaction of the creditors of the partnership). *Ex. active 100 - passive 80; net = 20. There are two partners, with individual share: 10. A shareholder has a debt of 50 against a third party (a personal creditor): if the third party could act directly against the corporate assets, then she would be fully satisfied. But a creditor can only ask for the liquidation of the participation in the company. Accordingly, he can only ask for 10.* To sum up: in partnerships, **creditors of the partnership** can make a claim for the payment only to the partnership, not to the single members; then, if the company's assets are not enough to pay, they can go before court to ask for payment from the one of the members, who will pay for everyone and then recover the other members' part. **Personal creditors** cannot attach the patrimony of the partnership because it is destined only for the company, but in simple partnership they can ask for the early liquidation of the member's participation. **Full financial autonomy** *vs* **partial financial autonomy** In general, it is better to have full financial autonomy, the greater the autonomy is, the greater is the **protection of third parties** too (because personal liability of the single participants is low). Furthermore, legal personality is recognized when the organization of the case is set up and, consequently, when the entity is subject to the rules on protection of the creditors, so: - - There is unlimited financial liability for transactions made before recognition or registration. **Types of legal persons and their bodies** **How to set up a legal person?** With an **atto costitutivo**, a contract with the consents of everyone involved, and then a **statuto**, a contract to regulate the activity done by those who have the majority. All changes (ex. changes of managers) must be registered in the Company Houses*organi serventi* (managers, who execute decisions from the owner). *Ex. fundations, founded by an unilateral legal transaction, such as a will, bc just one member.* -**corporations** are groups of people who pursue personal interests of the members (*ex. a company*) or interest of general nature (ex. an association for the development of cultural exchange among states). They have both **dominant bodies** (general assembly of the members, who take the decisions) and **serving bodies** (managers). Also there may be **control bodies**, and the **body for the defence of special interests**. *Ex. companies if they have a lucrative purpose, associations if another purpose.* **7**┃**PROPERTIES** ==================== We have talked about how physical persons and legal persons are holders of **rights**. *But if there is a right, it is a right of what?* A right consists of drawing utilities: \- *from things*. We're talking about a **right in rem**, governed by law of property \- *from others' behaviours.* Were talking about a **right in personam**, governed by law of obligations. If we talk about things, we must look into title I of book III of the Civil Code, so **art. 810** and following ones. **Properties** are things that are material objects and can be the subject matter of rights. According to **art. 812**, hey can be: \- **immovable**: lands, springs and waterways, trees, costrunctions, and in general everything that is artificially or naturally incorporated into the ground; Mills and other floating buildings are considered immovable only when firmly secured to the shore. \- **movable**: all other kinds of properties. **Universalità di mobili** → all the things with a common destination that belong to the same person. They can be subject matter of different legal relationships. **Pertinenze** → things destined to the service or ornament of another thing in a continuous way (in modo durevole). **Fruits** Fruits can be natural or civil ones.┃art. 820 \- **natural fruits**: those that come directly from the thing, with or without work of men, such as agricultural products, wood, parts of animals, products of mines... \- **civil fruits**: benefits or earnings that come from something as a result of others enjoying it, such as interests of capitals and considerations in case of lease. **Material and immaterial properties** \- **material properties**: the legal meaning of material must be seen in a broad way, as it means that a thing is not only visible or tangible but also other characteristics of the world of materials, such as being verifiable and quantifiable. So, material things can be solids, liquids, gasses and energies. \- **immaterial properties**: properties that are not things, such as copyrights, patents, radio and television waves. Intellectual property rights, such as copyright or patents for inventions or designs, can apply to intangible creations like books, inventions, and more. These intellectual creations are distinct from the physical objects in which they are expressed or contained. *Ex. the ownership of a physical item (like a book) and the ownership of its copyright are separate and often belong to different people. In the case of books, the publisher might own the physical copies, while the author retains the copyright.* The common characteristic material and immaterial properties share is their **absoluteness**, meaning both confer exclusive rights to their owners. **The legal concept of property** As we said before, properties are things that can be subject matter of **rights**.┃art. 810 → there things that cannot be subjected to rights, which are not properties: an attribution of a right is done to solve a **conflict of interests**, and there's no conflict if the thing that can satisfy the need is not **scarce**. For instance, the atmosphere, sun's rays and oceanic waters are not properties but "things common to everybody". *Ex. sun's rays are a common thing, but the impianti fotovoltaici that collect them are properties.* → things that are not subject matter of rights at the moment but will become in the future are called "not appropriated things" → things that are nobody's are called res nullius, such as a fish, until a fisherman acquires its ownership by *occupazione* → things that have been willingly abandoned are res nullius too **Partnership and limited liability shares as movable properties** According to the Cassazione Civile, the shares of partners in a partnership do not create a personal right to request the return of their contribution but are considered movable properties: this means that the shares held by one spouse in a partnership, including any increases in those shares, are treated as part of the legal community of property (comunione dei beni) between the spouses. This case arose in the context of a separation or divorce, where one spouse argued that the shares represented a mere personal right, while the other claimed they were properties. So they are governed by rules of law about movable properties. Similarly, the shares of members in a limited liability company are treated as intangible movable properties. While the share is not a physical item like a partnership interest, it has objective financial value as it represents a fraction of the company\'s assets. **Legal consequences of movable/immovable properties** Distinguishing between movable and immovable properties is fundamental due to the fact that immovable properties usually have more restrictions from the law, need a written form for contracts concerning rights over them and need trascrizione (type of legal publicity) to make a certain legal position publicly known and enforceable against everyone. Trascrizione also applies to certain registered movable properties, such as ships, aircraft, and vehicles. Some peculiar cases: **Disused airplanes → i**mmovable property refers only to things that are permanently incorporated into or joined to the land. Items merely attached to the land for stability do not qualify as immovable. For example, disused airplanes, even if placed within a property and used as part of a reception structure, are considered movable property. This is because they can be removed, even if doing so is costly, without altering their structure. As a result, legal concepts like accessione, superficie and servitù do not apply to such items. **Trees →** they are classified as immovable property because they are rooted in the ground and derive life from it. However, they lose their immovable status once they are removed from the soil. **Replaceable and irreplaceable things** **Replaceable things** or beni fungibili are things of a certain kind, where one can be substituted one with the other; they are equivalent to each other, when we deal with their use. Examples: agricultural and mining products; foodstuffs; serial products until they are new ones (such as copies of a book or a disk, home appliances, automobiles). On the contrary **irreplaceable things** or beni non fungibili are things produced in unique pieces. *ex. a tailored suit, a piece of furniture made by a craftsman based on a particular design, used things (two cars, when they are used, become beni non fungibili, generally all immovable properties (because they differ in their location in space, which is relevant).* [NB]: the character of fungibilità or infungibilità must be assessed under the circumstances of the case. *Ex. cars are not beni fungibili for their users; they are beni fungibili for demolition.* When an obligation has as subject matter the execution of a performance over things determined only in their genre, the debtor must provide things of a quality not below the average. **Transfer of ownership** **- of irreplaceable things** Ownership is transferred when the contract is completed, so with **mutual consent**. That is the moment when the part who receives it becomes liable for the property (so if something happens to the thing of the case he cannot blame the other party). In case of destruction of the thing, just a payment of the equivalent in terms of money is due.┃art. 1376 **- of replaceable things** Ownership is transferred in the way the identification has been agreed by the parties. If the thing is transported from one place to another, then the identification takes place when the delivery happens. In case of destruction, compensation in a specific form is available. A loan is a replaceable thing.┃art. 1378 **Consumable and i consumable things** **Consumable things** are things not meant for continuous or repeated use, because we use it/spend it and therefore deprive ourselves of it (food, fuel, money). **Inconsumable things** are those meant for repeated use (clothes, furniture, cars, buildings). The distinction is important because we can grant the right of enjoyment of inconsumable things with the obligation of restitution after a certain period of time. *Ex. the owner of an immovable property can sign a contract of lease or rent of his property to grant a temporary use of it, since it is an inconsumable thing.* **Pertinenze** Pertinenze are things destined to the **service** or **ornament** of another thing in a **continuous way** (not temporarily). This designation is established by the owner of the main item or by someone with a right in rem over it. *Ex. the spare wheel of a car; furnishings in a hotel; a box meant to be destined to the service of a residential house.*┃art. 817 Sometimes there are disputes regarding pertinenze, for example it happened with the *condominio****usufrutto*** Usufrutto is the right in rem of an usufructuary to **enjoy** a thing, but while respecting its **economic destination**. He can draw every kind of utility available from the thing, within the limits established by the law. \| **art. 981** Here, the right of **enjoyment** is separated from the right of **disposition** of the property of the case, as the usufruttuario has a right of enjoyment over the property, whereas the **bare owner** or nudo proprietario still remains the person in charge of disposition of the very same property. The said separation can only be a temporary one, due to market reasons: right of usufruct can last no longer than the life of the usufructuary or if in behalf of a legal person no longer than 30 years \| art. 979 **Use and abitazione** The right of use/uso (right of using the thing and collect its fruits) and housing/abitazione (right of live in the house) are rights in rem that differ from the right of usufruct only for quantitative reasons. \| art. 1021 and 1022 **Superficie** The right of superficie is based on the idea that the owner can grant to others the **right to build a construction** above his ground, and the building will be owned by whoever constructed it; or he can alienate the ownership of an existing building, without necessarily having to alienate the ownership of the land too. This rule applies both to costructions above and under the ground. \| art. 952 above - art. 955 below Basically, as we know the owner of a piece of land is entitled to what's built above and the underground (*accessione*). Though, if he doesn't want to exploit it, he can grant to someone else the right to do it, who will **acquire ownership of the property** he builds. There will be **two owners**: of the land and of the building. *Ex. for above the ground edicole (not those on the municipality's land) in the past, you would get the license to sell and you would have to build what's inside; for below the ground the autosilos (parcheggi sotterranei).* This rule does not apply to **State properties** (that's *concessione d'uso*). **Servitù prediali** A servitù prediale or **easement** consists of a weight imposed over a land for the benefit of another land belonging to a different owner. \| **art. 1027** It's a right in rem because the relationship is between the lands of different owners, not between the owners themselves. Easements can be very different in terms of kind and nature, for instance: 1. 2. 3. We know that a right in rem grants its right holder the power to draw benefits, called **utilities** out of the things of the case. Utility can include improvements in the convenience or enjoyment of the dominant land, or they might be inherent to its industrial use. \| art. 1028 **9**┃**RIGHTS IN PERSONAM** ============================ While a *right in rem* grants to its holder the right (the facoltà, claim or power) to draw utility out of one or more things in a direct or indirect way, a **right in personam** grants to its holder, in a direct way, the power to demand performance of a service or activity from one or more persons, by virtue of which he will still withdraw a benefit from the thing of the case. Rights in personam are in book IV of the CC. The relationship between **creditor** (namely, the holder of the right in personam or right of credit) and **debtor** (the person required to perform) of the service of the case is called **obligation** (or obligatory relationship). In case of contracts, both parties will be creditor and debtor (especially in sale-purchases). The **performance** of the case, due by the debtor, can be a **positive** or a **negative** one. A positive one consists of an action, and it can be of *giving* or *doing*, such as: - - - [NB]: when the performance of the case is a positive one, we distinguish between performances of giving and doing (defined in a residual way, meaning services that have as their subject matter just activities other than giving). On the contrary, a negative performance consists of an act of self-restraint, like: - - - - The most important thing is that every performance must have an economic (a financial) character, meaning it must be subjected to economic evaluation and it must be the subject matter of an economic exchange. Also, must correspond to an interest, even if not a financial one, of the creditor. *Ex. a marriage is not an obligation or a contract.* \| art. 1174 A **gift** is a contract but not an obligation, since it is performed out of the spirit of liberality by the donor. The interest of the donor is not a financial one, since the performance of the is not the subject matter of an economic exchange, even though the subject matter has a financial value. Both parties of an obligation must behave with **fairness**, meaning good faith. \| art. 1175 *Ex. the seller of a medicine must inform the buyer about hidden dangers that could come out from its use.* In case of an obligation of custody or delivery, it includes the obligation of safeguarding the thing itself until delivery. If that does not happen, the creditor can make a claim for the payment. \| art. 1177 For obligations due the creditor has a **power of action**, which means that if the debtor is in breach of fulfilling the activity, his creditor can act (make a claim) before court to obtain what is due to him in a coercive way. However, there is no causa and therefore the obligation itself does not exist, but, anyway, the service of the case has been performed, then it is an **unjustified obligation** and the person who has received the unjustified service/performance will subjected to the obligation to return it or its financial value. Also, if a non-existing debt has been paid, the debtor can ask for restitution. He is also entitled to interests from the day of payment if the creditor was in bad faith. \| art.2033 No claim can be made in case of breach of the performance of an obligation deriving from gambling or wagers, even in case of games not prohibited by law. However, if the loser **pays spontaneously** he cannot ask for restitution, unless he is an incapable person. \| art. 2033 So, in case of gambling, if the loser doesn't pay, the winner cannot make a claim against the court. **Sports competitions** are not part of art. 1933, however, the judge can reject or reduce the claim if he considers that the amount of wager is an excessive one. **Lotteries** on the other hand, grant a legal basis for a claim if they are legally authorised. **Means for the satisfaction of creditors' rights** We previously discussed that self-defense (*autotutela*) is usually not allowed, and when a debtor breaches an obligation the creditor has the right to file a claim against them. In other words, the creditor must seek satisfaction of their rights through a **claim** presented to the appropriate court: the the debtor\'s assets will come into play and become subject to a coercive, compulsory or forced execution to fulfill the obligation. Those assets can be also expropriated when they are bound to guarantee the credit of the case. \| art. 2910 \- if the obligation to **deliver** a thing is not fulfilled, the creditor can make a claim before court and obtain the forced delivery. \| art. 2930 \- if the obligation to complete a **contract** has not been fulfilled, the creditor can obtain a judgement that produces the effects of the contract not completed. \| art. 2932 \- if the obligation of **doing** has not been fulfilled, then the creditor can obtain that it is done at the expenses of the debtor. \| art. 2931 \- if the obligation of not doing has not been fulfilled, the creditor can obtain that was has been done in breach of the obligation is to be destroyed at the expense of the obliged party, but if the destruction of the thing can be dangerous for the national economy then he can only obtain compensation of damages. \| art. 2933 The debtor is liable for fulfilment of his obligations with all his present and future assets, and limitation of liability are not allowed. \| art. 2740 **Sources and proof of obligations** They can be **contracts**, **unlawful acts** and any **other** factaccording to the Law\* \| art. 1173. A contract requires an agreement of the parties involved, to become a source of obligations; therefore, we need the mutual consent of the parties involved. However, the other sources mentioned by the clausola di chiusura are **unilateral acts**, and here the existence of the relationship is presumed until proved otherwise, management of business of others and undue payments. \| art. 1987/88. \*The part "and any other fact according to the law" generally called clausola di chiusura. **Proof** refers to all the legal tools according to which a party can prove the existence of a legal relationship, governed in book VI CC and they are: - - - - - A **promise to pay** and an **acknowledgment of debt** are unilateral legal transactions that relieve the creditor from having to prove the relationship that justifies the promise or acknowledgment. The law **presumes** that this relationship exists unless proven otherwise. \| art. 1988 This rule establishes a specific evidentiary principle: a presumption known as *iuris tantum*, which holds true unless there is a contrary proof. A **Promise to the public** is a unilateral legal transaction that happens when a person publicly promises to perform something for the benefit of a person and he becomes obligated by that promise as soon as it is made public. If the promise does not specify a deadline the promisor's obligation ends after one year unless they are notified within that year of either the situation being fulfilled or the activity being completed. *Ex. A person has lost something and puts a sign promising a payment to whoever finds it.* \| art. 1989 [NB]: it should not be mistaken with the **offer to the public**, which is a means for the completion of a contract, not an unilateral legal transaction. Promises can be **revoked** before the expiration of the deadline only for just reasons, and the revocation must be made public in the same form of the promise or in an equivalent form \| art. 1990. *Ex. the person who put the sign puts another saying he won't pay the potential founder anymore.* **Obbligazioni reali** Obbligazioni reali or obligations *propter rem* are a peculiar kind of obligations that are owed by a person just because he is the **owner** of a thing or of a **right in rem** over it. They can be involved in case of relationships of neighbourhood, or when rights in rem of different persons coexist on the same thing, as it happens in case of community of ownership. *Ex. in a condominio there is the obligation to **pay the expenses** along with the other members to maintain the building. It is due because you are the owner of a right in rem, in this case the owner of an apartment of the condominio. Ex. in case of an easement, the obligation to maintain the road that crosses the land of the fondo servente for the benefit of the owner of the fondo dominante.* **Final observations on the difference between rights in rem and rights in personam** - a. b. - Finally, there is a distinction between a *right in rem of enjoyment* and a *right of enjoyment in personam*, such as the right to enjoy an immovable property. It can be either a right in rem, if its right holder is the owner of the property of the case or its usufructuary, or a right in personam, if the right arises from the signature of a rent agreement. **10**┃**LEGAL TRANSACTIONS** ============================= **Legal transactions***vizi di volontà* \| art. 1427 and following. Please note that, as you can see, the **rules of law on contracts** are applied--unless otherwise stated by the law under the circumstances of the case--**even to other legal transactions different from contracts**: another case of applications of the rules provided in contract law to the remaining legal transaction is the one of the rules on the interpretation of contracts. These rules can be applied even to the interpretation of wills. That's the reason why we are talking about legal transactions in general, even before contracts, which are a species of the genus legal transaction. Therefore, the one that deals with negozi giuridici can be qualified as a major class where contracts are contained into. **Limits to private autonomy in legal transactions** There are **limits** to private autonomy: the general rule is that private interests must not conflict with the **collective interests of society** and it must be **worthy** of legal protection. Sometimes it's the legal system itself that allows private individuals to choose only between certain types of legal transactions. This is the case of family law: there are rules on marriage, with their mandatory legal regime, and adoption is possible only in the cases provided for by law. We can speak of a **typical nature** for the legal transaction of the case. The typicality occurs because the prevailing interests are those related to issues concerning daily life of the family, not the financial ones. However, sometimes the principle of typicality can also be found in financial legal transactions, if there is a need for protection of interests of third parties or of the legal transactions as a whole. This occurs, for instance: - - Elsewhere, the law can rigidly determine the content of the legal transaction of the case or leave a space within which private autonomy can express itself and thus determine the content of the legal transaction of the case. *Ex. typical and atypical contracts, but they must comply with mandatory rules and principles of public policy and good costumes (ordine pubblico e buon costume).* **Integration of the settlement of interests amongst the parties in a legal transaction** Sometimes the parties of a legal transaction do not deal with all its own legal effects, since there are **essential elements** that must be included for the contract to not be void, but other than that the parties are not required to include all the **accidental elements**, even though they are important to disclose the personal reasons for entering the contract. *Ex. with the contract of sale-purchase the price is always agreed on by the parties, but often nothing is ruled on delivery of the property of the case.* In these cases, the law **fills in the gaps** outcoming from the settlement of interests of the parties. **\|** art. 1374 This happens also with **customary clauses**, which are meant to be included in the contract unless [expressly] not wanted from the parties. **\|** art. 1340 As we said, there is a distinction between dispositive rules of law and mandatory rules of law becomes relevant: mandatory rules are rules of law whose breach means voidity, nullity or inexistence of the legal transaction; dispositive rules are default rules that can be derogated by the parties with a different agreement, and are to be applied only when there is a lack of regulation by the parties. **Examples of supplementary rules of law** **→ place of delivery**: if there is no agreement, the delivery of the item takes place at the location where it was at the time of the sale, provided the parties were aware of that location. If not, delivery should take place at the seller\'s domicile or the headquarters of the company. If the item sold needs to be transported to a different location, the seller fulfills their delivery obligation by handing the item over to the carrier or forwarder. → **place of performance**: if the location for performing a service is not specified in the agreement, established by custom, or evident from other circumstances, the following rules apply: the obligation to deliver a specific item must be fulfilled at the location where the item was when the obligation was created; if it involves a sum of money it must be fulfilled at the creditor\'s residence; in all other cases, it must be fulfilled at the debtor\'s residence. → **guarantee for defects of the thing sold**: the seller must guarantee that the item sold is free from defects that render it unsuitable for its intended use or significantly reduce its value. However, agreements to exclude or limit this guarantee are valid only if the seller was in good faith and has not hidden the defects from the buyer. **Legal transactions available in the legal system** Legal transactions are traditionally classified into two categories: unilateral and bi/multilateral. 1\. **unilateral legal transactions**, which involve the will or actions of a single party. *Ex. a will or testament, a gift, abandoning a movable object, accepting or renouncing an inheritance.* Here, by party we refer to an individual or group of individuals acting as a single centre of interest; hence, there is just one party. 2\. **bilateral / multilateral legal transactions**, which involve the will or behavior of two or more parties. *Ex. a contract.* On a general level, the distinction between unilateral legal transactions and contracts depends on the **nature** of the obligations and rights involved: \- **contracts** are required when the parties involved have to take on obligations or dispose of their rights, since creating obligations for someone requires their explicit consent. Therefore, mutual agreement is essential. \- **unilateral legal transactions** may be enough for cases involving attributions free of charge. However, even in these situations, the beneficiary\'s role must be considered: while his consent might seem unnecessary when they receive a benefit without obligations, this is not always straightforward, because with a gift come liabilities too, so the beneficiary might need the possibility to refuse. *Ex. a gift of property might bring unforeseen liabilities to the donee (recipient), because based on the legal principle \"the owner bears the loss\", the new owner becomes responsible for any issues related to the property, such as damages caused if it collapses.* (art. 2053) Consequently, **acceptance by the beneficiary** becomes essential for certain unilateral transactions, especially those involving significant legal or financial implications. Beneficiaries must also have the ability to refuse such transactions.\ **Gifts**, for instance, are gratuitous attribution of rights, but they still qualifies as a contract because they require the donee\'s acceptance. **\|** art. 769 Other legal acts free of charge, still considered **contracts** because mutual is required, are: → the **promise to pay a debt for others**, and there might be three cases here, three legal mechanisms: 1. 2. 3. In all three cases, the common element is the importance of creditor's acceptance. → the **promise to guarantee the payment of a debt for others** (which can create a contract of fideussione) → the **remissione del debito**, happens when the creditor voluntarily renounces his credit and extinguishes the obligation of the debtor, provided the debtor does not reject when he's notified (because, maybe, it could result in liabilities or disadvantages). Although it is a means of extinguishing obligations, it differs from \"performance\" in the strict sense because it does not involve fulfilling the original obligation. **Contract with obligations for the sole proposer** This type of contract arises when one party (the proposer) makes a proposal that would create obligations only for themselves. The proposal becomes irrevocable as soon as it is known to the recipient, and he has the right to refuse the proposal within a timeframe based on nature of performance or customs. If he does not refuse the proposal, the contract is considered concluded, even without any active acceptance by the recipient. *Ex. an unilateral promise to perform a gratuitous act, such as a donation or the assumption of specific obligations.* **\|** art. 1333 **Effects of promises** Unilateral promises do not produce effects outside the cases permitted by the law. A promise to pay or an acknowledgment of a debt relieves the beneficiary of the obligation to prove the agreement that created the debt. The existence of this relationship is assumed to be valid unless evidence is provided to the contrary. Anyone who makes a public promise to perform an action for someone in a specific situation is bound by that promise as soon as it is made public. **Which legal transactions can be carried out by way of a unilateral transaction?** a. - - - - b. - - - [NB]: even resolutions of a **collegial body** of a legal person are unilateral legal transactions (there is a unique centre of interest). **Dichiarazioni recettizie and non recettizie** Declarations can be distinguished due to the fact that their legal effects can be subordinated or not to its own reception in the legal sphere of others. In **bilateral/multilateral legal transactions**, the declarations of each party are always meant to be addressed to the other party, and therefore they are dichiarazioni recettizie. **Unilateral transactions** can be both: a will and the acceptance of inheritance are dichiarazioni non recettizie, while the withdrawal from a company is a dichiarazione recettizia*.* **Act of manifestation of will** The will of a party can be manifested: - - - **The tacit way** A **behaviour** can be considered a determining one, because: a\) the **law** itself gives it such a value. For instance, with a voluntary performance of a contract that can be avoided by the party that is entitled to the avoidance--this kind of performance is called *convalida* of the contract; or a voluntary restitution of a titolo di credito to the debtor, which releases him. b\) the actual **circumstances** give it such a value. For instance, the immediate execution of a contract by a supplier means acceptance of the supply contract; getting on the bus means acceptance of the contract of transportation. Sometimes, the completion of a contract can be prevented by issuing a clear statement to the contrary, known as a **protestatio**. *Ex. if someone delivers an item with a note stating that it is sent only for inspection and not as part of a sale agreement, the protestatio can prevent the formation of a contract.* However, there are situations where a *protestatio* has no legal effect. *Ex. if you board a bus or park in a paid parking lot, you cannot later claim that you did not intend to enter into the associated contract.* In such cases, what matters is the actual performance, not the expressed intent to avoid it. **Silence** As a general rule, silence does not involve any expression or manifestation of intent. However, in some situations, it can have a declarative effect. *Ex. if someone is asked to vote on the approval of a resolution and chooses to abstain, their silence could be interpreted as a declarative act.* The recognition of a declarative value to silence can arise in specific ways: - - Silence can be in the form of **omission** of a declaration. For instance, if the parties have agreed on a term within a party has to declare his acceptance or renunciation of inheritance, if the party fails to do it in time, the legal consequence of their silence is that they lose the right to accept the inheritance. **\|** art. 481 **Interpretation of legal transactions** The meaning of the words and signs we use daily to communicate often changes depending on the context, the situation, or the specific ways individuals or social groups express themselves: as a result, **interpretation** is generally necessary to understand legal transactions. There can be areas of uncertainty or ambiguity, so one must be able to find the most appropriate meaning, and sometimes even legal interpretation is needed to resolve different possible understandings. The rules of law on interpretation are in contract law and applicable to unilateral legal transactions too. However, there are different provisions for subjective and objective legal interpretation. → **subjective interpretation** The principle of subjective interpretation, established by art. 1362, prioritizes understanding the **common intention of the parties** instead of focusing on the literal meaning of their words. To do that, we should analyse the parties\' **overall behaviour**, meaning pre-contractual negotiations, customs and the actions they take after the contract has been concluded. Additionally, **contextual interpretation** is important, as contract clauses should be interpreted in relation to each other to align with the contract as a whole. **\|** art. 1363 Those principles also extend to unilateral legal transactions with financial implications. → **objective interpretation** When the meaning of a contract term is disputed between the declaring party and the recipient, an objective interpretation becomes necessary. This approach relies on reasonableness and uses specific legal principles to determine the intended meaning and not make them ineffective. **\|** art. 1367 to 1371 - - - If ambiguity persists after applying all those rules: contracts free of charge must be interpreted in the least burdensome way for the obligated party; contracts involving consideration must be interpreted to achieve a fair balance between the parties\' interests. This provision acts as a *clausola di chiusura* when other interpretive methods fail. **\|** art. 1371 Contracts must always be interpreted in **good faith**, ensuring fairness. *Ex. if the declaring party knows the recipient has misinterpreted the meaning, they cannot enforce the misunderstood term.* **\|** art. 1366 **Hierarchy of interpretative rules** 1\. subjective interpretation 2\. good faith 3\. objective interpretation 4\. final rules **Special Case: wills** The rules for interpreting wills generally align with those for contracts; however, since wills are unilateral acts and *dichiarazioni non recettizie*, the focus is on subjective interpretation, looking primarily at the testator\'s intent as expressed in the document itself. Objective interpretation is used only when the intent cannot be discerned from the will's content. **11**┃**INTRODUCTION TO CONTRACT LAW** ======================================= A contract is an agreement between two or more parties to set up, govern or terminate a **legal financial relationship** amongst them. **\| art. 1321** **History** In the 1800s, contracts were viewed as a tool for individuals to express their **freedom** and achieve **autonomy** in private life and productive activities. The French Civil emphasized this principle, stating that "*agreements legally concluded have the force of law between those who have signed them*." This reflected a society where state intervention was [minimal], and the law primarily ensured that individuals could freely express their will, as long as it did not infringe on the freedom of others. This was capitalism\'s principle of prioritizing freedom as a foundation for enbvbabling everyone to participate in free competition using their resources: contracts, in this context, were seen as the ultimate expression of freedom, with the fairness of contractual relationships guaranteed by the equal ability of parties to negotiate freely. However, as societies evolved, it became evident that economic and social inequalities were a threat for this ideal of freedom, especially in contracts: disparities between contracting parties could allow one side to impose unfair conditions, such as what happened between big companies and their workers. This led to a shift away from the *laissez-faire* approach to the beginning of state intervention in economic processes. However, direct state management of economic activities often proved inefficient. Over time, we reached a point where we learnt to respect the freedom of private economic activities, but with regulations and state intervention when needed, to correct the free market imperfections. The aim has become to balance freedom with fairness in contract law. → **result**: according to **art. 1341**, the general terms of a contract established by one contracting party are enforceable against the other only if he is **aware** of them and, actually, he should have been aware of them when the contract was completed. However, certain terms require explicit [written] consent to be effective, such as the limitation of liability, granting the right to withdraw, imposing deadlines and restricting freedom of the other party. Also, in contracts concluded with the signature of certain forms used to govern contracts in an uniform way, the clauses added by the parties prevail over those already in the form. Over time, significant contracts have increasingly been signed by representatives of organizations or their legal teams, resulting in agreements shaped by \"anonymous\" or collective wills rather than individual intentions. This marks a shift from the traditional concept of contracts that prioritized personal freedom of will. In the 19th century, contract law focused on the autonomy of the parties involved and placed great importance on addressing flaws in consent, such as **mistake, violence** and **fraud**, which are now vices of will that can lead to avoidance of a contract**.** However, the rise of standardized contracts and collective bargaining has reduced the relevance of such concerns. In these contexts, individual consent plays a smaller role, and the focus has shifted to **regulating the terms of agreements** to prevent unfair practices. Consumer protection became fundamental, using **public policy rules** to prohibit clauses excessively one-sided. Today, the complex negotiations and discussions that take place before every completion of a contract have to respect **art. 1337,** which states the importance of good faith in negotiations which translates into a form of pre-contractual liability. Art. 1337 **\| negotiations and pre-contractual liability** *Parties must behave in good faith, during negotiations and before completion of a contract.* In cases where contracts and negotiations are conducted between companies, the relevance of **vices of will**---such as **mistake, coercion, and fraud**---is diminished. This is because the \"will\" of the contracting parties is no longer that of an individual, but rather an \"anonymous\" or collective expression of the company's representatives. Consequently, the legal system has recognized the need for rules to address **conflicts of interest**, aimed at protecting companies from potential abuses by their representatives. The evolution of contract law has led to several **results**: 1\. **consumer protection:** for contracts involving private individuals, there are public policy rules designed to prevent unfair practices and ensure balance in those relationships.\ 2. **labor law:** workers\' unions have developed policies for collective contracts to be used as templates for individual employment contracts, wit the aim to protect workers\' rights.\ 3. **contracts between entrepreneurs:** the principles of contractual freedom are still relevant in agreements between business entities. However, there are limitations, such as antitrust regulations and public policy principles. 4\. **forced Contracts and price controls: in** specific scenarios, limits to contractual freedom have been introduced through the repeal of clauses, particularly in cases involving price controls or mandatory pricing. These developments reflect our legal system\'s effort to balance the ideal of contractual freedom with modern economic and social realities, addressing power imbalances and fostering fairness in diverse contractual contexts. **Types of contracts** There are various kinds of contracts available in the Italian legal system to distinguish between: 1\) **Contracts signed for a consideration** (*contratti a titolo oneroso*) vs **contracts** **free of charge** (*contratti a titolo gratuito*). *Ex. a sale-purchase contract vs a gift.* 2\) **Contracts with corresponding services** (*contratti a prestazioni corrispettive*) vs **associative contracts** (*contratti associativi*). *Ex. a sale-purchase contract vs a contract of company.* 3\) **Contratti commutativi** vs **contratti aleatori**. The difference is relative to the risk of the contract. In contratti commutativi, there is a general risk that falls on each contracting party. On the contrary, in contratti aleatori there is a peculiar risk for one or both contracting parties. The word "*aleatorio*" comes from *alea*, which is related to the concept of risk itself, meaning a variation of value of the services of the case. The aleatorietà can arise from the will of parties and consequences can arise, such as rescissione. *Ex. a sale purchase contract is a contratto commutativo. Contratti aleatori are life annuity (rendita vitalizia), a stock-exchange contract,* a *contract signed to participate to a game or a bet (when they are legally allowed); a contract of insurance.* 4\) **Contracts providing for a continuous or periodic performace**. These are contracts whose execution continues over time (usually the duration is undetermined), to meet needs that also last over time. Here, unilateral withdrawal is always possible. *Ex. employment contacts, contracts of companies.* They differ from contratti ad esecuzione differita, done only to make it more convenient to perform the service of the case. 5\) **Consensual and formal contracts, contratti reali and contratti a effetti reali**. Consensual contracts are those that can be completed with the mere consent of the parties--it must not be confused with the *principio consensualistico*, which is not a specific kind of contract but a general rule for transfer of ownership or rights in rem. Formal contracts require, to be completed, a specific form. *Ex. gift and donation of a great value need the atto pubblico form.* Contratti reali require, to be completed, the delivery of the thing of the case, while it is not needed for contratti a effetti reali. *Ex. a loan and a gift of modest value are contratti reali.* **Completion of contracts** There are different ways to get into and complete a contract. \[art. 1326 and following\] A contract is completed when the proposer party is **aware of the acceptance** of the other party, basically an exchange of declarations, and acceptance should reach him within the time limit established by him or the circumstances. If, at request of the proposer, the service must be performed **before the reply**, the contract is completed at the time where the execution began. The acceptor must notify the proposer of the beginning of the execution or he will have to pay damages. The proposal can be **revoked** until the contract is completed. However, if the other party has initiated the execution in good faith before being notified about the revocation, the proposer must pay him an indemnity for the expenses he faced. **Proposal-acceptance** The proposal must be such that the **mere consent** of the counterparty can be enough for the completion of the contract, and it must contains the **essential elements** of the contract (agreement, causa, subject matter, form when prescribed). Moreover, proposal and acceptance must be fully aligned, or the acceptance will become a **counterproposal** that will have to be sent back and accepted again by the first proposer. **Irrevocable proposal** → it happens when the proposer obliges himself to keep the proposal steady for a certain period of time, meaning its revocation will have no effect. Generally, his death or incapacity will not revoke it either. **\|** art. 1329 Also, a proposal or acceptance made by an entrepreneur is still valid after his death or incapacity. **\|** art. 1330 **Other ways** → **option agreement \|** art. 1331: the parties agree that one of them will remain bound by his declaration (which will be irrevocable for him) and the other has the right to accept it or not; it can be an accessorial agreement to another contract or an independent contract itself. It is similar to the irrevocable proposal, but what differs here is that it comes from the agreement of the two parties, not from a unilateral declaration. This difference is relevant because here the two parties can agree on changes, while a proposer cannot modify his irrevocable proposal. *Ex. I do not have the money to buy a property right away, so I ask the seller for an option agreement.* → **contract with obligations of the sole proposer** **\|** art. 1333: a proposal that aims to create contract with sole obligations for the proposer becomes irrevocable once it is communicated to the other party, who has still the right to refuse it within a time limit (or the contract is automatically completed). Therefore, silence of the other contracting party signifies acceptance. *Ex. the unilateral preliminary agreement, a kind of preliminary contract that binds just one of the parties to complete the contratto definitivo.* → **offer to the public** **\|** art. 1336: an offer to the public can be valid as a proposal too if it includes the essential elements of the contract, unless circumstances or customs suggest otherwise. *Ex. a price catalog or a rental ad*. Revocation of such an offer is effective if made in the same or equivalent manner, even for those unaware of the revocation. Finally, we should always remember the general rule for the completion of contracts: the **general terms of a contract** drafted by one party are binding on the other party only if he knew or should have known them with ordinary diligence at the time the contract was completed. However, certain clauses, such as those limiting liability, allowing withdrawal or imposing deadlines, are only enforceable if explicitly approved in writing by the other party. **12**┃**CONTRACTS: NEGOTIATIONS, CONTENT & EFFECTS** ===================================================== **Negotiations and progressive completion of a contract** More and more frequently, nowadays the completion of a contract is often preceded by a very long preliminary phase during which the parties engage in negotiations and preparations. These activities, just like the others, need to be regulated to ensure clarity and order. As a result, documents such as *minuta* or *puntuazione* are often created and signed during the negotiation process before the actual contract is finalized. The purpose of a **minuta** is to record and disclose the ongoing negotiation process, so it can be used as evidence in case of a claim for damages arising from an unlawful breach of the negotiation. However, a contract is considered complete only when there is agreement on the four essential elements in art. 1325 (agreement, subject matter, causa, form when prescribed). Therefore, when disputes arise, the rules for interpreting legal transactions must be applied to determine whether a document signed in the negotiation phase constitutes a binding contract or simply a preliminary agreement like a **minuta**: this interpretation is performed by the judge under the principle of *iura novit curia* (the court knows the law). During the preliminary stages, the parties may choose to bind themselves to certain elements they agreed upon while reserving the right to negotiate others at a later stage. This allows flexibility in reaching a final agreement while ensuring that some aspects of the negotiation are secured. **Rules on negotiation** \[art. 1337 and following\] Parties must behave in **good faith**\* during negotiations. \*an objective good faith, governed by art. 1176 that describes it as using the **diligenza del buon padre di famiglia** in legal relationships and depends on the nature of the activity. Also, due to pre-contractual liability, there are many situations in the negotiation phase that can lead to **payment of** **damages**, such as: - - - To determine the damages, we must know the distinction between **interesse negativo**, benefits that would have been obtained and harms that would have been avoided by not engaging in the negotiations, and **interesse positivo**, benefits that would have been obtained and damages that would have been avoided if the contract was executed. Anyway, **compensation** of damages must include the emerging losses suffered by the creditor and his missing profits, if they are a direct consequence of the event. Emerging losses are called *danno emergente*, while missing profits are called *lucro cessante*. Ex. if i enter into a negotiation for a sale-purchase contract of goods for 500\$, in case of breach the emerging loss could be living expenses for 300\$ maybe due to travels. If the contract is completed, in case of breach the missing profits. *Ex. a negotiation for a contract to buy goods valued at €50,000, compared to the actual completion of the contract for the same goods. If the negotiation is breached, the consequences might include a loss of €300 in living expenses, such as travel costs, and the prospective buyer losing the chance to negotiate the purchase of alternative goods for €55,000. On the other hand, if the contract itself is breached, the buyer could have resold the goods for €60,000, making a profit of €10,000 from the difference between the purchase price (€50,000) and the resale price (€60,000). In this case, the **positive interest** (interesse positivo) would be €10,000, representing the lost profit from the resale. The **negative interest** (interesse negativo), on the other hand, would amount to €5,300, which includes the €300 in expenses plus €5,000, representing the missed opportunity to buy alternative goods for €55,000 instead of the €50,000 worth of goods in the negotiation.* **Contracts for persons to be appointed** At the time of completing a contract, a party may retain the right to later choose the **person** who will **acquire the rights** and **assume the obligations** arising from the contract. **\| art. 1401** If the parties have not agreed on a different term, the declaration of appointment must be notified to the other party within **three days** from completion of contract, and it has no effect if it is not accompanied by the acceptance of the appointee or if there is no power of attorney (*procura*, unilateral legal transaction that gives someone the power to act on behalf of another person) issued prior to the contract. **\|** art. 1402 However this is a dispositive rule of law. Moreover, the declaration of appointment, power of attorney, or the acceptance of the appointee will have effect only if issued in the same **form** as the one used for the contract; if the declaration of appointment is valid, its effects will start from the time of completion of the contract (so **retroactive effects**). If it has not been validly made within the time limit, the contract will produce its effects on the original contracting parties. **Practical uses** of this kind of contract can be: 1. 2. **Content of contracts** The general content of every contract, first and foremost, must be a financial one. Apart from that, the provision on contractual autonomy states that the parties can freely determine the content of the contract within the limits imposed by law, and they can also create atypical contracts. **\| art. 1322** Also, a contract obliges the parties not only to what is expressed there, but also to all the consequences that derive from it. **Common legal effects of a contract** When a person enters a contract he must consider the fact that it is a **binding legal relationship**, and its consequences are *inter partes* effects. Therefore, the contact has force of law amongst the parties and it can be terminated only by **mutual consent** or reasons established by the law, but there can be exceptions. One of the situations in which it is possible to terminate it without mutual consent is the **unilateral withdrawal**, meaning one of the parties can withdraw from the contract until it has had execution. In contracts involving continuous performances, though, a party can always withdraw, but it has no effect on services already performed (so, for instance, previous performances must be paid anyway). Also, if parties had agreed on the payment of a sum of money to withdraw, the withdrawing will have effect when the money is paid. **\|** art. 1373 this is a dispositive rule of law. Cases of withdrawal established by the law are: - - The parties can constitute a **deposit**, generally constituted by a delivery of a sum of money. In case of a regular execution of the contract of the case, the deposit is ascribed to the performance due. In case of withdrawal, the deposit can be retained as a means of compensation for the damages suffered. If the right of withdrawal is granted to the party who has received the deposit too, in case of withdrawal that party must give back the double of the deposit received. If the deposit is not delivered at the time of completion of the contract of the case, but it is simply promised as a consideration for the granting of right of withdrawal, then we speak of a **multa penitenziale**. There can be different reasons behind the exercise of a right of withdrawal: there could be a withdrawal due to a *ius poenintendi* (power to withdraw unilaterally from a contract) for companies, a right of withdrawal exercisable *ad nutum* (power to withdraw without justification) and a determining right of withdrawal. Based on art. 1453, a contract can also be terminated in case of **breach** (violation of any of the agreed-upon terms and conditions), and **payment of damages** can always be demanded. **Contracts and effects over things** In contracts which have as their subject matter the transfer of ownership or a right in rem **over a thing** or **another right**, ownership or the right of the case is transferred and acquired by way of expressed **mutual consent** of the parties (*principio consensualistico*), because that's when the contract is concluded and the ownership can be transferred. Therefore, if something happens to the thing before the conclusion of the contract, the liability falls on the previous owner. **\| art. 1376** If the subject matter of the contract of the case are **fungible things** (determined just by genre), then the right of ownership is transferred upon identification. **\|** art. 1378 **The case of double alienation** However, those two provisions can create a **problem**: if the ownership can be transferred only after the completion of a contract, it could occur that a property is sold twice (unlawfully). The final owner, in this case, will depend on the kind of property: for immovable properties the one that has done the registration (*trascrizione*) first, for movable properties even the last one can become owner based on *possesso*, according to which one can acquire ownership over a thing buìought from a non-owner if in good faith. However, the illegally disposing party will have to pay damages to the other. *Ex. if a person, after selling his land to another, enters in another sale-purchase contract over the same property, the final owner will be the one that has put it in the land register first. If it was a phone, the last buyer would be able to become owner because of possesso if he got it delivered first.* **The case of double alienation of credits** A similar problem can occur if the same **credit** has been transferred to different persons. Then, the assignment firstly notified to the debtor prevails, or otherwise the one that was firstly accepted by the debtor with an act of a certain date, even if it is of a later date. The same rule is observed when the credit has been the subject matter of a right of usufruct or a right of pledge. **\|** art. 1265 **The case of conflicts amongst multiple personal rights of enjoyment** Another problem is if a **right in personam of enjoyment** (like a rent) has been granted to different parties. In this case, the enjoyment belongs to the party who first obtained it; if none of them has obtained it yet, then the enjoyment belongs to one whose title is of an earlier date. **\|** art. 1328 In all three cases, the final owner will have a right against everyone else, meaning *erga omnes*. So, the **moment** of the transfer of ownership is relevant: 1. 2. 3. **13**┃**CONTRACTS: PRELIMINARY AGREEMENTS, CONTRACTS ON BEHALF OF THIRD PARTIES ETC.** ======================================================================================= **Preliminary agreements** A preliminary agreement is a type of **contract** used a lot in our legal system, and it represents the common obligation of the parties to conclude a final contract--basically a contract to complete another contract. This way, the parties will be sure that if they complete the preliminary agreement the final contract will be concluded, because if one of them does not fulfil his obligation, the other can obtain a **judgement** that will produce the same effects as the final contract not completed. *Ex. if you enter a preliminary agreement of the purchase of a property, if the promising seller does not fulfill the obligation of making a final contract, you can ask before court that its effects are produced anyway. It will be the judge to transfer the ownership to you.* **\|** art. 2932 However, a preliminary agreement is null and void if it has not been completed in the same **form** prescribed by the law for the closing contract. Ex. there cannot be an oral preliminary agreement on the transfer of ownership of an immovable property. **\|** art. 1351 **Trascrizione of preliminary agreements** The provision ruling it, **art. 2645 bis**, was inserted in the CC during the 1990's to solve a big issue on behalf of clients of *promittenti venditori* who had completed preliminary agreements for the sale of immovable properties "on paper" and had eventually gone into bankruptcy. It states that preliminary agreements must be **registered***patto di prelazione* is also a type of unilateral preliminary agreement normally subject to a condizione potestativa. *Ex. I promise you that if I am going to sell this apartment within the year, I shall prefer you against everybody else. This is a unilateral preliminary agreement (only the promising party is bound to complete a contratto definitivo); there is a condition (precedent) called condizione potestativa (as the event that triggers the right of pre-emption depends on the will of the very same parte promittente) which is valid, at law, because it is not considered as a condizione meramente potestativa. Accordingly, the patto di prelazione is a unilateral preliminary agreement subject to a condizione potestativa.* **Contracts on behalf of third parties** This is not a kind of contract but a **legal scheme** applicable to every kind of contract, and it represents an exception of art. 1372, which states that contracts cannot provide effects for third parties. Each contracting party generally tends to retain for himself/herself the right to the performance due by the counterparty, however, this doesn't happen with the *contratto a favore di terzi*: here the performance due by one of the parties goes to a **third party**, which will be the beneficiary of the contract. The persons involved herein are called promisee*cedente*, **assignee***ceduto*. Here, there will be relationships between the assignor and the assigned, the assignor and the assignee and the assignee and the assigned. → As for the one between **assignor-assigned**: the assignor is freed from his obligations against the assigned from the time in which the replacement becomes effective. However, if the assignee doesn't perform his duties, the assigned is actually free to decide whether to free the assignor or not. **\|** art. 1408 → As for the one between **assigned-assignee**: the assigned party can oppose to the assignee all the exceptions that arise from the contract, but not the others based on other relationships with the assignor. *Ex. if there are many contracts involved in the relationship, the assigned can only oppose exceptions from the contract assigned.* **\|** art. 1409 → as for the relationship between **assignor-assignee**: assignor must guarantee the validity of the contract assigned. Also, if he guarantees the performance, he is liable as fideussore for the obligation of the assigned. The word fideussore comes from *fideussione*, which is a type of guarantee in which the fideussore promises to pay someone else\'s debt or obligation if the debtor fails to fulfill it. **\|** art. 1410 Here a distinction arises, from the **cessione pro-soluto**, where the assignor doesn't guarantee against his assignee for performance by his assigned party; and **cessione pro-solvendo**, where the assignor guarantees for his performance. And note that the assignment of a contract is legally different from the assignment of a credit. **14**┃**CONTRACTS: ESSENTIAL ELEMENTS** ======================================== Every contract, to be a valid one, must have the **four essential elements**: agreement of the parties, causa, subject matter and form, when prescribed by law under penalty of nullity. **\| art. 1325** **art. 1418** **\| Grounds of voidity** *(cause di nullità)* A contract is void when: - - - - - **The subject matter** The subject matter must be legal, possible, determined or determinable. **\| art. 1346** *Ex. the subject matter of a sale-purchase contract is the transfer of a right of ownership.* → **legality of the subject matter**: it must not be against mandatory rules, public policy or good customs. **→ possibility of the subject matter:** the impossibility makes a contract a void one. However, the impossibility must be an objective and an absolute one; it means that the service of the case cannot be performed by anyone (subjective impossibility is not relevant at all!) *Ex. when someone sells a ship that has already sunk is sold, a building that has already collapsed, a car that has already been destroyed\...* - - The **assessment** of impossibility must be executed by the interpreter of the case subject to reasonableness. G*oing back to the examples mentioned above, if the sunken ship can be recovered, then the sale-purchase contract is still void if the costs due to recover it are such that the agreement has lost its own meaning anyway (in this case, for the seller).* Moreover, if a contract is subject to a condition precedent or a termine, it is valid if the subject matter that was initially impossible becomes possible before the condition is fulfilled or the termine expires. **→ determination of the subject matter:** the parties must agree on at least a criterion to identify the subject matter of the case, or they can surrender its determination to a third party. The criteria for referring this determination to a third party can be *fair appreciation* (reasonable determination) or *mere free will* (whatever he wants). With fair appreciation, if the third party doesn't do it, it will be made by a judge; with mere free will, it would be void.**\|** art. 1349 **Future properties** Future properties can be agreed on as subject matter of a contract, except in cases prohibited by law. **\|** art. 1348 Examples*:* \- the sale of future things is generally allowed \- the gift of future things is generally denied \- agreements on inheritance/patti successori are always denied **The causa** The **causa** the immediate reason for the parties to enter into the contract, so the reason that justifies the transaction both from the eyes of the parties than the legal system. If it's missing or illegal the contract is void. We must distinguish it from the **motivo**, which are personal reasons, that are not relevant for the legal system. It is made by the two causas of the single parties. *Ex. a sale-purchase agreement over a property:* - - *So the causa will be obtaining ownership of a property against the payment, and will be the only relevant element for the legal system.* → **lack of causa**: there is a lack of causa when one of the essential elements of the legal transaction of the case cannot be absolutely produced, due to the lack of one of its own logical assumptions. The contract is void. → **illegality of causa**: a causa can be illegal if it violates: - - - *Ex. against **political public policy** is a sale.-purchase contract in which a person sells his own right to vote to someone else is against political public polic or an act of corruption.* *Ex. against **good customs** is a bribery agreement, an agreement in which one agrees on lying, or contracts of prostitution.* The concept of illegal causa is often a duplication of the concept of illegal subject matter. Also, the causa can be considered illegal even if the individual performances are legal ones (*ex. a promise of money made to a public official for the performance of an act in accordance with his duties*) When two or more legal transactions are connected, if one of them is declared void, the other one fails too because it lacks of the causa. Also, a financial-legal transaction might be based on a pre-existing obligation. For instance, the creation of a pledge, a mortgage, or a contract of fideiussione is typically linked to the issuance of a prior loan. If the pre-existing transaction that justifies the linked transaction ceases to exist or never existed, the linked transaction becomes void due to the lack of *causa*. The **motivo** can become relevant only in two cases: **1.** if it is **illegal** and **common** to both parties (meaning they have the same illegal personal reasons), and in this case the contract is void. **\|** art. 1345 Common does not mean that the mere knowledge of the other party is enough to make the contract illegal, it means the other party must have the same motive. *Ex. I buy a boat to organize a quick escape after a robbery in Venice. This is a case of an illegal motive, for the completion of the sale-purchase agreement of the boat of the case, that does not matter per se, even if the other party knows about it (obviously, in private law, not criminal law). But it becomes illegal if the seller charges me double of the market price. The contract becomes null and void straight away;* *Ex. I complete a loan so to grant to the borrower of the case the money enough to gamble* *(or to continue to gamble). The contract is not void for the sole reason that I know, as lender, about it, but it becomes null and void if, apart from being lender, I am also the owner of the gambling house (because, accordingly, the borrower is pushed to gamble and, potentially, to lose money, so I can take a profit out of it).* **2.** if the parties put a **condition** or **onere** inside the contract. *Ex. I am gonna buy a house in Castellanza only if the university hires me. Here, the personal reasons become relevant because they are the event of the condizione sospensiva.* **Deserving interests** The causa of a **typical** legal transaction is independent of the specific details of the transaction, because it is already established by the law (*Ex. a sale involves an exchange of a thing for a price. This remains true regardless of whether the item is a movable or immovable property*), while for **atypical** legal transactions, where the causa is not predefined, determining it requires a more deep analysis, also to declare if it is valid and if the interests are worthy of protection for the legal system. **Negozi causali and negozi astratti** If the causa is illegal or not worthy of protection, then the legal system reacts by denying any effect of the legal transaction, this is a **negozio causale**. Other times, however, the reaction does not directly affect the legal transaction (which will produce its effects) but some of its consequences, this is a **negozio astratto**, which involves credits instruments such as shares, checkscondizione sospensiva. *Ex. an agreement in which one of the parties buys an immovable property if he gets hired in the workplace next to it.* → the **termination** of a contract if it is a **condition subsequent**/condizione risolutiva *Ex. an agreement in which one of the parties buys an immovable property but agrees that the legal effects of the contract will terminate if he gets transferred by his boss to another location.* There are a few legal transactions that [cannot] bear any condition at all: marriage, contracts relative to family law, issuance forward and acceptance of promissory notes or checks, acceptance or renunciation of inheritance. **Illegal condition** → if the condition is against mandatory rules of law, public policy or good customs, it makes the contract null and void. *Ex. i can\'t make an agreement based on which i will make a gift upon to someone the condition that he is gonna change religion or marry someone.* **Impossible condition** → if the precedent condition is impossible the contract is void, as it's no-sense to conclude it anyway. If the condition is subsequent then the contract is still valid but the condition is removed. If an illegal or impossible condition is attached to a **single clause** and not the whole contract, then if the clause wasn't very important only the clause is void and the contract is valid, viceversa the contract is void. An **authorisation** is classified as a condition as it can be a prerequisite for the effectiveness of a contract, due to law and not agreed on by the parties. Conditions can be distingued into: - - - - **Pending condition** During the time between the completion of the contract and when the event has not occurred yet, the condition is **pending**. During the pendency of a condition **precedent** the acquirer of the right can perform conservative acts\* and has an expectancy. During the pendency of a condition **subsequent** the acquirer of the right can exercise it and the other party can perform conservative acts\*. \*conservative acts are those related to the fear for upcoming prejudices, for instance activities to maintain the right as buyer. *Ex. a claim for sequestro conservativo of the asset from the debtor when there is the risk he may become insolvent.* A right subject to a condition is still **disposable**, but its effects will depend on the very same condition. **\|** art. 1357 Whoever has transferred a right under a condition precedent or has acquired it under a condition subsequent must behave in **good faith** to safeguard the interests of the other party. **\|** art. 1358 **Fulfillment of the condition** The condition is considered fulfilled if it occurs or if it does not occur due to a reason ascribable (*imputabile*) to the party who would have benefited from it not being fulfilled. **\|** art. 1359 **Retroactivity of the condition** the effects of a fulfilled condition generally **apply retroactively** to the moment when the contract was originally made. However, the parties can agree otherwise. If the contract includes a subsequent condition and involves an ongoing or **repeated performance**, such as regular services or payments, the fulfillment of the condition does not affect what has already been performed, unless the parties have agreed otherwise. Retroactivity works against third parties too. It can be: - - **Acts of administration** The fulfillment of a condition does not impact the validity of actions of administration taken by the party who, while the condition was pending, had the right to exercise the right. Unless the law states otherwise or the parties have agreed differently, the fruits collected are owed starting from the day the condition is fulfilled. *Ex. if i buy a property that produces civil fruits (revenues), the seller will collect them until the precedent condition occurs.* **\|** art. 1361 **Termine** A termine is a **future** and **certain** event. We are talking about a *dies certus* and *certus/incertus quando*, which means we are sure the event is gonna happen, and the day it's going to happen can be defined (*December 25th*) or not (*the day the government falls*). Practically speaking, a condition is "*if it happens*" while a termine is "*when it happens*". → **initial termine**, from when the contract will start to produce effects → **final termine** or **deadline**, from when the contract will end producing effects A termine is generally set up in favour of the **debtor**, meaning the creditor cannot ask for performance before occurrence of the termine of the case, whereas the debtor can perform before it. However, the parties can set it up in favor of the creditor or both parties too. **\|** art. 1184 There are not many provisions on termine, as it follows the same **rules on** **condition**. **Pending termine** During the pendency of the termine, a creditor cannot demand payment or performance before the due date unless the deadline was specifically set for the creditor\'s sole benefit. If a debtor has already made a payment before the due date, they cannot request a refund, even if they were unaware that a deadline existed; he can only ask for restitution for any benefit the creditor gained from the early payment, but only to the extent of the loss the debtor suffered. **\|** art. 1185 **The loss of a termine** Even if a deadline has been established for the debtor\'s benefit, the creditor can **demand immediate performance** if the debtor: 1. 1. 2. **Essential termine for one of the parties** If the termine for one party\'s performance is considered essential for one of the parties and the performance is not fulfilled and the termine has expired, if he wants to still demand the performance he must **notify** the other party within three days, unless the parties have agreed otherwise. If no notification is made, the contract is automatically considered **terminated**. **\|** art. 1457 *Ex. a bride will want to be sure that the wedding clothes come before the wedding, so the termine of the sale-purchase contract of the case is essential. If it does not get delivered on time, she will have to notify the seller if she still wants it. Same goes for a birthday cake.* **Invalidity of legal transactions: voidity and avoidance** In the context of contract law and the invalidity of legal transactions, two key concepts must be distinguished: **voidness** (or nullity) and **avoidance** (or annulment). **→ voidity**: This refers to a situation where a legal transaction, such as a contract, has no legal effect whatsoever. As the Latin phrase states, "quod nullum est, nullum producit effectum" (what is null produces no effect). A void contract cannot, for example, be confirmed or made valid under any circumstances. **\| art. 1423** → **avoidance**: it means that the effects of the legal transaction of the case are produced but they can be deleted if (and only if) the legal transaction is challenged by the party in whose interest this kind of invalidity is set up by the law (unless the very same party has previously confirmed it). Accordingly, a voidable contract can be confirmed/validated. **\| art. 1444** A deadline that determines when the legal effects of a universal *mortis causa* arrangement will begin or end is considered to be non-attached. **Modo*nullità relativa*, which is a special form of voidness aimed at protecting a specific party. This type of voidness exists to protect the party from decisions not considered adequately or from potentially harmful agreements. Contracts subject to relative voidness cannot be confirmed because they are **still considered void**. The protected party may have an interest in the contract and is the only one allowed to request its voidness. *Ex. contracts lacking the legally required form when completed by a bank or financial broker; insurance contracts*. Relative voidness is generally not detectable by a judge on their own initiative, except in cases provided by the law. ### **Claims for avoidance** Avoidance can be claimed only by the **party whose interest is protected by it**. However, the **incapacity** of a convicted person under a state of *interdizione* can be asserted by any party with a legitimate interest in doing so. **\| art. 1441** Avoidance is similar to *nullità relativa*, but here the party in whose favour the law provides protection can validate the transaction, and in nullità relativa she cannot. **Imprescrittibilità of a claim for voidity** A claim for declaration of a voidity is subject to no time-limitation, except for usucapione and prescrizione of claims for restitution. **\|** art. 1422 **Time limitation for a claim of avoidance** A claim for avoidance, on the contrary, has a time limitation*timore reverenziale* alone cannot be a reason for avoidance of a contract. *Ex. if i fear someone, it is not a valid reason to ask for the contract to be avoided.* **\|** art. 1437 The **threat of asserting a right** can cause avoidance of a contract only when it is aimed at obtaining unfair advantages. **\|** art. 1438 The threat must be unfair and anti-legal, but today more "sneaky" behaviors are common. *Ex. if i convince someone to enter a sale-purchase contract threatening him because of his financial difficulty, the contract is avoidable. If I threaten my debtor to resort to forced execution, that is not avoidable because what i aim to obtain is not beyond what was established by the contract.* **3. Fraud** Fraud*dolo incidente* and the contract is valid. Anyway, the party in bad faith is liable for damages. **\|** art. 1440 **Silence** can be a source of fraud too. It becomes relevant when it involves an intentional breach of the duty of disclosing relevant information to the other party. This duty can be imposed by the law or come from a mere duty of fairness. **Rescissione** *Rescissione* is a **legal remedy** about issues related to the time **before the completion** of the contract, and a contract subject to it cannot be confirmed/validated. It is different from *risoluzione* (which is about termination of contracts) and is available just in two specific situations: - - The **claim** of *rescissione* has a time limitation: it expires in **one year** from the completion of the contract unless it consists of a crime. **\|** art. 1449 Actually, the party against whom a claim for *rescissione* has been made can avoid it by offering a modification to the contract enough to bring it back to an equitable status. **\|** art. 145o **Effects of *rescissione* against third parties** The *rescissione* of a contract does not affect the rights acquired by third parties unless a **claim** for rescission has been **registered**. This is because, in general, the effect of a remedy is enforceable against everyone (*erga omnes*) only if the claim for that remedy has been recorded in the relevant registry, such as for properties requiring registration. Otherwise, if the third-parties have acted in good faith they won't be affected. **Missing performance of contracts** Once a contract has been completed, **legal issues** about its **execution** can still arise. In fact, once the contract of the case has been completed, the programs originally planned by the contracting parties could be troubled by new facts, which could even affect the financial balance behind the contract. These usually can be **three** main cases: **Case 1**: in contracts involving **corresponding services** (reciprocal obligations), each party expects to receive the agreed-upon performance from the other. However, obstacles such as the de