CONTRATTO

**CONTRACT** —

I. CONCEPT

By legal definition, a contract is the agreement of two or more parties to establish, regulate, or dissolve a patrimonial legal relationship between themselves (Art. 1321 of the Italian Civil Code). According to modern doctrine, it falls within the category of legal transactions (v.). The modern contractual system generally derives from Roman law, in which, however, there was no general category of contract, but rather a very extensive list of acts and conventions that gave rise to obligations. Therefore, alongside the Roman derivation, one must consider the entire reflection developed over the centuries.

A contract is generally a source of obligations (v.) for each of the two parties, or at least for one of them; however, an obligation may arise not only from a contract but also from the law, from so-called quasi-contracts (v.), from a delict (v.), or from other facts to which the law attributes such an effect.

II. ESSENTIAL AND ACCIDENTAL ELEMENTS OF CONTRACTS

The elements of a contract may be essential (without which the contract is null or changes in kind), natural (those that exist unless the parties otherwise intend), or accidental (those that may or may not be present).

a) Essential elements are consent (v.), the object, the cause, the capacity of the contracting parties, and the form.

The thing or performance stipulated in the contract must be in commerce (e.g., public domain goods are not); it must be physically, legally, and morally possible; it must be determined or at least determinable in its kind or quality, according to the different types of contracts; and it must be lawful, i.e., not contrary to mandatory legal provisions, public order, or good morals.

The *cause* of a contract is the objective legal reason for which the legal system deems that contract worthy of legal protection.

In moral theology, the question arises regarding an illicit cause in a contract (e.g., hiring someone to strike or kill another). If the case is considered before execution, it is evident that no obligation can exist; there can be no legal obligation to perform a morally reprehensible act. The question then revolves around this point: if one party performs an illicit act, does the other party have an obligation to pay? (Note that the turpitude must be intrinsic to the object; if malice pertains only to an extrinsic, secondary element [e.g., working on feast days], there is no doubt that the agreed-upon action must be compensated.) The negative opinion is associated with Adrian of Utrecht; the affirmative view was supported by Alexander of Hales, who focused on the economic value contained in an action, even if sinful. Thus, modern moralists analyze such a legal transaction as consisting of two contracts: one invalid (*de re mala*), and one valid (*de pretio*). D’Annibale contributed to this discussion by asserting, following Roman law, that the controversy only arises when the turpitude is shared by both parties. If, however, it is only on the part of the giver (e.g., promising remuneration with a secretly evil intention), then payment must be made; if it is only on the part of the receiver (e.g., promising a gift to a blackmailer to refrain from carrying out a plot and thus free oneself from harassment), then not only is there no obligation to give, but there is also a right to reclaim what has already been paid.

From the perspective of natural law, all persons who possess the use of reason are capable of contracting. However, according to civil law, the following are incapable of contracting: minors not emancipated, interdicted persons, and, for certain contracts, emancipated persons and those under partial guardianship. All such individuals can only contract validly through or with the assistance of a parent, guardian, or curator. Additionally, there are persons to whom the law prohibits the stipulation of certain contracts, such as those who administer another’s property, guardians, parents exercising parental authority, and administrators of municipalities or provinces; though it is debated whether these cases constitute true incapacity.

In cases of incapacity, as well as in the other cases mentioned, the contract is voidable (Arts. 1425–26).

Regarding form as an element of the contract, see the following section, letter d.

b) Accidental elements of a contract may include any clauses that the parties may freely include or omit. Among these, particular importance attaches—being governed by general principles that apply to all contracts—to conditions, terms, and modes or burdens (v. LEGAL TRANSACTION).

III. DIVISION AND TYPES OF CONTRACTS

Civil law regulates certain types of contracts with specific provisions (generally derogable by the parties); however, the parties may also conclude contracts that do not fall into any of these types, provided they aim to realize interests worthy of protection under the legal system (atypical contracts; Art. 1322 of the Civil Code). Despite the great variety that the free will of the parties can introduce into the content of a contract, it is still possible to group individual concrete contract types into various categories.

The principal distinctions in modern doctrine are as follows:

1) **Unilateral and bilateral contracts**: the former are those that give rise to obligations on the part of only one party toward the other (e.g., loan, deposit, donation); the latter are those in which both parties assume reciprocal obligations (e.g., sale, lease).

2) **Gratuitous and onerous contracts**: in the former, one of the two parties confers a benefit on the other without receiving any consideration (e.g., donation, interest-free loan, gratuitous loan); in the latter, each party receives consideration from the other, whether for themselves or for a third party (e.g., sale, interest-bearing loan, insurance).

Bilateral contracts are all onerous, and gratuitous contracts are all unilateral; however, onerous unilateral contracts may occur (e.g., interest-bearing loan), though they are more often bilateral.

3) **Aleatory and commutative contracts**: the former are those in which the advantage one or both parties expect from the other depends (in its existence or amount) on chance (e.g., insurance, life annuity, stock exchange futures); the latter are those in which such an advantage is certain and determined from the outset.

4) **Formal and informal contracts**: the former are those that are not valid unless executed in a specific form prescribed by law (a form that, in modern law, generally consists of a written act or a public deed); informal contracts are those that may validly be executed in any suitable form. Civil law typically requires special forms only for certain more important or more hazardous contracts concerning the assets of one or both parties (e.g., donation, many contracts relating to immovable property, etc.), while all other contracts for which the law does not prescribe a specific form are informal.

5) **Consensual and real contracts**: the former are perfected by consent alone, without the need for delivery of the thing (in modern law, nearly all contracts are consensual); the latter are not perfected unless the thing is delivered (such as, under current Italian law, repurchase agreements, contracts of estimate, deposit, gratuitous loan, and loan for consumption).

6) **Obligatory and real contracts**, depending on whether they merely give rise to obligations (e.g., lease, gratuitous loan, deposit) or also result in the transfer or creation of real rights (e.g., sale, repurchase, loan for consumption, emphyteusis).

7) **Preliminary and definitive contracts**: the former (also called compromises) are those by which the parties undertake to conclude another contract (e.g., promise of sale, loan, lease); all other contracts are definitive. For preliminary contracts, cf. Arts. 1351 and 2932 of the Civil Code.

IV. Effects of the contract

Contracts legally formed have the force of law for those who have stipulated them; they cannot be revoked except by mutual consent; they must be executed in good faith (art. 1375). In the end, therefore, the general effect of the contract is the obligation which must be fulfilled (under penalty of damages) with due diligence.

The obligation may be satisfied and thus extinguished in various ways: a) positive: payment, novation (substitution of a new obligation for a previous one, which is thereby extinguished), compensation (when two persons are mutually obligated, the two debts are extinguished to the corresponding amounts); confusion (in the case of the overlapping of credit and debt between the de cuius and the heir: a case of succession mortis causa); b) negative: remission of the debt, loss of the thing owed; annulment; rescission; fulfillment of the resolutive condition; prescription.

Delay or default occurs when one allows the term to expire without fulfilling the obligation. Here opens the entire juridical casuistry of debtors in distress, of insolvencies, of bankruptcies, of compositions.

V. Inefficacy of the juridical act

Since it has been necessary to mention the essential elements without which the contract either does not exist at all (nullity), or exists but may be annulled (voidability), it is appropriate to emphasize that civil law derives from natural law the power to invalidate, annul, or rescind contracts so that, after the judge’s sentence, they are devoid of their force. This power is precisely required by the common good, which in some cases demands that juridical acts be deprived of all efficacy: as a penalty for juridical faults, for having, e.g., vitiated the consent of the contracting party (error, fraud, violence); or to annul conventions contrary to the common good; or to promote equity and justice by removing excesses and abuses.

Validation of a contract. — A contract null by absolute nullity cannot be rendered effective but must be redrafted; whereas an invalid contract (relative nullity) may be cured either expressly (by means of confirmation or ratification, which in substance is the renunciation of a claim for annulment) or tacitly (one who could have sought annulment executes the contract knowing its defect, or allows the time limit for impugning it to elapse).