Contract

CONTRACT —

I. NOTION

By legal definition, a contract is the agreement of two or more parties to establish, regulate, or dissolve among themselves a legal relationship of a patrimonial nature (Art. 1321 of the Italian Civil Code). According to modern doctrine, it belongs to the category of juridical acts (v.). The modern contractual system derives in general from Roman law, in which, however, the general category of the contract was lacking; there was instead a very extensive list of acts and agreements that produced obligations. Thus, to the Roman derivation one must add all the reflection developed over the centuries.

A contract is generally the source of obligations (v.) for each of the two parties, or at least for one of them; an obligation, however, 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 acts to which the law attributes such an effect.

II. ESSENTIAL AND ACCIDENTAL ELEMENTS OF CONTRACTS

The elements of a contract may be essential (that is, those without which the contract is null or changes its kind), natural (that is, those which are present unless the parties have expressed a contrary intention), or accidental (that is, those which may or may not be present).

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

The thing or performance constituting the subject matter of the contract must be commercium (such, for example, are not public-domain assets); physically, legally, and morally possible; determined, or at least determinable in its kind or quality, according to the different contracts; and lawful—that is, not contrary to mandatory provisions of law, public order, or good morals.

The cause of a contract is the objective legal motive for which the legal order considers that contract worthy of legal protection.

In moral theology, the question is raised concerning an immoral cause of a contract (for example, paying a person 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 bond to perform a morally reprehensible action. The question, then, concerns whether, once the immoral action has been performed by one party, the other party is obliged to pay (it should be noted that the immorality must be intrinsic to the object: if the malice were inherent in a secondary, extrinsic element [having someone work on feast days], there is no doubt that the agreed action must be remunerated). The negative opinion is associated with Adriano di Utrecht; the affirmative view was defended by Alessandro di Hales, who directed his attention to the economic value contained in an action, even if sinful. Thus, moralists today divide such a juridical transaction into two contracts: one invalid, de re malo; one valid, de pretio. D'Annibale contributed to the question by asserting, following the line of Roman law, that the controversy has reason to exist only when the immorality is attributable to both contracting parties. If, instead, it were attributable only to the person who gives (for example, promising remuneration with a secret evil intention), then payment must be made; if it were attributable only to the person who receives (promising a gift to a blackmailer so that he refrain from initiating a plot, and thus purchasing freedom from harassment), then not only is there no obligation to give, but there is also a right to reclaim anything that may already have been paid.

From the standpoint of natural law, all persons who possess the use of reason are capable of contracting. Under civil law, however, the following are incapable of contracting: unemancipated minors and persons under interdiction, and, moreover, in the case of certain contracts, emancipated persons and persons under legal disability; none of these, therefore, can contract validly except through or with the assistance of a parent, guardian, or curator. In addition, there are persons whom the law prohibits from entering into particular contracts, for example, those who administer the property of others, a guardian or a parent exercising parental authority, and administrators of municipalities or provinces; but it is doubtful whether these are cases of incapacity.

Both in cases of incapacity and in the other cases just considered, the contract is voidable (arts. 1425–26).

As regards form, as an element of the contract, V. in the following number, letter d.

b) The accidental elements of a contract may be all those clauses which the parties may freely insert into, or omit from, the contract. Of these elements, particular importance—since they are governed by general principles applicable to every contract—is attached to the condition, the term, and the mode or charge (v. NEGOZIO GIURIDICO).

III. DIVISION AND TYPES OF CONTRACTS

Civil law regulates, by means of particular rules (generally subject to derogation by the parties), certain types of contracts (typical contracts); but the parties may also conclude contracts that do not belong to any of these types, provided that they are intended to serve interests deserving of protection according to the legal system (atypical contracts; art. 1322 of the Civil Code). Despite the great variety that the free will of the parties may give to the content of a contract, it is nevertheless possible to group the individual concrete forms of contract into various categories.

The principal distinctions in modern doctrine are the following:

1) Unilateral and bilateral contracts: the former are those that produce obligations incumbent upon only one of the parties toward the other (e.g., loan, deposit, gift); the latter are those in which both parties mutually assume obligations (e.g., sale, lease).

2) Gratuitous and onerous contracts: in the former, one of the two contracting parties procures an advantage for the other without receiving any consideration in return (e.g., gift, interest-free loan, loan for use); in the latter, each of the two contracting parties receives from the other consideration for himself or for a third party (e.g., sale, interest-bearing loan, insurance).

Bilateral contracts are all onerous, and gratuitous contracts are all unilateral; but onerous unilateral contracts may exist (e.g., an interest-bearing loan), although they are more often bilateral.

3) Aleatory and commutative contracts: the former exist when the advantage that one or each of the two contracting parties expects from the other depends (in its existence or amount) upon chance (e.g., insurance, life annuity, stock-exchange contracts for differences), whereas in the latter such advantage is certain and determined from the outset.

4) Solemn and non-solemn contracts: the former are those that are not valid unless made in a certain form prescribed by law (a form which, in modern law, generally consists in a written instrument or a public instrument); non-solemn contracts are those that may validly be made in any suitable form: civil law generally requires special forms only for certain contracts that are more important or more dangerous to the assets of one or both contracting parties (e.g., gifts, many contracts relating to immovable property, etc.), whereas all other contracts for which the law does not prescribe a specific form are non-solemn contracts.

5) Consensual and real contracts: the former are those perfected by consent, without delivery of the thing being necessary (in modern law, almost all contracts are consensual); in the latter, however, the contract is not perfected except by delivery of the thing (in current Italian law, these are the riport, the valuation contract, the deposit, the loan for use, and the loan).

6) Obligatory and real contracts, according as they have as their effect only the creation of obligations (lease, loan for use, deposit, etc.), or also the transfer or creation of real rights (sale, riport, loan, emphyteusis, etc.).

7) Preliminary and definitive contracts: the former (also called agreements to contract) are those by which the parties undertake to conclude another contract (promise of sale, of loan, of lease, etc.); all other contracts are definitive. With regard to preliminary contracts, cf. arts. 1351 and 2932 of the Civil Code.

IV. EFFECTS OF THE CONTRACT

Contracts lawfully formed have the force of law for those who have entered into them; they may not be revoked except by mutual consent; they must be performed in accordance with good faith (art. 1375). Ultimately, therefore, the general effect of the contract is the obligation, which must be fulfilled (on pain of compensation for damages) with due diligence.

The obligation may be satisfied and thus extinguished in various ways: a) positive: payment, novation (the substitution of a new obligation for a previous one, which thereby remains extinguished), set-off (when two persons are obligated to each other, the two debts are extinguished to the extent of the corresponding amounts); confusion (in the event of the merging of a credit and a 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 resolutory condition; prescription.

Default or delay occurs when a person allows the deadline to expire without fulfilling the obligation. And here begins the entire body of legal cases concerning overburdened debtors, financial collapses, bankruptcies, and compositions with creditors.

V. INEFFICACY OF THE LEGAL TRANSACTION

Since it was necessary to allude to the essential elements without which the c. 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, and rescind c., so that, after the judge’s sentence, they are deprived of their force. This power is required precisely by the common good, which in certain cases demands that all efficacy be removed from legal acts: as a punishment for legal offenses, for having, for example, vitiated the consent of the contracting party (mistake, fraud, violence); or to annul agreements contrary to the common good; or to promote equity and justice by removing excesses and abuses.

The validation of a c. - A c. void by absolute nullity cannot be rendered effective but must be redone; whereas an invalid c. (relative nullity) may be cured either expressly (through confirmation or ratification, which in substance is the renunciation of the right to seek annulment), or tacitly (when the person who could have sought annulment performs the c. while aware of its defect, or allows the time limit for challenging it to elapse).

BIBLI: F. Messineo, Teoria generale del c., 2ª ed., Milano 1948 (and bibliography cited therein). Vedi pure C. Antoine, Contrat, in DTHC, III, II, coll. 1649-70, and the texts of moral theology in the section dealing with: De contractibus. For c. in canon law V. also BENI ECCLESIAETICI: SIMONIA. Grazioso Ceriani