CONTRACT AND OBLIGATIONS LAW

A rule is a statement that governs human conduct, to direct. There are different types of rules:

 Personal: to regulate the conduct of a specific person or group of persons.

 Factual: regulates one or more factually specified situation
 General: directs whoever may find himself in a specified situation
 Abstract: covers any situation that repeats the one envisioned.

When speaking about rule of law legal scholars usually refer to higher rules prescribing in a general and
abstract fashion what conduct is permissible or required in a situation that resembles that envisioned by
the legal provision in question.

The effectiveness of a rule of conduct is conditioned on provisions to secure its enforcement, these are
subject to the person who breaks the rule to negative consequences (sanctions).

In small acts, as in major decisions, people adapt to or ignore rules: moral rules, local costumes, rules
governing professions, rules of courtesy, and many others. Intuition and experience tell the average person
that the first set of rules is the law and that the second set falls under a different category.

A legal system is a system of rules whose enforcement is entrusted to the authority of a court.

In history, as society becomes increasingly complex, a clear line is drawn between the rules that the court
applies in deciding a case and those that do not have such quality. At a certain stage, the court is no longer
free to draw its decision from whatever source it may choose. Above all, judicial precedents tend to
prevail, as continuity and coherence of court rulings lend credibility to the judicial function. Opinion of legal
scholars may also come into play. At times the rules formed out of such sources may be collected into
official collections which will acquire the authority of texts of reference. Lastly, all the rules may be
expressly dictated by an authority having the power to do so.

A legal rule is solely that which is formed out of one of the modes of production prescribed by the system
itself.

Sources of law

Sources of law can be defined as any act or fact fit to produce legal rules pursuant to the legal system.
Sources of low can be divided in:

 written and unwritten sources

 legal sources:
o Precedents, case law: a rule is formed for resolving other similar cases and may become a
criterion.
o Legislation: is the means through which an authority, vested with the power to legislate,
draws up a text containing legal rules.

The legislative process

In every system there are laws setting the ways and means through which the laws of the system are to be
legitimately drafted and passed. In the Italian legal system, specific provisions expressly lay down the
sources of private law.
Article 70 of the Italian Constitution elaborates on this by stating that the two Houses of Parliament have
the power to legislate.

As a matter of principle, rules that govern the making of laws themselves must be “legitimized” by higher
rule that provides for its making: as such legitimization process would stretch to infinity, the sources of the
whole legal system have always been historical events.

A plurality of systems

From the Italian point of view, only domestic law is applicable. Laws of other states are mere facts.
Understanding the relativity of the concept of law and accepting the plurality of systems is necessary to
anyone observing all these systems.

International law which regulates relationships between states, draws upon its own sources and rules
which every state, as member of the international community, is bound to observe. In Italy an International
Convention take effect in the Italian legal system only after its approval, so called ratification by the two
Houses of Parliament.

Sources of Italian law

Art. 1 Preliminary Provisions lists the sources of the Italian law has follows:

1. Laws
2. domestic regulations
3. customs

The Constitution of the Italian Republic was promulgated on December 27, in 1947 and become effective
on January 1st in 1948. Since then, the constitution has stood as the primary source in Italy. In its first
section the constitution lays down the fundamental rights and duties of citizens towards not only the
Republic but also towards one another.

The article 1 of the Civil Code was part of the text since coming into effect in 1942. The Constitution does
not include the provisions comparable to Art. 1 Preliminary Provisions to the Civil Code, hence it remained
effective subjected to the following clarifications:

1. ordinary law
a. statues or acts of the Parliament
b. legislative decrees and decree-laws (in cases of emergency)
c. regional laws and laws of the autonomous provinces of Trent and Bolzano.
d. Referendums
2. Domestic regulations
3. Customs or usage (must be general, repeated, constant within a community and members must
observe it).

Private law

There are some common rules to many countries (Convention on international sale of goods, Unidroit
principles, Consumer protection directives). But every country has its own private law, and contract and
obligations law, which is inside private law. That’s why it is important to study national law within the
contest of European Union.
Conventions make rules identical for many countries. There exist principles that are international and
common to many countries. These are soft rules. Then we have European directives.

Contract and obligations law is the core of private law for economics. The contract is the principal
instrument to circulate the wealth of nations, people, companies… In stipulating a contract, the parties
negotiate the content of the contract, terms, and conditions. One clause is the law applicable to the
contract, the one that will be followed.

Two different legal systems

In the world there are civil law system and common law system.

 Civil law (Countries: Italy, Spain, Germany, China, Japan, most African nations, all South American
nations (except Guyana)
 Common law (Countries: United States, England, Australia, Canada, India)

In the civil law system, written legal codes govern the decisions taken by judgements. The judge is obliged
to apply the code, the mouth of law and bound by the written law and its provisions. The judicial decisions
are not binding on 3° parties.

In common law, laws are based on past experiences, relevance is given to judgements and tribunals. Based
on precedents created by judges. The past rulings are taken into consideration when cases are decided.

These are the main differences, but we have others. We are in a period of transitions too.

There is no market without rules that create the market itself. There is the political decision, the rule and
then the market. To create a common market (as European) you need common rules.

The Private Legal Rule in the current Italian legal system

Italian private law

Our lives are governed by many rules, physical and behavioural. Physical rules are rules that describe a
phenomenon, can be verified. Behavioural rules prescribe a behaviour, we can’t say if they are wright or
wrong, are not absolute, vary on countries and cultures, and relative to a particular time and place in
history. A legal rule is produced by source of law.

Legal rule

A legal rule is a behavioural rule produced by source of law. The source of law is any act or fact fit to
produce legal rules pursuant to the legal system.

Private law legal rules are legal rules that regulates relationships between people and entities that are in a
position of equality.

Sources of Italian private law:

 1948 Constitution of the Italian Republic

 1950 European Convention of human rights (international, between states).
 1957 Treaty of Rome (European Economic Community)
 o Directives
o Regulations
 1942 Art. I of the Preliminary provision to the civil code:
o Statues (legge, Rule means, norma)
o Regulations
o Customs

Italian Costitution

The Italian constitution contains 139 articles. Principles of Italian Constitution: fundamental rights. The
structure of the State and power of the main constitutional bodies is based on the separation of powers:
legislative power; executive power; judicial power (principle of separation of powers).

Article 11. “The Italian State permits- on an equal footing with other States- limits to national sovereignty
belong to an organization that guarantees peace and justice between States”.

Remember that law is power for a State, limit it is a very strong decision (after WWII).

The Italian Costitution opened its legal order to legal sources of international law (international
conventions, multilateral Treaties, rules provided by international organizations) including them in the State
legal order.

European organizations:

After the War, it was necessary to develop an international ground of reciprocal relationships among the
States in order to protect peace and democracy.

 1949: establishment of Council of Europe

 1950: The Council of Europe adopted the European Convention on human rights
 1957: European Economic Community with the Treaty of Rome.

The Italian Government signed the European Convention of human rights in 1950. Right to life, Prohibition
of torture, Prohibition of slavery and forced labour, right to freedom, right to a fair trial, no punishment
without law, right to respect for private and family life, freedom of thought and religion, freedom of
expression, freedom of association, prohibition of discrimination. The justice body is the European Court of
human rights (Strasbourg).

European sources of law:

 1957: The Treaty of Rome (European Economic Community). The goal of EEC: a common market of
goods and services, free movement of people, through legal instruments. The EEC had the power to
produce normative acts: Regulations and Directives
 1987 Treaty of the European Community (Treaty of European Union 1992) …
 2007 Treaty of Functioning of the European Union
 A regulation shall have general application. It shall be binding in its entirety and directly applicable in all
Member States.
 A directive shall be binding, as to the result to be achieved, upon each Member State to which it is
addressed, but shall leave to the national authorities the choice of form and methods.

In Italy, Law 4 Feb. 2005 amended the procedure for the implementation of European Union directives:
Community Act: provides for the repeal or amendment of laws enforce that conflict with Italy’s duties
under European law and delegates to the government the authority to implement a series of directives
under terms laid down by the act itself.

The Court of Justice of the European Union has stated the direct effect of European law in Member States,
according to which unimplemented or badly implemented directives can have direct legal force, as well as
the principle of precedence of European law, which sets forth that European law is superior to national
law of member states.

The direct effect of European Law

The principle of direct effect enables individuals to immediately invoke a European provision before a
national or European court. There are two aspects to direct effect:

 Vertical direct effect means that individuals can invoke a European provision in relation to a
dispute between the single individuals and the EU Member State and /or its bodies.
 Horizontal direct effect: This can invoke a European provision in relation to a dispute between
himself and another individual.

The precedence of European law over national law is absolute. Therefore, it applies to all European acts
with a binding force, whether emanating from primary or secondary legislation.

About Italy…

Statutes: follow the procedure of approval by the two Houses of Parliament, promulgation by the President
of the Republic, publication in the Italian Official Journal.

Domestic regulations: instruments for the implementation of the statutes.

The Corte di Cassazione: the court of last resort in Italy, lower courts are bound by its judgments. The task
of the court is primarily to ensure uniform application of law and to clarify fundamental points in the
application of the law.

Hierarchy of sources

It takes the shape of a pyramid.

 Principles of Costitution: fundamental rights.

 Costitution, European Directives and European Regulations, European Convention on Human
Rights.
 Statutes: acts of Parliament.
 Italian regulations.
 Custom.

Relationship between sources of law

The presence of several sources of law may give rise to competition between legal rules concerning the
same subject matter. A conflict may arise between different sources of law. If there is a conflict between
legal rules, it has to be solved. There is a conflict when there are conflicting rules for the same fact: the
same conduct is considered, for instance, obliged and prohibited. The situation in which there are two
conflicting rules is defined: antinomy.

Every system has this problem. No legal system can work without criteria that permit to solve conflicts
among inconsistent rules. Types of antinomies:

 Vertical: among sources of different rank

 Horizontal: among sources of same rank

Criteria for solving antinomies:

 Hierarchy: if there is a conflict between rules issued by sources of different rank, the legal rule of a
higher source prevails over a legal rule of a lower source.
 Chronology: if there is a conflict between rules issued by sources of equal rank, the subsequent
legal rule prevails over the previous legal rule.

Repeals of law

Each legal system may produce new legal rules. As long as new laws are not inconsistent with existing laws,
such enactments modify the legal system expanding the body of laws. But a new legal rule may conflict
with existing legal rules applicable to the same matter.

Art. 15 Preliminary Provisions CC sets the situations where a law is repealed:

 Upon express statement of lawmakers: express repeal

 Upon incompatibility between new provisions and previous ones: implicit repeal
 Where the new law applies to the entirety of the subject-matter ruled by the previous law: implicit
repeal.

Conflict between successive rules don’t need to be solved by repeal when the new law doesn’t apply to the
whole matter but modifies only some points of it.

Statutes may also be abrogated by obsolescence. When a conduct violates the law becomes a social
pattern then social conditions dictate that the new law should not be enforced on account of obsolescence.

Art. 11 Preliminary Provisions “the law applies to future incidents only”, the principle of non-retroactivity.

Private International law

Private international law refers to that part of the law that is administrated between private persons of
different countries. It is a set of rules and regulations in every national legal system that establish which
national law will apply in the event of a dispute.

The relevant legislation in the Italian legal system is ItPIL. The general criterion for deciding jurisdiction is
the Art 3 ItPIL “there is Italian jurisdiction when the defendant is domiciled in or a resident of Italy”.
However, the will of the parties prevails when they have contractually established the jurisdiction.

According to Art. 4 ItPIL, parties to a contract can, by agreement, depart from Italian jurisdiction in favour
of foreign court or foreign arbitral tribunal. The parties have considerable flexibility, they can design a
unique national law for the whole contract or design the national applicable to just one part of it. In
absence of choice, Art. 4 enable identification of the applicable law in relation to the various contractual
categories.

Italian Civil Code

The Italian Civil Code is a statute. It was adopted in 1942 (unification of civil and commercial law; It is “a
business code”).

History:

 1865 Civil Code

 1882 Commercial Code (The model is the Napoleonic Code 1804; It is “a property code”).

The Italian Civil code contains 2969 articles and is divided into 6 books:

1. People and Family (1-455)

2. Succession.
3. Property.
4. Obligations (Contract) (1173-2059)
5. Labour.
6. Protection of Rights (2643-2969)

This course deals with topics that are regulated in the first, fourth and sixth books.

Decodification: the civil code loses its central importance. Why?

 Constitution and special statutes that apply constitutional principles (since 1978).
 European private law (directives about consumer protection)

Ricodification: sector codes (ex, consumer protection code, privacy code, insurance code, intellectual
property code).

You must use not only domestic sources (sector codes, statutes, civil code), but also European sources to
understand the meaning of private legal rules and solve legal cases.

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Legal rule’s structure

A legal rule is generally general and abstract. Every legal rule (ex. private rule, public rule, criminal rule …)
has the same structure of a hypothetical sentence “if A, then B”, where “A” is a model-situation and “B”
juridical effects attached to it.

A model situation (base situation) is a hypothetical situation. A model fact is created by the lawmaker.
Features of a model fact:

 Universal: you can apply a model situation to anyone

 Abstract: you can apply a model fact to any case.

The effects are the legal consequences that a rule attaches to a model situation. It sets out what certain
persons must or may do and defines a specific conduct as lawful, compulsory or prohibited.
Model situation example. Art. 2043 CC

“Any intentional or negligent fact or act, that causes an unfair injury to another, obliges who committed
fact to pay damages.”

What is the model situation in art. 2043 c.c.? Any intentional or negligent fact or act, that causes an unfair
injury.

What is the effect of art. 2043 c.c.? To oblige those who commit the fact to pay damages.

Often, the base situation is complex. The task of the court is to examine each specific case in order to asses
the base situation. A court must interpret not only the language and wording of the law but also the
material facts of the case and the point of law to be applied.

Application’s process is a logical procedure.

Case: An accident between John and Paul’s cars that happened in Via…. Roma the 18 th of October 2019 at
8.00 o’ clock in the morning.

Judge’s route

1. Lawyers bring forward evidence of the case

2. Judge weighs evidence to reconstruct case
3. Judge checks if the case can be connected to a model situation to apply effects that the rule
attaches to a model situation.

Articles and paragraphs

In the Italian legal system, the lowest level of division in the main body in statutory provisions is the article.
Each of them is subdivided in paragraphs, whenever the text begins on a new line.

Sometimes, the conduct prescribed by the rule must be inferred from a number of different provisions. Art.
2043 must be observed with art. 2056 (and others) to assess the quantity of the damage.

Interpretation of statutes

Interpretation is to look for the meaning of a word. It is important to establish the meaning of a word
because to follow the rule we must understand the meaning of it, to know what to do.

The word is the provision. The meaning is the rule.

Provision means disposizione in Italian. Rule instead is norma. What’s the difference? The provision is the
statement, the rule is the consequence of the interpretation of a statement. Interpretation is not free in
Italy. There are criteria that judges/lawyers have to follow and apply. Interpretation of provisions is binding
in Italy.

Ex. what is the meaning of servitude? In a legal meaning is not a relationship between people but a
relationship between fields. A burden imposed on a field for utility of another field belonging to a different
owner.

What are the criteria?

In the 12th article of the preliminary provision of the Civil Code. Applying “statues”, no other meaning can
be attributed to them that made clear by the technical meaning of words, according to connection between
them and by legislative aim.
  Literal interpretation: technical meaning of words and context.
 Teleological interpretation: check the aim of the rule.

Use this two is not sufficient. We must use the Costitutional principles. The Italian Civil Code is a liberal
code (Adam Smith) with liberal thought. What is the difference with Costitution? Economical approach
changed between the two sources of law. There is a connection between law and economy. In the Civil
Code the market adjusted everything alone. The approach of Italian Costitution changed: the state can
intervene when there is a failure of the market.

With pandemic we lived the conflict between the right of freedom (individual) and health (collectivistic).

Example: art. 844 c.c. Emissions

I. A landowner cannot object to the emission of smoke, heat, noises, vibrations from neighbouring land, on
condition that they don’t exceed what are considered normal and tolerable levels as could be expected for
that particular site.

II. In applying this rule, the court shall reconcile the requirements of production with rights of ownership. It
can also take account of the priority of a given use.

If I’m not a landowner but I’m renting the site, a tenant, can I use this norm?

This article is in the 3rd book, the one of property, that’s why we have the use of “landowner”. The aim of
the writer of this article (1942) was to protect the landowner, not the tenant. But we have to use the
Costitutional Principles, with this prospective. The Art. 32 gives the right to health. The consequence is that
a tenant has the right to health and so he can object if the levels of smoke, noise… are too high. Some
precedents in 60s said that if you were a tenant, you cannot use the article. Then, they started using the
Art. 32 of Costitution to interpret the Art. 844 C.C.. There is no more a gap.

Whenever the scope of application of a statutory provision reaches out beyond its literal meaning, it has
been interpreted extensively. On the contrary we have also the restrictive interpretations.

Legislative acts leave room for interpretation. To promote uniformity of judicial interpretation, litigants may
resort to the Corte di Cassazione, whose judgments contribute significantly to the harmonization of judicial
interpretation.

A gap is if a case can’t be attached to a model situation. No rule nor constitutional principles that you can
apply to solve the case. But a judge must solve it…

A cardinal principle: judges are the mouth of law and must solve the case (French principle from
Enlightenment period, Art. 4 Napoleonic Code). To solve a case not provided by law, judges can use
analogy.

Analogy: judges must look for similar cases.

When be a case can considered similar? It depends on the aim pursued by the rule.

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LEGAL CASE #1
Because of toxic fumes coming from a factory close to their houses, Tizio and Caio have suffered damages
to their vocal cords.

1. Which provision protects their rights to health?

2. What can they do to protect their rights to health?

Art. 1. One article, two provisions. Same for Art. 2.

1. Provisions from the article 32 of the Costitution, that protect each individual right to health, and
the article 844 of the Civil Code, that specifically protects the health of the landowner when the
level of pollution emitted by the neighbour exceeds the normal level for that site, and the article
2043 of the Civil Code that is about the compensation for wrongdoing.
2. If Tizio and Caio are landowners, with article 844 C.C., if toxic fumes of the factory exceed the level
of that site, they can object to a tribunal, then, with art. 2043 C.C. they can object/ make inhibitory
action for the damages suffered and ask for compensation.
In case Tizio and Caio are not landowners, but only tenants, art. 844 C.C + art. 32 of Costitution
protect their rights of health and with art. 2043 they can ask compensation to the factory.

In this case art. 32 opens the model situation, so we can apply the rule also for tenants and then
ask for compensation for damages with art. 2043.

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LEGAL CASE #2
Imagine this sign: “No entry in Villa Borghese by car”

Can you enter by motorcycle, bicycle, van, electric car?

Is sure that the van can’t enter. By motorcycle? If the provision wants to protect the safety of people or the
gas emissions of vehicles in the park, they can not enter. It depends on the legislative aim, if they don’t
want cars because they are too big the aim is different.
By bicycle is sure that we can enter. By electrical car it depends on the legislative aim. If the aim is to avoid
gas emission or noise, electric car could enter.
We have to use the teleological interpretation, if we change the aim, we change the solution.

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Legal facts and subjects of law

Legal fact: any fact fit to produce a legal effect. A fact is said to be legal when its occurrence falls under a
legal rule (if the fact can be connected to the model situation).

Who/what are the subjects of law in our legal system? All people, companies, states, institutions,
foundations and associations.

We have natural legal facts that don’t depend on the will of someone (earthquake, hurricanes, birth,
death…). Today birth and death are not natural legal facts; birth is not always natural (artificial
insemination); death too (euthanasia). They could be contested, but to distinguish them is preferred and it
is important to distinguish them with human legal facts.

Human legal facts are legal acts, in which the will is relevant for the statute. Also called acts.

 Acts in strict sense: ex. tort, default (these acts produce only effects provided for in provisions).
Art. 2043 is about tort liability. In a car accident (fact or act) the one who suffered the damage will
be compensated by the other (effects). Effects are provided by art. 2043.
 Negoti: ex. sale of good, marriage, last will (these acts produce not only effects provided for in
provisions but also effects set out by who carries out these acts).
In a contract there are effects set by the parties. You can negotiate the effects and conditions of the
contract (price, good, time…). Parties can create the rules. Then there are other effects from
provisions. If there is a contract of sale, the seller has to provide a guarantee of the good by article
in the Italian Civil Code.

In the language of the CC, legal acts mean allowing the persons to further their own interest, exercising
their autonomy.

Acts can be lawful (when a legal rule recognizes it as permissible), unlawful (when its breach of a legal rule
or of a principle of the legal system and falls subject to sanctions.

Unlawful acts

In criminal law, no crime is committed where no law provides for it, it is necessary to enumerate all the
types of crimes sanctioned by law (no use of analogy).

In private law the aim of the legislator is the safeguarding of determined interests.

There are different types of unlawful acts:

 Criminal wrongs: all conducts injurious to a value

 Administrative wrongs: conducts that violate rules established in the general interest of the
community

In private law:

 Unlawful acts (in a narrower mean civil wrongs): act which is foreseen by the law as it breaches a
specific legal rule, grievous of interest.
  A civil wrong is a conduct which is directly grievous to a particular interest protected by law and
causes damages to the aggrieved party.

Civil wrong entail civil liability, the duty to compensate for the damage inflicted.

The class of private wrongs falls into two categories:

 Contractual wrong. Art. 1218 CC lays down the effects of failure to perform an obligation. A debtor
who fails to carry out his obligation harms the interests of his contractual partner, the creditor.
 Non-contractual wrongs. Art. 2043 introduces the area of unlawful acts.

The difference is that in the non-contractual wrongs, the law provides misconduct occurring outside the
bounds of any pre-existing relationship. In the former, the law deals with conduct which constitutes a
violation of obligations flowing from an already existing relationship.

Who are the subjects of law in our legal system?

People: bearers of rights and duties, recipient of rights and duties.

We distinguish:

 Natural persons
 Collective entities/ artificial persons: (organizations, foundations, associations…)

They designate the subject of the law as the bearers of both rights and duties.

Legal capacity

Art. 1 C.C. Legal capacity: legal capacity is acquired at birth (capacità giuridica). It is a prescription; we can’t
say if it is right or wrong.

Legal capacity means to be able to be rightsholders. (Not obligations).

Art 2 of the Constitution affirms the “inviolability of the rights of the persons”, means their legal capacity is
prerogative. Art 22 of the Costitution states that “no person may be deprived, for political motives, of his
legal capacity.

The identification of a natural person is also closely connected to the location of his domicile (the principal
centre of his interests and businesses) and residence (habitual abode).

Capacity to act

Art. 2 C.C. Majority. “The age of majority is fixed at eighteen years old. On reaching majority one acquires
the capacity to perform all acts except those for which a different age is prescribed.”

Capacity to act means to be able to carry out acts.

Recently changed from 20 to 18. In case you are 16 years old you can’t stipulate a contract (but you can
work, exceptions).

Legal incapacity

1. Minors
 2. Judicial interdictions: a Court establishes the lack of capacity by reason of severe mental illness. All
these people can be interdicted, but they also cannot be judicially interdicted, the ruling of a Court
is needed (published). Doesn’t depend on the level of mental illness.
3. Legal interdiction: those who are sentenced to five or more years in prison. Means that there no
ruling that established that you are interdicted, it is a legal consequence.

The lawmaker, lawyer, has to study the being of the human in the problem. Political and social discussion,
but these are now the rules.

People who are considered legal incapable need a guardian (tutore) that carry out act in name and on
behalf of the incapable person. Legal representation (parents with minor).

Natural incapacity

By art. 428 C.C., a natural incapable is a person who although not interdicted is proved to have been for
any reason, even transient, incapable of understanding or intending at the time the acts were performed.

Also, a person with severe mental illness can be considered a natural incapable if not interdicted by a
ruling. Even means that also people with severe mental illness. There are legal consequences that are
different from the other incapacities.

In case of unilateral act, the act is “seriously prejudicial” to the person who didn’t have the capacity to
understand and to intend.

In case of a contract, the other party acted in a bad faith.

If a person is a natural incapable, and the other person was in bad faith, the contract is voidable. If not is
valid.

Two examples:

1. A person with severe mental illness (not interdicted because nobody asked to the Court): natural
incapable => lasting reason.
2. A person that occasionally uses alcohol or drugs (making him/her incapable of understanding or
intending at the time the acts were performed): transient reason.

If a person is interdicted and it stipulates a contract, the contract is voidable, only the guardian can. A
person not interdicted but has inhabitation he can stipulate the contract with the guardian (curatore).

If a person committed an act causing injury to another when he was lacking the capacity to understand and
to intend, he is not liable to compensate for damages, the exception applies when the natural incapacity is
caused by its own fault (case by case).

Partial incapacities

The Italian legal system provides for two partial incapacities to act:

 Emancipation: ex. a minor who has turned 16 receives the authorization to marry (solely for
“serious reasons” and if the minor has a sufficient maturity to understand).
 Limited conservatorship: according to art. 415 CC, for people routinely abusing of alcohol or drugs,
or excessive profligacy or person blind or deaf at birth that didn’t receive the adequate education.
Collective entities/ artificial persons

Legal entities: are registered association and foundation recognized by a public authority. There is an
administrative procedure. Assets are held separate and distinct from the assets of the members. Debt of
the association/foundation are paid by the assets of the partnership: limited liability. Members are not
liable for the debts of the association. The liability of the partners cannot exceed the amount invested in a
partnership.

Association: is a private non-profit organization. Made up of people (more than one so) who get together
to pursue a legal purpose through a common asset. Elements:

 Group of people
 Common goal
 Common assets
 Organization

Foundation: is a private non-profit organization. Its assets are dedicated to a purpose established by the
founder/founders. Elements:

 Assets
 Purpose
 Funder
 Organization

The difference is in people and assets. Both have the limited liability. Authority must check if the purpose is
legal, assets are sufficient to reach the purpose. If you don’t want to be checked by an authority (examples
are public unions) …

Entities not recognized/collective entities: called unregistered associations/committees. Consequences:

These associations will not have the limited liability. If assets are not sufficient, people who act in the name
and on behalf of organization are directly, personally, and jointly liable.

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LEGAL CASE #3

Because she was not advised by the doctor David, Mary don’t have a medical examination to investigate
the possibility of foetal malformation. Grace is born suffering from a foetal malformation.

1. Can Mary claim damages because of the lack of information?

2. Which provision protects her right to health?
3. Can Grace claim damages because of her right to born healthy?
4. Which provision protects her right to health?

1. Yes, she can if the doctor must give this information. There is a relationship (not contractual,
violation of obligations) between the doctor and the person who goes to the doctor. She was not
advice. The doctor has to advice the person, Mary to have medical examinations. Then the person
has to decide. The preventive medicine. There is a duty of information.
 2. Art. 32 of the Costitution. You go to the doctor, and he is obliged to give you some prescriptions.
Art. 2043 about tort liability. The relationship between them is quite different respect to the one
we used to explain art. 2043 C.C. There is a relationship. Or Art. 32 Italian Costitution plus art. 1218
C.C. that talks about the violation of an obligation. The doctor is obliged to give some information.
3. Grace can and can’t claim damages.
There is a ruling saying that she cannot because she was not born, having no legal capacity. The
mother can claim damages because when the fact happened, she was a conceived child.
4. Art 2043 because there is no relationship between Grace and the doctor (the lack of information if
the doctor had said the information, the mother could interrupt the pregnancy). If yes, art. 1 C.C.
says that the rights given by law to a conceived child are subject to the event of birth. Or the
mother when she is a minor. A recent legal ruling of Supreme Court says this. + art. 2 because she
has to wait the 18, or the mother can go as guardian. Art. 32 because of health.
We can also say no, because she hadn’t legal capacity during the violation. Both answers are right.
There is quite uncertainty. It shows how the reasoning is relevant in solving the case.

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LEGAL CASE #4

The athletic association “A” (a recognized association) didn’t pay taxes.

1. Who can the State sue for payment?

The athletic association “B” (unregistered association) didn’t pay taxes.

2. Who can the State sue for payment?

1. The State can sue the association because recognized by a legal authority. So, the payment will be
done on the asset of the association and not on the members of it (limited liability) if the debt
exceeds the asset of the association.
2. In case of unrecognized, the people member of the association can be sued by the State for the
payment of taxes if the asset of the association is not sufficient because they are personally and
jointly liable.

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The law of obligations

The contract is a source of obligation.

The 4th book of Civil Code opens with the sources of obligations, the article 1173 C.C. (the first article of the
4th book). So, sources are: “obligations come from contracts, illicit facts, or any other acts or facts which are
capable of producing obligations under law”.

So, from contract (art. 1321 CC, ex seller and buyer in an exchange), or if there is a wrongful fact (art. 2043
CC), the obligation is the tort liability.

What is an obligation?

An obligation is a relationship between a debtor and a creditor.

  The debtor must carry out a certain performance towards the creditor.
 The creditor needs the cooperation of the debtor to achieve his goal.

Obligations can be asserted only against a specific debtor. Obligations are Iuris vinculum.

The performance is the conduct capable of satisfy the interest of the creditor. Kinds of performance:

 To give/deliver something
 To do something
 To refrain from doing something

Effect of the due performance is the extinguishment of the obligation.

Due performance refers to the exact fulfilment of the obligation.

Patrimonial nature of the performance

Art. 1174 C.C. “The performance, which is the object of the obligation, must be of such nature as to be
capable of economic evaluation and must correspond to an interest, even if not patrimonial, of the
creditor”.

Patrimonial means that you can evaluate it in an economic prospective (as the ticket for a concert, the
performance of a singer).

Capable of economic evaluation implies that the performance can be transformed into money.

The interest of the creditor can be patrimonial or not patrimonial (going to the theatre, cinema… but
valuable with money!).

Relationship between creditor and debtor (soldi in banca)

The Italian legal system tends to favor the position of the creditor in order to promote the circulation of
wealth. This because a society based on certainty of exact performance of obligations is a society where
wealth circulates more smoothly: solely to the extent that the creditor occupies the strong position in
relation to the debtor.

Cardinal rule is that both parties must behave according to rules of fairness (art. 1175); this is
supplemented by the duty to behave in good faith in performing a contract (art. 1375).

Due diligence

Article 1176 C.C. provides that “in performing the obligation, the debtor shall observe the diligence of a
good pater familias (reasonable person). In the performance of obligations inherent in the exercise of a
professional activity, diligence shall be evaluated with respect to the nature of that activity”.

The lack of diligence implies negligence by the debtor. What is required is “ordinary diligence”.

Diligence and result

In a great number of cases, the creditor’s claim goes beyond the debtor’s due diligence and encompass is
the achievement of a certain result. In this cases, exact performance requires the achievement of the result
envisioned: obligations of result. Diligence is not sufficient.

In other cases, “due diligence” constitutes the object of an obligation (lawyers); the so called “best-effort
obligations” or obligation by means.

To determine whether exact performance has been carried out, in addition to the method of performance
(diligence), the Civil Code considers:

 The place of performance (the obligation consists in the payment of a sum of money to be carried out
at the creditor’s domicile or residence)
 Time of performance (can set the beginning or end of an obligation)
 Person who carries out performance

Who has to perform? The debtor or a third person (the one out of the relationship). But if I paid to go
to the concert of a certain singer…

Art. 1180 C.C. “The obligation can be performed by a third person, even against the will of the creditor,
if the latter has no interest in having the debtor perform the obligation personally”.

In case of a sum of money to be paid, a third person can perform, not in case of the singer.

“However, the creditor can refuse the performance offered by a third person, if the debtor has notified
him of his objection”.

 Person receiving performance (performance is carried out in the hands of a creditor or an agent of the
creditor). Art. 1189
Hence, a person who failed to carry out the performance in the hands of his creditor is compelled to
repeat the payment unless the creditor approved the payment.
Another case where the obligation is extinguished, although payment has not been made in the hands
of the creditor or to his agent, is usually referred as the payment made in favor of the apparent
creditor. This happens in presence of:
a) Ambiguous circumstances
b) Good faith by the debtor
c) A faulty conduct by the real creditor
 Nature of performance (if the creditor consents, the debtor can substitute a new performance for the
original one).

Non-actionable performance: to demand performance under adverse circumstances (rendering the

performance extremely difficult) may be considered an abuse of the creditor’s rights… the performance
may be non-actionable (inesigibile).

Civil obligation

Obligation implies a legal duty having as its object a performance capable of economic valuation. The
obligation has a juridical nature = civil obligation.

Duties arising from courtesy rules, religious rules, ethic rules are not relevant (are natural obligations).
Anyway, the lawmaker can consider them because of the model situation; there are effects connected with
natural obligations.
Obligation and liability

Obligation comprises of two elements:

 Duty
 Liability

Art. 1218 C.C. Contract liability “The debtor who does not exactly render due performance is liable for
damages unless he proves that the non-performance or the delay in carrying out the performance was due
to impossibility of the performance for a cause not imputable to him”. (factum principim).

The impossibility must be:

 Objective
 Absolute (compelling as not to offer any possibility whatsoever of carrying out performance).

The debtor must prove the existence of a causa external to him:

 Unforeseeable circumstances
 Force majeure
 Act of authority

The liability of the debtor thus appears as a strict liability (liability regardless of any faulty conduct on his
part).

Non-performance

Cases:

 Failure
 Flaw (difetto)
 Delay

If the condition of impossibility doesn’t hold, he must pay a sum of money, a compensation (another
obligation). If you don’t pay the compensation…

Art. 2740 C.C. “The debtor is liable for the performance of their obligations with all their present and future
assets”. Debtor liability.

To obtain satisfaction of his interests against a debtor in default (when doesn’t render the exact
performance), a creditor may turn to the courts and ask for the coercive enforcement of the performance.

A creditor can cause the property of the debtor to be expropriated; in order to obtain that which is owed
to him, the creditor can expropriate the debtor’s assets where the obligation is a payment of a sum of
money.

In other cases, the law provides for specific performance (forced delivery or release of immovable or
movable thing).

The problem is that you can win in the tribunal, but the debtor can be without money. That is why banks see
the patrimonial situation of a person before making loans (for example).

Default of the debtor

A firm didn’t delay a laptop to the consumer on a certain day. A message says that he will deliver the laptop
in 15 days (tolerance period), and this still doesn’t happen…

Art. 1219 Placing in default (mora) “The debtor is placed in default by means of a notice or request made in
writing”. Effects?

Art. 1221 Effects of default on risk “The debtor who is in default is not discharged by impossibility of
performance arising from a cause which cannot be imputed to him”.

Because he should have delivered the laptop on the correct day.

So, the debtor must pay damages for the delay.

Measure of damages

Art. 1223 Measure of damages “The measure of damages arising from non-performance or delay shall
include the loss sustained by the creditor and the lost profits, provided that they are a direct and
immediate consequence of the non-performance or delay”.

I rent a house for a certain day. Because of the delay of the train, I couldn’t take the key from the tenant,
and I lost the first day of my rent contract. The loss of the 1 day of the contract of the rent is the loss
sustained by the creditor, the lost profit is the room in which I will stay because of the delay. The judge in a
discretionary way will decide the sum of the damage (that depends also on the room that I will choose after
the loss).

Adequate causation: is complex and open to controversy. Only consequences within the bounds of what
can reasonably be expected to derive from a certain event, may be said to be caused by it.

Assessment of the damages

Art. 1226 provides that where damages cannot be proved in their exact amount, they are equitably
liquidated by the court. Damages in pecuniary obligations: legal interest Art. 1224.

Security on debtor’s assets

Art. 2740 “The debtor is liable for the performance of their obligations with all their present and future
assets”.

Features of securities:

 Generic: the debtor assets are the creditor’s securities.

The creditor can expropriate the debtor assets through enforcement proceedings.
 Unlimited: limitations upon such liability are not allowed, except in the cases set forward by the
law. Examples are registered associations/foundations.

Studying securities there are these two principles.

1. If there are creditors and the other party cannot pay the contract… equal protection of creditors “par
condicio creditorum”.

Art. 2741 C.C. Each creditor is equally entitled to be satisfied by the debtor’s assets, except for those with
grounds for priority (pledges, mortgages are the ground for priority).
Pledges and mortgages give you the right of priority above the other creditors from the sale of that specific
thing. Diritto di prelazione.

2. If the debtor sells or donate all his assets…

Remedies to protect the rights of creditors

 The derivative action (azione surrogatoria)

Art. 2900 “A creditor in order to ensure satisfaction of preservation of his rights can exercise the rights
and action which would be available to his debtor against third person and which the debtor fails to
exercise, provided that such rights and actions…

Aim of the derivative action

o To increase the debtors’ assets.
o All creditors get benefit from the derivative action.

 Actio Pauliana, ordinary claw – back action (azione revocatoria). Art. 2901. “A creditor can demand
that acts by which the debtor disposes of his assets to the prejudice of such creditor’s rights be
declared ineffective to him, provided that:
1. The debtor was aware of the prejudice which the act would cause to the right of the creditor
2. In the case of non-gratuitous act, the third person was aware of the prejudice.

Ex. David (debtor) sells an apartment to Paul (third person). Mary (creditor) can demand that the contract
of sale is ineffective to her if she demonstrate 1. And 2.

Ex. if David gives an apartment to Paul. Mary can demand that the contract of donation is ineffective to her
if she demonstrate 1.

Legal effect of claw-back action

The effect is to declare ineffective the act of the debtor (for example a sale of an immovable good) in favour
of the creditor who sued.

Aim of the ordinary claw-back action:

To prevent the decrease of the debtor’s estate by fraudulent acts (with intent to defraud creditors).

Ways of extinguishing obligation:

 Perform of the debtor

 Novation
 Declaration of remission of debt
 Set-off
 Merger
 Impossibility

Art. 1230 Objective novation “The obligation is extinguished when the parties substitute a new obligation
with a different object or a different source for the old obligation”.
Art. 1236 Declaration of remission of a debt “The declaration of the creditor releasing the debtor from
debts extinguishes the obligation when it is communicated to the debtor”.

Art. 1241 Extinguishment by the set-off “When two people are obliged to each other, both debts are
extinguished for their corresponding amounts”.

Art. 1253 Effects of merger “When the qualities of debtor and creditor are joint in the same person, the
obligation is extinguished”. In case of death of a father (creditor) and the heritage goes to the son (debtor),
the son becomes creditor and debtor at the same time.

Art. 1256 Impossibility “An obligation is extinguished when its performance becomes impossible for a
cause not imputable to the debtor”.

Natural obligations

Are moral or social duties to perform.

Examples of natural obligation provided by law:

 gambling debt (art. 1933)

 the payment of prescribed debt (art. 2940)

The law doesn’t enforce natural obligation, but law bars the recovery.

If you don’t pay a debt from gambling, nobody can go to the court and ask for damages, is not a civil
obligation. You cannot ask your money back if you pay the gambling.

There are some effects and three conditions to be met:

1. The spontaneity of the performance.

2. The capacity of the performer
3. The moral or social duty to perform

When these three conditions are verified, the law bars the recovery.

Art. 2034 C.C. “The recovery of what has been spontaneously given in fulfilment (performance) of moral or
social duties is not allowed unless the service has been performed by an incapable person.

The duties indicated in the preceding paragraph, and any other for which the law does not grant action but
bars (excludes) the recovery of what was spontaneously paid, do not produce other effects”.

Irripetibilità in italian. You can’t ask the money back, the effect if there is a natural obligation.

Particular cases of obligations

A debtor may be performing a primary performance (delivery of a good) and a secondary performance
(the safeguard of the good in the delivery).

In other cases, a single obligation entails two or more subject matters. This occurs when the debtor is
obliged to carry out either one of the two specified performances: alternative obligations (a company
relocating one of its employees abroad is obliged to provide either accommodation in an apartment with
certain amenities or to cover expenses for hotel accommodation). The choice is made by the debtor, unless
the contract delegates to the creditor or to a third person.
Elective obligations occur when the debtor is under a duty to carry out a single specified performance and
is granted the right to discharge his obligation by carrying out a different performance.

Plurality of persons

An obligation may have a plurality of persons, several creditors and several debtors.

Art, 1229 CC “several debtors are all bound for the same performance”. Two situations may arise:

- The obligation gives rise to joint and several liabilities. The debtor who carries out the entire
performance may only claim from each of the other debtors his respective share of the overall
obligation.
- The obligation give rise to a limited liability where each debtor position is distinct from the
positions of the other debtors.

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CASE #5

Elizabeth bought an apartment the 31 st of March 2021 from Kevin.

Can Henry, Kevin’s creditor, makes a claw-back action involving the apartment?

Yes, but he has to demonstrate that the debtor Kevin was aware of the prejudice. He also has to prove that
Elizabeth was aware.

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Law of contracts

In the 4th book of Civil Code. In the art. 1321 the notion of contract.

“A contract is the agreement of two or more parties to establish, regulate or extinguish a legal relationship
having patrimonial content”.

Hence, any agreement modulating relationships capable of economic evaluation, is a contract. A contract is
a covenant by which persons are mutually bound by pledging their word, it is acknowledged as a moral
principle and as established custom by all civilizations: Pacta sunt servanda.

Negotiate the content of the contract, depends on the contract itself. If the contract is between two
companies, the contract is negotiated between the companies and has high costs; they can ask for clauses…
also ordering a cup of espresso at a bar falls under the definition of contract.

Art. 1325 CC Essential requirements:

 Agreement
 Causa
 Subject matter
 Form

Absence, unlawfulness, defectiveness of any of these elements render the contract null.

Agreement

It is the essence of the contract, represent the will of the parties. Two important elements:
  Parties to the contract: person entering in the contract must be vested with capacity to act.
 Will: it has different forms and shapes. It can be explicit from an objective point of view (spoken
words, written words, simple gesture…) or implicit that implies the objective conduct of the party
to will to enter in the contract (a person at the supermarket that fills up a trolley with items and
pushes the trolley to the checkout) (a person on a train, wants to pay the thicket).
A special application of implicit manifestation is implied in the renewal of contract (in a leasing the
lessee is left in possession of the thing and in case of lease of undetermined period, notice of
termination has not been given).

Effects of the contract

The aim of the contract is to freely regulate the conduct between two or more parties. The efficacy laid
down in art. 1372 “a contract has the force of law between the parties. It cannot be dissolved except by
mutual consent or for a cause permitted by the law”. As general rule, it has no effect on third parties.

Effects can be:

 Generate ownership
 Transfer ownership
 Both

Legal act

The contract is a legal act established with the consent of two or more parties. It requires an agreement as
“concurrence of consents”, “meeting of wills”.

Plurality of parties and interests

To reach an agreement the parties have to stipulate a specific set of rules.

It is to be distinguished from unilateral acts: acts generating legal obligations which originates from the will
of a single individual. The difference is in the presence of parties, to have a centre of interests.

Typical and atypical contracts

So how can you establish the content of the contract. There are forms that are created by lawyer who
belong to the common law legal system. Law has provided the framework for many contracts, the typical
contracts; but contractual parties are free to enter into “new” types of contracts, the atypical contracts,
not previously provided by the legal system. Also called innominate contract, examples are leasing
contracts or factoring contracts or franchising contracts.

When you stipulate a contract of sale, you use the rules in the Italian civil code. With innominate contacts
you don’t have the pattern. The parties can decide the content within the limits imposed by the law. They
could use some forms that are written by lawyers who belong to a different legal system (ex. common law
legal system).

Ex. We can find the clause of partial nullity. Italian civil code says that if a part of the contract is void, this
could create the nullity of all the contract. So, parties must look at the limits of the law.
The mixed contracts instead combine features of separate and distinct types of typical contracts.

Alien contracts

Contractual autonomy

It is the translation of economic liberalism. Art. 1322 “the parties can freely determine the contents of the
contract within the limits imposed by law”.

The parties can also make contracts that are not of the types that are particularly regulated, provided that
they are directed to the realization of interests worthy of protection according to the legal order (=
innominate contracts).

People are free to choose the ends they want to pursue, and the means of reaching those ends.

People are equally free to elect the relations which they consider to be appropriate to reach the desired
ends. In other words, the role of legislative and executive powers is "to set out the rules of the game" and
provide for their non - infringement, and not "to step into the ground as players".

How can you behave when who negotiate the contract?

Art. 1337 “The parties, in the conduct of negotiation and the formation of the contract, shall conduct
themselves according to good faith.”

Parties must act honestly and fairly in initiating negotiations, in withdrawing, and entering in the contract.

At any stage of negotiations, and before its acceptance, an offer may be revoked.

The law places that each party is under a duty to inform the other of the existence of any reason for
invalidity of the contract. The violation of the duty doesn’t affect the validity of the contract. However, if
objective, the conduct can give rise to liability for damages. The liability is the pre-contractual liability.

In Italian law, pre-contractual liability is traditionally subject to a double limit:

1. No liability in case of conclusion of a valid contract.

2. Compensation only for costs and earnings lost during negotiations (the negative interest)

Irrevocable offer, option agreement

If the offeror has bound himself to keep the offer open for a certain time, the revocation is without effect.

Art. 1331 Option “when the parties agree that one of them is to remain bound by his declaration and that
the other has the power to accept or not, the declaration of the first is considered an irrevocable offer.

Giorgia wants to go to New York and Alex is a travel agent. Alex presents the price of the ticket and Giorgia
can decide to accept is offer until the 20 th of December. He is bound by his declaration. This is an option
agreement. Giorgia can decide or not.
The first agreement is the option contract: option agreement. The second is a contract of sale of
good/service.

The option agreement gives the right to purchase something (goods, services) by a fixed date. The offeree
can achieve their goal without the cooperation of the offeror. Therefore, nobody can prevent them from
achieving their goal.

As the freedom to conclude a contract is the rule, it is now necessary to turn to exceptions, the duty to
stipulate a contract:

 Legal obligation: businesses benefit from legal monopoly are an example (licence from a public
authority).
 Voluntary obligation to contract…

Preliminary contract

There is a contract if there is an interest. You can decide that all the parties are obliged to stipulate the
contract: preliminary contract.

By preliminary contract the parties are legally bound to stipulate a definitive contract. It must be stipulated
in the form that the law requires for the definitive contract.

The causa

The logic underlying the contract, which characterize it and justifies its effects, is the causa. As essential
requirement, every contract must have a lawful causa.

The subject matter

Another essential requirement. It must be:

 Possible: if physically or technically impossible the contract is not binding

 Lawful
 Determined or determinable: must expressly define the performance due; if not, the contract is
void.

The form

“Form” designates the written form “where prescribed by law under penalty of nullity” (art. 1325) (written
ad substantiam).

Contract is characterized by the principle of freedom of forms, which entail that, unless the legal system
provides otherwise, no written form requirements apply in order to validly enter into a contract.

The system in fact provides the “evidence in writing” or “written ad probationem”. Such written implies
that to provide the proof of certain facts, the contract has to be evidenced in writing. In the absence, the
contract is valid, but in case of dispute, proof by witnesses is not admissible.

Three kind of ad substantiam form:

1. The simple written form: it requires only the document to be signed and dated
 2. Written form with authenticated signatures: authenticated by a competent public official (notary
or others) that ascertain that the signatures are imputable to the signatory (Today a digital
signature corresponds to it). Needed for land registration.
3. Public deed: written form whose content has been authenticated. In addition to signatures, the
notary ascertains that the content of the contract corresponds to the will of the parties.

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Sale and land registration

Sale is the contract having as its object the transfer of the ownership of a thing or the transfer of the other
rights in exchange for a price. The contract is between the seller and the purchaser.

Consensual contract: consent for the transfer of the ownership is sufficient.

Sale of immovable goods: you must conclude a contract of sale in written form (simple written form,
authenticated signatures, public deed).

If one of these 3 forms is used, the contact is valid.

Effects of contract of sale

 obligation to deliver the thing

 obligation to pay the price
 Transfer of ownership or property interests
 To warrant the purchaser against eviction and defects of the thing sold (if excluded in bad faith,
agreement has no effect). It is a natural effect because it doesn’t require any explicit agreement
between parties.

What about thirds?

Thirds are those who are not parties of the contract. They may ignore the conclusion of the contract. When
you stipulate the contract of an immovable good, you must register the contract (trascrizione). So, you
have a contract enforceable against third people.

The form for the registration:

 Written form with authenticated signature

 Public deed

Effect of registration

o The contract produces effects against the thirds.

o The contract shall be enforceable (opponibile) against the thirds.

In case of registration, only written form with authenticated signatures or public deed are the options. So
that you are registered. If there is a dispute between two buyers from the same seller…

Who is the winner in the conflict between two or more buyers of immovable goods?
The winner is the buyer who first record the contract of sale of immovable goods (enforceable against third
people).

Is it possible to register the preliminary contract too?

Only if the preliminary contract is a preliminary contract of immovable goods.

Why register the preliminary contract?

Registration of preliminary contract for the sale of immovables good

Art. 2643 “The following must be made public by means of transcription:

1) contracts that transfer ownership of real estate

2) contracts that constitute, transfer or modify the right of usufruct on immovable property…”

2645 bis. Preliminary contracts for sale (transfer of ownership) of immovables or for the transfer of
property interests on immovable may be registered in the Land Register.

The goal of the registration of the preliminary contract for the sale of immovables is to bring forward the
effects of the registration of the contract of sale of immovables. The preliminary contracts says that the two
parties are obliged to buy and sell. If the seller transfers the good to another person, there is a violation of
the obligation (due performance).

John and Claire are obliged to stipulate the preliminary contract on the 24 th of November and John transfers
the good to Ruggiero on the 9th of December (the new owner).

1. If Claire didn’t notice to the notary the preliminary contract, Ruggiero is the owner. Claire can ask
for damages only.
2. If Claire registered the preliminary contract (paying the notary). Ruggiero stipulates the transfer of
the good with Jhon. Ruggiero, because of the registration can stipulate the contract becomes the
owner.
Now Claire can call the specific enforcement of obligation to make contract, art, 2932 C.C.” If a
person who is bound to make a contract doesn’t perform his obligation, (according to art 1218 can
ask for damages too) the other party can obtain a judgement producing the same legal effects as
the contract which has not been made”.

Usually stipulating a preliminary contract, you are obliged to stipulate the definitive contract. If this doesn’t
happen, the party can ask for a ruling (sentenza) that stends for the contract. The ruling produces the
same effects of the definitive contract, transferring the ownership from the seller to the buyer.

The ruling produces effects when the judge decides (let’s say in 2025…) and then Claire prevails. Effects are
enforceable since the 24 of November of 2021, because it is retroactive. The ruling substitutes the definitive
contract.

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CASE #6

David and Paul conclude the preliminary contract of the sale of David’s apartment on the 14 th Jen 2018.
They provide that the definitive contract shall be concluded by the 11 th of April 2018. Paul invites David to
be at the notary office on the 11 th of April 2018. David doesn’t turn up.
What can Paul do?

Which provision protects his rights?

Here the registration doesn’t matter. The provision that protects his rights is the 2932. He can go to the
court and ask the judge to enforce David’s obligation with a ruling transferring the ownership from the
seller to the buyer. The registration is not needed in this case because there is not conflict between the
buyer and a third person.

Precontractual liability or contractual liability?

Contractual liability. The preliminary contract is a contract, you can ask for positive interests.

Remember that in the case in which a negotiation is started, you have to behave in good faith, if one of
them breaks the negotiation, the other can ask for damages of precontractual liability (because still there
is no contract).

They can also decide to use an option contract or a preliminary contract. The first is not bounded, the
second is bounding the parties. In the second case if you register the preliminary contract, in case of
conflict with a third person, you can prevail.

The parties can negotiate the content of the contract. They can decide to stipulate the contract of an
immovable good or, if the buyer has no money (has to ask for a loan), he can decide to stipulate a
preliminary contract. The two parties are bound, obliged to stipulate the definitive contract. So, there is an
obligation, to make a contract. if one of them do not perform, the other can go to the court and ask for
damages thanks to art. 1218. They have another tool, go to the court and ask for an enforcement
proceeding (art 2932), a judgment that producers the same effects as the definitive contract and transfer
the ownership.

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CASE #7

David and Paul concluded a preliminary contract of David’s apartment on 14 of July 2020. They provide that
the definite contract will be concluded by the 14 th of October 2020.

Paul registered the preliminary contract on the 15 of July 2020.

David sold the same apartment to Claire on 14 of September 2020. Claire registered the contract of the
sale.

Paul invited David to be at the notary on 14 of October 2020. David didn’t come.

Paul asked for the enforcement under art. 2932 on the 24 of October 2020. Paul registered the document
on the same date.

On the 28th of November 2023, Paul will receive a judgment producing the same legal effects of the
contract not concluded. Paul registered the judgment on the same date.

Can Paul ask Claire to endow the apartment on 3 rd of December 2023?

Yes, the effects of the ruling are retroactive at the day of registration of the preliminary contract (15 of July
2020). Claire acquired the apartment on the 14 of September 2020. In the conflict within them, Paul
prevails. There is a conflict between 3 people. So, the registration is relevant. David was obliged to make
the contract with Paul (the promise), but he sold the apartment to Claire (the buyer).

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Law of contracts

So, we said that the parties can choose:

 The option agreement

 The preliminary agreement

Or

 The pre-emption agreement

The pre-emption agreement (pate di prelazione, as the right of priority)

By pre-emption agreement the parties are not bound to stipulate a definitive contract. They are free to
stipulate a purchase contract, but, if one party of the pre-emption agreement decide to stipulate a
purchase contract, he has to act in preference to choose the other party of the pre-emption agreement.

If the party doesn’t prefer the party of the pre-emption agreement, he is liable according to article 1218.
Not 2932, he is not obliged to stipulate a final contract. The other can ask only for damages. But he will
not have the apartment.

Different ways of formation of a contract

The law lays down different ways to conclude the contract. Contracts can be divided into:

 consensual if they are brought about by simple consent (sale of a good).

 real, if delivery of goods, and not consent alone, are required to be concluded (loan, pledge,
deposit).

Consensual contract

o 1326 CC (offer and acceptance)

o 1327 CC (performance before reply by acceptor)
o 1333 CC (contracts binding only on offeror).

1. Offer and acceptance 1326 CC

The formation of a contract is based on the simple exchange of an offer and acceptance.

 Offer: is the manifestation of will by which the first mover (offeror) offers to the other party to
enter into the contract.
  Acceptance: is the manifestation of will by which the person receiving the offer (offeree),
communicates his consent to the offer received. It leads to the conclusion of the contract.

Once the contract is entered, the offeror is bound by the terms of the contract. A contract is formed at the
moment when who made the offer has knowledge of acceptance of the other party.

Presumption of knowledge art 1335 CC

Offer, acceptance, their revocation and any other declaration directed to a given person, are deemed to be
known at the moment they reach the address of the person to whom they are directed, unless he proves
that, without his fault, it was impossible for him to have notice of them.

2. Performance before reply by acceptor art 1327 CC

When, at request of the offeror or by the nature of the transaction or according to usage, the performance
should take place without a prior reply, the contract is concluded at the time and place in which
performance begins.

The acceptor must promptly give notice of the beginning of performance to the other party and, if he does
not, is liable for damages.

3. Contracts binding only on offeror art 1333 CC

An offer of conclusion of a contract that creates obligations only for the offeror is irrevocable as soon as it
comes to the knowledge of the party to whom it is directed.

The offeree can reject the offer within the time required by the nature of the transaction or by usage. In the
absence of such rejection the contract is concluded.

Example: Surety agreements: the guarantor guarantees the performance of obligation of debtor by binding
personally to the creditor.

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Representation

Sources of representation art. 1387 and so on…

The power of representation is conferred by law (legal representation to the parents for the children,) or
by the principal (the will of the principal, voluntary representation).

Features of representation:

The agent (the representative) acts in the name of, on behalf of and in the interests of the principal.

The contract made by the agent produces effects directly to the principal.

Ex. if Alex is not in Milan, he can give the power of attorney to Caterina that acts in the name… of Alex. Can
stipulates contracts in his name for example… so who is the buyer? Alex. Because Caterina used his name on
the contracts produces effects directly to the principal.
The power of attorney

The power of attorney (procura, delega) (voluntary representation) is an uniliteral act, that confers to the
agent the power to act in the name of the principal.

The form of power of attorney uses the same rules of preliminary contracts (that is a bilateral contract!). A
power of attorney has no effect unless it is conferred using the formalities prescribed for the contract which
is to be made by the agent.

If the contract to be concluded by the agent requires a written form under penalty of nullity, then the act
that conferred the power of attorney also has to be made in written form (one of the three forms).

Ex. Purchase of a flat => Written form for the purchase of immovable goods => Written form for the power
of attorney

Contract entered into by representative

A contract made by a representative in the name and in the interest of the principal, within the limits of
the powers conferred by the principal, produces effects directly to the principal. Within the power of
attorney.

In a selling contract for Alex, there can be a conflict of interest between the representative of Alex and the
seller (for some reasons). The representative is not acting in the interests of his principal.

Conflict of interest

A contract concluded by the agent who conflicts with the interests of the principal can be annulled at the
request of the principal if the conflict was known or was knowable by the third person (the other party of
the contract).

What happens if the representative acts in the name of the principal without the power of attorney?

Anyone who is contracted as an agent without having the power to do so or acts more than the authority
conferred on him, is liable for damages which a third person suffers as a result of having, without fault,
relied on the validity of the contract. The contract is ineffective, doesn’t produce effects.

Without fault because the third person must ask for the power of attorney, no fault happens for example if
the agent shows a false power of attorney. There is a burden (onere) by art. 1393.

Alex will not have any damages, so he will not be compensated.

Ratification

In the case of representation without power of attorney, the contract can be ratified (if he wants to) by the
principal, giving to the contract effects. It is a unilateral act.
Internal/ external relationship in representation

We have to be careful in make a distinguish between representation and mandate.

They are different. The power of attorney exists when a person confers the power to act in name and
behalf of the principal, it is a unilateral act.

The representative, Caterina, can decide to stipulate or not stipulate the contract for Alex.

But if there is a contract of mandate Caterina is obliged to stipulate the contract.

 The mandate creates an internal relationship between principal and the mandatory (name of
representative for mandate). The third person obviously doesn’t care.
 The power of attorney instead creates an external relationship because the seller must ask for the
power of attorney.

If Irene (the seller) knows that Alex gave the power of attorney to Caterina, she can decide not to stipulate
the contract (perchè je sta sul cazzo). So, Alex can decide to stipulate the mandate but without the power of
attorney.

So, we can have a mandate with power of attorney or a mandate without it.

Mandate

A mandate is a contract whereby one party binds himself to accomplish one or more legal transaction for
the account of another.

If we have a mandate with the power of attorney, the contract has direct effects to the principal and the
agent is obliged to perform (to stipulate a contract for example).

If the mandate is without power of attorney, the contract produces effects directly to the agent. The
person (mandatory, mandatario) acts in his own name (not the one of the principals and on behalf of the
principal. Therefore, he acquires the rights and assumes obligations.

The third person has no relationship with the principal. And the mandatory is bound to transfer the rights
to the principal.

What happens if the mandatory doesn’t transfer the rights to the principal?

The principal can claim the specific enforcement of obligation to make contract, art. 2932 CC as in
preliminary contracts.

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Interpretation of contracts

The interpretation of contracts is to understand the mean of the contract, the common interests of the
parties, the meaning of the clauses of the contract.

Interpretation is not free in Italy: rules art. 1362-1371 CC of interpretation and criteria for lawyers and
judges.

Art. 1362-1365 are about rules of subjective interpretation (common intent of the parties).
Criteria of subjective interpretation:

o Literal meaning
o The common interest of parties

Literal interpretation

Is the literal meaning of the words. Comprehensive interpretation of clauses: every clause of the contract
is interpreted with reference to all the others, attributing to each, the meaning resulting from the acts as a
whole.

The common intent

Art. 1362 CC. In order to ascertain the common intent of the parties, the general course of their behavior
shall be taken into account: previous, simultaneous and subsequent to the conclusion of the contract.

If we don’t understand the mean of the contract…ambiguous words…

Rules of object interpretation (1367 – 1371)

After using criteria of subjective interpretation, if clauses of the contract appear objectively ambivalent,
the law provides a set of criteria aimed at resolving doubts, attributing to the contract one of the two or
more possible meanings.

The goal is to give rules to help to choose between a variety of possible meanings.

One of them is the general interpretative practices. Ambiguous clauses are interpreted according to the
general practice in the place in which the contract was concluded.

The bridge rule

Art. 1366, both subjective and objective interpretation of the contract are guided by the principle of good
faith. This rule flows from the application of the principle of reliance, a principle which dominates
contractual relations: a person who accepts an offer and, in good faith, regulates his acts in reliance
thereof, is deserving of protection.

The condition, contingent condition

The contingent condition is a future and uncertain event upon the happening of which the beginning of
effectiveness of a contractual obligation or its termination, depends.

1. Ex. Two parties stipulate a contractor of sale of an apartment on the condition that the bank grants
the buyer a loan (the effectiveness depends on the agreement of the loan).
o Effects in the future. Suspensive conditions, the contract will have validity if a certain event
happens.
 2. Two parties stipulate a contract of sale of an apartment subject to termination if the bank doesn't
grant the buyer a loan (the termination depends on the agreement of the loan).
o Effects in the present and eventual termination in the future. Resolutive condition. The contract
has effects today, but it will not have effects anymore if the event happens.

When the events happen, the effects of the contract are retroactive. So, if today, 01/12 I stipulate a
contract with the condition for a certain event on the 9/12, the contract will start having effects, but this
are retroactive on the 1st of December.

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Invalidity of contracts

An invalid (invalido) contract may be either null/void (nullo): irredeemably incapable of legal effects
(subjects to nullity) or voidable (annullabili)(incapable of stable and final effects, subject to annulment).
Indeed, a voidable contract retains effectiveness until the court invalidates it.

Ineffectiveness is a consequence of invalidity.

By art. 1325 CC, essential requirements of a contract:

1. Agreement
2. Causa
3. Object/subject matter
4. Form

Causa: it is the individual economic function, ex. The causa of a contract of sale is the transfer of
ownership and the exchange of money.

The causa is unlawful when it is contrary to the mandatory rules, public policy or common perception of
fairness. A contract to which a condition, whether suspensive or resolutive, is attached is void if such a
condition is contrary to mandatory rules, public policy, or morals.

Object: the object of the contract must be possible, lawful, determined, or determinable.

Form: the written form is a requirement only for some contracts that transfer the right of ownership or
property interests of immovable goods.

o Simple written form

o Public deed

Impossible conditions

An impossible condition makes the contract void if it is suspensive. If it is resolutive, it is treated as non-
existent.

Fulfilment of condition

A condition is considered fulfilled when it fails for a cause imputable to the party who had an interest
contrary to its fulfilment. The effects of fulfilment of the condition are retroactive to the time when the
contract was made.
Validity

A contract is valid if it has been formed according to the law (essential requirements).

When is the contract void, invalid? When one of the requirements lacks.

Invalidity:

o nullity
o annulment

Nullity

Nullity: art. 1418 CC, Causes of nullity of contracts

1. A contract, that is contrary to mandatory rules, is void, unless the law provides otherwise.
2. A contract is rendered void by the lack of one of the requirements indicated in the art. 1325.
3. unlawful causa

Nullity of a contract aims at safeguarding general interests. Nullity of contract is absolute.

Partial nullity

Art. 1419 CC. Partial nullity of the contract or the nullity of the single clauses may lead to the nullity of the
entire contract, if it appears that the contracting parties would not have concluded it without the part of its
content which is affected by nullity.

Substitution of clauses

The nullity of a single clause doesn’t lead to the nullity of the contract when the void clauses are replaced
by the mandatory rules.

Ex. Paul is the owner of an apartment. He rents his apartment to David for two years. However, the Italian
law prescribes that rental contract have to stipulate a four-year period. Therefore, the void clause is
replaced by the four years period.

According to art. 1424 CC a void contract can produce the effects of a different contract, of which it has the
requisites of substance and form, whenever, having regard to the objectives pursued by the parties, they
would have concluded such contract they had known of the nullity.

In order to have a conversion:

1. the contract contains all the elements of a different valid contract

2. the parties, when concluding the contract, were not aware of the cause of nullity
3. prior negotiations and objective circumstances suggest that the parties would have entered into
different valid contract.

What can you do if the contract is void?

Eligibility (legittimazione) for action of nullity

Unless the law provides otherwise, nullity can be claimed by anyone who has an interest in it, and it can
also be found by the court.

Can we go to the court anytime or there is a limit?

The action for a declaration of nullity is not subject to prescription (time limit) except for the effects of
usucaption: the acquisition of a title or right to the property by uninterrupted possession for a prescribed
term.

If the contract is void, can the parties decide that it is valid?

A contract that is void cannot be validated, unless the law provides otherwise: inadmissibility of
validation.

What is the effect of nullity? Example

A sells his flat to B. B sells the same flat to C. C sells the same flat to D. The law lays down that if the
contract between A and B is void, the nullity produces effects also toward D.

It works retrospectively.

o 28th November 2017: stipulation of the contract.

o 1st February 2018: you go to the court
o 10th October 2018: declaration of nullity

The contract is void since 28th November 2017.

Annulment

Causes of annulment of a contract:

o Art. 1425 Incapacity: the contract is voidable if one of the parties was legally incapable of
contracting.
o Art. 1427 Lack of will: Mistake, duress, and fraud. A contracting party whose consent was given by
mistake, extorted by duress, or obtained by fraud, can demand annulment of the contract,
according to the following provisions.

Mistake: 1428. Relevance of mistake. Mistake is cause of annulment of a contract when it is essential and
recognizable by the other party.

 Recognizable when it would have been detected by a reasonable person.

 Essential: A mistake is essential when:
o it concerns the type or the object of the contract.
David stipulated a contract for lease a car (he thought he had stipulated a contract of sale).
o It concerns the identity of the object of the performance or a quality determinative of
consent
David bought a pair of 42 cm trousers (he thought he had bought a different size).
o It concerns the identity or personal qualities of the other party
David bought a painting of an unknown painter (he thought he had bought a painting of a famous
printer).
o The mistake was one of law and was the only or the principal reason for the conclusion of
the contract. Grey zone.
David bought land without planning consent (of public authority to build) (he made a mistake in the
interpretation of the rules of the development plan). IGNORANTIA LEGIT NON EXCUSAT
Duress: is a moral violence as to coerce the will of a reasonable person and to cause him to fear that his
personal integrity or his property will be exposed to an unjust and considerable injury.

Fraud/malice: art. 1439 CC (is a criminal issue, but you can also ask for the annulment of the contract).
Fraud is cause for the annulment of the contract when the deception employed by one of the parties was
such that, without it, other party would not have concluded the contract.

Incidental fraud: If the deception was not such as to compel consent, the contract is valid, even though
without the deception it would have concluded at different terms; however, the contracting party in bad
faith is liable for damages.

Eligibility for annulment

The annulment of contract can be demanded only by those people in whose interest it is established by
law. Ex. the person who has fallen into mistake.

Statute of limitation (prescription)

The action for annulment is prescribed in five years.

When voidability depends on a defect in consent or legal incapacity, the time runs from the day on which
the duress ceased, the mistake or fraud was discovered, the interdiction or disability ceased, or the minor
attained majority.

In other cases, the time runs from the day the contract was made.

Validation (convalida) with annulment

The party entitled to sue for annulment can validate the voidable contract by declaration containing a
reference to the contract and to the cause for voidability thereof, and a declaration of intent to validate it.

A contract is likewise validated if the contracting party entitled to sue for annulment, knowing voidability,
has voluntary performed it.

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Termination

When there is invalidity, the contract is invalid, and it will not produce effects. If the contract is void, the
invalidity is retroactive, since the contract is stipulated. Termination doesn’t regard invalidity.

Termination is caused by

1. Non-performance: if one of the parties doesn’t carry out the obligation, the other party can go to
the court and ask for termination.
2. Frustration/ supervening impossibility: if there is an event and this event causes the impossibility
of the contract, you can ask for termination. With obligations, impossibility is one of the 5 ways of
extinguishing a contract.
3. Hardship/ excessive onerousness
Contract for mutual counter performance

With a contract of sale, there is the seller obliged to deliver the good, the buyer is obliged to pay, counter
performance of the two parties.

Both parties promise to carry out their due performance.

If the buyer doesn’t pay the price, what can the seller do?

The seller can choose to ask for the performance, the price, or can terminate the contract. In case the seller
asks for termination, then the seller cannot come back in his decision.

Termination of contract by non-performance.

Art. 1453 CC Termination of contract by non - performance. “In contracts providing for mutual counter
performance, when one of the parties fails to perform his obligations, the other party can choose to
demand either performance or termination of the contract. In any case, the party can claim compensation
for damages (because of liability)”.

Relationship between the action of performance and the action of termination

Termination can be claimed even when the performance has been claimed but performance can no longer
be claimed after an action for termination.

This because the other party now thinks that the contract is ended and so doesn’t know that he still needs
to performance, it is needed to see and balance the two different interests, even after the termination.

Ex. the seller wants to have the price. He can ask for compel the performance. After three months the seller
doesn’t want to go on and ask for termination. But if the seller decides to terminate the contract, then he
cannot change his mind. The buyer knows about termination and can use his money for other affairs.

Features of non-performance

The principle of pacta sunt servanda. Contracts must be followed. It is why contracts cannot be terminated
if the performance is not relevant/fundamental.

Art. 1455 CC “A contract can be dissolved if the non-performance by one of the parties is fundamental with
regard to the interest of the other.”

The court checks that the non-performance is not of minimal importance. The European sources of law use
the expression fundamental breach. In Italy “non scarsa importanza”.

Judicial termination by non-performance

The contract can usually be dissolved with a judgment.

In the German Civil Code, there is not this provision. In Italy, Spain, France the judge check if there is a
fundamental breach. In Germany, UK, the judges don’t check, the parties decide what can be a
fundamental breach in the contract.
There is an historical reason. The roman legal system was very connected to Church in the Medieval era. A
non-performance was seen as a pity, in a religious sense. So, if there is a pity, a sanction and termination.
Protestants and Calvinism in Germany and UK said that they didn’t need Church, didn’t need a judge.

So, you must go to the court for task for termination, burden of the costs… but there are exceptions:

Out of court termination by non-performance

1. A notice to perform
2. An explicit termination clause
3. Time essential to one party

1. A notice to perform (diffida ad adempiere)

ex. The seller writes (written) a note to the buyer “you have to pay within 15 days (appropriate time,),
otherwise the contract will be terminated”.

Art. 1454 CC 1. The other party can serve a written notice to perform within an appropriate time, declaring
that, unless performance takes place within such time, the contract shall be deemed dissolved. 2. The time
cannot be less than fifteen days. 3. If the time elapses without performance having been rendered, the
contract is dissolved by law.

2. An explicit termination clause

Art. 1456 CC 1. The contracting parties can expressly agree that the contract will be dissolved if a specific
obligation is not performed. 2. In this case, the termination takes place by law, when the party declares
that he wants to exercise this right.

Ex. Contract between two companies. Written in the contract, “if the buyer doesn’t give me all money in 3
days from stipulation, the contract will be terminated.”

The specific performance must be written in the contract. The parties agreed on the condition and the
termination happens when the party decides to use his right. This is comparable to what we find in
Germany.

3. Time essential to one party

Art. 1457 CC 1. If the time fixed for performance by one of the parties is considered essential to their
interest, and they want to demand performance of the obligation notwithstanding the expiration of the
time, they have to notify this within three days, unless there is a different agreement or usage. 2. In the
absence of such notice, the contract is deemed dissolved by law, even if the termination was not expressly
agreed on.

Ex. if you want to buy a dress for a wedding, the time is essential, the day after it is useless. If the time
expire, the contract is terminated unless within 3 days the damaged party writes a note.

You must show that the time is essential, and you need to see the nature of the performance, it is not
sufficient to say that time is essential. In fact, this termination is rare.

Termination by frustration
Art. 1463 c.c. In contracts providing for mutual counter performance, the party released due to the
supervening impossibility of the performance cannot then demand performance by the other party.
Impossibility of performance leads to the termination of the contract, without a declaration of the party or
a judgement.

When the performance of one party has become impossible only in part (partial impossibility), the other
party has a right to a corresponding reduction of his obligation and can also withdraw from the contract if
he lacks an appreciable interest in partial performance.

The same option applies in the case of temporary impossibility. It gives rise to the termination of the
obligation if the impossibility continuous until (depending on the nature of obligation) the debtor can no
longer be required to perform the obligation, or the creditor is no longer interested in it.

Real fact. In December 2019 we couldn’t imagine the Covid-19. We are restoration and we stipulate a
contract of rent in that month. The rental fee is 8000€ each month. On 8 th of March, lockdown. You are not
allowed to open your restaurant and you couldn’t expect. You can’t, factum principit, law doesn’t allow. So,
he can ask for termination.

The other party can say that a pecuniary obligation doesn’t give you the possibility to terminate the
contract.

Pecuniary obligation doesn’t extinguish, you can ask for loans… But there is hardship, Covid 19 was not
foreseeable. It can be considered extraordinary and unforeseeable.

Termination by excessive onerousness (= hardship)

Art. 1467 CC. In contracts for continuous or periodic performance or for deferred performance, if
extraordinary and unforeseeable events make the performance of one of the parties excessively onerous,
the party who owes such performance can demand termination of the contract. A party against whom
termination is demanded can avoid it by offering to change equitably the terms of the contract.

Only for long term contract. A contract of sale is one shot contract. Only the other party can stop
termination.

Something changed, the judgment of the tribunal of Rome in August 2020. The judge said that there is
hardship, the principal of good faith, the parties are obliged to renegotiate the content of the contract. in
case this doesn’t happen, the party can ask to the redaction of the rental fee to the judge. There is not this
rule. But in this real case the judge used the principal of good faith. So, from March to December hen get a
40% discount and a 20% for the following months.

In 1978 another example with the close of the Suez Channel, ship had to circumnavigate all Africa. Many
companies used this article.

Aleatory contracts

Termination cannot be claimed if the supervening onerousness is part of the normal risk of the contract.

Ex. insurance contracts.

Tort liability

Art. 2043 C.C. “Any intentional or negligent fact that causes an unfair injury to another, obliges those who
committed the fact to pay damages.

Sources of tort liability

 Any fact
 intentional or negligent
 that causes to another
 an unfair injury

The aim of tort liability and strict liability is to restore the inured party to the position he enjoyed before
the injury. And, when we talk about an unfair injury, we are talking about an injury to an interest protected
by the law.

There are some prerequisites for tort liability, specifically: the capacity to understand and to intend as well
as Art. 2046 CC: “a person who was incapable of understanding or intending at the time he committed the
act causing an injury, is not liable for its consequences, unless the state of incapacity was caused by his own
fault”.

 Intentional: will
 Negligent: fault

The effects:

Liability to pay for damages (loss and lost profits (1223) if they are a direct consequence of the injury)
(2056,1226).

There are different types of damages: economic loss (danno patirmoniale), pain and suffering (danno
morale), and physical loss (danno biologico).

Strict liability:

 Art. 2048 CC: Parents are liable for fact committed by their minor children.
 Art. 2049 CC: Entrepreneurs are liable for facts committed by workers in the exercise of their work.

a) It is about role/position (Parents, Entrepreneur)

b) Any fact
c) That causes to another
d) An unfair injury

Differences between tort liability (2043) and liability of the debtor for non – performance of an obligation
(1218).

Tort liability doesn’t arise from a relationship between the parties, while liability for non – performance of
an obligation arises from a binding legal relationship. The debtor doesn’t carry out the due performance.
Non – performance causes damages to the creditor.
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Multi – subjective obligations, circulation:

The obligation requires at least two parties: the debtor and the creditor. Each part may be composed of
more than one person: all – at the same time – creditors or debtors.

In this kind of obligations there are two problems to solve:

1. The relationship between a multi – subjective part and the other party
2. The relationship among the debtors (or creditors)

There are two types of multi – subjective obligations:

Separate obligations:

1. Each debtor is bound to pay only his share of the debt.

2. Each creditor may claim only his share of credit.

Obligations in solido:

1. Solidarity among debtors: several debtors are all bound by the same performance, in such a
manner that each can be required to perform. The performance by one discharge the others. Co-
debtors are bound in solido unless it appears otherwise from the law or the sources of obligation
(presumption of joint and several liability).
2. Solidarity among creditors: among several creditors, each has the right to demand performance of
the entire obligation, and performance obtained by one of them discharges the debtor with respect
to all the creditors.

With internal relationships, the obligation is divided among the various debtors or among the various
creditors. The shares of each are presumed equal.

A debtor in solido who has paid the whole debt can only claim only from the co-debtors the portion of each
(c.d. recourse, regresso).

Circulation of credit:

Assignment of claims: a creditor can assign his claim, gratuitously or non-gratuitously, even without the
consent of the debtor, provided that the claim does not have a strictly personal character or that the
transfer is not forbidden by law. If the same claim has been the subject of more than one assignment to
different people, the first assignment of which the debtor has been notified or that which has first been
accepted by him, by an instrument having a certain date, prevails, even if it is of a later date.

LEGAL CASE #8
John is pushed by his friend Tom, a ten-year-old boy, during the break at school. John falls and breaks his
arm.

How can John’s parents claim damage?

Jhon’s parents can ask damages using the article 2048 (for teachers) and 2049 (for school), expanding the
article to the “teachers” and the “school” (is better to ask to school that has more assets than the
teachers). This because the act of Tom, being a minor, cannot be proven as intentional and he is a legal
incapable. Moreover, the fact was committed at school, so not under the parents’ responsibility.

LEGAL CASE #9

Firm “Number One” and firm “Yellow” conclude a contract for services on the 1st of January 2019. Firm
“Yellow” will deal with the cleaning of firm “Number One”.

They provide that firm “Number one” will pay firm Yellow 12.000 euros on the 31st of July 2019 and 8.000
euros on the 31st of December 2019.

Firm “Yellow” assigns its claim of Euro 12.000 to bank “Zero” on the 21st of January 2019. Bank “Zero”
notifies firm “Number One” of the assignment on the 23rd of January 2019.

The same claim is assigned on the 22nd of January 2019 to bank “C”, who notifies firm “Number one” of the
assignment on the same date.

Who should firm “Number One” pay?

Firm 1 should pay bank C because bank C notified Firm 1 of the assignment of claim one day before Bank
Zero (22nd instead of 23rd January).

“If the same claim has been the subject of more than one assignment to different people, the first
assignment of which the debtor has been notified or that which has first been accepted by him, by an
instrument having a certain date, prevails, even if it is of a later date”. Art. 1264-65

Delegation (delegazione)

Trilateral contract:

 delegator (debtor)
 delegated
 delegatee (creditor)

Ex. the debtor orders the bank to pay his creditor

The structure of the delegation is the structure of the check (two contracts between delegator and
delegated + delegator and delegatee).

Expromission (espromissione, subjective novation).

Debtor doesn’t have money and transfer the money to a third person. The third person doesn’t pay but
obliges himself to pay, he assumes to pay. Without delegation by the debtor assumes the obligation of the
debtor to the creditor.
Ex. A father assumes the obligation of his son.

Expromission is an agreement between a third person and a creditor.

Assumption of debt (accollo)

Debtor and a third person agree that the latter assumes the debt. Ex. the bank assumes the debt of a
client.

Assumption of debt is an agreement between a third and the debtor.

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Non-negotiated contracts

Terms and conditions, ticket of public transports, insurances… the business makes the standard terms, you
can accept or not.

Standard because faster, cheaper, easier for the company.

Features of standard trade terms

 One contractual party drafts the terms of the contract

 The other party can only «take or leave» (contracts of adherence)

No negotiation of the contract

Aim is the uniformity.

Standard trade terms Art. 1341 1. Standard trade terms drafted by one of the parties are effective, if at the
time of entering into the contract the other party knew of them or should have known of them by using
ordinary diligence.

Art. 1341 c.c. (II paragraph = called «List of unfair trade terms») 2. In any case, standard trade terms, that
establish/impose, in favour of the person who has drafted them,

1. limitations on liability
2. the power of withdrawing from the contract
3. the power of suspending its performance

are ineffective, unless specifically signed.

Signature specific is sufficient to make these unfair terms effective only in B-to-B contracts.

Examples:

Air carriage contracts/ Contracts for rail transport/ Telephone contracts for trade, business or professional
purpose.

Unfair terms in consumer contracts

Italy, being part of EU, has to follow directives:

EEC Directive 93/13 (1993/13) on the protection of consumers. Aim is to improve the European market. If
you are a business and you want to sell all over Europe, you want to follow common rules (law creates the
market).

This article implemented the CC (decodification). There were in 1996 new articles in CC (L. n. 52/1996: Art.
1469 bis – art. 1469 sexies CC) that today, since 2005, are in the new Consumer Code (recodification).

So, now, if there is a non-negotiated contract between a business and consumer, drafted by the business
through standard terms …

The field of application

 Non-negotiated contracts between a business and consumer,

 drafted by the business
 through standard trade terms or
 for individual use

Business: any natural or legal person who is acting for trade, business or professional purposes;

Consumer: any natural person who is acting for purposes which are outside his or her trade, business or
profession.

Unfair terms in B-to-C

A contractual term is unfair if it causes a significant imbalance between rights and duties. Terms which
have been individually negotiated are not unfair.

Severability

Unfair terms are void but the contract is valid and binding.

The force of law of contracts

Art. 1372 CC: A contract between the parties has the force of law. It cannot be dissolved except by mutual
consent or for a cause provided by the law.

The right of withdrawal (recesso)

A right of withdrawal may be granted by law or established by the contract. The exercise of the right to
withdraw from the contracts terminates the rights and obligations of the contract.

Penalty as compensation for withdrawal (c aparra)

Art. 1386 CC. If a right to withdraw is stipulated in the contract for one or both parties, the only function of
the penalty is to compensate for the withdrawal. In this case, the party who withdraws forfeits the penalty
given.

The deposit (caparra confirmatoria)

Art. 1385 CC 1. If at the time of formation of the contract one party gives to the other, as a deposit, a sum
of money, the deposit, in case of performance, has to be paid back or imputed to the performance due.

2. If the party who has given the deposit doesn’t perform the obligation, the other party can withdraw and
retain the deposit; if the party who received the deposit doesn’t perform the obligation, the other party
can withdraw from the contract and demand double the amount of the deposit.
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Contract and third parties

Art. 1372. The contract has the force of law between the parties.

The privity of the contract

The doctrine of privity of contract provides that a contract cannot confer rights or impose obligations
arising under it on any person except the parties to it.

Exception

The principle is excepted for the contracts made for the benefit of third parties. Example: life insurance
contract. Tom (= promisee) concludes a life insurance contract with a company (=promisor) for the benefit
of his wife Mary (=beneficiary).

Contract in favour of third party

A stipulation in favour of a third party is valid when the promisee (“stipulante”) has an interest. The third
person acquires a right against the promisor (promittente), as a result of such stipulation.

Revocation of the stipulation

The stipulation, however, can be revoked or modified by the promisee unless the third person declares to
the promisor, that he intends to avail himself of the stipulation.

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Sham (farsa) contracts (simulation)

There is a sham contract when there is a deliberate divergence between the will of the parties and their
declaration.

Types of simulation

 Absolute: A simulation is absolute when the parties don’t want any effect.
Example: Bill and Tom conclude a sham sale of good. They agree that they don’t want any transfer
of the ownership of the house.
Effect of absolute simulation: a sham contract doesn’t produce effects between the parties.
 Relative: A simulation is relative when the parties want different effects from those apparently
created.
Example: Mary wants to give her daughter Claire her house. Mary and Claire conclude a sham sale
of good.
Effects of relative simulation: the genuine contract produce effects if the requirements of
substance and form are met.

Why does the law regulate sham contract?

Because the creation of an apparent situation, different from a real one, causes several conflicts of
interests. The creditors and thirds of both parties to a sham contract have opposing interest. Thirds and
creditors of sham transferor want the genuine contract to prevail. Thirds and creditors of the sham owner
want the sham contract to prevail.

Effects of simulation on thirds

Thirds can claim a contract is sham when it is prejudicial to their rights. Sham contract cannot be used as a
defense by the parties or by the creditors of the sham transferor, against third parties who, in good faith,
have acquired rights from the apparent owner of the right.