Contract Law

(Materiale suplimentare) Autor: Prof.dr.Cornelia Lefter A. The payment within the contracts Notion The payment means the fulfillment of civil obligation. In other words the debtor is bound to perform all services due to the creditor and the latter has the correlative right to ask for the debtor to give, to do or not to do something for him art.1470 NCC: any payment presumes a debt. According to art.1469 (2) NCC the payment consists of the handing over (remission) of an amount of money or, according to the case, in the performance of any other service which constitute the object of the obligation itself and according to art.1469 (1) NCC: the voluntary fulfillment of an obligation = payment In case of the obligations are not fulfilled the creditor may ask for the forcedexecution either in kind or by equivalent. The term payment applies to different activities: - rendering a service - performance a work - transfer a real right (ownership) No matter what activities are covered by the term payment, this one is a juridical operation, an agreement between the solvens (person who pays) and the accipiens (person who receives the payment) When the payment is fulfilled means that a civil obligation is paid off, or, in other words, the juridical relation that exists between the debtor and the creditor is paid off. In relation with the payment, the followings questions are interested: 1) who can make the payment 2) to whom the payment is made 3) payment conditions 1) Who can make the payment According to art.1472 NCC the payment can be made by any person even if he is a third party in relation with this obligation. Also, according to art.1473 NCC incapable person: the debtor that fulfilled his obligation cannot ask for the restitution by claiming his incapacity at the time of fulfillment From these legal provisions it is understood that:

the debtor is the first one bound but, the payment can be made by a person who is jointly bound with the debtor (a co-debtor or a fideiussor), or by a third person who has the interest (e.g.purchaser-acquirer of a mortgage building has the interest to pay off the mortgage in order to have a building discharged of any debt), or by a non-interested parson who wants to gratify the debtor (the debtor consent is required), and for the obligation to give only the owner of the goods (which should have also the legal capacity to assume such an obligation, otherwise the contract is null and void) In case that the payment is made by a third party, art.1474 NCC stipulates: (1)the payment made by a third person pays off the obligation if it is done on behalf of the debtor. The third party does not replace (substitute) the paid creditor. (2) the creditor may refuse the payment made by a third person if he was notified by the debtor, unless such a refusal would be detrimental to the creditor (3) the creditor can refuse the payment made by a third person only if the nature of obligation or the parties agreement stipulates that the payment shall be done only by the debtor. Conclusion The payment can be made by anybody but the debtor is the only one bound 2) to whom the payment is made According to art.1475 NCC the payment should be made to the creditor, to his representative, legal or conventional, to the person nominated by him or authorized by court to receive it. It means, as a rule, that the payment should be made to the creditor. By exeption, the payment can be made to: the creditors heirs, to a conventional representative (mandatory) of the creditor, to a creditors legal representative (tutor, legal guardian), to a distrait creditor nominated by the court or to a third person. In this latter case, according to art.1477 NCC: (1)the payment made to a third person is still valid if: a) it is ratified by the creditor, b) that who received the payment becomes further the owner of the debt c) it was made to that who claimed it based on a discharging receipt signed by the creditor. (2) the payment made in other conditions than those provided at (1) extinguishes the obligation only to the extend it benefit to the creditor. Special situations: Art.1476 NCC- payment made to an incapable: the payment made to person incapable to receive it discharges the debtor only to the extend it benefit to the creditor

Art.1478 NCC payment made to an apparent creditor: the payment made in good-faith to an apparent creditor is valid even if further it is proved that this one was not the real creditor refund of the debtor Art.1479 NCC payment of distress goods: payment made with the nonobservance of a distrait, distress or opposition made according to the law,, does not impede the creditors that took such a measure to claim again the payment. , and the debtor has a regress right against that who receive an nonvalid payment

3) Payment conditions a) object of the payment b) place of the payment c) date of the payment d) payment prove (evidence) e) payment imputation 3.a) object of the payment According to art.1492 NCC (1) the debtor cannot be discharged himself by fulfilling another service that it is due, even if the value of the service offered would be equal or higher, unless the creditor accepts it . It means that the payment must consists in the exact execution of the due obligation. When another service than the obligations object is fulfilled, even accepted by the creditor, it is not a real payment but it is a given payment (datio in solutum). Also, according to art.1480 NCC the debtor is bound to fulfill his obligations with the diligence that a good owner administrates his goods, unless law or the contract stipulates otherwise. In order to have a valid payment, its object has to fulfill the following conditions: - to exist - to be possible from a legal and material point of view - to be determined or determinable (example: art.1484 NCC obligation to assign rights or court actions, art1487 NCC, obligation to constitute a warranty, art.1488 NCC obligation to give an sum of money) - to be the property of the owner (example: art.1482 NCC obligation to hand over goods individually established, art.1485 obligation to hand over a good, art.1486 NCC obligation to give goods generally established, art.1483 NCC obligation to transfer an ownership right) - other conditions ( when the contracting parties have agreed that the payment is divisible, when the debtor dies and has more heirs, when the obligation is paid off through compensation, when the debt is paid by a fideiussor, when the court allows a grace period). Other special conditions refer to: Art.1491 NCC payment made with somebody else goods (1) When, within the fulfillment of the obligation, the

debtor hands over a good that he does not own or of which he cannot dispose, he cannot ask to the creditor the restitution of the handed over good unless he promises to execute the due service with another good that he can dispose.(2) the creditor in good-faith can restitute the good received and claim, if it is the case, damages for the suffered prejudice. Art.1492 NCC given in payment (previously mentioned), art.1493 NCC assignment of debt instead of fulfillment. (1) Then when, instead of the initial service, it is assigned a debt, the obligation is extinguished on the moment when the assigned debt is fulfilled. Art.1481NCC obligations of means and obligation of result (1)in case of an obligation of result the debtor is kept liable to secure the creditor the promised result.(2) in case of obligations of means, the debtor is kept liable to use all the necessary means in order to achieve the promised result. (3) In order to establish if an obligation is of means or of result, it will be taken into consideration especially: a) the way in which the obligation is provided by the contract, b) the existence and the nature of the counteroffer and the other elements of the contract c) the degree of risk supposed for reaching the result d) the influence that the other party has against the fulfillment of the obligation. 3.b) The place of the payment According to art.1494 NCC (1) By default of a contrary provision or if the place of the payment cannot be established according to the nature of the service or based on the contract, on practices established between the parties or by the usages: a) monetary obligations should be fulfilled at the domicile, or, respectively, at the headquarters of the creditor at the date of the payment; it means that the payment is portable b) the obligation to hand over a good individually established should be fulfilled at the place where the good is located at the date the contract is concluded; c) the other obligations are fulfilled at the domicile or, respectively, at the headquarters of the debtor at the date the contract is concluded. it means that the payment is carried (2) the party that, after the contract is concluded, changes his domicile or, respectively, his headquarters, established as place of the payment, bears the supplementary expenses that this change determines. Effects: - the place of the payment determines the transport expenses - in international private law, the place where the obligation should be fulfilled is determined according to the law of the place where the payment is made (lex loci solutionis or lex loci executionis) 3.c.) Date of the payment Within this field, the following rules apply:

Art.1495 NCC (1) By default of a term stipulated by the parties or determined based on the contract, of practices established between the parties or by the usages, the obligation should by fulfilled immediately.(2) when the nature of the service or the place where the payment has to be made imposes, the court can establish a term Art.1496 NCC advanced payment (1)the debtor is free to fulfill the obligation even before it is due if the parties have not agree the contrary or this does not result from the nature of the contract or the circumstances it was concluded.(2) Nevertheless, the creditor may refuse an advanced payment if he has a lawful interest that the payment is made at the due date.(3) in all the cases, the supplementary expenses caused to the creditor by the fact of an advanced payment are the debtors duty. Art.1497 NCC date of the payment through banking transfer If the payment is made through banking transfer, the date of the payment is that when the creditors account was supplied with the sum of money that is the object of the payment Art.1498 the payment expenses the payment expenses are the debtors duty, unless contrary provision

3.d) The payment prove (evidence)- rules: Art.1499 NCC means of evidence if the law does not provide otherwise, the payment prove is made with any means of evidence. Art.1500 NCC discharged receipt (1) that who pays has the right to receive a discharged receipt and, according to the case, to the handing over of the original document of his debt. (2) the charges to draw up the receipt are in the duty of the debtor, unless a contrary provision. (3) in case the creditor refuses, with no reason (unjustified), to issue the receipt, the debtor has the right to suspend the payment.

Law presumes the payment of the debt as follows: Art.1501NCC-presumption of execution of accessory services the receipt through which the reception of the principal service is confirmed presumes, until the contrary prove, the fulfillment of accessory services relatively presumption Art1502 NCC presumption of execution of periodical services the receipt given for the reception of one of the periodical service that is object of the obligation presumes, until the contrary prove, the fulfillment of services that previously become due relatively presumption Art.1503 NCC the handing over of the original title of the debt (1)the voluntary handing over of the original title ascertaining the debt, made by the creditor towards the debtor, one of the co-debtors or the fideiussor, presumes the extinction of obligation through payment. The contrary prove belongs to that who has the interest to prove the extinction of obligation otherwise. (2) If

the original receipt voluntarily handed over was drawn up in authentic form, the creditor has the right to prove that the handing over was made for another reason that the extinction of obligation. a) when the creditor voluntarily hands over the original title of the debts, the debtor's payment is relatively presumed; b) when the creditor hands over the authentic copy of the debt, the debtors payment is absolutely presumed Art.1504 NCC payment through banking transfer (1) If the payment is made through banking transfer, the giro transfer order signed by the debtor and approved by the credit institution liable to pay presumes the execution of payment, until the contrary prove. (2) the debtor has anytime the right to claim to the credit institution of the creditor a written confirmation about the payment through the banking transfer. This confirmation makes the evidence of the payment . Art.1505 NCC discharge of warranties if the parties have not agreed that the warranties will secure the execution of another obligation, the creditor that received the payment shall discharge the goods affected by real warranties and to give back the goods kept as warranty, if it is the case.

3.e) payment imputation Art.1506 NCC Payment imputation made through the parties agreement (1) The payment made by the debtor of many debts due to the same creditor, that have the same object, is imputed on them according to the parties agreement. Art.1507 NCC Imputation made by the debtor (1)The debtor of many debts that have as object the same kind of goods has the right to indicate, when he pays off, the debt which he understands to fulfill. The payment is imputed above all on the expenses, then on the interests and finally on the capital. (2) The debtor cannot without the creditors consent, to impute with preference the payment on a debt that is not due yet over a due debt, by difference of the case when it was provided that the debtor may pay in advance. (3) when the payment is made through banking transfer, the debtor makes the imputation through the corresponding mention recorded on the transfer order Art.1508 NCC Payment imputation made by the creditor (1) In the absence of the debtors indication, the creditor may, in a reasonable term after he received the payment, to indicate to the debtor the debt on which it is imputed. The creditor cannot impute the payment on a non-due or litigious debt.(2) When the creditor hands over a discharged receipt, he is bound to make the payment imputation through it. Art.1509 NCC Legal imputation (1) When none of the parties make the payment imputation, the following rules apply: a) the payment is imputed with priority on the debts due;

b) there are considered paid off, above all the unsecured debts or those for which the creditor has less warranties; c) the imputation is made above all on the debts more onerous for the debtor; d) if all the debts are alike due, as well as equally guaranteed and onerous, the oldest debts are paid off; e) in the absence of the criteria mentioned at letters a)-d), the imputation is made proportionally with the value of the debts. (2) In all the cases, the payment is impute above all on the court and execution expenses, then on the rate, interests, penalties, in chronological order of their due date, and, finally, on the capital, if the parties do not agree otherwise. B. Selling and purchasing contract According to art.1650 NCC (1) The selling and purchasing is the contract wherein the seller (vendor) transfers or, is liable to transfer to the buyer the property over a good in exchange of a price that the buyer is obliged to pay.(2) There also can be transfer through the sale a dismemberments of the ownership right or any other right. Also, according to art.1657 NCC Any good can be freely sold, if the sale is not forbidden or limited by law or convention or will In case of future goods: according to Art.1658 (1) NCC if, the object of the sale is a future good, the buyer acquires the property in the moment when the good is achieved. With regard of the constructions, there are applicable the rules concerning the land registers.(2) in case of sale of goods from a limited kind, the buyer acquires the property when the goods are individualized by the vendor. When the good, or the type is not achieved, the contract does not produce any effect. But, if the achievement is determined by the guilt of the vendor, he is liable to pay damages(3) When the good is only partially achieved, the buyer has the choice to claim either the annulment of the sale, or the reduction of price. The same solution applies when the limited type is partially achieved, and due to this reason, the vendor cannot individualized the entire quantity of goods mentioned by the contract. If the partial non-execution of the good, or according to case, of the limited type was determined by the vendors guilt, he is bound to pay damages.(4) When the buyer had assumed the risk of non-achievement of the good or of the limited type, he remains liable to pay the price.(5)..the good is considered achieved at the date when it is able to be used according to the destination for which the contract was concluded . In case of totally or partially perished goods, according to art.1659 NCC: If, in the moment the sale, an individual established good has totally perished, the contract does not produce any effect. If, the good has perishes only in part, the buyer that had no knowledge about this fact, can claim either the sale annulment, or, accordingly, the price reduction. In order to be validly concluded, the contract has to fulfill the conditions mentioned by law:

1) Parties capacity: according to art.1652 NCC stipulates that Can buy or sale all those that are not forbidden by law But, according to art.1653 NCC Incapacity to buy debatable right (1) under the sanction of absolute nullity, the judges, prosecutors, court clerks, judicial executors, lawyers, public notaries, judicial councilors and practitioners in insolvency cannot buy, directly or through interposed persons debatable rights that are under the competence of the court where they carry on their activity. (2) There are excepted: a) the purchase of succession rights or of quota-parts of ownership right from the co-successors or, respectively co-owners; b) purchase of debatable right with the view to increase the debt that was born before the right become debatable; c) purchase made in order to protect the rights of that who posses the goods related to the debatable right. (3) the right is debatable if it exist an ongoing and unfinished lawsuit regarding its existence or its length. Art.1654 (1) NCC - Other incapacities to buy:(1) there are incapable to buy, directly or through interposed persons, even through public auction: a) mandators, for the goods they are mandated to sell; b) parents, tutors or guardianships, temporary administrator, for the goods of the persons they are representing; c) public clerks, syndic judges, practitioners in insolvency, executors, or any similar persons, that can influence the sale conditions made through their intermediation or has as object goods that they administrate or (they) supervise.(2) the non-observance of interdictions provided by letter a) and b) is sanctioned with relative nullity, and of that provided by letter c) with absolute nullity. Art.1655 NCC - Incapacities to sell: (1)The persons mentioned by art.1654 (1) also cannot sell their own goods for a price represented by an sum of money resulted from the sale or the exploitation of the good or of the patrimony that they administrate or supervise, according to the case. Art.1656 NCC Inadmissibility of action in annulment those that are forbidden to buy or to sell cannot claim either in their own name, or in the name of the protected person, the sale annulment. 2) Parties consent: according to art.1669 NCC- promise to sell and promise to buy (1) when one of the parties that concluded a bilateral promise to sell refuses, unjustified, to conclude the promised contract, the other party can claim the court to give a judgment that takes the place of the contract, if all the other conditions of validity are fulfilled. (2) The right to bring the action is prescribed in 6 months from the date when the contract should be concluded. (3) The same rules apply accordingly in case of unilateral promise to sell or to buy. (4) In case of unilateral promise to buy an individual established good, if, before the promise is executed, the creditor alienate the good or constitutes a real right on it, the promisors obligation is considered extinguished. Also, according to art.1670 NCC price of the promise by default of a contrary provision, the sums paid on the grounds of a promise to sell represent an advance from the agreed price.

Moreover, according to art.1668 NCC Option pact regarding the sale contract: (1) In case of an option pact regarding a sale contract of an individual established good, it cannot be disposed of the good that constitutes the object of the pact between the day the pact is concluded and the day when the option is exercised, or, according to the case the option period elapsed. (2) when the option pact has as object tabular rights, the option right is registered into the land register.(3) the option right is cancelled under law if, there was not registered any declaration to exercise the option together with the prove of notification of the other party until the expiration term of the option. 3)Object of the contract: movable/immovable goods Special situations: - if the goods cannot exist in the future - force majeure or accidental case - selling of good will - selling of merchandises shipped (either with indication of ship art.63,64 commercial code or selling on documents) 4)The price: it shall be establish in money, determined or determinable, real (serious). It means that the price shall be established according to the others party obligation => if it is fictitious or ridiculous - the contract is null. 5)the form of the contract: according to art.1675 NCC The sales opposability: In special cases established by law, the sale cannot be opposed to third parties unless the publicity requirements are fulfilled. The parties obligations are: a) Obligations of the vendor, according to art.1672 NCC the vendor has the following principal obligations: to transfer the ownership of the good or, according to the case, of the sold right, to hand over the good, to warranty the purchaser against eviction and goods vices. The handing over the good is made when the possession is achieved (in case of real contracts); when the purchaser hand them (in case of consensual contracts) and symbolical when the goods are in warehouses or shipped. The guarantee for eviction (art. 1695-1700 and art.1702 NCC) and for vices (art.1707-1709 NCC) means that the vendor shall insure the peaceful use of the goods bought. He warrants the buyer for total or partial eviction and serious hidden vices, not for apparent vices. The vendor also has to inform the purchaser (through labeling, marking and use instructions) and to guarantee the safe use of goods (control of products qualities).

The transfer of the ownership right or, of the sold right is made according to art. 1674 NCC. unless the cases provided by law and, if from the parties will does not result otherwise, the ownership right is transferred under law to the purchaser from the moment when the contract was concluded, although the goods were not been handed over and the price was not been counted yet. Also, according to art.1673 NCC obligation to transfer the sold right: (1) the vendor has the obligation to transfer to the purchaser the ownership over the sold good. (2) Together with the ownership the purchaser acquires all the rights and court actions that belonged to the vendor. (3) If the law does not dispose otherwise, the provisions regarding the transfer of ownership apply accordingly when through the sale is transferred another right than the ownership right. By exception: - Sale with ownership reserve (sale by installment art.1684 NCC) - sale with option of redemption (= resolution express clause) - alternative sales (purchaser has option art.1668 NCC) - sale of future goods (art.1658 NCC) - sale of general established goods included a limited class art.1678 NCC: - wholesale of goods (in bloc)- art.1679 - sale on sample or model art.1680 NCC: - sale on try (test) art.1681, 1682 NCC - sale of another partys good art.1683 NCC b) Purchaser obligations: According to art.1719 NCC: the purchaser has the following principal obligations: a) to take over the sold good b) to pay the price. In additional to these obligations, the buyer also has to take over the goods if not they will be assigned on his behalf and to bear to sales expenses (shipping included). The place where the payment has to be done and the date are provided by art.1720 NCC. Also. art.1721NCC provides when the prices interests are due. The payment of the price can be suspended, under the conditions stipulates by art.1722 NCC. If the buyer does not pay the price agreed, he will be sanctioned according to art.1724 NCC. The buyer can also be put, under law, in default according to art.1725 and 1728 NCC. As a rule: the guilty contracting party (meaning, that who does not fulfilled or unsuitable fulfills his obligations) has to pay damages. The damages shall cover: damnum emergens + lucrum cessans (real damages) (non-achieved profit)