The effects of contracts. Performance of contract and Termination.

Damages

4.3. The effects of contracts

4.3.1 General rules for the interpretation of a contract

1. The priority of the real will of the parties

Contracts shall be interpreted according to the will of the parties and not by the literal
meaning of the terms. (Art. 1266 alin (1)CC)
The real will of the parties must be proved. The proof can be made by any means and until
proved otherwise, the form that corresponds to the manifestation of the parties will will be
considered to meet their real intention.

2. The contract produces, apart from the specific effects expressly stated, other effects

A valid contract obliges the parties not only to what is expressly stipulated but also to all the
consequences that practices established between the parties, usages, contract law or equity
give to the contract, according to its nature. (Art.1272 (1) CC)

3. The meaning of the usual clauses is implied

The meaning of the usual clauses is implied, athough they are not expressly stipulated.
(Art.1272 (2) CC)
An example would be the case of the sale contract where the obligation of the seller to
guarantee the buyer for the crowd is implied, although this obligation was not expressly
stated in the contract

4.3.2. Special rules for the interpretation of a contract

1. The systematic interpretation of the clauses

Clauses are interpreted one through the others giving each of them the meaning resulting
from the entire contract. (Art.1267 CC)
We should not understand from this principle that if one clause is declared null, the contract
itself will be declared null, because our legislation stipulates that the partial nullity is the rule
and the total nullity is the exception and, in adittion, the clauses should be interpreted in the
way in which they can produce some effect.

2. The interpretation of the doubtful clauses

The doubtful clauses cand be defined as the ones that can be undertsood in more than one
way or the ones that can not be understood in any way.
In order to interpret these types of clauses, the following rules should be respected:

1. a) When a certain clause can be interpreted in two different ways, it will be

interpreted in a way that can produce a effect.

This principle has its origin in the Roman Law which stipulated the principle actus
interpretandus est potius ut valeat quam ut pereat. It can not be accepted that the parties
have stipulated a clause without the intention that this certain clause would produce juridical
effects.
Practical application:- the case when a sale contract is declared null, but it is valid as a sale
promissory agreement, according to the principle of the conversion of the legal act. This
principle is stated in Art.1260 (1) CC a contract which is declared null and void will
produce the effects of the legal act for which all the condition specified by law are
accomplished.

1. b) When the terms of the clause have more than one meaning, they will be interpreted
in the way that fits the most with the nature and the subject matter of the contract
2. c) The doubtful clauses will be interpreted taking into consideration the nature of the
contract, the circumstances in which it was concluded, the previous interpretation of
the clauses and expressions of the contract given by the parties, the sense that
generally is assigned to the clauses and expression in this domain and the usages.
3. d) When in doubt, the clauses will be interpreted in favor of the debtor, according to
the principle in dubio pro reo.

In case of the sale contract, we have a special rule which derogates from the rule mentioned
above. Therefore, In a sale contract, the doubtful clauses will be interpreted in favour of the
buyer, with the exception of the rules applicable to the consumer contracts and adhesion
contracts. Art.1671 CC)

1. e) No matter how general are the terms of the contract, its only subject matter are the
benefits to which the parties have committed.
2. f) In the case when in the content of the contract, we are given an example for a
specific obligation, their number and scope are not restricted to the example given.
3. g) The clauses in the adhesion contracts will be interpreted against the one who have
proposed them, according to the principle in dubio contra stipulantem.

4.3.3 The effects of the contract between contracting parties.

1. The principle of compulsory force of the act pacta sunt servanda

The principle of compulsory force of the act is expressed by the Latin Idiom pacta sunt
servanda. Indeed, the civil code synthetically expresses this idea by stipulating that the
conventions legally concluded have the force of lawbetween contracting parties.
Furthermore, the principle of compulsory force is effective even upon the court of law. For
instance, the court solves the litigation between parties according to the legal provisions and
also based on the convention existing between the litigants.
Nevertheless, law expressly provides the exceptions from the compulsory force of the act.
Thus, despite the parties will the contract takes end in the following cases:
the death, incompetence, insolvency or bankruptcy of any of the contracting parties
terminates the mandate contract
the contracts concluded intuitu personae are generally terminated by the promisees death.

2. The principle of irrevocability of the act

The principle of irrevocability of the act restrains the promisor to revoke his promise. This
rule is a corollary of the previous one (the principle of compulsory force of the contract).
By way of exception,

1. there are several cases where the unilateral revocation of the bilateral legal act is
allowed by law. For instance:

the cancellation of a gift made by one of the spouse to another,

the termination of a lease (rent) contract by the lesee, if there is no certain term for the
contract. A lease is an agreement whereby one party (the so-called landlord) transfers his or
her right into immediate possession to the other party (the so-called lesee) for a commonly
consideration, the so-called rent.
the dissolution of a partnership;
the termination of the gratuitous mandate by any of the parties,
the termination of a gratuitous deposit by the deponent,

1. There are also several unilateral juridical acts that may be merely revoked by their
author, such as:

the (last) will. The testator may revoke its (last) will at any time until his or her death.
Notwithstanding, conceptually, a will is not a true juridical act until the testators death,
because it has no juridical force. Obviously, after the testators death it cannot be revoked
anymore;
the relinquish of an inheritance. To revoke a relinquish of the inheritance means to accept
the inheritance. Therefore, the conditions requested for revocation of the relinquish are the
same as they are for the acceptance of an inheritance;
acceptance of an inheritance (the acceptance should be expressed within 6 months from the
death of the person inherited and the inheritance should not to be previously accepted by
another heir).
the revocation of an offer. A revocation is a withdrawal of the offer by the offeror. In order
to be effective, law requires that the revocation of the original offer is notified to the offeree
unless the latter has effectively accepted it.
4.3.4. The effects of the contract towards third parties.

1. The principle of relativeness (privacy) of the act

According to the principle of relativeness (privacy) of the acts effects, the effects of a
juridical act are produced strictly between the parties of the act (the promisor and the
promisee).
Hence, a plaintiff can maintain a lawsuit only against the party with whom the contract has
been concluded.
In order to understand that principle, the following basic notions have to be explained:
party (the so-called contracting party in case of a bilateral act);
third party;
interested party.

1. A party is a person who concludes a legal act, either referred to as an author (in
case of a unilateral act), or as a contracting party (in case of a bilateral act).

Depending on the nature of the act, the parties can have specific names: grantor-grantee,
legator-legatee, assignor-assignee, bargainer-bargainee, leasor-Ieasee, landlord-tenant,
vendor-purchaser, consignor-consignee, devisordevisee, mortgagor-mortgagee, etc.
From a juridical point of view, a party can be a single person or group of two or more
persons, whether they have the same interest within the act.

1. A third party is a person who was not involved in the conclusion and the
performance of the act.

iii. An interested party (known, also, as ayant cause or habentes causam) is a non-
contracting party who uses the existence of the act as a basis for a lawsuit.
Essentially, the interested parties are persons who are recognized either as having enforceable
rights or as being liable for duties created by an act where they are not parties.
These persons are grouped into three classes:

1. Universal successors and successors with universal title, either intestate or

testamentary.

a.1. A universal heir succeeds an universitas bonorum, with assets and liabilities, and every
legal act made by the deceased takes effects upon him or her.
In company law, a case of universal succession is the merging through absorption. The
absorption supposes that a company becomes a part of another company (the so-called
absorbent company). The former company ceases its existence but the absorbent company
continues to exist and succeeds into the rights and duties owed by the former corporation.
One of the absorption effects is that the absorbent company retains its name and identity and,
at the same time, acquires the assets, liabilities, franchises and power of the company that
ceases to exist.
Another case provided by company law is the merge. Within merge, two or more companies
are united and form a new company. At the same time, the original companies cease to exist.
In both the case, the absorbent company or the company resulted from merge acquires the
assets and liabilities of the former company/companies, being its universal successor.
a.2. Successors with universal title are persons who bequeath a fraction of the deceaseds
patrimony. They have the same position like universal heirs, being bounded by any contract
or unilateral act made by the deceased. The only distinction between them and the universal
heirs is that the former inherits a fraction of the patrimony, whereas the latter inherit
a whole patrimony.
For example, within company law, the division of a company leads to such succession with
universal title. Thus, the divided company ceases to exist and the resultant companies
bequeath fraction of its patrimony.
Universal successors and successors with universal title are interested parties in any act
concluded by the deceased because they inherit the patrimony as it is (e.g. decreased by
expensive gifts). Thus, even if they were not parties of the act, due to their inheritance right,
they become interested parties. It should be mentioned that, there are cases where law allows
to a special category of heirs to avoid the gratuitous acts made by the deceased.

1. Successors with a particular title

A successor with a particular title is a person who acquires a certain enforceable right, by
any lawful transfer. For instance, such persons are the purchasers, the assignees, the heirs
who inherit a specific right.
The transferees are interested persons only related to the acts which fulfill certain conditions
as follows:

the act is previously concluded;

the transfer
the act refers to the right acquired by the transferee.

We emphasize that the transferee can be either a party (in the act whereby he or she acquires
the right), or a third party (in the act which has another object than the acquired right).

1. Simple creditors

A creditor is a person to whom an obligation is due. According to law, the creditor has the
right to demand and to be recovered by a certain performance of his debtor.
The secured creditors are entitled to a lien (e.g. a charge, holds or claims upon the property of
another as security for some debt or charge).
The simple creditors have no such guarantees.
Inasmuch as their claims are unsecured, the simple creditors are interested parties in legal
acts made by their debtor, if such acts may influence the promisees solvency. Therefore, law
allows them to avoid the gratuitous acts concluded by their debtor with the view to jeopardize
the creditors rights.
Exceptions
The universal successors and successors with universal title, as well as the simple creditors
are considered apparent exceptions from the principle of relativeness effects of the act.
But, the so-called contracts to the benefit of a third party (e.g. life insurance contract) is
considered real exception to above mentioned principle.

Other exceptions from the principle of privacy of the act

The genuine exception from this principle is the stipulation for somebody else,
because a third party, a stranger to the contract, becomes creditor as a consequence of
the agreement will of the contracting parties.

Stipulation for somebody else (Stipulation to the interest of a third party)

Stipulation for somebody else (so-called contract to the benefit of a third person) is a contract
whereby a party (the so-called promisor) pledges himself to the other party] (the so-
called promisee) (promises) to fulfill an obligation to the benefit of third party (the so-
called beneficiary).
For instance, in case of life insurance contract, the insurance company (the promisor)
promises to pay an insurance indemnity to a beneficiary (the third party) mentioned by the
insured person (the promisee), if the insured person dies.
Thus, the third party becomes direct creditor of the promisor; therefore, he/she has to
be determinate or determinable, even if it refers to a future person.
The goal of stipulation is the service rendered (awarded) by the promisee to the beneficiary
through the promisors action. This award (interest) can have either an onerous or a
gratuitous title.
the interest has an onerous title when the promisee has a debt due to the beneficiary that is
paid by the promisor directly to the beneficiary;
the interest has a gratuitous title in case of life insurance contract that allows a person to
make a gift to a beneficiary.
There are three categories of legal effects:

1. between promisee and promisor

there is a relationship specific to any contract that implies that the obligations have to be
fulfilled and the rights to be observed by both contracting parties.

1. between promisor and beneficiary

the beneficiary enjoys the right risen from the contract concluded between the promisee and
the promisor;
the beneficiary has a direct right aganinst the promisor therefore the beneficiary may sue
the promisor for claiming the carrying on of his promise, (but he/she cannot claim the
cancellation of the contract).
iii. between promisee and beneficiary
 there are only indirect consequences from stipulation.

The apparent exceptions from this principle are:

1. Reprezentation a party, the representative, concludes a legal act, usually a contract,

in the name and on behalf of another person, called proxy, in such a way that the
effects of the contract which is concluded are produced towards the proxy (the person
who was not present at the moment when the contract was concluded).
2. The Direct actions A creditor has the right to ask directly his debtor contracting
party (a third party) in order to recover his own debt.

An example would be the situation when some persons who concluded a contract with an
entrepreneur does not receive money for their work, so they can ask for the money directly to
the beneficiary of the work.

3. The promise for others action (porte-fort convention)

The porte-fort convention is a contract (or a clause in a contract) through which a person
the debtor (promises) commits towards the creditor to determine another person to make a
legal commitement in favor of the creditor from the contract.
The (promisors) debtors obligation consists of persuasion of the third party to assume a
commitment against the creditor.

Differences between the porte-fort convention and stipulation for somebody else:
Stipulation for somebody
Porte-forte convention
else
Exception
from the Apparent exception Genuine exception
principle
he makes an act
of acceptance;
he makes an act he consolidates the
of ratification; rightacquired from the
Third party he becomes a party in the contract concluded between
contract concluded initially the one who stipulates and
between promisor and creditor the promisor,
he does not become a
party in the contract
The to give or to make
to determine the third party
promisors something in favor of the
to conclude or to ratify an act
obligation third party beneficiary
the promisor becomes
Quality of the the promisor is only debtor creditor for this third party,
party towards the creditor depending on the decision
of the third party.
 2. Opposability

The contract is enforceable against third parties who are required to respect the rights and
obligations of the contracting parties. (Art.1281 CC)
Even though a contract produces effects only towards its contracting parties, in general, that
does not mean that other persons can completely ignore its effects. The other persons who
were not parties in the contract are held to respect all the rights and obligations which arose
from this particular contract.
Exception from the principle of opposability
Simulation exception from the principle of opposability of the contract
The simulation is a legal operation stipulated expressis verbis in the New Civil Code and it is
based on the mutual intention of the parties to simulate:
creating through a public act (but untrue) a legal appearance which does not corresponds to
the reality, but it produces effect toward third parties, and
through another act (a secret act) modifies entirely or partially the legal appearance created
through the public act.
The features of the simulation:

1. a) Conventional characteristic the intention of the parties is to hide under an untrue

appearance the true reality
2. b) Legal characteristic simulation is permitted by law only if the parties do not
pursue the breaking of the law.
3. c) Unitary characteristic simulation is a single legal operation: first, the real act, but
secret, is concluded and after this operation, the parties conclude the public act, but
untrue.

Conditions of the simulation:

1. a) the mutual intention of the parties to simulate (anumus simulandi)

2. b) the simultaneous existence of 2 acts: the public one (untrue) and the real one
(secret)
3. a) The mutual intention of the parties to simulate

The intention of the parties to simulate is a sine qua non condition for the existence of the
simulation. The parties conclude an act, that is secret, but is real and afterwards they conclude
another act, public, but untrue.

1. b) The simultaneous existence of 2 acts: the public one and the real one

In order to be valid, the public act must meet all the conditions imposed to the acts, in
genere. This act does not produce any effect towards the parties because they were never
intent to give this act a legal significance.
The secret act (contra-lettre) is the legal act in which we can find the real manifestation
of the parties will. This act and only this will produce effects between the parties, but it
will not produce any effects towards third parties. This act must meet all the substantive
condition provided by law for legal acts. This contra-lettre should follow this
two conditions:

It must have a secret characteristic,

It must be contemporary to the public act the act are contemporary when they are
concluded simultaneously, but also when first is concluded the secret act and
afterwards the public act. It is essential that at the moment the public act is concluded,
the secret one to be already concluded.

The secret act must meet only the substantive conditions provided by law for legal acts. They
are not required to follow any formal conditions.
According to the New Civil Code, the simulation is not sanctioned with the nullity, but the
specific sanction for this institution is the unenforceability of the secret act towards third
parties.
The secret act only produces effects between the contracting parties, unlike the public act
which does not produce any effect between the parties, it only produces effects to the third
parties, but they have to be of good faith.
The third parties can ask the court to ascertain the existence and content of the secret act in
order to remove the effects of the public act. If the action is admitted, then the secret act will
produce effect towards the third parties, not only between the contracting parties.

4.3.5. The specific effects of the mutually binding contracts

The specific feature of the mutually binding contracts is the reciprocity and interdepency of
the obligations of the parties which basically means that each party is at the same time both
debtor and creditor.
Given this principle, we have some specific effects:

1. If one of the party does not fulfill his obligation but he request the other party to
perform his, the party who was asked to carry out the obligation can invoke the
exception for non-performance of the contract.
2. If one of the party, guilty of culpable misconduct, does not carry out his obligation,
the other can ask the court to pronounce the rescission of the contract.
3. If one of the party can not by any means carry out his obligations and because this
situation, the contract is terminated, the question which arise is who bears the risk of
contract.

A) The exception for non-performance of the contract (exceptio non adimpleti

contractus)
Exceptio non adimpleti contractus can be defined as a muniment (way of defence) made
available for the party that is asked to carry out his obligations although the party who is
asking did not carry out his own obligations.
Lets take as an example the case when A seller sells to B buyer a mobile phone. If in the
contract is stated that the phone will be given only after the price will be paid, A wont be
forced to give the good before he receives the price. If the buyer asks such a thing, the seller
can successfully invoke the exception for non-performance of the contract.
Nevertheless, if in the contracts content exists a clause that states that the buyer will pay the
price at a certain date agreed by the parties, after the good will have been given, the seller
will not be able to invoke this exception because he had given up his right.
The conditions that must be fulfilled in order to invoke the exception for non-performance of
the contract:

1. a) The mutual and interdependent obligations of the parties must have their basis in
the same contract.
2. b) To exist a non-performance, even a partial one, but important enough from the
other party.

Civil Code introduce a presumption of guilt The fault of the debtor of a contractual
obligation is presumed by the simple fact of the non-performance. (Art.1548 CC)
Moreover, the CC states that the enforcement may not be refused if, according to the
circumstances and taking into account the small matter of the performance which was not
executed, this refusal would be contrary to good faith.

1. c) The non-performance should not be due to a certain fact of the party that
invokes the exception and because of this, the other party could not perform his own
obligation.
2. d) Parties should not have agreed a term for the performance of their mutual
obligations.

This exception can be invoked between the parties that have concluded a contract, by the
party who is entitled to this, without the intervention of a judge and without giving notice to
the debtor. In this case, the party does not want the rescission of the contract, but only a
suspension of its effect.
The most important consequence which arises from this exception is the temporary
suspension of the obligation of the party who invokes it. For example, if an architect does not
receive the money agreed for his work, he can suspend the work until the payment is made.

B) Rescission of the contract

The rescission of the contract is the abolition of a contract, usually mutually binding, uno-
ictu, at the request of a party when the other party did not perform the obligations that he had
taken when the contract was concluded
Features:
a) Institution sanctioning the non performance of the obligations in a contract, usually
mutually binding, uno-ictu. As an exception, this sanction can arise also in the case of
a unilateral contract, (such as the contract of pledge).
b) Arises when the non-performance of the obligations is due to the debtors guilt and not to
the force majeure or due to some unforeseeable circumstances.
c) Operates by virtue of a court judgment, of an unilateral declaration of rescission or if the
law expressly provides it.
d) If this exception is invoked and obtained, the contract is disbanded.
e) The rescission frees the one who obtain or invoke it from its own commitment.
f) The most important effect of the rescission of the contract is its retroactive nature which
produces the following consequences:
-The benefits which were performed will be restored,
-If a third party had obtained some rights from the purchaser of the good, once the rescission
was obtained, these rights will be disbanded as well.
-If a third party had concluded conservation acts or acts of administration and rescission was
obtained, these acts will remain valid.

1. g) Is optional the creditor may choose between the forced execution of the
obligation or the cancellation of the contract

Rescission may be: judicial, conventional, legal

The judicial rescission

The judicial rescission will be decided by the court at the request of the interested party.
Though, if the non-performance of the debtors obligation is of little significance, the creditor
will not be able to obtain the rescission of the contract.
However, there is an exception to this rule the case of the contracts with successive
execution where the creditor may ask for the rescission of the contract even though the non-
performance of the obligation is of little significance. Still, the non-performance must have a
repetitive character.
The creditor is not obliged to ask for the rescission of the contract, he can ask the court to
compel the debtor to perform his obligations instead.
The judicial rescission can be admitted if the following conditions are fulfilled:

1. a) One of the party did not perform his obligation; the non-performance may be either
total or partial and in this last case, the non-performance must have been considered
essential at the moment when the contract was concluded.
2. b) The party who did not perform his obligation should be responsible for this
situation;

The fault of the debtor of a contractual obligation is presumed by the simple fact of the non-
performance. (Art.1548 CC)
The non-performance of the obligation must be due to the debtors guilt and not to the force
majeure or due to some unforeseeable circumstances.

1. c) The debtor who did not perform his obligations must have been given notice, in the
conditions provided by the law.
If the obligation had not been carried out in the term stipulated in the contract, it will not be
considered that the debtor had been given notice. For this purpose, it is necessary a
manifestation of the creditors will.
It will be considered that the debtor was given notice:
if he had received a written notice
if the creditor submitted the request for summons.
If the debtor had not been given notice and the creditor submitts a request for summons, the
judge will give the debtor a reasonable period of time in which he can perform the
obligation.
Action for rescission of the contract
In order for the rescission of the contract to operate, it must be requested by the interested
party. The action for rescission of the contract must be submitted in the general term of
prescription (3 years).
If the debtor does not carry out his obligation, the creditor is entitled to damages.
The damages are:
1) compensatory damages = the damages that the creditor is entitled to if the debtor
does not perform his obligation or if he performs it inadequately
2) punitive damages = the damages that the creditor is entitled to if the debtor does not
perform his obligation in time.
Therefore, the creditor has a right of choice, he is not forced to ask for the rescission of the
contract, he can request the forced execution of the contract if this is still of interest to the
creditor.

The conventional rescission

New Civil Code expressly stipulates that the conventional rescission is possible, moreover,
the conventional rescission becomes the rule in this domain, while the judicial rescission
becomes the exception.
The conventional rescission can take place through a written notice send to the debtor,
when the parties agreed this way,
when the debtor is in default without notice or
when the debtor did not perform his obligation in time.
The resolutive clause in a contract
= is the clause by which the parties stipulate the rescission of the contract for non-
performance of the obligations of one of them.
This type of clause produces effects only if expressly stipulates the obligations for which the
non-perfomance leads to the rescission of the contract.
This clause only leads to the rescission of the contract:
if the debtor was given notice or
 if the parties have agreed that the simple fact of non-performance would lead to the
rescission of the contract.
The parties must stipulate clearly in the contract the content of the resolutive clause and
also the condition in which it operates.

The effects of the rescission

The rescission produces the same effect, irrespective of its type (judicial or conventional) and
this is the cancellationof the contract for the past and for the future as well.
The rescission produces effects between the parties of the contract, but also towards the third
parties.

1. The effects between the parties

If the rescission is admitted, the parties must give back the benefits which were obtained at
the conclusion of the contract

2. The effects towards third parties

If a third party had obtained some rights from the purchaser of the good, once the rescission
was obtained, these rights will be disbanded as well, according to the principle resuluto iure
dantis, resolvitur ius accipientis.

The dissolution of the mutually binding contracts

The action for dissolution of contracts is a procedural means which allows the party that had
performed his obligation from a contract with a successive execution to ask the court the
dissolution of the contract when the other party did not performed his own.
In order to be admitted, it must follow the same rules as the rescission of the contract, but
unlike the rescission, the dissolution only produces effects in the future, which means that the
contract will produce no effects from the moment when the dissolution was admitted to the
future this is one of the differences between these two juridical institution

Differences between rescission and dissolution:

the rescission the dissolution
applicable to the applicable to the
Type of contract contracts with an contracts with a
instantaneous execution successive execution
can be non-essential,
non-performance of the
is essential but it must have a
obligation
repetitive character
The effect:
for the past and for the
the cancellation of the only for the future
future as well
contract
C) Risks of the contract
The question that arises when we say risks of the contract is whether a party must or must
not perform his obligations if the other party fails to execute his own. For example, if we
agree that the seller bears the risks of the contract, it means that the seller looses the good and
the price as well. If we agree that the buyer bears the risks of the contract, it means that he
will have to pay the price even though he didnt receive the good. Which is the solution of the
Romanian law?
The risks of the contract is a juridical institution consisting of a rule res perit debitori and
an exception res perit domini.

1. The principle res perit debitori

The rule is that the risk of the contract is beard by the debtor whose obligation had
become impossible to perform, respectively by the party that, due the force majeure, can not
carry out his obligation. Because of the fact that he is in an impossibility to perform his
obligation, he will not be able to compel the other party to perform his own obligations.
If the obligation is only partially impossible to be carried out, there are possible
two situations:

1. a) A decrease of the other party benefits, the debtor whose obligation had become
impossible to perform bearing the risks of the contract if he hadnt carried out his
obligation.
2. b) Termination of the contract when the part that still can be carried out is not able to
assure the scope of the contract. In this case, the debtor whose obligation had become
impossible to perform is completely bearing the risks of the contract.
3. The risks in the mutually binding contract that transfers property rights

In this situation, we must take into consideration the risks of the contract, but also the
situation in which the obligation can not be performed due to an impossibility of performance
of the contract.
Although in the previous legislation the rule for these types of contracts was res perit domino,
which means that the risk is beard by the party who was the owner of the good at the moment
of the fortuitous/accidental loss an exception from the rule res perit debitori.
The New Civil Code states that for these types of contract is applicable the general rule: res
perit debitori.
BUT if the creditor was given notice, then he would have to bear the risks, according to the
rule res perit creditori, as a consequence of the principle res perit domino.

Contractual liability

The contractual liability means the debtors obligation to repair the damage that he had
caused to the creditor due to the non-performance, improper execution of his own obligation
or due to the fact that he had performed his obligation, but not in time.
 The essential condition to exist a contractual liability is to have a valid
contract between the debtor and the creditor.
If a contract does not exist, then we will apply the tort liability

The contractual liability has two forms:

1. The contractual liability for his own deeds

2. The contractual liability for the others deeds

Conditions for contractual liability

1. The existence of a valid contract

2. An illegal act
3. The existence of an injury
4. The existence of a connection between the illegal act and the injury
5. The debtors guilt

The illegal act

An illegal act means the non-performance of the obligations lato sensu. This means that:
the debtor is held responsible if he does not perform his obligations or
if he performs in an inadequate way or
if he performs them too late.
The non-performance may be either totally or partially.
Civil Code introduce a presumption of guilt which states that The fault of the debtor of a
contractual obligation is presumed by the simple fact of the non-performance. (Art.1548
CC)

The injury
The injury may be defined as the damages caused to the creditor by the non-performance of
the obligations of the debtor, or by the inadequate performance of these or by the
performance of the same obligations too late.
The injury may be:
patrimonial consists of the actual damage suffered by the creditor (damnum emergens)
and the loss of profit (lucrum cessans)
moral the physical pain and sufferings caused to the creditor by the non-performance of
the obligation
corporal the damages caused to the health and physical integrity of a person.
The creditor must prove the existence of the injury, unless the law stipulates otherwise ot the
parties have agreed otherwise
The injury must fulfill the following conditions:

1. to be sure
 2. to be foreseeable
3. to be attributable to the debtor

An injury is sure when its existence is certain. In genere, the actual injuries are sure. Also,
the future injuries are sure if their existence is sure.
The debtor can only be held responsible for the injuries that he foresaw or could have
foreseen at the moment when the contract was concluded. (Art.1533CC)
The injury must be attributable to the debtor which mean that the debtor should be guilty of
non-performance hisobligations.
The connection between the illegal act and the injury
According to Civil Code, the damages cover only what is a direct and
a necessary consequence of the non-performance of the obligation.

The debtors guilt

Only if the debtor is guilty of non-performance his obligations, the creditor is entitled to
damages.
There are two forms of guilt (Art.16 CC):
1) intent
2) negligence

1. The offense is committed with intent when the author foresees the result of his action
and he either follows its outcome or although he doesnt follow the outcome, he
accepts the possibility that this outcome will produce.
2. The offense is committed with negligence when the author either foresees the
outcome of his action, but he does not accept it considering that it will not produce or
he does not foresees the outcome of his action although he was supposed to foresee it.

In contract law, the debtor is held responsible no matter the form of his guilt. This is the
general rule, but we have exceptions as well.

Damages
Damages can be defined as compensation money that the debtor is held to pay
for repairing the injury suffered by the creditor as a consequence- for non-performance of
the obligation of the debtor,
for an inadequate performance of the obligation or
for not performing the obligation in time.
Damages are always established in money.
The court can force the debtor to pay damages to the creditor if the creditor has given notice
to the debtor. In contract law, if the time in which the obligation must have been performed
had expired, it is necessary a manifestation of the creditors will in order to give notice to the
debtor to perform his obligation.
The debtor is considered to have been given notice when
the creditor send him a written statement asking to perform the obligation or
the creditor introduce a writ of summons to the court.
The debtor is in default without notice in the following cases:

1. a) when the law expressly provides,

2. b) when the contracting parties agreed this way,
3. c) when the obligation, through his nature, had to be performed in a certain time and
the debtor had not performed it,
4. d) in the case of continuous obligations (the obligation to supply water),
5. e) if the obligation of not to do was breached,
6. f) in other cases provided by law

The following effects arise from the moment when the debtor was given notice

1. a) the debtor is held: to punitive damages,

to compensatory damages

1. b) if the obligation is to transfer an individually determined good, the risk of the

contract is not any more beard by the debtor of the obligation of releasing the good,
but by the creditor who did not took the good.
2. c) If an amount of money is not paid in time, the creditor has the right to
receive punitive damages, in the amount agreed by the parties or in the
amount stipulated by the law (if the parties have not agreed to a specific interest, then
it will be applicable the legal interest.)

Penalty cause
The penalty clause is a clause through which the parties agrees that if the debtor does not
perform his obligation, he will have to pay a certain amount of money. (Art.1538 CC)
The parties sets in advance the value of the injury caused to the creditor and they will not be
able to ask for moredamages in court and the judge will not be able to reduce or to
increase the amount of the damages.

Clauses concerning the contractual liability

1. Irresponsibility conventions = the debtor is not held responsible for any obligation;
they are permitted only if the creditors guilt is negligence
2. Limitation of liability clause = the parties agrees to a maximum amount of money
which the debtor has to pay if he causes a damage to the creditor. The clause is only
valid if the creditors guilt is negligence.
3. Aggravation of the liability clause = the debtor agrees to be held responsible for any
obligation.

They are permitted no matter the debtors guilt.

The contractual liability for the others deeds
The debtor is liable for damage caused by negligence of the person who is used by him in the
performance of the contractual obligations.
The conditions under which the contractual liability for the others deeds can be applied:

1. a) contractual obligation of the debtor to be executed through another person,

2. b) the third party who has to perform the obligation has to be assigned,
3. c) absence of the exemption from liability of the debtor by the creditor.