INTRODUCTION TO THE LEGAL SYSTEM

- MODULE 1

PRIVATE LAW
FIRST PARTIAL
STUDY GUIDE

MADE BY :
ENRICO NAVAZZA
1-‐LAW AND THE STATE
Law and moral sciences

“few questions concerning human society have been asked with such
persistence and answered by serious thinkers in so many diverse, strange, and even
paradoxical ways as the question “What is law?”” (H.Hart, The concept of law)
The difficulty to answer such questions is frequent in moral sciences, differently
to natural sciences.

Definition of law
The definition of law was proposed by Immanuel Kant in 1795; the philosopher made a
distinction between two basic questions about law:
1. Quid ius? (what is law), referring to the definition of law as such
2. Quid iuris? (what is the law?), which is the responses given by law as to
cases shall be decided.

Ius was the latin for “law”; it probably derived from iussum (what has been
commanded), from which we derived words such just, justice, jurisprudence,
jurist…
However, European languages adopted a different term to mean law: Neo--Latin
languages took the word directum, meaning “straight”, in the sense of just and
equal. From this word derived “diritto (IT), “droit” (FR), “derecho” (ES)

Law, society and the state

law exists in the framework of social life: ubi societas, ibi et ius. However, in
some cases, the mutual relations between law and society have been put into
question:
• By “society”, is it solely meant an organized group of men?
• Did prehistoric men have a law?
• Are primitive communities to be considered as societies and, anyways, do they
have a law: These issues have been particularly dealt with by anthropology of law
or ethnology of law, the cross--cultural study of social ordering.
However, most of legal science understands law on the basis of the so--called Western
legal tradition; in this vast context, law is commonly seen as something which is not
only controlled but also created by a national State.

State law
As each state creates its own law, any discourse about it is possible only with regard to
a national law, which depends on the acts enacted by each state (with the exception of
international law): any scientific study would be one of Italian law, German law etc.;
studying Italian law, for instance, would mean to ascertain the acts adopted by the
Italian state to create its own law. To compare different systems of law a branch of
legal sciences, comparative law, investigates the comparison between one national law
and another.
Note moreover that European law does not radically contrast this view on state laws.
Western legal tradition: Ius civile
The written legal tradition was one of unity thanks to the heritage of roman law,
which provided foundations for it. As the roman empire fell in the 5th century a.D, some
“dark periods” followed (the middle ages), when roman law disappeared until the
middle of the 11th century – beginning of the 12th. During the middle ages writings were
nearly lost; civilization was handled down by monasteries, where monks used to copy
literature, philosophy etc. However, as books were expensive and legal text were not
considered vital, those texts were recycled through scratching pages to copy books of
interest.
The beginning of western legal tradition may be traced back to the renaissance of
roman law between the end of the 11th and the beginning of the 12th century.
In Bologna Irnerius rediscovered the Justinian compilation, made up in the 6th
century under the orders of Justinian, emperor of the Eastern Roman empire. Irnerius
began to read, comment on and teach the Justinian compilation. Thus led to the
foundation of the first university on the (Western) world, the alma mater studiorum,
university of Bologna. Hence, the study of Roman law, and particularly of the
Pandectae or Digesta spread throughout Europe.

Ius civile
Opinions rendered by jurists living in Rome between the 2nd century B.C. and the 3rd
century a.D, as collected in the 6th century a.D. in Byzantinium, was considered the
main source of law. That was so not because a sovereign ordered it (non ratione
imperii), but because legal thought was deemed to be endowed with an inner
rationality (sed imperio rationis). However, due to the tremendous changes in society
occurring at the time, political institutions urged for a mighty effort of creative
interpretation and adaptation of those ancient texts: the combination of Roman law
collected in the Justinian compilation and the apparatus of its “scientific”
interpretations by scholars (communis opinion doctorum) became the generally
applicable law in Western Europe.

Ius canonicum, ius commune

Ius canonicum was adopted by the Catholic church, which at least from Pope Gregory
VII (1173-- 1185) was organized as a political institution which hence needed a law of
its own.
The “canon (or canonical) law” was indeed created, also based on roman legal
thought; the main collection of canon law, the Decretum Gratiani, made up right
before the middle of the 12th century, was given the epithet of Corpus iuris canonici.

Students in law of the time had therefore to study both civil law and canonical law;
those two branches together formed “common law”, the matrix of the Western
legal tradition, and the study of it was needed to have a master of laws.

Peace of Westphalia
the Holy roman empire and the Roman church were not states in a modern sense: they
claimed universal institutions, whose powers were not confined within a territory with
definite borders. As a matter of fact, the institutional paradigm of the Empire went
gradually into pieces after the peace of Westphalia, dated 1648, which put an end to
religious wars.
As a consequence, the means to eradicate civil conflicts was found in the emergence
of National states, replacing the universality of the Empire.
The Westphalian paradigm was established, according to which law was not
hinged anymore on rationality of legal reasoning, but on the State’s political
will and sovereign power. This fragmentation lead to the separation between
domestic law and international law:

la domestic non prevale sulla international e viceversa
• Concerning domestic law, the state’s sovereignty entitles it to bind its own
citizens by enacting legal rules: the way to legal nationalism was thus opened
and led to the major codifications of private law of the 19th century.
• On the other hand, in international law, the State’s sovereignty can be
voluntarily self-- limited by means of agreements with other states; each
contracting state has the duty to give execution to the international
agreements it has entered into.

Fragmentation shaped different legal systems; René David has gathered them into
“families” which share similar concepts and historical roots. Within the western legal
tradition, the two main families are that of civil law and that of common law.

Civil law
The basic characteristics of such jurisdictions is that they have fully implemented the
doctrine of separation of powers into:
• Legislature
• Executive
• Judiciary
Proposed and defined by Baron de Montesquieu, who said: “only the mouth that
pronounces the words of the law, inanimate beings that are not able to modify
either its force or its rigour”. The core of private law is gathered and systematically
organized in a civil code (e.g code civil, 1804 and codice civile, 1865/1942)
Common law
The rise of common law dates back to the end of the battle of Hastings, 1066. The
political and juridical unity achieved in England already in the 11th century prevented
the ius commune of continental Europe from expanding on the island (with the civil war
of 1642--1651 and the Glorious Revolution, 1688--89). As a matter of fact, the tenets of
the French revolution could not gain ground in England, essentially because the
democratisation of politics had already been achieved. Common law is not based on
acts approved by the Parliament and, particularly, it is not codified, but rather it
develops through a case approach by courts. The main rule is that of “stare decisis”,
pursuant to which precedents are binding four courts. Indeed, there were no faculties
of law in the Anglo--American world, as it was a matter of practice in courts: legal
education consisted of taking part in concrete cases, and law became a sort of
“remedy” for each case.

Two (opposite) views of law

The answers given to the question “what is law?” during the course of history may be
gathered into two main groups:
1. Legal naturalism:
 By “legal naturalism” it is meant that this view of law was hinged on the
ancient sense of nature as a rational order, where all men, animals and
things were to accomplish their own, inner reason of being (naturalis ordo),
whether or not a divine footprint was


acknowledged in it. Law was justice and justice was the rational truth of
nature, where all beings and things did what they were designed to do.

2. Legal positivism:
During the 19th century, legal positivism has gradually overcome legal naturalism,
thus becoming the common ground of any discourse about law and embodying
the current mentality of jurists. In the positivist view, the “source” of a law is
the establishment of that law by some socially recognized legal authority. The
most famous conceptualization of legal positivism is to be ascribed to Hans
Kelsen.
Here law in nearly considered as a threat, an obligation to be followed and to be
compliant with.

Legal positivism
His theory goes under the denomination of “normativism”: “based upon the
basic assumption that law consists of legal rules, or norms, which are
completely autonomous from religion, morality and so on –in this sense, this
theory is qualified as “pure”” (pure theory of law, 1933).
This theory requires that some kind of test is introduced, through which norms
can be acknowledged as such and discriminated from other, non legally binding,
rules. Such a test could solely rest on the “origin” of a norm, its “pedigree” (the
process through which laws are enacted), to wit the process through which a
norm is adopted by political institutions. Each norm owes its validity to another
norm, which governs and rules the proceedings through which the former is
enacted. There is a basic norm, on which all the others depend on, which is
considered the threshold of law. It is valid, but not enacted as it simply is the
acceptance of a legal order.
Normativism
According to normativism, a theory developed by Kensel, norms are dislocated
through a hierarchical order (stufenbau), where each of them depends on the one
which stands above it; a norm is therefore valid in and only if it pertains to such
hierarchical order, termed as legal order (or legal system). The author defined it
as “pure theory of law” (1933), meaning that the basic assumption is that law
has little to do with ethics, moral and justice. It is rather based on points of view
which could eventually diverge from morality and justice. Indeed, “pure” means
autonomous, in the sense that law consist of legal rules, norms which are legally
bounding not because they are consistent with justice but because they are
legally enacted.
Hart also elaborated “soft positivism”: the conventional “rule of recognition”
of a norm may well incorporate, besides pedigree, principles of justice or
substantive moral values.

The structure of norms

Law does not adopt absolute imperatives (such as “thou shalt not kill”), but it rather
conveys a coercive social order, instead of binding only those who believe in it as
religion does or instead of binding only those who accept it, as in the case of morality.
According to Kelsen’s theory, a norm is such not because it stipulates a
command, but because it stipulates the sanction to be applied in case the
command is disobeyed by someone
A norm is shaped as a “hypothetical independent period”, whose protasis (if--clause)
consists of a state of affairs and whose “apodosis” (then--clause) of a sanction. Hence
a norm attaches a (negative) reaction of the State to a possible event or behaviour


The scope of norms

A norm has two main characteristics:
• Generality: a norm is applicable to anybody finds herself in the state of affairs
envisaged by the If clause. Moreover, it is addressed not to individuals as such but to
a class of individuals who happen to find themselves in the state of affairs envisaged
by the If--clause
• Abstractness: a norm is applicable to whatever event or behaviour matches with
the state
of affairs envisaged by the if--clause.
all norms acknowledged by “one basic norm”, or “rule of recognition” belong to a
hierarchic order, called legal system or legal order. That’s no surprise then that a
plurality of legal systems exists and, after the Westphalian paradigm, most of them are
national jurisdictions. States however are also bound by international law, largely based
on interstate agreements.
2-‐PRIVATE LAW AND PUBLIC LAW
Jurisdictions of continental Europe are generally acquainted with the distinction
between private law and public law.
Public law is that part of the law in which the government as such plays a role, whereas
it does not play any role in private law (although it can act as a private party). The
distinction is rooted in the sources of Roman law and over time dealt with by German
and French scholarships. This distinction then became an institutional reality only in
1800, when Napoleon created administrative tribunals and when, with the peace of
Westfalia, the idea of nation spread, thus creating the division between national law
and international law.
What is private law?
Private law deals with the mutual relations between citizens; it is divided into:
• Civil law, applicable to the generality of legal subjects (e.g. contract law, tort
law, property law, family law, inheritance law)
• Commercial law, specifically applicable to enterprises (e.g. companies, fair
competition,
industrial and intellectual property).
the Italian codice civile encompasses both civil and commercial law, thus reuniting
private law.
What is public law?
The rise of public law has historically aimed at exempting the state’s authoritative
power from undergoing private law norms (particularly regards civil liability towards
citizens). Moreover, it is exceptional in face of private law, as the latter is applicable
in any legal relations, whereas public law only to the state while exercising its
authoritative power.
If the state acts not for the sake of its own authoritative power, but like any other legal
subject,
private law is perfectly applicable to its legal relations: the state is said to act iure
privatorum
(according to private law); e.g. it may have private properties and, if so, may well rent
or sell them
by entering into private law contracts with any other legal subject.


• Administrative law pertains to the executory, and it covers the many interactions
between the government agents and civilians;
• Criminal law deals with the prosecution of crimes or criminal offences: unlawful
acts which are punished by the state because of their harmfulness towards
individuals or the community;
• Constitutional law lays the state’s foundations, both concerning protection
of citizens’ fundamental rights and liberties, and the structural and
functional organization of its powers;
• Procedural law regulates the proceedings for the judicial application of
private law, criminal law and administrative law;
• Tax law regulates taxation.

Mandatory and dispositive rules

Norms may also be distinguished between mandatory and dispositive:
• Mandatory norms are those which may not be set aside through an agreement
between their addressees; most public law consists of mandatory norms as the
 paramount of public law is the supremacy of public interest towards

individual interests.
• Default norms, which may be set aside through an agreement between
addressees, represent nearly the entire private law. A major role is then played
by default norms which supplement agreements concluded by the parties.

Sources of law
“a legal system comprises not only “primary” rules, but also “secondary” rules,
which aim at identifying, changing and enforcing the first ones” (Hart)
a legal system should indeed be certain, dynamic and efficient. According to hart, a
legal system had some basic features:
1. The basic norm is typically a secondary rule, which aims at identifying primary
rules, thus ensuring certainty of a legal system;
2. Secondary rules which govern the possible change of primary ones ensure
dynamism of a legal system
3. Rules which deal with the enforcement of primary ones ensure the efficiency
of a legal system.

The secondary rules which govern the possible change of the primary ones are
commonly known as sources of law; they play a major role in the historical
development of a legal order since they stipulate what facts or acts are capable both
of creating new rules and of changing or repealing those already existing.
They answer to the question whether a particular rule is also a legal rule. Each system
is based upon its own sources of law, which may not be effective as such in any other
legal system.
Sources of Italian law
According to Italian terminology, the term “sources” can have different meanings:
• Sources of production of law are those acts or facts which can produce a legal
rule;
• acts are voluntarily adopted laws that produce a juridical effect
because they satisfy three conditions: existence, validity and
efficacy.


• Facts instead are traditional customs and practices that combine two
elements:
one, objective, stability in time; the other, subjective, derives
from the perception that a given behaviour is considered to be
legally binding.
Among the sources of production we can find:
1. The constitution
2. Statutes/enactments having force of law
3. Regional laws
4. Regulations
5. uses
• Sources of cognizance give legal notice about the sources of production (e.g.
official journal of the European union or “gazzetta ufficiale della repubblica
italiana”).
The Italian civil code
The Italian civil code is made up of 6 books:
1. Book I concerns persons and family, and deals with natural persons, legal
entities and family law;
2. Book II deals with successions
3. Book III regulates property: notion and categories of goods, ownership rights and
powers of the owner, lesser property rights or movable and immovable goods,
possession;
4. Book IV concerns obligations and debtor--creditor relationships: some
points are the general discipline of obligations, contracts in general and
special contracts, other acts considered as sources of obligations, such as
torts.
5. Book V focuses on labour, regulating professional and entrepreneurial activities,
employment contracts, company and corporate law. It also contains most of the
provisions of the Commerce Code which was incorporated to the Civil Code in
1942
6. Book VI is about the protection of rights, as it deals with evidence rules,
personal liability for obligations, judiciary remedies and prescription.
Filling legal gaps
According to a traditional claim of continental legal positivism, a legal system is
both complete and consistent.
It is complete in the sense that no gaps are to be encountered in its primary rules,
since they provide for any relevant case; it is consistent as no contradictions are to
be encountered in its primary rules, since each relevant case is given just one legal
response.
However, it is undeniable that, if taken statically into consideration, any legal system is
incomplete and inconsistent. Any system therefore comprises some secondary rules
which are designed to fill in such gaps and others which are designed to solve such
contradictions.
The Englaro case
Eluana Englaro was born on November 25th 1970 and entered a persistent vegetative
state on January 18th, 1992, due to a car accident. Afterwards, she has been nourished
by medical staff through a feeding tube, but her father was intentioned to remove it
and put an end to his daughter’s life as he claimed that, prior to the car accident, she
visited a friend of hers laying in a coma and told him that, had the same occurred to
her, her will would have not been to be kept in life artificially. This will was in contrast
with some articles in the Italian constitution:
• Art. 2, duty to solidarity
• Art. 13, personal liberty is inviolable
• Art. 32, the Republic safeguards health as a fundamental right of the
individual and as a collective interest.


The corte di cassazione, on October 16th 2007, stated that the court may authorize the
legal guardian to interrupt the medical treatments that keep alive artificially an
interdicted person lying in a persistent vegetative state, provided that the condition is
ascertain as irreversible, according to recognized scientific parameters, and the
application is expressive of the patient’s will, drawn from his previous statements and/
or from his personality.
Filling legal gaps:
Gaps in primary norms may be filled in by secondary rules authorizing judges
either to create new law or to extend the scope of that already existing; the
first option has been adopted by Anglo-- American jurisdictions; according to
Hart, gaps in
law are filled through discretion by judges, whereas Dworkin asserts that no gaps
in law really exist (“implicit” law principles).
Civil law jurisdictions on the other hand have adopted normative mechanisms to
extend already existing law to unregulated cases, by analogy.

France-‐ le Code Civil

Titre préliminaire: de la publication, des effets et de l’application des lois en general.

• Article 4: le juge qui refusera de juger, sous prétexte du silence, de

l’obscurité ou de l’insuffisance de la loi, pourra etre poursuivi comme
coupable de déni de justice
• Article 5: il est défendu aux juges de prononcer par voie de disposition
génerale et réglementaire sur les causes qui leur sont soumises.
Analogy
Italian law provides for two levels of analogy, which are set in a hierarchical order:
1. (pursuant to art. 12 prel. Disp. To c.c.): if no settled law necessitates a case,
then it is to be adjudicated in accordance with dispositions pertaining to similar
cases or to akin branches of law (analogia legis).
If this mechanism fails to fill in the relevant gap, particularly because no
“dispositions pertaining to similar cases or to akin branches of law” are
given
if there is still any doubt, the case shall be decided accordingly to the general
principles of the State (analogia iuris).
2. (pursuant to art.14 prel. Disp. To c.c.): furthermore, criminal law (nullum
crimen, nulla poena sine lege) and exceptional norms are to be applied
analogically. As a matter of fact, the exceptionality of a norm wits that it
provides for cases which are not similar to any other, so that it is not matched
the very basic requirement of analogy.
However, such norm does not exist in many jurisdictions as the main
problem is to determine in which cases a norm can be considered
exceptional.

The Swiss model

Sometimes a combination of analogy and discretion by judges is provided by law: “if no
legal provision is available, then judges shall apply custom and, if also the latter is
lacking, the rule they would lay down in the legislator’s shoes. In that, commanding
scholarship and tradition are to be followed.

Settling conflicts of norms

Inconsistences in primary norms, traditionally termed antinomies, may be solved by

secondary rules authorizing judges to apply just one of the colliding primary norms,
which is to be identified on the basis of the criteria given by law:


• hierarchical criterion: if a norm, which is subordinated in the hierarchical order of

a legal system, collides with another, which is superordinate, the latter prevails
upon the former.
 • Content--based criterion: if a norm, which has a broader scope, collides
with another, which has a narrower scope, the latter prevails upon the
former.
• Time--based criterion: if a norm which has been enacted sooner collides
with another, which has been enacted later, the latter prevails upon the
former.
Settling conflicts of laws
Example: a contract is concluded in Italy between a French party and a German
party. The question arises whether applicable to the contract will be the Italian
law, the French or the German.
Such collisions of laws are addressed to by a branch of each legal system, called
international private law.
As regards States which are members of the European Union, their international
private law has been unified through regulations of the EU.
The primacy of the Union’s law
In case of incompatibility between a domestic norm of a member state of the European
union and a norm enacted by the same union, the union’s law shall prevail. (ruling of
the ECJ 1964, case costa vs enel).

The concept of principles

The view of law as a hierarchical order of rules has been mighty criticized by Ronald
Dworkin, who sustained the need for a less “formalistic” jurisprudence to promote the
best possible legal response to relevant cases. As he said, to carry out his task,
jurisprudence should start not so much from “rules”, but rather from “principles”.
Those principles are requirements of justice or fairness, which stand as the best
frameworks of and justifications for legal practices and paradigms of law which
command lawyers’ general consensus of a given legal system.
Those principles moreover embody the “preinterpretative” basis of any decision
rendered by courts.
According to Dworkin’s view, legal positivism would fail in accounting for principles for
at least two reasons:
• Principles are the soundest part of law, but they might not be acknowledged
by a “basic rule” or “rule of recognition”, since they precede any rule.
• While conflicts of rules must be solved in favour of one of them, unless
consistency of the
legal system is affected, conflicts of principles leave them untouched, because
although conflicting, each principle may play a role in finding the best possible
response by law to relevant case
Hart on the other hand asserts that differences between rules and principles are just a
matter of degree, as both may be understood as narrower or broader norms in the
sense advocated for by legal positivism.

Canons of interpretation
Sometimes it is necessary to decide about the proper scope of application of a rule.
The civil law tradition has developed different canons of interpretation:
• The literal rule (or grammatical interpretation): the interpretation matches
the literal meaning of the words in the rule


• The legislative intent (or historical interpretation): the interpreter reverts to

the intention of the legislator who formulated the rule
 • Teleological interpretation (the golden rule): the interpreter tries to
determine the purpose of the rule himself.

Juridical facts, juridical acts, legal transactions

Legal effects
A legal rule is shaped as an if--clause, which describes the state of affairs and
the field of application of the rule, and a then--clause, which stipulated the
sanction.
However, not all rules have legal effects: social rules (e.g. reciprocating a greeting)
differ from legal rules.
A “state of affairs provided for by a norm may consist of one single event or behaviour.
More states of affairs however entail a whole series of events and/or behaviours and the
sanction is only triggered by the occurrence of the entirety of them.
Any event or behaviour which is included in the “state od affairs” provided for by a
norm, both when it is simple and when it is complex, is said to be legally relevant.
Juridical facts
There is no ontological criterion to divide what is law from what is not: if a norm
provides a state of affairs, then we are in front of an event or behaviour which has
legal consequences; if no norm does so, that event or behaviour does not exist in front
of law, however material for a society it might be.
All events and behaviours which are legally relevant are classified as “juridical facts”.
However, a juridical fact in Italy could be non--juridical in another country. Some
examples of juridical facts may be contracts and torts. Legal science has also
proceeded to identify a number of sub-- categories of legal facts to coherently
categorize many species of them.
1. Bare juridical facts
Bare juridical facts are those juridical facts regarded by a norm irrespectively of any
human consciousness and voluntarity which might affect them. Some natural events
such as death, which opens the deceased’s succession belong to this category.
2. Juridical acts
Juridical acts are those juridical facts that produce legal effects under the
assumption that they have been consciously and voluntarily kept by a person. If
consciousness lacks , such human behaviours do not produce legal effects.
Another example of juridical act is tort, opposed to a payment, which is a bare juridical
fact.
As by definition juridical acts make a big category, there is a further classification
among those:
• Bare juridical acts are those juridical facts that derive from conscious
and voluntary behaviours (acts), and whose effects are set by law,
irrespectively of the will of the agent. In other words, anyone can freely
decide whether or not to keep a certain behaviour, but not to select its
legal consequences, which are stipulated by a norm.
e.g. torts: a wrongdoer may intentionally cause a damage, but if he
does so, the legal consequences attached to his behaviour are set by
the norms pertaining to tort law.
-- legal transactions are those juridical facts that attach to a human
behaviour those very legal consequences which are consciously and
voluntarily envisaged by who acted. Here, anyone can freely
 decide not only whether to keep or not a certain behaviour,
but also to
select legal consequences connected to it.


e.g.: wills: the testator entitles someone to acquire his inheritance

after death, or acknowledges a child born outside his marriage, whose
family status would therefore change.
This classification was forged by German legal science of the 19th
century through the elaboration of the concept of “Rechtsgeschaft”,
and the notion has been adopted by the german civil code, which
provides a set of general rules pertaining to it. The distinction between
bare juridical acts and legal transactions however is not acknowledged
by other jurisdictions such as France and Italy: in France, any fact
which is legally relevant is qualified either as an acte juridique (=legal
transaction) or as a fait juridique (=bare juridical facts/acts). In Italy,
there is a mismatch between the categories acknowledged by the
codice civile and those acknowledged by scholarship. The civil code
recognizes fatti giuridici (bare juridical facts) and atti giuridici (bare
juridical acts, legal transactions); the Italian scholarship is German--
oriented though, as it predominantly acknowledges the category of
negozi giuridici (legal transactions), as opposed to atti giuridici in
senso stretto (bare juridical acts). Contracts: by entering into a
contract, parties aim at some change in rights and duties entailed in
their legal relation and get them from the law.
Legal transactions are concluded through a declaration of will (by
language or conduct) which is intended to perform a change in rights
and duties of who is acting (the party). Therefore, any legal subject is
given the power to produce a legal effect on her own patrimony or
her own personality, to the extent to which law does not impose her
any mandatory prohibition to do so. (private autonomy).
Legal transactions play a major role in private law. Undeniably, they constitute the most
important
category of legal facts and their domain tends to expand also in other areas of legal
systems
(criminal and administrative laws, for instance).
They can be categorized according to structure:
• Unilateral: e.g. wills, which produce their own legal effects when they
come into someone else’s knowledge (not the will)
• Bilateral: e.g. sale contracts, which have real effects opposed to
obligatory effects;
• Multilateral: e.g. companies which issue shares.

• Patrimonial, when the party/parties’ will pursues an interest which can be

economically assessed e.g. contracts
• Non--patrimonial, when the party/parties’ will pursues an interest which
cannot be economically assessed e.g. marriage.
Dcfr II.-‐1:102: party autonomy
1. Parties are free to make a contract or other juridical act to determine its
contents, subject to any applicable mandatory rules.
2. Parties may exclude the application of any of the following rules

relating to contracts or other juridical acts, or the rights and obligations
 arising from them, or derogate from or vary their effect, except as

otherwise provided.

3. A provision to the effect that parties may not exclude the application of a rule
or derogate from or vary its effect does not prevent a party from waiving a right
which has already arisen and of which that party is aware.
Parties autonomy concerning patrimony is broader, whereas concerning personality is
narrower. e.g.: art. 5 codice civile: any decision about one’s own body is prohibited if it
undermines his/her physical integrity permanently, or anyhow is contrary to law, to
public order or to morality.
Draft common frame of reference: II.-‐1:101: meaning of “contract” and “juridical act”
1. A contract is an agreement which is intended to give rise to a binding legal
relationship or to have some other legal effect. It is a bilateral or multilateral
juridical act.
2. A juridical act is any statement or agreement, whether expressed or implied from
conduct, which is intended to have legal effect as such. It may be unilateral,
bilateral or multilateral.
Relativity of legal qualifications
Any event or behaviour which is regarded as bare juridical fact by a norm, may be
simultaneously regarded as juridical act by another.
e.g: art. 1321: a contract, based on a voluntary agreement, is a juridical act; however,
according to art. 1425, if one of the parties is for instance under age, the contract is
voided. But, when a contract is concluded in order to fulfil a previous obligation to
enter into it, it is a bare juridical fact as far (art. 1191 c.c.): even when it is concluded
by un under aged party, the execution of the contract makes such an obligation
discharged.
A comparison
• Bare juridical act: legal effects are stipulated by the norms pertaining to
them and hence fixed (heteronomous). since they are fixed by the
relevant norms, the effects of a bare juridical act are to be ascertained in
advance and definitely.
• Legal transaction: legal effects are stipulated by the addressee of the
norm, through an act of private autonomy (autonomous). The legal
effects of a legal transaction are to be ascertained with regard to each
single case, as a matter of interpretation of the parties’ specific and
concrete will.

Ex: evolution of legal rules, same-‐sex partnerships

Legge 20 maggio 2016, n.76; regolamentazione delle unioni civili tra persone dello
stesso sesso e disciplina delle convivenze
It came into force on June 5th, 2016.
This confirms that what is juridical may not be such anymore, if a more recent law
avoids the legal effects on the previous one.

Invalidity
That a legal transaction does not infringe a mandatory prohibition is (necessary, but) not
sufficient for its validity. The party’s will is not held good by law for two main categories of
reasons:
• Because the party or one of the party was lacking the capacity to
conclude a legal transaction
 • Because the party or one of the parties’ will was viciated by a factor of
irrationality or coercion (mistake, fraud, duress)
Therefore, a legal transaction which infringes a mandatory prohibition is
rejected by law and does not perform the very legal effects which have been envisaged
by the parties (voidness, nullità); on the other hand, if there is lack of capacity or
defects in consent, legal effects are produced but can be cancelled through a
subsequent initiative of the party (avoidance, annullamento).


JURIDICAL POSITIONS
The role of legal concept
If lawyers should any time help themselves with norms as such, legal discourse would
be too long and complicated, and even almost impossible to be managed. Therefore
language must be simplified through concepts, which might be able to summarize the
norms’ contents and convey them. (e.g. “debtor”, “obligation”, “contract”, “wrong”
are legal concept employed to shorten the norms’ content. Each of them opens the way
to one or more norms).

Juridical positions/subjects
Among legal concepts, an outstanding role is played by rights and duties, which
pertain to the broader genre of juridical positions. Those tell us what the holder (a
legal subject) can or cannot do, and what he shall or shall not do.
Juridical positions belong to one or more legal subjects; a legal position of “can
do” (i.e. a creditor who can claim a performance from someone else) corresponds to
one of “shall do” (i.e. a debtor who shall pay back the performance received). As a
matter of fact, a legal position entails a legal relation.
Legal relations
Legal relations are correlations between a position of “can do” and an opposite position
of
“shall/shall not do”.
e.g.:
-- a credit is a juridical position of “can do”, which entitles its holder to claim a
performance by someone else. This “someone else” holds a correlative juridical
position of “shall do”, which obliges him to render that performance in the interest
of the former.
An obligation, for instance, is one of the most prominent legal relations, that ties
together the holder of the credit (creditor) and that of the debt (debtor).

Basic juridical positions

1. Basic positions of “can do”/”may do” are powers and privileges:
-- A power is a position of “can do” in the sense that the holder is entitled to
conscionably
and voluntarily change a juridical position (legal relation) e.g.: the owner of a
land has
the power to sell it.
-- A privilege (or freedom) is a position of “may do”, in the sense that its holder
is allowed
to do something. E.g.: the owner of a land has the privilege to enter it;
anyone has the
privilege to express an opinion.
2. Basic positions of “shall do” are duties and onera
 -- A duty is a position of “shall do”, in the sense that the holder is

bound to behave on
behalf of someone else. E.g.: parental duties towards under age children.
-- An onus is a position of “shall do”, in the sense that the holder is burdened
with a
requirement he is bound to meet by his conduct. E.g.: art. 2697, paragraph 1,
c.c.: who
alleges a fact at court, shall give evidence of it.
POWERS
By bringing about the power which she holds, the powerholder can either give rise to
a juridical position, which was not existing before, or modify or discharge a juridical
position, which was already existing.
Generally, the juridical position affected by the exercise of the power is that of the
powerholder, but a power may be purpoted to change juridical positions of someone
else than the powerholder herself:


Because of the command of the law (e.g. parents with child)

--

Because of the will of whom is concerned (authorization) e.g.: an agency has the
--

power to act on behalf of someone else.

A power given to someone entails a liability pending on someone else: the
position, which is correlative to a power, has been traditionally depicted as a
liability.
A LIABILITY is a mere submission to the holder of a power; yet, it is by now generally
acknowledged that any power has to be brought about along the general principle of
good faith, so that he who is concerned as deemed to hold a legitimate interest to be
protected against an abuse of power.
PRIVILEGES
Most privileges are part of a freedom or of a right of anyone and, therefore, are not
considered often as juridical positions as such. Freedoms involve an explicit permission
to do something, such as expressing one’s opinion, becoming a member of a political
party or casting a vote.
e.g.: it is part of general freedom of anyone that of bringing about (or not) the power
of private autonomy. Generally, everyone is free not only to enter or not into a
contract, but also to negotiate its terms with other parties.

Subjective rights
Subjective rights are the most prominent legal positions of “can do”; their content
consists of a cluster of powers and privileges, and common denominators for the different
kinds of rights are:
• Rights are interests that are protected by the law. A right enforces the
rightholder’s interest to acquire or to hold a utility against someone else’s
potential will.
• Rights entail a claim towards someone else, towards the holder of a correlative
position of “shall do” (e.g. to perform a given activity).
Categories of subjective rights
• According to their nature
Rights may be either economic or not economic, depending on whether or

not the utility, towards which the rightholder’s interest is enforced, in allowed

by law to be exchanged for money. Therefore,
Disposable rights are those which can be exchanged through
negotiations and contracts (e.g.: ownership of goods)
non--disposable rights are those which are protected through inalienability
(e.g.: human rights)
• According to their structure
Relative rights regulate legal relations between specific persons (rights in
personam)
Absolute rights regard an object, the object of the right (rights in rem)

Relative rights (in personam)

A right is said to be in personam when it entitles its holder a claim towards one or
more specific legal subjects. Relevant economic rights in personam are credits and
power rights. Relevant non-- economic rights in personam pertain to family law, such
as the rights and the duties between spouses and those between parents and children.


Credits-‐ obligations:
A credit entitles its holder a claim for an economic performance which is to be
rendered by another subject (debtor). This obligation is a legal relation, as the
debtor holds a specific duty to render the performance owed to the creditor, the
debt.
Power rights:
They entitle the holder of a claim a change in someone else’s juridical position.
The holder of the power acts in his own interest, and does not need an activity
of the other person in order to achieve it. On the other hand, the other person
is in a position of subordination and cannot oppose himself to the change.
e.g.: employee’s resignation

juridical position/status
a status is a peculiar legal position that derives from the position of individuals in
their community, and to which rights and duties are attached. It does not depend on
a specific act of law or on the will of the party involved. Status may be relevant:
-- In public law: e.g. being a citizen implies rights (vote) and duties (pay taxes)
-- In private law: e.g. marriage is the source of the personal status of “married
persons”,
from which peculiar juridical positions derive in family law.
Absolute rights (in rem)
Rights in rem are essentially relations between the right holder and the object of the
right, but they may also be understood as based on legal relations: rights in rem as
rights are valid erga omnes (against the world) as they can be invoked against
potentially anyone. E.g.: the owner of a car can in principle invoke his ownership
against anyone who happens to have the car in his possession.
A right is said to be in rem when it entitles its holder to a claim towards anyone who
interferes with a utility held by the rightholder, and that derives from the enjoinment
of a resource, tangible or intangible.
-- relevant economic rights in rem are real rights and intellectual property.
 -- Relevant non--economic rights in rem are rights of personality, which

are encompassed
in the broader genre of human rights.

Prescription
Prescription is the extinction of rights due to the lapse of a certain time determined by
the law
(e.g. in Italy it is generally 10 years).
They are used to:
-- Facilitate resolution within a “reasonable” length of time
-- Assure certainty in legal relationships
-- Avoid difficulties involved in the proof of facts
-- Protect the debtor’s confidence.
Prescription does not apply to both rights of ownership and non disposable rights.

6-‐SUBJECTS, CAPACITY
Subjects are holders of juridical positions; we can consider humans and organizations
as such, whereas the issue is more controversial concerning animals: in Germany,
differently from Italy, animals are not considered things and are hence protected
through specific statutes.
The notion of legal subject is strictly correlated to the one of legal capacity, which is
the capacity to have juridical positions.
Legal rules impose duties and assign competences and rights to legal subjects: society is
composed of persons who pursue, as individuals or collectively, different aims and
interests (through legal acts).
We can distinguish two categories of legal subjects:
• Human beings are natural persons: those have rights such as privacy,
freedom of expression etc.
• Collective organizations that have received the status of legal subjects are legal
persons, which do not have some of the rights natural persons benefit from (e.g.
physical integrity).
Legal persons act through human agents.
In private law, important consequences of being a legal subject are that one can have
rights, such as property or a claim to be paid money, and that one can perform
juridical acts; legal subjects have the “power right”, hence the right and power to
change a juridical position. Both natural and legal persons:
• Are vested with rights and duties (legal capacity). This feature is static: think to
the right to have an apartment.
• Have the ability to enter into legal relationships, as their acts may generate
effects within their legal sphere (capacity to act). This feature is more dynamic:
for instance, subjects can buy or sell.

Natural persons
Capacità giuridica:
art. 1 c.c.: natural persons acquire legal capacity at birth, and maintain it up to the
moment of their death.
Individuals are eligible to have rights and duties: art. 22 of the Italian Constitution
states that “ no person may be deprived, for political motives, of his legal capacity”.
-- In the past, slaves did not have legal capacity: for instance in a case (Lenoir vs
sylvester, north Carolina, 1830) it was said: “does a slave have the capacity to
accept a gift?” the reply was:
“...a legacy cannot be given to a slave; for he can have no right, whatever,
which does so, the instant it is transferred to him, pass to his master. Every
thing which belongs to him, belongs to his master. In other words, he is in law
himself chattels personal; and it would be absurd to say, that property can
own property..”

Capacità d’agire:
Art. 2 c.c.: natural persons are vested with the capacity to act, i.e. the “ability to perform
all juridical acts except those for which a different age is prescribed”, on attaining the age
of majority.
Art. 2 also says that the age of majority is fixed at eighteen years. With the

age of majority individuals become able to perform juridical acts except those

for which a different age is not prescribed.
However, “juridical acts” performed by persons lacking capacity to act are not
always legally irrelevant:
-- A contract entered into by a person lacking capacity to act is legally binding
and
effective until it is annulled by a court (art. 1425 c.c.)
-- A contract cannot be annulled if the person under age has concealed his
minority with
trickeries, but a simple declaration by him that he has reached majority does
not
prevent the annulation (art. 1426 c.c.)
Canons of interpretation
Sometimes it is necessary to decide about the proper scope of application of a rule.
The civil law tradition had developed different canons of interpretation:
-- The literal rule (or grammatical interpretation): the interpretation matches
the literal
meaning of the words in the rule
-- The legislative intent (or historical interpretation): the interpreter reverts to
the
intention of the legislator who formulated the rule
-- Teleological interpretation (the golden rule): the interpreter tries to
determine the purpose of the rule himself.
Legal incapacity
The legal system provides for a plurality of incapacities to act, in order to protect
peculiar classes of individuals, or to punish them
1. Protective
incapacity
Minors
Interdiction: refers to persons who are routinely impaired in their mental
ability and hence may be deprived of their capacity to act, by means of a
juridical position Inabilitation: refers to cases of: 1--routinely abuse of
alcoholic beverages or drugs; 2-- excessive profligacy; 3--the person were to
be blind of deaf mute at birth, provided he has not been supported by
adequate education
Support administration: can be adopted for any case of incapacity
2. Incapacity as criminal sanction
Interdiction at law: additional criminal sanction, consisting in the
deprivation of the capacity to act, with reference to a person sentenced to
an imprisonment term exceeding five years.
Acts in the name and on behalf of the person lacking the incapacity to act may be
entered into by
a guardian.
1. Absolute incapacity
Minors/court interdiction: minors and interdicted persons cannot validly enter
into ant legal act. In case of minors, as a general rule, i.e. unless
circumstances suggesting a different solution exist, both parents share the
parental authority and are guardians.
2. Relative incapacity
 Court inabilitation: disabled persons may validly enter into acts of

ordinary administration, whereas they may not validly enter into

so--called acts of extraordinary administration.
Natural incapacity

If the person is not “formally incapable” but incapable of understanding or intending

at the time he acts:
Art. 428 codice civile

Acts performed by 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, can be annulled on request of such person or his heirs or
successors in interest, if such acts result in grave prejudice to the person who
performed them 


Contracts cannot be annulled except when the bad faith of the other party is
apparent from the prejudice that has ensued or can ensue to the person incapable
of understanding or intending, or from the nature of the contract, or otherwise 


Consumers
The notion of consumer stems from economics and sociology; it has developed an
autonomous meaning in the legal domain, having become the factor triggering the
application of a distinct set of rules, known collectively as “consumer protection law”.
Legal rationale for protecting consumers is based on the notion of market failures
and inefficiencies, such as inequalities of bargaining power between a consumer and
a business and information asymmetries.
In the EU law, mandatory provisions which limit the contractual freedom in order to
protect the consumer are enacted; in some member states moreover, a consumer code
has been adopted.
Notion of consumer
Despite being phrased in different ways, the vast majority of the definitions of the
notion of “consumer” found in EU legislation include a common core: “ a consumer is a
natural person, who is acting outside the scope of an economic activity (trade,
business, craft, liberal profession)”. The vast majority of member states have one,
overarching definition which applies across consumer law.
The notion of consumer does not extend to legal persons though; a particularly
controversial area is the so called mixed transactions, which a person concludes both
for a personal and a professional purpose. The solution is in the Draft Common Frame of
Reference: such a transaction is covered by consumer protection rules if it is concluded
“primarily” for non--professional purposes.

Legal persons
The expression “legal person” designates a variety of entities; the major distinctions
are:
Public and private legal persons
Associational and non--associational legal
persons Non profit and for profit legal
persons
 1. Non profit legal persons are those organizations bound together by a

desire to achieve a mission, rather than to make a profit. The term

non--profit does not indicate any specific type of legal structure.
In Italy foundations and associations, the most relevant types of non--profit
organizations are defined in the first book of the civil code.
2. For profit legal persons are those organizations which aim to earn profit
through their operations and are concerned with its own interests. In Italy S.r.l.
and S.p.a. (limited liability and joint--stock, respectively) are the most relevant
types of for--profit entities and are defined in the 5th book of the civil code,
dedicated, inter alia, to corporations and corporate law.


Legal persons-‐limited liability

Legal persons established for a specific purpose and in pursuance of specific interests
which under the law are considered completely separate and distinct from the
individuals that compose them. A peculiar feature of legal entities is the right to (and
the privilege of) limited liability: the personal assets of the members of the entity are
protected from unlimited liability so that, should the legal person face mounting debt,
the debt is to be paid exclusively from its assets.
Not every legal person however fully enjoys limited liability: whilst any collective
entity is a “legal person”, only some of them enjoy the separation between the assets
and liabilities of the entity itself and the assets and liabilities of its members/
shareholders.

Rules on imputation
By its nature, a fictitious person (i.e. a legal person) can act only through the human
agency of the natural persons. An agent who acts within the scope of authority
conferred by the legal person binds the latter in the obligations he creates against third
parties.
In case of defects in consent (mistake, fraud..), the state of mind taken into
consideration is the one of the natural person who acts on behalf of the legal person.
7-‐OBLIGATION IN GENERAL & INTRODUCTION TO
CONTRACTS
An obligation is a two--ended relationship which appears from the one end as a
personal right to claim (credit) and from the other end as a duty to render a
performance (debt).
As the aim of roman jurists was to have unity among institutes, to have them set in a
common conceptual background, under the concept of obligations we can include
many institutes such as contracts, torts etc. In civilian tradition contracts, torts and
other institutes of private law are conceptualized as chapters or subchapters of law of
obligations.
• A credit entitles its holder, the creditor, a claim for and economic performance
which is to be rendered by another subject, the debtor.
• A debt is an obligation, hence a legal duty imposed on the debtor to either
transfer something (dare), do something (facere) or refrain from doing
something (non facere). The performance, object of the obligation, “must be
capable of economic evaluation and must correspond to an interest, even if non--
patrimonial, of the creditor” (art. 1174 codice civile) Most obligations are
pecuniary, i.e. to pay a sum of money (e.g. sale price)
Obligations with many creditors and /or many debtors
• Joint obligations are those obligations in which each debtor owes/ each creditor
has the right to the full amount of the performance (think of a married couple who
opens a checking account: they’re joint creditors, as each of them is entitled to
withdraw money).
• Proportioned obligations are those in which each debtor owes/ each creditor
has the right to his portion solely (e.g.: a debt which is transferred mortis causa
to the heirs of the deceased).
Sources of obligations:
1. Contracts
2. Torts
3. Other sources:
-- Management of the affairs of another (negotiorum gestio; ex: when fire breaks
in a
house and the owner is away, the neighbour takes initiative).
-- Undue payments


-- Unjustified enrichment (e.g. a party of a married couple withdraws everything

from the checking account)

An obligation comes to an end with either the performance:

Place of performance
Time of performance
Diligence
Good faith and fairness
Or with other forms of termination:
-- Novation: the parties agree to put aside the obligation and replace it
-- Release: the creditor renounces to his claim
-- Set--off
-- Merger: the creditor becomes the debtor as well
-- Supervening impossibility
Contract law
People enter into contracts when they buy products, rent an apartment, take

out insurance etc.; contract law governs not only the so--called consumer

contracts, but also commercial contracts such as the sale of goods, franchising,
agreements to create joint ventures and so on.
Contracts allow businesses to trade goods and offer services, and are used by citizens
to pursue the things they are after, even though they do not always realize that.
Modern society would be unthinkable without the possibility to conclude binding
contracts, expressions of the freedom of private initiative and choice thanks to which
consumers become the very judges of markets, deciding which contracts to enter.
In theory, societies without contracts are conceivable in situations where the
State or the community takes care of everything, including the provision of the
necessities of life.
Exchange is the core of a typical contract in which one party gives
something to the other, receiving something in return. The exchange is
prompted by the belief of both parties that they benefit from it, even
though this is not true for all the contracts (e.g. gratuitous contracts, the
promise to make a gift); however, law can make the premise enforceable
even if only one party will benefit from it.

The word contract derives from contractus, meaning con--trahere, unify the will of
parties. However, there is no universal definition. According to the European Draft of
Common Frame of Reference, a contract is an agreement which is intended to give
rise to a binding legal relationship or to some other legal effect. It is a bilateral or
multilateral juridical act. According to the definition attributed by Italian law instead
(art. 1321 codice civile), a contract is an agreement between two or more parties to
establish, regulate or estinguish a patrimonial legal relationship among them.
Contracts, in most of the legal systems, include both obligations (creation,
modification and discharge) and ownership (transfer of rights).
A contract (juridical transaction) is therefore a source of obligations (credits); e.g.: in
contracts of sale, whose object is the transfer of the ownership of a thing or other
rights in exchange for a price, both the seller and the buyer have obligations:
-- The seller has to deliver the product and warrant the buyer against
eviction and
defects in the thing sold;
-- The buyer has to pay the price within the time and the place fixed by the
contract.
Main issues:
Contract law has three main areas:

-- Formation: can be any promise of to do or to give be enforced in courts?
-- Determination of contents: what should the parties do?
-- Remedies for non performance: what rights does a party have if the other
party does not perform?
Sources of contract law
Contract law is a set of rules and principles that governs transactions among parties,
setting the rights and obligations of those. Contract law is made up by a large
number of different rules emerging by contracting parties themselves, from the
official national, European and supranational sources and from informed rules that
are made by others (e.g. academics)
• rules made by contracting parties
 compared to many other fields of private law, contract law is special in

one aspect: the question of what the law is can, to a large extent, be

decided by the parties themselves with the so called freedom of contract
(contracts as legal transactions): not only are parties free to decide whether
they want to contract at all and with whom, but they can also determine the
contents of their contract. (art. 1134 French civil code: “agreements lawfully
entered into take the place of the law for those who have made them”).
Functions of contract law
In most of the cases, party agreement alone cannot set all rights and obligations
under the contract: parties only discuss those elements they consider essential (e.g.
price and time of delivery), and often it is not established what would happen if one
party does not perform the contract.
Law provides therefore for the so--called default rules, automatically applicable if the
parties have not made any other arrangements.

According to art. 1374 Codice civile, a contract binds the parties not only as to what
it expressly provides, but also to all consequences deriving from it by law or, in its
absence, according to the usage and equity.
e.g.: sale of movables (art. 1510 Codice civile on place of delivery): in the
absence of an agreement or usage to the contrary, delivery shall be made at
the place where the thing was at the time of sale, if the party new of the
place, or else at the place where the seller had his domicile or where his
enterprise had its headquarters.
It may indeed happen that parties would like to contract in a way that is considered
contrary to law or morality, or that one of the contracting parties is not capable of
assessing his own interest or, though being capable, his will is affected by some ground
of irrationality; in that case, the law must intervene with the so--called mandatory
rules that declare such a contract void or avoidable by one of the parties.

Invalidity
That a contract does not infringe a mandatory prohibition is (necessary but) not
sufficient for its validity; the party’s will however may not be held good by law for
two categories of reasons:
-- because the party or one of the party was lacking the capacity to
conclude legal transactions
-- because the party or one of the parties’ will was vitiated by a factor of
irrationality or coercion (mistake, fraud, duress).
Contracts which infringe mandatory prohibitions are rejected by law as illicit; indeed, they
do not perform the very legal effects which have been envisaged by the parties
(voidness); instead, a
contract entered into by a party lacking capacity or whose will was vitiated

produces legal effects, but it can be cancelled through a subsequent

initiative of the party (avoidance).

Freedom of contract and market regulation (b-‐to-‐b contracts)

A specific set of limitations to the freedom of contract is intended to protect the fair
competition between businesses in the interest of consumers:
• the parties may never enter into agreements that aim at undermining the
functioning of the market and limiting competition between companies.
Antitrust legislation forbids agreements restricting or distorting competition
(art. 102 TFUE) and the abuse of a dominant position within the market (art.
103 TFUE).
e.g.: agreements between companies or entrepreneurs to set a specific higher
price for a
certain good is null: it cannot be enforced and will trigger administrative and civil
liability
for the parties in breach of competition laws.
Another set of limitations protects the interests of the weaker party, as people
competing in the market do not have equal strength.
• Restriction to the freedom of contract are increasingly being harmonized within
the EU to protect people in a weaker position (consumers, for instance) such as
the Unfair Contract Terms Directive (93/13/EEC).
National contract law
At a national level, the official contract law is primarily produced by the legislature and
the courts; this branch is arguably the field of law in which it is possible to find more
commonalities among the world’s jurisdictions but, despite those, parties may have the
need to choose a particular national law to regulate their contracts (e.g. international
contracts, agreements between parties based in different countries-- another example
of contractual freedom).
European contract law
To enforce national law, in the last three decades the European legislature has enacted
almost 20 directives with relevance to contract law, which the Member States have had
to implement in their national legislation.
The source of EU competence is usually found in art. 114 of the Treaty on the
Functioning of the EU, which allows the European legislature to adopt measures
harmonizing national provisions “which have as their object the establishment and
functioning of the internal market”. However, European contract law is rather
fragmented as directives only deal with specific contracts (e.g.: package travel,
doorstep sales..) and only with certain aspects of there (e.g.: information duties,
possibility to withdraw).

EU contract law-- rationale: market integration. E.g.: consumer law

Directive 90/314/EEC on package travel & holidays: 

Art. 5: “Member States shall take the necessary steps to ensure that the organiser and/
or retailer party to the contract is liable to the consumer for the proper performance of
the obligations arising from the contract, irrespective of whether such obligations are to
be performed by that organiser and/or retailer or by other suppliers of services without
prejudice to the right of the organiser and/or retailer to pursue those other suppliers of
services 

With regard to the damage resulting for the consumer from the failure to perform or the
improper performance of the contract, Member States shall take the necessary steps to
ensure that the organiser and/or retailer is/are liable unless such failure to

perform or improper performance is attributable neither to any fault of

theirs nor to that of another supplier of services”.


Sources of contract law

1. Soft law: contract law is increasingly influenced by rules that are not officially
binding but have the status of “soft law”. Among those we find rules that can be a
sources of inspiration for parties having to draft a contract and can be chosen as
law applicable to it:
o Undroit Principles of International Commercial Contracts
(UP), 1994 o Principles of European Contract Law (PECL),
1995--2002
o Draft Common Frame of Reference of European Private Law (DCFR) 2009.
8-‐CHOICE OF LAW, FORMATION OF A BINDING

CONTRACT
the choice of law clause is a term of a contract in which the parties specify that any
dispute arising under the contract shall be regulated in accordance with the law of a
particular jurisdiction.
At the Rome convention on the law applicable to contractual obligations
(1980), with the regulation 593/2008/EC it was concluded that:
-- Art. 3.1: a contract shall be governed by the law chosen by the parties. The
choice must be expressed or demonstrated with reasonable certainty by the
terms of the contract or the circumstances of the case. By their choice
parties can select the law applicable to the whole or a part only of the
contract.
-- Art. 6: without prejudice to articles 5 and 7, a contract concluded by a
natural person
for a purpose which can be regarded as being outside his trade or profession
(consumer) with another person acting in the exercise of his trade or
profession
(professional) shall be governed by the law of the country where the
customer has his
habitual residence, provided that the professional
(a) Pursues his commercial or professional activities in the country where the
consumer has his habitual residence, or
(b) By any means, directs such activities to that country or to several country
including
that country, and the contract falls within the scope of such activities.
The choice of the parties may be directed either to the contract law rules of a
national state, the so--called “hard--law” choice, or to the contract law rules set in a
restatement (UP, PECL, DCFR), with the “soft law” choice.
Nominate and innominate contract
The parties may decide to make reference to a specific set of rules corresponding to a
determined economic function which is worth legal protection (causa) and to a
specific type of contract (e.g.: sale, lease…).
Nominate contracts are types of contracts that are expressly regulated by
the legal system
Innominate contracts are agreements that do not refer to any specific type
of contract but appear to be a combination of different sets of rules; the
applicable regulation will be identified according to the undertakings
selected by the parties

Requirements of a contract
In Italy, the essential elements for contract validity, according to art. 1325 codice civile
are:
1. Agreement
2. Causa
3. Subject matter
4. (Form).
The absence or unlawfulness or defectiveness of any of these elements renders the
contract void.
The formation of a binding contract
First of all, we need to distinguish the cases when a promise to do or to give

something is binding and the cases when it is not, given that no legal system

allows all promises to be enforceable. The main criterion adopted to make the
distinction is the intention of the parties to enter into a legal relationship (also
adopted by art. 2:101 PECL):
gentlemen’s agreements, relations undertaken to satisfy social, religious,
cultural and sentimental needs; the parties agreed to intend their relation
not to be subject to legal remedies (not enforceable). E.g.: friends agree to
participate to social activities, help in domestic activities etc.
The conclusion of a contract is the point in time in which the parties reach
agreement on the terms which are essential by the law to the type of transaction
involved. The contract is validly concluded and binding when are clearly stated:
the expression of the will of the parties (offer/acceptance) to enter into a legal
-- relationship
(agreement).

The aim or social economic function of the relationship (cause – type of

-- agreement)
-- The goods, services and rights bargained (subject matter)
-- Other essential elements required by law for the transaction (form)
Offer & acceptance
The consent of the parties is a necessary requirement for a binding contract. There
are some criteria though to qualify a proposal as an offer, to set revocation
conditions and to state the moment when the acceptance of the offer would lead
to a binding contract.
OFFER: art. 2:201 PECL.
“A proposal amounts to an offer if:
a) It is intended to result in a contract if the other party accepts it
b) It contains sufficiently definite terms to form a contract”
e.g.: if I want to sell a car, in the offer I have to specify at least price and
characteristics (unless the other party knows exactly the car); if the offer is not
definite enough, it would be an invitation to enter into negotiations about a contract.
Concerning the display of goods in a shop instead, it is ambiguous whether they
should be considered as an offer or not; the response provided by legal systems is
not unique, and it underlines the need of balance between the interest of the buyer
(not to be confronted with a seller who can withdraw a proposal) and the interest of
the seller (not to be forced to sell the product to anyone).
The PECL state that such proposals are presumed to be offers to sell or supply at the
indicated price until the stock of goods or the supplier’s capacity to provide the
service is exhausted. REVOCATION: can the offeror revoke its offer before
acceptance by offeree?
The answer is in the balance between the interests of each jurisdiction: the offeror
wants to be able to change his mind at any time, and the offeree wants to have some
time to think about the offer.
ACCEPTANCE: when does the acceptance of an offer lead to a binding contract?
The question is very important in commercial practice, as parties need to know at what
moment they are bound to a contract because of all kinds of rights and obligations that
may follow from it. According to the rule adopted by many jurisdictions, the contract is
concluded when the acceptance reaches the offeror (knowledge rule); however, a
well--known exception to this widely accepted rule may be found in English

law: in case acceptance Is sent by (regular) mail, the ontract is concluded

when the acceptance is dispatched by post (posting rule)

 The knowledge rule

To protect the interest of the addressee, law provides that a declaration

directed to a
given person is deemed to be known at the moment it reaches the address of
the
person to whom it is directed.
e.g. ITALY:
-- art. 1326 C.C.: formation of contract-- “a contract is formed at the
moment when he who made the offer has knowledge of the acceptance of
the other party”.
-- art. 1335 C.C.: presumption of knowledge: an offer, acceptance, and 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.

The posting rule

o. A contract for the sale of wool fleece was at issue. Here is the timeline:
o. 9/2: Lindsell wrote to Adams offering to sell him wool fleeces. In the
letter, Lindsell required expressed acceptance (by 9/7) in the form of a
mailed response 


o. 9/5: Adams received the offer letter, accepted in writing and quickly
mailed the
offer back to Lindsell 


o. 9/8: Lindsell did not receive the written acceptance in the mail and
decided to sell the wool to another party 


o 9/9: Lindsell received Adam’s acceptance, but the wool was already sold 

Lindsell argued that there was never a valid contract because
acceptance was not received by the specific date of September 7th.

The court considered the contract validly concluded; in the common law the offeree
bears the risk of revocation only for the extra period between the arrival of the offer
and the dispatch of the acceptance.

Revocation of an offer in England

Van Tienhoven & Co posted a letter from their office in Cardiff to Byrne & Co in New
York, offering 1000 boxes of tinplates for sale on 1 October. Byrne and Co got the letter
on 11 October. They telegraphed acceptance on the same day. But on 8 October Van
Tienhoven had sent another letter withdrawing their offer, because tinplate prices had
just risen 25%. They refused to go through with the sale.

The judge held that the withdrawal of the offer was not effective until it was
communicated
(knowledge rule); revocation of an offer must be received and understood

by the offeree before it comes into effect. An acceptance by the offeree

before he receives the notice of the revocation will be considered valid.

Revocation in case of performance before reply by the offeree (art. 1327 codice civile)
When, at the request of the offeror or by nature of the transaction or according to the
usage, the performance should take place without a prior reply, the contract is
concluded at the time and place in which performance begins. (e.g.: a retailer who
orders a certain quantity of products from a wholesaler).
In these cases, the offeree must promptly give notice of the beginning of the
performance to the other party; if he does not, he is liable for damages.

Withdrawal rights (consumers)

Withdrawal rights allow the cancellation of a contract without giving any reason:


o. in doorstep selling and in distance contracts, consumers only need to send to the
professional party a notice of cancellation within the “cooling off--period” (usually
14 days).
o. These statutory rights must be distinguished from the policy of many shops
allowing the consumer the possibility to “bring back” the purchased product
within a certain period.