LEGAL ACTS

LEGAL ACT Means establishing, amending or abolishing legal rights Unilateral or bilateral Generally binding

CONTRACTS

MAIN PRINCIPLES Freedom of contract As regards the form, contents, parties of the contract As regards the decision to make a contract Contract is enforceable as agreed => BINDING no second thoughts unless there is a reason for invalidity Assumption of good faith Bona fide / mala fide Contracts Act 228/1929

GOOD FAITH One is in good faith (bona fide) if one Did not know and Should not have known about the circumstances Assumption of good faith Burden of proof is with the one who claims that the other was not in good faith

CASE In a shop, Paula saw a lovely Canadian Goose down jacket at €5. She decided to buy it but the shop assistant refused to sell it at €5 saying that there was a mistake. Isn’t the price tag binding to the shop?

TYPES OF CONTRACT Contract between two parties – several parties Single performance contract – continuous performance contract Undefined term – defined term B to B contract – B to C contract Written contract – orally agreed contract

CASE When wandering in the market place, Ville saw in a stall a charming water color painting for sale. He asked for the price, and the seller promised the painting at the cheap price of 100 € because he was just in the need of money. Ville got excited about the good price and ran home to ask for his girlfriend’s opinion.   When Ville and his girlfriend came back to the market after one hour to see the painting, the seller had raised the price to € 150. Ville got furious, and he demanded the painting for 100 €, referring to the contract they already had made. Who was right?

FORMATION OF A CONTRACT OFFER + ACCEPTANCE = CONTRACT

CASE Anna is willing to sell her computer to Matti at €400. What consequences are there for the alternative situations: A) Matti agrees B) Matti doesn’t answer because he wants to think about it C) Matti would like to buy the computer but at €380?

specifically adressed OFFER valid, detailed and specifically adressed 1 3 ACCEPTANCE on time and In accordance with the terms of the offer REPLY delayed or modified 2 REFUSAL COUNTER OFFER CONTRACT OFFER LAPSES

CASE A retailer offers a shopkeeper 50 pairs of canvas shoes at the price of € 10/pair. Due to high demand, the retailer soon regrets the cheap price he has set for the shoes and wishes he could amend his offer. Can he revocate the offer or is it binding to him?

TIMELINESS AND CONTRACT FORMATION OFFER COMES TO THE ATTENTION OF THE OFFEREE ACCEPTANCE IS DISPATCHED ACCEPTANCE COMES TO THE ATTENTION OF THE OFFEROR OFFER IS DISPATCHED Acceptance may be revoked Offer may be revoked Acceptance becomes binding CONTRACT IS CONCLUDED Offer becomes binding Modified from: Richards, E. 1994. Law for global Business. Irwin, USA

CASES Mr. Black wants Mr. White to paint his kitchen walls on Christmas morning and he forces Mr. White to sign a contract on it. Will Mr. White have to comply with the contract? A shopkeeper tells the customer that ”these shoes are not available anywhere else” and the customer buys the shoes. However, she soon finds the same kind of shoes in another shop at a cheaper price. Can she get her money back?

INVALIDITY OF A CONTRACT Nullity Contract is originally invalid, null and void Voidability (contestability) Contract becomes valid after a stipulated period of time unless contested within this time Invalidity based on objection Contract remains valid, unless one of the parties makes a plea (allegation) objecting its validity

STRONG GROUNDS FOR INVALIDITY Can be objected even if the other party of the transaction was in good faith Grave duress (28§) When a person has been coerced to a transaction into which a person has been coerced with physical violence or a threat involving imminent danger to life or health In case the coercion was exercised by a third person and the person to whom the transaction was directed was in good faith, the coerced party shall, if he/she wants to invoke the said coercion in relation to the other party, without undue delay after the coercion has ceased notify that party thereof at the risk of the transaction otherwise becoming binding

WEAK GROUNDS FOR INVALIDITY Can be objected only in case the other party is not in good faith Mild duress (29§) Coercion by other means than physical violence or a threat involving imminent danger to life or health Fraud inducement (30§) Undue influence (31§) Advantage is taken of another’s distress, lack of understanding, imprudence or position of dependence on him/her and benefit obviously disproportionate has been acquired or for which there is to be no consideration Mistake in utterance (32.1§) Circumstances incompatible with honour and good faith (33§) Simulated transaction (34§) Main general clause and adjustment (36§)

WHO HAS RIGHT OF PLEA Both parties The mortified party A third party In case the invalidity reason is to protect public interest The mortified party When the invalidity reason is to protect that party A third party When the invalidity endangeres his / her rights