cases

• Civil Code Art 1325 states that the requisites of the contract are the agreement of the parties.
• According to Civil Code Art 1326, a contract is formed at the moment when he who made the offer has knowledge of the acceptance of the other party.
• Civil Code Art 1337 states that the parties, in the conduct of negotiations and the formation of the contract, shall conduct themselves according to good faith.
• Civil Code Art 1362 states that the common intent of the parties, not limited to the literal meaning of the words, shall be sought in interpreting the contract.
• For this reason, the architect sued the engineer.
• The plaintiff was to receive 20% of the capital of the company that became the purchaser of the land.
• The first instance Tribunal ruled in favor of the plaintiff, holding that a binding contract was concluded.
• According to the plaintiff, there was a binding contract between the parties and the defendant has performed it only partially.
• The defendant started to set up the company and bought the land and shares of the plaintiff's brothers but did not carry out the other commitments.
• According to the defendant, there wasn't any binding agreement but only some pre-contractual documents and the performance of his other commitments depended on the finalizing of agreements with other members of the plaintiff's family.
• In order to ascertain the common intent of the parties, the general course of their behavior, including that subsequent to the conclusion of the contract, shall be taken into account according to Civil Code Art 1363.
• Every clause of the contract is interpreted with reference to all the others, attributing to each the meaning resulting from the act as a whole, according to Civil Code Art 1364.
• In a case, an engineer wrote and signed a "letter of intent", this letter was addressed to an architect who signed the letter as receipt.
• The Principles of European Contract Law (PECL) states in Art. 2:101, Conditions for the conclusion of a contract, that "a contract is concluded if: (a) the parties intend to be legally bound and (b) they reach a sufficient agreement".
• This judgment is interesting because, in order to ascertain whether a contract was concluded or not, the Court paid attention to the overall picture and did not consider to be bound to the "name" of the document.
• The absence in the document of a clause that expressly excluded the binding nature of the letter confirmed that it was not a mere pre-contractual document.
• The Court did not feel to be restrained by the fact that not all the aspects had been object of agreement by the parties because it deemed that a sufficient settlement of the parties' interests had already been reached.
• The Court looked at the specific commitments and obligations undertaken by the parties and at their following behavior in order to conclude that they intended to be legally bound.
• This is in line with the projects of unification of private law within the European Union where the arbitral courts and the judge are asked to ascertain whether the parties have reached a "sufficient agreement".
• A surety is a person who guarantees the performance of the obligation of another by binding himself personally to the creditor.
• In the letter, the engineer committed himself to performing specific obligations such as setting up a company and buying some land owned by the plaintiff's brothers and their shares of the company.
• A suretyship obligation is binding even if the debtor has no knowledge of it.
• The judge is not bound to the name given by the parties to the documents and thus in the specific case could ignore that the letter was entitled "letter of intent".
• The Court of Appeal and the Court of Cassation affirmed the judgment.
• The "letter of intent" is usually not binding and only a preparatory draft of a future contract.
• The Court, in formulating the principle above, affirmed the judgment under appeal that, despite the fact that a document was entitled "letter of intent" had held that a binding agreement had been concluded, considering the final settlement emerging from the overall writing and in particular the presence of an arbitration clause, the start of the performance of contractual obligations and the absence of a clause that expressly excluded the binding nature of writing.
• At the same time, the plaintiff committed himself to giving up his shares of the company.
• Regarding drafts and other pre-contractual documents that precede the conclusion of the contract, if the subject-matter of the agreement reached by the parties is final settlement of the relationship, this agreement has more than just a preparatory function to a future binding contract, it is already itself a binding contract.
• Article 1362 provides in particular that the interpreter must also look at the behavior of the parties that followed the conclusion of the agreement and thus, in the case discussed, the judge could also evaluate the fact that some of the obligations had been performed by the defendant.
• In the case discussed both the trial courts and the Court of Cassation deemed that the "letter of intent" together with the other documents, formed a complete and final settlement of the interests of the parties and thus that the parties had concluded a binding contract.
• Defenses of a surety include all defenses available to the primary debtor, except the defense arising from incapacity.
• The liability of a surety remains in effect even after the primary obligation has matured, provided that the creditor, within six months, has instituted an action against the debtor and has diligently pursued it.
• The "Institute for Public Housing" of the province of Perugia (IPH) commissioned construction works from "Viola Constructions".
• The contractor signed a surety policy with Llyod Italic Insurance in favor of IPH.
• The contractor breached the contract and IPH unilaterally declared the contract terminated and asked Llyod Italic Insurance to pay the sum of the surety policy.
• The plaintiff claimed that the contract was a performance bond since it provided for the right in favor of the Instute to be paid by the Insurer within a brief period of time from a written demand, and for the commitment of the constructor to reimburse all the money spent by the Insurer, with express renounce to set up any defense.
• The first instance Tribunal classified the surety policy as a simple suretyship (Art 1936 c.c.) and dismissed the plaintiff's claim, stating that his right to recover the money from the Insurer was extinguished pursuant to Art 1957 c.c.
• The Court of Appeal affirmed the judgment.
• Ater (legal successor of IPH) appealed from the judgment; the question was devolved to the United Sections of the Supreme Court.
• The Supreme Court was asked in particular to interpret the terms of the surety policy and to qualify it.