natural obligations

• Contract


  The foundation of contracts lies in consent, integral for their validity
• Contracts


  • Historically, contracts were often enforced without regard for consent, notably in feudal societies
  • The concept of free will became pivotal during the French Revolution, shaping legal systems like the Napoleonic Code
  • The emphasis on free will led to disparities between affluent traders and impoverished workers
  • Over the 19th century, a shift occurred towards emphasizing trust in contracts, spearheaded by legal scholars like Savigny
  • Modern contracts reflect not just consent but also the underlying trust between parties, ensuring that agreements are entered into sincerely and fairly
• Volonta Theory


  A basic fundamental of the Code Napoleon, stating that one is free to enter a contract and therefore, consent is an essential element of a contract
• Pacta Sunt Servanda


  As soon as an individual signals their intent to enter into a contract, they would be bound by that contract
• The volonta theory posed no threats as the law assumed equality between all parties involved
• A discrepancy started to be created between the strong trader and the weak consumer, leading to 'take it or leave it' contract situations with clauses advantageous to the trader and detrimental to the consumer
• Affidamento Theory


  The theory of good faith, which highlights the necessity of both consent and trust in contracts
• Under the Affidamento Theory, courts have the authority to intervene and assess the presence of good faith, even in the absence of explicit consent, allowing them to create or enforce contracts accordingly
• In the English case Smith vs Hughes, the court ruled that if a person behaves in a manner that would lead a reasonable person to believe they are agreeing to the terms proposed by another party, they are bound by those terms, regardless of their actual intention
• In Malta, consent is still primarily linked to intention, but the concept of good faith is gaining recognition, particularly through the acknowledgment of Pre-Contractual Liability, where parties are expected to act in good faith even during negotiations
• The Maltese law of obligations, established by Sir Adrian Dingli in 1860, is heavily influenced by the French Code Napoleon, with limited subsequent amendments
• While the Italian Civil Code was also based on the Code Napoleon before adopting the Affidamento Theory in the 1940s, it is now less relevant to Maltese law
• Roman Law remains a source of law in Malta, particularly in cases of legal gaps
• The introduction of British Common Law was resisted by Maltese legal professionals, who preferred to retain Roman Law
• The Code of Louisiana, with its French roots, influenced Maltese law
• Maltese law traditionally follows the Pacta Sunt Servanda (will theory), but consumer law has been influenced by European Union directives advocating for good faith and trust
• Courts are increasingly interpreting laws in line with good faith principles, sometimes incorporating the affidamento theory through judgments
• The subjective nature of good faith poses challenges in its application
• Defects of consent in Maltese law

  • Error
  • Violence
  • Fraud
  • Deceit
• Contract


  The law that the parties have agreed to draft for themselves, through which they create a normative regime, a set of rules, which find their foundation in the fact that there has been agreement
• Contracts


  • They generate both rights and duties for the involved parties
  • The rights and duties arising from a contract are only binding on those parties
• Natural Obligations


  Duties that lack legal enforceability but are still recognized by law
• Natural Obligations


  • When a loan is not repaid within the statute of limitations, rendering it legally unenforceable, but the debtor voluntarily repays the loan after this period
• Types of Natural Obligations

  • A Civil Obligation which degenerates into a natural obligation
  • A duty of conscience which is transformed into a natural obligation
  • Debts of honours which are all considered to be natural obligations
• In the case of Maria Mifsud vs Dragonara Casino Ltd, the First Hall Civil Court ruled that certain circumstances can give rise to natural obligations, particularly in the absence of fraud
• In the case of Magri vs Gauci, it was established that under Maltese law, an error of fact entitles the aggrieved party to seek recovery, but an error of law does not
• In the case of Carmelo Parascandalo vs Procuratore Legale Pietro Paolo Lanzon, the Court of Appeal ruled that once a natural obligation is fulfilled, it cannot be reclaimed, regardless of the payer's awareness of the obligation
• In the case of Gio Maria Muscat vs Carmelo Vella, the Court reaffirmed the principle that a person who receives something not due to them under any civil or natural obligation must return it, but noted that if a prohibition rule is based on public policy, the natural obligation principle may not apply
• In the case of Felix Farrugia vs Direttur tas-Sigurta' Socjali, the Court of Appeal emphasized that agreements involving usury are null and void, as they contravene the law, and there is no natural obligation to uphold such agreements
• When there is a breach of the law and the law is one of public policy, then natural obligations cannot arise and recovery is always possible. But if the law is only in the interest of the parties, which they may or may not choose to follow, then a natural obligation would come into play