Law of Obligations - Contract

• We still follow the Roman Law System of the Law of Obligations – the jus civile – if there is a gap in our law then, we have default to follow the Roman Law
• When the Knights came here, we continued with Roman Law – Roman Law is basically the Institutes of Justinian and we follow that system
• When there were gaps, and Roman Law was not all that clear – which led to a dispute of what Roman Law is on a particular point – this led to the creation of the Code de Rohan
• The British came – and they wanted to introduce their Common Law – our lawyers and judges objected to this Common Law and that there shouldn't be this abrupt change from a Civil Law system to a Common Law system
• The Civil Code was created at the time of the French Revolution. The Code Napoleon was a very important – as it codified Roman Law at that time
• Napoleon conquered most of Europe and introduced the Code to several countries – he did not stay in Malta long enough to introduce it to the Maltese however, Sir Adriano Dingli copied indirectly this Code when he wrote the Civil Code
• Freedom of Contract


  The principle that the Romans did not have - they couldn't invent a contract, they had to follow the contracts found in Roman Law
• Four Principles of a Contract

  • Capacity
  • Consent
  • Object
  • Consideration/Causa
• Basis of a contract


  Consent - as long as one gives his or her consent then, you are bound with that contract
• Volonta Theory


  The basis that the Code de Napoleon followed - one is free to enter a contract and therefore, consent is an essential element of a contract
• Affidamento Theory


  The theory that the giving of consent alone would not give rise to a contract - because there needs to also be the element of good faith
• In 1946 – Italy changed their law from the Napoleon Code to a new Code based on the Affidamento/Behaviour Theory
• In our case – we still need the state of mind – the intention – did he intend to give his consent? – one can presume consent however; one must take note of consent
• Our Law of Obligations is based on the Roman Law of Obligation – and while Maltese Law prevails, Roman Law has not been extinguished as a source of law
• We still base our law on the Pacta Sunt Servanda (Volonta Theory) – agreements must be kept – once you have given your consent, you are bound by that contract and you are bound that you have to follow that contract
• Four defects of consent

  • Error
  • Violence
  • Fraud
  • Deceit
• Freedom of Contract


  The great innovation of the Code de Napoleon - one could create any sort of contract as long as there are the elements of capacity, consent, object and consideration/causa
• Legal Incapacity


  A person who is under the age of 18
• Natural Incapacity


  One does not have the use of reason - the person is incapable of entering into a contract
• Rights and duties in Human Rights Law vs Civil Law


  In Human Rights Law, we focus on the right first and then figure out the corresponding duty. In Civil Law, the relationship between rights and duty is intrinsic.
• Rights and duties in contracts


  The rights and duties which come out of a contract bind only the parties to the contract.
• Freedom of Contract


  The great innovation of the Code de Napoleon - one could create any sort of contract as long as there are the following elements: capacity, consent, object, consideration/causa.
• Elements required for a valid contract

  • Capacity
  • Consent
  • Object
  • Consideration/Causa
• Capacity


  There is a natural and legal capacity - the standard age is 18 years of age - once one turns 18, under the Civil Law, one reaches full capacity. Legal incapacity is a person who is under the age of 18. Natural incapacity is one does not have the use of reason - the person is incapable of entering into a contract.
• Consent


  A person must intend to enter into a contract - how he expresses his consent, there are various forms - oral, written, tacit - sometimes the law expressly requires a written consent such as when one is purchasing an immovable property via a public deed.
• Object


  One must deal with something - there must be an object. Such object could also be an intellectual right such as a trademark.
• Consideration/Causa


  This is the purpose of a contract - it was introduced by the Code Napoleon when one has the freedom of contract and thus, can enter into any contract as long as there is a lawful consideration. If it is an illegal consideration - against morality, public policy etc. - then the cause is unlawful.
• Will Theory vs Behavioural Theory


  The 'Will' Theory (Volonta Theory) vs The 'Behavioural' Theory (Affidamento Theory) - how one will give the second element which is consent.
• One can enter into a contract as long as it is not against the law, not against public order and not against morality.
• If there is a lack of one of the four elements (capacity, consent, object, consideration/causa), then there is no contract.
• Goods in commercio vs goods extra-commercio


  There are certain goods which cannot be the object of a contract, as they are extra-commercio (e.g. selling one's kidney, son etc).
• Once the consent is given, and these elements exist, then one is bound by this contract.
• Natural Obligation


  A natural obligation is the natural duty to do something, even though one is not legally bound to do so. It is not an obligation, it is something which you are consciously bound to however, one is not legally bound to it.
• Article 1021 of the Maltese Civil Code is the only article in which natural obligation is mentioned, under the concept of indebito soluzio.
• Types of obligations in Malta


  • Contract
  • Quasi-contract
  • Tort
  • Quasi-tort
• In Italy, obligations arise only from a contract, tort or a form any other obligation which arises from the law.
• Significance of natural obligations

  Natural obligations are not legal obligations - they are obligations bound on your conscience - they cannot be enforced! However, they have legal consequences - if one performs a natural obligation, one cannot go back.
• Types of natural obligations

  • A Civil Obligation Which Degenerates into A Natural Obligation
  • A Duty of Conscience to Transform into a Natural Obligation
  • Debts of Honour
• Whether the person fulfilling a natural obligation knows that he is doing so or not is irrelevant - the natural obligation exists objectively and he cannot recover the payment.
• If the rule of prohibition is one of public policy, then the natural obligation rules do not apply. For example, one can recover interest paid above the 8% legal limit.