Civil Code > TITLE XII CONTRACTS IN GENERAL 2

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Chapter 2. Effect of contracts

Art. 1731. Principle.

(1) The provisions of a contract lawfully formed shall be binding on the parties as though they were law.

(2) The contents of the contract shall be determined W the parties subject to the mandatory provisions of the law.

(3) The provisions of this Title shall apply to all contracts where such provisions are of a mandatory nature or their application has set been set aside by the parties.

Section 1. Interpretation of contracts

Art. 1732. Interpretation in accordance with good faith.

Contracts shall he interpreted in accordance with good faith, having regard to the loyalty and confidence which should exist between the parties according to business practice

Art. 1733. Limits interpretation.

Where the provisions of a contract are clear, the court may not depart from them and determine by way of interpretation the intention of the Parties.

Art. 1734. Common intention of the parties.

(1) Where the provisions of a contract are ambiguous, the common intention of the parties shall be sought.

(2) The general conduct of the parties before and after the making of the contract shall be taken into consideration to this effect.

Art. 1735. General terms.

A contract shall be deemed to relate to such matters only on which it appears that the parties intended to contract, however general the terms used.

Art. 1736. Interpretation in accordance with the context.

(1) The provisions of a contract shall be interpreted through one another and each provision shall he given the meaning required by the whole contract.

(2) Ambiguous terms shall he given such meaning as is the more likely, having regard to the subject matter of the contract.

Art. 1737. Positive interpretation.

Provisions capable of two meanings shall he given a meaning to render them effective rather than a meaning which would render them ineffective.

Art. 1738. Interpretation in favour of the debtor.

(1) In cases of doubt, a contract shall he interpreted against the party who stipulates an obligation and in favour of the party who assumes it.

(2) Stipulations inserted in general provisions, models or forms of contracts prepared by one party shall be interpreted in favour of the other party.

Art. 1739. Gratuitous contracts.

The obligations assumed by a party who derives no advantage from the contract shall be construed more narrowly.

Section 2. Performance of contracts

Art. 1740. Performance by whom made.

(1) The debtor shall personally carry out his obligations under the cow tract where this is essential to the creditor or has been exprem4w agreed.

(2) In all other cases, the obligations under the contract may he carried out by a third party so authorised by the debtor, by the court or by law.

Art. 1741. Payments to whom made.

Payment shall be made to the creditor or a third party authorised by the creditor, by the court or by law to receive it on behalf of the creditor.

Art. 1742. Creditor incapable.

Payment to a creditor incapable of receiving it shall not be valid unless the debtor can show that such payment has benefited the creditor.

Art. 1743. Payment to unqualified person.

(1) Payment to a person unqualified to receive on behalf of the creditor shall not be valid unless the creditor confirms it or such payment has benefited him.

(2) Payment shall be valid where it is made in good faith to a person who appears without doubt to be the creditor.

Art. 1744. Doubt as to the creditor.

(1) Where there is a doubt as to who is qualified to he paid, the debtor may refuse to pay and release himself by depositing the amount due with the court.

(2) The debtor shall pay at his own risk where he is aware of litigation and pays to any of the persons who hold themselves out to be creditors.

(3) Where a case is pending in court and the debt is due, any of the persons who hold themselves out to be creditors may require the debtor to deposit the amount due.

Art. 1745. Identity of object.

The creditor shall not be bound to accept a thing other than that due to him, notwithstanding that the thing offered to him is of the same or of a greater value than the thing due to him.

Art. 1746. Part payment,

(1) The creditor may refuse part payment where the. debt is liquidated and fully due.

(2) Where part of the debt is contested,; the debtor shall pay such part of the debt as is admitted and as the creditor is willing to accept.

Art. 1747. Fungible things. 1. Quality due.

(1) Unless otherwise agreed, the debt6r may choose the thing to he delivered where fungible things are due.

(2) The debtor may however not offer a thing below average quality.

Art. 1748. 2. Insufficient quantity or quality.

(1) The creditor may not refuse fungible things on the ground that the quantity or quality offered to him does not exactly conform to the contract, unless this is essential to him or has been expressly agreed.

(2) Where the thing does not exactly conform to the contract, the creditor may proportionately reduce his own performance or, where he has already performed, claim damages.

Art 1749. Money debts.

(a) A debt consisting in a sum of money shall be paid in local currency.

(2) The sum of money owed by a party may he fixed by reference to the price of raw materials. goods or services or any other element whose value can be ascertained.

Art. 1750. Currency not legal tender.

Where under the contract a debt is to be paid in a currency which is not legal tender at the place of payment, the debt may he paid in local currency at the rate of exchange on the day when the debt falls due, unless the contract contains the words "actual value" or any other provision of the name nature imposing literal performance of the contract.

Art. 1751. Legal interest.

The rate of interest shall be of nine per cent per annum where interest is due and the rate has not been fixed.

Art. 1752. Appropriation of payments. 1. Costs, interest, principal.

Where a debtor is to pay costs and interest in addition to the principal, any part payment made by him shall be appropriated firstly to the costs, secondly to the interest and eventually to the principal.

Art. 1753. 2. Choice by the parties.

(1) Where a debtor owes several debts to the same creditor, he may specify the appropriation of any payment made by him.

(2) Where the debtor does not specify the appropriation of a payment such payment shall be appropriated to the debt specified by the creditor in the receipt unless the debtor forthwith objects to such appropriation.

Art. 1754. 3. Appropriation by law.

(1) Where no appropriation is specified in the receipt, the payment shall be appropriated to the debt which is due, or, where no debt is due. to the debt which shall first become due,

(2) As between debts due or debts which shall become due on the sam day, the payment shall he appropriated to the debt which it was to the greatest advantage to the debtor to pay.

(3) Where the advantages to the debtor are equal, the payment shall be appropriated proportionately.

Art. 1755. Place of payment.

(1) Payment shall be made at the agreed place.

(2) Where no place is fixed in the contract, payment shall be made at the place where the debtor had his normal residence at the time where the contract was made.

(3) Unless otherwise agreed, payment in respect of a definite thing shall be made at the place where such thing was at the time when the con. tract was made.

Art. 1756. Time of payment.

(1) Payment shall be made at the agreed time.

(2) Where no time is fixed in the contract, payment may be made forthwith.

(3) Payment shall be made whenever a party requires the other party to perform his obligations.

Art. 1757. Simultaneous performance.

(1) Only a party who benefits by a time limit having regard to the terms or nature of the contract or who has performed or offered to perform his obligations may require the other party to carry out his obligations under the contract.

(2) A party may refuse to carry out his obligation under the contract where the other party clearly shows that he will not perform his obligations or where the insolvency of the other party bag been established by the court.

Art. 1758. Transfer of risks.

(1) The debtor bound to deliver a thing shall bear the risks of loss of or damage to such thing until delivery is made in accordance with the contract.

(2) The risks shall pass to the creditor where, he is in default for pot taking over the thing.

Art. 1759, Limit of right to refuse performance.

Notwithstanding the provisions of Art. 1757 (2), a party shall carry out his obligations under the contract where the other party produces securities .1ifficient to guarantee that he will perform his obligations at the agreed time.

Art. 1760. Costs of payment.

Unless otherwise agreed., the debtor shall meet the costs of payment.

Art.1761. Receipt.

(1) The debtor may on payment demand a receipt and, where the debt is fully discharged, the delivery or cancellation of the document supporting the debt.

(2) In cases of part payment or where the creditor has additional rights supported by the some document, the debtor may only demand a receipt and that the payment be mentioned on the said document.

Art. 1762. Loss of document supporting the debt.

Where the creditor alleges that he has lost the document supporting the debt, the debtor may demand the delivery of an attestation to the effect that the document supporting the debt is cancelled and the debt extinguished.

Section 3. Variation of contracts

Art. 1763. Power of the Court.

The court may not vary a contract or alter its terms on the ground of equity except in such cases as are expressly provided by law.

Art. 1764. Modification of the balance of a contract.

(1) A contract shall remain in force notwithstanding that the conditions of its performance have changed and the obligations assumed by a party have become more onerous than he foresaw.

(2) The effect of such changes may be regulated by the parties, and not by the court, in the original contract or in a new agreement.

Art. 1765. Arbitration by third party.

When making the contract or thereafter, the parties may agree to refer to an arbitrator any, decision relating to variations which ought to be made in the contract, should certain circumstances occur which would modify the economic basis of the contract.

Art. 1766. Special relationship between the parties.

The court may vary a contract where the parties do not agree and a family or other relationship giving rise to special confidence exists between the parties and compels them to deal with each other in accordance with equity.

Art. 1767. Contracts with a public administration.

(1) The court may vary a contract made with a public administration where the circumstances in which it was made have changed through an official decision in consequence of which the obligations assumed by the party who contracted with the administration have become more onerous or impossible.

(2) The provisions of the Title of this Code relating to "Administrative contracts" shall apply to contracts made with a public administration (Art. 3191 3193).

Art. 1768. Partial impossibility of performance.

The court may reduce the obligations of one party where the performance by the other party of his obligations has become partially impossible and there is no ground for cancelling the contract.

Art. 1769. Balance of the contract.

In making its decision under Art, 1767 and 1768, the court shall ensure that the balance, of the contract be preserved.

Art. 1770, Period of grace.

(1) The court may, with all necessary care, grant a period of grace for the debtor to carry out his obligations under the contract having regard to the position of the debtor and the requirements of justice.

(2) The period of grace shall not exceed six months.

(3) The parties may provide that no period of grace shall be granted.

Section 4.Non-performance of contracts

Art. 1771. Effect of non-performance.

(1) Where a party does not carry out his obligations under the contract, the other party may, according to the circumstances of the case, require the enforcement of the contract or the cancellation of the con. tract or in certain cases may himself cancel the contract

(2) He may in addition require that the damage caused to him by non-performance be made good.

Art. 1772. Notice necessary.

A party may only invoke non-performance of the contract by the other party after having placed the other party in /default by requiring him by notice to carry out his obligations under the contract.

Art 1773. Form and time of notice.

(1) Notice shall be by written demand or by any other act denoting the creditor's intention to obtain performance of the contract

(2) Notice may not be given unless the obligation is due.

Art. 1774. Time for performance.

(1) The creditor may in the notice fix a period of time after the expiry of which he will not accept performance of the contract.

(2) Such period shall be reasonable having regard to the nature and circumstances of the case.

Art. 1775. Notice when unnecessary.

Notice need not be given where:

(a) the obligation is to refrain from certain acts; or

(b) the debtor assumed to perform an obligation which the contract allows to be performed only within a fixed period of time and such period has expired; or

(d) it is agreed in the contract that notice shall not be required and the debtor shall be in default upon the expiry of the time fixed.

Art. 1776. Specific performance.

Specific performance of a contract shall not be ordered unless it is of special interest to the party requiring it and the contract can be enforced without affecting the personal liberty of the debtor.

Art. 1777. Obligation to do or not to do.

(1) The creditor may be authorised to, do or to cause to be done at the debtor's expense the acts which the debtor assumed to do.

(2) The creditor may be authorized to destroy or to cause to be destroyed at the debtor's expense the things done in violation of the debtor's obligation to refrain from doing such things.

Art. 1778. Fungible things.

Where, fungible things are due, the creditor may be authorised by the, court to buy at the debtor's expense the things which the debtor assumed to deliver.

Art.1779. Creditor refusing to accept the thing.

Where the creditor refuses without good cause to accept the thing offered

to him, the debtor may deposit the thing at the risk and expense of the creditor in a public warehouse or deposit bank or in any other place named by the court of the place where payment is to be made.

Art. 1780. Delivery of the thing not possible.

The provisions of Art. 1779 shall apply and notice under Art. 1772 shall not be required where the creditor is not known or them is a dank as to who is the creditor or the debtor cannot deliver the thing for a reason within the control of the creditor.

Art. 1781. Sale of the thing.

(1) Where the thing is of a perish" nature or the costs of its deposit or custody are disproportionate to its value, the debtor may be authorised by the court to sell the thing by public auction.

(2) Where the thing is quoted on the Stock Exchange or has & current price or the costs of the sale by public auction am disproportionate to its value, the debtor may be authorised by the court to sell the thing by private agreement.

(3) The proceeds of the sale shall in such a case he deposited with a public deposit bank.

Art. 1782. Validity of deposit.

The debtor shall be released where the court finds that the thing or the proceeds of its sale have been validly deposited.

Art. 1783. Withdrawal of deposit

(1) The debtor may withdraw the thing or money deposited until the deposit has been accepted by the creditor, notwithstanding that the. deposit has been found valid by the court.

(2) The claim shall revive upon withdrawal of the deposit.

(3) The securities attaching to the claim shall not revive where the de )o At has been found valid by the court.

Art. 1784. Cancellation of contract by the Court

A party may move the court to cancel the contract where the other Party has not or not fully and adequately performed his obligations within the agreed period of time.

Art. 1785. Good faith.

(1) In making its decision, the court hall have regard to the interests of the parties and the requirements of good faith,

(2) A contract shall not be cancelled except in cases of breach of a fundamental provision of the contract.

(3) No contract shall be cancelled unless its essence is affected by non. Performance and it is reasonable to hold for such reason that the Party requiring cancellation of the contract would not have entered into the contract without the term which the other party has failed to execute being included.

Art. 1786. Cancellation by a party. 1. Under the contract.

A party may cancel the contract where a provision to this effect has been made in the contract and the conditions for enforcing such provision are present.

Art. 1787. 2. Expiry of time limit.

A party may cancel the contract where the other party has failed to perform his obligations within the period of time fixed in accordance with Art. 1770, 1774 or 1775 (b).

Art. 1788. 3. Performance impossible.

A party may cancel the contract even before the obligation of the other party is due where the performance by the other party of his obligations has become impossible or is hindered so that the essence of the contract is affected.

Art. 1789. 4. Party refusing performance.

(1) A party may cancel the contract where the other party informs him in an unequivocal manner that he will not carry out his obligations under the contract.

(2) The party who intends to cancel the contract shall place the other party in default and the contract shall not be cancelled where the party in default produces within fifteen days securities sufficient to guarantee that he will perform his obligations at the agreed time.

(3) Notice shall not be required and the contract may he cancelled forthwith where a party informs the other party in writing that he will not perform his obligations.

Art. 1790. Damage arising out of non performance.

(1) Apart from or in addition to the enforcement or cancellation of the contract, a party may require that the damage caused to him by the other party failing to perform his obligations be made good.

(2) Without prejudice to the provisions of the following articles, the provisions of the Chapter of this Code relating to "Extra contractual liability" shall apply where the damage is made good under sub art (1) (Art, 2090 2123).

Art. 1791. Damage when to be made good.

(1) The party who! fails to perform his obligations &hall be liable to pay damages notwithstanding that he is not at fault.

(2) He shall not be released unless he can show that performance was prevented by force majeure.

Art. 1792. Force majeure.

(1) Force majeure results from an occurrence which the debtor could normally not foresee and which prevents him absolutely from performing his obligations.

(2) Force majeure shall not exist where the occurrence could normally have been foreseen by the debtor or where it renders more onerous the performance by the debtor of his obligations.

Art. 1793. Cases of force majeure.

The following occurrences may, according to the circumstances, constitute cases of force majeure.

(a) the unforeseeable act of a third party for whom the debtor is not responsible; or

(b) an official prohibition preventing the performance of the contract; or

(d) international or civil war; or

(e) the death or a serious accident or unexpected serious illness of the debtor.

Art. 1794. Absence of force majeure.

Unless otherwise expressly agreed, the following occurrences shall not he deemed to be cases of force majeure:

(a) a strike or lock-out taking place in the undertaking of a party or affecting the branch of business in which he carries out his activities; or

(b) an increase or reduction in the price of raw materials necessary for the performance of the contract; or

Art 1795. Proof of fault.

A party may not claim damages on the ground of non performance of the contract by the other party, unless he can show that the other party is at fault, where:

(a) the debtor has undertaken to do his best to procure something to the other party without guaranteeing that he would succeed; or

(b) such an exception is expressly provided by law in respect of certain contracts.

Art. 1796. Grave fault.

Where the contract is made for the exclusive advantage of one party, the other party shall not be liable to pay damages in cases of non performance he has committed a grave fault.

Art. 1797. Notice to other party.

(1) The debtor shall forthwith inform die other party of the reason which prevents him from performing his obligations.

(2) He shall be liable as though non performance were attributable to him for any damage caused to the other party which could have been avoided, had notice been given.

Art. 1798. Party in default.

Where performance is prevented by force majeure, damages shall be due where force majeure occurred after the debtor had been placed in default.

Art. 1799. Normal amount of damages.

(1) Damages shall be equal to the damage which non-performance would normally have caused to the creditor in the eyes of a reasonable person.

(2) The nature of the contract, the profession of and the relations between the parties and any circumstances known to the debtor which surrounded the making of the contract shall be taken into consideration in assessing the amount of damages.

Art. 1800. Lesser damage.

Where the debtor can show that the amount of damages assessed in accordance with Art. 1799 is greater than the damage caused to the creditor, he shall be liable to the extent of the damage actually caused.

Art. 1801. Greater damage.

(1) The amount of damages shall be equal to the damage actually caused to the creditor where the debtor on entering into the contract was informed by the creditor of the special circumstances owing to which the damage is greater.

(2) The provisions of sub art. (1) shall apply where non performance is due to the debtor's intention to cause damage or to his gross negligence or grave fault.

Art. 1802. Duty to limit the extent of the damage.

(1) The party who invokes non performance shall take. all reasonable measures not involving inconvenience or heavy expenses to limit the extent of the damage caused,

(2) Where he fails to take such measures, the other party may invoke such failure to require that the amount of damages be reduced.

Art. 1803. Money debts. 1. Interest for default.

(1 ) Where the debtor owes a money debt and he is in default, he &hall pay interest for default at the rate fixed by law (Art. 1751) notwithstanding that the contract fixes a lower rate in respect of interest to be paid before the debt is due.

(2) Where a higher rate of interest is fixed in the contract, such interest shall he due in lieu of interest under sub art. (1).

(3) Interest shall be due notwithstanding that: no loss is incurred by the creditor.

Art. 1804. 2. Interest on interest.

(1) Where the debtor fails to make periodical payments which constitute an income for the creditor, such as rent% arrears of life or perpetual annuities or interest on capital, interest for default shall be due from the day on which proceedings for recovery are instituted where the debtor is one year in arrears.

(2) Nothing in this Article shall affect the provisions relating to current accounts.

Art. 1805. 3. Greater Damage.

Where the damage caused to the creditor exceeds the interest for default, such damage shall be fully made good by the debtor where he knew of the circumstances on entering into the contract or where non performance is due to the debtor's intention to cause damage or to his gross negligence or grave fault

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