BOOK IV. TITLE XII. CONTRACTS IN GENERAL

BOOK IV. OBLIGATIONS

TITLE XII. CONTRACTS IN GENERAL

 

Art. 1675. Contract defined.
A contract is an agreement whereby two or more persons as between themselves create, vary or extinguish obligations of a proprietary nature.

Art. 1676. Provisions applicable to contracts.
(1) The general provisions of this Title shall apply to contracts regardless of the nature thereof and the parties thereto.
(2) Nothing in this Title shall affect such special provisions applicable to certain contracts as are laid down in Book. V of this Code and in the Commercial Code.

Art. 1677. Scope of application of this Title.
(1) The relevant provisions of this Title shall apply to obligations notwithstanding that they do not arise out of a contract.
(2) Nothing in this Title shall affect the special provisions applicable to certain obligations by reason of their origin or nature.

Chapter 1. Formation of contracts

 

Art. 1678. Elements of contract.
No valid contract shall exist unless:
(a) the parties are capable of contracting and give their consent sustain. able at law;
(b) the object of the contract is sufficiently defined and is possible, and lawful;
(c) the contract is made in the form prescribed by law, if any.

Section 1. Consent
Paragraph 1. Elements of consent

Art 1679. Consent necessary.
A contract shall depend on the consent of the parties who define the object of their undertakings and agree to be bound thereby.

Art. 1680. Agreement of the parties.
(1) A contract shall be completed where the parties have expressed their agreement thereto.
(2) Reserves or restrictions intended by one party shall not affect his agreement as expressed where the other party was not informed of such reserves or restrictions.

Art. 1681. Form of offer and acceptance.
(1) Offer or acceptance may be made orally or in writing or by signs normally in use or by a conduct such that, in the circumstances of the case, there is no doubt as to the party’s agreement.
(2) The party who makes an offer may stipulate a special form of acceptance

Art. 1682. Silence. 1. Principle.
Silence where an offer is made shall not amount to acceptance.

Art. 1683. 2. Duty to accept.
(1) No acceptance shall be required where a party is bound by law or by a concession granted by the authorities to enter into a contract on terms stipulated in advance.
(2) In such a case, the contract shall he completed upon receipt of the Offer.

Art. 1684. 3. Pre-existing business relations.
(1) An offer to continue or vary an existing contract or to enter into a subsidiary or complementary contract may be accepted by silence.
(2) Such shall be the case where the offer is made in a special document informing the other party that the offer shall be regarded as accepted if no reply is given within a reasonable period of time.

Art. 1685. 4. Invoices.
Particulars entered by a party in an invoice shall not bind the other party unless they conform to a prior agreement or have been expressly accepted by the other party.

Art. 1686. 5. General terms of business.
General terms of business applied by a party shall not bind the other party unless he knew and accepted them or they were prescribed or approved by the authorities.
Art. 1687. Declaration of intention.
No person shall be deemed to make an offer where:
(a) he declares his intention to give, to do or not to do something but does not make his intention known to the beneficiary of the declaration; or
(b) he sends to another or posts up in a public place tariffs, pricelist or catalogues or displays goods for sale to the public.

Art. 1688. Sale by auction..
(1) Whosoever offers a thing for sale by auction shall be deemed to make, a declaration of intention and not an offer.
(2) In such a case, the contract shall be completed only where the thing is knocked down upon the last bid being made.

Art. 1689. Public promise of a reward.
(1) A promise published by posters or in any other manner to reward the person who will find an object which has been lost or who will perform a certain act shall be deemed to be accepted where a person brings the object back or performs the act, notwithstanding that he did not know of the promise.
(2) The promisor shall give the promised reward.

Art. 1690. Offer with time limit for acceptance.
(1) Whosoever offers to another to enter into a contract and fixes a time limit for acceptance shall be bound by his offer until the time limit fixed expires.
(2) He shall not be bound where his offer is rejected before the expiry of the time limit fixed.

Art. 1691. Offer without time limit.
(1) Whosoever offers to another to enter into a contract and does not fix any ‘time limit shall be bound by his offer until the time when he can reasonably expect the other party to decide on the offer.
(2) Where acceptance is late, the offer or shall forthwith inform the other party where he does not intend to be bound.

Art 1692. Contract between absent parties.
(1) A contract made between absent parties shall be deemed to be made at the place where and time when the acceptance was sent to the offer or.
(2) A contract made by telephone shall be deemed to be made at the place where the party was called.
(3) Nothing in this Article shall affect contrary stipulations made by the parties.

Art. 1693. Withdrawal of offer and acceptance,
(1) An offer shall he deemed not to have been made where the offeree knows that it is withdrawn before he knew or at the time when he knows of the offer.
(2) The provisions of sub art. (1) Shall apply ‘where acceptance is withdrawn.

Art. 1694. Defective acceptance.
The offer &hall he deemed to be rejected and a new offer shall be deemed to be made where the acceptance is made with a reservation or does not exactly conform to the terms of the offer.

Art.1695. Completion of contract.
(1) A contract &hall not be deemed to be completed unless the parties have expressed their agreement to all the terms of the negotiation.
(2) A contract shall be deemed to be completed where the parties show that they intend to be bound notwithstanding that they have not expressed their agreement to all the terms of the negotiation.
(3) In such a case, the law shall remedy any deficiency in the agreement of the parties.

Paragraph 2. Defects in consent

Art. 1696. Invalidation of contract.
A contract may be invalidated where a party gave his consent by mistake or under deceit or duress.

Art. 1697. Mistake must be decisive.
The party who invokes his mistake shall establish that he would not have entered into the contract, had he known the truth.

Art. 1698. Mistake must be fundamental.
A contract may be invalidated on the ground of mistake as defined in Art. 1697 where such mistake relates to an element of the contract which the parties deem to be fundamental or which is fundamental, having regard to good faith and to the circumstances in which the contract was made.

Art. 1699. Mistake as to the nature or object of the contract.
A contract may be invalidated on the ground of mistake where:
(a) the mistake relates to the nature of the contract; or
(b) the mistaken party has undertaken to make a performance substantially greater or to receive a consideration substantially smaller than he intended

Art. 1700. Mistake as to the person.
A contract may be invalidated ‘on the ground of mistake where such mistake relates to the identity or qualifications of the other party and such identity or qualifications are a fundamental element of the contract in the general opinion or having regard to the circumstances of the.

Art. 1701. Non fundamental mistakes.
(1) A contract may not be invalidated on the ground of mistake where, such mistake only relates to the motives which led to the making of the contract.
(2) Arithmetical mistakes in a contract shall not affect its validity and shall he corrected.
Art. 1702, Good faith of mistaken party.
(1) The mistaken party may not invoke his mistake in a manner contrary to good faith.
(2) He shall be bound by the contract he intended to make where the other party agrees to perform such contract.

Art. 1703. Reparation of damage.
Whosoever invokes his mistake to avoid the effect of a contract shall make good the damage arising out of the invalidation of the contract unless the other party knew or should have known of the mistake.

Art. 1704. Fraud.
(1) A contract may be invalidated on the ground of fraud where a party resorts to deceitful practices so that the other party would not have entered into the contract, had he not been deceived.
(2) A contracting party who has been deceived by a third party shall be bound by the contract unless the other contracting party knew or should have known of the fraud on the making of the contract and took advantage thereof.

Art. 1705. False statements.
(1) A contract way be invalidated where a party in bad faith or by negligence made false statements and a relationship giving rise to a special confidence and commanding particular loyalty existed between the contracting panics.
(2) The provisions of sub art. (1) shall apply where a party, by his silence., caused the other party to believe a fact which was untrue.

Art. 1706. Duress.
(1) A contract may be invalidated on the ground of duress where the acts of duress led a party to believe that he, one of his ascendants or de. ascendants, or his spouse, were threatened with a serious and imminent danger to the life, person, honour or property.
(2) Duren must be such as to impress a reasonable person.
(3) The nature of duress shall be determined having regard to the age, sex and position of the parties concerned.

Art. 1707. Duress by third party.
(1) A contract may be invalidated on the ground of duress notwithstanding that duress was exercised by a person other than the party who benefited by the contract.
(2) The party who invokes duress to avoid the effect of a contract shall make good the damage arising out of the invalidation of the contract, where duress was exercised by a third party and the other contracting party did not and should not have known thereof.

Art. 1708. Threat to exercise a right.
A threat to exercise a right shall he no ground for invalidating a contract unless such threat was used with a view to obtaining an excessive advantage.

Art. 1709. Reverential fear.
(1) Fear of an ascendant or a superior shall be no ground for invalidating a contract where no duress was exercised.
(2) The provisions of sub art. (1) shall not apply where the contract was made with the person inspiring the fear and such person derived an excessive., advantage from the contract.

Art. 1710. Unconscionable contract.
(1) A contract may not be invalidated on the sole ground that its terms are substantially more favourable to one party than to the other party.
(2) Where justice requires, any such contract may be invalidated as un conscionable where the consent of the injured party was obtained by taking advantage of his want, simplicity of mind, senility or manifest business inexperience.

Section 2. Object of contracts

Art. 1711. Determination of object.
The object of a contract shall be freely determined by the parties subject to such restrictions and prohibitions as are provided by law.

Art. 1712. Obligation to give, to do or not to do.
(1) A party may undertake to procure to the other party a right on a thing or to do or not to do something.
(2) The party who undertakes to do something may undertake to procure to the other party a specified advantage or to do his best to procure such advantage.

Art. 1713. Contents of contract.
The parties shall he bound by the terms of the contract and by such incidental effects as are attached to the obligations concerned by custom. equity and good faith, having regard to the nature of the contract. Art.

1714. Object must be defined.
(1) A contract shall be of no effect where the obligations of the parties or of one of them cannot he ascertained with sufficient precision.
(2) The court may not make a contract for the parties under the guise of interpretation.

Art. 1715. Object must be possible.
(1) The object of a contract must be possible.
(2) A contract shall be of no effect where the obligations of the parties or of one of them relate to a thing or fact which is impossible and such impossibility is absolute and insuperable.

Art. 1716. Unlawful or immoral object.
(1) A contract shall he of no effect where the obligations of the parties or of one of them are unlawful or immoral.
(2) A contract shall be of no effect where it appears to be unlawful or immoral that the obligations assumed by one party be related to the obligations of the other party.

Art. 1717. Motive. 1. Principle.
The motive for which the parties entered into a contract Shan not be taken into account in determining the unlawful or immoral nature of their obligations.

Art. 1718. 2. Exception.
The court shall not order a contract to he performed where:
(a) the terms of the contract denote that the parties or one of them have an unlawful or immoral purpose in view; or
(b) the party Who requires the performance of a contract produces a document denoting such purpose.

Section 3. Form of contracts

Art. 1719. Form of contracts.
(1) Unless otherwise provided, no special form shall be required and a contract shall be valid where the parties agree.
(2) Where a special form is expressly prescribed by law such form shall be observed.
(3) The parties may stipulate that tire contract shall he made in a special form.

Art. 1720. Effect of provisions as to form.
(1) Where a special form is prescribed by law and not observed there shall be no contract but a mere draft of a contract.
(2) A contract shall be valid notwithstanding that fiscal provisions, such as provisions relating to stamp duty or registration fee, have not been complied with.
(3) Unless otherwise provided, a contract shall he valid notwithstanding that prescribed measures of publication have not been complied with.

Art. 1721. Preliminary contracts.
Preliminary contracts shall be made in the form prescribed in respect of final contracts.

Art. 1722. Variations.
A contract made in a special form shall be varied in the same form.

Art. 1723. Contracts relating to immovables.
(1) A contract creating or assigning rights in ownership or hare owner. ship on an immovable or an usufruct, servitude or mortgage of an immovable shall be in writing and registered with a court or notary,
(2) Any contract by which an immovable is divided and any compromise relating to an immovable shall be in writing and registered with a court or notary.

Art. 1724. Contracts made with a public administration.
Any contract binding the Government or a public administration shall be in writing and registered with a court, public administration or notary.

Art. 1725. Contracts for a long period of time.
The following contracts shall be in writing:
(a) contracts of guarantee; and
(b) insurance contracts; and
(e) any other contract in respect of which such form is required by law.

Art. 1726. Agreed form.
A contract which the parties agree to make in a special form not required by law shall not be deemed to be completed until it is made in the agreed form.

Art. 1727. Written form.
(1) Any contract required to be in writing shall be supported by a special document signed by all the parties bound by the contract.
(2) It shall he of no effect unless it is attested by two witnesses.

Art. 1728. Signature.
(1) Any party bound by a contract shall affix his handwritten signature thereto.
(2) Where a party cannot write, he may affix his thumb mark.
(3) The signature or thumb mark of a blind or illiterate person shall not bind him unless it is authenticated by a notary, registrar or judge acting in the discharge of his duties.

Art. 1729. Witnesses. 1. Capacity.
(1) Where witnesses are required by law or agreement, they shall he of age and not judicially interdicted, unless otherwise expressly provided.
(2) Sex or nationality shall not be considered in determining the capacity to act as a witness.

Art. 1730. 2. Duties.
(1) Where necessary, the witnesses shall certify that a contract was made
and the terms thereof.
(2) Unless they act expressly as guarantors, the witnesses shall not guarantee the performance of the contract.

 

 

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
(c) the debtor has declared in writing that he would not perform his obligations; 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
(c) a natural catastrophe such as an earthquake, lightning or floods; 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
(c) the enactment of new legislation whereby the obligations of the debtor become more onerous.

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

 

 

 

 

Chapter 3. Extinction of obligations

 

Art. 1806. Obligation performed.

An obligation shall be extinguished where it is performed in accordance with the contract.

Art. 1807. Other causes of extinction.
An obligation shall be extinguished where:
(a) the contract in which it is provided is invalidated or cancelled; or
(b) the parties or one of them enforce a provision made in the contract for the termination of the contract; or
(c) the parties agree to substitute a new obligation for the original obligation; or
(d) the debtor’s obligation is set off by an obligation owing from the creditor to the debtor; or
(e) tile positions of creditor and debtor are merged in the same person; or
(f) performance of the contract has not been demanded within a fixed period.

Section 1. Invalidation and cancellation of contracts

Art. 1808.Who may require invalidation.

(1) A contract which is affected by a defect in the consent or by the incapacity of one party way only be invalidated at the request of that party.
(2) A contract whose object is unlawful or immoral or a contract not made in the prescribed form may be invalidated at the request of any contracting Party or interested third party.

Art. 1809. Party may refuse performance.
A party who is entitled to require the invalidation of the contract may at any time refuse to perform it.

Art. 1810. Action for invalidation.
(1) No contract shall be invalidated unless an action to this effect is brought within two years from the ground for invalidation having disappeared.
(2) Where a contract is unconscionable and tile party injured was of age, the action shall be brought within two years from the making of the contract.

Art. 1811. Confirmation of contract.
(1) The party whose consent was vitiated may waive his right to require tile invalidation of the contract where the cause which vitiated his consent has disappeared.
(2) Where the contract was made in a special form, waiving as mentioned in sub art. (1) shall be made in the same form.

Art. 1812. Putting an end to action.
Where a party requires the invalidation of an unconscionable contract. the other party may put an end to the action by offering to make good the injury.

Art. 1813. Partial invalidation.
Where part only of the contract is vitiated, only that part shall he in validated unless such invalidation affects the essence of the contract.

Art. 1814. Duty to opt.
(1) The party who is entitled to require the invalidation of the contract or to c4neel the contract shall, where he is so asked by the other party, without delay answer whether he intends to confirm or to cancel the contract.
(2) Notwithstanding any proof to the contrary, the contract shall be deemed to be cancelled where answer is not given in due time.

Art. 1815. Effect of invalidation or cancellation.
(1) Where a contract is invalidated or cancelled, the parties shall as far as possible be reinstated in the position which would have existed, had the contract not been made.
(2) Acts done in performance of the contract shall be of no effect.

Art. 1816. Rights of third parties.
Acts done in. performance of the contract shall not be invalidated where the interest of third parties in good faith so requires.

Art. 1817. Restoring previous position not possible.
(1) Acts done in performance of the contract shall not be invalidated where such invalidation is not possible or would involve serious disadvantages or inconveniences.
(2) The parties shall as far as possible be reinstated in the position which would have existed, had the contract not been made, by the payment of damages or any other remedy which the court thinks fit.

Art. 1818. Expenses.
Where a party who is to restore a thing following invalidation or cancellation of the contract has altered such thing or incurred expenses in relation thereto, the provisions of the Chapter of this Code relating to “Unlawful Enrichment” (Art. 2168 2178) shall apply in settling the rights or obligations arising out of such alterations or expenses.

Section 2. Termination of contracts and remission of debt

 

Art. 1819. — Consent of the parties.
(1) A contract may terminate where the parties so agree.
(2) A contract which is terminated shall no longer be performed.
(3) Termination shall have no retrospective effect.

Art. 1820. — Termination by one party.
(1) Provisions may be made in the contract to the effect that the patties or one of them may terminate the contract on notice.
(2) Where more than two persons enter into a contract, provisions may be made to the effect that the contract shall terminate with regard to one of them and remain in force with regard to the other parties.

Art. 1821. — Contracts for an. undefined period of time.
Where a contract is made for an undefined period of time, both parties may terminate it on notice.

Art. 1822. — Period of notice.
(1) The party who terminates a contract shall comply with legal or customary periods of notice.
(2) Where the period of notice is not fixed by the law or by custom, it shall be reasonable having regard to the circumstances.

Art. 1823. — Special relations between the parties.
A party may apply to the court to order the termination of a contract which requires a special confidence, cooperation or community of views between the parties, where such requirements are no longer present.

Art. 1824. — Gratuitous contracts.
The court may order the termination of a contract made for the exclusive advantage of one party where the other party for good cause so requires.

Art. 1825. — Remission of debt.
Where the creditor informs the debtor that he regards him as released, the obligation shall be extinguished unless the debtor forthwith informs the creditor that he-refuses his debt to be remitted.
Section 3. Novation

Art. 1826. — Principle.
An obligation shall be extinguished where the parties agree to substitute therefor a new obligation which differs from the original one on account of its object or nature.

Art. 1827. — Effect of novation.
(1) Unless otherwise expressly provided, securities or privileges attaching to the original obligation shall not be transferred to the new obligation.
(2) Unless otherwise expressly provided, interest due prior to novation may not be recovered thereafter.

Art. 1828. — Intention to extinguish original obligation.
Novation shall not occur unless the parties show the unequivocal intention to extinguish the original obligation.

Art. 1829. — Absence of novation.
Unless otherwise agreed, novation shall not occur where:
(a) a new document is prepared to support an existing debt; or
(b) the debtor signs a promissory note or bill of exchange in respect of an existing debt; or
(c) new securities are provided to ensure payment of an existing debt.

Art. 1830. — Current account.
(1) Novation shall not result from the entry of credit or debit items in a current account.
(2) Novation shall occur where the balance of an account is finalised and admitted.
(3) Unless otherwise agreed, the creditor shall retain such securities as may attach to one of the items entered in a current account notwithstanding that the balance of the account has been finalised and admitted.

Section 4. Set-off

Art. 1831. — Principle.
Where two persons owe debts to one another, set-off shall occur and the obligations of both persons shall be extinguished in accordance with the provisions of the following Articles.

Art. 1832. — Positive conditions.
Set-off shall not occur unless both debts are money debts or relate to a certain quantity of fungible things of the same species and both debts are liquidated and due.

Art. 1833. — Negative conditions.
Set-off shall occur regardless of the cause of either, obligation except where:
(a) the special nature of the obligation requires that the creditor be actually paid, as in the case of maintenance or wages necessary for the livelihood of the creditor and his family; or
(b) the obligation is owing to the State or municipalities; or
(c) the obligation is to restore a thing of which the owner has been unjustly deprived; or
(d) the obligation is to return a thing deposited.

Art. 1834. — Period of grace.
The granting of a period of grace shall be no bar to a set-off,

Art. 1835, — Appropriation, of payments.
Where several debts liable to set-off are owing from the same person, the set-off shall be made in accordance with the provisions of Chapter 2 of this Title relating to appropriation of payments (Art. 1752-1754).

Art. 1836. — Effect of set-off.
The debts shall extinguish each other as from the day when they both exist and to the extent of the amount of the lesser debt.

Art. 1837. — Rights of third parties.
Set-off shall not affect the rights which a third party may have in respect of one of the debts.

Art. 1838. — Intention, to set-off.
(1) Set-off shall not occur unless the debtor informs the creditor that he intends to make a set-off.
(2) The court shall not have regard to set-off unless raised.

Art. 1839. — Waiving of right to set-off.
The debtor may in advance waive his right to make a set-oft.

Art. 1840. — Contractual set-off.
(1) Set-off may occur in cases not provided by law where the parties agree.
(2) The parties may in advance specify the conditions of a set-oft.

Art. 1841. — Set-off by the court.
(1) Where one of the debts is not liquidated, the court may hold that a set-otf has been made to the extent of such amount of the debt as is admitted.
(2) Where one of the debts is not liquidated but can be liquidated without delay, the court may suspend judgment against the debtor whose debt fs liquidated until the other debt is liquidated.
Section 5. Merger

Art. 1842. — Principle.
Merger shall occur and the obligation shall be extinguished where the positions of creditor and debtor are merged in the same person.

Art. 1843. — Rights of third parties.
Merger shall not affect the rights which a third party may have in respect of the obligation.

Art. 1844. — End of merger.
The obligation shall revive where merger comes to an end.

Section 6. Limitation of actions

Art. 1845. — Period of limitation.
Unless otherwise provided by law, actions for the performance of a contract, actions based on the non-performance of a contract and actions for the invalidation of a contract shall be barred if not brought within ten years.

Art. 1846. — Beginning of period.
The period of limitation shall ran from the day when the obligation is due or the rights under the contract could be exercised.

 

Art. 1847. – Annuities.
In respect of annuities, the period of limitation shall run from tee day when the first payment not made was due.

Art. 1848. — Calculation of period.
(1) The period of limitation shall not include the day from which such period begins to run. .
(2) The action shall be barred where the last day of the period of limitation has expired without having been used.
(3) Where the last day of the period of limitation is a holiday at the place of payment, the action shall be barred on the next working day.

Art. 1849. — Collateral claims.
Interest and collateral claims shall be barred where the principal claim is barred.

Art. 1850. — Pledge.
A creditor whose claim is secured by a pledge may exercise the rights arising out of the pledge notwithstanding that the -claim is barred.

Art 1851 — Interruption.
The period of limitation shall be interrupted where:
(a) the debtor admits the claim, in particular by paying interest or instalments or by producing a pledge or guarantees; or
(b) the creditor brings an action for the debtor to discharge his obligation.

Art. 1852. — Effect of interruption.
(1) A new period of limitation shall begin to run upon each interruption.
(2) Such period shall be of ten years where the debt has been admitted in writing or established by a judgment.

Art. 1853. — Special relations between the parties.
(1) The court may set aside a plea based on limitation where it is of opinion that the creditor failed to exercise his rights in due time on account of the obedience he owed to or tear he felt of the debtor to whom he is bound by family relationship or subordination.
(2) In such a case, third parties who guaranteed the payment of the debt shall however be released.

Art. 1854. — Bad faith.
A party may plead limitation notwithstanding that he is in bad faith.

Art. 1855. — Contrary provisions.
The parties may not in advance waive limitation nor may they fix periods of limitation other than those fixed by law.

Art. 1856. — Waiving of limitation.
(1) A party may waive limitation after it has become effective.
(2) The court shall not have regard to limitation unless pleaded.

 

 

 

Chapter 4. Special terms of obligations or contracts

 

Section 1. Provisions as to time

Art. 1857. — Calculation of period of time.
Where an obligation is to be discharged or another act of a legal nature is to be performed after a certain period of time from the date of the contract or any other date, such period shall be reckoned in accordance with the provisions of the following Articles.

Art. 1858. — Period fixed in days.
Where the period is fixed in days, the debt shall be due on the last day of such period, the day of the making of the contract not being included.

Art. 1859. — Period fixed in weeks.
Where the period is fixed in weeks, the debt shall be due on such day of the last week as corresponds by its name to the day of the making of the contract.

Art. 1860. — Period fixed in months.
(1) Where the period is fixed in months or so as to include several months, the debt shall be due on such day of the last month as corresponds by its number to the day of the making of the contract.
(2) Where the period is fixed in accordance with the Gregorian Calendar and no day in the last month corresponds to the day of the making of the contract, the debt shall be due on the hut day of the last month.
(3) The thirteenth month of the Ethiopian Calendar shall not be taken into account.

Art. 1861. — Monthly periods.
(1) Where the period expires at the beginning or at the end of a month, such period shall expire on the first or on the last day of such month.
(2) Where the period expires in the middle of a month, each period shall expire on the fifteenth of such month.

Art. 1862. — Holidays.
Where the period expires on a day which it a holiday at the place of payment, such period shall expire on the next working day.

Art. 1863. — Lapse of time.
(1) Where an obligation is to be discharged within a specified period of time, the debtor shall discharge his obligations before the expiry of such period.
(2) He shall fix the exact date on which he shall discharge his obligations unless the circumstances are such as to show that the said date is to be fixed by the creditor.

Art. 1864. — Period extended.
Where the period is extended, the new period shall, unless otherwise agreed, begin to run from the day following the day on which the first period expired.

Art. 1865. — Benefit of period of time.
The period of time shall be deemed to be fixed for the benefit of the debtor unless the contract or the circumstances show that it is also fixed for the benefit of the creditor.

Art. 1866. — Waiving of benefit of time.
(1) The debtor may discharge his obligations before the expiry of the agreed period of time unless the contrary intention of the parties can be inferred from the terms or nature of the contract or from the circumstances.
(2) Payments made before the expiry of the agreed period of time may not be recovered,

Art. 1867. — Rights of creditor.
(1) The creditor may not demand performance before the expiry of the freed period of time unless such period was fixed for his exclusive benefit.
(2) Where the period is fixed for the exclusive benefit of the creditor, he shall, where necessary, grant a reasonable period of time for the debtor to discharge his obligations.

Art. 1868. — Loss of benefit of time.
The debtor whose insolvency bas been established or who has reduced the value of the securities given by him to the creditor shall loss the benefit of the agreed period of time.

Section 2. Condition

Art. 1869. — Principle.
A contract shall be deemed to be conditional where it relates to an obligation. whose existence depends on the occurrence or non-occurrence of an uncertain event.

Art. 1870. — Good faith.
A party may regard a condition as fulfilled where the other party has prevented its fulfilment in a manner contrary to good faith.

Art. 1871. — Condition precedent.
Unless otherwise agreed, the contract shall be effective as from the day when the condition u fulfilled.

Art. 1872. — Condition, subsequent.
(1) A contract whose cancellation depends on the occurrence of an uncertain event shall be effective forthwith.
(2) It shall cease to be effective where the event ocean.

Art. 1873. — Non-interference.
The parties shall refrain from doing any act likely to prevent the regular performance of the contract upon the fulfilment of the condition.

Art. 1874. — Acts of management.
Acts of management done prior to the fulfilment of the condition by the party who exercises the right shall remain valid where the condition is fulfilled. Damages may be claimed where such acts were done in bad faith.

Art. 1875. — Acts beyond management.
(1) Acts beyond management done by the party who exercises the right may be invalidated where the other party so requires.
(2) Any interested party may require the other party to state within a reasonable period of time whether he will require the acts beyond management to be invalidated.
(3) The effects of invalidation shall be as provided by Art. 1808-1818.

Art. 1876. — Fruits and profits.
The party who exercises the right prior to the fulfilment of the condition shall, where the condition is fulfilled, retain the fruits and profits he received in good faith prior to the fulfilment of the condition.

Art. 1877. — Protective measures,
A party whose conditional rights are imperilled may take such protective measures as he could take, were his rights not conditional.

Art. 1878. — Impossible, unlawful or immoral condition.
The provisions relating to the impossible, unlawful or immoral object of a contract (Art. 1715 and 1716) shall apply where the condition on which a contract depends is impossible, unlawful or immoral.

Art. 1879. — Condition depending on a party.
(1) An obligation assumed subject to a condition the fulfilment of which depends solely on the party who assumes the obligation shall be of no effect.
(2) An obligation shall be deemed to be assumed under sub-art. (1) where the promisor’s liability for non-performance of the contract is excluded in the contract.
Section 3. Alternative obligations

Art. 1880. — Principle.
A debtor who is to discharge alternative obligations shall be released where he discharges either of the duties provided in the contract.

Art. 1881. — Rights of debtor.
(1) The debtor may choose which duty he will discharge unless such right is expressly conferred on the creditor or a third party.
(2) Where the party entitled to choose does not exercise his right on being required to do so, such right shall pass to the other party.

Art. 1882. — Performance impossible.
(1) Where the discharge of one of the duties is or becomes impossible, the debtor shall discharge the other duty.
(2) Damages shall be due where such impossibility is due to the fault of a party who was not entitled to choose the duty to be discharged.

Section 4. Earnest

Art. 1883. — Effect of earnest.
The giving of earnest shall be proof of the making of the contract.

Art. 1884. — Performance of contract.
Unless otherwise agreed, the party who has received earnest shall return it or deduct it from his claim where the contract is performed.

Art. 1885. — Non-performance of contract.
(1) Unless otherwise agreed, the party who has given earnest may cancel the contract subject to forfeiture of the earnest given by him.
(2) Unless otherwise agreed, the party who has received earnest may cancel the contract subject to repayment of double of the amount received by him.

Section 5. Provisions as to liability

Art. 1886. — Extension of liability,
The parties may extend their liability under the contract and provide that they will be liable for non-performance notwithstanding that performance it prevented by force majeure.

Art. 1887. — Limitation of liability.
The parties may limit their liability under the contract and provide that liable unless they commit a fault.

Art. 1888. — Acts of employees.
(1) The parties may provide that they will not be liable where non-performance is caused by a fault of their employees or auxiliaries.
(2) Any inch provision shall be of no effect where it is made to the prejudice of, a party who is the employee of the other party.

Art. 1889. — Penalty.
The parties may fix the amount of damages which will be due, should a party fail to discharge his obligations or to discharge them completely and in due time.

Art. 1890. — Rights of creditor.
(1) Unless otherwise agreed, the creditor may require the performance of a contract which includes a penalty.
(2) He may not require both the enforcement of the contract and the penalty unless the penalty was provided in respect of delay or the non-performance of a collateral obligation.

Art. 1891. — Conditions of application.
The penalty shall be due whenever the creditor is entitled to claim damages by reason of non-performance of the contract.

Art. 1892. — Actual damage.
(l) The penalty shall be due notwithstanding that no actual damage was caused to the creditor.
(2) Damages may not be claimed above the amount of the penalty unless non-performance is due to the debtor’s intention to cause damage or to his gross negligence or grave fault.

 

Art. 1893. — Variation of penalty.
The agreed amount of the penalty due for non-performance may not be reduced by the court unless partial performance has taken place.

Art. 1894. — Invalidation.
(1) A penalty shall be of no effect where the contract in which it is prescribed is invalidated.
(2) A contract shall remain in force notwithstanding that the penalty is not valid.

Art. 1895. — Contractual sanctions.
Where a contract provides that a party may apply certain sanctions, should the other party fail to carry out one of his duties, the court shall, notwithstanding any provision to the contrary, verify whether the agreed sanctions may be applied.

 

 

Chapter 5. Plurality of debtors or creditors

 

Section 1. Debtors jointly and severally liable

Art. 1896. — Cases of joint and several liability.
Unless otherwise agreed or provided by law, co-debtors shall be jointly and severally liable.

Art. 1897. — Principle of joint and several liability.
(1) The creditor may require all the debtors or one of them to discharge the obligation in whole or in part.
(2) Each debtor shall be liable until the obligation u fully discharged.

Art. 1898. — Res judicata.
Proceeding instituted against one of the debtors shall be no bar to similar proceedings bang instituted against the other debtors.

Art. 1899. —Notice.
Notice placing one debtor in default shall be effective against all the debtors.

Art. 1900. — Nullity of obligation
(1) Any debtor may act up against the creditor defences based on the nullity of the obligation.
(2) Where the obligation, is null owing to a defect in the consent or to the incapacity of the debtor, such nullity may be raised by that debtor only.

Art. 1901. — Payment and limitation.
Any debtor may act up against the creditor defences based on the total or partial payment of the debt or on limitation.

Art. 1902. — Remission of debt.
(1) Where the debt is remitted to one debtor, all co-debtors shall be released.
(2) Notwithstanding the provisions of sub-art. (1), the creditor may specify that the debt is remitted for the exclusive advantage of one debtor.
(3) A remission under sub-art. (2) shall not release the co-debtors unless the debt ultimately rests with the debtor for whose advantage the remission was made

 

Art. 1903. — Novation.
(1) The provisions of Art. 1902 shall apply when the creditor agrees with one debtor to substitute a new debt for an exiling debt.
(2) The creditor may specify that novation shall only apply to the share of that debtor.

Art. 1904. — Set-off.
Where the creditor owes a debt to one debtor, the co-debtors shall not be released unless the debt ultimately rests with the debtor with whom the set-off was made.

Art. 1905. — Merger.
Where one debtor becomes the creditor, merger shall not release the co-debtors unless the debt would ultimately have rested with the debtor who became the creditor.

Art. 1906. — Liability.
(1) A debtor who is jointly and severally liable may do nothing to increase the liabilities of the co-debtors.
(2) A debtor shall be liable to the co-debtors where he fails to raise defences common to all the co-debtors.

Art. 1907. — Share in the debt.
Unless otherwise agreed provided by law, each debtor shall share equally in payments made to the creditor.

Art. 1908. — Claims as between co-debtors. .
(1) A debtor who pays in excess of his share may claim the amount paid in excess from the co-debtors in proportion to their share.
(2) Any amount which cannot be recovered from one of the debtor shall he repaid by the other debtor in proportion to their share.

Art. 1909. — Substitution.
(1) A debtor who may claim under Art. 1908 shall substitute himself for the creditor to the extent the amount paid by him to the creditor.
(2) The creditor shall had to the debtor who makes the payment all documents and make all formalities to enable the debtor to claim from the other debtor.
(3) Where the creditor makes substitution impossible, he shall be liable for the damage caused by him to the debtor.

Section 2. Joint creditors

Art. 1910. — Scope of application.
Unless otherwise agreed or provided by law, joint creditors shall not be jointly and severally entitled to claim payment.

Art. 1911. — Principle.
(1) Each joint creditor may require the debtor to pay the whole debt.
(2) Payment made to one of the creditor shall be effective against all the creditors.
(3) The debtor may, at his option, pay any of the joint creditors until he is informed that proceeding hare bean instituted by one of them.

Art. 1912. — Limitation.
Any act interrupting the period of limitation as regards one joint creditor shall interrupt it for the benefit of all.

Art. 1913. — Remission of debt.
A remission of debt made by one joint creditor shall release the debtor in respect of the share of that creditor only.

Art. 1914. — Novation.
The provisions of Art. 1913 shall apply to a novation agreed upon between one joint creditor and the debtor.

Art. 1915. — Set-off.
Where the debtor becomes creditor of one joint creditor, he may invoke a set-off against the other co-creditors only to the extent of such creditor’s ultimate share in the claim.

Art. 1916. —Ultimate Sharing.
(1) Unless otherwise provided by the contract or by law, each joint creditor shall be entitled to an equal share of the debtor’s payment.
(2) A creditor receiving more than his share shall account for the excess to the other creditors.
Section 3. Obligations other than joint obligations

Art. 1917. — Indivisibility.
The provisions regarding joint obligations shall apply by analogy to obligations which are indivisible owing to their nature.

Art. 1918. — Plurality of debtors.
(1) Obligations which are neither joint obligations nor indivisible owing to their nature shall be divided between the persons liable for the debt.
(2) Each debtor shall be liable for his lawful share or for such other share in the debt as may be prescribed by the contract or by law.
(3) Nothing in this Article shall affect the case where one debtor has acted as surety and guaranteed payment of the debt by the principal debtor.

Art.1919. — Plurality of creditors.
(1) Obligations which are neither joint obligations nor indivisible owing to their nature shall be divided between the creditors.
(2) Each creditor may only demand payment of his lawful share or of such other share as may be prescribed by the contract or by law.

Section 4. Suretyship

Art. 1920. — Principle.
Whosoever guarantees an obligation shall undertake towards the creditor to discharge the obligation, should the debtor fail to discharge it.

Art. 1921. — Consent of debtor.
A. guarantee may be given without any request from the debtor for whom it is undertaken or without his knowledge.

Art. 1922. — Form.
(1) A guarantee shall not be presumed.
(2) It shall be express and may not be extended beyond its contractual limits.
(3) The contract of guarantee shall be of no effect unless it specifies the maximum amount for which the guarantee is given.

Art. 1923. — Principal obligation void.
(1) A guarantee may not be given except in respect of a valid obligation.
(2) A debt resulting from a contract which, owing to mistake or incapacity, is not binding on the debtor, may validly be guaranteed where the guarantor, on undertaking the guarantee, was aware of the defect pertaining to the debtor which vitiated the contract.

Art. 1924. — Limits of a guarantee.
(1) A guarantee may not exceed the amount owed by the debtor, nor be contracted on more burdensome terms.
(2) It may be contracted in respect of part only of the debt and subject to less burdensome terms.
(3) A guarantee which exceeds the amount of the debt, or which has been contracted on more burdensome terms, is not void but merely reducible to the amount of the primary debt.

Art. 1925. — Future or conditional obligations.
(1) A guarantee may be undertaken in respect of future or conditional obligations.
(2) Where the time during which the guarantor is to be bound has not been stipulated in the instrument creating the guarantee, the guarantor may put an end to his undertaking so long as the primary debt is not yet dm.

Art. 1926. — Extinction of primary debt.
(1) The guarantor shall be released when the primary debt is discharged for any reason whatsoever.
(2) The guarantor may set up against the creditor all the defences available to the debtor, and the fact that the principal debtor might have waived them cannot be set up against him.
(3) The fact that the obligation of the principal debtor is null by reason of a defect in the latter’s consent or of his incapacity shall not affect the guarantor, where he bound himself with fullll knowledge of these circumstances.

Art. 1927 — Substituted performance.
The voluntary acceptance by the creditor of an immovable or of any other asset in satisfaction of the primary debt shall discharge the guarantee even though the creditor may subsequently be evicted.

Art. 1928. — Variation of primary debt.
(1) Contracts entered into between the creditor and the principal debtor after the making of the contract of guarantee may not increase the liabilities of the guarantor.
(2) The guarantor shall be released where the creditor, without his being expressly authorised to do so, allow time for payment to the debtor.

Art. 1929. — Limitation.
Proceedings instituted against the principal debtor shall interrupt the period of limitation as regards the guarantor.

Art. 1930. — Interest.
Where the debt guaranteed bean interest, the guarantor shall, unless otherwise agreed, guarantee the payment of the interest within the limits of the maximum amount stated in die instrument of guarantee.

Art. 1931. — Legal costs.
The guarantor shall be liable, even beyond the limits of the maximum amount stated in the instrument of guarantee, for the costs of any actions brought against the principal debtor, provided he received sufficient notice thereof enabling him to forestall them by discharging the debt.

Art. 1932. — Maturity of debt.
(1) The guarantor may not be required to pay prior to the time fixed for the payment of the primary debt notwithstanding that the debt became mature at an earlier date owing to the bankruptcy of the debtor.
(2) Where the primary debt is exigible only after previous notice is given to the debtor, such notice shall also be given to the guarantor.
(3) The period of notice shall run as regards the guarantor from the day he was notified.

Art. 1933. — Joint guarantee.
(1) Where the person undertaking the guarantee described himself as joint guarantor, co-debtor, or used equivalent, terms, the creditor may sue him without previously demanding payment from the debtor or realizing his securities.
(2) The relevant provisions of this Chapter shall apply to joint guarantee.

Art. 1934. — Simple guarantee.
(1) Apart from the case mentioned in Art. 1933, a guarantor shall not pay the creditor unless the principal debtor fails to discharge his obligation.
(2) The guarantor may demand that the creditor, before requiring him to pay, should discuss the principal debtor’s assets and, in particular, realize the real securities available.

Art. 1935. — Benefit of discussion.
(1) The creditor shall not discuss the principal debtor unless the guarantor so requires as soon as he is first proceeded against.
(2) The guarantor may not claim the benefit of discussion where the insolvency of the debtor has been judicially established.

Art. 1936. Assets to be discussed.
(1) A guarantor requiring discussion shall indicate the debtor’s assets to the creditor and advance sufficient money for the costs of their discussion.
(2) He may not indicate such debtor’s properties as are subject to litigation, or situate outside the country of payment, or mortgaged as security for the debt but no longer in the debtor’s possession.

Art. 1937. — Failure to proceed.
Where the guarantor has indicated the assets as provided in Art. 1936 and has supplied sufficient money for their discussion, the creditor is answerable to the guarantor, up to the value of the assets thus indicated, for an insolvency of the principal debtor due to the creditor’s failure to proceed.

Art. 1938. — Summons to proceed.
(1) Where the primary obligation has fallen due, the guarantor may demand that the creditor sue the principal debtor within six weeks for the enforcement of his rights.
(2) The guarantor shall be released where the creditor fails to comply with this summons or to continue the proceeding with reasonable diligence.

Art. 1939. — Tender of payment.
(1) Where the primary obligation has fallen due, the guarantor may require that the creditor accepts the payment from him.
(2) The guarantor shall be released where the creditor does not accept such payment or refuses to transfer to the guarantor the securities he enjoys.

Art. 1940. — Guarantor’s indemnity claim.
(1) The guarantor who has paid shall be indemnified by the principal debtor, whether the guarantee had been given with or without the tatter’s knowledge.
(2) Such indemnity claim shall apply to the principal, interest and costs incurred.
(3) The guarantor may claim to be refunded with such costs only as he incurred since he notified the principal debtor of the proceedings directed against himself.

Art. 1941. — Damages.
(1) The guarantor may claim damages from the debtor where it was owing to the latter’s fault or negligence that the guarantor had to pay the creditor.
(2) The amount of such damages shall be fixed in accordance with the rules laid down in Chapter 2 of this Title (Art. 1790-1805).

Art. 1942. — Lapse of indemnity claim.
(1) The guarantor has the right and the duty to set up against the creditor all the defences available to the principal debtor unless they are excluded by the nature of his guarantee.
(2) The guarantor who fails to set up such defences is debarred from his remedy in so tar as they would have relieved him of payment.
(3) The provisions of sub-art. (2) shall not apply where the guarantor can prove that he was in ignorance thereof without his fault.

Art. 1943. — Second payment.
(1) The guarantor shall lose his indemnity claim where the debtor pays a second time because the guarantor failed to inform him of his own payment.
(2) He may claim from the creditor what the latter unduly received from the debtor.

Art.l944. — Subrogation.
(1) The guarantor shall be subrogated to the rights of the creditor to the extent of his payment to him.
(2) The benefit of such subrogation may not be waived in advance.

Art. 1945. — Duties of creditor.
The creditor shall hand over the documents of title to the guarantor who pays him and perform such formalities as will enable the guarantor to exercise his remedy and realize the securities available to the creditor.

Art. 1946. — Impossibility of subrogation.
The guarantor shall be relieved of his obligation towards the creditor where the guarantor’s subrogation to the rights, mortgages and liens of the creditor can no longer be effected owing to the creditor’s act or omission.

Art. 1947. — Debtor’s bankruptcy.
(1) Where the debtor becomes bankrupt the creditor shall prove in the bankruptcy.
(2) He shall inform the guarantor of the bankruptcy as soon as he is aware of it.
(3) Where the creditor fails to comply with these rules, he shall lose his rights against the guarantor to the extent of the latter’s loss resulting from such failure.

Art. 1948. — Securities due to guarantor.
The guarantor, even before he has paid, may take action against the debtor and demand securities from him where:
(a) the debtor has been given notice to pay his debt;
(b) the debtor has been declared bankrupt;
(c) either by reason of the losses the debtor has suffered or as result of a fault committed by him. the guarantor runs a considerably greater risk than when be undertook the guarantee.

Art. 1949. — Counter- guarantor.
The counter-guarantor guarantees towards the guarantor the effectiveness of his indemnity claim against the principal debtor.

Art. 1950. — Secondary guarantor.
(1) A person may stand surety not only for the principal debtor but also for his guarantor.
(2) The secondary guarantor shall he in the game position towards the guarantor as a simple guarantor is towards the principal debtor.
(3) Merger between the principal debtor and the guarantor shall not extinguish the creditor’s right of action against the secondary guarantor.

 

Art. 1951. — Plurality of guarantors.
(1) Where several persons became at the same time guarantors of the same debtor in respect of the same debt, each of them shall be liable as simple guarantor for his share and as secondary guarantor for the shares of the others.
(2) Where the guarantors entered into their undertakings by successive acts, he who bound himself in the second place shall be held liable as secondary guarantor of the guarantor who bound himself before him.
(3) Where the guarantors expressly bound themselves as joint guarantors either with the principal debtor or as between themselves, each of them shall be answerable for the whole debt, subject to contribution from the others proportionate to their shares.

 

 

 

Chapter 6. Third Parties in Relation to Contract

 

Art. 1952.__ Relative effect of contract.
(1) Except in the cases provided in this Code, contracts shall produce effects only as between the contracting parties.
(2) Nothing in this Article shall affect the provisions relating to extra contractual liability (Art. 2056).
(3) Nothing in this Article shall affect the provisions relating to agency (Art. 2179-2265).

Section 1. Promises and Stipulations Concerning Third Parties

Art. 1953.— Option to substitute third party.
At the time of the making of a contract, a party may reserve the option to substitute for himself another person assuming the rights and obligations under the contract.

Art. l954— Effect.
(1) Where the appointment thus provided is made within the following three days, the contract shall be effective as if it had been entered into by representation.
(2) Where the appointment is not made within three days, the contract shall be effective as between the parties who made it.

Art. 1955. — Promise for third party.
A person may stand promisor for a third party by omission by the said third party.

Art.1956.—Effect.
(1) Where the third party ratifies the promise concerning him, the person who stood promisor shall be released.
(2) Unless otherwise agreed, such person shall not guarantee the proper performance of the contract.
(3) Where the third party does not ratify the contract, the person who stood promisor for him shall he liable towards the other contracting party for the damage resulting from the non-performance of the contract.

Art. 1957. — Stipulation for benefit of third party.
Parties to a contract may stipulate that one of them shall perform an obligation for the benefit of a third party.

Art.l958. — Rights of stipulator.
(1) Unless otherwise agreed, he who stipulates for the benefit of another may reserve for himself the benefit of die contract or appoint a new beneficiary wider the stipulation, as long as the option has not been offered to the third party mentioned in the contract, or where the said party has benefit the benefit of the stipulation.
(2) Where the beneficiary of the stipulation has accepted it, the stipulator shall retain the right to vindicate the rights resulting from the non-performance of the contract where the promisor fails to perform his obligation.

Art. 1959. — Option of beneficiary.
The person for whose benefit the stipulation was made may, when the option is offered to him in accordance with the contract, accept or refuse as he pleases the benefit of the stipulation.

Art. l960. — Heirs of stipulator.
(1) Where the obligation undertaken by the promisor is to be performed upon the death of the stipulator, the person whom the latter appointed as beneficiary of the stipulation shall, where he claims the benefit of the stipulation, acquire his right against the promisor on the day of the beneficiary’s death.
(2) The heirs of the stipulator may not revoke the appointment made by him of the beneficiary of the stipulation.

Art. 1961. — Rights of beneficiary.
(1) Upon his acceptance, the beneficiary of the stipulation shall irrevocably acquire the rights which the contract confers upon him as against the promisor.
(2) The promisor may set up against him any defences of a purely personal nature which he may have against the stipulator.

Section 2. Assignment of Obligatory Rights and Subrogation

Art. 1962. — Assignment of rights.
A. creditor may assign his rights to a third party without the consent of the debtor, unless such assignment is forbidden by law or the contract, or is barred by the very nature of the transaction.

Art. 1963. — Scope of assignment.
Arrears of interest shall he deemed to have been assigned with the principal of the debt.

Art. 1964. — Warranty.
(1) Where the assignment is for consideration, the assignor shall guarantee the existence of the right at the time of the assignment.
(2) He shall not guarantee the solvency of the debtor, unless he expressly accepted such liability.
(3) Where the assignment is gratuitous, the assignor shall not guarantee the existence of the right.

Art. 1965. — Scope of guarantee.
(1) An assignor bound by the guarantee shall be liable to the assignee only to the extent of the amount he received in principal and interest.
(2) He shall in addition be liable for the costs of the assignment and of any unsuccessful proceedings against the debtor.

Art. 1966. — Valid defences.
(1) The debtor may set up against the assignee, as he could have done against the assignor, any defences which were available to him upon his becoming aware of the assignment.
(2) Where he had a claim against the assignor which was net yet demandable at the time, he may invoke a set-off, provided his claim does not fall due later than the, assigned claim does.

Art. 1967. — Opposability of assignment to debtor.
(1) The debtor shall be released where, before the assignment was brought to his knowledge either by the assignor or the assignee, he pays the assignor in good faith.
(2) Where the same claim was assigned to several assignees, regard shall be had to the date on which the assignments have been notified to the debtor or agreed by the latter in a document with an authenticated date.
(3) The debtor shall pay to the assignee who avails himself of the earliest date.

 

Art.1968.— Subrogation by creditor.
(1) A creditor who is paid by a third party may subrogate him to his righto.
(2) Subrogation shall be express and effected at the time of payment.

Art. 1969. — Subrogation by debtor.
A debtor who borrows money or other fungible things to pay his debt may subrogate the lender to the rights of the creditor, even without the consent of the latter.

Art. 1970. — Conditions.
(1) Subrogation by the debtor implies that the instrument evidencing the loan bears an authenticated date and that the use of the sum lent to expressly specified therein.
(2) The receipt for the loan shall bear an authenticated date and include an express .statement that the payment was made by means of the borrowed money.
(3) The creditor may not refuse to include this statement in the receipt where the debtor so requires him.

Art. 1971. — Legal subrogation.
Subrogation to the rights of the creditor shall take place by virtue of the law, to the extent of the amount paid:
(a) for the benefit of any person who, being bound with other or on behalf of others for the payment of a debt, discharged the debt and is thereby entitled to indemnity, or contribution from his co-debtors; and
(b) for the benefit of any person who, being owner of a property or enjoying over it a right of lien, mortgage or pledge, paid a creditor who enjoyed over the same property a right of lien, mortgage or pledge; and
(c) whenever the law so provides.

Art. 1972. – Partial payment.
(1) Subrogation may not be made to the detriment of a creditor who has been only partly paid.
(2) The creditor may exercise his rights in respect of the balance still due in priority to the person from whom he received partial payment.

Art. 1973, – Effect of subrogation or assignment.
(1) The subrogated creditor or the assignee of a right may exercise the liens, securities and other accessory right attached to it.
(2) He may not enter into possession of the thing received in pledge by the creditor without the consent of the pledger.

Art. 1974. — Duties of original creditor.
(1) He who assigned a right or was paid by a third party shall hand over to the assignee or to the subrogated creditor the document of title relating to the debt and furnish him with any available means of proof, as well as with the necessary information enabling him to vindicate his rights.
(2) In cases of partial alignment or payment, the original creditor shall supply a copy certified by two witnesses of the documents evidencing the claim.

Art. 1975. — Exceptions.
(1) Nothing in the preceding Articles shall affect the special rules governing, the assignment of certain specified rights.
(2) Nothing shall affect the cases where the claim is embodied in a registered document or an instrument to order or to bearer.

Section 3. Delegation, and Assignment of Obligations

 

Art.1976.— Principle of delegation.
A. debtor may with the consent of the creditor, or without such consent in case provided by law or usage, delegate to another the performance of his obligations.

Art. 1977. — Acceptance by creditor.
(1) Unless the contrary has been expressly stipulated, the creditor who has agreed to such a delegation shall retain his right against the original debtor.
(2) He way not demand satisfaction from the original debtor before demanding it from the delegate debtor.

Art. 1978. — Acceptance fey delegate.
Subject to usage, the delegate shall not be broad to accept the delegation notwithstanding that he is the debtor of the person appointing him as delegate.

Art. 1979. — Revocation of Delegation.
(1) The delegator may no longer revoke the delegation after the delegate accepted the liability towards the creditor or effected the payment.
(2) The delegate may accept the liability or perform the obligation even after the death of the delegator or after the delegator having become incapable.

Art. 1980. — Rights of delegate.
(1) The delegate may not set up against the creditor defences deriving either from his personal relationship with the delegator, or from the relationship between the creditor and delegator.
(2) He may set up against the creditor defences deriving from his personal relationship with him.

Art. 1981. — Insolvency of delegate
(1) A creditor who has released the original debtor has on remedy against him where the delegate debtor becomes insolvent, unless the delegation in point.
(2) He shall retain his remedy against the original debtor where the insolvency of the delegate had been already judicially recorded at the time of the delegation.

Art. 1982. —Securities.
Third parties who hare secured the debt upon their property or are guarantors shall not be liable to the creditor unless they consented to the delegation.

Art. 1983. — Assignment of estate.
(1) He who acquires an estate or an undertaking with assets and liabilities shall be personally liable for the debts to creditors as soon as he notified them of the transfer or published it in the newspapers.
(2) The former debtor shall be jointly liable with the new debtor for a period of two years.
(3) This period shall run, a respect of mature debts, from the day of the notification or publication and, in respect of other debts, from the date of maturity.

Art. 1984. — Amalgamation of undertakings.
Where two undertaking amalgamate by the mutual transfer of their assets and liabilities, the new undertaking shall be liable for all the debts of each of them.

Art. 1985. — Formation of partnership.
(1) The provisions of Art. 1984 shall apply where an individual undertaking is converted into a general or limited partnership.
(2) The new partnership shall he liable for the debts of the individual undertaking it absorbed.

 

Section 4. Heirs of the Parties

Art. 1986. — Principle.
The heirs of a person shall be substituted for him in contracts to which he was a party, unless the contrary was stipulated or flows from the nature of the contract

Art. 1987. — Stipulation for benefit of third party.
A stipulation tor the benefit of a third party shall be performed for the benefit of his heirs where he dies after having accepted it but before it was performed.

Section 5. Creditors of the Parties

Art. 1988. — attachment.
(1) The performance by the debtor of his obligations shall be secured by all his assets, with the exception of those which cannot be attached at law.
(2) The rules relating to attachment, and in particular to the attachment of claims vested in the debtor, are contained in the Code of Civil Procedure.

Art. 1989. — Agreements entered into by debtor. — 1. Principle.
(1) Agreements entered into by a person may be set up against his creditors.
(2) Agreements entered into by a person in respect of a certain thing may be set up against third parties who acquire from that person a particular right in respect of such thing, as from the time their date is authenticated or, where the law provides for the publication of such agreements, as from the day of publication.

Art. 1990. — 2. Preferred creditors.
The provisions of Art. 1989 shall not apply where the law so provides, in particular where a preferential right or lien is conferred upon the creditor by law or contract, or where the debtor has been deprived, by judicial decision, of the management of his properties,

Art. 1991. — 3. Apparent acts.
(1) The provisions of Art. 1989 shall not apply in cages of simulation.
(2) Counter-deeds shall bind the contracting parties only.
(3) The creditor of one of the parties may avail himself of such apparent act on the basis of which he contracted.

Art. 1992. — Preservatory measures.
A creditor may take in the name of the debtor any preservatory step required with a view to preventing the extinction of a right of the debtor.

Art. 1993. — Exercise of debtor’s rights.
(1) A creditor may, with the authorisation of the court, exercise as representative of the debtor all the rights of the debtor so as to prevent such impoverishment of the debtor as would jeopardize the payment of the debt.
(2) The authorisation to act shall be refused to the creditor where the right he intends to exercise is, by nature or under the law, inherent in the person of the debtor.
(3) The authorisation shall be refused where the creditor’s rights are not imperilled by the inaction of the debtor whose insolvency is not in view.

Art. 1994. — Simulation.
A creditor may have established, by judicial decision, that a transaction effected by a debtor was a simulated one which, by agreement, was not intended to be carried out.

Art. 1995. — Debtor’s fraud.
A creditor may, in his own name, challenge the validity of acts whereby the debtor, in fraud of the creditor’s righto, alienated property or entered into obligations.

Art. 1996. — Fraudulent acts.
(1) An act shall be deemed to have been done in fraud of the rights of creditors where it was done by the debtor so as to become .insolvent, or with the knowledge that he was thereby increasing his insolvency.
(2) The payment of mature debts may not be challenged by the creditors.

Art. 1997. — Third parties in good faith.
A third party who is prejudiced by the creditor’s action may set up his good faith as a defence against such action where the act which is challenged, or a contingent act conferring rights on the third party, was done for consideration.

Art. 1998. — Time.
The creditor’s action shall be brought within, two years from the date of the act which is challenged.

Art. 1999. — Effect.
(1) A debtor’s act declared to be fraudulent may not be set up against the creditor who brought the action.
(2) It shall remain valid as between, the parties and in regard to other creditors.

Art. 2000. – Bankruptcy
The provisions of the preceding Articles shall not affect the rules concerning the exercise by creditors of the debtor’s rights or the action of creditors against the debtor’s fraudulent acts in the event of the tatter’s bankruptcy.

 

 

 

Chapter 7. Proof in Relation to Contracts

 

Section 1. Burden and Admissibility of Proof

Art. 2001. — Burden of proof.
(1) He who demands performance of an obligation shall prove its existence.
(2) He who alleges that an obligation is void, has been varied or is extinguished shall prove the facts causing such nullity, variation or extinction.

Art. 2002. — Means of evidence.
Proof may be adduced by writings, witnesses, presumptions, a party’s admission or oath, in accordance with the rules set out in this Chapter and the forms prescribed in the Code of Civil Procedure.

 

Art. 2003. — Contracts to be in writing.
Where the law requires written form for the completion of a contract, such contract may not be proved by witnesses or presumptions unless it ia established that the document evidencing the contract has been destroyed, stolen or lost.

Art. 2004. — agreements relating to evidence.
Parties are not allowed to provide in their contracts exceptions to the rules which bar or restrict the admissibility of certain means of evidence.

Section 2. Written Evidence

Art. 2005. — Probatory value of written instrument.
(1) A written instrument shall be conclusive evidence, as between those who signed it, of the agreement therein contained and of the date it bears.
(2) It shall have the same probatory value for persons represented in the act and the heirs of the parties.

Art. 2006. — Contrary proof.
(1) Statements contained in a written instrument may be challenged by those who signed it only by tendering an oath to the party who avails himself thereof.
(2) No proof by witnesses nor any presumption is admissible against such statements.

Art. 2007. — Disallowance of handwriting.
(l) He against whom a non-authenticated instrument is set up shall, where he intends not to recognize it as his own, formally disclaim his alleged handwriting and signature.
(2) It shall be sufficient for heirs to declare that they do not recognize the writing or signature of their ascendant.

Art. 2008. — Verification of handwriting.
Where a party disclaims his handwriting or signature or his heir declare that they do not recognize them, their verification shall be ordered by the court.

Art. 2009. — Third parties.
(1) Third parties may prove by all means the falsity of statements contained in an instrument, unless the instrument was drawn up or received by a public officer.
(2) They may, in particular, prove by all means the falsity of the date on the instrument, unless such date is authenticated.

Art. 2010. — Authentic deed.
(1) Where the instrument was drawn up or received by a duly qualified public officer, third parties may freely challenge such statements only in the instrument as originated from the parties and could not be verified personally by the public officer.
(2) Statements which the public officer personally verified may not be challenged except with the permission of the court.

 

Art. 2011. — Copies of authentic deeds.
(1) Copies or photostat copies of original authentic deeds shall have the same probatory value as the originals where they are certified by a duly qualified public officer.
(2) The same rule shall apply to photostat copies of parts of the originals.

Art. 2012. — Public records.
Copies of public or private instruments kept in public registers, issued in accordance with regulations by the registrar to whom the instruments are entrusted, shall have the same authentic value as the originals.

Art. 2013. — Collation and photographs.
(1) In the cases provided in the preceding articles, the parties may not require the production to the court of the original instrument, but may require, at their own cost, the collation of the copy produced with the original text or, failing such text, with the copy kept in public registers.
(2) They may, at their own cost, demand a photostat copy of the instrument being collated.

Art. 2014. — Loss of original.
Failing an original text or a copy kept in public registers, copies made in accordance with the preceding articles shall retain their authenticity where on their face appear no erasures, alterations or any other particularity justifying suspicion.

Art. 2015. — Authenticated dote.
An instrument shall acquire an authentic date:
(a) where the instrument was drawn up or received by a public officer, at the date of its drawing up or reception; or
(b) where the instrument is referred to in another instrument drawn up or received by a public officer, at the date of the drawing up or reception of the other instrument; or
(c) where one of those who signed the instrument has died or become physically incapable of signing it, at the date of the death or of the occurrence of the incapacity.

Art. 2016. — Trade books.
(1) Entries in trade books are no evidence in favour of those who made the entries.
(2) They are evidence against those who made the entries, but a party wishing to avail himself thereof may not sever them so as to discard entries contrary to his claim.

Art. 2017. — Domestic records mid payers.
Domestic records and papers are no evidence in favour ot the person who wrote them.

Art. 2018. — Evidence against author.
Such records and papers are evidence against the person who wrote them where:
(a) they formally mention a payment; or
(b) they include an express statement that the entry was made to make good the lack of document of title in favour of the person for the benefit of whom they state an obligation.

Art. 2019. — Proof of cause.
(1) Where a person promised to make a payment or acknowledged a debt, the person in whose favour the promise was made or the debt acknowledged need not prove a cause justifying them.
(2) The existence of a valid agreement shall be presumed, subject to proof to the contrary.
(3) Where proof of simulation of the cause is adduced, the party alleging that the obligation has another lawful cause shall prove it.

Section 3. Presumptions of Payment

Art. 2020. — Presumption of Payment. – 1. Handing over of document of title.
The handing over of the document of title to the debtor shall raise a presumption that the debt has been discharged.

Art. 2021. — 2. Creditor’s entries.
Entries made by the creditor at the end, in the margin or at the back of a document of title, which remained at all times in his possession, shall be conclusive evidence although not signed or dated by him, where they tend to establish the debtor’s release.

Art. 2022. — 3. Prior or concomitant debt.
(1) In the case of interests or other periodical dues, the creditor who gives a receipt for a given period, without making any reservation, shall be deemed to have collected the dues for the previous periods.
(2) Where the creditor gives a receipt for the principal, the debtor shall he deemed to have paid the interest.

Art. 2023. — 4. Presumption of payment after six months.
The following debts shall be deemed to have been paid where six months have elapsed since they fell due:
(a) debts in respect of wages owed to clerks, office employees, servants, daily workers and workmen; and
(b) debts due to masters or teachers in respect of lessons given monthly; and
(c) debts due to hotel-keepers, inn-keepers or managers of boarding-houses in respect of lodging and food; and
(d) debts due to merchants in respect of goods and foodstuffs supplied by them to private persons for consumption or common use.

Art. 2024. — Presumption of payment after two years.
The following debts shall be deemed to have been paid where two years have elapsed since they fell due:
(a) debts due to physicians, surgeons, dentists, midwives, pharmacists or veterinary surgeons in respect of professional services or supplies; and
(b) debts due to advocates, notaries or other members of the legal profession in respect of professional services; and
(c) debts due to handicraftsmen in respect of work done by them; and
(d) debts due in respect of rents for houses or agricultural estates; and
(e) arrears of periodical dues; and
(f) interest on loans and generally any sum payable annually or at shorter periodical intervals.

Art. 2025. — Contrary proof.
The presumptions laid down in the preceding Articles shall not apply where:
(a) the debtor has acknowledged the debt in writing; or
(b) prior to the expiry of the period prescribed by law, the creditor has instituted proceedings with a view to the debtor paying the debt.

Art. 2026. — Oath.
(1) No proof shall be admitted to rebut the presumptions laid down in Art. 2020-2024.
(2) The creditor may require the debtor or the debtor may require the creditor to take an oath as to whether or not the debt has been paid.
(3) The heirs of the creditor or debtor may be required to take an oath as to whether they know if the debt has been paid or not.