92 the enforceabilit y of promises

In Case 3(b), Anna’s claim is barred by prescription. Although Spanish law provides regulation for the prescription of duties and actions, it is generally understood that the Spanish Civil Code refers not to prescription of duties but to prescription of the enforceability (Statute of Limitations in English common law), even though the Code speaks of both things. Some authors contend that only a moral duty remains after prescription.13 If we assume that a moral obligation exists in Case 3(b), then, after the new promise is made, the moral obligation becomes a legal obligation and is enforceable.

If the debt was incurred by Ian when he was a minor, then Ian is not bound before the unilateral promise is made because the contract lacked mutual assent. According to art. 1263 of the Civil Code, an ‘unemancipated minor’ ‘may not give consent’. But Ian’s new promise will be a ratification of his will which makes the prior contract enforceable. Article 1311 of the Civil Code provides: ‘Ratification may be made either expressly or tacitly. Tacit ratification shall be considered to exist in instances where having knowledge of the cause of nullity, and such cause having ceased, the person with the right to invoke the nullity executes an act that necessarily implies the intention to renounce it.’

portugal

Case 3(a) could not occur under Portuguese law. The debts of the bankrupt are not discharged by the bankruptcy proceedings. These proceedings establish only which creditors will be paid from the bankrupt’s current assets and to what extent (art. 209 of the Bankruptcy Proceedings Code) but they do not extinguish the creditor’s rights. Therefore these rights can always be enforced as to assets the debtor acquires later if his economic situation changes.

In Case 3(b), Anna can enforce the promise to pay the time-barred debt. The effect of the passage of time in Portuguese law is not to extinguish the debt automatically but to allow the debtor legally to refuse to pay it. The debtor has to raise the defence of prescription, and can be forced to pay the debt if he does not (arts. 304(1) and 303 of the Civil Code). If the claim is barred by prescription, the debtor is considered to be under a moral obligation. In one respect, the result is the same as that discussed in Case 2(a): if the debtor voluntarily fulfils the obligation, he cannot ask for restitution

13Díez Picazo and Gullón, Sistema de derecho civil, vol. I, 474; Castán Tobeñas, Derecho civil, vol. II–1, 968.

of the payment. In this case, however, the recognition of a duty to pay has the same effect as a voluntary payment. Therefore, if Ian promises to pay Anna a claim barred by prescription, he would not be entitled to raise the defence of prescription afterwards. He can be forced to pay the debt, even if he changes his mind (art. 304(2)).

In Case 3(c), the debt incurred by Ian as a minor is considered to be voidable but not void. Even if it has been paid, it can be annulled at Ian’s parents’ request within a period of a year after it was incurred or at Ian’s request within the same period after he becomes eighteen. If the debt has not yet been paid, annulment can be requested at any time (arts. 125 and 287(2) of the Civil Code). Nevertheless, the debt is no longer voidable if Ian’s parents confirm it or if he does so himself after he becomes an adult (arts. 125(2) and 288). Therefore, Ian’s promise is regarded as such a confirmation, and it is legally enforceable.

italy

Anna would not be able to enforce Ian’s informal promise in Case 3(a). She would be able to enforce it in Cases 3(b) and 3(c) only if Ian intentionally renewed his obligation while aware that the debt was barred by the passage of time (Case 3(b)) or that the original contract was voidable (Case 3(c)).

In Case 3(a), Ian promised to fulfil a moral obligation.14 According to the Civil Code, case law, and a vast majority of scholars, such a promise is not enforceable at all15 (see Case 2).

In Case 3(b), if Ian promised to pay the debt without knowing that it was already barred by the passage of time, Anna cannot sue him successfully for the payment. The position of Italian law is that Anna’s claim is still alive, but nevertheless, when she brings this claim, Ian has the procedural defence of prescription. If he were to pay the debt, he would not be able to reclaim his payment (art. 2940 of the Civil Code). Most Italian scholars do not consider payment of a debt barred by prescription to be fulfilment of a moral obligation because, as just noted, the creditor’s claim is deemed to be still alive but subject to a procedural defence. Recent case law takes the position that partial payment of a barred debt does not itself constitute

14See the discussion of Case 2. See also Gorla, Il contratto, 142–3; Marini, Promessa ed affidamento, 400 ff.

15See L. Nivarra, ‘Obbligazione Naturale’, Digesto (1995), 366; A. Zaccaria, ‘Novazione’, Digesto (1995), 280 at 288, with accompanying references. See also art. 1234 of the Civil Code.

94 the enforceabilit y of promises

a presumption of the implicit intention to give up the procedural exception of prescription, which, therefore, is still available to the debtor for the unsatisfied portion of debt.16

If Ian deliberately promised to pay Anna a barred debt while aware of the fact that it was barred by the passage of time, then the promise would be enforceable because it constituted a renewal, or, in technical terms, a novation of the original debt (art. 1230 of the Civil Code).17 According to some scholars, however, art. 1234(2) of the Civil Code18 is applicable by analogy, and, therefore, for the novation to be valid, the intention to waive the right to raise the defence of prescription must appear unequivocally.

In Case 3(c), the obligation originally undertaken may be annulled because Ian lacked legal capacity on account of his age (arts. 1425 and 1441 ff. of the Civil Code). Nevertheless, Ian’s promise is enforceable if, as an adult with full capacity, he explicitly ratified the obligation incurred while aware that the original contract can be avoided because he was too young (arts. 1234(2) (novation) and 1444 (validation) of the Civil Code).19

By Gorla’s view (see Case 2), the promises in Cases 3(a), 3(b) and 3(c) would probably all have a sufficient basis for enforcement (cause suffisante), and so be legally binding. As mentioned earlier, his view is not held by the majority of Italian legal scholars.

austria

There are two main types of bankruptcy proceedings in Austrian law. The first is called Ausgleichsverfahren. Here the insolvent debtor offers to pay his creditors a certain percentage of his debt. The rest of his debt is then discharged. There remains, however, a ‘natural obligation’ (Naturalobligation

16See Cass. civ., sez. lav., 7 Jan. 1994 n. 94, in Giust. civ. I (1995), 567.

17Article 1230 of the Civil Code: ‘Objective novation: The obligation is extinguished when the parties substitute a new obligation having a different object or a different title for the old obligation. The intention to extinguish the preceding obligation must appear in an unequivocal manner.’

18Article 1234 of the Civil Code: ‘Lack of effect of novation: The novation is without effect if the original debt did not exist. When the original obligation arose from a voidable transaction, the novation is valid if the debtor validly assumed the new debt knowing the defect in the original transaction.’

19Article 1444 of the Civil Code: ‘Validation: The contracting party entitled to sue for annulment can validate the voidable contract by a declaration containing a reference to the contract and to the cause for voidability thereof, and a declaration of intention to validate it. A contract is likewise validated if the contracting party entitled to sue for annulment, knowing of the voidability, has voluntarily performed it. The validation has no effect if the person who does it is not in a condition to validly conclude the contract.’

or obligatio naturalis). It has the consequence that if the debtor decides to pay a debt that was discharged, he cannot claim the payment back. The second type of bankruptcy proceeding is the so-called Konkursverfahren. Its principal purpose is to sell off the assets of the bankrupt in order to pay his creditors. His debts are not discharged.20

Consequently, Case 3(a) can arise only with respect to an Ausgleichsverfahren if Ian promises to pay Anna a debt which has been discharged. Here the promise is binding.21 It would be construed as a waiver of the defence to Ian’s claim that the debt was discharged through the insolvency proceedings. Such a waiver is possible because the court will take the discharge into account only if the debtor raises it as a defence.

In Case 3(b), Anna can enforce the promise. It would be construed as a waiver of the defence to Ian’s claim that it is barred by the passage of time. Such a waiver is possible because the court will take this bar to a claim into account only if the debtor raises it as a defence.

In Case 3(c), two different situations must be distinguished since Austrian law has two different rules governing contracts made by minors or other persons who lack legal capacity. The first rule applies to persons under seven years of age.22 In general, they are unable to enter into a contract.23 Any promise they make is invalid.24 Such a contract cannot be acknowledged after the minor has come of age.25 If Ian made the contract when he was below seven, he therefore would not be bound by his second promise.26 He would be bound by it only if it could be interpreted as a new contract for which the form requirement does not apply.

The second rule applies to persons who are at least seven years old.27 They can make a promise which becomes valid when their legal guardian gives his approval to the contract. The validity of the contract therefore

20If the bankrupt is not a company, it is possible under certain conditions that a discharge can be granted even within a Konkursverfahren. See §§ 181 ff. Konkursordnung (Bankruptcy Act).

21See G. Stanzl in Klang, ABGB vol. IV/1, 602. OGH Rspr 1932/47; GlU 6902. The other authors (W. Wilburg in Klang, ABGB vol. VI, 462 and Ehrenzweig, System vol. II/1, 7) to whom Stanzl refers, however, discuss a different topic, namely the question whether a

26It is possible that the first contract was executed and Anna has a claim in unjust enrichment against Ian. The validity of such a claim does not depend on the other party’s age. Such a claim could be acknowledged by a second promise after Ian has come of age.

27§ 865(2) of the Civil Code. Persons aged over seven are also able to accept gifts.