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Учебный год 22-23 / The Enforceability of Promises in European Contract Law.pdf
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c ase 12: taking less than was agreed

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tenants. Later he changed his mind and asked the seller to get rid of a tenant. The court held that the remission was valid although it was not in writing and was without apparent causa donandi or intention to confer a liberality. The buyer had allowed the tenant to stay and continue to use garage space because the tenant happened to own another house in which the buyer himself was a tenant, and so he was looking after his own interests.

portugal

Realty can recover the unpaid rent from Travel unless the parties have agreed to extinguish the debt or to a modification of the contract. Whether they have is not clear.

According to art. 863 of the Civil Code, the creditor can always extinguish his claim by a contract with the debtor. Such a contract is called a remission (remissão). If the remission were done with the intention of acting out of liberality, the transaction is considered a donation (art. 863(72)), and it would have to be contained in a written document. Here, however, Realty was not acting with such an intention. Therefore, it would not be able to recover that amount.

The situation might also be considered as a conditional modification of the lease by agreement of the parties. According to art. 406 of the Civil Code, the parties can always modify the contract if they both agree. If they have, Realty cannot rely on the initial contract.

It is possible, however, that the agreement between Realty and Travel should be construed, not as one to reduce the amount of rent due, but as one not to claim the amount due until Travel is in a position to pay. In this case the duty to pay the other part of the original rent remains as an obligation cum potuerit. According to art. 778(1) of the Civil Code, it can be claimed only if the creditor proves that the debtor is able to pay.

Thus the solution of this case depends on a question of fact as to how the agreement between Realty and Travel is interpreted.

italy

If the judge determines that Realty meant to reduce the rent and not merely to accept partial payment, reserving its right to receive full payment at a subsequent time, Realty cannot recover the remainder from Travel. The question is one of interpretation to be resolved by the rules provided by arts. 1362–71 of the Civil Code.

272 the enforceabilit y of promises

As already explained (Case 11), waivers of a contractual duty are enforceable even if they advantage only the other party. Their enforceability is said to follow from the principle of freedom of contract. As noted (Case 12), Realty’s promise will not be considered to lack a causa because the judge will examine it not in isolation but as part of the entire rental agreement.

austria

Realty cannot recover the amount from Travel. The agreement constitutes a relinquishment (Verzicht, see Civil Code § 1444) of the claim for half of the rent. According to § 939 of the Civil Code, such a relinquishment is not a gift. Therefore, the form requirement does not apply.

Nevertheless, the result would be different if the agreement were interpreted merely to defer payment. Then Realty would not have lost its right to be paid. Whether such an interpretation is warranted would depend on the circumstances of the case and the formulation of the promise. In case of doubt, § 915 of the Civil Code would apply. According to this provision, if a unilateral promise is unclear it is to be assumed that the promisor wished to incur a smaller rather than a larger obligation. With respect to the present case, that would mean that the promise would have to be interpreted as deferring payment without relinquishing the right to it.

germany

As in Case 11, the promise to change the amount due per month is not considered to be a gift. Therefore, it is binding without the formalities that gifts require (see Case 1).

Realty’s claim, however, depends on how the modification is interpreted. It may be just a deferment of payment. In this case Realty would be able to recover the money. But it may be interpreted as a partial renunciation of the rent.

According to § 157 of the Civil Code, the interpretation of a contract depends on good faith and the Verkehrssitte, which is defined by the courts as the actual beliefs and customs of daily life of the group involved in the contractual relation in question.17 The purpose of the interpretation is to determine what the parties objectively willed, or, if they did not take the

17 RGZ 55 (1904), 375 (377).

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point in question into consideration, to find out what kind of agreement reasonable people would have made (ergänzende Auslegung).18 All of the circumstances of the case have to be taken into account, but if there are no contrary indications, it is more likely that the parties intended to defer payment because people are not expected to act altruistically in a business relationship.

Although there is no authority on this point, there are provisions in the Civil Code that reflect the same idea. Sections 612, 632, and 689 provide that certain kinds of contracts are presumed to be made in return for compensation, even if the contract does not mention it, when the service in question is not normally performed free of charge. Here, it is unlikely that Realty wanted to renounce its claim forever even if Travel’s economic situation improved.

greece

Realty’s agreement that Travel could pay half the agreed rent for the duration of the economic recession is valid by virtue of the principle of freedom of contracts (art. 361 of the Civil Code).

If Realty had expressly reserved its right to recover the other half of the rent originally agreed after the end of the economic recession then Realty would be able to do so. If it did not do so expressly, then the agreement must be interpreted in accordance with arts. 173 and 200 of the Civil Code. Article 173 provides: ‘When interpreting a declaration of will, the true intention shall be sought without adhering to (the literal meaning of) the words.’ Article 200 provides: ‘Contracts shall be interpreted according to the requirements of good faith taking into consideration business usage.’

The question, then, is what the parties intended, taking into account good faith and usage. If the parties did not understand the same thing, then the meaning prevails which the declarant expected that the recipient could and should have understood.19 Accepted views on business transactions would play a role but the specific circumstances and the capabilities of the parties would be crucial.20

Consequently, in the present case, Realty would not be entitled to recover the amount from Travel.21

18BGHZ 9 (1953), 273 (278).

19Stathopoulos in Georgiadis and Stathopoulos, Civil Code, art. 173, no. 8; art. 200, no. 11;

AP 269/72, NoB 20, 1025.

20 Stathopoulos, Contract Law, 125–9.

21 The proper application of the rules of interpretation is subject to judicial control. Ibid.

274 the enforceabilit y of promises

scotland

By s. 1(2)(a)(i) of the Requirements of Writing (Scotland) Act 1995,22 ‘a contract or unilateral obligation for the creation, transfer, variation or extinction of an interest in land’ must be constituted in a written document. This applies to leases of more than a year: s. 1(7). The original lease must be in writing. The variation of the lease must be in writing whether it be regarded as a contractual variation or as a unilateral obligation on the part of Realty to forgo half the rent. It is then a matter of construction to determine the extent and duration of the variation. It would appear that Realty will not be able to recover the amount in question as they contracted to the effect that payment of that amount was no longer due, that is, no longer due for the extent of the recession. After the recession, the original rent is due for the remainder of the lease.

england

It is clear in English law that, despite the apparent lack of consideration for its promise to reduce the rent, Realty cannot recover the remainder of the original rent owed. The example is almost identical to the leading case of Central London Property Ltd v. High Trees House Ltd,23 where it was held, in similar circumstances, that the landlord could not go back on his representation to reduce the rent. The legal basis of the High Trees decision is the doctrine of promissory estoppel, which, as already discussed (see Case 1), holds that if A induces B to alter his position detrimentally by a representation that A will not enforce her strict legal rights, A is then estopped from going back on her word. The primary limitation on the scope of estoppel – that it may be used only as a defence to a cause of action – is not a barrier here because the promise would be raised as a defence against Realty’s attempt to enforce in full the original agreement.

It should be noted that while the result here is clear because of the precedent of High Trees, in High Trees itself the court did not discuss whether the tenant had in fact relied nor whether the tenant should be able to rely on the defence of estoppel only to the extent of his reliance. It may have been assumed that substantial reliance had occurred or it may have been thought that the extent of reliance was irrelevant. The latter point is significant because there is no consensus (but also relatively little discussion)

22 See Case 1.

23 [1947] KB 130.