TABLE OF CONTENTS

The Legal System ..................................................................................................................................................................................................... 3

The language of the law .............................................................................................................................................................................. 3

Rules and norms ............................................................................................................................................................................................ 3

The notion of source of the law .............................................................................................................................................................. 3

The legal system ............................................................................................................................................................................................. 4

The sources of Italian law .......................................................................................................................................................................... 4

Repeal of laws (art.15 CC) / The principle of non-retroactivity ............................................................................................. 5

Relations between sources: Equality, supremacy, competence ............................................................................................. 5

Case law and legal scholars ...................................................................................................................................................................... 6

The enforcement of legal rules ......................................................................................................................................................................... 6

Structure of legal rules ................................................................................................................................................................................ 6

Statutes. Rules and provisions ................................................................................................................................................................ 6

The interpretation of statutes ................................................................................................................................................................. 6

Interpretation and the legal system ..................................................................................................................................................... 7

Legal facts and acts ................................................................................................................................................................................................. 7

The concept of legal facts and acts ........................................................................................................................................................ 7

The  concept  of  “act”  in  the  CC .................................................................................................................................................................. 8

Validity and effectiveness of legal acts ................................................................................................................................................ 8

Persons ......................................................................................................................................................................................................................... 8

Natural and legal persons .......................................................................................................................................................................... 8

Natural persons .............................................................................................................................................................................................. 9

Minors and parental rights ....................................................................................................................................................................... 9

Legal entities ................................................................................................................................................................................................. 10

The  concept  of  “thing” ........................................................................................................................................................................................ 10

The concept of thing in the CC .............................................................................................................................................................. 10

Relations between things ....................................................................................................................................................................... 10

Categories of things ................................................................................................................................................................................... 10

The human body ......................................................................................................................................................................................... 11

Beyond things ............................................................................................................................................................................................... 11

Movables and immovable property ................................................................................................................................................... 11

Universality of movables ........................................................................................................................................................................ 11

Fruits ................................................................................................................................................................................................................ 11

Public and private things ........................................................................................................................................................................ 12

Protection of rights .............................................................................................................................................................................................. 12

Public Records ............................................................................................................................................................................................. 12

Proof and evidence .................................................................................................................................................................................... 12

Proof by witnesses ..................................................................................................................................................................................... 13

Presumptions ............................................................................................................................................................................................... 13

Confession - Judicial Oaths ..................................................................................................................................................................... 14

Situations under the law and Prescription .............................................................................................................................................. 14

Prescription ................................................................................................................................................................................................... 14

Forfeiture. Lapse of time ......................................................................................................................................................................... 15

Rights and remedies. Standing to sue ............................................................................................................................................... 15

Qualified interests, collective interests ............................................................................................................................................ 15

Elements of civil procedure ................................................................................................................................................................... 16

The Constitution and ordinary Law ............................................................................................................................................................ 17

Constitutional rights ................................................................................................................................................................................. 17

The  “Economic  Constitution” ................................................................................................................................................................ 17

Private ownership ...................................................................................................................................................................................... 17

European treaties ....................................................................................................................................................................................... 18

A three-pronged system .......................................................................................................................................................................... 18

The right of ownership and property interests ..................................................................................................................................... 18

The right of ownership ............................................................................................................................................................................ 18

Diversity of ownership ............................................................................................................................................................................ 18

New economy ............................................................................................................................................................................................... 18

The right of ownership in the CC ........................................................................................................................................................ 19

Land ownership .......................................................................................................................................................................................... 19

Property interests ...................................................................................................................................................................................... 19

Usufruct ........................................................................................................................................................................................................... 19

Predial servitudes ...................................................................................................................................................................................... 20

Common ownership .................................................................................................................................................................................. 20

Possession ................................................................................................................................................................................................................ 21

The notion of possession ........................................................................................................................................................................ 21

Relevance of possession: acquisition of ownership and property interests by original title ................................ 21

The action for recovery of possession .............................................................................................................................................. 22

The Law of Obligations ...................................................................................................................................................................................... 23

Introduction .................................................................................................................................................................................................. 23

Due performance and non-performance ........................................................................................................................................ 24

Particular cases of obligations ............................................................................................................................................................. 26

Circulation of rights and obligations ................................................................................................................................................. 27

The law of contract .............................................................................................................................................................................................. 28

THE LEGAL SYSTEM

THE LANGUAGE OF THE LAW

A rule is a statement that prescribes some human conduct defined as 1) compulsory (duty to act) 2) prohibited

(duty not to act) or 3) lawful (possibility to act). Æ a rule does not describe, but prescribes.

x Personal Æ regards the conduct of a specific person/group e.g. Close the door, Paul

x Factual Æ covers one or more factually specified situations e.g. if  you’re  the  last  to  leave,  close  the  door

Paul.

x General Æ directs the conduct to whoever may find himself in a specified situation e.g. the last out

closes the door

x Abstract Æ covers any situation that repeats the one envisioned e.g. at the end of each lecture (base

situation), the last out closes the door

x Personal and factual: John, debtor, has to pay a sum of money to Joe, creditor

x General and factual: ordinance issued to the residents of a street to shovel the snow in case of snowfalls.

Save exceptions, rules contained in Codes, Statutes, Decrees and Regulations are both general and abstract.

RULES AND NORMS

Rule/norm:   rule   derives   from   “regula”   (straight),   norm   means   “normal”   and   has   the   goal   to   make   one’s  behaviour normal.

Sanctions: 1) civil sanction: compensation for damages 2) criminal sanction: imprisonment 3) administrative

sanction: a fine

A legal rule is : 1) a rule the violation of which would be checked by the use of force of a person or group that

has the socially acknowledged privilege to act in such manner 2) a rule the enforcement of which is entrusted

to the authority of a court

In a primitive or elementary organization the court yields the power to adjudicate even in absence of a criterion

that would directs it to draw its decisions solely from a certain source: precedents, customs, opinions of wise

men. However, as a society becomes more complex, a discriminating criterion is introduced between rules: the

only  accepted  rule  is  the  “legal  rule”

THE NOTION OF SOURCE OF THE LAW

A  source  of   law  can  be  defined  as   “any  act  or   fact apt at producing legal rules in a given system. Distinction

between: 1) written sources: acts of Parliament 2) observance of customs, examination of precedents

x Judicial precedents Æ decision rendered in a case similar to the case to be decided, or a series of

uniform cases from which a rule can be extracted

x Legislative act Æ a proceeding by which an Authority vested with the power to legislate draws up a text

containing legal rules.

Who decides which sources are apt to generate rules? 1) In every system there are rules setting forth the ways

and means to make the rules of that system. However, if every rule had to be legitimized by a higher rule, legal

scholars would go to infinity. Ultimately, the legitimacy of a legal system stems from its affirming itself as such,

within a given social grouping.

THE LEGAL SYSTEM

Legal system Æ a complex of legal rules made in conformity with an ensemble of sources, legitimized by a

single founding act which paved the way to the organization of a social grouping.

For a  given  system,  the  law  is  only  the  domestic  law  (the  laws  of  another  state  are  “mere  facts”).  Æ plurality of

systems.

International Law Æ regulates relationships btw State, draws upon its own sources and rules (i.e.

international customs and treaties). However, what is unlawful according to the International Law may be

lawful under Italian Law. In Italy, the international rules take effect after ratification (approval) by the 2 Houses

of Parliament.

Locking up the legal system Æ generally societies who draw a clear line between the legislative power and the

judicial power have a locked system of sources, in which a court cannot render a decision amounting to a new

binding rule. The line is less clear where case law is the sources of law and where a part of the body of law is

formed out of judicial precedents. Howveer, a fully locked system is impossible to attain because rules (written

or not) are influenced by ideas, judgements and values acquired by the court through experience in and

observation of social life Æ it’s   convenient   to  use    words  with  broad  meaning,   in  order   to   enable  a   court   to  evaluate the facts in light of the evolution of society.

THE SOURCES OF ITALIAN LAW

x Constitution (and Constitutional statutes)

x Treaty of the EC

a. Regulations: on matters stipulated by the founding Treaty of the EC (modified by the Single EU

Act -1987-, EU Treaty of Maastricht -1992-, Treaty of Amsterdam – 1997-, Treaty of Nice -2001-,

Treaty of Lisbon – 2007-), to take immediate and direct effect in the Member States and prevail

over diverging statutes.

b. Directives: in order to harmonize the legislation of the Member States, for the approximation of

laws that directly affect the establishment or functioning of the Common market e.g. Community

Act

x Laws (Statutes, Acts of Parliament) Æ all enactments within the legislative function under the Italian

Constitution, that is:

Consitution

European Provisions

Statutes and similar provisions

Customs and usages

a. Statutes: acts of Parliament made in conformity with the appurtenant procedures described in

art.70 IC i.e. approval by the Houses of Parliament, promulgation by the President of republic,

publication the Official Gazette

b. Enactments: same power as the Statutes, but made with a different procedure: 1) Legislative

Decrees, made by the Italian Government on delegated legislation 2) Law decrees, made by the

Government in cases of extreme necessity and urgency, subsequently approved and turned into

statutes.

c. Regional Laws: in  case  they  don’t  respect  the  fundamental  principles  set  out  by  the  State,  the  Constitutional Court is called to decide.

x Domestic Regulations Æ issued by Ministries, regions, Provinces, Municipalities.

x Customs/Usage Æ subsidiary sources of law. They cannot conflict with higher sources. In order to

have a custom, a certain pattern of behaviour has to be: a) general, repeated and constant within a

certain community b) members of the community observe it in the belief that they are bound by the

“rule  of  behaviour”. A distinction is btw a) custom praeter legem: not regulated by another source of

law b) custom secundum legem, regulated by a higher sources.

REPEAL OF LAWS (ART.15 CC) / THE PRINCIPLE OF NON-RETROACTIVITY

If a new legal rule created at a later time conflicts with existing legal rules applicable to the same matter, those

rules can be repealed: when such conflicts arise, chronology determines its resolution, so that the more recent

law prevails (if they are ranked in the same position, otherwise the pyramid hierarchy prevails)

x Express repeal: upon express statement of lawmakers

x Implicit repeal: upon incompatibility btw new provisions and previous ones / because the new law

applies to the entirety of the subject-matter subject to the previous law. No repeal if the law modifies

only one point of a previous statute.

x Repeal by Referendum: signed by 500 000 citizens or 5 Regional councils. No referendum may be

proposed for laws regarding taxation, budget, amnesty, pardon or ratification of international treaties.

x Obsolescence: whenever a certain conduct which violates the law becomes a social pattern / when a

certain omission which comes under the law becomes a social pattern, and is believe to be consistent

with the legal system, then the social conditions dictate that the law be not enforced on account of

obsolescence.

¾ This stems from the principle of non-retroactivity  of   law:   “there   is  no  crime when there is no

law”  /  “the  law  only  provides  for  the  future”.  Problems  arise  when  transactions  beginning  under  existing law are not concluded by the time the new law takes effect. In such cases, lawmakers

may design interim provision, in order to solve the conflict.

RELATIONS BETWEEN SOURCES: EQUALITY, SUPREMACY, COMPETENCE

x As long as the rules do not conflict with themselves, they are simply added

x In case of conflict, if sources are different but of equal rank, the criterion is chronology

x When sources are not homogeneous (different rank), hierarchy is the criterion: even if the rule of the

lower rank is more recent w/ respect to the one of higher rank, it will not be applied.

Illegitimate rules Æ when there is a defect in their formation which disqualifies them. This is the case when

competence oversteps its bounds or when an inferior sources is in conflict with a superior source. However, it

doesn’t  mean  that  the  provision  is  void,  voidable  or  inexistent  (it  has  to  be  complied  with  for  the  time  between  the beginning and the ending of the procedures to strike off those provisions). In case of unconstitutional law,

the Constitutional Court is the only body vested with the power of judicial review

CASE LAW AND LEGAL SCHOLARS

The Italian legal system makes a clear distinction btw the role of lawmakers and the role of courts. The former

makes the law but cannot enforce them, whilst the latter adjudicate controversies by enforcing the laws, but

cannot create new laws. Æ principle of separation of powers

Only the Court to whom the Corte di Cassazione (civil and criminal matters) refers a case for adjudication is

bound to apply the legal principle stated by the Court with specific reference to the case submitted.

THE ENFORCEMENT OF LEGAL RULES

STRUCTURE OF LEGAL RULES

Generally, the characteristic of a legal rule is that it is abstract Æ the  logical  scheme  is  “if  P,  then  Q”.  

A  situation  coming  under  a  rule  is  referred  to  as  the  “base-situation”  (fattispecie)  Æ this legal concept is used 1)

on a abstract level:  “if  someone  inflicts  injury  to  others”  2)  on  a  specific  level:  when  referring  to  concrete  facts  e.g.  “on  April  25,  2009…)  

For each single occurrence (IF) the legal rule sets out specific effects (THEN) i.e. what a person must or may do

and usually defines a conduct as lawful, compulsory or prohibited. The relation between the situation and

the definition of the conduct is characterized by stating that a certain event brings about certain effects

imputable to the doer.

Often the base-situation that brings about the effects under the legal rule is complex, in the sense that it

encompasses several distinct factual elements, all of which are necessary. E.g. according to art.927-929,

ownership  can  be  acquired  by  “invention”  (finding).  All  of  the  following  circumstances have to occur: 1) finding

of a movable thing 2) the finder brings it to the mayor 2) mayor issues a public note 4) a year lapses and

legitimate  owner  hasn’t  claimed  it  Æ the relevant facts do not occur simultanouelsy but progressively.

STATUTES. RULES AND PROVISIONS

The meaning of a legislative act is not immediately certain: it depends on the meaning of words according to

the social background where the rule has to be applied. For instance, if a statute precludes an owner from

“building”  within  3  m  from  the  window  of  a  neighbour’s  house,  we  need  to  define  “to  build”  (erecting  a  hedge?  Inflating a tent?) Æ interpretation

Sometimes, the conduct prescribed by the rule must be inferred from a number of different provisions.

Moreover there are provisions that do not require any manner of conduct, but merely define the requisites for

the adoption of any number of conducts.

The base unit of an Act is the article (identified by ascending number). Each article is subdivided in paragraphs.

When the Code is long, the sections are divided into Titles, Headings, Sections. Articles may be preceded by a

heading summarizing the content: this heading is not part of the article.

THE INTERPRETATION OF STATUTES

Seeking the meaning of provisions is an operation known  as   “interpretation  of   the   law” (art.12 CC provides

guidance).

x Literal interpretation Æ “in  the  application  of  the  law,  one  may  not  attribute  it  to  a  meaning  different  from  the  manifest  meaning  of  the  words  resulting  from  their  connection”  (art.12  CC). So the context is

important

x Teleological interpretation Æ interpretation should be directed to ascertaining whether the words

are   consistent  with   the   aim   of   the   legal   rule   itself   e.g.   “do  not   lean   out   of   the  window”   has  different  meaning if affixed to the ledge of a train window or on the top floor of a skyscraper. Preliminary drafts

and  bills  may  help  determine   the  “intention  of   lawmakers”,  yet  they  are  not  binding  when  such  rules  become part of the body of law.

INTERPRETATION AND THE LEGAL SYSTEM

Harmonization of the interpretation:

x Decisions of Corte di Cassazione (especially during its Joint Sessions)

x Systematic interpretation Æ “parts   are   consistent   with   the   whole”   e.g.   art.2   CC   states   that   the  minority of age is fixed at 18, so every provision referring to minor with no further specification will

mean  “less  than  18” x Analogy Æ when confronted with facts where no law seems applicable, we start from a basic

assumption:  “any  case  arising  falls  within  the  boundaries  of  the  legal  system  and  may  be  resolve  by  it”.  Therefore the court must look for analogous cases. E.g.   art.1783   “Hotel-keepers are liable for any

deterioration,   destruction   or   theft   of   things   taken   into   the   hotel   by   their   guests”.   Now   suppose   the  things  are  stolen  in  a  camping  site.  If  we  consider  the  hotel  a  “locked  environment”,  then  it  cannot  be  applicable to campsites. But if we assume that the aim of the article is to ensure that whoever is away

from home has a safe depository for things (teleologic interpretation), then there is no difference btw a

camping site and a hotel

x General principles Æ expressively declared in the Constitution i.e. fundamental rights of a person,

freedom to pursue private business undertakings and its limits etc. However, many principles remain

implicit and may be inferred only from the prescriptive tenor of a set of rules e.g. art. 1865 provides for

the right of a creditor to receive in perpetuity periodic payments, notwithstanding any contrary

agreement. However, art 1865 CC expresses the general principle that no perpetual obligations exist in

private law. Therefore any party may always seek termination of a contract. We must distinguish btw

general   principle   #   general   clauses   i.e.   rules   with   a   broader   tenor   (“good   faith”   of   the   parties   of   a  contract).

LEGAL FACTS AND ACTS

THE CONCEPT OF LEGAL FACTS AND ACTS

Legal fact # mere fact Æ a legal fact  is  “any  fact  which  a  legal  rule  applies,  ascribing  a  certain  legal  effect  to  it”  i.e.  an  event  in  life  identified  by  law  as  giving  rise  to  rights  and  duties.  A  mere  fact  is  “any  event”.  

Facts vs acts Æ facts are occurrences while the latter are motions directed by the mind, carried out voluntarily.

x Legal facts: birth, death, collapse of a building

x Legal acts: manifestation of the human will that produce correlative rights and duties. Among legal

acts, there are human acts: the legal effect associated with a certain event occurs regardless of the

intent of the person adopting a certain behaviour to produce it.

x Distinction btw intent of a person to adopt a specific conduct # intent to produce certain effects:

someone becomes the owner of a movable thing  found,  even  if  the  finder  does  not  want  “those  effects”.  

One the other hand marriage is a legal act, as in order to marry the person must want to contract

marriage.

Lawful vs unlawful Æ an act is lawful when a legal rule provides for the legal effects of a certain permitted

conduct  /  an  act  is  unlawful  when  it’s  in  the  breach  of  a  legal  rule  and  consequently  falls  subject  to  a  sanction.  

Unlawful acts Æ a conduct is unlawful either when 1) is undertaken although expressively prohibited by law

or 2) is grievous to the interests protected by the law. In criminal law where the principle says that no crime is

committed where no law expressively provides for it, it is necessary to enumerate all the types of crime

sanctioned by law (no use of analogy). In private law instead,

THE  CONCEPT  OF  “ACT” IN THE CC

In   the   CC   the  word   “act  may   take   different  meanings:  more   general   like   “behaviour”,   “action”,   “practice”   or  narrower  i.e.  upon  reaching  the  age  of  majority,  a  person  acquires  the  “capacity  to  act”  Æ capacity to carry out

all  the  acts  for  which  the  law  doesn’t  provide  any  other  specific  age.  Acts  requiring  majority  are  contracts,  wills,  marriage, acknowledgement paternity, taking a judicial oath.

x Hence, when entering into a contract, a person accepts to stand by the rules flowing from it. Their

autonomy enables to set themselves the rules by which to guide their conduct and further they own

interest. Autonomy is however relative: parties can set up rules but not change the essence (e.g.

prenuptial agreement prohibiting cohabitation)

N.B.  Whenever  the  terms  of  a  legal  acts  are  written  down,  also  such  document  is  called  “act”

VALIDITY AND EFFECTIVENESS OF LEGAL ACTS

Requirements for a compensation of wrongs Æ the fact was 1) either deliberate or culpable 2) was

committed by a person who had the capacity to understanding and intending (imputability) 3) caused directly

and immediately (causation) 4) unjust damage to a third person (wrongfulness)

Requirements for validity of contract Æ 1)agreement btw parties who have the legal capacity to cat and

their will is properly and plainly expressed 2) a subject-matter which must be possible, lawful, determined or

determinable  3)  a  “causa”,  the  socio-economic function of the contract 4) a form, when specifically requested by

the law for the validity of the contract.

When a contract meets all the requisite laid down by the law, then it is valid i.e. appropriate to generating the

effects provided for under the law (contract is a form of private law).

Contract # act Æ a contract can be valid BUT non effective (i.e. will take effect only in the future or under

certain  circumstances,  e.g.  “  if  the  construction  project..).  Instead,  when  an  act  doesn’t  meet  all  the  requisite  of  the  law,  it’s  not  appropriate  to  generating  the  effects  provided  for  by  the  law,  it’s  invalid/void/voidable

x Voidable act Æ when it contains a flaw which is not so relevant to make it void. They are valid until

annulled by a decision of the Court

x Void act Æ when it falls short of one of the cardinal requisites under the law, or when it is unlawful.

They  are  “per  se”  invalid,  therefore  not  enforceable  at  law.  

PERSONS

NATURAL AND LEGAL PERSONS

Society is composed by individual who pursue, singly or collectively, different aims and interests. As such,

individuals and entities are vested with rights and duties.

Natural persons (individuals) / Legal persons (collective entities) Æ they both act following interests,

whose acts and conducts are autonomous and purposeful. Legal persons are therefore distinct from the natural

persons who compose them. Therefore they both are:

x Vested with rights and duties: insofar as their very existence originates situations falling under legal

rules

x Acting within the legal system: insofar their acts and facts may general legal effects

Whereas the legal capacity of natural persons is concurrent with their birth, the legal capacity of legal persons

is consecutive to their establishment: the legal capacity is therefore not innate but acquired.

NATURAL PERSONS

As human beings, all individuals have legal capacity, to the extent that they are eligible to have rights and duties

Æ art.2  IC:  “inviolability  of  the  rights  of  the persons”  (the  legal  capacity  is  protected  by  the  Constitution),  “no  person  may  be  deprived,  for  political  motives,  of  its  legal  capacity”

Legal capacity Æ a  natural  person’s  lifespan  stretches  from  birth  to  death  (not  considering  legal  status  of  the  embryo).  Its   identification  is  strictly   linked  with  its  “domicile”   i.e.  the  place  where  the  person  has  established  the principal centre of their business and interests   and   its   “residence”   i.e.   the   place   where   the   person   has  established  its  “habitual  abode”  (place  where  one  lives)

Capacity to act Æ when they reach 18 years, individual acquire the capacity to act i.e. capacity to exercise

rights and duties in their own name and interest. It does not mean that acts performed by a person lacking

capacity to act are irrelevant (e.g. a contract entered into a person without legal capacity is valid until annulled

by the court). Two exception to the general principle:

1. Persons who are habitually impaired in their mental ability to make decisions may be deprived of their

capacity to act Æ interdiction / disability

2. Remedies are available for those cases in which a person, temporarily lacking sufficient ability to make

decisions, enters into legal transactions Æ de facto incapacity / natural incapacity

Indeed, if a minor despite their legal incapacity to act, has the capacity to understand and intend, can be

appointed  as  “agent”  (power  of  attorney),  which  confers  him  the  power   to enter into legal transactions in the

name and in the interest of the principal, provided the latter has capacity to act.

Natural incapacity is the cause for the annulment of any legal act performed, provided that: 1) the incapacity

existed at the time the  legal  act  was  performed  2)  in  the  case  of  unilateral  act,  the  act  is  “seriously  prejudicial”  to the person with incapacity 3) in case of a contract, the other party was in bad faith

N.B. in case a person (incapable of understanding and intending) committed an act causing injury to someone

else, they are not liable to compensate for the damage unless the state of incapacity was caused by themselves

(e.g. a drunk person).

MINORS AND PARENTAL RIGHTS

Parents have the right and duty to care and educate their child, to represent their child in all civil acts, to

administer  the  child’s  property,  enjoy  the  property  of  the  child,  provided  the  fruits  received  are  destined  for  the  maintenance of the family and the education of the child.

LEGAL ENTITIES

Legal entities are kept separated from the individuals that compose them Æ to facilitate trade during the

colonial period, monarchs would grant partnership the privilege (and right to) limited liability. In the Italian

system not every legal person enjoys limited liability: every legal person can enter in contracts, but only legal

entities enjoy separation btw assets and liabilities.

x partnerships, non-registered associations Æ legal persons

x registered associations, foundations, stock companies Ælegal entities: separation btw assets and

liabilities is an exception to the general principle that a debtor is liable with all present and future

property for the fulfilment of the obligations (liability is limited to the assets invested)

THE  CONCEPT  OF  “THING”

THE CONCEPT OF THING IN THE CC

“  Things   that   can   form   the   subject  matter  of   rights   are  property”  Æ 3 requisites to be satisfied in order for

something to qualify as property

x a thing Æ whatever pertains the world of matter (empirically verifiable and quantifiable) i.e. solids, gas,

energy (even if you can touch them or see them).

x that can form the subject matter of rights Æ a thing may belong to nobody e.g. res nullius (a fish in the

sea  doesn’t  belong   to   anybody  until   caught  by  a   fisherman),   res  derelicta (an abandoned thing). The

granting of a right always purports to resolve a conflict of rights which arises from scarcity, so if things

belong to everybody (air, water), they cannot be property. For the same reason, fossil fuels are things #

solar energy is not (no scarcity)

RELATIONS BETWEEN THINGS

Appurtenance Æ there exists a principal thing and a secondary thing (the appurtenance), which is destined

permanently to the service or ornament of the former e.g. a frame and a painting (movables), a garage and a

house (immovable), letter box and a condominium (movable+immovable). Any transaction involving the

principal thing includes also the appurtenance if not stated differently.

Compound thing Æ all the components are essential for the integrity of the thing itself, while the principal

thing maintains its own integrity and identity even without the appurtenant thing e.g. wheels and cars

CATEGORIES OF THINGS

Replaceable/Irreplaceable Æ it depends on the perception that the party involved has e.g. a serial thing like a

t-shirt may be perceived as irreplaceable if it was a birthday gift. The distinction is relevant in contract law,

because the destruction of a replaceable thing the debtor intended   to  hand  over   to   the  buyer  doesn’t   imply  impossibility to carry out the performance.

Consumable/Non-consumable Æ in contract law, the so-called  “comodato”  (art.1803,  gratuitous  loan  for  the  use of a thing) is restricted to non-consumable things

Money Æ it’s  the  economic  measure  of  all  things.  Banknotes  do  not  have  an  intrinsic  value,  but  are  promises  t  pay,  so  they  can  be  exchanged  between  people.  To  that  extent,  they  can  be  considered  “things”

THE HUMAN BODY

Holy objects, sepulchres and family memorabilia are not subject to the general rules governing the transfer of

the rights of ownership, possession and use. As for rules applied to the human body, a person cannot dispose of

their own body should it 1) result in permanent impairment of physical integrity 2) violate mandatory rules,

morals  or  public  policy.  However  a  person  is  owner  of  dethatched  parts  of  their  body  (i.e.  can  sell  hair”)  BUT  Statute n.107/1990 states that blood cannot be sold, only donated.

BEYOND THINGS

It has long been admitted that a thing can be intangible i.e. creative intellectual activities are subject to

copyright, while innovations may be subject to patent rights. Lawmakers have therefore extended the concept

of  “thing”  beyond  their  limits,  shifting  to  refer  also  to  “rights”.

Hence the definition of thing can be delineated by two complementary definitions:

x according  to  art.810,  a  thing  is  any  utility  that  may  be  subject  to  rights  (“bene”)

x according to art.813, a thing is any right that has economic utility as its subject (“patrimonio”,”property”) x property is any interest protected by the law (i.e. physical integrity, reputation)

MOVABLES AND IMMOVABLE PROPERTY

x Immovables Æ soil, rivers, buildings and other constructions even if joined to the soil for a temporary

purpose, and in general everything that is artificially or naturally annexed to the soil is an immovable

thing. The definition for certain things is uncertain e.g. trailers/prefabs though trailed on roads, they

are set to the ground and connected to water and power supplies.

x Movables Æ all other things

Legal rules aimed at regulating transferring of rights are different: in case of movables, simplicity prevails (i.e.

no written procedures): this apply also on expensive objects such as jewels, paintings, machinery. For

immovable instead, a written document is required for the transferring of ownership and property interests

(“Publicity”:  registration  in  the  Land  Register)

UNIVERSALITY OF MOVABLES

x Universality of movables Æ a plurality of things that belong to the same person and have a common

destination i.e. a flock of sheep, a library, a collection of stamps

x Universality of things Æ includes also immovable i.e. business=a universality of things organized by a

businessman for the conduct of a business. Sometimes  it’s  also  intended  as  “assets  and  liabilities”  of  a  person  i.e.  estate  of  the  decease,  define  as  “a  universality  of  things  by  operation  of  law”,  in  the  sense  that  they are not united by a common economic destination, but by the necessity of being considered as a

whole pursuant to the law of inheritance. N.B. the assets of a living person are not considered as a

universality

FRUITS

x Natural fruits Æ “they  derive  directly  from  the  thing,  with  or  without  the  aid  of  man”  i.e.  agricultural  product, wood. They therefore are, for a certain period, part of the main thing from which they separate,

acquiring a distinct identity: they can be object of transactions before the separation, being considered

as  “future  movable  things”

x Civil fruits Æ compensation (money or other) received for the enjoyment of a thing i.e. rents, interest

payments. In this case no separation occurs, as they move on a day-by-day basis, for the duration of the

rights.

PUBLIC AND PRIVATE THINGS

Constitution   states:   “Ownership   is   either   public   or   private.   Economic   things   belong   to   the   State,   to   the  institutions or to private parties Æ Two  problems   in   the  definition:  1)  not   clear   the  meaning  of     “economic  things”   i.e.   generally   means   of   production   2) not clear distinction btw public institutions and private

institutions

The difference btw state-owned and private-owned property is important because different legal rules apply to

public  things  and  private  things  (the  difference  doesn’t  concert  the  identity of the owner, because theState can

own both public and private things).

Public things Æ 1) owned by the State or by any other public institutions 2) destined for public utility or for

public service. economic

PROTECTION OF RIGHTS

It refers to a broad range of instruments aimed at protecting and enforcing legal rights and interests Æ the aim

is at preventing the arising of disputes and facilitating their resolution.

Set of instruments:

x Registration/statute of limitation/expiration Æ instruments aimed at verifying the certainty of the

legal situation

x Once legal action is commenced, the procedural law of evidence acquires substantial meaning Æ being

vested with a right is of importance but being able to prove the facts that determine such right is what is

material to the resolution of a case in a court of law.

x Protect  the  rights  of  the  creditors  by  defining  debtors’  liabilities,  entrenching  guarantees  and  rights  on  collaterals, and enforcing seizures.

PUBLIC RECORDS

Lawmakers have to ensure the certainty of legal situations. As for the circulation of wealth, the rapidity of

circulation requires that the legal status of the things being circulating and of the persons circulating them be

clear and certain

x Publication is necessary:

o To make a certain act or fact “public”  e.g. when a person is deprived of their capacity, this is

recorded registered in the margin of birth certificate

o To inform third persons that a transaction such as a transfer of the right of ownership of an

immovable has been concluded Æ it has to be registered at the Land Register (in case of

conflicts, the principle of chronology subsists). Same rules for certain corporate acts, registered

in the Company registry

o For the validity of certain acts, publication is the very requisite for their legal effectiveness e.g.

mortgage exist from the moment the deed is registered in the Land Register

PROOF AND EVIDENCE

Under private law, the parties involved in a dispute must move for the enforcement of their own rights i.e. it is

up to private parties to initiate legal actions Æ the plaintiff and the defendant bear the burden of proving in

court the facts on which their rights are based # when interests of the community are at stake, the court has to

seek evidence of it. In this case an investigation must be conducted by the court (parties in case may only

suggest or offer evidence e.g. in the case of deprivation of legal capacity).

Principle of allocation of the burden of proof Æ 1) the one who wants to assert a right bears the burden to

prove the facts upon which this tight is based 2) the one who asserts the invalidity of such facts must prove the

facts on which the defence is based.

9 The plaintiff has to prove the facts upon which their rights are based

9 The defendant has to prove the facts that extinguish or limit the rights asserted by the plaintiff

Exceptions when the burden of proof is inverted Æ liability for damages: the unjued party must prove 1) the

road accident 2) the injury 3) the deliberate of culpable conduct of the motorist. If he proves 1) and 2), the

motorist has to prove that he did everything possible to avoid the accident.

Statutory provisions that introduce exceptions to the general rule Æ legal presumptions

Evidence

The elements of proof used for the establishment of a fact of truth are called evidence. Æ 1) The proof may not

always be established with absolute certainty. 2) In criminal law, instead, sentence can be passed against the

accused only when the underlying facts have been proved beyond reasonable doubt. 3) In civil procedure the

evidence gathered for the establishment of the occurrence of a fact covers a diversity of elements:

9 Documentary evidence Æ document, film, tape, computer data

9 Legal evidence Æ 1) notarial deeds, public records, statements, authenticated private documents,

confessions in court and declarations under oath in court: the court must hold them as truthful 2)

private documents / non-authenticated documents + declarations by witnesses: the court retains the

discretionary power to evaluate them

Î Even a statement authenticated by a public notary or civil servant only go so far as to declare as true

the statements uttered in their presence, they do not declare as true the content of the statements

themselves.

Î Any on these pieces of evidence is held as truthful unless the other party files an action claiming

that evidence is fabricated.

PROOF BY WITNESSES

Witness Æ a person who has direct knowledge of the facts at issue

The main question relates to the admissibility of the proof by witnesses (conflicts of interests, distortion of

truth). Commonly, the court has discretionary power to decide. In contracts, the law encourage rapid resolution

of the case by setting general limits to proof by witness (there are written documents available) e.g. settlement

agreement must be proved in writing, unless the document has been destroyed.

In disputes over international contracts for the sale of goods proof by Witness is always admissible.

PRESUMPTIONS

A presumption is an inference which the law or the court draws from a known fact to arrive at a fact which is not

known. Æ if   John  proves  that  Bill  received  a   letter  some  days  ago,   it’s  a   fair   inference  that  Bill  read  the  letter.  Presumption help the court in the establishment of a fact in truth

� Mere presumption Æ e.g. in a car crash, tire marks and force of braking and inspection reveals

condition of the chassis (clues), then speed (unknown fact) may be estimated. Court can admit mere

presumptions only if they are  “material,  precise  and  consistent” � Legal presumption Æno contrary evidence is admitted against.

� Absolute presumptions Æ if no contrary evidence is admissible e.g. a child born between the 180th

after marriage and the 300th day  after   its  dissolution,   it’s  presumed  that   the   child  was   conceived  during marriage

� Relative presumption Æ when contrary evidence is admitted. In this case burden of proof shifts, as

the  law  presumes  that  a  certain  fact  occurred,  it’s  for  the  person  to  prove the contrary

CONFESSION - JUDICIAL OATHS

Confession

“declaration  made  by  one  party  stating  the  truth  of  facts  unfavourable  to  them  and  favourable  to  the  other  party”

� Private law Æ value of confession closely related to the discriminating principle of the relative freedom

of a person to dispose of their own interests. A judicial confession i.e. a confession made during judicial

proceedings  is  a  legal  evidence,  provided  it  doesn’t  concern  facts  to  non-disposable rights

� Criminal law Æ #private law, the court is never bound to a confession of guilt to find the person guilty.

Judicial Oaths

Oath Æ asseveration  of  fact  as  truthful  :  it’s  a  solution  of  last  resort,  used  when  available  evidence  is  insufficient  to establish the fact. The party who cannot prove its crime may charge the counterparty to confirm under oath

its claim Æ decisory oath

A party cannot be charged with / refer back an oath for the decision of a case 1) concerning rights which cannot

be disposed 2) concerning a contract for whose validity a written form is required 3) for denying a fact which a

public act proved to have occurred

Statement under oath is legal evidence. If one party has take the oath, the other party is not allowed to prove

the contrary, nor can the other party demand revocation of the judgement Æ a statement under oath wilfully

declaring a falsehood is a crime

SITUATIONS UNDER THE LAW AND PRESCRIPTION

PRESCRIPTION

“All  rights  are  extinguished  by  way  of  limitation  whenever  the  person  holding  the  rights  fail  to  exercise  them  within  the  time  fixed  by  law”  (art.2934  CC)  Æ the statute of limitation (or prescription) terminates the rights of

the holders, shoukd they leave their rights dormant by their inactivity.

x 1) need for certainty of legal relations placed under strain 2) the legal system disfavour inactivity

x Statutes of time limitations are mandatory i.e. cannot be modified by private parties. However, once the

term of prescription has expired, the favourable person can renounce to prescription # the parson

cannot renounce to limitation before its expiration.

Some rights are excluded from time limitation:

8 Non-disposable rights Æ personal rights related to marital and family status + physical integrity,

honour, name etc

8 Other rights specified by law Æ right to claim that a contract is null and void

The statute of limitation is subject to the following rules:

8 Running of the statute of limitations Æ the statute begins running from the day on which the right

can be exercised.

8 Suspension Æ temporary suspension of the prescription is possible, during which the period of time

for prescription is not computed. Either because of 1) relationship during the parties: suspension btw

spouses 2) condition of a certain person: suspension in time of was against members of the armed force

of the state, attached to the army by duty

8 Interruption Æ it sets the clock back to the start of the running i.e. a new prescription period begins as

a result. E.g. 1) action brought for redress by the holder of right 2) acknowledgement of the right from

the person against whom the right can be enforced

8 Duration Æ rights are extinguished by prescription after the lapse of 10 yrs

The law prescribes for shorter time periods:

8 Brief prescriptions Æ right of compensation arising from the circulation of vehicules (2 yrs), right to

the payment of a premium (1 yr)

8 Presumptive prescriptions Æ applied in day-to-day transaction where parties are bound only orally.

The time period usually ranges btw 6 months (e.g. right of innkeepers and restaurant owner for the

lodging and food they provide) and 3 yrs (right of public notaries for acts performed in the discharge of

their function). Assumption that the debt has either been paid or is extinct.

FORFEITURE. LAPSE OF TIME

Forfeiture is solely concerned with absolute certainty # prescription takes into consideration the reasons of

inactivity. Æ lapse of a right caused by failure to observe the time limit prescribed by the law. The right must

be exercised within a very short period of time, regardless of any circumstantial consideration, so as to

establish outright certainty.

RIGHTS AND REMEDIES. STANDING TO SUE

The law provides for the possibility for a person to claim for the enforcement of a right in court Æ action.

Action in support of a claim cannot commence without certain preliminary conditions: 1) who can submit and

plead the claim 2) what procedures have to be followed.

x The standing to sue is grounded on an interest to bring the action. This is true only for interests placed

under the protection of law e.g. right of ownership. Therefore there is an interest to act to the extent

that  the  plaintiff  (person  bringing  legal  action)  is  vested  with  “subjective right”

QUALIFIED INTERESTS, COLLECTIVE INTERESTS

Legal action is not only meant   for   the   protection   of   “subjective   rights”,   but   also   of   “qualified   interests”.   E.g.

relatives can bring an action when a parent violates or neglect the duties inherent in parental authority or

makes abuse.

x 1) In a contract: nullity can be claimed by anyone who has interest in it 2) a testamentary position can

be challenged by anyone who has interest in it.

Problems occur with collective interests / diffuse interests: in the US law provides for class action, where one

or more persons may bring action in court  to  enforce  a  collective  interest  on  behalf  of  the  entire  “class”.  Italian  law  doesn’t  provide  for  analogous  possibilities,  but  strides  toward  that  direction:  1)  in  case  of  unlawful  urban  development, residents can group in a committee and intervene claiming damages 2) petition, in the Antitrust

Act

ELEMENTS OF CIVIL PROCEDURE

x Ordinary jurisdictions Æ administered by career courts who have competence for civil and criminal

matters. The procedural rules are different: the ones governing civila matters are included in Code of

Civil Procedure.

x Special jurisdictions

Legal action

The plaintiff (person who initiates legal action) seeks to obtain a judgement in their favour, while the defendant

disputes the claim and files a defence. One the legal action is brought by the defendant , the task of the cours is

examine the merits of the case Æ 1) verify that a question of law is involved 2) determine the law that applies

to the case at issue.

Appeal and recourse to Corte di Cassazione

Once the court ahs made its decision, any party not fully satisfied has the right to appeal the judgement before a

higher court Æ 1) Tribunal / Justice of the Peace (limited economic value) Æ 2) Court of Appeal: re-examines

the merits of the case Æ 3) Corte di Cassazione: it enjoys the power to revise questions of law # questions of

facts

Enforcement of judgements and other coercive proceedings

Documents whose aim is to ensure the enforcement of the judgement through coercive proceedings (aimed at

forced satisfaction of interests protected at law).

x Judicial sentences

x Injunctive orders

x Bills of exchange

x Public acts

By way of an executive officer of the court, the plaintiff serves the other party an order to comply 8atto di

precetto) within a period of 10 days Æ if not, the order is enforced: 1) delivery/release 2) specific performance

of the obligation to do or not to do 3) coercive dispossession by way of seizure and sale of property

Arbitration

Civil litigations proceedings are notorious for being long and slow + perceived as biased or prejudiced. An

alternative is to appoint arbitrators.

x Arbitrators may observe the rules provided by the Code of Civil Procedure which regulates arbitrator

appointment, arbitration proceedings, duties and authority of arbitrators, arbitral award (i.e. a judicial

sentence when declared enforceable by the Tribunal).

x Arbitration may also follow rules laid down jointly by the parties Æ negotiation. In this case the

arbitrator plays a role similar to third persons to whome the disputants entrust resolution of the

determinants of the performance provided for in a contract. Their role is not to resolve the controversy,

but to fill the gaps in private agreements.

Whatever rule they follow, they will apply law strictly. If they are expressly requested to settle the dispute

“according   to   equity”   (or   amiable   composition),   they   will   outweigh elements in support of conclusions

submitted by both parties, allowing for a sort of compromise.

THE CONSTITUTION AND ORDINARY LAW

The Italian Contitution of 1948 goes well beyond laying the structure and working of a State, it also provide

guidance for social life.

Part I: rights and duties of citizen w/ regards to

x civil relations (personal rights, freedom)

x ethical and social relations (family, maternity, school)

x economic relations (ownership, entreprise, labor, national saving)

x political relations (constituents, defense)

CONSTITUTIONAL RIGHTS

Nature of the relationships btw state and citizens Æ art.2 : primacy of the person, protection of the

fundamental  rights  of  the  person  both  as  a  “single  person”  and  “social  groupings”.  Preclusion  of  hypothesis  of  1)  totalitarian relationship 2) libertarian relationship

THE  “ECONOMIC  CONSTITUTION”

The Constitution was the result of a compromise btw liberals, communists and catholics Æ 1) laissez-faire,

laissez-aller / free-market 2) state-planned economy, inspired by the Soviet Union 3) preserve the bonds btw

State and Church, inspire solidarity in the economy

� inconsistencies / contradictions (art.41)

o economic initiative is free, the people initiating that are entrepreneurs, freedom of the ends (i.e.

freedom of contract) Æ free market

o economic freedom is not unlimited. Such   freedom   “may   not   come   into   conflict   with public

interest, or being exercised in a way which infringes upon the safety, freedom and dignity of

persons”  Æ catholic spirit

o “the   law   prescribes   programs   and   controls   expedient   to   direct   and   coordinate   public   and  private economic activity towards social  ends”  Æ state commands the economy

� Art.43:   “the   law   may   pre-empt or transfer, by way of expropriation, to the State/public agencies,

companies/classes of companies related to essential public services or sources of energy or to a

position of monopoly, so long as they play a prominent role for the general interest Æ the state is not

only the one who sets the rules of the game, but also the key player and the referee.

Such a situation distorts the rules of the market, as state-owned firms enjoy unlimited resources and may

produce, with a blithe disregard for cost-effectiveness, shoddy goods that get sold anyhow since they benefit

from a monopoly position. When unsuccessful, state-owned business are bailed out by an injection of fresh cash

from State coffers.

PRIVATE OWNERSHIP

Art.42:   “private   ownership   is   recognised   and   guaranteed   by   the   law,   which   provides   for   the   forms   of   its  acquisition,  it’s  enjoyment  and  its  limitations,  in  order  to  ensure  its  social  purpose  and  its  accessibility  to  all.  

� 1) How far can limitations go? 2) View to make goods accessible to all

EUROPEAN TREATIES

When Italy became a member of EU, its sovereignty had to adjust to the broader statutory framework of this

supra-national  identity.  The  concept  of  “social  market  economy”  is  based  on  the  principle  of  “an  open  market  with  free  competition”  Æ free movement of persons, services and capital # autarchy / self-sufficiency

The purpose of the EU is to make sure that all players stick to the rules of fair competition Æ 1) market

deregulation 2) liberalization 3) social policy to offset the effect of free market

A THREE-PRONGED SYSTEM

Private law throughout time stressed different aspects:

� Ownership: absolute right, imposing the duty on everyone other than the owner not to interfere with

their enjoyment of the thing

� Credit: law of obligations. Unlike ownership which leaves the enjoyment to the discretion of the owner,

rules in defence of credits aim to induce or coerce the debtor into fulfilling its obligations

� Fundamental interests of persons: private relationship are subject to the respect of individual

personality and its inalienable rights (dignity, health, privacy)

THE RIGHT OF OWNERSHIP AND PROPERTY INTERESTS

THE RIGHT OF OWNERSHIP

The III Book of CC is entirely dedicated to the Law of property. Art.832 CC states:

� “the  owner  has  the  right  to  enjoy  of  things  fully  and  exclusively   ¾ The owner has the right to decide the use of the thing as well as the interests and ends toward

which it could be directed

� Within the limits of and observing the  obligations  established  by  law” ¾ The enjoyment is subject to limits set by law

This definition is completed and clarified by other sources of law.

DIVERSITY OF OWNERSHIP

x The intrinsic value of the thing owned matters for diversity of powers and capacities of the owner,

depending on the nature of the thing

x Identity of the owner Æ 1) legal incapacity: the guardian has to preserve the thing and use it in

conformity with the interests of the person they are acting for 2) legal person: the rights of individuals

over the things are removed from the rights of individual owners.

NEW ECONOMY

Wealth, and therefore property, is no longer solely valuated in terms of tangible things. Indeed, this process

may be tracked back to the advent of mass-production and rise of brand marketing. Nowadays dot.com

businesses have no fixed assets, but all intangible assets. Æ generally accepted accounting principle have to

adapt to adapt by substituting clicks for bricks (factories) and slicks (catalogues).

x The concept of property is dematerialised.

THE RIGHT OF OWNERSHIP IN THE CC

x Enjoyment Æ any manner by which to extract any utility from the thing, either directly (collecting

fruits) or indirectly (by collecting the dues paid by some other person to whom the enjoyment has been

granted – civil fruits)

x Disposition Æ to have legal disposition of the thing i.e. may sell it, give it away or grant other people

some rights to it

9 Full Æ the  law  doesn’t  prescribe  what  they  can  do  with  the  thing,  but  what  they  can’t  do.

9 Exclusive Æ the owner has absolute claim against other individuals to refrain from interfering

with the enjoyment deriving from the thing granted to them.

An   exception   are   the   “emulative   acts”  Æ the owner cannot perform acts that have no other purpose than

harming or causing annoyance to others e.g. an owner cannot try to force a neighbour into selling its house by

growing a tall hedge btw the respective pieces of land, within the prescribed distance, but in a manner that

shades daylight.

Right of ownership is not subject to limits in time. However, the inactivity of the owner may entitle the person

who possessed it for a certain time to acquire the right of ownership by original title as a consequence of

usucapio.

LAND OWNERSHIP

The greatest part of laws related to the right of ownership rule ownership in land. Its importance stems form

the fact that immovable have played a major role in the economy. Commonly, land ownership affects both

individual and community interests e.g. erection of a block of flats.

Art  845  CC:   “   land  ownership   is  subject   to  specific  rules  for  the  attainment  of  public   interests  purposes”  and  refers both to special laws and to the provisions of CC.

Two areas of land law: 1) relations between neighbours 2) urban planning and rural property.

Land ownership Æ it extends to the subsurface, with all that is contained therein, and to the space above

ground. Nevertheless, the owner cannot oppose to activities taking place as such depth or such height that they

cannot have an interest in excluding them (e.g. flight of an airplace at 20,000ft)

Mode of acquisition Æ art. 922: entering into a contract (a sale) or succession. They both are modes of

acquisition by derivative title i.e. the party to a contract or the heir is in the same legal position as the person

transferring the right. Hence the transferee acquires the same right previously lodged to the transferor.

PROPERTY INTERESTS

Property interests have either 1) the purpose of enjoyment: superficie, emphyteusis, usufruct, use, habitation,

predial servitudes. 2) the purpose of security.

Mortgage (immovable) / pledge (movables) are granted to offer an additional security to their creditor.

USUFRUCT

9 It is the right to use the thing, receive its fruits (natural or civil), but respecting its economic destination e.g.

the usufructuary over a herd is bound to replace dead animals up to the number of those born / the

usufructuary of a villa canot transform it into a hotel

9 The right granted to natural persons is either for limited time or until death

Duties in an usufruct of a villa:

� Apply the diligence of a good pater familias in the enjoyment of the thing

� Draft an inventory at their expense and give suitable security

� Pay expenses related to the custody, management and maintenance of the thing. The owner will have to

repay for extraordinary repairs (unless made by non-performance of obligations)

� Pay taxes and other burden related to revenues from the thing. The owner has to pay fr taxes related to

ownership of the thing.

Use Æ entitles  its  holder  to  make  use  of  the  thing  and,  if  it’s  productive,  to  collect  the  fruits  exclusively to the

extent necessary for the family

Habitation Æ entitles the holder to inhabit the house within the limits of their family and family needs.

PREDIAL SERVITUDES

Relation btw adjacent pieces of lands (not necessarily contiguous) are subject to rights are duties Æ predial

servitude: burden imposed on land for the utility of other land belonging to a different owner.

A  typical  example  is  the  right  of  way  e.g..  the  right  to  have  a  way  over  the  neighbour’s  land  (the  corresponding  piece remains of ownership of the neighbour, who is under duty to let him use the way) Æ dominant land

(benefits from servitude) # servient land (on which burden is imposed)

� Servitude  are  rights  either  to  use   the  other’s   land  or  not  to  use  one’s  own   land  (e.g.  not   to  erect new

buildings)

� Predial servitudes can be 1) voluntarily constituted 2)compulsory constituted 3) by usucaption 4)

destination of the head of the family e.g. when the owner of a single piece of land dies and the land is

divided into 2 pieces, with just one standpipe serving the two. The pipe will be located into the servient

land

� The servitude can be established by judgement (previous case) or compulsory:

9 For the passage of water of any kind pr for the removal of surplus water, if the neighbouring

piece of land lacks the necessary water for the maintaining of people/animals

9 When  a  piece  of  land  is  surrounded  by  others’  land  and  do  not  have  access  to  public  way. 9 Same applies for electric lines, cables of aerial funicular

� Servitude terminates by way of 1) confusion : ownership of the dominant and serviant land are united

2) limitation: the servitude is not exercised for a continued period of 20 yrs. The right is not terminated

merely because of impossibility in fact to exercise the servitude supervenes or because the lack of

utility

COMMON OWNERSHIP

Two or more person can have the common ownership:

9 Voluntary: 2 + persons purchase something together / 2+ landowners join their land together

9 Incidental: land is bequeathed to heirs

9 Forced: ownership of the different floors of a building have common ownership

In the case of marriage, until the spouses have opted for division of property in common ownership or have

entered in a marriage agreement providing otherwise, household things acquired by each spouse separately

become common property after marriage.

Common  ownership  is  not  encouraged  by  law  because  it’s  an  obstacle  to  the  speedy  circulation  of  wealth:

9 each participant in a common ownership can seek resolution e.g. an owner of 2% of a thing can

dissolute the common ownership.

9 An agreement to remain in common ownership for a period of no more than 10 yrs is valid and is also

enforceable against the successors of the participants

POSSESSION

THE NOTION OF POSSESSION

In law, the notion of possession is distinct from the notion of ownership or wealth

9 Possession  is  “the  power  over  a  thing  as  it  is  expressed  in  an  activity  corresponding  to  the  exercise  of  the  right  of  ownership  or  property  interest”

The most important thing is therefore activity i.e. a conduct: if somebody behaves as if they were the owner (or

vested with property interest), then they possess the right of ownership or property interest (e.g. usufruct,

servitude).

9 if John lends his notebook to Paul and Paul places an advertisement offering the notebook for sale, he

possesses the book since his activity shows the exercise of the right of ownership.

9 If John rents the notebook to Paul, he is behaving both as the owner and the holder of the right of

usufruct: he either has possession or usufruct

Whether the person acting like an owner is entitled or not is not important: what matter is that he acts with

respect to the thing as an owner or holder of a property interest. In order to act as an owner, the possessor

doesn’t  have   to  hold   i.e.   to  have  physical availability of the thing Æ possession can be direct or by means of

another person (who has retention – he  doesn’t  behave  according  to  ownership  because  he  pays  a  rent) i.e. a

tenant  renting  an  apartment  is  the  possessor  even  if  he  doesn’t  physically hold it

Normally the owner is also the possessor Æ possession (state of fact) and ownership / property interests (state

at  law)  coincide.  The  word  “power”  doesn’t  refer  to  any  notion  of  authority  lawfully  devolved  to  or  vested  in  a  person, who is therefore entitled to carry out certain tasks.

RELEVANCE OF POSSESSION: ACQUISITION OF OWNERSHIP AND PROPERTY INTERESTS BY

ORIGINAL TITLE

So  far,  the  notion  of  possession  considers  exclusively  the  “state  of  fact”:  that’s  because  situations  when  the  state

of  fact  and  state  at  law  don’t  coincide  pose  a  series  of  problems  Æ transfer of movable

Suppose Bob sells a painting to John, with delivery on the following day, and later Paul comes to the art gallery

and buys the same painting. Bob behave as if he were the owner (i.e. he possessed the painting), by agreeing to

sell the painting to John. Question is: who will get the painting?

“Possession  vaut   titre”   (art  1153  CC)  Æ the person to whom movable are transferred by one who is not the

owner acquires ownership. Three conditions:

9 Good faith: the person receiving the movable is not aware of injuring the right of another person

9 Appropriate title: the parties entered into a contract that transfer the right of ownership (i.e. a sae),

regardless of the fact that one person  should  be  entitled  because  he’s  not  the  owner.  If  the  contract  is  a  “lease”,  the  rule  doesn’t  apply  because  there  is  no  transfer  of  ownership.

9 Possession: possession has been traferred

9 John acquires ownership by original title (i.e. the right of the transferee is independent from the right of

the  transferor:  “transferred  by  one  who  is  not  the  owner,  acquires  ownership”)

In so doing, everyone following those rules is protected, even in the case the seller turns out not to be the real

owner. Right of usufruct,   use   and   pledge   are   acquired   in   the   same  way.   Obviously   the   rule   doesn’t   apply   to  registered movables, where ascertaining who is the real owner is easy by consulting the public registries.

Usucaption Æ continued and uninterrupted possession over time (20 yrs), leads to the acquisition of the right

of ownership. Shorter periods apply in case of good faith or small rural properties. As for movables, usucaption

doesn’t  apply  in  case  of  lack  of  good  faith  and  appropriate  title.  

N.B.  Usucaption  doesn’t require good faith of the possessor : 1) active use of property 2) a situation of fact

ascertained over time coincides with the existence of a right.

Two presumptions for possession: 1) a present possessor who possessed at an earlier time is presumed also to

have   possessed   in   intermediate   times   2)   present   possession   doesn’t   imply   earlier   possession,   unless   the  possessor  has  a  “title”

9 Possession by succession Æ possession of the deceased continues in the heir

9 Possession by accession Æ successor different by the heir can add their possession to the possession

conveyed

Possession is not exclusively referred to ownership but also to usufruct, habitation, emphyteusis, superficie and

predial servitudes Æ all property interests can be acquired by usucaption

THE ACTION FOR RECOVERY OF POSSESSION

The lagal system protects the existing state of fact against the violent or secret deprivation of possession. On

the principle that the state of fact would be preserved before any further assessment, the law discourages any

attempt to reverse it violently or secretly.

9 Art 1168: if someone has been deprived he can sue the take for recovery of possession, within a year of

the loss, within one year. Restoration of possession is restored based on common knowledge of the fact,

without delay

9 Rather than deciding straightaway which of the parties has the right to adopt a certain conduct, the

system - first and temporarily – orders the restitution of the thing

Example: a footpath crossing a field is used by another land owner. If the latter decides to close access, there

are 2 possibilities: 1) a petitioner has to prove that he has servitude granting them the right of way 2) the

claimant must only prove that they possessed the servitude i.e. they acted as if they were entitled to have a

right of way Æ the court will firstly order the reopening and then will proceed with the issue of existence of a

right of way.

The action for recovery of possession is also granted to those who have retention (e.g. a tenant) Æ if a tenant

refuses to pay the rent and the owner profits from his absence to change the lock and move all his objects in a

warehouse, the tenant may bring the action for recovery of possession. This protection works only temporarily

as the owner may bring action for revendication.

THE LAW OF OBLIGATIONS

INTRODUCTION

The concept of Obligation. The sources of obligation

Obligation Æ relationship   btw   a   debtor   and   a   creditor.   It’s   the   legal   duty   of   the   debtor   to   either:   1)   give  something 2) do something 3) refrain from doing something, for the benefit of the creditor. Hence, any kind of

legal and economic relation which involves legal duties btw 2 parties is an obligation.

Sources of Obligation Æ 1) contracts 2) unlawful acts 3) any other acts or facts capable at producing

obligations under the law. The first two are easily recognized by the law, while for the others the existence of

an obligation is ascertained case by case

E.g. an unilateral promise gives rise to an obligation only in case: promise to the public, promise of payment

and acknowledgment of debt, negotiable instrument, management of affairs of another, payment of what is due

and unjust enrichment.

Performance of obligation

Obligations are characterised by their object: obligation is a relationship in which a party (the debtor) is

required to execute a performance capable of economic evaluation to satisfy an interest of the other party

(creditor)

x Obligation to deliver something Æ e.g. the seller must deliver the thing sold to the buyer. 1) Deliver

doesn’t  mean  to  only  transfer  the  object,  but  also  the  right  of  ownership.  The  performance  is  carried  out  when both occur. 2) performance  is  not  the  “thing”  (subject  matter  of  obligation)  but  the  “giving  of  the  thing”  (object  of  obligation)

x Obligation to do something Æ performing some activity to satisfy the creditor e.g. nominate contracts

(contracts provided by the law): carriage contracts, employment contracts

x Obligation to refrain from doing something Æ e.g. whoever transfers a business shall refrain from

starting a new enterprise which is likely to divert customers from the business i.e. refrain from

competition

Relation btw debtor and creditor

The relation is not necessarily characterised by imbalance (creditor>debtor) e.g. a person who palces savings in

a bank is in weaker position. However, the Italian law privileges the creditor in order to promote the circulation

of wealth (receiving what is due).

x Rule of fairness (obligations) Æ 1) debtor: duty to ensure the normal due diligence is performing the

obligation e.g. duty to inform the shipper in carriage contracts, mandate contracts, in agency contracts 2)

creditor: in case of   debtor’s   default   the   creditor   must   cooperate   in   order   to   help   him   perform   the  obligation

x Good faith (contracts)

Obligation and liability

To sum up, an obligation is the legal duty having as its object a performance capable of economic valuation.

Nonetheless, legal tradition defines an obligation as a constraint: legal duty vs liability

9 “a  debtor   is   liable  with  all   their  present  and   future  property   for   the  performance  of   their  obligation”:  there is a constraint in the sense that a debtor exposes their property to the claims of the creditor

9 Some legal scholars state that obligations comprise 2 elements: duty and liability

DUE PERFORMANCE AND NON-PERFORMANCE

Due performance

It refers to the exact execution of the performance. Due performance and exact performance are synonymous.

Consequently, the debtor is in default unless he proves that the non-fulfillment or delay was cause by

impossibility of performance deriving from a cause non-imputable to them

Due diligence and fault

In carrying out the obligation  a  debtor  must   act  with   the  diligence  of   a   “good  pater   familias”   i.e.   reasonable  person, behaving according to what is commonly hold as right and proper. The degree of diligence is not

important

The notion of diligence takes on a new meaning with regards to performance by professionals, where diligence

must be evaluated with respect to the nature of the activity Æ technical diligence: respect of the rules of the art,

where effort and care are commensurate to the lesser or greater complexity of the activity carried out

Due diligence and result

The carrying out of the performance is instrumental to the satisfaction of an interest of the creditor. Normal

due  diligence  of  the  debtor  doesn’t  necessarily  bring  satisfaction  to  the  creditor.  Sometimes  exact performance

requires the achievement of the result envisaged. Examples: in case of the payment of a sum of money, the

debtor is discharged when the exact sum is paid. The question plays fundamental role is obligations to do:

x Obligation of means Æ due diligence is the object of obligations e.g. in case of lawyers, doctors and

professionals.  Lawyers  don’t  have  the  duty  to  win  the  case  but  to  exercise  their  activity  in  conformity  with the highest standards of diligence

x Obligations of result Æ a contractor has a duty to perform a piece of work or provide a service, and

not merely to exert themselves to the utmost to achieve such result.

Modes of performance

Criteria of exact performance:

x Place of performance Æ 1) portable: payment of a determined sum of money to be carried out at the

creditor’s  address  2)  delivery  of  a  determined  thing  to  be  carried  out  in  the  place  where  the  thing  was  when the obligation arose

x Time of performance Æ a time period can be specified. Otherwise the creditor can ask immediate

performance

x Person carrying out performance Æ someone else can offer to carry out the performance. Can the

creditor refuse? Art. 1180 states that the obligation can be performed by a third person, even against

the will of the creditor, if the latter has no interest in having the original debtor performing the

obligation personally: payment vs undergo surgery by a different surgeon.

x Person receiving performance Æ the obligation is discharged when due performance is carried out in

the hands of the creditor or of a  creditor’s  agency.  The  obligation  is  also  fulfilled  (repetition  of  oayment  is   therefore   not   required)   in   the   case   of   “apparent   creditor”   provided   there   are:   1)   unambiguous  circumstances 2) good faith by the debtor 3) faulty conduct by the real creditor

x Identity of performance Æ if the creditor consents, the debtor can substitute a new performance to

the original performance. The original performance is extinguished only when the new performance is

carried out in place of fulfilment

Non-performance and impossibility

Non-performance is a mismatch between the performance carried out and due performance Æ the risk in the

transaction is charged either to the creditor or to the debtor. If the debtor is exonerated from liability, the

creditor has no claim. Art.1218   states   that   the   debtor  who   doesn’t   carry   out   due   performance   is   liable   for  damages unless they prove that the non-performance was due to impossibility for a cause not imputable to

them

x Impossibility must be Æ 1)   objective:   it   doesn’t   depend   on   the   particular situation of the debtor 2)

absolute: it is so compelling as not to offer any possibility whatsoever of carrying out performance

x Cause not imputable Æ 1) hazard: an event which could never reasonably be expected to occur 2) force

majeure: foreseeable occurrence but nonetheless unstoppable 3) act of authority

N.B. performance involving replaceable things is never impossible. E.g. money can always be replaced.

Relevance of effort

Art.   1176   apparently,   by   putting   emphasis   in   the   “effort”,   exonerates   the debtor in case the carrying out of

performance  requires  an  extra  effort.  In  reality,  due  diligence  is  the  means  of  measurement  of  the  “exactness”  of  performance,  it’s  not  a  general  criterion  to  exonerate  the  debtor.  

x Obligations of result: only effective achievement of the result counts

x Obligations of means: due diligence preponderates over the achievement of a specific result

Performance non-actionable

Obligations arising from contracts place both debtor and creditor under the duty of behaving according to the

rules of fairness Æ it’s   not   a   duty   but   a   criterion   to   evaluate   the   acts   of   both.   Demanding   performance   in  adversary circumstances is ruled as abuse of right of the creditor Æ the performance, though possible, may be

held as non-auctionable.  E.g.  a  jewish  tenant  who  didn’t  pay  the  rent  during  the  German  occupation

Effects of non performance

The liability of the debtor for non performance (lack, flaw, delay) is to compensate for the damages.

Liability of the debtor

The liability provided for in art.2740 (debtor liable with current and future properties) is more extensive than

liability arising from a pledge, mortgage or security bond Æ from the very moment when a debtor enters an

obligation, all the current and future properties are subject to possible action brought by the creditors Æ

obligation= duty + liability = constraint

Coercive performance

x Replaceable things / money Æ the property must be expropriated and put up for sale / revenues for

sale should go toward satisfying the economic interest of the creditor (loss + damages)

x Specific performance Æ mandatory delivery, release of an obligation to do something, enforcement of

obligations to do something, enforcement of obligations not to do something i.e. destruction

Default of the debtor / creditor

x Default of the debtor Æ if  he  doesn’t  render  the  performance  (can  also  follow  delay) x Default of the creditor Æ 1) the creditor bears the risk of supervening impossibility of performance due

to a cause not imputable to the debtor 2) the interests are no longer due and the fruits of the thing not

yet taken are no longer due 3) the creditor is liable for damages deriving from the default

Compensation for damages

Damage   is   not   only   an   actual   loss,   but   also   “loss   profits”,   insofar   as   they   have   direct   and   immediate  consequence of the non-performance or delay.

Compensation is limited to the damages that could have been predicted at the time of the obligation was

undertaken, save when non-performance is intentional: in this case compensation extends to unpredictable

damages. Predictability refers to the time when the obligation arose. If the creditor has contributed to cause the

damage, the compensation is reduced.

Causation

Any occurrence may be traced back to a chain of facts, which, had they not occurred, might have precluded the

subsequent from occurring. To that extent, any event in a sequence may be viewed as a contributor to the

occurrence of the subsequent. If such notion would be applied, it would make the wrongdoer liable for damages

remotely connected to their wrongdoing e.g. John had an accident because he had been held longer to the

dentist, he had to call an electrician, take a taxi with a drunk driver etc.

Art. 1233 CC sets forth that damage must be immediate and direct consequence of non performance i.e. it must

be free from extraneous intervening causes and it must not be interspersed by any intermediary cause, at it

happens in remote causation.

This  notion  might  be   too  strict  so   the  court  will  have  to  examine   if   the  primary  event  was  “apt”  to  cause  the  damage i.e. only consequences within the bounds of what can be reasonably expected to derive from a certain

event can be said to be cause by it.

� Adequate causation

Assessment of damages

It  is  particularly  complex  to  assess  damages  not  only  for  a  loss,  but  for  a  “loss  of  gain”:  art.  1226  CC  proved  that  when  damages  “cannot  be  proved  in  their  exact  amount,  they  are  equitably  liquidated  by  the  court”

Manners of discharge other than performance

o Objective novation: the parties substitute a new obligation having a different object or different

source for the old obligation

o Declaration of remission of debt

o Compensation

o Merger: debtor and creditor are united in the same person

o Supervening impossibility, when impossibility is objective and absolute

PARTICULAR CASES OF OBLIGATIONS

Obligation and plurality of subject matters

A debtor might be under duty to carry out a plurality of performances, one being the primary performance and

the other the secondary performance.

� Fundamental obligation Æ it originate a plurality of distinct obligations e.g. the obligation to delivery

a thing includes the obligation to safeguard it until delivery (one subject matter)

� Alternative obligations Æ a single obligation has 2+ performances as subject matters e.g. the holder of

a theatre ticket for a season can choose the one to attend. The debtor is discharged by carrying out one

of the  2+  performances.  An  alternative  obligation  is  said  to  be  “simple”  if  1)  one  of  the  2  performances  

could not form the object of an obligation (original impossibility) 2) has become impossible

(supervening impossibility). The debtor will have to do the other one, unless the impossibility is

imputable  to  the  creditor  (in  this  case  he’s  discharged) � Elective obligations Æ parties agree that, in the sole interest of the debtor, they may discharge their

obligation by electing another performance. E.g. an heir obliged to transfer silverware to a legatee may

decide to discharge their obligation by paying the corresponding sum of money. #alternative

obligations, the primary performance due is solely the one flowing form the original obligation.

Therefore the debtor is discharged from performance, should the performance become impossible for a

cause no imputable to the debtor.

Obligation and plurality of persons: plurality of debtors

The obligation can have a plurality of debtors and creditors. When several debtors are all bound for the same

performance, 2 situations may arise:

� Joint an several liability Æ if each debtor can be required to render the performance in its entirety.

The debtor who carried it out can then claim from the others their respective share

� Limited liability Æ each debtor is held to discharge their respective share of debt

Presumption of joint and several liability

In case of several debtors, co-debtors  are  bound  “in  solido”  (non-fulfillment will give right to joint and several

liability). E.g. if several people buy a determinate thing, they are all liable for the payment. In tort law, if an act

causing damages can be attributed 1+ person, all are liable in solido Æ the creditor may also choose the party

liable for full performance

Î 1) facts having effects favourable to the single debtor create effects for the other debtors e.g. facts

extinguishing obligations other than performance discharge all debtors 2) facts having effects

unfavourable to the single debtor create effects solely within the relationship between the single debtor

and the creditor

Î In   case  of  death  of  one  debtor,   the   joint   and   several  nature  of   obligation  doesn’t  hold:   the  obligation  only extends to their respective share

Plurality of creditors

� Obligation in solido Æ normally  it’s  not the rule. Among several creditors, each has the right to demand

performance of the entire obligation and performance obtained by one of them discharges the debtor

w/ respect to all other creditors

� Obligation not in solido Æ each creditor has the right to demand satisfaction only of their share

If co-owner of a thing sell it, each one of them can claim their share of the price agreed upon, unless contract

provides otherwise. If something jointly owned is damaged, the compensation must be divided.

Indivisible obligations

When the performance has as its object a thing or an act which is not susceptible to division Æ these

obligations  are  rules  by  the  norms  of  obligations  “in  solido”

CIRCULATION OF RIGHTS AND OBLIGATIONS

The parties to the obligation

The  relation  between  creditor  and  debtor  is  founded  on  the  existence  of  a  “source”  e.g.  in  a  contract  parties  are  the contracting parties, in a tort case the injured party and the wrongdoer. However, sometimes the

identification of the creditor and debtor flows from a different legal relation e.g. coowner have to pay expenses

for  common  areas  of  the  building  by  way  of  their  “source”  to  a  common  ownership.  The  obligation  to  pay  takes  on 2 features:

� Ambulatory obligation: it moves from one person to another as the legal status circulates (right of

ownership)

� Obligation related to a property interest / right of ownership: the obligation is attached to a property

interest or to a right of ownership

Circulation of credit

The rights of the creditor can be viewed 1)  as  part  of  the  relationship  btw  debtor  and  creditor  2)  as  a  creditor’s  asset.

Circulation of credit takes many shapes and forms. A creditor can assign their credit without the consent of the

debtor, unless the credit is personal or transfer forbidden by law. With respect to the assigned debtor, the

assignment is effective when they accepted it. Should the same debt have been assigned to different persons,

the first noticed prevails.

Circulation of debt

In this case, the identity of the debtor is important although the creditor may not care that the debtor in person

renders the performance Æ the substitution of a new debtor must be accepted by the creditor. Otherwise, the

original debtor is not discharged i.e. they are obliged in solido with the new debtor.

THE LAW OF CONTRACT

Nature and definition of contract

“A  contract   is  the  agreement  of  2+  parties  to  establish,  regulate  or  extinguish  a  patrimonial   legal  relationship  among  themselves” Æ 1) agreement over a subject matter 2) measurable economically

The definition encompasses different agreements: getting a haircut, purchasing a coffee, merging of 2

companies, joining a sport club. N.B. marriage is not a contract, because the economic purpose is not central.

Cardinal requisites i.e. requirements that cannot be absent, regardless of the economic value of the contract or

circumstances of the specific agreement:

9 Agreement

9 Causa

9 Subject matter

9 form

Purpose and efficacy of contract

The aim of a contract is to freely regulate the conducts of the parties involved, hence it has the force of law

between   the   parties.   We   can   rephrase   the   definition:   “a   contract   is   an   agreement   of   2+   parties   aimed   at  establishing  between  them  a  certain  set  of  rules  with  regard  to  their  economic  interests”

Contracts produce 2 different categories of effects :

9 transfer of ownership or establish property interests

9 create obligations

¾ they can create both e.g. sale of a house transfers ownership and create the obligation of

delivering the house and paying the price

A contract is a legal act, established with the consent of 2+ parties. As a covenant giving rise to specific relations,

the contract refers to the reciprocal rights and obligations flowing form it, its duration, method of performance

and  discharge,  it’s  continuation  through  supervening events, its termination and assignment.

Contract as a legal act

Agreement is a meeting of wills, but also a fact which may be observed and ascertained i.e. a certain conduct of

the contracting parties. As the individual interest converge i.e. result in a common set of norms ruling the

underlying  interests,  the  agreement  is  not  the  meeting  of  “individual  wills”  but  the  convergence  of  statements  or expression of wills, whose significance coincides

Plurality of parties and interests

Party: center of interest

9 unilateral act/multilateral act: unilateral act is an act generating legal effects which originate from the

will of a single person. They include: notice of termination, declaration of renunciation, exercise of the

voting right. If an 2+ owners release a notice of termination of the lease, the act is unilateral despite the

plurality of co-owners.

9 contract: it involves a minimum of 2 parties with separate and distinct interest. The contract is intended

to make these interests converge.

Lawmakers try to find the right balance btw the interests of the parties: rules laid down for contracts are also

applicable to unilateral acts btw living persons having patrimonial content

Good faith

The cardinal principle which must preside the general conduct of the parties is good faith. In the conduct of

negotiations and during the formation of the contract, parties are under duty of good faith Æ parties must cat

honestly in starting negotiations, withdrawing from them and when entering into the contract

9 duty to inform the other party of the existence of any reason for invalidity Æ liability for damages

suffered by the party who has relied to the validity of the contract: pre-contractual liability

9 interpretation of contracts Æ the declarations and statements of the parties have to be understood in

the way a honest person behaving in good faith would understand them.

Î Good faith integrates the effects of the contract

Contractual autonomy and its limits

Contractual autonomy means that people are free to elect the economic ends they want to pursue Æ 1) choose

the ends 2) choose the means 3) choose the relations which they consider to be appropriate in order to reach

the desired ends.

Freedom of contract has undergone different changes in its definition:

9 Protection of specified   interests,  held  as  prevailing  over   the   “free  market” Æ freedom of economic

initiative may not conflict with social utility or prejudice human safety, freedom and dignity. Freedom in

contract is limited w/ regards to 1) urban planning and development 2) fairer distribution of fundamental

services e.g. education, health, transportation 3) use of energy sources, environmental protection.

Restriction to freedom of contract are in close interplay w/ restrictions to private ownership e.g. urban

planning limits freedom of contract, freedom of contract limits ownership.

9 Protection of free competition Æ antitrust rules setting limits to, and regulating mergers and acquisitions,

in particular where large corporations also control or have stakes in the media (publishing, the press and

television)

9 Protection of weaker parties in the market Æ prohibition of the unjustified dismissal of an employee,

rules governing unfair advertising, unfair terms in consumer contracts (protection of the consumer),

control on prices of basic commodities and rates of services (telephone, public transit)

The binding force of a contract

Contractual autonomy implies that 1) every person may at will dispose of their interest within the limits laid

down by the legal system 2) no other person may dispose of their interests i.e. alter or modify their legal sphere

without their consent. Æ a contract has the force of law between the parties and creates no effect on third

persons.

Consequences: 1) the disposal of the interest of another person is admissible only if the latter provides for it 2)

not even an economic advantage can be force upon another person without their consent i.e. a gift is a contract

# unilateral act, because it has to be accepted.

Freedom to contract

Freedom of contract includes the freedom to enter or not to enter into a contract. At any stage of negotiations

and before its acceptance, an offer may be revoked. This is the rule, but there are important exceptions Æ

duties to contract

9 Legal obligations to contract Æ companies benefiting from legal monopoly as those who operate lines

for transportation of things under a license from the public authority and insurance companies when

receiving an offer for mandatory insurance

9 Voluntary obligations to contract Æ arises from preliminary contract, by which parties oblige

themselves   to   enter   into   a   “final   contract”   or   in   a   contract   of   “mandate”,   the   mandatory   who   has  acquired a specified thing is under the obligation to transfer to the principal the thing purchased on

their behalf

Freedom of contract and contents to contract

Although law has provided the framework for many contracts, in pursuing their in interests, contractual parties

are   free   to   enter   in   “new”   types   of   contracts Æ innominate contracts # nominate contracts. Previous

examples are franchising, leasing, factoring. The fundamental limit is the realization of interests deserving of

protection according to the legal system e.g. a contract by which a party agrees to  pay  a  bribe  doesn’t  pursue  deserving of protection and therefore is null and void.

Innominate contracts must be distinguished from mixed contracts which combine features of separate and

distinct nominate contracts

TABLE OF CONTENTS

Elements of a contract ................................................................................... 3

Requisites of a contract. Agreement ...................................................................................................................................... 3

Formation of a contract ................................................................................................................................................................ 3

Preliminary contract...................................................................................................................................................................... 4

Standard trade terms .................................................................................................................................................................... 4

Unfair terms in consumer contracts ...................................................................................................................................... 4

The causa............................................................................................................................................................................................. 5

The subject-matter ......................................................................................................................................................................... 5

Contingent conditions ................................................................................................................................................................... 5

The form .............................................................................................................................................................................................. 6

The Binding Force of a contract ................................................................... 6

The force of law of contracts ..................................................................................................................................................... 6

The right of withdrawal ............................................................................................................................................................... 6

Contracts transferring ownership or property interests............................................................................................. 7

Interpretation of contract ........................................................................................................................................................... 7

Filling gaps in incomplete contracts ...................................................................................................................................... 8

Contracts and third persons ...................................................................................................................................................... 8

Agency and representation ........................................................................................................................................................ 8

Sham Contracts (simulation) ..................................................................................................................................................... 9

Indirect use of contract. Fiducia. Trust. ................................................................................................................................ 9

Validity of contracts ....................................................................................... 9

Validity, invalidity and effectiveness ..................................................................................................................................... 9

“Void”  and  “voidable”  contracts .............................................................................................................................................10

Vices of will ......................................................................................................................................................................................10

The action of nullity .....................................................................................................................................................................11

The action for annulment ..........................................................................................................................................................11

Termination of contract ..............................................................................11

The concept of termination ......................................................................................................................................................11

Dissolution for breach ................................................................................................................................................................12

Out of court dissolution for breach ......................................................................................................................................12

Dissolution for supervening impossibility ........................................................................................................................12

Dissolution for excessive onerousness ...............................................................................................................................13

Rescission of the contract .........................................................................................................................................................13

Security ...........................................................................................................14

Liability of the debtor .................................................................................................................................................................14

Limited liability ..............................................................................................................................................................................14

Pre-emptive rights ........................................................................................................................................................................15

Security against default ..............................................................................................................................................................15

Protection of the rights of the creditor ...............................................................................................................................15

Derivative action (substitution).............................................................................................................................................15

Revocation (ordinary revocation) ........................................................................................................................................16

Preventive seizure of assets .....................................................................................................................................................16

Types of contracts ........................................................................................16

Introduction .....................................................................................................................................................................................16

Sale .......................................................................................................................................................................................................17

Lease and leasing (IT. locazione)...........................................................................................................................................17

Contract for work and services (it. appalto) ....................................................................................................................18

General principles of tort law ....................................................................18

Liability in tort ................................................................................................................................................................................18

Sources of tortious liability ......................................................................................................................................................19

Article 2043 CC ...............................................................................................................................................................................19

Strict liability ...................................................................................................................................................................................19

Injury and damage ........................................................................................................................................................................19

Remedies ...........................................................................................................................................................................................20

Entrepreneur and enterprise competition ..............................................20

Entrepreneurs and economic initiative..............................................................................................................................20

Small businesses enterprises ..................................................................................................................................................20

The business as a going on concern .....................................................................................................................................21

Trademarks, patents, copyright .............................................................................................................................................21

Free competition ...........................................................................................................................................................................21

Unfair competition .......................................................................................................................................................................22

Advertisement ................................................................................................................................................................................22

ELEMENTS OF A CONTRACT

REQUISITES OF A CONTRACT. AGREEMENT

The requisites of a contract are the agreement, causa, subject-matter and form (when prescribed

by law). The absence, defectiveness or unlawfulness of any of these elements render a contract void

or voidable.

Agreement Æ essence of a contract – the essence of the contract is to enforce the will of the parties.

Two main aspects: 1) parties: must be vested with legal capacity to act 2) expression of will: can be

explicit or tacit

x Explicit manifestation: communicated by words, spoken or written. Simple gestures which in

a context are commonly regarded as corresponding to words e.g. raising the hand at an auction

are considered express manifestation of will.

x Tacit manifestation: no express sign has been used but the objective conduct of the parties

implies (i.e. logically presupposes) their will to enter into a contractual relation e.g. filling up a

trolley with food and pushing it to the checkout, boarding on a train.

o Conclusive conduct: a conduct that leads to conclude that the person entered into a

contract.   So,   e.g.   if   a   person   doesn’t   have   a   train   ticket,   it   is   held   liable   for   non-

performance. If a person behaves as a party to a contract e.g. people jointly operate and

run a company like a partnership, it is inferred that the contract is entered into.

o Implicit renewal of contract: e.g. if in a lease, 1) after the expiration of a contract, the

party is left in possession of the thing or 2) for lease with undetermined time, no notice

of termination has been given.

FORMATION OF A CONTRACT

x Offer Æ manifestation of will by which the offeror (first mover) offers to the other party to

enter into the contract.

x Acceptance Æ manifestation of will by which the offeree communicates their consent to the

terms of the offer received.

o Agreement Æ conceived as the exchange of two manifestations of will.

o Acceptance is known at the moment it reaches the address of the offeror – otherwise

the offeror has to prove it was impossible to have notice of the acceptance # mail-box

rule of the Anglo-saxon system: a contract is formed as soon as the acceptance has been

mailed by the offeree.

o Acceptance must receive the offeror within the time set by the parties or according to

performance or usage

o Mere  silence  doesn’t  account  as  an  acceptance

When the performance should take place without a prior reply, the contract is concluded at the time

and place in which the performance begins. The offeree must give notice of the beginning of the

performance to the other party and if they fail to do so, they are liable for damages.

Revocation Æ 1) The offeror may revoke their offer before it is accepted by the offeree (i.e. until

contract is concluded) BUT if the offeree has begun performance in good faith before any notice, the

offeror must pay for expenses & losses incurred in beginning the performance 2) irrevocable offer: if

the offer is open for a certain time, revocation is without effect

An offer must include all essential elements and express the actual will of the offeror to enter

into  a  contract,  otherwise  it’s  a  mere   invitation to treat e.g. “for  sale”  notice  on  a  car  parked.  In  this  case, the party receiving it will not issue an acceptance BUT an offer.

Acceptance must “mirror”  the  offer i.e. accept all the  terms  of  the  original  offer,  otherwise  it’s  simply  a counter-offer that has to be accepted by the other party. The contract is not concluded until this

counter-offer is accepted.

PRELIMINARY CONTRACT

Parties stipulate that a definitive contract will be signed within a prescribed time: they are legally

bound by the preliminary contract Æ specific enforcement of the obligation to make contract:

should a person who is bound to make a definitive contract not perform their obligation, the other

party may obtain with a judgement the same legal effect as the contract which has not been made e.g.

in a sale of a piece of land, ownership is transferred from seller to buyer

Preliminary contracts for the transfer of ownership / property interests of immovables must be

registered at the Land Register and the definite contract must be entered into within 3 yrs from the

registration.

STANDARD TRADE TERMS

A huge number of contracts not subject to prior negotiations are concluded daily in all branches of

economic activity (not only minor transactions)

Standard terms contracts / Contracts of adhesion: one party drafts the terms of the contract, while

the other party merely accept its content. The aim is to create uniformity in the shape and form of

reciprocal rights and duties to ensure expeditiousness of performance + predictability of costs of

performance and possible litigation.

Standard trade terms: rules applicable to contracts drafted in advance, intended to rule an indefinite

number of contracts. They are effective if at the time of entering into the contract the other party knew

of them or should have known them by using ordinary diligence. Æ it suffices that the terms are

written on a sign at the entrance of a parking lot, at a bus stop etc

x Terms which establish – in favour of the drafting party – limitation on liability, power of

withdrawing or suspending its performance, impose time limits involving forfeitures to the

other party, restriction in contractual freedom of relation with third parties, tacit extension or

renewal of contract, arbitration clauses, derogation from competence of court are ineffective,

unless specifically approved in writing.

x The drafter of the terms must ensure clear wording. In case of doubt, the terms must be

interpreted in favour of the other party.

UNFAIR TERMS IN CONSUMER CONTRACTS

Consumer Code: against unfair terms in consumer contracts

x To whom: applicable only to relations btw  “consumer”  and  “business” o Consumer: any natural person who, in contracts covered by these regulations, is acting

for purposes which are outside their trade, business or profession

o Business: any natural or legal person who is acting for purposes relating to his trade,

business or profession whether publicly or privately owned.

x Scope of application: the regulations on unfair terms applies only to terms drafted in advance

by the business – it  doesn’t  mean  only  standard  terms  contract,  but  also contracts drafted in

advance for individual use.

A contractual term is unfair if:   1)   hasn’t   been   individually   negotiated   2)   is   contrary   to   the  requirement   of   good   faith   3)   causes   significant   imbalance   in   the   parties’   rights   and   duties   arising  during the contract to the detriment of the consumer

¾ Terms regarded as unfair are void # the rest f the contract remains valid and binding (i.e.

partial nullity is not applicable).

¾ The assessment of the unfair nature is not related to 1) determination of the subject-matter 2)

adequacy of the price or remuneration payable against goods and services in exchange –

provided there is transparency

¾ Generally, terms which have been individually negotiated (i.e. the consumer becomes

aware of the unfair term before the conclusion of the contract) are not unfair, except from

terms which:

o Exclude or limit the liability of the business in case of death or injury to the

person/consumer resulting from an action/omission of the business

o Exclude or limit the claims of the consumer in case of total/partial performance

o Provide for the consumers’ total acceptance of terms they couldn’t  have  learnt  before  entering into the contract

THE CAUSA

Causa is the social and economic function of a contract which is worth of legal protection – true

for both nominate contract and innominate contract

x Sale: transfer of the right of ownership in exchange for a price

x Lease: enjoyment of a thing for a given period of time against the payment of a compensation

x Carriage: transport of persons or things in return for payment

Causa is unlawful 1)   when   it’s   contrary   to   mandatory   rules   2)   when   it   constitutes   the   means   for  evading the application of mandatory rules Æ nullity of the contract.

THE SUBJECT-MATTER

It must be possible, lawful, determined or determinable.

x Possible Æ 1) a promise to do something impossible/not existing cannot be binding 2) a

contract may provide for future things (e.g. wine from the next harvest) or future rights (e.g.

copyright on book) BUT no gift of a future property.

x Lawful Æ when   it’s   not   contrary to mandatory rules, public policy or morals (refer to the

“causa”  for  guidance).   x Determined Æ 1) define the performance due 2) identify the things to be transferred – in

transfer of property 3) indicate number, measurement or quantity – in supply of goods

x Determinable Æ through the application of dispositive rules or interpretation. E.g. if price not

specified or not agreed on how to determine it, the price is normally set by the seller or – if the

thing has a mkt price – taken from the quotation of the nearest mkt of the place where delivery

has occurred. When   parties   refer   to   “fair   price”,   if   the   previous   provisions   don’t   apply,   it’s  determined by a third person appointed by the President of the Tribunal

In order to determine the subject-matter, the parties can refer to criteria fixed outside the transaction

e.g. price for a car is the one listed on the issue of a car magazine, or may refer to the determination of

performance provided for in a contract to a third person.

CONTINGENT CONDITIONS

A contingent condition designates an uncertain and future event on whose verification depends the

beginning of the effectiveness of a contractual obligation (condition precedent), or their termination

(condition subsequent)Æ If either of these conditions is unlawful, the contract is void.

x A condition is impossible if: 1) condition precedent: prevents the contract from ever taking

effect 2) condition subsequent: it amounts to the certainty that the contract will never be

terminated Æ in the first case the contract is void, in the 2nd case the condition is treated as

inexistent.

x A condition is merely potestative when the event foreseen in the condition depends on the

simple will of one of the parties and it is an event about the occurrence of which the party is

indifferent.

x A person who is under obligation shall act according to good faith during the pendency of

the condition, in order to safeguard the interests of the other party e.g. Paul undertakes to sell

a flat to Paul, provided he gets a loan from the bank. Then, he cannot aim at making the fact of

obtaining the loan impossible.

THE FORM

Generally, the requirements to have a written form may be met by:

x Simple written form Æ document has been signed e.g. transfer of right of ownership /

property interests of immovable

x Written form with authenticated signature Æ authentication means that an authorized

official will identify the signators prior to their signing and will require them to sign in his

presence e.g. transfer of right of ownership / property interests of immovable

x Written form whose content has been authenticated (public deed) Æ besides

authenticating signatures, the official ascertains that the content of the document correspond

with the will of the declarants – he is not obliged to verify the truthfulness. A document drawn

up by an unauthorized official or not compliant with required formalities is equivalent to a

simple written form.

THE BINDING FORCE OF A CONTRACT

THE FORCE OF LAW OF CONTRACTS

Art.   1372  CC   states:   “a contract has the force of law btw the parties. It cannot be dissolved except from

mutual consent or for a cause permitted by the law”  Æ from when contract is concluded, parties are

legally bound

THE RIGHT OF WITHDRAWAL

Therefore, no party can unilaterally withdraw Æ “right of withdrawal” may be granted by law or

expressively provided for by the contract: terminates the rights and obligations related to the

contract. Sometimes it is:

x Limited Æ its exercise is subject to the existence of serious motives e.g. in case of the lessee,

when not expressively provided for

x Just cause / justified motive Æ e.g. in case of dismissal, when employer terminates

employment contract

When withdrawal is expressively provided for:

x The right can be exercised when there is no commencement of performance.

o Withdrawal CAN be exercised after commencement in case of long term contracts Æ

contracts for continuous or periodic performance: dissolution concerns future

performance

x Failure to exercise the right of withdrawal can amount to tacit renewal of performance

x Withdrawal may be subject to payment by the withdrawing party Æ withdrawal takes

effect after the payment

o Earnest – money given at the time of the formation of the contract – can be used as

compensation: the party who withdraws forfeits the earnest given or must pay double

of what they have received

Law expressively provides for the right of withdrawal for all consumer contracts, negotiated away

from business premises Æ 1) door-to-door sales 2) mail order catalogues i.e. telematics contracts with

electronic signature 3) distance contracts i.e. by phone, tv programs

x In this case provisions are not valid (e.g.  “justification”)  Æ the right can be exercised during a

limited period of time, to be communicated

x The purchased item must be returned undamaged

CONTRACTS TRANSFERRING OWNERSHIP OR PROPERTY INTERESTS

The transfer of ownership or property interests over a thing is acquired by virtue of the fully

expressed agreement of the parties (principle of mutual assent) Æ #other legal systems where mere

agreement is not sufficient: 1) delivery of the thing, in case of movables 2) formal procedure, in

case of immovable.

According to Italian law, mere agreement has the force of transferring the right: the purchaser

becomes the owner from the moment the contract is concluded, provided the agreement is lawfully

expressed i.e. in the manner required by law.

INTERPRETATION OF CONTRACT

The first step into a contract is to ascertain the content of the converging manifestation of wills. The

content is determined by its interpretation i.e. to attribute a meaning to certain events reflecting the

will of the parties, such as words said or written, gestures and – more generally – the overall conduct

adopted in the context. Æ the common intent of the parties has to be sought (subjective

interpretation) # only the literal meaning. If one or more meanings are possible (ambivalence), there

is an objective interpretation.

x No  enquire  into  “inner  will”  but  determination of the significance those words or gestures had

at the time and in the place and context they were used

x Common intent Æ coincidence / correspondence of meaning of the manifestations of the

wills of the parties # coincidence of will

Criteria of interpretation:

x Good faith: meaning attributed by an honest and loyal person. The rule flows from the

principle of reliance: a person receiving a statement and, in good faith, regulating their acts in

conformity thereof, deserves protection

x Context: connection btw words is important i.e. “every clause is interpreted with reference to all

the others, attributing to each the meaning resulting from the act as a whole.” x Ambiguity/Ambivalence

o Effect: in case of ambiguity / ambivalence, clauses are interpreted in a way in which

they have effects rather than in a way in which they have none.

o Interpretation according to the general practice in use in the place where the contract

was entered into

o Standard terms drafted in advance by one party are interpreted in favour of the other

party

o In case of extreme ambiguity, it has to be understood in the sense least burdensome

for the debtor (gratuitous) or in the sense that equally reconciles the interests of the

parties (non-gratuitous)

FILLING GAPS IN INCOMPLETE CONTRACTS

Freedom of   contract  doesn’t   imply   that   every   single   aspect  of   the relationship has to be laid out Æ

integration of the contract Æ process that, based on the agreement reached, completes its content

and determine its effects. It presupposes interpretation i.e. qualification to determine its essential

effects as agreed by the parties.

x Clauses on price of goods or services is automatically inserted

x a contract binds the parties also to all consequences deriving from it at law or according to

usage then and equity finally. However, law provisions exist only in case of nominate

contracts.

CONTRACTS AND THIRD PERSONS

As a general rule a  contract  doesn’t  produce  effects  with  respect  to  third  persons except in cases

provided by law. However, when contractual parties carry out performance, the new situation may

affect indirectly third persons e.g. in a transfer of ownership, the neighbour.

A contract in favour of a third person is effective when the person has an interest therein e.g. in life

insurance when a person stipulates that, in case of death, a third person should receive a sum of

money. Explicit acceptance of the beneficiary is not necessary.

AGENCY AND REPRESENTATION

Power of representation Æ the authority to act in the name of someone else. It can be conferred by

the principal (voluntary representation) or by law (legal representation) Æ the act of granting this

power is called “power  of  attorney”: unilateral act directed to third persons, providing the proof of

authority conferred to the agent to act in the name of the principal. The conferral of this power can be

inferred from the conduct of the persons (declaration of will) or from a de facto situation (implied

from circumstances) e.g. shop assistant representing the owner of the shop.

Three requirements: agent must act

x in the name of the principal Æ if the agent acts in their own name, even if on behalf of the

principal, the effects of the contracts are on the agent e.g. price of an house purchase

x in the interest of the principal Æ a contract against the interest of the principal can be

annulled at the request of the principal if conflict recognisable by third person e.g.   “contract  with  oneself”:  if the agents enters in a contract with themselves or as an agent of another party,

the contract is voidable unless 1) authorised by the principal or 2) proven that there is no

conflict of interest.

x within the limits conferred on them Æ if the agent exceeds the limit of the power, he is liable

for any damage that the third person suffers for having placed confidence without fault in the

validity of the contract. The third person has to check the power of attorney, otherwise he

has to bear the risks e.g. someone buys a house on behalf of Obama

When authority given by the principal,  for  the  effectiveness  of  the  contract  it’s  sufficient  that  they  have  capacity to understand and intend. A contract is voidable if the consent of the agent is defective:

however if such defect concerns matters predetermined by the principal, the contract is voidable only

of the consent of the latter is defective.

SHAM CONTRACTS (SIMULATION)

Sham contract: deliberate divergence btw will and declaration of the parties

x absolute sham: the contract is intended to have no effect Æ Paul is full of debt and to avoid

confiscation  of  the  house,  he  sells  it  to  Paul  but  they  don’t  want  the  transfer  of  ownership.   x Relative sham: the contract has effects different from what declared Æ a gift (genuine

contract) instead of a sale (apparent contract), because purchase price is zero. In this case the

genuine contract has effects, provided causa and form are met (e.g. no gift of future property)

Interests of third persons (creditors of sham transferor / owner or people to whom rights have been

transferred by the sham owner) Æ 1) third persons can plead simulation against the contracting

parties, when it is prejudicial to their right 2) sham contract cannot be used by the contracting parties

against the creditors of the sham owner 3) in a dispute with the creditors of the sham owner, the

creditors of the sham transferor are preferred 4) in a dispute btw creditors and third persons who in

good faith have acquired rights from the sham owner, the latter prevail when the sham contract

prejudices its rights.

INDIRECT USE OF CONTRACT. FIDUCIA. TRUST.

In order to obtain some economic results, sometimes contracts are used in a strategic way i.e. parties

have recourse to an indirect use of contract Æ no  “sham”  as  the  contracts  concluded  correspond to the

interests pursued by the parties.

x Fiducia (fiduciary contract / agreement) Æ parties enter into the agreement for the transfer of

ownership and at the same time agree to return the property back after some time.

x Trust Æ a trustee holds a property in trust for the benefit of another, namely the beneficiary,

who may be the settlor of the trust or a third person.

The main difference entails the degree of protection of the trust property / trust fund against the

claims of the personal creditors of the parties to the trust (i.e. the settlor, the trustee, the beneficiary)

Æ trust property is separated from the property of the trustee.

VALIDITY OF CONTRACTS

VALIDITY, INVALIDITY AND EFFECTIVENESS

x Valid contract: formed in conformity to what the law prescribes and therefore fit to generate

stable and durable effects Æ has binding force and legal effectiveness

x Invalid contract: essential requisites are lacking or are defective and therefore

o Is unfit to generate effects Æ void/subject to nullity/null

o Is unfit to generate stable and durable effects Æ voidable/subject to annulment

x The notion of effectiveness is separated from validity: a contract is not effective when it is null

(but a voidable contract is effective until annulled)

x Ineffectiveness also applies to sham contracts where parties agree that the performance

shall not be executed.

“VOID”  AND  “VOIDABLE”  CONTRACTS

x Void Contract

o Against mandatory rules

o Absence of one of the essential requirements

o Unlawful contracts i.e. when causa or subject-matter are unlawful: 1) mandatory rules,

public policy or morals 2) contract constitute the means for evading the application of

mandatory rules 3) contract concluded solely for unlawful motive

x Voidable contract

o Party lacking legal capacity to act i.e. minors, persons subject to court interdiction /

interdiction at law, emancipated/disable minors.

o Vices of will: 1) mistake 2) duress 3) fraud

VICES OF WILL

Mistake

It has to be:

x Essential Æ when it concerns

o the nature or object of the contract

o the identity of the object of performance or a quality of the said object which, according

to common understanding or circumstances, should be determinative of consent.

o Identity or personal qualities of the other contracting party

o When the mistake was one of law and was the only or principal reason for entering into

contract

x Recognisable Æ when, w/ respect to its content, to the circumstances of the contract/quality

of contracting parties, it would have been detected from person of normal diligence.

E.g. Paul tells he needs 5 m of a certain fabric to make trousers: the essentiality depends on whether

the fabric is suitable for making a pair of trousers and the recognisability on whether John is a tailor

x A  mistake  in  calculation  doesn’t  lead  to  annulment  but only to correction

x The provisions also apply when there is a mistake in declaration (i.e. not in the formation

of will) or when the declaration was inexactly transmitted by the person in charge.

Duress

It must be of such nature as to impress a reasonable person and to cause them fear that they or their

property will be exposed to unjust and considerable injury.

x The  “suitability”  of  the  threat  uttered  to  alter  the  formation  of  will  of  the  contracting  party  is  evaluated in objective terms, notwithstanding its adaptation to the specific situation, by

considering age, sex and condition.

x The contract is annulled also if 1) a third person carries out duress 2) the harm concerns

descendant or heirs 3) it’s  a  possible  future  contract  e.g.  suppose  threat  to  burn a factory if not

sold,  in  case  the  farmer  doesn’t  sell  it. x A threat to enforce a right leads to annulment only if it is aimed to obtaining unjust

profits e.g. failure to repay debts, threat to sell the assets of the debtor is NOT duress

Fraud

x Annulment when the deception is such that, without it, the other party would not have

concluded the contract

x If the deception is not of such manner, the contract is valid but the party in bad faith is

liable for damages (because maybe the party would have entered into another contract)

x When deception is practiced by a third person, contract can be annulled if the party who

took advantage of it was aware

THE ACTION OF NULLITY

x To safeguard general interest Æ it flows from the infringement of a general interest e.g. an

oral  sale  of  immovable  is  void  even  though  it  doesn’t  harm  any  personal  interest x Absolute Æ it may be claimed by anyone who has an interest in it or by the court (by its own

initiative), even if the litigation is not related to the validity of the contract

x Not subject to any prescription Æ except from 1) usucaption: nullity cannot be sought after

23 yrs in a sale of house, because the person has behaved as the owner, therefore acquired the

ownership of it. 2) prescription of actions for restitution: Bill thinks he has to pay a

commission to John for the sale of an apartment and 11 yrs later (10 yrs is the limit for

restitution) he discovers John is not a professional agent

x Conversion of void contract Æ a void contract can produce the effects of a different contract

(valid) w/ same substance and form, which the parties would have concluded if they had

known of the nullity. The fundament is good faith.

N.B. 1) A void contract cannot be validated 2) the nullity works retrospectively even if the

parties/third persons are in good faith. An exception applies in case of registered transfer of

ownership, provided the action of nullity is registered after >5 yrs (restorative registration)

THE ACTION FOR ANNULMENT

x Relative Æ it may only be demanded by those persons in whose interest is established by law.

x Contract is voidable for vices of will or incapacity

x It will produce effects until a court decisions declares for annulment: the action for

annulment is prescribed for 5 yrs, while the defendant can oppose annulment of the contract

anytime

x #void contract, the voidable contract can be validated by the party entitled to sue for

annulment, by a declaration containing a reference to the contract and to the cause of its

voidability and the declaration that they intend to validate it.

x Annulment   that   doesn’t   depend   on   legal   incapacity   doesn’t   prejudice   the   rights   acquired   by  onerous title by third persons in good faith, except for the effects of transcription of the

petition for annulment.

TERMINATION OF CONTRACT

THE CONCEPT OF TERMINATION

x Termination by performance Æ carrying out of the performance

x Mutual Consent Æ another contract

x Cause permitted by law

o Non-performance

o Supervening impossibility

o Excessive onerousness

x Right of withdrawal / Revocation / Renounciation

DISSOLUTION FOR BREACH

In contracts for mutual counter-performance i.e. where both parties commit themselves to render a

performance   #   gratuitous   contracts,   when   confronted   to   a   counterparty  who   doesn’t   execute   exact  performance, the innocent party has different options:

x Seek performance

x Seek dissolution of the contract

x Regardless of the choice the innocent party is entitle to compensation for damages

“Fair  behaviour”/”good  faith”:  

8 a contract cannot be dissolved if the non-performance by one of the parties has slight

importance with regards to the interest of the other.

8 In contracts of counter-performance, each party can refuse to render their performance if

the  other  party  doesn’t  perform or  doesn’t  offer  to  carry  out  their  own  performance at the

same time – except from cases with different times of performance. Performance cannot be

rejected if the rejection is contrary to good faith.

OUT OF COURT DISSOLUTION FOR BREACH

Out of court dissolution is the dissolution for breach without the need to file a corresponding action is

court. The CC provides for 3 types:

8 Notice to perform Æ in case of significant breach, the party can serve a written notice to the

other party, inviting them to perform within appropriate time – usually <15 days – and

declaring that failure will result in the dissolution of the contract (by operation of law)

8 Explicit dissolution clause Æ the contracting parties can explicitly agree that the contract

will be dissolved, if a specified obligation is not performed. This clause important because it

allows to attribute fundamental importance to an otherwise non-performance of slight

importance, that would not suffice to dissolve the contract (the rule flows from contractual

autonomy). The dissolution takes place by operation of law when the innocent party declares

that they intend to avail of themselves of the clause. If they change their mind after the

contract is written and want to accept performance, the innocent party can simply not mention

the clause.

8 Time essential to one party Æ the contract is dissolved if the time fixed for performance by

one of the parties must be considered essential in the interest of the other (no need for an

explicit agreement) e.g. deliver of slides for a presentation. #explicit dissolution, failure to

demand performance notwithstanding the expiration of the time of 3 days thereof results in

dissolution of the contract, unless the is an agreement or usage to the contrary

DISSOLUTION FOR SUPERVENING IMPOSSIBILITY

8 In Law of Obligations, supervening impossibility releases the debtor from performance,

provided that impossibility is due to a cause not imputable to the debtor.

8 In contracts for counter-performance, the party released for impossibility cannot demand

performance by the other party and is bound to restore that which they have already received.

o Dissolution of contract is automatic and  doesn’t  need  any  activity  (e.g.  declaration)  by one party or by the court

o Partial impossibility Æ when performance is partly impossible, the other party 1) has

a right to a corresponding reduction of the performance due by them and to demand

partial performance 2) can withdraw if they lack an appreciable interest in the

performance

o Temporary impossibility Æ extinction of the obligation if the impossibility continues,

until 1) the debtor can no longer be required to perform the obligation 2) the creditor

is no longer interested in the performance.

8 In contracts which transfer ownership of a specified thing or constitute or transfer property

interests, destruction of the thing by a cause not imputable to the transferor does not release

the transferee from the obligation of performance, even though the thing was not handed to

them e.g. in a sale of house, if the house is destroyed by a fire before the handover of the keys,

the purchaser still has to pay the price.

DISSOLUTION FOR EXCESSIVE ONEROUSNESS

x Mutual performance Æ the   economic   “balance”   of   the   performance   and   counter-

performance is left to the contractual autonomy. Parties are expected to exercise discernment

and ability to assess the current circumstances and foreseeable future developments.

x Continuous or periodic performance / deferred performance Æ if the performance of one

party becomes too onerous because of the occurrence of extraordinary and unpredictable

events, the party can seek the dissolution of the contract.

o Dissolution cannot be demanded if the supervening excessive onerousness is part of

the normal risk of the contract

o Dissolution is not applicable to contracts which are aleatory by their nature or due to

the will of the parties i.e. contracts of mutual performance where the exact amount of

at least one party is not determined at the moment of its conclusion e.g. insurance

o Dissolution can be avoided by the party against whom it is demanded by offering to

modify equitably the economic terms of the contract

RESCISSION OF THE CONTRACT

A contract may be valid, yet one  party  feels  that  its  terms  were  “unfair”: in general, any individual is

exposed to the risk of running their business deals badly.

Fundamental mistakes regarding quality and quantity can lead to the annulment – not because of

imbalance in the price, but based on the assumption that the  person  wouldn’t  have  concluded  the  contract, had they known. Compensation for damages can only be asked in case of fraud.

However, the law provides for a limited remedy to unequal bargains where economic imbalance

flows from exploitation of either 1) the state of danger 2) state of need that one party finds himself

into.

x Contract by which one party assumes obligations under unfair conditions because he is in a

condition of necessity of saving themselves or other party from present danger, known to

the other party.

x State of need of the aggrieved party, where the disproportion btw mutual performance that

the contractual parties agreed to perform results from a state of need of one party, of which the

other was aware at the time of concluding the contract.

Requirements:

x Rescission is not actionable  if  the  injury  doesn’t  exceed ½ of the value that the performance

made or promised by the injured party had at the time of the contract.

x In order to demand rescission, the injury must continue until the time when the action is

brought

x The exploitation of a state of need matters insofar as it refers to an economic situation e.g. if a

person needs to buy wood at 3 times the price because he has no heating, rescission is not

possible.

x Rescission is subject to a 1-year prescription, from the conclusion of the contract

SECURITY

LIABILITY OF THE DEBTOR

3rd Chapter CC: liability + grounds for pre-emption and preservation of property as collateral security.

These legal instruments are designed to ensure protection of the rights of a creditor seeking

satisfaction from the assets of a debtor should the latter fail to discharge his obligation. Æ these

instruments are the source of general rules, followed by such exceptions as are expressively

provided for by law.

x Unlimited liability Æ “the  debtor  is liable for the performance of his obligations with all his

present  and  future  and  future  assets”

x Equal protection of creditors Æ each creditor is equally entitled to satisfaction from the

property of the debtor

o Exceptions: pre-emptive rights e.g. privilege, pledge, mortgage

x However, most creditors would try to have pre-emptive rights Æ General rules do not apply

only when the law expressively provides so. No person may elect and decide for himself to be

exonerated from such rules.

LIMITED LIABILITY

General rule:  “all  assets  of  the  debtor,  without  distinction  of  status,  may  be  set  against  all   liabilities  accrued”.  

Exceptions: some specific assets may be destined primarily or exclusively as security against a

specific class of liability or debt.

x Only a part of the assets is factored in to calculate the ratio btw distinct A & L generated by the

debtor.  Such  distinct  ratio  doesn’t  factor  in  the  general  property  of  the  debtor.  Æ estate of the

deceased : without liability to debt beyond assets descended i.e. A&L of the heir are distinct

from the ones of the deceased, so that the heir is held to pay back only to such extent as the

assets of such estate may cover

x Assets and liabilities of distinct persons are compounded to calculate a ratio distinct and

separate from the respective A & L of each single person Æ bankruptcy

x Separate legal entities Æ 1) S.r.l.: limited liability company w/ sole quota holder 2) s.p.a:

corporation w/ sole shareholder

Common features:

x Complex of property co-owned by several persons and which are destined to a specific

scope

x Rules which place such property under protection from the respective creditors of the single

co-owners. Conversely, the respective co-owners are under protection from unlimited liability

to the creditors of the venture.

x Segregation of A & L is based on legal relations btw several persons, which do not involve

their respective personal A&L

Limited liability applies to different situations: 1) community btw spouses 2) property funds jointly

owned btw spouses 3) associations/committees/partnerships 3) corporations / limited liabilities

companies - for profit 4) foundations and registered associations - non profit.

PRE-EMPTIVE RIGHTS

Generally speaking, being  the  first  to  take  an  action  doesn’t  entitle  the  creditor to any privilege.

Moreover, suppose 3 creditors, one entitled to 10mln, the other two entitled to 5 mln. If proceeds from

sale amount to 16 mln, the 1st receives 8ml and the others 4mln each.

Pre-emption instead means that one of the creditors is entitled to preference of satisfaction over

the other creditors. It arises from 1) privilege 2) pledge 3) mortgage. Creditors with no pre-emption

are knows are chirographs.

SECURITY AGAINST DEFAULT

Security against default covers all such elements as are instrumental in securing creditors means of

coercive enforcement of the obligations, in case due performance of the latter is not discharged.

x Personal surety (surety bonds, guarantee) Æ another person enters into the relation btw

debtor and creditor becoming surety or guarantor for the debtor. He becomes another debtor,

to whom the creditor may request performance and whose property serves as collateral

x Collateral (pledge and mortgage) Æ all the assets of the debtor provide generic security to

the creditor (secured transaction): the creditor is vested with 1) right of pursuit:  seize  debtor’s  property 2) pre-emption: obtain satisfaction by right of preference from proceeds of sale

These rights have a source in the will of the parties. The creation of a lien (i.e. a security interest)

modifies the status of property and thus affect the position of all creditors towards the person whose

property has been modified. It is necessary that 3rd parties be informed.   That’s  why   the   creditor  obtains possession of the pledged property (movable) while mortgages (immovable) are recorded in

the public register.

PROTECTION OF THE RIGHTS OF THE CREDITOR

The   right  of   the   creditor   to  obtain   satisfaction  doesn’t   automatically create a collateral security or

restraint on the rights of the debtor to enter in other transactions (i.e. sell, incur other debts).

Î However, a creditor is entitled to protection whenever the debtor puts at risk the generic

security tied to his obligation, either by 1) neglecting to exercise his rights 2) attempting to

conceal his property out of reach of the creditors

Î Remedies: 1) derivative action 2) revocation 3) attachment

DERIVATIVE ACTION (SUBSTITUTION)

x Substitution: “   a creditor may exercise such rights and actions towards third parties of his

debtor that said debtor fails to exercise”   x aim of the action:   “to  ensure   that  his  claims  be  satisfied  and  protected”  Æ action limited to

such specific situations deriving from the inertia of the debtor that puts at risk the generic

security of the creditor e.g. a debtor fails to claim a debts due which he know would be exacted

by his creditors

x Derivative action may be brought for all rights and actions of economic nature

x The effect is the reinstating of the debtor in full possession of the property and consequently,

the protection and continuance of general security also for other creditors

REVOCATION (ORDINARY REVOCATION)

A  creditor  has   the  power   to   request   that   “such dispositions laid down by the debtor with regard to his

property as may prove prejudicial to the claims of the creditor shall be declared void”  Æ debtor takes

action to modify or alter the status of his property

Conditions to be satisfied:

x Acts of the debtor are such as:

o to cause injury to the claims of the creditor

o to diminish the assets on which the creditor relied e.g. remission of debt, donation,

sale at knock-down price

o to render more difficult or  uncertain  the  coercive  enforcement  of  the  creditor’s  rights  e.g. sale of block of flats, translating into a sum of money that can be easily concealed

x Fraud of the debtor

o the act has been committed in full knowledge of the injury caused to the creditor. If act

predates   the   creation   of   debt,   then   it’s   necessary   to   demonstrate   that   the   act   was  maliciously planned in advance with a view to removing property from liability.

o If the transfer of property is for value then it is also necessary to demonstrate that

the third party was complicit in the fraud

o Further third parties that acquired rights from the third party to whom the debtor

transferred property are protected, provided their rights wee acquired 1) in good

faith 2) for value

Effect of the revocation:

x the act of the debtor is declared ineffective with regards to the claiming creditor. This act is

valid and therefore remains effective both 1) between the parties and for third parties 2) with

regards  to  creditors  that  didn’t  bring  action

x the act of the debtor cannot be raised as a defence against the creditor e.g. the creditor

can bring coercive or protective action against third-party buyers that are necessary to his

satisfaction. However, the property remains in the hands of the person who acquired it and

not of the debtor

x Statute of limitation: 5 years from the date of the act

PREVENTIVE SEIZURE OF ASSETS

It can be requested to the judge by a creditor, where there is valid ground to fear loss of the security

on credit. Æ seizure prevents 1) transfer of property 2) modification of its status.

A debtor removing or damaging seized property is subject to criminal punishment and acts related to

transfer are void with regard to the creditor who filed for seizure.

TYPES OF CONTRACTS

INTRODUCTION

x Nominate contracts Æ specific types of contracts individually named by law and governed by

specific set of rules which are supplemented by the rules of contract in general

x Innominate contracts Æ types that are not particularly regulated, provided that they are

directed to the realization of interests worthy of protection.

SALE

1. It’s  a  contract  of  exchange

2. Transfers ownership of a thing or other rights (e.g. credit) from one party (seller) to another

(buyer) and a correlative amount of money (price) moves from the latter (buyer) to the former

(seller) Æ causa of the contract

Mutual assent Æ transfer of ownership occur by mere agreement of the parties without the need for

subsequent acts (e.g. delivery, conveyance). Such principle applies when there is transfer of 1)

ownership of a determinate thing 2) limited real right on things owned by others 3) another right

Obligations of the seller:

x Delivery of the thing to the buyer

x Cause the buyer to acquire ownership or other right on the thing, if such acquisition not

immediate as a consequence of the contract

x Warrant buyer against eviction and defects of the thing sold Æ natural effect of a contract i.e.

no agreement is required

o an agreement excluding or limiting such warranty has no effect if the seller has, in bad

faith, omitted to mention such defects

o protection bears on latent defects i.e. defects that the buyer had no knowledge of or

couldn’t  be  reasonably  discovered

Additional warranties Æ they are provided to cover the proper functioning of an electric appliance

or automobile: 1) promise to perform 2) free of charge 3) reparation of any failure independent of

defects

LEASE AND LEASING (IT. LOCAZIONE)

x Lease

o the owner of a piece of property (movable or immovable) grants to the other party

(lessee) the exclusive possession and the right of enjoyment of said property for a

certain period of time, in exchange for the payment of a rent.

o The lessee must return the property when the term is finished

x Operative leasing

o A party grants to another party, upon payment of a fixed periodical rent and for a fixed

period, the use of a thing (machinery, vehicle)

o Both parties agree that upon expiration, the lessee may elect to 1) return the thing 2)

renew the contract – substituting the thing or reducing the rent if the lessee was

already using the thing 3) acquire ownership of the thing by paying the residual price

x Financial leasing

o The leasing Co. buys the machinery selected and leases it to an entrepreneur at a fixed

rent and upon expiration, the lessee can elect btw the 3 options above mentioned

o The Co. remains owner of the thing so 1) Co. less at risk in case of bankruptcy w/

respect  to  lending  money  2)  the  entrepreneur  doesn’t  have  to  appropriate  its  cash  flow  for capital expenditure and has a fiscal advantage (lease is a liability)

o For sale with title retention, the risk of loss of the property leased is borne by the

lessee (generally subscribe insurance) and maintenance as well.

CONTRACT FOR WORK AND SERVICES (IT. APPALTO)

x The contractor undertakes to perform some work or service

x The principal undertakes to pay a correlative in money

x Work or service has to be undertaken with an appropriate organization of means and run at

the risk of the contractor

Requirements to be a contractor:

x Have   an   “organization   of   means”   i.e.   capital,   human   resources,   material   to   carry   out   the  performance

x Assume  the  “risk” of the operations i.e. assume risk of a possible inefficiency of the means

organized, resulting in an inability to perform the undertaking

Î Definition of entrepreneur

The contractor may not subcontract the performance of work or service he has undertaken to

perform, unless he is authorized by the principal: the aim is to prevent other companies, which the

principal wishes to keep out, from using the contractor as a front to get into the deal.

The law also protects the several and separate interest of both contractor and principal. The

contractor can renegotiate the price of the work in case of supervening impossibility e.g. a sudden

increase in price of material (most contracts are price-adjusted though)

Variations from the original contract Æ 1) Variations agreed 2) Variations made necessary upon

which  the  parties  don’t  agree  3)  Ordinary  variations  moving  from  the  principal

Inspection of the work in progressÆ in case the work falls short of the undertaking, the principal

can direct the contractor to conform to it within due time and terms. In case of non-compliance upon

expiration, the contract is automatically terminated and the principal can claim damages

Final test Æ prior  to  communicating  the  principal’s  acceptance  of  the  works.  The  test  is  essential  bcs  the payment is contingent to this acceptance. Should the principal neglect to conduct a test or omit to

communicate acceptance with due time, the work is admitted as accepted

Warranty against defects Æ after acceptance, such guarantee applies only to defects not discernable

by the principal or fraudulently non-disclosed by the contractor. For contracts of sale, petitions for

remedy in case of defects is subject to statute of limitation.

GENERAL PRINCIPLES OF TORT LAW

LIABILITY IN TORT

Notion that people who claim to have been, in some way, injured by a conduct, situation or activities

generated by other people should be entitled to seek compensation for damages.

x Estimation of the entity of the damage inflicted Æ reparation of injury for unjust damage (it.

danno ingiusto)

x Ascertainment of liability

o the wrongdoer has to be identified (elucidation of causation)

o once causation has been established, the wrong has to be ascertained as 1) negligent or

2) wilful

x Amount of damages that may be imposed on the wrongdoer.

o Difficult when there is no material loss (e.g. loss of employment, opportunities).

o Function of damages is to remedy (compensate) the injury of loss Æ #criminal law,

whose goal is punishment

o Liability arises only when damage is wrongful and conduct is blameworthy

(intentional or negligent)

SOURCES OF TORTIOUS LIABILITY

Liability for damages arises from committing a civil wrong (tort) Æ 1) act or fact injurious to an

interest protected at law 2) which causes detriment to the injured person

Clear distinction btw torts # unlawful acts / contractual wrongs (breach of contract) Æ the latter

presuppose that 1) there exists a binding legal relation 2) there exists a non-performance by the

debtor 3) the non-performance causes damage to the creditor

Î In tort law, liability  doesn’t  arise  from  a  pre-existing relationship btw the wrongdoer and the

injured party

ARTICLE 2043 CC

A  civil  wrong  is  “any  intentional  or  negligent  fact  causing  unjust  damage  to  others”

Reparation can be claimed if the damage is 1) wrongful 2) connected to the fact committed by

causation 3) the person who has committed it either intentionally (wilfully) or negligently (with

fault), provided the person has capacity to understand and intend

Elements of the definition:

x Objective elements (pertaining to the fact) Æ unjust damage and causation

x Subjective elements (pertaining to the conduct of the wrongdoer) Æ culpability, negligence

and intention

STRICT LIABILITY

Others tests of liability (from tradition / exigencies of industrial society):

x Parental authority is liable for damages cause by minor

x The person who benefits from an activity is vicariously liable

x The owner is liable for damage cause by things owned

Î Strict liability: a person could be held vicariously liable for the damage committed by a

wrongdoer on the ground of the relation this person has with him.

Î Cases not specifically delineated by law (as above) or not falling in the general principle

pertain to a different category of liability.

INJURY AND DAMAGE

Damage Æ 1) material loss 2) injury 3) non-satisfaction of needs : economic, physical or mental

At law, defined as: 1) something injurious to an interest 2) something detrimental (to property or

person) 3) something resulting from injury to an interest

Test to assess the magnitude of the damage: 1) loss sustained 2) lost profits

Compensation for non-economic losses applies only to such cases laid down by law Æ damages

causing mental distress, grief or psychological complaint that may afflict the victim of a crime

REMEDIES

x Monetary damages Æ pecuniary compensation amounting to the value of the loss suffered

x Reparation (restitutio in intregrim) Æ intended to restore the situation of the plaintiff to

what it would have been if the tort had not occurred

Assessment of damage adopts the same principles as in the case of non-performance in obligations

(with exception of the limitation – foreseeability):

x Loss sustained and lost profits are recoverable and this rests on the principle of causation

x Judge is vested w/ the power to assess equitably the magnitude where a monetary evaluation

cannot be easily performed

x Contributory negligence of the injured party must be taken into account (it diminishes

compensation)

ENTREPRENEUR AND ENTERPRISE COMPETITION

ENTREPRENEURS AND ECONOMIC INITIATIVE

x Definition of entrepreneur:   “a person who professionally conducts an organized economic

activity destined to the production or exchange of commodities or services” x Freedom of undertaking or contracting:   “private economic activity is free”   Æ an

entrepreneur may decide if and when to produce, where and what to produce, provided his

pursuit remains within the bound of the Constitution

x Definition of economic activity: series of coordinated acts destined to the attainment of a

singles purpose (produce and place new wealth for and on the market)

Essential elements to define an activity “an enterprise”:

x Search for profit is not an essential feature Æ it suffices that production of commodities or

services is conducted along economic criteria i.e. calibrated to adjust cost and revenues

x Professionalism Æ 1) the activity must be constant and lasting # intermittent and occasional

2) seasonal activities e.g. a hotel closing in summer is considered an enterprise

x Organization Æ a business is a complex of properties organized by an entrepreneur for the

conduct of his business i.e. there exists no enterprise with no plant or facility: business as a

going on concern (it. azienda)

x Scope is production and exchange of commodities or services Æ 1) excluded activities

with the sole scope of enjoyment of the goods i.e. renting an apartment or production for

personal use 2) an  example  of  “exchange”  is  the  case  of  retailers

SMALL BUSINESSES ENTERPRISES

Small entrepreneurs are such persons that exercise an activity “organized  mainly  by  their  own  industry  (effort) and  by  the  industry  of  the  members  of  their  families”

Unlike other enterprises:

x They are not subject to registration in the trade register

x They are exempted from keeping books and other accounts

x In case of insolvency, they are not subjected to proceeding applying to insolvent enterprises

THE BUSINESS AS A GOING ON CONCERN

Assets of a business: complex of property owned by an entrepreneur for the conduct of his business

Æ capital expenditures (vehicles, machinery), trademarks and copyright.

Leased facilities are as well part of the assets because they share the same purpose (conduct of the

business). This can create problems w/ regards to the transfer of the business, because the interest

of the lessor may collide w/ the one of the entrepreneur, keen to transfer the business as a going on

concern Æ since the goal is producing new wealth, regulation is in favour of the business:

x Assignment of the contract Æ 1) general rule in contract w/ mutual obligations: assignment

of the contract is subject to acceptance by both assignor and assignee. 2) In case of leasing, the

person who takes over the business automatically becomes party of the contract, unless

decision of the third party to terminate the contract (if there is just cause & is within 3 months

from communication of transfer)

x Assignment of accounts receivable Æ assignment takes effect from when transfer recorded

in  the  trade  register,  “even in the absence of communication  or  consent  of  the  debtor”

x Assignment of account payable Æ general  rule:  consent  must  always  be  requested  e.g.  “the

transferor is not free from debits incidental to the conduct of the enterprise transferred and

arising prior to the transfer, unless creditors have consented”

x 5-years no competition rule on the seller of the business against the buyer Æ The restriction

prevents the seller from soliciting or retaining customers away from the business newly

owned. The parties may agree upon dropping or extending the restriction beyond what the

law  imposes  e.g.  geographic  area,  provided  they  don’t  prevent  the  transferor  from  exercising  any professional activity

TRADEMARKS, PATENTS, COPYRIGHT

An entrepreneur has to make sure to obtain exclusive right over trademarks and names that

distinguish his products from all the others. Such distinctive signs are:

x Trademark (marchio) Æ which all the products bear and which may be composed of a name

and a logo symbolizing the enterprise

x Commercial name of the enterprise (ditta) Æ which identifies the entrepreneur

x Commercial sign (insegna) Æ which identifies the premises where the business is conducted

Features of distinctive signs:

Î Character of novelty: bcs trademarks already registered enjoy protection from imitation

Î Discriminating capacity: must not employ generic words that would create confusion among

customers  e.g.  Levi’s  and  jeans

Patents Æ 1) are valid for 20 yrs but expire after 3 yrs if the innovation is not used 2) may be licensed

for use by some other person or business upon payment of royalties

Copyright Æ 1)   designed   to   cover   “works of ingenuity of a creative character pertaining to science,

literature, music, figurative arts, architecture, theatre and cinema […]   whatever   the   mode   or   form   of  expression”  2)   the  author  enjoys  exclusive  right   to  make  profit   from  his  creation  &  can   freely  assign  this right

FREE COMPETITION

Although the notion of free competition would be challenged by few people, nonetheless there is a

general consensus on the fact that such freedom has to be restricted by rules and limits

8 Sherman Antitrust Act (1890) in USÆ to break cartels that distorted the rules of the mkt

8 Antitrust Authority in Italy (1990) Æ declares cartel practises as void & sanctions practises

and abuses generated by dominant positions on the mkt

UNFAIR COMPETITION

The CC, which antedates the Constitution, displays more restraint on the issue of free competition:

8 it enables competitors to strike co-competition covenants for a period not exceeding 5 years in

order to protect a party to the covenant from seeing his freedom initiative tied up for too long

period of time.

8 Competition must be at all time honest and fair

Three categories of acts of unfair competition:

9 Acts designed to create confusion btw names, logos, trademarks or products Æ convince

consumer to buy their own products by taking advantage of the notoriety of a competitor e.g.

slave copy, parasite competition

9 Acts of denigration Æ designed to cast doubts on or tarnish the reputation of the

products/activities of an enterprise e.g. negative advertisement

9 Any other acts with the goal of inflicting damage to another enterprise Æ they infringe

the dictates of honest professionalism e.g. industrial espionage, dumping, soliciting of

employees and boycott

Î To counteract such practises, plaintiffs may 1) publish decision of the judge on newspapers or

periodicals to counteract negative advertisement 2) obtain seizure and destruction of the

goods impeached

ADVERTISEMENT

It is subject to rules and regulations to ensure both fair competition and protection of consumers.

Introduction of comparative advertising (proven facts and figures of products are compared) &

tightening of provisions against deceptive advertisement.