Members of Parliament on Thursday, November 5, approved the draft law governing contracts and other obligations, introducing provisions on business agreements, debts and compensation for damage caused to others. The bill, comprising 763 articles and reviewed by the Parliamentary Committee on Governance and Gender Affairs, was approved by all 71 MPs present during Thursday's sitting. It brings together rules governing contractual and non-contractual obligations, covering agreements between individuals and businesses as well as situations where a person causes harm to another outside a contractual relationship. ALSO READ: Lawyers undergo training in Contracts Law The proposed law also sets out rules for different types of contracts, including sales, leases, loans, guarantees, commercial agency, carriage and franchising. Rules governing contracts and debts The bill sets out general rules on how obligations are created, fulfilled, transferred and brought to an end. It provides for different ways of settling obligations, including payment, set-off, cancellation of a debt and situations where fulfilling an obligation becomes impossible. It also addresses obligations involving several creditors or debtors and those subject to specific conditions or time limits. Where a party fails to honour a contract, the other party may seek to have the agreement fulfilled, request a reduction in the price, terminate the contract or claim compensation for the damage suffered. ALSO READ: Over 200 lawyers trained in contracts Law The proposed law also provides for circumstances in which a party may suspend performance of an agreement and recognises force majeure in cases of non-performance. How contracts are formed The bill sets out conditions for entering into valid contracts, including the capacity of the parties, their consent, and the legality and clarity of the contract's subject and purpose. It also provides rules on offers and acceptance, requiring parties to negotiate in good faith and observe obligations relating to information and confidentiality during negotiations. Agreements made through electronic communications and contracts concluded at a distance are also covered. Different types of contracts The draft law provides rules for several types of contracts commonly used in personal and business transactions. For sales and exchanges, it governs agreements through which ownership of goods or other property is transferred in return for payment or another item. It also sets out the rights and obligations of landlords and tenants under lease agreements, and rules governing loans and repayment. The bill covers deposit and sequestration agreements, which involve keeping property in safe custody, including property placed with a third party while a dispute is being resolved. It also provides for suretyship, through which a person guarantees another person's obligation. Other contracts covered include mandate, where one person authorises another to act on their behalf; works and services agreements; and transactions through which parties settle or prevent disputes by making mutual concessions. New provisions for commercial agreements The bill introduces provisions on brokerage, commission, commercial agency, annuity, carriage and franchise agreements. Brokerage agreements involve a broker bringing parties together to facilitate a transaction. Commission agreements cover situations in which a person undertakes commercial transactions on behalf of another, while commercial agency agreements govern arrangements in which an agent represents a principal in commercial activities. Annuity agreements provide for regular payments to a person over an agreed period or during their lifetime. For carriage agreements, the bill sets out rules on the transportation of passengers and goods. It also addresses the carrier's liability in cases involving passenger death or injury, lost or damaged baggage, and delays. Franchise agreements involve the use of another party's business model, brand or commercial rights. The proposed law provides for disclosure of relevant information before parties enter into such agreements, as well as obligations relating to good faith and confidentiality. Obligations outside contracts The draft law also covers obligations that arise even when parties have not entered into a contract. These include quasi-contracts, which may arise when a person manages another person's affairs without being asked, makes a payment that was not due, or benefits unfairly at another person's expense. It further addresses delicts and quasi-delicts. A delict involves an intentional act or omission that causes damage to another person, while a quasi-delict involves damage caused through an unintentional act or omission. Under the bill, a person whose fault causes damage to another may be required to compensate the affected person. Compensation for damage The bill sets out rules on civil liability and compensation for damage caused to others. It covers liability arising from a person's own actions, as well as circumstances in which a person may be held responsible for damage caused by another person or by things under their responsibility. It also addresses liability relating to products and provides for compensation for material and moral damage. The proposed law sets out how compensation may be assessed and paid. Time limits for legal claims The draft law provides rules on limitation periods, which determine the time within which a person can pursue a legal claim. It addresses how these periods are calculated and the circumstances in which they may be suspended or interrupted. These include impediments to pursuing a claim, mediation, conciliation and certain judicial or investigative proceedings. Why the law is being introduced The explanatory note accompanying the bill says the existing Law No. 45/2011 of November 25, 2011, governing contracts, does not comprehensively regulate specific types of contracts and non-contractual obligations. The new legislation seeks to bring together provisions on contracts and other forms of obligations under one legal framework. In preparing the bill, some provisions from the former Book III of the Civil Code were retained, while others were revised or improved. The explanatory note says the drafting process also drew on civil codes from Switzerland, Belgium, France and Quebec in Canada.
