Contractual and Tort Liability: A Comprehensive Guide
Contractual Liability
Definition
Contractual liability is established by a contract, such as a purchase and sale agreement. If the seller provides a defective product causing harm to the buyer, the buyer is entitled to compensation.
Article 1264 of the Civil Code states that obligations must be fulfilled exactly as agreed upon. The debtor is liable for damages in case of violation.
Tort Liability
Definition
Tort liability is not established by any contract.
Example
If a dog bites a passerby or someone breaks a house’s windows, Article 1185 states that whoever intentionally, recklessly, or negligently causes damage to a third party is obligated to repair it.
Wrongful Act
Definition
A wrongful act is any act against the law. It involves intentional fault or a violation of the law, resulting in a duty to compensate.
Characteristics of a Wrongful Act
- A voluntary and culpable act by the agent.
- It originates from the breach or failure to comply with existing conduct implied by law, specifically the principle of not harming others intentionally or through gross negligence (Article 1185).
- The failure to conduct pre-existing fault causes harm. The production of damage is essential for the wrongful act to have legal consequences.
- The negligent failure must involve lawful conduct that is not tolerated, condoned, or protected by law.
Elements of a Wrongful Act
- The initial fact is the breach or nonperformance of a behavior every subject of law must observe. The legislature sets this pre-existing conduct in two ways:
- Conduct assumed and recommended to all subjects of law, even if not expressly stated, such as the obligation not to harm others intentionally or through negligence or recklessness (Article 1185).
- Conduct explicitly defined in positive law, where violation requires the offender to repair the damages caused.
- The failure is made by mistake, including both intentional and unintentional fault (e.g., simple imprudence or negligence).
- The culpable violation is illegal. The negligent performance should not be tolerated, condoned, or permitted by law. Illegality is a necessary condition for a wrongful act.
For a wrongful act to be actionable, it must cause harm. If no damage is caused, there is nothing to repair.
Business Management
Definition
Business management is the act by which a person (the manager) is involved in the affairs of another (the owner) without legal or conventional obligation.
Elements of Business Management
- The legal business of others, which can be handled without a mandate. This includes completing legal acts and implementing material compliance with a legal act, either in the manager’s name (intending to benefit the owner) or on behalf of the owner.
- The business owner (negotiorum dominius) has not consented to or opposed the management.
- The manager is capable and intends to intervene in the owner’s affairs.
Effects of Business Management
Obligations of the Business Manager
- To third parties: The manager is bound to third parties in all matters concerning the obligations under management, even if the management has not been helpful.
- To the owner: The manager must continue and complete the management until the owner can provide for themselves, subject to all consequences and obligations of the mandate (Article 1173). The manager must exercise the care of a good father (Article 1175).
Obligations of the Business Owner
- To third parties: The owner is bound to comply with the manager’s obligations if the business was well managed and carried out without the owner’s prohibition (Article 1176).
- To the manager: The owner must compensate the manager for all obligations related to the management and reimburse necessary and helpful expenditures, including interest from the date of expenditure.
Ratification of Business Management
Ratification is the owner’s approval of the management acts. It can be express or implied. Ratification has the same effect as a mandate (Article 1177).
Contract Formation
Definition
A contract is an agreement between two or more people to establish, regulate, transmit, modify, or terminate a legal relationship.
Formation
Contracts are formed through offer and acceptance.
- Offer: A proposal to conclude a contract.
- Acceptance: A commitment to the offer.
Contracts can be concluded between parties present or absent.
Elements of a Contract
- Consent of the parties.
- Object (subject matter of the contract).
- Cause (reason for the contract).
Classification of Contract Elements
Essential Elements
These are indispensable for a valid contract (e.g., consent, object). The absence of an essential element can cause the contract’s absolute invalidity.
Consent
The agreement of two or more parties’ wills towards a common purpose.
Object
The object can be an obligation to give, do, or not do something. Parties can enter any type of contract not opposed to public order or morality.
Natural Elements
These are presumed requirements for certain contracts (e.g., guarantee for eviction). Parties can modify or eliminate these elements.
Accidental Elements
These are stipulations agreed upon by the parties that do not affect the contract’s intrinsic validity (e.g., conditions, terms).
General Classification of Contracts
By Nature
- Unilateral: One party is obligated to the other (e.g., donation).
- Bilateral: Reciprocal obligations (e.g., sale, exchange).
By Purpose
- Onerous: Reciprocal advantage to both parties (e.g., sale, barter).
- Gratuitous: Advantage for one party (e.g., donation, loan).
By Form
- Solemn: Require a particular form for validity (e.g., some types of partnerships).
- Informal: Do not require a specific form.