LAW OF OBLIGATION ACT, PART 2, CHAPTER 12- 14

Chapter 12

BARTER AGREEMENT 

  • 254. Definition of barter agreement

(1) In a barter agreement, the parties mutually undertake to transfer an object to the other party and to allow the transfer of ownership of the object and the transfer of any other right which grants the right to dispose of the object.

(2) The provisions concerning contracts of sale of apply to barter agreements. In a barter agreement, the party who transfers is deemed to be the seller and the party who takes delivery is deemed to be the purchaser of the object of the agreement.

  • 255. Price of bartered objects

The price of objects subject to barter is presumed to be equal.

Chapter 13

FACTORING CONTRACT 

  • 256. Definition of factoring contract

In a factoring contract, one person (client in factoring) undertakes to assign to another person (factor) financial claims against a third person (obligor in factoring) which arise from a contract on the basis of which the client, in the client’s economic or financial activities, sells an object or provides services to the obligor, and the factor undertakes to:

1) pay for the claim and bear the risk of non-fulfilment of the claim, or

2) grant credit to the client out of the fulfilment of the claim, administer the claim for the client and exercise rights arising from the claim, including organising related accounting, and collect the claim.

  • 257. Notification of assignment of claim

A client in factoring is required to notify the obligor of the assignment of the claim.

  • 258. Breach of contract

(1) If a client in factoring violates a contract of sale or provision of services entered into between the client in factoring and the obligor and if a financial claim arising from the contract is assigned to the factor, the obligor shall not claim repayment of money paid to the factor on the basis of the claim if the obligor can claim repayment from the client.

(2) In the case of a breach of contract by a party specified in subsection (1) of this section, the obligor in factoring may still claim repayment of money from the factor which was paid to the factor on the basis of a claim to the extent that the factor:

1) did not perform the obligation to make a payment to the client in the part of this claim;

2) made the payment to the client at a time when he or she was or ought to have been aware of the breach of the contract of sale or provision of services by the client.

Chapter 14

GRATUITIOUS CONTRACT 

  • 259. Definition of gratuitious contract

(1) In a gratuitious contract, one person (donor) undertakes to transfer an object belonging thereto to another person (donee) and allow the transfer of ownership to the donee or waive a patrimonial right in favour of the donee or enrich the donee in another manner.

(2) The following are not deemed to be gifts in favour of another person:

1) avoidance of acquiring assets;

2) waiving of rights which have not yet been acquired;

3) renunciation of an estate or legacy.

  • 260. Gratuitious contract in favour of unborn child

A gratuitious contract may be entered into in favour of an unborn but conceived child or in favour of a future child of a specified person alive at the time the gift is made even if the child has not yet been conceived. In such case, the parent or guardian of the future child shall decide on the acceptance of the gift.

  • 261. Form of gratuitious contract

(1) An application by a donor to assume obligations arising from a gift shall be prepared in writing unless otherwise provided by law.

(2) A gratuitious contract is deemed to be valid upon performance of the obligations which arise from the gratuitious contract even if the formal requirements provided for in subsection (1) of this section are not complied with.

  • 262. Donatio causa mortis

If a gratuitious contract is entered into causa mortis, the provisions of the Law of Succession Act concerning legacy or testament apply thereto. If such obligation arising from a gratuitious contract is still performed during the lifetime of the donor, the provisions concerning gratuitious contracts apply thereto.

  • 263. Donor’s obligation to transfer

A donor shall deliver the gift to the donee or allow the receipt to take possession of the gift in another manner, and shall remove all impediments to possession of the object.

  • 264. Liability of donor for breach of contract

(1) Upon assessment of the conformity of a gift to the contract, the provisions of §§ 217 and 218 of this Act apply as appropriate.

(2) If a gift does not conform to the contract, the donor is liable only if the donor did not notify the donee of the lack of conformity intentionally or due to gross negligence or if the donor has undertaken such liability.

(3) If a donor had promised to deliver a thing only with specific characteristics and which the donor first had to acquire, and if the delivered thing did not conform to the contract, the donee may demand the delivery of a thing which conforms to the contract instead of the defective thing if the donor was aware or ought to have been aware of the defect at the time of acquiring the thing. If a donor does not give notification of the defects of a thing intentionally, a donee may claim compensation for the damage caused by violation of the obligation instead of delivery of a thing which conforms to the contract.

(4) The provisions concerning the liability of the seller for the lack of conformity of a sold thing apply to the demands of a donee specified in subsection (3) of this section.

(5) A donor shall not pay a penalty for late payment if the transfer of a gift is delayed, or transfer the benefit received from the granted object.

  • 265. Encumbrances and obligations for donees

(1) A gratuitious contract may prescribe duties and obligations for donees.

(2) If the performance of duties or obligations is in the public interest, a competent state agency or local government agency may also demand the performance thereof after the death of the donor.

(3) If an encumbrance is in favour of several persons without specifying the share of each person and one of these persons dies, the share of the deceased shall accrue to the shares of the other persons.

(4) If the value of a gift does not cover the costs necessary to fulfil a duty due to its lack of conformity, a donee may refuse to fulfil the duty to the extent exceeding the value of the gift until the expenses which exceed the value of the gift are compensated thereto. If a donee still fulfils a duty, the recipient may demand that the donor compensate the expenses which exceed the value of the gift and are incurred upon fulfilment of the duty.

  • 266. Specifications for termination of gratuitious contract

(1) A gratuitious contract which has not yet been performed by the donor terminates upon the suspension of execution proceedings due to a lack of assets or on the declaration of the donor as bankrupt.

(2) If a gratuitious contract prescribes the payment of an allowance which comprises payment by instalments to a donee who is a natural person, the contract terminates upon the death of the donor or donee who is a natural person or on the dissolution of the donor who is a legal person.

  • 267. Withdrawal from gratuitious contract before performance thereof

A donor may refuse to perform a contract before transferring a gift to a donee and withdraw from the contract if:

1) the donee behaves in a manner displaying gross ingratitude towards the donor or a person close to the donor;

2) in the case of performance of the contract, the donor is unable to perform a maintenance obligation arising from law or to maintain himself or herself reasonably, unless the donor has placed himself or herself in this situation intentionally or due to gross negligence or unless the donee pays the necessary maintenance sum;

3) the donee unjustifiably fails to fulfil a duty or condition related to the contract;

4) new or significantly greater maintenance obligations arise for the donor after entry into the contract;

5) the donee dies.

  • 268. Withdrawal from gratuitious contract after performance thereof

(1) If a gratuitious contract is performed, the donor may withdraw from the contract and reclaim the gift from the donee according to the provisions concerning unjustified enrichment in the cases prescribed in clauses 267 1) to 3) of this Act.

(2) If a donor withdraws from a gratuitious contract on the basis provided for in clause 267 2) of this Act, the contract is not deemed to have been terminated if the donee pays the sum needed for the maintenance of the dependant pursuant to the procedure provided for in § 571 of this Act as of the transfer of the gift until the death of the donor.

  • 269. Restriction on compensation for damage

In the cases specified in §§ 267 and 268 of this Act, the donee does not have the right to claim compensation for the damage caused to him or her by withdrawal from the contract.

  • 270. Restrictions on withdrawal

(1) A donor may withdraw from a gratuitious contract within one year as of the time when the donor becomes or should have become aware of the creation of the right of withdrawal. If a gratuitious contract is performed, the donor may not withdraw from a gratuitious contract after the death of the donee.

(2) If a donor dies before the expiry of the term provided for in subsection (1) of this section, the rights specified in subsection (1) transfer to his or her successors to the extent of the remaining term. Successors may withdraw from a gratuitious contract within the term specified in subsection (1) of this section only if the donee intentionally and unlawfully caused the death of the donor or hinders his or her withdrawal from the contract.

(3) A donor shall not withdraw from a gratuitious contract which is entered into for the observation of a moral obligation.

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