Performing and breaching a contract
What a contract imposes, the five remedies for breach, formal notice, force majeure, the penalty clause and the five-year limitation period.
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Binding force of contract: what is it?
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The principle that lawfully formed contracts are law for those who made them, and can be undone only by their agreement or on a ground the law allows.
One party cannot change the terms alone: the other must agree. Even the judge revises a contract only in provided cases, such as hardship.
An unforeseeable rise in energy costs makes a service contract very costly for the host, and the contract did not provide for this case. What does the Civil Code allow?
- Ask to renegotiate the contract, while continuing to perform it meanwhile
- Unilaterally suspend performance of the contract until the price of energy falls again
- Treat the contract as automatically terminated
- Nothing: hardship has no effect on the contract
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Ask to renegotiate the contract, while continuing to perform it meanwhile
This is hardship: the debtor asks for renegotiation without stopping performance. If it fails, the parties may agree to end the contract or ask the judge to adapt it.
Article 1217 of the Civil Code lists five remedies: withholding performance, … in kind, …, … and damages.
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Article 1217 of the Civil Code lists five remedies: withholding performance, enforced performance in kind, price reduction, termination and damages.
They do not all exclude one another: compatible ones can be combined, such as termination and damages.
Withholding performance: what is it?
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The right to refuse to perform one's own obligation, or to suspend it, as long as the other party has not performed theirs.
It requires a sufficiently serious failure by the other party. Being temporary, it does not end the contract: it pressures the debtor to perform.