03 Nov 2016

Atypical Contracts – Under Italian Law

Anglo-Saxon basic approach in contract law clearly demonstrates an attitude inclined to enhance commerce, supporting a lasseiz-faire regime, which has party autonomy as its predominant value. In point of fact, one of the main features of English contract law is the protection of freedom of contract principle as a starting point and main pillar of the entire discipline. We know that one of the main differences between Common Law and Civil Law systems is the existence, for these latter, of codes establishing basic provisions to regulate the most various fields of law. It is thus likely to assume that the Italian system regulates in greater detail the structure and discipline of a contract, but this is however not entirely true.

In fact, even if main sources of the law of contract are the legislative provisions comprised in the Civil Code of 1942 and the various statutory laws enacted to regulate individual contracts or specific aspects, customs and equitable principles in general are as well residual sources.

Freedom of contract acquires a completely new dimension under Italian Contract law, as it is not only a basic principle of law, in terms that contractors are free to regulate their relationships, but it comes to the point that it allows the parties may freely determine the content of the contract within the limits imposed by law.

In order words, the parties may also celebrate contracts that do not fall into the categories with a particular discipline, if these contracts are directed to make interest worthy of protection according to Law. Those are the so-called “atypical contract” (contratti atipici). i.e. flexible arrangements that are not governed by any specific legal provision,  deviating for the fixed legal terms established by the legislator.

Pursuant to Italian Civil Code, the contract is the agreement between two or more parties to establish, regulate or terminate a legal relationship about their assets. In the Italian Civil Code we find indeed a general section on typical contracts, which contains rules on requirements, interpretation, effects, discharge, rescission, assignment and validity of a contract (Title II of book IV on Obligations, arts 1321 to 1469); and is a section on individual contracts, comprising specific rules and exceptions for the so called nominate or typical contracts (Title III of book IV on Obligations, arts 1470 to 1986).

The parties however enjoy the possibility to create ad hoc contracts, according to their concrete needs. Even though they are not object of a precise regulation, atypical contracts are admitted and allowed provided that they are lawful and designed for legitimate purposes or somehow related to activities considered to ‘‘deserve protection’’ for the Italian legislator.

Pursuant to article 1322, para. 2 CC, the parties can also make contracts that are not of the types specifically regulated in the Code provided that they are directed to the realization of interests worthy of protection according to the legal order. The Courts must determine that such contracts are worthy. When a certain form of agreement is widely accepted within the international legal community, therefore, Italian Courts always consider it enforceable.

Atypical contracts may be:

  • “mixed contracts” – contratti misti – if build with elements typical of other pre-regulated form of contract; or
  • sui generis, when completely independent from other contractual models.  Sui generis se sono indipendenti da altri modelli contrattuali preesistenti.

Anyhow, they are always bound to the respect of essential requirements of a legally binding promise.

Art. 1325 states that every contract must have a “causa”, i.e. an object deserving legal protection as real purpose of the contract: it is the reason that justifies the promise and the obligation. The most important case in which a promise is considered binding under Italian Contract Law is the typical economic exchange. This means that a promise is enforceable whenever it is part of an exchange of an economic nature, such that a counter promise, or a reciprocal performance, can be identified. Therefore, when the parties face reciprocal legal detriment, corresponding to reciprocal economic interests, the requirement of the existence of lawful object is fully satisfied and there is no enforceability problem related to a typical legal regulation of a contract model.

Some examples of atypical contract are:

  • Leasing
  • Factoring
  • Franchising
  • Factoring
  • Advice on contract law in Italy

If you are a business-man seeking to conduct business in Italy and if you are interested to know further details on Italian Contract Law to better analyse and evaluate your bargaining power in the country, please do not hesitate to contact our Italian department or send an email to info@kentonmiles.net. We will offer you legal assistance and guidance for settling rapidly and cost efficiently.

Our team of English-speaking Italian lawyers can assist both local and foreign clients, we enjoy the support of an international network of experienced and skilled attorneys coming from four different legislations, which can provide you with all the assistance you need. Due to our wide international legal background, our professional will surely constitute a solid help in designing for you the perfect model of contract you need, combining typical provisions and fixed terms with non-typical clauses or innovative form of contract.

Article by Daniela Pacino | Contact KM Legal Network here.

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