Libro Quinto Título I. Del negocio jurídico

The juridical act requires for its validity: legal capacity of the subject who declares his will, consent free from defect and lawful object. 111 112

The manifestation of will may be express or tacit and may also result from presumption of law in cases in which the law expressly so provides.

Silence shall not be considered as a tacit manifestation of will except in cases in which there exists, for the party whom it affects, the obligation to explain.

Every person is legally capable of making a declaration of will in a juridical act, except those whom the law specifically declares incapable.

The relative incapacity of one of the parties cannot be invoked by the other for its own benefit, if it had timely known of it.

When the law does not prescribe a specific form for a juridical act, the interested parties may use such form as they deem convenient.

The juridical act is voidable when the declaration of will arises from mistake, fraud, simulation or violence. Nullity may not be requested or sued for by the party that caused the defect.

Error is a cause of nullity when it bears upon the substance of the thing serving as its object, or upon any circumstance that was the principal cause of the declaration of will.

Error as to the person shall invalidate the juridical act only when consideration of such person was the principal motive therefor.

An error in calculation shall only give rise to its correction.

Fraud is any suggestion or artifice employed to induce error or to maintain any of the parties therein.

Fraud by one of the parties and fraud proceeding from a third party, with knowledge thereof by that party, produces nullity if it has been the determining cause of the juridical act.

Fraudulent omission produces the same effects as fraudulent act.

Consent given by violence or intimidation shall be ineffective.

Violence or intimidation must be of such a nature as to cause a deep impression upon the mind of a reasonable person and to inspire in him the fear of exposing his person or his honor, or that of his spouse or common-law cohabitant, ascendants, descendants or siblings, to serious harm or to considerable loss of his property.

If it concerns other persons, the judge may declare nullity according to the circumstances.

To assess violence or intimidation, regard shall be had to the age, sex, condition of the person and other circumstances that may affect its seriousness.

The threat of the regular exercise of a right and reverential fear, that is, the mere fear of displeasing persons to whom submission and respect are owed, shall not annul the act or transaction.

If, the violence having ceased or the mistake or the fraud having become known, the person who suffered the violence or endured the deception ratifies his will or does not bring a claim within the limitation period, the juridical act acquires full validity.

In conditional juridical acts, the acquisition of rights, as well as the termination or loss of those already acquired, depend on the event that constitutes the condition.

The conditional juridical act takes effect upon fulfillment of the condition, unless otherwise stipulated.

Any conditions that are not contrary to the laws or to morals may be stipulated.

Impossible conditions and those contrary to the laws or to good customs do not vitiate the contract and are deemed unwritten.

A juridical act entered into under a condition whose fulfillment depends absolutely on the will of the obligated party is void.

The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

A juridical act subject to the condition that an event occur within a term lapses if the term expires without the condition being fulfilled, or earlier if there is certainty that it cannot be fulfilled.

If the condition is that a certain event does not occur within a term, it is deemed fulfilled from the moment the term expires or it becomes certain that the event cannot occur.

The creditor may, before fulfillment of the condition, exercise the actions conducive to the preservation of his right.

The fulfillment of the condition is indivisible, even if it consists of a divisible performance.

The express resolutory condition operates by operation of law.

The time limit only fixes the day or date of performance or extinction of the act or juridical transaction.

Performance may not be demanded before the expiry of the time limit, but if the person who paid was unaware of the existence of that time limit when he made the payment, he shall have the right to claim from the creditor the interest or the fruits which the latter may have received by reason of the advance payment.

The debtor shall lose the right to use the time limit:

1°.When after the obligation has been contracted the debtor becomes insolvent, unless he guarantees the debt;

2°.When he does not grant to the creditor the guarantees to which he has committed himself; and

3°.When by his own act he has diminished the guarantees and when by fortuitous event they disappear, unless they are immediately substituted by others, to the satisfaction of the creditor.

The time limit is presumed to have been agreed in favor of the debtor, unless it appears from the tenor of the instrument or from other circumstances that it has been fixed in favor of the creditor or of both parties.

If the transaction does not state a time limit, but from its nature and circumstances it may be inferred that it was intended to be granted to the debtor, the judge shall fix its duration.

The judge shall also fix the duration of the time limit when it has been left to the will of the debtor.

Simulation takes place:

1.When the juridical character of the transaction that is declared is concealed, giving the appearance of another of a different nature;

2.When the parties declare or falsely confess what in reality has not happened or been agreed between them; and

3.When rights are constituted or transferred to interposed persons, in order to keep unknown those who are truly interested.

Simulation is absolute when the declaration of will has nothing real; and it is relative when a juridical act is given a false appearance that conceals its true character.

Absolute simulation produces no legal effect. Relative simulation, once proven, shall produce the effects of the concealed juridical act, provided its object is lawful.

Simulation does not annul the juridical act when it has no unlawful purpose nor causes prejudice to any person.

The action for simulation is imprescriptible as between the parties who simulated and for third parties harmed by the simulation.

If the person favored by the simulation has transferred their rights to another, the action against the third party shall only be admissible if the transfer took place on a gratuitous title. If the transfer was effected on an onerous title, revocation shall only be possible if the sub-acquirer acted in bad faith.

Any creditor may request the revocation of transactions entered into by the debtor in prejudice to or in fraud of their rights.

Only creditors whose claims predate the challenged transaction may exercise the revocation action,

Disposition transactions for gratuitous consideration carried out by the insolvent debtor, or by a debtor reduced to insolvency as a consequence of such transactions, may be revoked at the instance of the creditors.

If the transaction is onerous, revocation shall only take place where there is bad faith on the part of the debtor and the acquirer.

Revocation may take place both in transactions in which the debtor alienates the property that he actually possesses, as well as in those in which he renounces rights established in his favor and whose enjoyment is not exclusively personal.

The revocation action must be pursued at the instance of the creditor.

Revocation shall only be declared in the interest of the creditors who have requested it and up to the amount of their credits.

The revocation action shall cease once the debtor satisfies his debt or acquires property with which to be able to cover it. The person to whom the debtor's property had been alienated may cause the creditors' action to cease by satisfying the credit of those who had presented themselves.

When the fraudulent transaction of the debtor is revoked, the property shall be returned by the person who acquired it in bad faith, with all its fruits; or compensation for damage and losses when restitution of said property is not possible.

The action granted to the creditor against the first acquirer does not lie against the third possessor except when the latter has acquired in bad faith.

Payments made in a state of insolvency, on account of obligations to the performance of which the debtor could not be compelled at the time of making them, are also revocable.

The following are presumed fraudulent:

1.Advance payments made by the debtor in concurso or declared bankrupt, within the ten days prior to the date fixed for the cessation of payments.

Advance payment exists in the discounting of promissory notes or invoices payable by the bankrupt and in that effected by waiver of the time limit stipulated in favor of the debtor;

2.Any encumbrance which, within that same ten-day period, is constituted over the property of the bankrupt, for debts contracted within the same period or previously;

3.Transfers for consideration or encumbrances constituted over property, carried out by persons against whom a condemnatory judgment has previously been pronounced with respect to such property; and

4.Transfers made by the deceased or person in concurso after the day fixed for the cessation of payments or within the ten days that have preceded it.

The revocation action prescribes in one year, counted from the execution of the transaction or from the date on which the payment was effected or the waiver of the right was made.

There is absolute nullity in a juridical act when its object is contrary to public order or contrary to express prohibitory laws, and due to the absence or non-concurrence of the essential requirements for its existence. 125 126 127 128

Transactions suffering from absolute nullity produce no effect and are not revalidable by confirmation. Nullity may be declared on its own initiative by the judge when it is manifest. It may also be alleged by those having an interest or by the Public Prosecutor's Office 129 In case file 237-2001 judgment of cassation dated 15/02/2002 the

130 In case file 325-2002 judgment of cassation dated 07/04/2003 the

The juridical act is voidable:

1°.For relative incapacity of the parties or of one of them; and

2°.For defects of consent.

Transactions affected by relative nullity may be revalidated by expressly confirming them or by performing the obligation, with knowledge of the defect that makes them voidable.

Express revalidation must be made with the same requirements that the law requires for the execution of the transaction sought to be revalidated.

The express or tacit confirmation of a transaction vitiated by relative nullity implies waiver of the action or exception of nullity.

Confirmation takes effect from the date of execution of the transaction being confirmed, but shall not prejudice rights of third parties in good faith.

The nullity of one or more of the provisions of a juridical act does not prejudice the others, provided they are separable.

The nullity of the principal obligation entails that of the accessory obligations; but the nullity of the latter does not entail that of the principal obligation.

The transaction affected by relative nullity produces all its effects while such nullity has not been declared in a final judgment.

Nullity based on defects in the consent of the parties or of one of them may only be asserted by the party whose consent is vitiated or by whoever is directly harmed.

Nullity applies with respect to the obligations of absent persons, minors and incapacitated persons, when the formalities required by law have not been observed, or when minors or incapacitated persons act without the intervention of the persons representing them.

In these cases, the nullity action on the part of the minor, incapacitated person or absent person corresponds to his legal representative or to the Public Prosecutor's Office.

The right to request relative nullity lasts two years counted from the day on which the obligation was contracted, except in cases in which the law sets a different term.

If the nullity is founded on violence or grave fear, the term is one year, counted from the date on which the violence ceased or the grave fear should reasonably have disappeared.

The parties shall reciprocally restore to each other what they have received or collected as a consequence of the annulled juridical act.

In cases in which both parties have received fruits, products or interest, they shall be compensable until the date of notification of the nullity claim, and from that date they shall be subject to restitution.

Restitution of the things shall be made in the condition in which they were at the time of the conclusion of the transaction.

Improvements or deteriorations shall be paid for by the appropriate party, unless the deterioration results from fortuitous event, force majeure, vice or latent defects.

If restitution of the thing is impossible for one of the parties, such party shall perform by delivering another of the same kind, quality and value, or by returning the price it had at the time of the conclusion of the transaction; and if the nullity of the obligation or the impossibility of delivery arises from bad faith, it shall also pay the corresponding damage and losses.

The return of the things, once nullity has been declared, must be made simultaneously, and if this is not possible, within the term fixed by the parties or, in default thereof, by the judge.