- The Generalitat’s Official Gazette published on 22 February book six of the Civil Code of Catalonia, on obligations and contracts.
- It regulates sale, exchange and mandate, and organises remedies for breach and consumer sales.
- It takes effect on 1 January 2018: almost a year remains to review contracts, general terms and templates.
On 22 February 2017 the Official Gazette of the Generalitat of Catalonia (number 7314) published Law 3/2017 of 15 February on book six of the Civil Code of Catalonia, on obligations and contracts, which also amends books one to five. The law will take effect on 1 January 2018 and replaces the Compilation of Catalan civil law.
It is a significant step for Catalan private law. To a large extent, contracts between individuals and companies have until now been governed, on a supplementary basis, by the Spanish Civil Code and by state and European rules. Book six provides a framework of its own for contracts governed by Catalan civil law, and begins with three of the most common in everyday business: sale, exchange and mandate.
What book six regulates
The text sets out the general structure of book six and regulates those three contracts in detail. Sale is the central contract and serves as the model for the other figures: it sets out the obligations of seller and buyer and the remedies available to whoever suffers a breach. The law also incorporates contracts from special laws and revises provisions of the five earlier books of the Code.
Among the novelties highlighted by legal writers are the regulation of consumer sales, treated together with general sales, and mechanisms for rebalancing an unfavourable contract, such as unfair advantage and loss of more than half the value. It also regulates the management of another’s affairs without mandate, covering someone who acts for another without prior instruction.
Remedies and contractual balance
One of the most important practical effects lies in the remedies for breach. When one party fails to perform, the other needs to know what it can demand and in what order. Bringing those remedies into a coherent system helps whoever drafts a contract and whoever must claim, because it reduces uncertainty about the consequences of a delay, a defect or a total failure to perform.
The rebalancing mechanisms, for their part, recognise that freedom of contract has limits when one party takes advantage of the other’s weakness or when the agreed price is manifestly disproportionate. Their application will depend on how the courts interpret them, and in the early years there are likely to be more doubts than certainties.
What to review
A company operating in Catalonia can begin by identifying which contracts could fall under Catalan civil law. It is not always obvious: it depends on the rules that determine which civil law governs each relationship, so it should be checked case by case with an adviser, especially in long-term contracts or with parties from different territories.
With the entry into force still some way off, it is a good moment to go over standard contracts and general terms of sale and engagement, check whether they remain consistent with the new framework and confirm with the adviser which regime will apply to contracts already signed. Whoever arrives prepared will have a practical edge over whoever finds out after the first dispute.
With almost a year ahead, reviewing standard contracts is the best way to arrive prepared.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
