Lecture 1

06 February 2009
14:01
Chris cilia

Law is the pillar of a civilized society. Every society is regulated by the rules of law. In our law we
have 4 main codes of law; the civil code which is chapter 16, commercial code chp 13, criminal code
chp9, code of organization and civil procedure, chp12.

Now the civil court counts for both civil and commercial cases. The civil court has been dvidided in
the inferior court which will decide any law suwed not more than lm5000. and superior court will
decide on any case which is about the subject matter of which with more than lm5000 or a
decleratory ammount (unknown).

Voluntary arbitration is when two people that agree that they have a dispute ibetween them and
instead of going to court they sign a contract so that their dispute is dicided by means of
arbitration. Mandatory arbitration, like traffic accidents, where there is not issue of personal
disabilities but by material damages.

An obligation is a legal bond between two persons in virtue of which one of them is bound in
favoiur of the other to do a certain act or abstain from doing an act or to create a right over a thing
or to transfer the ommission of a thing. There is a classification of obligations.

1. Contracts
2. Quasi Contracts
3. Torts
4. Quasi Tort

CONTRACTS
Contracts: in order for a contract to exist, you need to have at least two persons who are agreeing
to something. For a contract to be valid at law, we need at least 4 elements to subsist.
a. 1st element is the capacity of the parties who are contracting ex: an 8 year old boy does not
have the capacity to contract, or a person who have lack of intellectual capacity..
b. 2nd element is the element of consent and in order to be valid, consent has to be free,
informed and serious.
c. 3rd element is the object of the contract.
d. 4th element is what we call the consideration which is being agree (kawza).

Section 959 onwards of the civil code

A contract (section 960)

An agreement or an accord between two or more persons by which an obligation is created,

regulated or dissolved. A contract can be bilateral or unilateral. A contract is bilateral when the
contracting parties bind themselves mutually towards another. Ex: a contract of works, a
contractor is binding himself to execute the work to a client, and the client is accepting to pay for
the work. A unilateral contract is when one or more persons bind themselve toward one or more
persons without the consideration of the latter. Ex: a contract of donation, by which two parties
are existing but the receiving party is not obliged to give something back. Contracts can be
honorous or gratoutous contracts. Honouros is when each of the party undertakes the obligation.
Gratoutous is when one party procoutous give advantage to the other.

The first element as we said before is the capacity of two parties. You have to use the faculty of
reason. Natural and legal incapacity. Natural incapacity is when an adult is not longer vested with
the natural capaciy to administer his own property or to make ex his own will. Legal is when a
minor cannot be undertaken by minors. There are various classifications and the law states that
any contract handed into any person who is incapacitated and is under the age of 7 is Null but if a
contract is made between a person who is between 9 and 14 years old is not null but can be NULL.
A minor reaching the age of 16 he can go in front of voluntary jurisdiction, by means of written
pleadings in order to be emancipated ( be considered as if he was in majority age).

The second element is that of consent by which many people try to annul contracts. The law wants
to make sure that no one is bound unless one freely gives his consent and with the ntention to bind
himself into that particual obligation. This is why Concent must be free, informed and serious.
i. Intention is the first step by which a person must have the will.
ii. Expression is the second step and my expression would be manifested.
iii. The unity of expression is where 2 people must be intending the same thing.
iv. There must be the meeting of expression.

Section 974:

Where consent has been i)given by error or ii) extorted by violence iii) procured by fraud, it shall
not be valid.

Error: determining and excusable error by which determininig we mean that it has to fall on
something substantial and not incidental to the contract. Ex: Someone is buying a plot of land,
buying with a price, prepared to pay because in his mind this plot of land can be developed into a
block of apartments, and finds that this plot of land there is ground rent and a condition on ground
rent by which it cannot be developed. Excusable is that the error must be that I could not have
avoided even if had every necessary precaution. An error can be of person, of law, or of fact. And
error of fact shall not void the contract unless it affects the substance itself of the thing which is the
subject matter of the agreement. Error incorpore is an error on the object itself (ex: error on a
garage and it was on the other garage). error in negozium an error on the nature of the transaction
which is done (ex: I lend some money to someone, but the contract is like a deposit).
Violence:
Fraud:

Obligations
Il-Ħadd, 15 ta' Marzu 2009
09:15
 Obligations.
Obligation  a legal bond between two persons in virtue of which one of them is bound,
in favour of the other, to do a certain act or abstain from doing an act or to create a right
over a thing, or to transfer the ownership of a thing.

The two parties involved in an obligation are the debtor, that is the person who is bound
to make the performance and the creditor, the person who has the right to compel the
performance. The right enjoyed by the latter is a personal right, that is a right against a
designated person or persons or a defined class of persons.

Causes of obligation - the classification adopted by the law of Justinian is relevant to our
law:
1. contracts (ex contractu)
2. quasi-contracts (ex quasi-contractu)
3. delicts or torts (ex delictu)
4. quasi delicts or quasi torts (ex quasi delictu)

1. Ex contractu
This is undoubtedly the most important category. The Romans abided by the rule that a
person cannot enter into any type of contract. „Pacta‟ was very limited. The French,
conversely, especially owing to Pothier`s ideas, asserted that people had to be given power
to enter into any type of contract. Pothier developed the notion that for a contract to come
into being there had to be 4 elements:
 Capacity - the attainment of 18 years of age marked the full capability of a person
to contract. However there are various modifications under this age limit.
 Consent - which had to be free, informed and serious. The contract must be willed
by a party. It may be effected by a vice: error, violence or fraud. French law includes
another defect: lesion ( if the contract is to my disadvantage then there is something
wrong, and thus there is lesion and the contract is annulled.)
 Object - the thing of the contract
 Consideration ( Kawza) - a very disputed element amongst authors as to what it really
means. In fact certain legislators, have eliminated it as a requisite for a contract. Kawza
can be described as the purpose of the contract. The kawza must not be illegal; the only
restriction to the type of contract is that it is not unlawful and it is within the public policy
of the particular country.

2. Quasi Contracts
Their basis has always been disputed. Some authors ( Ricci) say that they are called so
because you don‟t have the consent of both parties, but the consent of one and the
presumed consent of the other.
Others say that the basis is unjustified enrichment and the corresponding action is the actio
de in rem verso.
 Others say that the basis of the quasi-contracts is that there is an obligation because the
law says so.
The Italians have eliminated quasi contracts from their law.

3. & 4. Torts and Quasi Torts

 
harm caused voluntarily harm caused negligently
 
Determination of amount of
damages is the same in both cases
The amount of compensation must supply for real damages and not moral damages. There
must be some permanent injury/ permanent loss and thus the latter must be real and
proven.

CONTRACTS
Section 960 defines the term :
A contract is an agreement or an accord between two or more persons by
which an obligation is created, regulated, or dissolved.

Section 961 distinguishes between BILATERAL and UNILATERAL contracts:

 A contract is synallagmatic or bilateral when the contracting parties bind
themselves mutually the one towards the other.
 It is unilateral when one or more persons bind themselves towards one or
more other persons without there being any obligation on the part of the
latter.

Section 962 distinguishes between ONEROUS and GRATITOUS contracts:

 When each of the parties undertakes an obligation, the contract is termed
onerous.
 When one of the parties gratuitously procures an advantage to the other,
the contract is termed gratuitous.

Section 963 describes a COMMUTATIVE contract:

A contract is commutative, when each party binds himself to give or to
do a thing which is considered as the equivalent of that which is given to
or done for him.

An example of a commutative contract is the case of lease, because the compensation is

considered to be equivalent to the enjoyment. On the other case a non-commutative
contract arises in the case of emphyteusis, because the ground rent is not equivalent to the
enjoyment.

Section 964 mentions ALEATORY contracts:

 When the advantage or loss, whether to both parties or one of them,
depends on an uncertain event, the contract is aleatory.
An example of an aleatory contract are insurance policies.

Other classifications which are not mentioned in our law are the following:

Principal and Accessory obligations - the latter being the security, pledge, guarantee,
hypothec etc…
Solemn and Non-Solemn obligations - the former require certain formalities in order to
arise, such as the contract of sale requires a public deed. Non-solemn obligations do not
require any formalities to arise.
Contracts of Adhesion - there are no negotiations; one has to sign or not sign, certain
conditions are involved.

Of The Conditions Essential to the Validity Of Contracts

Section 966 states:

The following are the conditions essential to the Validity of a Contract:
 Capacity of the parties to contract;
 the consent of the party who binds himself;
 a certain thing which constitutes the subject matter of the contract;
 a lawful consideration; (Kawza/Causa)

 Of The CAPACITY of Contracting Parties .

Our law deals both with natural and legal incapacity. The Italian Code does not mention
natural incapacity because it considers it obvious, i.e. a person who has not got the use of
reason cannot make any contract.

Natural incapacity.

It is important to distinguish between incapacitation and interdiction.

Interdiction - a person cannot do any type of contract at all.
Incapacitation - a person is only prohibited from concluding certain contracts. When
the court incapacitates a person, it must state from what contracts he is incapacitated.

It is important to distinguish between the use of reason and interdiction.

A person who does not have the use of reason may or may not be interdicted. If he is
interdicted then it is clear that he cannot make any contract whatsoever and if no proof is
necessary that at the moment when he signed the contract, he did have the use of reason.
The same goes if he is incapacitated for that particular contract. It is absolute proof that he
is incapable of signing the contract.

If a person is not interdicted/incapacitated ( for the particular contract) it is always

necessary to annul a contract to show that at the moment when the contract was signed, the
 person did not have the use of reason. It is irrelevant to show whether he is habitually mad
or not. One must prove that at the moment when he signed the contract he did not
have the use of reason. This is sought very often when people make wills. It has to be
proven that when a person is making a will he lacked the faculty of reason and this is very
hard to prove and much depends on the evidence of the notary.

Till now we have discussed 3 forms of natural incapacity:

 interdiction,
 incapacitation and
 lack of use of reason.

With regard to deaf and dumb individuals, generally the courts have taken the view that
people who are born deaf and dumb do not have the use of reason, but if they are born
normally and eventually become deaf and dumb, than they do have the use of reason.
However, this is just a trend adopted by our Courts and one can always prove otherwise.

Legal Incapacity.

Minority - a minor‟s power of reflection is insufficient because he lacks that degree of

mental development which is necessary to understand the importance of a contract, and his
inexperience is insufficient to protect his interests. A minor is not equally incapable
throughout the whole period of minority:

Minors Under 7:

Section 968: Any contract entered into by a person who has not the use of
reason, or is under the age of seven years is null.
The law treats on the same level a person who has no use of reason and a person under 7
years of age.

Minors of the Age of 8:

Although not mentioned in section 968, it is mentioned in 969(1) and any obligation is
null.

Minors between 9 and 14:

Section 969:
(1) Any obligation entered into by a child under the age of fourteen years
is also null.
 Nevertheless, where the child has attained the age of 9 years, agreement
shall also be valid in so far as it relates to the obligations entered into by
any other person in his favour.
 This is referred to as a lame contract as it relates to obligations entered into by another
person in favour of the minor. This does not mean that the minor can choose from the
contract those obligations which are in his favour and simply insist on their performance,
while the minor himself not performing the corresponding obligations. Ex. There is a
contract where A sells a house to a minor. The minor cannot obtain the house because that
is in his favour without paying the price. In other words we are speaking about whole
contracts which are in favour of the minor.
In the case of a donation, if it is awarded to a 6 year old then I can revoke it because that is
null, but if I give it to one who is 10 year old, I cannot later revoke it, as that is an
obligation in his favour.

Minors between 14 -18:

 Section 970 states that the provisions of 969…shall also apply with regard to any
person who has attained the age of 14 years, but has not attained the age
of 18 years, if such a person is subject to parental authority, or is
provided with a curator, saving always any other provision of law
relating to marriage.
In the case of parental authority the same rules as above apply.

 Section 971: (1) ….. any minor who has attained the age of 14 years, and is
not subject to parental authority, nor provided with a curator, may
not alienate or hypothecate his immovable property without the authority
of the competent court.

 Such minor may, however, enter into other obligations, saving, in regard
to such obligations, any rescissory action which, on the ground of lesion,
may be competent to him under the provisions of sections 1214 to 1219.

A minor between 14-18 years who is NOT under the „patria potestas‟ has full capacity to
enter into a contract, but this minor may always rescind the contract on the grounds of
Lesion.. Such a minor has the faculty of using …any rescissory action which, on
the ground of lesion, may be competent to him…
Lesion occurs when there is a disproportion between what I am giving and what I am
getting. Before, this ground of lesion was universally applicable to all contracting parties,
even if they were over 18 years. In France it is still a good method of annulling contracts.

Emancipation at 16:

If a minor at 16 is emancipated according to the Commercial Code, he acquires full

capacity for the purposes of trade and he cannot annul the contracts on the ground of
lesion.
If a person is between 14-16, not under „patria potestas‟ and not emancipated according to
the Commercial Code, he can still enter into contracts but he can annul them on the
grounds of lesion.
 Nullity may not be set up by person capable of contracting.

Section 973 states Persons capable of contracting may not set up the nullity
of the contract on the ground of disability of those with whom they have
contracted.

Therefore the right to annul a contract on the ground of incapacity vests only in the
minor himself or his representative, and not in the other party.
This created the concept of „relative nullity‟. The contract is not absolutely but relatively
null because it can only be annulled by one party.

(B) CONSENT

Consent can be said to be the most important element in contracts. The law wants to make
sure that no one is bound unless one freely gives his consent and with the intention to bind
himself into that particular obligation. Consent must be free, informed and serious.
The four main steps towards consent are the following;
 intention ( I must will my consent)
 expression (must be manifested)
 unity of expression (at least two people talking of the same thing)
 meeting of expression ( both consents must at a point meet)

What happens if there is a distinction between intention and expression?

The emphasis of the Code Napoleon and our code is based on the teoria della volonta
(intention), while modern continental codes tend to protect the expression (teoria
dell’affidamento).
If between the intention and the expression there is no meeting point then there is a vice of
consent which could take the form of error, violence or fraud, as clearly expressed in
Section 974 of the Civil Code:

Where consent has been given by error or extorted by violence or

procured by fraud it shall not be valid.

These defects/vices render the contract relatively null - the defect can only be brought
forward by the person whose consent is defective and not by the other party.

(i) Error

According to the general rule, the error has to be determining and excusable.

By determining, we mean that it has to fall on something substantial to the contract and
not incidental. The error must be such as to induce an individual to enter into a contract
which he would not otherwise have entered.
The error must also be excusable, that is one should not be negligent. If one makes an
error through one‟s own fault, then he has himself to blame and it does not create a defect
of consent.
In Pisani vs Mamo 7/11/33
“la dottrina da acettarsi nella soggetta materia e` quella secondo cui l‟errore non puo`
adursi quando e` affetto da grande negligenza.”
The court held that plaintiff could have easily realised that there was an error, even with a
„lieve diligenza‟.

In Schembri vs Azzopardi 1965

Plaintiffs had acquired under title of temporary emphyteusis certain fields which they had
to use as quarries and on agreement that “jergghu iwittuh meta tispicca l-enfitewsi.”
They eventually discovered that the directus dominus was the government who had given
fields on emphyteusis to defendants on condition that they transform these fields in
cultivable land.
Plaintiffs were claiming that they would have never entered into such contract had they
known of such a condition and they were induced in it by error of fact.
The Court rejected their pleas: “l-atti ta` l-akkwist jirriferixxu kontinwament ghall-
esistenza tal-kuntratt enfitewku originali u l-atturi setghu bl-akbar facilita jaccertaw
ruhhom minn dak il-kuntratt jekk l-art setghetx tigi uzata bhala barriera. L-izball ta` l-
atturi, jekk kien zball ma kienx skuzabbli.”
“l-izball, skond id-duttrina u l-gurisprudenza, biex ikun hemm kawza ta` difett ta’
kunsens, irid ikun skuzabbli, tali li, anke jekk jorigina minn xi asserzjonijiet inezatti ta` xi
wiehed mill-kontraenti, ma jkunx jista` jigi agevolment verifikat mill-kontraent l-iehor.”
Therefore the emphasis is always on the fact that if a person does not take the necessary
precautions to avoid error, he will not be able to make use of error as a defect of consent.

Strict traditionalists do away with this element of excusability on the grounds that being
excusable or not, my consent is in error and therefore the consent is defective. Although
this idea has been put forward by some jurists it has not been accepted and in our courts it
is generally taken for granted that the error has to be excusable.

In Borg vs Grima Comm. Court 3/6/94

Plaintiff was asked by defendant to go with him to the bank to sign a formula. What the
plaintiff was really signing was a guarantee form for a loan of defendant.
Eventually his friend did not pay the loan and the plaintiff was sued by the bank.
Plaintiff argued that he did not realise that he was signing a guarantee form; but since he
and defendant were about to join in a company, he thought he was simply signing a
sample signature for the purpose of cheques.
Court held that a guarantee form had written on it “GUARANTEE” and even if plaintiff
was genuinely in error he should have seen „guarantee‟ written on top, and if he did not
see it then he has only himself to blame.

One realises that this theory of „excusability‟ was entered into by our Courts because of
the question of proof. Strictly speaking, as some jurists argue, an error, even if not
excusable, is always an error and as such vitiates consent. But if it is a stupid error, can the
Court believe such person? How is the Court going to conclude that he was genuinely in
error? Thus the requirement of excusability was entered into by jurists in order to avoid
the problem of proof. Thus the court avoids entering into the issue of whether it avoids the
defendant or not.
Therefore it is today accepted doctrine that for an error to vitiate consent, it must be
excusable.

An error may be of Person, Law or Fact.

Error of Person.

Section 976(2) states: The agreement shall not be valid if the error relates
solely to the person with whom the agreement has been made, unless the
consideration of the person has been the principal inducement thereof.

It must be shown that I entered into a contract because of the person with whom I entered
the contract. Had it been another person, I would not have entered the contract. Ex I sold
my house only because my nephew was buying it.
Therefore one has to prove that the contract was entered into because of the “consideration
of the person”

In Vincenza Roth vs Carmelo Abela 11/11/93 Court of Appeal.

This was a contract of lease made with a person whom the owner thought was a foreigner.
A lease made in favour of a Maltese person is protected by law, whilst a lease made in
favour of a foreigner is not.
The owner eventually discovered that the tenant was a Maltese person and not a foreigner
and sought to annul the contract of lease.
The owner claimed that he had only entered into the contract of lease because he thought
that Vincenzina was a foreigner.
The Court said that the consideration of the person has to be taken to mean not only that
Person A as distinct from person B, but also the quality of the person.]
If I thought that a person had certain qualities and I entered into the quality because of
such qualities, if it results that those qualities do not exist then I may annul the contract
because of the fact of error of person.

Error of law.

This type of error was not a defect of consent in Roman times. It is now established in
Section 975: An error of law shall not void the contract unless it was the
sole or principal inducement thereof.

It must be shown that I entered the contract because I thought I was bound to enter such
contract because of the law
In Borda vs Borg
 A landlord reduced his rent because he thought the law bound him to reduce the rent.
Therefore the person entered into an obligation not because he wanted to enter into an
obligation but because he had a mistaken idea of the law.

Borsari makes a distinction between an act of omission and an act of commission. The
plea of ignorance can only be raised if I acted in some way because of ignorance of the
law, not because I did not act because of ignorance of the law.
Error of the law is a defect only if it forces me to act, not if because of it I did not act.

Error of fact.

This is undoubtedly the most important element, as contemplated in Section 976(1):

An error of fact shall not void the contract unless it affects the substance
itself of the thing which is the subject matter of the agreement.

Error in substantia should be distinguished from error in corpore or error in negotium:

Error in corpore- an error as to the object of the thing. Ex I want to sell flat A and you
want to buy B
Error in negotio- an error as to the nature of the contract. Ex I give you something as a
deposit and you think it is a loan.

The distinction is made because in the case of an „error in corpore‟ or „error in negotio‟,
we are talking about an ABSOLUTE nullity, while in an „error in substantia‟ we have
RELATIVE nullity.
When there is an error in the object and an error as to the contract „in negotio‟, there is no
consent at all and therefore no contract at all. Carbonnier in fact describes these two as
an error obstacle - an obstacle to the creation of the contract, because consent does not
exist.
In an error in substantia, this does not disrupt the contract. The contract comes into being
but it may be annulled by the person whose consent is vitiated. Therefore the contract is
valid until it is annulled.

What is the substance of the thing?

 Some writers, such as Turandot say that the substance of the thing emerges from the
thing itself. What emerges from the thing is to be considered the substance, „ex natura
rei‟.
 Others, such as La Rompier and Troplong, claim that the substance is that thing which
the parties agree to be the substance of the thing. It is not something which emerges
objectively from the thing itself, but it is that characteristic which in the mind of the
parties is the substance of the thing. There must be an agreement of opinion.
 The most accepted view is that there need not be an agreement as to what the substance is.
The substance of the thing is, what the individual who was in error, had in mind.
Giorgi holds that “la parola sostanza significa quella qualita dell‟oggetto contrattuale che
e` stata il motivo determinante del contratto.”
What induced me to conclude the contract? The substance is subjective. Ex an antique
gold ring. Is the substance the fact of it being antique or gold? This depends on the
individual. If am going to buy that ring because it is an antique, then for me that is the
substance of the thing. If I am going to buy that ring because it is made of gold, then that is
the subject of the thing.

Ricci states that the substance is any of the essential qualities of the thing; for error in
substantia to be proved it must be shown that the quality of the thing about which there is
error must represent the sole reason why the obligee had entered into the contract in
the first place. The obligee must prove that had he/she known the object of the contract
lacked such qualities, he/she would not have entered into the contract at all.

Pothier holds that the error annuls the contract when it affects the quality of the thing
which the parties aimed at and which forms the substance of the thing.
Laurent, on the other hand states that an error of substance is an error of quality, but not
every error of quality is substantial - and it is the intention of the parties which
determines whether it is a main one or not.

In Emanuel Cutajar vs Carmel Petroni 15/7/69 Court of Appeal

The court held that “il-kriterji biex jigi stabilit jekk kienx hemm dan l-izball ghandu jkun
suggettiv. Jigifieri, li wiehed ghandu jhares lejn il-mod li bih il-proprijent imqarraq kien
qed jikkunsidra l-oggett tal-konvenzjoni.”

In Cassar vs Pace 28/11/86 1st Hall Civil Crt.

Plaintiff bought a Landrover because of all its accessories. Whilst driving it, he was
stopped by a policeman and he was told he could not drive the landrover with all those
gadgets. He made an action to annul the sale on the ground of error in substanatia.
He managed to show that he wanted to buy the Landrover because of all its accessories
that came with it; he considered them the most important part of the car.
The Court annulled the contract because it argued that the substance of a thing is a
subjective view.

In Abela vs Tabone 18/2/76 Commercial Court

Plaintiff entered into a contract with defendant for the purchase of butter on the guarantee
that it contained only natural ingredients. In actual fact butter contained some artificial
material.
Court decided that there was a mistake on the substance of the thing and this was not a
latent defect; hence the action available was that of nullity.

Laurent points out that it is not necessary to consider a substantial error the wrong
calculations which the contracting parties make, and the deceitful hopes to which they
submit. This happens to industrial societies which whilst trading believe that they are
making good bargains, and then find out is a complete ruin.
He refers to a case where a company was set up for the construction of guns and
manufacturing of gun powder in Prussia. Losses were made and an action for liquidation
was instituted. The company directors sustained that whilst contracting they were lead to
believe that the fall of water which was the essential element for manufacturing had a
powerful force which in reality did not exist.
The court decided that error on a quality which is more or less prosperous in a transferred
business does not constitute error on the substance of the thing.

In Cutajar vs Petroni
The error as to the substance of the thing, for it to lead to the annulment of the contract, is
not only subjective but also unilateral.

For our courts the other party is not considered and they have maintained the view of
protecting the individual‟s consent. If I am in error when I give my consent, then my
consent is in error and the contract can be annulled.

Ricci, Giorgi, Laurent and Pothier also hold that the error is not only subjective but also
unilateral.
Ricci states that even though the error was on my part only, it still leads to the annulment
of the contract because there has been no units of consensus on the substance.
However, though both Ricci and Laurent are supporters of this subjective unilateral
theory, they both consider the other party. Ex Laurent asks whether it is equitable that the
other party did not know. Isn‟t it better for the buyer to tell him? Thus the traditionalists
felt this difficulty.

In fact, Ricci whilst giving the right to annul the contract to the individual who was in
error, also gives to the other party the right to sue for damages.
However, this remedy of damages to the other person in good faith was not accepted by
other authors, such as Giorgi. According to the latter, Ricci‟s argument is illogical because
if an error has been established in a contract, then the error is excusable and there is no
question of damages.

In our Courts, there has never been the awarding of damages to the other party in good
faith. In Malta we are still very much bound by the traditional view that in consent the
error has to be unilateral and subjective.

In Camilleri vs Cuschieri Commercial Court

The Court held that if the error is subjective, substantial and excusable on the part of one
of the parties to a public deed, this rendered the contract null (and therefore this applies
even in the case of a public deed)

This trend of Malta does not follow foreign trends where the good faith of the other party
is always increasingly taken into consideration.
 (ii) Violence

In Violence we must distinguish between:

Physical and Moral(Duress)
 
when effected by means of external acts upon the mind of the contracting
force. This excludes consent altogether, party, and inspires such a fear of a future
because who consents in this way is evil as to deprive him of his liberty of
simply an instrument in the hands of choice.
others.

Generally it is stated that what the law is talking about in this section is „moral‟ violence
as distinguished from „physical‟ violence, because „physical‟ violence does not lead to a
relative nullity of the contract, but to an absolute nullity of the contract ( as in the case of
error in corpore or error in negotio.)[1]
Thus, Moral violence leads to a relative nullity - it can only be raised by the individual
whose consent has been vitiated.

The general characteristics of violence are not stated in the law. Authors hold that moral
violence must have three characteristics:
 Unjust
 Grave
 Determining.

1 Unjust

The threat must be of doing something unjust, contrary to the law. Ex If I threaten a
person to take him to court that is not violence, as the threat is not unjust.

In Huber vs Gasan 31/3/32 Commercial court

“la violenza non costituisce un vizio del consenso se non quando sia ingiusta ed
illegitima…. La minaccia di venire alle vie legali non vizia per se stessa il consenso dato
sotto la pressione di questa minaccia.”

In Zammit Cutajar vs Debattista 27/7/89 Commercial court

Defendant brought merchandise from the plaintiff‟s company and because he was in some
difficulty, he issued some cheques which were not honoured by the bank.
Plaintiff threatened to take the matter to the Police if the amount was not somehow settled.
The parties, therefore entered into an agreement whereby the defendant produced a
guarantor in order to make good the amount which he owed.
Subsequently, he sought to annul the agreement on the basis of violence, because, he said,
he had entered into the agreement under a threat.
The court said: “ l-allegata minaccja ma twassalx ghal vizzju tal-kunsens. Ir-rimedju mhux
kontra l-ligi u lanqas ma hi kontra l-ligi l-iskrittura.”

But if one were to use his rights in order to acquire more than what he is entitled to, a
threat in such circumstances would be considered unjust.
Giorgi, holds that if one catches someone else doing an illegal act, and threatens to report
to the Police unless some sort of compensation is given to him, that is to be considered an
unjust threat.

2 Grave.

Section 978(1) states: Consent shall be deemed to be extorted by violence

when the violence is such as to produce an impression on a reasonable
person and to create in such person the fear of having his person or
property unjustly exposed to serious injury.
(2) In such cases, the age, the sex and the condition of the person
shall be taken into account.

What is grave has to be determined by the subjective criteria and not on objective
standards. What is grave is not something which can be decided a priori; it all depends on
the individual.
The threat could be on the person or property, a threat to one‟s honour has also been
accepted as violence.

The „condition of the person‟ is such a wide notion that it can cover any possible
particularity of the contracting party involved in the matter.

3 Determining.

Violence must be such that without it the party would not have concluded the contract.
There must be this relationship of cause and effect.

Violence - influencing contract under different terms and conditions

Giorgi states that if the violence is such that I would still have agreed to the contract in
spite of the violence, but I entered into the contract under different terms and conditions,
then I would have entered into had it not been for the violence, in that case I cannot annul
the contract but I would be able to sue for damages.
Therefore these writers distinguish between violence which made me sign the contract (
which contract can be annulled) and violence which made me sign the contract under
different terms and conditions, had it not been for the violence (only to be able to sue for
damages)

Violence exercised by third parties

In the case of violence exercised by third parties, and an individual takes advantage of
that violence, the consequence is not the annulment of the contract but a change in terms
and conditions by the court in order to give a fair result to the contract between the parties.
Ex. If A has burnt B‟s house, and B needs help and C comes along and offers his help for
LM1000, C is taking advantage of the violence practised by A; the contract is valid but the
court will fix the right amount ( rather, it will reduce it) in order to create a fair proportion
between the service and compensation.
In fact Section 977(2) states:
Nevertheless an obligation entered into in favour of a person not being an
accessory to the use of violence, in consideration of services rendered for
freeing the obligor from violence practised by a third party, may not be
avoided on the ground of such violence; saving the reduction of the sum
or thing promised, where such sum or thing is excessive.

Violence by „force majeur‟

On the other hand, violence by force majeur is not contemplated by the law.
Ex A is swimming and feels sick and begs another to save him. The latter says I will only
save you if you pay me a substantial sum. Is there a remedy for such a person?
Not all writers agree, but some say that this contract would be null. Others, such as Giorgi
distinguish: if the offer for compensation is made by the victim, then the contract is valid.
If the demand for compensation is made by the other party, then he would apply the rule
that compensation will be reduced in proportion to the service.
Others have held that the whole contract has to be annulled because one should not
demand compensation for danger as a result of violence which is caused by a „force
majeur.‟
Our courts have never expressed an opinion, but they normally follow Giorgi.

Violence against members of the family

Section 979(1) states:

Violence is a ground of nullity of a contract even where the threat is
directed against the person or the property of the spouse, or of a
descendant or an ascendant of the contracting party.

Section 979(2) states:

Where the threat is directed against the person or property of other
persons, it shall be in the discretion of the court, according to the
circumstances of the case, to void the contract or affirm its validity.
In subsection(1) the law provides certain degrees as to which members of the family it
protects, and as to other relatives there is no a priori rule a threat to other relatives may be
considered as a threat depending on the situation ( in the discretion of the court).

Reverential Fear.

Section 980 states:

Mere reverential fear towards the father, mother or other ascendants or
towards the husband, shall not be sufficient to invalidate a contract, if no
violence has been used.

Torrente states that “..se il consenso e` emesso per non riuscire sgraditi verso la persona
autorevole o per non ricevere da esse rimproveri, il negozio non e` annullabile.”

Economic Duress.

The fact that a person has found himself in a severe economic position as a result of which
he will have to enter into contracts which he would otherwise not have entered into, is not
accepted by our courts as a ground for annulment of the contract.
The reason is that the threat has to be directed and individualised. The threat must result
from a person who threatens me. A bad economic situation is not something which is
individualised and will not lead to an annulment of the contract, that is no one is actually
threatening me.
This was confirmed in Soler vs Campbell
The Court held that “…..il-vjolenza trid tkun l-opra ta` persuna tezercita.” And basically
excluded economic duress as a reason amenable to annul a contract.

The English courts have tried as much as possible to balance out the conditions of the
contract but in our case the courts have not accepted the theory that individuals should be
put as much as possible on an equal bargaining power.
The fact that one finds himself in a very weak position vis-a-vis the other, will be taken
into consideration by the English Courts to try and balance as much as possible the
conditions of the contract.

An interesting English case of 1978 is

North Ocean Shipping Company Ltd. Vs Hyundai Construction Company
Ltd.
The plaintiffs entered into a contract with Hyundai for the building of a ship.
Half-way through the construction of the ship, Hyundai said that they would only continue
the construction if the contract was changed and they were given more money.
Obviously North Ocean did not want to pay extra money, but it had already entered into
another contract with others so that the ship would be chartered at a substantial profit.
 Therefore to avoid being sued for damages and also of losing the substantial profit, North
Ocean agreed to sign the contract and amend the terms of agreement.
After the ship was ready, they sued Hyundai to recover the extra money they had paid
because they claimed they had signed the new contract under Duress.
The Court of Appeal accepted North Ocean‟s view and it annulled the second agreement,
saying that this agreement was a result of economic duress and the court ordered Hyundai
to give the money back.

In England, they also have the doctrine of Frustration - mainly that a contract may be
valid at its initial stage, but may become invalid on the date of its execution. It is not really
a defect of consent because it refers to the moment of signing the contract.
At the moment of signing the contract, everything was fair, but when I came to perform
my obligation, circumstances have changed so much that if I were to perform that
obligation, it would lead to my financial ruin.
English courts have accepted that in this case, they would apply this doctrine of frustration
and would annul the contract. This doctrine is nowhere to be found in our law, even in
extreme cases. Ex A enters into a contract with B to supply clothes to B. A‟s employees go
on strike and A is unable to supply the clothes. In England the doctrine of frustration
would apply, but in Malta, the contract would still be valid, and A would have to pay
damages to B because the contract is not annulled.

(iii) Fraud

Section 981 (1) states that

Fraud shall be a cause of nullity of the agreement when the artifices
practised by one of the parties were such that without them the other
party would not have contracted.
Subsection (2) states that
Fraud is not presumed but must be proved.

Fraud is basically the deceit of the artifice carried out by 1 party as a result of which the
other party is induced into error.
Fraud is that artifice, deceit or simulation which is made use by 1 of the contracting parties
in order to deceive the other and to induce him to enter the contract.
If there is fraud on one party, there is error on the other, but the error as a result of fraud
need not have the same qualities as „error‟ ( as a separate defect of consent).
Error as a result of fraud need not have the same qualities ( excusable, in substantia) as
error on its own.

Giorgi holds that fraud as a defect of consent must be construed as „dolo nel senso ristretto
di inganno o raggiro‟ and not „mala fede‟

For fraud to serve as a vice of consent, there are 4 main conditions:

 there must be intention to deceive.

 The victim must prove that the other party intended to deceive him. They used to say that
from the act itself, one can presume fraud but this is no longer accepted by our courts.
Fraud in re ipsa is no longer accepted and it is necessary for the victim to prove the
intention to deceive.

 it must be grave.
This is because the courts do not want to stifle too much trade. The Court in fact
distinguishes between deceit so called and the normal lies of trade. It is obvious that a
trader is going to praise his goods. This is not fraud, even though he may not be
completely correct in his statements
Courts have used the words „kredulita zejda‟ to refer to dumb persons who believe
everything.
In Cachia vs Cachia 1957

The courts said that “zeghil, attenzjoni, suggerimenti, insistenzi li ma jkunux

akkumpanjati minn mala arte, minn artifizi ragonevoli, ma jammontawx ghal frodi.” and
would not be allowed to annul a contract.

The law does not encourage, but on the other hand does not condone “exaggerated praises
of one‟s own works.”

In Micallef vs Cuschieri 1931

Exaggerated praises of one‟s own work have become an accepted practice and it would be
contrary to public policy to annul such contracts just because of “a liberal dose of
favourable adjectives.”

Galgano refers to this esagerate vanterie delle qualita del proprio bene o della propria
abilita proffesionale and states that the reasonable person knows that the vendor is
exaggerating and thus the law would not annul a contract if one would have believed the
exaggerations of the vendor.

In Cauchi vs Borg 11/6/95 Court of Appeal

Woman had a premise on lease and she wanted to buy the premise from landlord who
however asked for a high price. The Tenant of a premise suggested to the owner that the
premises needed repairs. She dropped a hint that her niece would be coming to live with
her and thus she would become tenant upon the death of the old woman.
The owner taking all this into consideration sold it to the old woman for a low price and
consequently the woman sold it to a 3rd party for a considerable profit.
The previous owner sued the former tenant arguing that she had deceived him. He claimed
that there was fraud as he had been blackmailed.
But the court held that although the tenant did in a certain way deceive the owner, the
means she used were not serious, not grave so as to lead to an annulment of contract on the
basis of fraud. The court held that something more is needed for the fraud to subsist.
 Ricci holds that “la frode deve consistere in quelle arti, maneggi e manovre che escono
fuori dalla cerchia dell‟astuzia solite ad usarsi da tutti i contraenti…”. The normal tricks
of „astuzia‟ are accepted and fraud means more than this. There isn‟t any established
criteria and Giorgi states quite clearly that one cannot say what is acceptable and what is
not. Everything depends on the particular case.

The art of trade talk is referred to as dolus bonus and is to be distinguished from dolus
malus. Dolus bonus according to del Giudice refers to the esaltazione delle merci o
servizi, normalmente tollerata dalla pratica degli affari.
He gives an example of this dolus bonus  the fishmonger attracts the housewife in
buying fish by declaring that it is fresh when in reality it is of medium quality.
An example of dolus malus  the same fishmonger induces the housewife to buy the fish
making her believe that it is fresh when in reality it was frozen.

 it must be determining.
It must be shown that I entered into the contract as a result of fraud. The wording of
Section 981(1) also shows this.
The artifices must be such that the other party would NOT have contracted and not that the
other party would have contracted under different terms and conditions. If the fraud only
results in a change of conditions, then it cannot give rise to annulment, but only to a suit
for damages.
As the Italian author Lucarelli states there must be “una volonta reale di non modificare
la situazione pre-esistente.” I would not have changed the situation had it not been for the
fraud.

 it must not result from the act of the 3rd party. The fraud must take place
with the participation active or passive of the other party .
In contrast to the case of violence the law does not admit as ground of annulment fraud
practised by a 3rd party. If I am deceived by a 3rd party and as a result of which I entered
into a contract with another, that contract is valid. However I can start an action for
damages against the party committing the fraud.
While violence by a third party can lead to annulment, fraud cannot lead to annulment.
What if the contracting parties are more than one and it is only to one of them that dolo
may be attributed- is it possible for the injured party to rescind from the contract against
all of them?
Giorgi holds that this can be done on the basis of natural equity.

Can SILENCE amount to fraud?

Silence as a general rule cannot amount to fraud. I am not deceiving you by the fact that
I‟m not saying anything. Of course, then there are certain contracts like insurance and sale
where there is a duty of full disclosure.

In Housing Authority vs Cilia 7/5/82 Court of Appeal]

 Person applying for housing unit has to give certain information and the fact that Housing
Authority did not know that he had another house available, this amounted to deceit.

Manifestation of Consent
Consent exists when there is a union of the wills between 2 individuals. Consent on the
part of an individual on his own can never give rise to an obligation in terms of law, unless
there is a promise on one hand and acceptance on the other. In the absence of 1 of the 2,
then one cannot really state that consent exists.

The Stages for Consent to be completed are 4:

 It must exist internally;
 It must be externally manifested;
 There must be the identity between acts of volition of the contracting parties, that is the
acts of volition must be the same ( errore in corpore and errore in negotio)
 There must exist the union of these acts of volition.

 The Consent must exist internally

There must exist the will to bind oneself; the consent must be Free, Informed, Serious and
Definitive.
It has to be Serious - one has to have the will to enter a contract (it must not be a joke).
Neither is a consent serious if one contracts an obligation for the mere sake of being
courteous.
It must be Definitive - There must be a „definitive‟ yes. It is not definitive if negotiations
are not concluded and when they are concluded is a question of fact.
It must be Free - one should not be constrained in giving his consent.

 The consent must be externally manifested.

I have to manifest the intention of entering the contract and this form of manifestation
depends on the type of contracts we are dealing with. Generally, we distinguish between
the Free form and the Solemn Form.

The Solemn Form refers to when consent, according to law has to be manifested in a
public deed or a specific form which the law requires, as in the case of sale of
immovables.

Free Form
 
Express Tacit
 
Oral Written Positive Negative Acts.

As regards the Free form of consent, this is again subdivided into Express or Tacit.
 The express form of consent is again subdivided into oral or written, because there are
certain contracts which although do not require a public deed, still require the written form
for the manifestation of consent.
Ex the promise of sale of an immovable must be in writing - public/private. Even the sale
of a car must be the result of a written instrument. If the law does not say anything, then
the oral form would be sufficient.
The oral or written manifestation of ideas may be either Mediate: which takes place
between absent persons or between persons who though in each other‟s presence cannot
understand the language spoken by others. Such communication takes place by means of
an interpreter, mandatory, telephone, etc.. … or Immediate: which takes place between
persons who are in each other‟s presence and who understand directly by means of speech.

The Tacit Form creates some problems. It is subdivided into Positive and Negative Acts.
Tacit forms of manifestation are all those positive or negative acts which though they are
not signs destined for the manifestation of ideas, implicitly show that the person who
performs them wants to bind himself.

The Positive Tacit form of consent has been often readily accepted; it is possible for one to
give his consent without actually saying “Yes”, but by doing what one has been asked to
do; Ex a building contractor who does not say “OK I‟ll start building your house
tomorrow” but actually starts building it.

When we talk of consent, we can consent to the creation of obligations and also its
extinction or renunciation.
Now, when we speak of Negative Tacit consent, there is a problem, especially in the
context of renunciation to obligations. Can one be said to renounce to his rights simply by
saying nothing? Here again there is the usual problem of the traditionalist and modern
perspective.

The Traditionalists do accept a tacit negative form of consent, that is that there be a tacit
renunciation to one‟s right. But one must always infer an intention to renounce. In
other words, if someone does something against my rights, the fact that I do nothing on its
own would not be sufficient for the Court to assume that there was a consent - unless there
was the volonta` on my part to renounce to the right.

The Modern View is that which supports the good faith of the other party: they do not look
at my consent or intention, but they state that if by your inactivity, the other party would
have assumed that you have renounced your right, then the law would protect his good
faith. The moderns protect the affidamento of the other party. If I rightly put my faith in
your inactivity, then my good faith is protected, whether or not you intended to renounce.

Our Courts abide by the „teoria della volonta‟ and this was confirmed in
Sammut vs Azzopardi Court of Appeal 29/11/93
The Court accepted that it is possible to renounce to his rights in a tacit form but on two
conditions:
 il-volonta preciza li d-dritt qed jigi abbandunat u li
 il-fatt huwa assolutament inkonciljabbli mal-konservazzjoni tad-dritt.
That is, the fact that I did not act has to be absolutely “contradictory” to my wanting to
preserve my right - had I wanted to preserve my right, I would have acted.

You find other cases which make the emphasis on the volonta`. For a court to accept a
„rinunzja tacita‟, there must be proof of the „volonta`‟ to renounce to that right. In absence
of evidence of this volonta` the Court will not presume.
A strange case concerned A who had the lease of property X. The owner of X sold it to B
and B took over possession of the property leased and started making alterations. A visited
the site, saw the works being carried out and left without uttering a word. A did not do
anything until the structural alterations were completed and B moved in. The Court here
presumed the volonta` once it was proved that A had visited the site and saw B take over
the possession and do nothing. It is not clear whether all judges would arrive to the same
conclusion.
Our courts do not protect the good faith of the other party but protect the individual‟s will.

As held above there must be an external manifestation of consent. Now it is also important
that what is externally manifested corresponds to what is intended.
If there is a discrepancy between the internal will and the external manifestation then
again there is a defect of consent.
This discrepancy between the will and the external manifestation may be either
 
VOLUNTARY INVOLUNTARY
A person intends something but he This is the result of the vices of
voluntarily manifests a different type consent already mentioned. i.e.
of consent - Simulation. Error, violence and fraud.
One of the parties simulates consent; I want to do something but
he intends something but manifests because I am deceived I do
intent for something else. something else.

Simulation
 
ABSOLUTE RELATIVE
when a person does not want to enter when a person wants to enter a
into a contract, but apparently gives contract, but apparently consents
his consent to it. to a different type of contract.
In this case you have nothing, but In this case, you have something
there is the appearance of something. but there is the appearance of
something different.
In simulation, the truth prevails over reality.

Therefore if in the case of absolute In relative simulation what is accepted

simulation you prove that nothing by law would not be the contract
was intended, then we have nothing, apparently consented to, but it would be
because though in reality he gave his the contract originally intended.
consent to a contract, in truth he did
not really intend to enter into a contract.
 Examples of simulated contracts:

 A husband who is going to separate from his wife. He tries to dispose of his property so
that he will not have to share it with her. He creates a contract of sale and gives property to
his brother. In reality, he intends to give the property as a donation. If the wife can show,
that the contract, was not intended but simulated, then the contract may be annulled and
the property remains in the estate of the husband.

 In succession a child is entitled to at least the legitim which is calculated as a proportion of

the estate. Now a father may want to disinherit one of his children. So he sells his property
to the other children, so that there would not be much on which the other child could claim
legitim. If such „disinherited‟ child proves that there was no contract of sale ( ex the
money was not passed) but a donation, then in that case the contract of sale would be
annulled and the contract of donation would be valid ( and in this the child would be
entitled also to a proportion of property given in donation.) In this case, the contract is null
because the truth prevails, and what the father wanted was to donate.

 To avoid paying duty or tax, contracts are sometimes simulated: ex, instead of entering
into a contract of sale they enter into a contract of exchange, since less duty is paid on the
latter. If government proves that what was intended was not an exchange but sale, then the
government will be able to recover the full duty + the penalty imposed by law.

 There must be an identity between the acts of volition of the two parties .
When we spoke earlier of „error of fact‟ we distinguished between „error in substantia‟ on
the one hand and „error in negotio‟ and „error in corpore‟ on the other. While the first leads
to relative nullity the error in corpore and error in negotio lead to absolute nullity.
Error in corpore (A would be thinking of Flat1 B of Flat 2) and Error in Negotio ( A is
thinking of Sale B of Donation) fall right under this heading, for there would be a lack of
identity between the act of volition/consent of the 2 parties.

There could be disagreement as to the juridical modification of the same contract.

While A is thinking of a guarantee in subsidium, B believes of a suretyship in solidum.
There is not a unity of consent as to the modification.
However, besides the above, there could be other instances because the consent of both
parties must be identical before we reach the contract.

 There must be the Union of these Acts of Volition.

Therefore the consent must be internally willed, externally manifested and identical and
also the consents must meet. This might be a problem especially when we contemplate the
instance of 2 persons who are not in each other‟s presence.

If I am dealing with a person in England it is necessary that my offer reaches such person
and that person accepts. When is the contract concluded?- when he declares his
acceptance, when he transfers his acceptance to me or when I receive his acceptance/ This
point is very important when we are dealing with the termination or the moment of
conclusion of a contract, because according to PIL as a rule, the applicable law is that of
the country where the contract is concluded. It is also important to determine whether an
offer can be revoked, because generally speaking an offer can be revoked unless it is
accepted.

Various theories in this regard have been developed:

The Theory of Declaration.

As soon as the one receiving the offer declares his acceptance of the offer, then the
contract is complete. The followers of this theory argue that as soon as there are 2 consents
which exist at the same time, then the contract is concluded. That is if notwithstanding the
distance, there is the co-existence of 2 consents, then the contract is concluded. It is clearly
more advantageous to the offeree as it offers a freer hand for him to establish or renounce
to the contract, while it undoubtedly burdens the offerer so as to provide evidence so as he
might contradict allegation of offeree. It stands to the detriment of the offerer.
The basis of this theory is that as soon as the declaration is made there is an objective co-
existence and agreement of two wills, and this constitutes consent.
Baudry-Lacantinerie states on the issue:
“...l`accettazione basta. Razionalmente, non si scorge perche` dovrebbe necessitare un`
altra condizione; alorche` l‟accettazione unita all` offerta, vi ha unione di due volonta`;
ora questa unione si costituisce la convinzione e la costituisce da per se..”
This theory is not accepted by most jurists.

The Theory of Transmission.

This states that one should not only accept the offer but it should at least leave one‟s
patrimony- one should dispose or send his answer. Upon sending the answer it is no longer
under my control - this theory is favoured in England.

The Theory of Reception.

It is not enough that one only sends his acceptance but neither that it reaches the person
who has made the offer. It is necessary and enough that the answer reaches its destination (
the place where the person who offered is).
Ex if the answer is sent by post, as soon as the postman posts the letter at the address of
the person who made the offer, then the contract is concluded.
This theory of reception is favoured in Germany.

The Theory of Information.

What is required to complete the contract is not the „yes‟, not the fact that it is „sent‟, not
the fact that it reaches the destination but that the person who makes the offer gets to know
of the answer, therefore we have a full circle of information and as soon as the person who
made the offer gets to know of the answer, the contract is concluded. There is a
SUBJECTIVE CO-EXISTENCE OF 2 CONSENTS.
 This is favoured by the majority of jurists, as it completes the circle and it also has the
advantage that the person who made the offer knows when it is accepted and it is only then
that the contract is concluded.

Thus there is the finalisation of the contract only when it has come to the actual knowledge
of the offerer.

This theory appears to be the only theory which bases the conclusion of a contract on the
“union” between the different wills of the contracting parties, for the union of the wills
really exists when the acceptance has become known to the party making the offer.

This is the theory adopted in our Commercial code. It says clearly that a contract is
concluded when the acceptance reaches the person ( and not only the destination) who
made the offer. Although the Civil Code does not have a similar position and does not
expressly deal with this theory, the general rule is that it also applies to the Civil Code.
This has been confirmed by case-law.

When the 4 Stages for Consent are satisfied

 It must exist internally;
 It must be externally manifested;
 There must be the identity between acts of volition of the contracting parties, that is the
acts of volition must be the same
 There must exist the union of these acts of volition.
Then the consent is Final and Irrevocable.

C) OBJECT
According to Ricci, the object of the contract can be no other than the obligation itself, in
so far as it creates, modifies or abrogates the juridical relationship between the parties
concerned.

Section 982(1) of the Civil Code states that

Every contract has for its subject-matter a thing which one of the contracting
parties binds himself to give, or to do, or not to do.

Such thing is the object or subject-matter of the contract. Now, barring some exceptions,
everything can form the object of a contract, even future things .
We, thereby distinguish between 2 types of contracts concerning future things:
 Pactum de re sperata (Pact of the thing coming into being)  is a conditional contract and
the contract will come into being if that thing we are contemplating comes into existence.
Ex if you can produce 100 tonnes of wheat, I will buy them. If the future thing we are
contemplating does not come into existence, then the contract would not subsist.

 Pactum de Spei (Pact of Hope)  is not a conditional but it is a risky contract. Whatever
would come into being in the near future, I will buy for a fixed stated price. Therefore
whether you have 1 store or a field full of wheat, I will buy for the stated price; that is why
it is a contract based on risk. This has the advantage that the supplier knows that he is
getting paid for whatever he produces; the buyer on the other hand may either make large
profits or vice-versa. This was quite common especially in agricultural produce.

One must also distinguish between a contract referring to a future thing and a contract
referring to a thing which is inexistent at the time when the contract is concluded.
In the former case, the contract is valid, subject that the future thing comes into being. But
if we are contemplating something present, but this is inexistent, then the contract is null.
Thus, one has to see whether the parties are contemplating some present or future object.
In the case of a present object, if the latter is inexistent at the time the contract is
concluded, then the contract is null. Moreover, the latter contract does not become valid by
the fact that the thing which is inexistent comes into being in the future.
The matter is different if we are contemplating something which we know does not exist
and which we contemplate to come into existence in the future.

Thus, it is possible to enter into a contract in relation to things which may exist in the
future. But future successions cannot form the object of a contract. The law forbids a
contract dealing with a future succession, because one would be contemplating the death
of someone else.
However, there are certain exceptions where they are possible. Ex pre-marital agreement
of a future spouse with her parents - she may be given certain property before her marriage
and then she could renounce to it. However these are exceptions to the rule.

Section 984 deals with this issue:

(1) Future things can form the subject of a contract.

(2) Nevertheless, it shall not be lawful to renounce a succession not yet devolved,
or to make any stipulation with regard to any such succession, whether with the
person whose succession is concerned, or with any other person, even though
with the consent of the former; saving any other provision of the law in regard to
any renunciation or stipulation made in contemplation of marriage, or upon the
taking of religious vows.

It is generally held that the object of a contract can be anything which is:
 In commercio
 Possible
 Lawful
 Specified or which may be Specified.
 In Commercio - as clearly expounded in section 982(2):
Only the things that are not ‘extra commercium’ can be the subject of an
agreement.
Nowadays, there aren‟t much objects which are said to be „extra commercio‟ - sacred
objects, public squares, etc. there is some dispute whether the „foreshore‟ is extra
commercio or not. Today the foreshore is considered to be „extra commercio‟ and cannot
be the object of a contract, although there are some who still argue that they can own the
foreshore.
With regard to what is considered to be a foreshore, we still follow the Roman Law
definition as held in the case
Busuttil vs Commissioner of land 26/6/92 1st Hall
“Quel tratto di terra che la piu` alta ondata del mare puo` coprire nella stagione
invernale.”
It was moreover held that the foreshore does not belong to the individual but to the public.

 Possible - we mean Physically possible. If the object of the contract is something which is
not physically possible, then again the contract would be considered to be void. Only
objects which are completely Impossible would lead to the nullity of the contract.

 Lawful - the subject matter of the contract has to be something which is lawful.
Section 986(1) states that Stipulations ‘quotae litis’ are void.
Subsection (2) holds that Saving the provisions of Section 1852 and any other
provision of this Code or of any other law, any obligation to pay a rate of interest
exceeding 8% per annum is also void in regard to excess.

„Quotae litis”- a contract between a lawyer and his client, whereby the fee of the lawyer is
a percentage of the win.
In Malta like the UK, but as opposed to the US, this is unlawful. However in Malta, what
is prohibited, is a portion of the winnings (ex 2%) but it is lawful for a lawyer to agree
with his client a stated sum if he wins the case. Ex an extra Lm1000 if I win the case, but
not a percentage.

Section 985 also states that

Things which are… prohibited by law…may not be the subject matter of a
contract.
Moreover, certain cases widened the concept of „prohibited by law‟ and said that it is not
necessary that the object be in direct conflict with the law, but it is enough if the object is
tainted with unlawfulness to render the object/subject matter unlawful.

In Vella vs Fenech Commercial Court 29/8/1990

This case referred to a sale of a house which was not covered by a building permit. A
person bought a house and later discovered that the house had been built without a permit.
He annulled the contract on the basis that the „object‟, the subject matter of the contract
was unlawful.
 Specified - as stated in Section 983(1)
The subject of an obligation must be a thing determinate, at least as to its species.
Subsection (2) states:
The portion or quantity of the thing may be uncertain, provided it is capable of
being ascertained.

Now by specified and determinate you do not necessarily mean „identified‟. Ex one can
enter into an agreement whereby the vendor binds himself to transfer „a horse‟. This is a
valid contract, even though he might not yet have identified the horse in question. Also, it
is a normal thing if one buys a carton of milk, he is not interested whether he has this or
that carton, so long as he has a carton of milk.
Therefore specification of the thing could refer either to the particular thing (species) or
to the class to which the object belongs (genus).
This kind of relative specification (by genus) is sufficient, because although the genus and
not the particular thing is laid down in the contract, there are means either agreed upon by
the parties themselves, or, supplied by law, by which the particular thing to be performed
may be determined.

Ricci says that there are things which cannot however be determined by sole indication of
species to which they belong. It is necessary to specify their quantity. If I undertake to sell
you oil, wine and grain, this alone is not sufficient to establish the object of obligation.
By failing to indicate the quantity of the wine sold, one may bind himself to provide a
small quantity, which is not capable of giving rise to that interest, which is required for the
existence of the obligation.
Exemption clauses in Standard Form contracts .

Standard form contracts are also known as Contracts of Adhesion. Special reference must
be made to the exemption clauses one often finds in these types of contracts.
David Yates held that “Mass marketing is not possible without mass contracting and this
could only be achieved by the use of standard form contracts.”
It is hardly possible in today‟s age for businesses to be carried out on an individual
bargaining basis. In fact very often the Courts accept „standard form contracts‟ without
dispute.
In Rizzo vs Dawson 1953
The court expressly stated that the fact that the agreement was in printed form and applies
to various individuals, that does not detract from the juridical validity of that agreement.

But then the tendency became that one includes various exceptions in these standard form
contracts and the question is how valid are these „exemption clauses‟?

In such a case you either accept the contract or you do not accept it and the consumer does
not have much choice on deciding whether he wants a particular exemption clause or not.
Normally such big enterprises (airlines) operate within these standard form contracts, or
they don‟t operate at all. Abroad there is a tendency to protect the consumer as much as
possible.
In the UK there is the „Unfair Contract Terms Act 1977‟ whereby they introduced a
general principle of reasonableness. Thus the exemption clause is only deemed valid if
they are considered to be reasonable in the circumstances of the case. If the English Court
does not consider the clause reasonable than it simply ignores it.

In Italy Articles 1341/1342 holds that the exemption clauses (clausole vessatorie) are
valid if the customer has given his written approval, so as in this way it is made sure that
his attention would have been drawn to them. Trabucchi however holds that a legislative
amendment providing some form of control is to be exercised on the contents of these
standard contracts, so as to guarantee that if the clauses are against l‟equita and la
ragionevolezza, they would not be able to bind the contracting parties.

In Malta we have NOT gone that far (as in the UK) and in fact we do not have specific
legislation dealing with exemption clauses or standard form contracts and the rules have to
be decided on particular cases. In fact the Courts seem to offer 3 forms of Protection:

1 If an entrepeuner is relying on a particular clause, this must be brought to the attention of

the consumer. Therefore a clause in small print, to which the attention of the consumer
was not brought, would not be accepted.

In Borg vs Calascione 1961

Plaintiff ordered crates of fruit to be delivered to his house. When the fruit was delivered,
he was given a delivery note which he was asked to sign. This person took the note and
signed. At the back of the note there was a condition that the vendor was not responsible
for the condition of the fruit delivered, and the Court dismissed that clause.
The Court held that before the contract was concluded, the attention of the customer was
not brought to that clause.

In Giordano vs Grech 1933

There was a notice attached to the back of a door of a hotel room saying that the hotel
keeper was exempt from any liability.
The Court again ignored this clause as the attention of the customer must be brought to the
clause before the contract was concluded.
Here the client entered the hotel, signed a book and then went to his room and found this
notice.

In Sammut vs Sullivan 16/10/1995

This case dealt with the question of an exemption clause within a travel brochure. This
individual booked a tour with a particular company, and in this tour the company reserved
the rights to change the tour, to alter the destinations or not to carry out the individual
tours at all. But this particular clause was not brought to the attention of the client in
question. And when he came back to Malta after certain tours were cancelled, he sued the
company for compensation.
The Court accepted his request because this particular clause was not brought to his
attention before the contract was concluded.
In Micallef vs Baldacchino 20/1/92
Under the contract of sale the vendor is responsible for latent defects. He can be exempted
from giving this guarantee, and this was one instance. However no attention was brought
to the purchaser about the existence of this clause.

Thus in Malta the Courts grant a protection to the consumer, in that any clause affecting
his rights must be brought to his attention.

2 Another tendency of the courts in relation to these exemption clauses is that of shifting
the burden of proof in common types of contracts, between people who are used to these
types of contracts.
Ex Traders who export their products on a ship. These know that when the goods are
exported on a ship, a bill of lading is issued and this bill has standard conditions at its
back. Traders ought to know that what these conditions are because they are common and
standard and so the attention of the trader need not be brought to the particular trader. But
in order to somehow afford some protection to the trader, the Courts interpret this clause
as not exempting completely liability on the owner of the vessel, but of shifting the burden
of proof - I put my goods on a ship to be transported to the UK. If the goods result
defective/lost/damaged, then I have to prove that the goods have been damaged by the
members of the vessel.
Also under the normal rules, if I deliver the goods in a good state of condition, then it
would be up to the vessel to prove that it was not negligent. BUT, if there is a clause
stating that the vessel is not responsible for any damage, our Courts have interpreted this
as meaning that it is now no longer the vessel who must show that it was not negligent, but
it is now the trader who must show that the vessel was negligent.
Therefore instead of exempting the vessel from complete liability, the clause is
interpreted as exempting the vessel from the burden of proof.

In Rizzo vs Ellul Sullivan 14/10/87

Plaintiff company submitted that they had ordered „vireg tal-hadid‟ (longer than 12m)
which had to arrive on the vessel „Olkusz‟ of which defendants are the agents. These
„vireg‟ ended up „mghawgin‟. Plaintiff sued for damages.
Defendant pleaded that they were not responsible because according to the bill of lading
single pieces or packages exceeding 12m in length are at the risk of the receiver in what
concerns handling, loading, stowing and discharging..
It resulted that the iron was in a good state before unloading started, however upon
unloading the iron „tghawweg xi ftit‟
Although these clauses cannot be used to exempt the vessel from total responsibility, at
least it exempts the vessel from the burden of proof. It has the effect of transferring the
burden of proof on the receiver of the cargo, to prove that the damage had occurred due to
dolo or culpa of the captain.
The only evidence brought by plaintiff was that when a certain witness saw the vireg on
the quay “kienu mghawgin b‟mod li ma kienux utilizzabli”
The Court confirmed the sentence of the Commercial court and concluded that taking into
consideration all evidence
“ma tezisti ebda prova illi t-tghawwig gie kkawzat waqt l-iskarikar ta` l-istess mill-istiva
tal-barkun, jew li kien hemm traskuragni da parti tal-agent fil-process kollu ta` l-
iskarikar. Anzi mhux eskluz li l-hsara setghet grat fuq il- moll.”
3 Recently there has been a tendency to follow English doctrine- the doctrine of
Fundamental Breach. Basically this doctrine holds that a party cannot rely on a term
of a contract if through his actions he has breached that contract.
Thus there is a limit to the effects of an exemption clause. First you have to perform your
contract before being able to make use of such exemption clause.
This doctrine imported from English law has not been accepted expressly.

In Farrugia vs Camilleri 11/6/93

The customer had ordered certain tiles for his house, and the company which supplied
these tiles had rendered a clause that the company is not responsible for variations in the
colour of the tiles.
When the tiles were laid down on the floor, they eventually all became discoloured and
ugly and the customer sued the vendor for compensation. The vendor tried to rely on the
exemption clause but the Court held
“…il-klawzola kien ikollha xi valur kieku kien il-kaz illi d-difetti naturali kienu
jikkostitwixxu l-eccezzjoni. Imma f‟dan il-kaz…l-irham kollu kien difettuz u dan ibiddel l-
istampa kompletament….. l-irham fornit huwa ta` kwalita inferjuri.”
The company had therefore committed a fundamental breach of the contract and thus
could not rely on the exemption clause.

In Demajo vs Schembri 12/11/94

A person bought a painting from an auction and in the catalogue there is always an
exemption clause stating that the auctioneer is not responsible for the restriction of goods.
Demajo bought a painting by an artist Schreider, but when he took it home, He realised
that it was not by Schreider, but it was a common painting.
He, thus brought an action against the auctioneer to recover the amount paid and to annul
the contract. The auctioneer relied on the exemption clause of the contract, but the Court
dismissed it because it said that he simply did not perform his obligation of delivering a
painting by Schreider. ( had the painting been of the school of Schreider the Court would
probably have resorted to the exemption clause.)

In Sylvana Camilleri vs Swan Laundry & Dry Cleaning 14/11/94

A woman gave her wedding dress to the laundry and the result was that the wedding dress
came out completely burnt and destroyed. The dress had pearls and the company did say
specifically did it is not responsible if the pearls are lost. But then it also got burnt while it
was being dried.
The company tried to rely on an exemption clause that they are not responsible for any
damage to the goods, but again the Court dismissed their argument and said that there was
a fundamental breach of the contract. The Court held that the exemption clause applied to
minor defects not fundamental breach of the contracts.

Thus the court will ignore the exemption clauses if there is a fundamental breach of a
contract.
Therefore in our system we do not have a comprehensive principle dealing with
„exemption clauses‟ and the protection given to the consumer has emerged through
jurisprudence:
1 A particular clause has to be brought to the attention of the individual;
2 The exemption clause would have the effect of at least shifting the burden of proof.
3 Exemption clauses do not exonerate the individual from responsibilities in case of a
fundamental breach of contract.

D) CAUSA.[2]

It has always been debated whether we should have this 4th element of Causa. In Roman
law the contracts were nominate and all transactions had to fit in. With the creation of
innominate contracts, any contracts is accepted upon giving the Causa.

What do we understand by causa?

Ricci, who is rather simplistic in his approach, states that it is “il movente che ha indotto
chi si e` obbligato ad imporre una restrizione alla sua naturale liberta.”
It is defined as being the why of the contract, “il perche`”
Ricci looks at it from a purely objective point of view…. the causa of one is the object of
obligation of the other.
EX The sale of a house:
Why is the buyer paying the money? Because the vendor is giving him the house. Why is
the vendor giving the house to the buyer? Because the buyer is giving him the money.
Thus this is why he defines it as il perche` of the contract. Critics of this theory hold that
„causa‟ can be done away with since it is the object of obligation. Thus basically Ricci
confirms that there is no reason for the existence of causa, because basically the existence
of an object would serve the purpose of causa:
“La scienza non sa neppure trovare una ragione qualsiasi per distinguere l‟oggetto
dell‟obbligazzione dalla causa, essendo che oggetto e` causa dell‟obbligazione non sono
in fondo che una cosa sola.”

Pacific Mazzoni builds on the idea of Ricci. He says that you have got two obligations: the
obligation of the vendor to give the house and that of the buyer to give the money. If the
house is lacking, the obligation of the vendor is defective, as the object is missing. But if
the causa were no element of a contract, the buyer‟s object still exists ( he has the money)
and strictly speaking the buyer would still have to give the money, even though, even
though he‟s not receiving the house ( as he‟s got capacity consent and object).
Pacifici Mazzoni says that this is why the „causa‟ is important - although the buyer has the
object (the money), he has no reason ( no causa) to perform the contract. Indeed the
function of the „causa‟ is to link the 2 objects - the object of the vendor and that of the
buyer.
Pacifici Mazzoni builds on the idea of Ricci by saying that it is true that the „causa‟ of one
party is the „object‟ of the other, but this does not mean that there is no need for a causa,
but on the other hand, that a causa unites both objects:
“Quando trattasi dell‟oggetto, la prestazione dovuta da ciascuno delle parti e` considerata
in se medesima e isolatamente;
Quando trattasi della causa, le prestazioni reciprocamente dovute si considerano l‟una in
opposizione all‟altra.”

This theory still keeps us within the objective sphere. Therefore when we talk of nominate
contracts such as sale, the causa is always lawful as it is established by law.
In fact Galgano states that “I contratti tipici, perche previsti e regolati dalla legge, hanno
tutti una causa…… e l‟assunzione dell‟obbligazione sono direttamente giustificati dalla
legge.”
“per i contratti atipici…il giudice deve accertare… se in essi ricorra il requisito della
causa.”
Torrente does in fact state that in case of nominate contracts the causa is always lawful,
while in the case of innominate the lawfulness must be determined.

French authors especially Planiol et Ripert went beyond the doctrine of Pacifici Mazzoni.
They said that the causa should not have this limited function of determining “I perform
mine if you perform yours.” Causa should also have the function of controlling the
purpose behind the obligation.

Thus the objective interpretation is „my causa exists if your object exists.‟ But then if the
causa exists objectively, one should also seek the subjective interpretation : What is the
purpose behind the contract? If the purpose is against the law, morality and public policy,
then the causa is considered illicit and the contract falls through.
Ex Objective causa - I pay the money to you if you give me the house.
Subjective causa - Why do you want the house?

Our Courts have adopted this dualist approach, examining both the subjective and
objective theories.

When is a causa unlawful?

Section 987 An obligation without consideration, or founded on a false

consideration or an unlawful consideration shall have no effect.

Here one uses the objective test. Ex I pay you a sum of money to repay you for a loan you
have given me. Now it results that you never gave me that loan. Objectively the causa does
not exist.
Once the court determines that there objectively exists a „causa‟ one passes to see whether
it is lawful causa, by adopting the subjective theory.
 Section 990 The consideration is unlawful if it is prohibited by law or contrary to
morality or public policy.
Therefore the subjective theory is to check whether the „causa‟ is unlawful.

1. prohibited by law
There are various examples dealing with this:
 Usuary - Interest at more than 8%. Repaying at an amount superior to the 8% would be
null since the causa is illegal.
 Sale of a house not built according to the building permit. The buyer of such a house
annulled the contract on the basis that the causa was illegal.
 Person gives property on lease to a foreigner for 2 years without the required permit.
Foreigner left the premises without paying and owner sued for 2 years rent. Court
dismissed plaintiff‟s contract because contract was illegal.
 An electrician carrying out his work without the required permit. The electrician
performed his job but the other person refused to pay. The electrician sued the latter. The
latter brought up the subjective theory: Why was I paying? For something illegal and
therefore the contract was null.
 Transfer of vehicles - these must be made in writing and must be registered by the police.
In the past a fee used to be levied and thus no registration took place. Such transfers were
illegal due to an unlawful causa.

In Vassallo vs Cuschieri Court of Appeal 14/11/96 and

Melita Insurance Brokers vs Fenech 14/10/97
The issue of Promise of Sale was discussed. The two parties had not declared the full price
of sale for tax purposes. One of the parties did not appear on deed. The other party sought
to enforce the promise of sale. However, the other party raised the issue of the illegal
causa. In fact this was confirmed as being against the law.

In Gauci vs Zammit 26/5/83

A company had to collect Lm 3000 from an individual X. Y told the Company how to
collect this sum by providing some inside information, and in return be given an amount.
The 1st Hall declared the contract to be illegal due to an unlawful causa, while the Court
of appeal held there was no unlawful causa.

Everything must be examined according to the particular case in question.

In Vassallo vs Cuschieri 18.5.93 1st Hall

The Court said that any agreement which in any way goes against the fiscal laws would be
contrary to public policy and contrary to the law.

2. contrary to public policy

 Generally what courts give as an example are creating of monopolies and the fixing of
prices.
In Aveta vs Pecorella 1936
This case deals with a society of self-drive car owners who fixed tariffs at a higher rate
than the normal rates. Such an agreement was declared null because imur kontra l-interess
pubbliku.

3. contrary to morality
There are quite a few cases dealing with concubinage and prostitution
 If I give money to a prostitute for services rendered, that is an immoral causa and the
contract would be null.
 If I live with a woman outside marriage. I give a loan to this woman ( because of her
services) and I come to recover the money. The contract would be null because it is based
on an immoral causa.

But Courts have been careful to distinguish where the concubinage

- was the reason of the contract from situations where the concubinage
- was the occasion for the contract.
In the former case the contract would be declared null.

EX If Mr.X is living with Ms Y in an immoral state and he gives money to Y for the
services being rendered. If X tries to recover the money, the contract would be considered
null, because the reason for the obligation is an immoral one.

If Mr.X is living with Ms.Y in an immoral state, and Y needs to buy something and X
gives her money, if X tries to recover the money, the contract would be valid.

In Bajada vs Lumb 1954

“Dak li hu importanti hu jekk il-kawza ta` l-ghoti tal-flus jew oggetti ohra, ikunu meta
jkunu moghtija, jkollix jew le rapport dirett mal-konkubinat jew ahjar jekk il-konkubinat
kienx il-kawza ta` l-obbligazzjoni jew kienx meriment l-okkazzjoni.”

The same principles were enunciated in Dimech vs Aquilina 1983.

In Fenech vas Jubber 31/1/1983

Two persons were living together. The woman had a plot of land and the man was a
contractor and he built the house himself. They quarrelled. The house was the woman‟s
since it was built on her land. The man had to move out and he sued the woman for having
built the house. The Court held that the house was built for an illicit purpose and so the
causa went against morality. The man lost the case and the woman had a freely built
house.

In Fenech vs Calleja 28/6/07

The Court of Appeal held that “la locazione di uno stabile per lo scopo di prostituzione e`
nulla” - the lease of such premises would be immoral.
Plaintiff was asking Court to order defendant to pay him what was due in rent of some
premises in Valletta. However these premises were used for prostitution purposes and
plaintiff was aware of it; so much so that he himself „tentando di speculare sull‟esercizio
della prostituzione‟ had charged high rent.
The Court confirmed the sentence of the First hall saying that such a contract “non ha
nessun effetto giuridic perche` e` contrattazione immorale.”

The Court has recently held that an unlawful causa can be raised ex officio in the case
Vassallo vs Cuschieri presided by said Pullicino. The court is duty bound to raise
the issue „ex officio‟ even if the parties do not agree to raise the issue themselves.

Section 991(2) states that If the consideration is unlawful in regard to both

contracting parties neither of them, unless he is a minor, may recover the thing
which he may have given to the other party, saving the provision of Section 1716.

Section 991(1) holds that Where the consideration for which a thing has been
promised is unlawful only in regard to the obligee, any thing which may have
been given for the performance of the contract, may be recovered.

Therefore if the consideration is unlawful for one and not for the other, the „innocent‟
party may recover what he has given, but not the other party.
Ex If I give the property on lease and this property is used for prostitution purposes, but I
did not know of that purpose, I can take the property back, because the contract would be
null but the other party would not be able to take the money back.

A case which clearly referred to „the motive‟ and its subjective test was:
Scicluna vs Chetcuti 1951
“il-kawza jew motiv impellenti jew determinanti tal-kontraenti sabiex waslu ghall-
konvenzjonijiet jew obbligazzjonijiet kienet kawza direttament kontra l-ligi u kwindi
illecita.”

Of course there is always the problem of determining what is the determining motive
behind the contract. In the case of the electrician without a licence, the court held this to be
an illicit causa and the electrician would not be able to sue for his dues.

But there have been other case which have not followed this particular trend:
Pisani vs Degiorgio
A person sold cars without having a licence. The Courts did not see the fact of not having
a licence as being the principle motive of the transaction. He was liable to a penalty but
did not render null the contract.

To pinpoint what the motiv impellenti is the Courts have not always followed the same
criteria. In some cases the Courts have held that any illegal aspect (such as the absence of
a license) of a contract rendered the „causa‟ illegal; other cases held that it is the real
 intention itself behind the contract which has to be illegal and therefore absence of a
licence doe not mean that the whole intention of a contract is illegal.

Therefore to see whether Section 990 (The consideration is unlawful if it is

prohibited by law or contrary to morality or public policy) is applicable, the test
have varied.

The Inexistence of Causa

With regard to the existence or otherwise of the causa the test has always been objective.
Ex A gives B Lm100 because he thought he owed him Lm100 but in fact he didn‟t.
The causa need not be mentioned in the contract itself. No rule imposes an obligation to
lay down the causa in a contract. Also the causa need not be express so long as there is a
causa behind the contract. The contract is still valid as long as the causa may still be
proven:
Section 998: The agreement shall, nevertheless, be valid, if it is made to appear
that such agreement was founded on a sufficient consideration, even though such
consideration was not stated.

Referring to the existence of a causa one has to distinguish between:

 The existence of a causa at the moment of conclusion of the contract.
 The existence of causa at the moment of fulfilment of the contract.

The courts do not often make this distinction. Strictly speaking the existence of causa
should be determined at the moment of conclusion of a contract, because causa is an
element of contract and would be discernible at the moment of conclusion.
If causa ceases to exist later on when the contract comes to be fulfilled, one cannot really
say that the contract lacks causa.
EX of a case where there was an agreement between a seller and a buyer for a car. The
contract was signed today, the parties agreed and the vendor had to import the car from
abroad. In the time between the conclusion of the contract and the order of the vendor to
import the car, a legal notice was issued and the importation of that particular car was
prohibited. Here the Courts wrongly annulled the contract on the ground that it was
without causa. But strictly speaking when the contract was signed there was a causa. What
happened afterweards would render the contract unenforceable but not inexistent.

A similar case is one where 2 persons agreed to set up a partnership and both parties had
agreed to render their services to the partnership. One of the partnerships did his job, while
the other stayed at home and did nothing. At the ened of the year the one who stayed at
home wanted his share of the profits and therefore filed an action claiming his share of the
profits. Here again the Courts held that his claim was without causa, because once he did
not render services, then he has no right for compensation. But here again, the causa
existed at the moment of conclusion of the contract; What happened afterwards is lack of
enforcement of the obligation. If the causa fails to materialise later, then the contract is
ineffective and not inexistent.
 The causa existed at the moment of the conclusion of the contract; if something happens
later, that is a different matter.

Torrente uses this distinction between:

 mancanza genetica della causa e
 mancanza funzionale della causa

La causa puo mancare fin dall‟origine, dalla genesi del negozio (mancanza genetica della
causa). Puo anche avvenire che, pur esistendo originariamente la causa, per vicnede
successive non sia piu realizzabile il risultato a cui il negozio era diretto (mancanza
funzionale della causa).
In the latter case, of the mancanza funzionale della causa, the contract is not null, but the
party injured may rescind the contract.

In the case Sister Sommers vs Fountain 4/6/80

Sommers was a Blue Sisters Nun. Fountain was a woman who had booked a labour room
in hospital so that when it is her time to deliver, she would go there. But then, when the
time came, she went to another hospital.
The sister sued for the booking fee and the woman replied that she would not pay as she
had not made use of the room. The Court held that at the time for which the room was
booked the room was free and available to you for the time you had booked for. Therefore
even though you did not make use of the room, you still have to pay for it.
The Court held that the causa exists and it continues to exist because the room was made
Available. Whether you mad use or not of the room is another thing.

False Causa

This is the 3rd type of a defective causa. Section 987 states

An obligation…founded on a false…consideration shall have no effect.

Here the situation is similar to when we discussed „relative simulation‟. In the case of a
false causa, a causa does in reality exist, but the parties give the real causa a different
appearance to make it look like a different causa. Ex you may want to gain something
which is illegal and you therefore create a false legal causa in order to give the semblance
of legality to the illegal obligation.

Just as in simulation, Truth prevails over Appearance. Therefore when a declared causa is
found to be false, the Court will see what is the real intended causa. Then if the real
intended causa is against the law, the obligation would be null. If the real intended causa is
valid, then even the contract is valid. So a false causa does not necessarily lead to the
nullity, but it depends on the real intended causa.
In fact Section 989 states:
Where the consideration stated is false, the agreement may, nevertheless be
upheld, if another consideration is proved.
 In Borg vs Brignone 5/5/97
The Courts sought to enforce a private writing which purported to create a loan. Brignone
did not pay the loan and Borg sought to recover. However the money owed was due not on
the basis of a loan but as a gambling debt.
There is evidently a false causa. The court had to discover the true intention, which was
the repayment of a gambling debt.

If the true causa was lawful then the contract would be upheld.

The presumption is always that every contract is bound by a causa. The burden of proof is
always on the person who alleges that causa is unlawful, or that there is no causa.
A person says that the contract is not valid because there is no causa. What if no causa is
declared in the contract? How is the person to prove that there is no causa? What he must
do is to shopw that there is no possible causa on which the contract can be based. This
would be a very difficult burden of proof.
If the causa is declared, the party stating its inexistence has to prove what he is saying.
Then it is up to the other party who is claiming that contract is valid to show the existence
of some other causa

Of The Effects Of Contracts

Contracts affect the relationships:
 Between the parties themselves and
 Vis-à-vis third parties.

 Between the parties themselves.

Section 992(1) states: Contracts legally entered into shall have the force of law for
the contracting parties.
Therefore contracts are positive law for the parties and the Courts will have to interpret the
contract as it interprets any other law. Thus the courts will have to follow the terms of
agreement between the parties. If the contract is in writing, and the wording is clear there
is no scope for interpretation.

Parties may even go against what is stated in the general law by virtue of their agreement,
unless there is a prohibition by the law itself by way of mandatory rules or because of a
prohibition of public policy. But barring these exceptions, private law may supersede the
general rule.

Section 992(2): They may only be revoked by mutual consent of the parties, or on
grounds allowed by law.
However, besides by mutual consent, or on grounds allowed by law, there exist contracts
which the law states may be annulled by 1 of the parties:
 mandate
 contract of works (appalt)
 civil partnership.

Section 993: Contracts must be carried out in good faith, and shall be binding not
only in regard to the matter therein expressed, but also in regard to any
consequence which by equity, custom or law, is incidental to the obligation,
according to its nature.
Therefore the obligation is binding not only for what the parties are expressly stating; but
also for what is incidental to the fulfilment of the contract. Therefore the contract has the
force of law between the parties, not only for what is declared, but also for what is
incidental.
Moreover this is the only time the concept of good faith is referred to. While
Continental law is moving towards the creation of good faith. In Malta once the contract is
created it must be carried out in good faith.

There is a presumption that when a person enters into a contract, he binds not only himself
but also his heirs and persons claiming under him.
In fact as held in section 998:
Every person shall be deemed to have promised or stipulated for himself, for his
heirs and for the persons claiming through or under him, unless the
- contrary is expressly established by law,
- or agreed upon between the parties,
- or appears from the nature of the agreement. such as maintenance allowance.

It is possible for the parties to exclude the heirs or limit the effect of their obligation, but it
is not possible for a person signing a contract to bind only his heirs and excluding himself.
This is not allowed under the general principles of law.

Transfer of Ownership

Section 994 states: When the subject matter of a contract is the alienation of the
ownership, or of any right over a certain and determinate thing such ownership
or other right is transferred and acquired in virtue of the consent of the parties,
and the thing remains at the risk of the alienee, even though the delivery has not
taken place.

Therefore where the thing alienated is certain and determinate, the ownership or other
right passes on to the other party, as soon as the 2 consents meet. As soon as the contract is
concluded, the title is transferred and the delivery of the object or the payment of the price
is immaterial.( This is not what was applicable in Roman times. In Roman law the transfer
of title occurred only when the delivery took place.)

Notwithstanding the delivery has not yet taken place and the thing is still not in possession
of the new owner, the risk of damage/destruction of the goods passes on to the new owner
 as soon as the contract is concluded. Therefore the risk is transferred with the ownership.
This is the rule of res perit domino.

Section 995(1): Where the subject matter of the contract is an uncertain or

indeterminate thing, the creditor does not become the owner of such thing until it
has become certain, or the debtor has specified it, and has given notice to the
creditor that he has specified it.

Section 995(2) Until the thing has become certain or has been specified, it remains
at the risk of the debtor.

Therefore ownership is not transferred with the conclusion of the contract if the thing is
uncertain or indeterminate. It remains under the ownership of the alienor.

 In regard to 3rd Parties.

a) Immovables
The contract is binding on 3rd parties only when it has been registered. Once A and B
enter into a contract relating to immovables, ownership is transferred, but for it to be
effective against 3rd parties, it must be registered in the Office of the Public Registry, as
stated in Section 996(1).

Section 996(2) holds that Where the alienation is made by judicial auction the note
for the registration shall be signed by the registrar of the Court under the
authority of which the adjudication of the thing shall have taken place.

b) Movables
Free form is sufficient to transfer ownership between A and B but vis-a-vis C the contract
becomes effective when there is a delivery.
As stated in Section 997:
Where the thing which a person has by successive agreements undertaken to give
or deliver to 2 or more persons is movable by nature, or a document of title
payable to bearer, the person to whom the thing is delivered, and who obtains it
in good faith, shall have a prior right over the other or other and shall be entitled
to retain it, even though his title is subsequent in date.

c) Incorporeal Rights
The contract is concluded when there is agreement between A and B, but it becomes
effective against third parties, only when the debtor is informed of the transfer.

Therefore the law introduces 3 rights of preference in cases of transfers to more than one
person- registration for immovables, possession for movables and notification to the
debtor in case of corporeal rights.

Examples:
 If A sells house to B, and A sells the same to C. If C registers before B, C is the owner vis-
à-vis 3rd parties.
 If A sells a book to B, there is agreement but there is no delivery as yet; if A hands over
the book to C, we have delivery and C would be owner vis-à-vis 3rd parties.
 If A sells his credit to B, and then sells it again to C. If C informs the debtor before B does,
then C is deemed to be the owner.

Although the law says that the contract is concluded as soon as there is exchange of
consent, vis-à-vis third parties who are competing with me, something more is needed.

In England vs Gauci Borda 24/5/68

It was held that possession will give a preference not only to movables by nature but also
to personal rights such as lease.

Lease is classified as a movable and so if the same property has been leased to the same
person, it is the person who takes the possession of the property first who is the tenant.
In Ciappara vs Mifsud
Meta jkun hemm zewg lokazzjonijiet successivi ta` l-istess fond jirbah dak li jkun ha l-
pussess tal-fond l-ewwel.

In Baldacchino vs Pace December 1997

Judge Arrigo presiding in the 1st Hall held that movable by nature referred to in section
997 is extended to include also movable by law. If 2 persons are claiming the same shares
of the company, preference is given to that person registered by the company.

Can a contract directly effect 3rd parties?

Section 1001 states: Contracts shall only be operative between the contracting
parties, and shall not be of prejudice or advantage to 3rd parties except in the
cases established by law.

A contract between 2 persons does not affect a 3rd party - a contract between A and B
does not effect C, C does not benefit from it, neither is C being prejudiced by it. And C has
to respect that contract. In this regard there is a common maxim:
Res inter alios acta terzio neque nocet neque prodest.

Torrente explains this maxim: il terzo non acquista alcun diritto da un contratto al quale
e` rimasto estraneo, quando le parti non hanno alcuna intenzione di procurare al terzo
l‟acquisto del diritto, ma non esclude che la volonta` dei contraenti possa essere diretta
ad attribuire diritti ad un terzo: non si vede infatti, il motivo per cui questa volonta non
possa essere rispettata.

If A sells a house to B, B can stop C from entering into the house, as C has to respect the
contract. Even if B has not yet registered his title, C is not entitled to enter the house. But
 if C also acquires the house from A and registers it before B does, then C has a preference
over B.

In our code we still abide by the provisions, unlike Continental law, to the effect that
contracts affecting 3rd parties have to be limited in scope and effect, and thus they have to
abide by the terms established by law.

In fact the general norm is that established in Section 999(1) which states that
A person cannot by a contract entered into by his own name bind or stipulate for
anyone but himself.

Nonetheless there are 2 exceptions:

 Promessa di Rato - Section 999(2)

Nevertheless a person can bind himself in favour of another person, to the

performance of an obligation by a 3rd party, but in any such case if the 3rd party
refuses to perform the obligation, the person who bound himself or promised the
ratification shall only be liable to the payment of an indemnity.

This section deals with a promessa di rato, a promise by a person binding himself that he
will get the consent of a 3rd party to that obligation. An example would be in the case of
co-owners of property.
The property is co-owned by A& B and there is a prospective buyer who does not want to
buy A‟s share only, but wants to buy the whole property. B is not present, and so what A
can do is to enter a „promessa di rato‟, whereby A first sells his share and also promises
that B will transfer his share.
That promise binds A, but does not bind B, and B may simply ignore the promise. But if B
chooses not to perform this obligation, then A would be liable for damages.
The 3rd party can refuse without giving any particular reason.
Therefore the promessa di rato actually binds the person who is making the promise and
not the person on whose behalf the promise is made.

In Xuereb vs Pace 22/6/64

“l-obbligazzjoni li tigi ffurmata bhala oggett mhux il-fatt tat-terz, imma l-fatt proprju tal-
promettent ghaliex dan jobbliga ruhu li jipprokura l-obbligazzjoni ta` dik it-terza
persuna.”
It was thought that upon the promessa di rato of one of the parties the possession passed
and if after the 30 years the other co-owner did not sell his share, the buyer would have
acquired by means of acquisitive prescription.
The Court did not accept this argument. It held that possession gives title but one must
possess animo domini. When one acquires property with promessa di rato there was no
possession animo domini. The property is not his, he can never prescribe in his favour.
Since this judgement the effects of the promessa di rato have been reduced. The buyer
could sue the promissor for damages but he surely hasn‟t acquired ownership.
 Such action for damages would have to be made within a 5 year prescriptive period, and
these 5 years start running from the moment in which that other person refused to perform
that obligation.

Recently, there was a case where the „promessa‟ was used with respect to a minor. The
parents did this in order to avoid the permission of the 2nd Hall Civil Court so as they
would be able to get authorisation for the sale of the thing in question. They also
presupposed that the minor would ratify the contract entered into by his parents on his
behalf at the age of 18. But the minor, on reaching 18, refused to ratify the contract. The
question arose whether the 5 year period starts to run from when the minor submitted the
refusal. The Court of Appeal held that it starts running from the moment of refusal.

Torrente gives the following example: If I bind myself to get you employed with X. X
„che e` rimasto estraneo al negozio, non e` affatto vincolato per effetto dal mio impegno:
saro io che dovro‟ procurare di convincere il mio amico a fare quanto ho promesso.‟ If X
does not employ you „saro tenuto ad indenizzare l‟altro contraente dei danni che ha
subito per avere fatto affidamento sull mia promessa.‟

 Section 1000:

It shall also be lawful for a person to stipulate for the benefit of a 3rd party, when
such stipulation constitutes the mode or condition of a stipulation made by him
for his own benefit, or of a donation or grant made by him to others;
and the person who has made any such stipulation may not revoke it, if the 3rd
party has signified his intention to avail himself thereof.

The Italian Code has only one section in connection with contracts effecting 3rd parties
(Art. 1411), stating that it shall be lawful for 2 persons to stipulate a contract for the
benefit of a 3rd party, provided “che lo stipulante abbia un interesse, anche se solamente
morale, all‟attribuzione di tale vantaggione al terzo.[3]”
In our case Section 1000 is some what more lenghty as the stipulation has to constitute the
mode or condition of a stipulation made by him for his own benefit.

Section 1000 is contemplating that the contract has 2 parts in it ( benefit of both):
(a) I bind you to do something in favour of X, if you do not do it you have to give me Lm
1000, or
(b) I am selling you property: give Lm 9000 to me and Lm 1000 to X. Therefore in all
cases the person who has entered into the obligation must have a benefit. In Italy, even a
moral interest is enough and therefore the requirement is different under our law as in
Malta, the contract must have some benefit for the party to that contract.
(c) Another ex: I am transferring a business concern on condition that you maintain the
contracts of employment with the current employees. I am selling the business and as a
condition of that benefit which I am getting, I am imposing on you an obligation in favour
of a 3rd party.
Basically section 1000 is saying that such a situation should contain itself another
stipulation which is to the benefit of the party to the contract. Such a situation has
sometimes been used to justify the giving of life insurance policies.
A pays a life policy, and upon A‟s death the insurance company will give a payment to B.
We do not have a law dealing with life insurance policies, but this section has been
invoked to make the policies „legal‟. However, some argue that A (or the one making the
life policy) pays premiums every year, and does not get any benefit himself. On A‟s death,
it is B who is going to get the benefit. However, the Courts have given a wide
interpretation to the phrase “benefit” and they said that the fact that A made a life
insurance policy is of a moral benefit to A himself[4]. Hence the Courts have also
accepted the concept of a moral benefit and therefore a life insurance policy is seen as a
valid contract under Section 1000.
However, the Courts have not allowed a life insurance with a named beneficiary, that is on
A‟s death the proceeds go to a specifically named person. That would be in violation of
Section 984, whereby one cannot stipulate a contract dealing with future successions as I
would be deciding what is going to happen with the funds before I die.
Normally the proceeds of a life insurance would go to all my heirs - this avoids the
possibility of by-passing the succession law. ( I could invest all my property in an
insurance policy to go to Mr.C, thus leaving B& D without legitim.)

In whatever type of stipulation, be it a donation or a grant, I can stipulate contracts in

favour of 3rd parties, so long as I derive some benefit. Ex of a donation. It is quite
common in wills to leave a legacy to a person on condition that he pays Lm2000 a year to
his sister.

One should also distinguish between a MODE and CONDITION.

A contract made subject to a Condition, may be annulled if the condition is not
performed.
If the contract is made subject to a Mode, the contract cannot be annulled if the mode is
not performed, but one can only insist on the performance of the mode.
“A mode is a condition which dimishes the enjoyment of an acquired right, the non
performance of which does not however effect the continued enjoyment of that right.”

Ex I give you my business on condition that you give Lm 1000 a year to your sister. If
such condition is not observed, the contract may be annulled. If the Lm 1000 a year is only
a mode of the contract, that is I leave you the business, but the mode of carrying such out
is to give Lm 1000 to your sister - then the contract may not be annulled but one may
insist on the performance of the mode.

There was a case where a person gave property in a will to a congregation of nuns subject
to a mode or condition that the nuns had to give their religious doctrine to the children of
the village. Because of a shortage of nuns they could not continue teaching this religious
doctrine and the heirs sought to annul the contract and get the property back. The Court
held that this teaching was not a condition but only a mode of contract and if the
obligation is not performed, still the property was not lost[5].
In every case, the Court when deciding whether it is a mode or a condition, it looks at the
intention of the parties and the type of wording used.

Section 1000 also stipulates that ….. and the person who has made any such
stipulation may not revoke it, if the 3rd party has signified his intention to avail
himself thereof.

This is similar to the provision in the Italian Civil code (1411), and in the words of Del
Giudice
“…con l’accettazzione del diritto, il terzo non diventa parte contrattuale, ma rende
definitivo l’acquisto del diritto: a seguito di tale dichiarazione, lo stipulante non potrebbe
piu` revocare (ritirare) o modificare il beneficio.”

In Millard vs Said 14/09/88

A property was occupied by an old woman. She had no title of lease, but occupied the
property with owner‟s consent. The owner sold the property to a 3rd party and bound the
3rd party not to evict the old woman until she dies. Subsequently, the owners changed
their mind and made another contract of sale with no conditions at all. The old woman
instituted an action to annul the second contract because she argued that it was a breach of
obligations in her favour arising from the first contract.

A number of points arose before the Court of Appeal:

1) With regard to whether the old lady could have started the case before an attempt had
been made for her eviction, the Court said that once the 1st contract was cancelled by the
second contract, the old lady had an immediate interest to make the action to have the 2nd
contract annulled.
“…l-azzjoni mhux intempestiva. Il-konvenuti jallegaw li l-attrici ma kellha ebda dritt li
tikkostitwixxi l-kawza qabel ma d-drittijiet taghha jigu vjolati. Izda l-qorti osservat li l-
vjolazzjoni saret bil-kuntratt u ghalhekk kellha kull interess tagixxi biex tipprotegi dawk li
hija tippretendi li huma d-drittijiet taghha.”
Thus as soon as the second contract was made, her rights had been violated.

2) With regard to against whom the old lady had to file the case: the Court held that the
action had to be made against both parties to a contract: “il-kawza saret tajjeb kontra z-
zewg kontraenti u t-tnejn li huma legittimi kontraditturi.”

3) The defendants argued that since the contract was between A and B, the old lady had no
personal interest in the matter. But the Court said that once the obligation in favour of the
3rd party (old lady) had been made known to the 3rd party, and the 3rd party had accepted
the obligation in her favour, then she becomes a party to that contract, and that contract
cannot be changed without the consent of the 3rd party: ….. and the person who has
made any such stipulation may not revoke it, if the 3rd party has signified his
intention to avail himself thereof.
 Therefore any change to that contract would also require her consent: “l-attrici ghanda
azzjoni personali u tista tagixxi a bazi ta Artiklu 1000, peress li bl-ewwel kuntratt bejn il-
prokuratur u Said saret kundizzjoni favur terz, u r-rizerva kienet bhala kundizzjoni ta` l-
istess koncezzjoni enfitewka u din il-kundizzjoni saret favur terzi, it-terza giet infurmata
bil-kundizzjoni favur taghha b‟ittra li ntbaghtetilha qabel ma sar it-tieni kuntratt u
ghalhekk ma tistax titnehha minghajr il-kunsens tagha.”

 In these types of contracts for the benefit of 3rd parties, once the 3rd party gets to know of
this obligation and accepts it, he is no longer considered to be the 3 rd party, but becomes a
full party to the contract and as such he has a personal interest to secure the
enforcement of that obligation in his favour.

OF Proof of Obligations and their Extinguishment Sections 1232 - 1235

Section 1232(1): Where the law does not require that an obligation or its
extinguishment should result from a public deed or a private writing, such
obligation, or its extinguishment may be evidenced by means of witnesses or any
other means allowed under the provisions of the COCP.

Section 1232(2): A public deed is an instrument drawn up or received with the

requisite formalities, by a notary or other public officer lawfully authorised to
attribute public faith thereto.

Section 1233(1): Saving the cases where the law expressly requires that the
instrument be a public deed, the transactions hereunder mentioned shall on pain
of nullity be expressed in a public deed or a private writing:

 any agreement implying a promise to transfer or acquire, under whatsoever title,

the ownership of immovable property, or any other right over such property;
 any promise of a loan for consumption or mutuum;
 any suretyship;
 any compromise;
 any lease for a period exceeding 2 years, in the case of urban tenements, or 4
years, in the case of rural tenements;
 any civil partnership; and
 for the purposes of the Promises of Marriage law, any promise, contract, or
agreement therein referred to.

(2) Where, in the case of a private writing, the writing is not signed by each of the
parties thereto, it must be attested in the manner prescribed in Section 634 of the
COCP.

Therefore these transactions must be expressed in a public deed or a private writing under
pain of nullity. Here one should carefully note the words „on pain of nullity‟, as in this
case the writing is not a matter of form but a matter of substance. Therefore in Malta,
in the cases mentioned in Section 1233, the writing is a question of validity - a matter of
substance. The contract simply does not exist.

If the consent is not expressed in writing, Ex, a verbal promise of sale to transfer an
immovable it is invalid for the purposes of law. ( of course the Court is satisfied that the
agreement did once result in writing, but the writing has been lost or destroyed, then the
Court will still accept the validity of the agreement - therefore one need not actually
produce the document in Court in order to prove the validity of these agreements).

One must also dstinguish between a private writing and a writing. There is a
fundamental difference between the two. This difference appears also in the Italian Code,
where we find per iscrittura (writing) or per scrittura (private writing).

Does a private writing require the signature of both parties on the document?

If I sign and the other party has assumed the obligation and is in possession of the
document, but has not signed it, would that amount to a valid private writing?

In Buttigieg vs Ellul 18/6/38

“F‟kaz li ssir skrittura privata u wiehed mill-partijiet ma jiffirmawhiex, il-fatt li l-parti ma
tkunx iffirmata tkun zammet l-iskrittura ghandha, imbaghad tipproducieha f‟kawza bhala
prova, jsir ekwivali ghal firma.”

But in Spiteri vs Buhagiar 20/1/61

The Court said that the material possession of the writing in the hands of the party who
failed to sign it could not supply the requirement of actual signature as required by law.
The Court said that there cannot be a private writing if there at not at least 2 signatures-
this is a requirement „ad validatem‟ and not „ad probationem‟.

But in Brincat vs Falzon 17/6/91

The Court of appeal again revised that decision, but the Court emphasised that it was
limiting its judgement to the facts before it. There was a bank guarantee ( which normally
requires a private wirting) which was signed by the client but not by the bank. The bank
had possession of the guarantee form and the Court held that this was a valid private
writing.

Would an exchange of letters amount to a private writing?

Also the courts have held that an exchange of letters would NOT amount to a valid private
writing. Ex A sends a letter to B asking him to buy his house for Lm 10,000. B answers in
another letter and agrees to the sale. That is not a private writing.

In Vella vs Cassar 24/4/67

The Court analysed past jurisprudence, examined autors and concluded that an exchange
of correspondence does not amount to a privet writing. What is required is one documet
signed by both parties, not necessarily contextual, but on the same document.

Thus a private writing requires the signmatures of both parties, but does not require that
such suignature be witnessed by a notary. But iof 1 of the parties does not know how to
sigh his name, then it is necessary that he traces his mark in front of 2 witnesses, a notary
and a lawyer.
This was held in Zarb vs Pullicino 28/3/88
If the mark is not attested in such a way the mark is null.

Contracts which at least have to be carried out in a private writing (1233(1))

a) any agreement implying a promise to transfer or acquire, under whatsoever

title, the ownership of immovable property, or any other right over such property;

There is a dispute as to whether a mandate to sign a public deed needs to be done in

writing. Our law states that a mandate is avlid even if carried out orally, but there are other
authors such as Ricci, who argue that if I am authorising another person to sign on my
behalf a contract relating to immovabkle property, that mandate has to result in writing by
means of a public deed. Some local judgements have held that mandate could be carried
verbally, however there is still some validity in Ricci‟s argument that a power of attorney
to enter into a public deed should be manifested in a public deed itself.

There have also been cases which have held that a promise to enter into a division of
property does NOT require a private writing as in the case of a promise of sale. Therefore
a partition has to be carried out be a public deed, but a promise to enter into a division
need not be carried out by means of a writing.
This has recently been confirmed in Caruana vs Caruana 30/5/85 1st Hall and
Giordamania vs Dimech
Where the courts held that a verbal promise to effect a partition suffices. This is because
Section 1233 speaks about “any agreement implying a promise to transfer or
acquire…” and a promise of contract of division or partition, whilst having declaratory
effects does not actully transfer property.

However in Sammut vs Sammut 14/2/95

The Court of Appeal held that a promise to effect a transfer requires a writing and this also
applies to a promise to effect a partition.

A contract of partition has declaratory effects and does not effect a transfer; on the basis of
this one would tend to prefer the position taken by the other 2 judgements.

b) any promise of a loan for consumption or mutuum;

 It is the promise of loan which has to result from a writing and not the loan itself. If I
actually give a loan, no writing is required.

c) any suretyship;

If a person is guaranteeing the debt of someone else, that has to result in writing - a verbal
guarantee has no effect.
But the Courts have distinguished between a suretyship and when a person assumes the
liability of someone else.
I am not saying “if he does not pay, I will pay” ( a suretyship) but I am saying “the debt is
mine and I will make good for that debt.”
Again, whether it is an assumption of liability or whether it is a suretyship depends on the
wording used in the particular contract or on the circumstances surrounding that
obligation.This is very important since a suretyship requires a private writing while an
assumption of liability does not. So, the individual is not guaranteeing a debt, but is
assuming the liability, he may do that verbally, without the need of a private writing.

In Xuereb vs Cremona
The Court had to interpret the phrase “Ahna naghmlu tajjeb ghalih” It concluded that this
amounted to a guarantee and since there was no writing then it is not valid.

d) any compromise;

This is understood to mean “a compromise of a pending lawsuit”. Once the matter has
been brought before the Courts, if the parties want to resort to a compromise, then that has
to result in writing.
But if there are 2 individuals who are involved, ex, in a traffuic accident and the matter is
settled amicably and they do not involve the police, once the matter was not brought
before the courts, a verbal compromise is sufficient.

e) any lease for a period exceeding 2 years, in the case of urban tenements, or 4
years, in the case of rural tenements;

A lease for 1 or even 2 years does NOT require a private writing. An issue arose when for
example we verbally make a lease for over 6 years, would it be valif for 2 years or would
it completely be invalid? The conclusion generally reached by the Court is that such a
verbal lease would be completely null in its entirety.

f) any civil partnership;

 for the purposes of the Promises of Marriage law, any promise, contract, or
agreement therein referred to.

Although the law mentions these contracts here in Section 1233, we must not assume that
these are the only contracts that have to be carried out in writing.
 Ex annuities (section 1690), arbitration awards, sale and transfer of motor vehicles require
a private writing.

[1] The law only discusses instances of „relative nullity‟. The law never expressly deals with cases of
„absolute nullity‟. In such cases there is no need for the law to say the contract is null.
[2] It is better to use this term rather than „consideration‟ since this has a different meaning in English law.
[3] Torrente
[4] TM in 1998, has also equated the benfeits acquired by 3rd parties from life policies to donations.
[5] TM in his 1998 version states that the „mode‟ of the contract, was that the nuns were to take care of the
person who gave them the property, and since she was growing old they could not continue in this „mode‟
and thus sent her to a Church Home. The elderly sought to annul the contract on the basis of non-fulfilment
of this condition. However the Court held that this was a mode, and thus does not suffice to annul the
contract.

Pasted from <file:///C:\Users\Clarsti\Documents\Downloads\FEMANotesObligations.doc>

Lecture 2
13 February 2009
14:00

Audio recording started: 14:19 13 February 2009

Phyzical violence and moral violence. Phyzical violence is When a person contracts and his consent and
is derived by an external force, the consent is excluded all together. When we have moral violence,
these are acts on the mind of the contracting party and inspire fear on the contracted party to act to
such fear. Altough our law does not establish the characteristics of violence, jurists have developed 3
main characteristics. It has to be unjust, grave, and determining. Unjust - the threat to something illegal.
Ex: a person threat another to agree that if he doesn’t sign a debt he will do something which is illegal. If
a check bounces, it does not means that a criminal offence has occurred. The check must be a way of
means by which I obtain something. The violence must be grave and serios. Section 978 of civil code
stipulates : " consent shall be deemed to be extorted by violence as the violence is such as to produce an
impression on a reasonable person and to create in such person the fear of having his person or his
property unjustly exposed to serious injury. In such cases, the age, sex and condition of person shall be
taken into account. ". Violence must be determining : without the party would not have concluded the
contract. Violence can be exerted both by the person with whom the contract is concluded but also
violence exerted by 3rd parties. "violence is a ground of nullity of a contract…"
Economic duress. As a court does not entertain economic duress. If a person concludes that a person's
motivation was due to a financial problem cannot adopt a case for economic duress.

Fraud: article 981 provides that: "…." Fraud as a vice of consent: 4 conditions: 1) intention to decieve 2)
fraud must be grave 3) Fraud must be determining 4) Fraud must result from the other party and not
from 3rd parties

Consent exists when there is a union of the wills between two individuals. Consent by a one individual
cannot give rise to an obligation of law. Consent must exist internally, externally manifested (free form
and solemn form. The solemn form is when you have the agreement being made in writing. Free from
can be either express (verbal or in writing) or tacit (all those positive or negative acts which altough they
are not signs destined for the manifestation of ideas implicitly show that the person who performs them
wants to bind himself) and there must be the identity between the acts of volition by which both parties
wanting the same thing.

Object: section 982 of the civil code : every contract has for its subject matter a thing which one of the
contracting parties binds himself to give or to do or not to do. Section 984 provides that future forms
can subject the form of a contract. Infact the object of a contract can be anything of a incommercio
(something which can be commercialized), possible (something which is physically possible), lawfull
(something permitted by law) , specified (983 provides that the subject must be a thing determinant at
least to its species).

Causa (consideration): section 987 of the civil code provides as follows: obligation without consideration
or an unlawful consideration shall have no effect. The consideration is unlawfull if it prohibited by law or
is against public morality.

Lecture 4
27 February 2009
14:30

Audio recording started: 14:33 27 February 2009

Il-Ħadd, 15 ta' Marzu 2009

09:17

Torts and Quasi-Torts - sec. 1029 et seq

Tort is completely separate from contract; in fact where is there is tort, there is no contract.
Contracts involve a relationship between two parties who wanted to enter in that relationship.
Tort does not depend on this relationship.
If there's a contract, and there's a breach of that contract, that is you've acted contrary to what
you agreed, then there would be damages.
In the case of tort, there is no prior relationship/agreement/contract, but there is a responsibility
for the payment of damages. The reason is because a person has caused harm to another. The
basis of this obligation is the precept of natural justice: naeminem laedere.

It is important to distinguish tort (civil liability) from criminal liability.

Generally, every criminal act gives rise to a civil act for damages. The other way round is not
necessarily true. I may be civilly resp for damages but I may not be criminally resp. Just as I may
be criminally resp for damages but not civilly; although as a general rule, a criminal offence
gives rise to civil liability.

The two are distinct: we have two separate systems of courts, and two separate systems of laws
which regulate criminal and civil liability.

• Criminal law: the fundamental principle is that a person may only be found guilty if this is
proved beyond a reasonable doubt. This is a very difficult burden of proof on the prosecution.
Civil law: responsibility is based on a balance of probabilities. It is more likely that a person is
found not guilty by the Criminal Crt but responsible civilly.

• The presumption of innocence in criminal law which does not exist in civil law.

• Criminal law: prosecution cannot force the accused to give evidence. Civil: plaintiff can force
defendant to give evidence.

• It is also generally the rule that acts of the criminal trial are not referred to by the civil crt.

The concept of Tort: 'any person who by an unlawful and unjust act, whether positive or
negative, whether due to dolus or culpa, causes damage to the person or the property of
another individual, is to make good such damage'.

In tort and quasi-tort we distinguish between direct and indirect responsibility.

Direct responsibility occurs when a person is responsible for his own acts.

Indirect responsibility occurs when a person is held responsible for the acts of someone else.

The cases of indirect resp. are those mentioned in the law; it is not possible to extend beyond
what is laid down by the law, because making a person responsible for the acts of someone else
is not the normal rule.
The basic elements of direct responsibility are:
1. there must be an act which is imputable to a person
2. there must be an act which is unjust
3. which causes damage
4. through dolus or culpa.

CASE: Agius vs. Busuttil 14th December 1982 FH

The elements of tort are:
' il-fatt dannuz illecitu, l-imputabilita' ta' l-istess fatt ghal min ikun ghamlu, id-dannu
kagunat minn dan l-istess fatt. Dawn it-tliet elementi ghandhom bilfors jikkonkorru f'delitti
civili jew fi kwazi-delitt u jobbligaw l-awtur taghhom ghar-rizarciment tad-danni kagunat'.

There are basically 2 theories at the basis of tortuous responsibility. The subjective
traditional theory held that although the act committed must have been unjust and
must have caused damage, it is required that the act must be attributable to the person
committing it and such person must have committed it with either dolus or at least culpa.

The objective theory: the sole criterion for determining whether an act amounts to tort
is whether the act is illegal and whether it has caused damage, and this is
independently of whether it can be attributed to the person committing it, dolus or culpa
etc.

In our law, these elements manifest that tortuous responsibility as far as direct
responsibility is concerned, has both an objective and a subjective basis. The objective
elements (i.e. an unjust act which causes damage) alone are not sufficient to found
responsibility for tort.

The Court held in Thomas Davison vs. Azzopardi noe (1962) XLVI.I.479, that these
four elements are ' ...dawn l-elementi ghandhom bilfors jikkonkorru f'delitt civili ........
huma kumulattivament dezinjati taht l-isem generiku ta' htjia fl-artiklu citat'.

Section 1030 of the Civil Code: Every person however shall be liable for the
damage which occurs through his fault'.
______________________________________________________________

1. An act imputable to a person.

A person may be held resp. for tort only if he committed the act through dolus or culpa, which
are inconceivable if the agent is not in full enjoyment of his faculties of free will and
understanding.

CASE: Thomas Davison vs. Azzopardi 1962: l-imputabilita' tesigi li l-fatt ikun
jipprocedi minn volonta' libera, li hi dejjem necessarja biex tigi kostitwita l-htija'.

By law, there are certain persons who are not responsible for their acts because they are not
capable of causing harm. These are
(i) persons of unsound mind (whether interdicted or not);
(ii) children under 9 yrs of age and
(iii) children between 9 and 14 unless mischievous discretion is proved.

• This does not mean that if for ex, damage is caused by an 8 yr old, no one is responsible. This
is one of the cases of indirect responsibility. The parent/person who has charge of such child
would be held responsible at law.
• But under direct responsibility, (i), (ii) and (iii) are not responsible for their acts and are not
liable to compensate for any damage they might have caused.

• Unless acc to sec 1036, 'if the victim cannot recover compensation from the person
indirectly responsible either because he is not responsible or because that person has no funds,
and the victim himself has not contributed to the damage, then he may recover compensation
from the property of the person of unsound mind or the minor.

• E.g. if a child is 8 yrs old and causes damage. Child is not responsible for damage caused.
Law provides for indirect responsibility to his father/person in charge. But the father cannot
make good the compensation either because he does not have sufficient funds or because he is
not responsible. Indirect responsibility does not operate automatically; there have to be certain
criteria. In this case, to avoid that the victim remains without compensation the law says that the
victim may recover compensation from the property of the minor.

CASE: Casolani vs. Barbara et II.200

Defendant had demolished his house as a consequence of which plaintiff alleged that
the adjacent tenement of which he was the owner had suffered damage.
Court held that damage in plaintiff's house 'era pre-esistente alla demolizione della casa
e derivante da difetti nella sua costruzione'.

CASE : Schembri vs. Davis FH 24th June 1955

A lent car to B, and B crashed into C.
A' s car was insured for one driver only (i.e. A himself) and B was hence driving a car without
proper insurance.
When B crashed into C, B did not have any means to pay C, and so C sued A for damages.
Court held that A was indeed responsible. The fact that he lent a car to B, knowing that B was
not covered by insurance, such an act, was the cause of C not getting compensation and it meant
that he was responsible for the damage suffered by C.
CASE: Kasap vs. Ellul 30th October 1993
Plaintiff was driving a car towards M'Scala Bay. Defendant was driving in the opposite
direction and turned right crossing Kasap's path.
There was a collision and Kasap's car ended on the pavement, injuring a lady in the
process.
Court held defendant to be exclusively responsible.
Although it was plaintiff who materially caused the damage, fault was attributable to
defendant.

CASE: Francis Vella vs. James Micallef 31st January 1994

Damages were suffered by the owner of a hotel who failed to put up adequate signs in
the road to show that there were works in process. This resulted in a traffic accident bet
plaintiff and defendant.
'l-incident gie kawzat biss bhala rizultat dirett tan-nuqqas ta' senjalizzazzjoni adegwata
lis-sewwieqa minn min kien responsabbli tad-direzzjoni tat-traffiku minhabba x-xoghol li
kien qieghed isir.
Is-sewwieqa f'dawk ic-cirkustanzi kellhom kull dritt jippretendu li l-mizuri kollha mehtiega
biex tigi assikurata l-inkoluminita taghhm ittiehdu minn min kien responsabbli'.

Issue as to whether the fact has to be the immediate cause of

the damage sustained or not.

CASE: Cefai vs. Attard 1924

The act must have been ' ... la causa diretta e immediata del danno'. Nonetheless the
crt made it clear that under certain circumstances a cause which prima facie appears to
be mediate and indirect may still constitute a sufficiently strong link of causality.

CASE: Moore vs. Falzon 1955

'Il-ligi taghti d-dritt u l-azzjoni ghar-risarciment tad-danni mhux biss lil kull min ikun milqut
direttament u jkun il-vittma principali tal-hsara; imma anki lil min ikun sofra hsara
indirettament mill-fatt dannuz. Ghalhekk min jippretendi li sofra hsara minn azzjoni ta' persuna
ohra jista' jazzjona lil dik il-persuna avolja ma jkollu ebda rapport guridiku maghha. ' The Crt
opened up the concept of cause.

CASE : Cini vs. Galea Appeal 27th Oct 1958[1]

• A contractor was carrying out some works on a particular building and a beam fell and a
passer-by was injured.
• Court held responsible not only the contractor but also the architect who had supervision of
the property. An architect is resp to supervise all the work that is carried out and while the
contractor was negligent in that he allowed a beam to fall on a passer-by then the architect even
though he was not there, he was resp to supervise the building of the property and was jointly
resp with the contractor.
• The fact that a person has acted in breach of a criminal law, that does not automatically
mean that he is responsible for any damage which shall ensue.
• Ex: the fact that a person has parked his car in the middle of the road, does not mean that one
is entitled to crash into it. IF I can see it, and I can avoid it, if I crash into it, I shall be responsible
for damages.
• Similarly an individual who has contravened the one way, has broken the criminal law; but it
does not mean that if an incident occurs then he is automatically resp for that accident. Civil
liability is different from criminal liability.

CASE: Vella vs. Ruggier Appeal 25th April 1995

• A person parked his car in front of a garage.
• Owner of the garage wanted to get his car out of the garage but couldn't because of this car.
He therefore fiddled with the lock of the car, opened it and moved it away from his garage. The
owner of that car sued the owner of the garage for damages.
• Court rightly ordered the owner of the garage to pay damages.
• No individual can take the law in his hands but the individual must act through the proper
channels of authority; no individual is authorised to cause damage to another person, even if that
person is breaking the law.

(the crime of „ragjon fattasi‟ – Article 85 of the Criminal Code)

Can a company be responsible for tort?

Some judgements used to hold that a company being a legal person cannot be found responsible
for harm; but then later judgments held that one cannot make such an a priori statement and each
case is to be examined on its merits.

CASE: Ragonesi noe. vs. Mallia 30th May 1989

Court held that in the case of tort and quasi-tort, it is only a physical person that can be
resp for damages and never a legal person. If a contract is entered into with a company,
and the contract is breached, of course the company would be resp.; but in case of tort,
it is the individual who committed the act, who is resp. for damages.

CASE: Pace vs. Attard July 1995 - Mifsud Bonnici

Either a physical person or a company can be found resp. for damages depending on the
circumstances.
_____________________________________________________________________

2. An act which is unjust[2] i.e. contrary to the law

As Torrente points out in his opening paragraphs on 'La Responsabilita' per Atto Ilecito', not
every harm caused gives rise to a claim for damages.
Carbonnier also accentuates this and gives the foll ex: one cannot say that a trader is
liable in damages if he opened a shop very close to his competitor's, even though his
act might have resulted in loss of profits for the other trader.

This is spelt out in section 1033: Any person who .... is guilty of any act or omission
constituting a breach of the duty imposed by law ....

Arguing a contrario senso, if one makes use of his right abusively, then he would be
responsible for any damage which follows. I may say that I had a right to do what I did,
but the Court will still examine whether I exercised that right within limits allowed by law.

Sec 1030: A person who makes use within the proper limits of a right competent
to him shall not be liable to any damage which may result.

The distinction is that my right ceases to be a right when it impinges on the rights of
others.

CASE: Tonna vs. Cremona 1935 XXIX.!.1285

'Min jezercita d-drittijiet tieghu barra mill-proper limits, ghandu jhallas tal-hsara li
ghamel'.

E.g. If I take a court action and I loose the case, it does not mean that I am responsible for
damages because initiating proceedings is a right. But if it is shown that the court action was
completely vexatious just to cause you trouble, than that becomes an unjust act for which I
would be responsible. Courts are very strict in their interpretation – must be very clearly
vexatious in order for there to be a claim for damages because otherwise this would be in
violation of the citizen‟s rights to seek judicial redress in order to safeguard his rights and
interests.

CASE: Barbara vs. Fleri Comm Crt 20th Feb 1931

• Fleri had made an action for unfair competition against Barbara and he lost the case. Barbara
then made an action against Fleri to get compensation for damages caused by the previous action
instituted by Fleri
• Courrt said that Fleri had acted in good faith, and just because he lost the case, does not make
him responsible for damages.

CASE: Farrugia vs. Sammut 1954 38.1.223

Same principle as in Barbara vs. Fleri
'Dan ma jfissirx li min jitlef kawza ghandu jirrispondi ghad-danni ... sakemm il-
pretensjoni tieghu ma tkunx arbitrarja jew kapriccuza'.

______________________________________________________________

3. Act must cause damage

There can be no action for damages unless damage has effectively been caused.

Carbonnier gives the example of a driver who manages to drive on the left without
causing any damage to anyone. He is not civilly liable (although, criminally it's another
matter altogether. Carbonnier defines damage as 'la premiere condition de la
responsabilite' civile'.

Baudry-Lacantinerie says that person asking for reparation 'deve in conseguenza

giustificare un danno attuale e valutabile'. A person cannot claim compensation for a
possible and eventual damage which might eventually result from a threat, a threat
which might never even come into being.

Carbonnier asserts that for damage to be made good it must be:

(i) certain et donc dommage eventuel, hypothetical damage cannot give rise to an
action
(ii) personnel, thus excluding the possibility of any person claiming damages if the victim
refrains from doing so;
(iii) direct, thus implying the link of causality between the act and harm caused. Thus
creditors of X cannot demand compensation from Y if the latter is responsible for X's
death.
In Malta, only real damages can be claimed i.e. there have to be actual expenses, actual money
lost and actual loss of potential income. In the US, in civil cases, they also allow punitive
damages i.e. you pay an extra sum as a punishment for doing that act. In the UK, France, and
Italy, they have moral damages or damages for pain and suffering.

_____________________________________________________________________
4. Damage must be caused through dolus or culpa.

A person is liable only if he acts intentionally or negligently. For a person to be at fault there
must be either dolus or culpa.

This can be seen in sec 1033: Any person who, with or without intent to injure, voluntarily
or through negligence, imprudence or want of attention, is guilty of any act or omission
constituting a breach of the duty imposed by law, shall be liable for any damage resulting
therefrom'.

Dolus

Dolus consists in the knowledge that one's act or omission is contrary to the law and
that such conduct or abstention therefrom will cause damage to others. Knowledge that
one's act is illegal and foresight of the harmful consequences which will ensue.

Sec 1033 merely refers to dolus through the word 'voluntarily'.

Torrente: Harm has been caused by dolo when 'l'autore del comportamento
pregiudizievole ha previsto e programmato l'evento lesivo, realizzandolo non per
sbaddatagine o trascuratezza, ma intenzionalmente'.

CASE: Falzon vs. Felice 27th Nov 1934 XXIX.II.117

The way defendant had inflicted personal injury on plaintiff demonstrated
'responsabbilita' doluza'.

Some authors like Pacifici-Mazzoni and Baudry-Lacantinerie additionally require the

animus nocendi but the Italian and French Codes are silent on the matter.
Maltese Code expressly contends that it is irrelevant; in fact sec 1033 speaks of 'with or
without intent to injure'.

CASE: La Rosa de Cristofaro v. Rouselle noe 17th February 1936

PF was suing def for damage which he had sustained as a conseq of what he alleged to
be the abusive issue of three warrants which def had issued against him.

'Hija haga assoluta fid-dottrina u gurisprudenza li d-dolo f'kaz ta' inadempjenza ta'
obligazzjoni jikkonsisti fil-kuxjenza li wiehed ma jaghmilx dak li ghandu jaghmel; u mhux
mehtieg l-animus nocendi jigifieri l-hsieb li jaghmel hsara b'dik l-inadempjenza'.

Culpa
Culpa consists in the omission of due diligence on account of which one is not aware
that one's act or omission constitutes the breach of a duty imposed by law.

Culpa, we are talking about is 'culpa aquiliana' in order to distinguish it from 'culpa' in
the performance of contracts which is known as 'culpa contractualis'.
Torrente: Un evento si dice colposo quando non e` stato intenzionalmente procurato
ma si e` verificato a causa di negligenza, imprudenza o imperizia, ovvero per
inosservanza di leggi, regolamenti, ordini o discipline.

CASE:Bonello vs. Fsadni 1994

A 15 year old girl was killed after being run down by a car when crossing a road. Driver
was sued on the basis of negligence and imprudence. But it turned out that it had been
the girl's fault because she crossed without keeping a proper look-out.

I had a similar case myself – Angelo Camilleri (Blue Grotto Avenue, Zurrieq – a girl who
crossed the road inadvertently because she was being chased by a dog).

Sec 1032: A person shall be deemed to be in fault if in his own

acts he does not use the prudence, diligence and attention of a
bonus paterfamilias.

The standard of reason required is that of a reasonable man; in the words of IL

Nuovissimo Digesto Italiano, ' di un uomo onesto, diligente, il tipo genuino della
persona'.
Crt has to examine whether a person acted according to the behaviour expected from a
persona normale ed accorto and this culpa is referred to as culpa levis in abstracto.
i.e that degree of diligence which a reasonable man would have shown in similar
circumstances.

(there is also what is referred as culpa levis in concreto: when a person does not show
the degree of diligence which he normally shows in his affairs. but the law is here
requiring culpa levis in abstracto.)

CASE: D'amato vs. Camilleri et 3rd March 1958

Meta l-att li kkaguna d-danni kien jikkonsisti fil-manegg ta' haga perikoluza, ir-
responsabilita' ta' min jaghmel l-att hija assoluta, sakemm ma jipprovax il-fatt tat-terz
jew il-vis major.
It's no defence to say that the one who caused damage had done the same act for a
long time without anything happening and that hence he could not foresee the
possibility of harm being caused.
'Il-kolpa fil-fatt ta' kaz dannuz li minnu torigina l-azzjoni akwiljana tavvera ruhha filli
wiehed jaghmel att volontarjament u jonqos li jipprevedi l-effett dannuz ta' dak il-fatt
meta seta' jipprevedih.'

SEC 1033: The legislator refers to various states of mind which culpa may take:
negligence, imprudence, want of attention and unskilfulness.

Since R.L. culpa has been subject to a 3 degree classification:

1. Culpa lata - extraordinary negligence, superior to the common average.
2. culpa levis - 'non usare quell'attenzione dell'uomo regolato e ordinato - P.Mazzoni
3. culpa levissima - a very slight degree of negligence which even the most
reasonable and prudent person would find impossible to avoid.

Our legislator in sec. 1032(2) does not think it fit that culpa levissima should be made
punishable, unless there is a provision of the law which stipulates the contrary.

Sec 1032(2) 'No person shall, in the absence of an express provision of the law, be liable for
any damage caused by want of prudence, diligence or attention in a higher degree'.

CASE: Agius vs. Busuttil 14th December 1982

'Il-persuna responsabbli ghad-danni ma tkunx tenuta ghal htija superjuri, fi grad oghla ghal dik
ta' bonus paterfamilias'.

This has also been held inter alia in :

CASE: Tabone vs. Galea 23rd July 1958 XLII.II.1108
CASE: Vella vs. Chapelle 15th April 1916 XXIII.II.69

Force majeur
Our law on tort is based on fault. A person must be at fault before he can be found responsible
for damages.
If the accident or damage is a result of a force majeur or irresistible force, then person is not at
fault, and is not liable in damages. - Sec 1029 of the Civil Code.

If you want to bring forward this defence, it is important to prove that the damage would be
completely due to a fortuitous event.

If however, there is self-inflicted incapacity (I placed myself in a position as to be unable to react

to that accident), then I am still liable for damages. Hence the maxim: volenti non fit injuria. It
is important also that there is no contributory negligence on the part of defendant otherwise the
force majeure defence would not succeed.

CASE: Fenech vs. Gatt 1902

For a defence of force majeure to succeed, the following must concur:
1. an unusual irregular event
2. due to some natural cause
3. inevitable

CASE: Pace vs. Bonello 25th January 1977

Plaintiff's truck skidded because it had ran on some oil split by defendant.
Notwithstanding, plaintiff was still held resp. because the tyres were not up to standard.
CASE: Mizzi vs. Carbone FH 1986
A gale force of wing toppled a pole, pole crashed on a car.
Court concluded that damage was purely accidental; pole was put in a proper place and car
owner had to bear the damage.

CASE: Cini vs. Mifsud Bonnici FH 30th June 1986

• A no of cows died electrified when they contacted an electricity pole.
• Owner of cows sued EneMalta. EM claimed that it was an accident since the day before a
strong wind had dislodged certain electrical connections of the pole.
• Court expert held that connections were not carried out properly in the first place and this had
facilitated the 'wind's work' to dislodge the pole.
• EM was held responsible for the death of the cows. There was an Act of God (the wind) but
this was aided by the intervention of a third party.

_____________________________________________________________________

In Malta, tort is completely based on fault; unless fault is proved, there could be no resp. and
the duty to prove fault is on part of the victim.

Some systems are against this idea of fault based damage. Some have adopted the strict liability
theory; namely if you cause damage, you have to compensate whether or not, you are at fault. In
occupational damages cases, our courts are moving very closely to a doctrine of strict liability eg
judgments to the effect that the employer is bound to take into consideration that the employees
are bound to be negligent at some point in time.
Indirect responsibility

Indirect responsibility presupposes a situation where individuals are responsible for the damage
which other persons produce by their acts. One rightly asks: since our provisions re. tort are
based on fault (i.e. liability cannot exist without fault) why is it that A can be liable for B' s acts?

Answer: persons are answerable for the acts of others because these same persons have been
negligent in one way or another as far as the individuals for whom they have to answer are
concerned.

1. Indirect responsibility of the employer

Section 1037: Where a person for any work/service, employs another person who is
incompetent or whom he has not reasonable grounds to consider competent, he shall be
liable for any damage which such other person may, through incompetence in the
performance of such work or service, cause to others.

This is culpa in eligendo: fault in employing a particular worker.

The legislator thought it wise to include the words 'or whom he has not reasonable
grounds to consider competent'. Because otherwise the employer wld find no difficulty in
disclaiming liability because, he would easily say that he thought the person employed
with him was competent, and that he had no reasonable grounds to consider him
incompetent.

And there is great difference between the words (i) 'he has not reasonable. grounds to
consider him incompetent' and (ii) 'he has not reasonable grounds to consider him
competent'.

In (i) there is no obligation on the part of the employer to seek factual evidence of the
employee's incompetence; in (ii) there is most definitely the obligation of the employer to
seek such evidence and proof of the competence of the employee.

Thus this phrase (ii) ensures to a more certain extent the answerability of the employer
in those cases where the employer's liability is required.

The courts have changed the interpretation of this section over these last years.
Originally the Courts examined the situation at the time the employee was assumed; if employer
knew or could have known that the employee was incompetent, then the employer would be held
resp. This is referred to as culpa in eligendo. This made it very difficult to prove the employer's
fault because:
(i) had he known he was incompetent, he would not have employed him in the first place.
(ii) in the case of govt employees, who had passed a recruitment exam, then they are presumed
competent.

Now: courts examine the situation at the moment of injury, and not at the moment when the
employee is hired. If it is shown that the employee was incompetent, then the employer must
have known that he had employed an incompetent person and employer is held responsible.
Burden of proof against the employer is increased, even if the employer were the govt.

By inverting this method of interpretation, courts have widened the instances where an employer
is found responsible for the acts of his employee, because it is easier to find fault on the
employer than it was before.

Factors which brought this change: (i) usually the worker was of ltd means and wld not be able
to compensate the injury caused to the 3rd party; (ii) it was difficult to determine which
particular worker caused the injury.

Laurent quoting Pothier holds that the master shd be held responsible for the damage
caused by their servants even when they could not prevent the damage. Because after
all it is the service from which the master profits that has caused the damage.

Giorgi says that this responsibility is based on the fact that the employee must be
dependent on his employer under whose supervision he carries out his work.

CASE: Grech vs. Commissioner of Police Appeal 1st March 1988

Grech had issued a warrant of impediment of departure against a person, but the latter was
nonetheless allowed to leave the island. Commissioner of Police said that the police officers had
passed an exam and were not incompetent.
Court rejected his claims and held that by the time the particular police officer had caused
damage to Grech, the Commissioner had ample time to find out about his incompetence.

Through developments, we find cases where owners of vehicles make a claim against
the govt for damages caused to their car by virtue of the bad state of the road and they
succeed. Govt cannot exonerate himself from the responsible. just because a part dept
did not maintain a road properly. e.g.: Zahra vs. Director of Public works 3rd
December 1991 Appeal

CASE: Naudi vs. Schembri Appeal 13th May 1991

• An individual was working as a plasterer in another's flat (flat a); there was an interruption of
the water service and the employee left the tap open by mistake, and during the night, the water
service resumed and water overflowed even into the flat below (flat b) causing damage.
• Owner of flat b sued owner of flat a.
• Crt held that there was an employer-employee relationship bet the owner of flat a and the
plasterer, and the employer shd have known that the employee was incompetent by the time the
tap was left open. Owner of flat a was thus made responsible.
• Crt also held that owner of flat a was responsible even if he cld not have known that the
employee was incompetent.

CASE: Camilleri vs. Carbone 30th June 1995

Enemalta was digging a trench; during the night, the only lamp left lighted by an incompetent
employee was knocked over, and a car drove into the trench and its driver was injured.
Court t held that the employer shd have ensured that the employee carried out the instructions
given.

CASE: Vassallo vs. Azzopardi Appeal 18th Jan 1995

One of two tunnels was serving as a two-way tunnel until the other was back in order.
Commissioner had given order that police had to direct traffic on both sides of tunnel; this did
not take place, and there was a head-on collision.
Commissioner was just the same held responsible.

CASE: Elvira Abela vs. PM 19th Jan 1995

The Xatt ir-Rizq ramp was protected by barriers, but vandals had removed them, and a car fell
into the sea and two persons died.
Govt was still held responsible, because it failed to ensure that damage would not occur.

_____________________________________________________________________
2. Liability of a person having charge of a minor or a person of unsound mind - sec
1034

'Any person having the charge of a minor or of a person of unsound mind shall be liable for
any damage caused by such a minor or person of unsound mind, if he fails to exercise the
care of a bonus paterfamilias in order to prevent the act'.

Therefore, there is no strict/absolute liability on the part of the person in charge because if he
shows that he exercised the care of a bonus paterfamilias, then he is not responsible.

Person in charge does not necessarily mean parent/s, but it may be a relative or a teacher or
someone else in whose charge the minor is at the time of the occurrence.

When an action is made as a result of damage caused by the minor, the court does not investigate
whether the minor was negligent, but whether the parents or person in charge exercised their
duty of care on the minor.

On whom is the burden of proof? Has the victim to prove that the person did not exercise proper
care? Or must the person in charge prove that he did exercise proper care?
On this point there is no common answer; but the majority argue that the burden of proof is on
the person in charge to come out with a good explanation in order to exonerate himself from
liability.

On the other hand, the way the law is worded, it seems that it is the plaintiff who must prove that
the parent etc. failed to exercise care of a bonus pater familias

CASE: Zerafa vs. Gauci 14th December 1955

• Minor was on his way to school and he was kicking a tin lid. Before entering school,
he removed the lid from the street so as not to cause any injury to passers-by and threw
it in a field.
• Plaintiff was working in the field and the tin landed on his leg, causing him deep cuts
and an injury which made him stay away from work for quite some time.
• Plaintiff sued the father and asked the court for a declaration that defendant did not
take care of the minor properly.
• For the action to succeed against the person in charge of the minor, it must be shown that:
1. damage was caused by the minor
2. minor was under the charge of another
3. this other did not use the necessary diligence to prevent the act of the minor
• This case also referred to 'in charge of' and said that: 'Rigward il-kura, din il-kelma hija
adoperata fis-sens lat, jigifieri kustodja attwali indipendenti jekk kinitx akkumpanjata jew le
mid-drittijiet u poter ta' patria potesta.'

• Now the father had been at work and he had left the minor at home and his mother
sent him to school. Crt said that his responsibility does not end unless he no longer
exercised patria potestas on the child. It's not simply 'il-prezenza tieghu materjali li
tirrendih responsabbli izda d-direzzjoni u l-kura li skond il-ligi ghandu tat-tfal minuri'.
• Crt held that plaintiff had not brought evidence that def had failed to exercise proper
care on the minor and he had never received any complaints about child's behaviour.
Besides minor had looked into the field before throwing the lid but was not in a position
to see the plaintiff.
• Pf's plea was rejected.

Between 9 and 14, the minor would be responsible if he acted with mischievous discretion.
Therefore:
(i) if damage was caused by a minor, but you want to sue under sec 1034, you have to sue the
parents.
(ii) if you are of the opinion that the minor (who's bet 9 and 14) acted with mischievous
discretion and hence you want to sue the minor, action has to be made against the parents on
behalf of the minor.

CASE: Formosa vs. Borg FH 24th June 1993

• A 12 yr old boy lost control of a horse he was riding; this horse dashed into a car and
caused it damages.
• Owner of car sued the father on behalf of the minor.
• Crt argued that once the action was instituted in this manner, plaintiff must show that
child was acting in mischievous discretion, because such an action is directed against
the minor.
• Court said that in this case there was no such discretion. Plaintiff lost case.

3. Liability of hotel-keepers - sec 1039

Introduced in 1966 as a result of an international 1965 convention which Malta had signed. The
Convention sponsored by the Council of Europe is entitled 'Convention on the Liability of hotel-keepers
concerning the property of their guests'.
The idea of the convention is to try and make the hotel-keeper responsible as much as possible;
but since we have the notion of fault based tort, still liability of the hotel-keeper is not absolute
and he can defend himself.

_____________________________________________________________________

4. Responsibility for animals - sec 1040

'The owner of an animal, or any person using an animal during such time as such person is
using it, shall be liable for any damage caused by it, whether the animal was under his
charge, or had strayed or escaped'.

This indicates absolute liability. But Courts have held that it is possible for the owner of the
animal to exempt himself by showing that he was not at fault.

According to Baudry-Lacantinerie, the reason for this section is that a person who
makes use of an animal is bound to supervise it, to impede it from causing harm and if
harm is actually caused, it is presumed that there was 'da parte di quella persona difetto
di vigilanza'.

CASE: Farrugia vs. Calleja (1969)

This section does not deny the owner of the animal, the right to prove force majeure or fault on
the part of the injured person himself.

Ricci: 'non si ha responsabilita' senza che il fatto da cui si fa derivare sia imputabile al suo
autore, ma se ne l'autore non vi ha ne dolo ne colpa alcuna non puo esservi imputabile e
mancando questa vi e meno la responsabilita` civile'. This is a traditionalist view which has bn
followed by our courts.

NB: The law imposes responsible either on the owner or on the user; if it is being used by
someone else, despite the fact that there is also an owner, it is the user who is responsible.

Other than a cas fortuit or force majeure a person is liable for the animals he owns
irrespective of the normal daily nature of the animal. In Malta, if A owns a dog which is
normally tame, and this dog one fine day decides to bite someone, even if that dog was
provoked into doing so by teasing children, he would still be resp.

CASE: Sammut vs. Colonel Hughes XIII.66

Plaintiff was suing for damages caused by defendant's horse. Crt explained that even in
this sit of indirect responsibility, at its basis is the principle of 'naeminem laedere'.
'Ogni volta che dal nostro animale si produca il danno nelle persone o nella roba altrui,
o per fuga momentanea o per vizio che in lui sia, e' nostro dovere risarcirlo'.

Notary VB Case – cross breed / pure breed

______________________________________________________________

5. Responsibility of the owner of a building - sec 1041

'The owner of a building shall be liable for any damage which may be caused by its fall, if
such fall is due to want of repairs, or to a defect in its construction, provided the owner was
aware of such defect or had reasonable grounds to believe that it existed.

Absolute liability is again excluded, there is defence available to the owner of the building.

CASE: Attard vs. Farrugia 14th July 1988 - Appeal

• A 30 yr old waitress was waiting for the transport to go home after work and she climbed up
the gates of the outer-door of the Verdala Hotel; she was with another person and they were
simply behaving like children. the gate went loose, it fell on the woman and crushed her to death.
Girl's heirs submitted that the factor of safety of the gate was rather low and was not in a good
state of maintenance.
• Crt held that the owner of the building is not responsible because no ordinary use of the
building was being made.
• Owner of the building was not responsible for the death of the woman. Had the woman been
passing through and the gate fell, then the owner would have been responsible but the gate fell
because the child was using the gate as a swing. There was no normal and reasonable use of the
gate. 'Il-mejta kkontribwit ghaliex ma kienx mistenni minnha li titbandal mar-rixtellu. ' The hotel
owners did not have the obligation to provide for the abusive use of the gate but only up to the
extent that the gate was OK for the ordinary reasonable use.
• The case is also important because it shows that in 'building', the law is including also the
surrounding wall or the surrounding gates and the garden. So it is also up the owner to see to the
upkeep of these premises.
_____________________________________________________________________

6. Responsibility of the occupier of a building - sec 1042

If a thing suspended or placed in a dangerous position or thing or matter is thrown or

poured from a building, the occupier of the building is not responsible for any damage
caused unless he has committed the act or contributed thereto.
The sec. continues, '..... except in so far as the provisions contained in this title relating
to the liability of a person for damage caused by another are applicable to him'.

QUANTIFICATION OF DAMAGES

It is perhaps obvious but not ideal that compensation can only take the form of money - the law
cannot order any other form of compensation for the damage caused.

Our courts grant only real/material damages. The only instance in Malta where a court can grant
moral damages is in case of a violation of Human Rights, under the press law and for bethrotal
under the promise of marriage law. Abroad, we find also punitive damages and compensation for
'pain and suffering', but our courts hold that:
'Il-ligi taghna ma tipprovdiex ghad-danni morali li l-parti tista' ssofri. L-attur sofra sfregju permanenti izda
ma garrab ebda debilita' jew dizabilita li tista tigi ridotta f'termini ta' percentagg. Dan l-isfregu ma gablu
ebda menomazzjoni fil-kapacita tieghu ghax-xoghol jew xi telf ta' avvanz fuq ix-xoghol tieghu'.[3]

The Liquidation of damages under the Law of Torts in Malta

The section under our law which deals with the compensation of damages is section 1045
of the Civil Code:

Section 1045:
(1) Damage which is to be made good by the person responsible in accordance with the foregoing
provisions shall consist in:
a. the actual loss which the actual act shall have directly caused to the injured party.
b. the expenses which the latter may have been made to incur in consequence of the damage.
c. the loss of actual wages or other earnings.
d. in the loss of future earnings arising from any permanent incapacity total or partial which the act
may have caused.

(2) The sum to be awarded in respect of such incapacity shall be assessed by the court, having regard
to the circumstances of the case, and, particularly, to the nature and degree of incapacity caused,
and to the condition of the injured party.

At a first glance at this section it is clear that the attribution of responsibility is a necessary
antecedent to any assessment of damages obviously because, it is the responsible party that will
make good for the damages.
Sub-sections (a), (b) and (c) are easily determined: ex actual loss, expenses such as medical
treatment, overtime lost - these are referred to as damnum emergens.
(d) - the loss of future earnings creates some problems. Referred to as lucrum cessans, literally
means, the profit that stops.

Damnum Emergens
In the case of an employed person, it can easily be ascertained the amount of wages lost from the
records of the employer.
As regards a self-employed person it is more difficult. The system adopted by our courts can be
seen from, Busuttil Naudi vs. Hunt[4] where the defendant caused injury at plaintiff's hand but
there was no permanent disability; so there was not the question of loss of future earnings but
there was a claim for the loss of earnings. The plaintiff was self-employed. The court examined
his IT returns over a number of years. It calculated the average rate of increase of his income
from one year to the other and then it established the average rate of income. Then it saw the
income of that particular year when the injury had occurred and increased it to reach the average
increase of income of that particular individual. And it reached a figure to determine the loss of
earnings of plaintiff.
Sometimes the courts do not operate a system, they just fix an amount themselves. This is why it
is sometimes called arbitrio boni viri.

Lucrum Cessans

'Kriterji li ghandha timxi fuqhom il-Qorti fil-likwidazzjoni tal-lucrum cessans huma li sa

fejn hu possibli ghandha terga` tqieghed lill-vittma fl-istess situazzjoni li kien fiha qabel l-
incident'.[5]

Up to 1962, as regards the sum of lucrum cessans to be awarded, a distinction was made between
the cause of malicious damage and the cause of negligent damage. In both cases, sum was
assessed by the Court but if the damage was not caused maliciously, such sum was never to
exceed LM1200.
In 1962, this provision was amended and the maximum amount awardable was deleted with the
result that Court may award any amount which it deems reasonable.
In Galea et vs. Gatt the defendant drove into a cyclist into the early hours of morning and the
latter died. Defendant was found entirely responsible for the accident because he was driving
without glasses when he could not see a thing without them and his vehicle was not properly
lighted. The cyclist heirs sued for compensation. Our Courts held that:
'Tiddikjara li ma kellha l-ebda ezitazzjoni tistabilixxi li l-ammont fid-danni kellu jkun anqas mill-maximum ta'
LM1200 stabbilit mill-ligi meta l-hsara tkun giet kagunata kolpozament imma mhux dolozament.
Il-principju hu li l-patrimonju tal-vittma ghandu jigi jekk jista' jkun interament reintegrat b'mod li l-werrieta
jitpoggew sakemm jista` jkun fl-istess pozizzjoni kieku ma tilfux lil din il-persuna'.[6]

The case that has determined the method of compensation for lucrum cessans and thus
considered as a landmark case in this field is Butler vs Heard decided by the Court of
Appeal on the 22nd December 1967. The facts of the case are briefly the following:
The plaintiff had been driving a motor and the defendant who was driving a car collided with
him, causing the former 'feriti ta' natura gravi u hsara fil-mutur'. Plaintiff sued defendant,
alleging that the collision was a result of carelessness, negligence and non-observation of traffic
rules on the part of defendant.
The First Hall held for plaintiff and ordered defendant to pay to plaintiff: LM500 for
damnum emergens and LM6,000 as lucrum cessans.
On appeal, court held that the collision despite injuring seriously plaintiff, had caused him
such a great shock that he ended up suffering from a nervous breakdown, attakki ta'
sturdament u hass hazin, so much so that he had to be taken to a pscychiatric hospital. The
Court examined in detail how the accident had taken place and still considered defendant to
be responsible. The other plea raised was as regards the LM6,000 granted as compensation
 for loss of future earnings. The doctor who had operated plaintiff gave evidence; he
explained that plaintiff:
“issa ghandu gog falz u ma jistax izomm fuq sieq wahda. Ghandu wkoll inegwalita' fit-tul tar-riglejn u
ghandu bzonn zarbun specjali biex jikkumpensa. Issa hu kapaci jimxi bil-bastun. L-appellat tilef 50% mill-
kapacita fis-sengha tieghu ta' xogho.l.[7]

The doctor further said that undoubtedly in the long run he will suffer from osteoartritis which
will raise his disability even up to 60%. The court said that our law provides only for pecuniary
loss and in this regard:
“hi inferjuri ghal-ligijiet ta' pajjizi ohra progressivi li jpprovdu anke ghal kumpens li jinkludi pain and
suffering, both pyhsical and mental, loss of the pleasures of life, actual shortening of life and in some cases
mere discomfort and inconvenience”.'[8]

Regarding the system as how to calculate the lucrum cessans, the court held that it agrees with
the First Hall, that the system is substantially just and practical.

“Skond dan il-metodu, jinsab b'kemm il-qliegh tad-danneggjat ez kull gimgha ghandu jitqies li jigi
permanentament ridott ghall-futur konsiderati ukoll il-prospetti li d-danneggjat kellu qabel il-korriment u
dawk il-possibli accidenti li setghu, anke kieku l-korriment ma garax jinfluwixxu fuq il-qligh, u dak it-telf jigi
moltiplikat ghal numru ta' snin mehud rigward ta' l-eta' u stat ta' sahha tad-dannegjat.”[9]

“In-numru ta' snin mehud bhala multiplier m'ghandux ikun bazat fuq l-aspettativa tal-hajja in generali tad-
danneggjat izda fuq l-aspettativa tal-hajja lavorativa tieghu u ghandu jiehu rigward tac-chances and
changes tal-hajja.”[10]

The court also held that the fact that compensation was going to be granted as a whole, in the
form of capital, is another consideration as a reason for moderation.

The following are the court‟s considerations when calculating compensation:

The age of the individual at the time of the accident. (ex 30 yrs old)

Wage he's earning at the time of accident. (ex LM200 a week)

If the person is self-employed, court has to discover his earning capacity during that year; the
tendency of the self-employed is not to declare all their income in their Income Tax return. If one
declares LM5000 a year, but in front of the court claims LM8000, the court will take into
consideration the IT return which is considered to be one‟s real income. The wage taken is the
actual net pay i.e. after deducting national insurance and income tax.

Percentage of disability to be determined by medical experts. (ex 10%)

 Nowadays, it is held that just because a person has suffered an injury and is now doing the
„same‟ work and earning the same wages, does not mean that he has not suffered a
disability. If there is a possibility that he might suffer a loss of future earnings, then that
loss has to be quantified. Disability could range from 1 to 99%, e.g.,:

a person who has been reduced to a wheel chair and cannot do an active
job, then the % disability would be high.

a person who dies is treated by the law as total incapacity - 100%.

So it is no longer the rule that one must see that a person actually suffers a reduction in his wage;
the fact that he suffers a disability which may affect his future chances of employment, is also
quantified by the courts.

Then the court has to determine the Multiplier – how long it is expected that this
individual would work.

If one considers the retirement age at 61, one would say that the multiplier is 61-30 = 31.
But this is not the multiplier which the court adopts. Our court takes into account the
Chances and Changes of life. A person may retire at 50 or die of some illness. The court
will not give a 31 multiplier but at the age of 30, the maximum that the court gives is 20,
making the individual retire at 50.

The following is a worked example of how compensation is calculated:

Amount of compensation due: 20 x LM300 x 52 x 10

100

20 = multiplier

52 = weeks per year

LM300 = estimated wage

10% = percentage disability

If the amount of compensation is given soon after the accident, there is a 20% deduction
from the amount. This is because, you're getting a lump sum payment and the victim would be
earning interest on that amount when technically, had this accident not occurred the victim
would have earned that amount over the 20 year period. If between the accident and the date of
judgement 8/10 years pass, then no lump sum deduction is made. If between the accident and the
date of judgement 4/5 years pass, then the lump sum deduction would be 10%.
Death of a person

If a person dies, the formula is the following: 20 x LM300 x 52 (because the disability is 100%)
+
There is the 20% lump sum deduction as in the normal situation when the compensation is
given soon after the accident.
+
There is a further 25% deduction which is taken to be equivalent to personal consumption. The
person is not going to spend that amount on personal consumption since he is dead and hence the
heirs should not keep it.
+
In case of death there is a further 50% deduction, depending on the degree of dependency (see
below). If compensation is given to the son or wife that is one thing while if it is given to
brothers that is another issue as the degree of dependency is
loose. The Courts have deducted up to 50%.

[3] Micallef vs. Micallef, First Hall Civil Court, 18th January 1984
[4] First Hall Civil Court, 27th November 1972
[5] Camilleri vs Borg, 8th May 1990
[6] Galea et vs Gatt, 24th November 1958
[7] Michael Butler vs Christopher Heard, Court of Appeal, 22nd December 1967
[8] ibid., The court had referred to Boys vs Chaplin
[9] ibid.
[10] ibid.

Pasted from <file:///C:\Users\Clarsti\Documents\Downloads\LAW_3-4_TORTNotesFEMA.doc>

Lecture 5
06 March 2009
14:23

Audio recording started: 14:27 06 March 2009

Il-Ħadd, 15 ta' Marzu 2009
09:17

QUASI-CONTRACTS

Sec 1012 of the Civil Code - Definition of quasi-contract

' .. a lawful and voluntary act which creates an obligation towards a third party, or a
reciprocal obligation between the parties'.

Quasi-contracts (Qcs) were introduced by the Emperor Justinian (who had codified Roman Law
– Codex Justinianus) in order to cover situations which could not fall under the headings of
contracts, and since the general concept of innominate contract was not developed at that time
and since the Romans preferred classification, the category of Qcs was created.

The 2 situtations contemplated by Justinian, and then in the Napoleonic Code and now also in
our Code are:

1. Negotiorum Gestio - A person undertakes the business of someone else without instructions
to do so. i.e . A person takes upon himself the administration of the affairs of another person
believing that had that person been present or capable or had he been able to give his consent, he
would have given it. A Qc, because it resembled the law of mandate, where a person authorises
the other to act on his behalf. In mandate, you have the consent of 2 parties.
2 . Indebiti Solutio - When a person gives something to someone else when he is not bound to
give it to him, for instance he gave it by mistake, there is an action for recovery. A Qc because it
resembles an action arising out of loan.

One may ask - why are they called quasi-contracts? Why is it important that we bother about the
classification of these situations? It is important because ultimately it would lead to different
consequences depending on the point of view adopted.

Although there has been much academic debate and juridical theories evolved with regards to the
institute of Quasi-Contracts, the prevalent idea today is that Quasi-contracts should not be
classified under any particular heading but they create an obligation since the law says that they
create an obgation.

In fact, if there are situations which are similar to Negotiorum Gestio and Indebiti Solutio but are
not contemplated in the law, then they also should be granted a remedy under this general
heading of QCs.

3. Actio de in rem verso

The most imp. remedy which was developed by the Courts but which is not found in the Code is
the actio de in rem verso. This is a safety-valve, an action which can be instituted by an
individual who claims that an injustice has occurred to him but he cannot find a remedy in the
law. It is very wide, an action based on equity.

4. Action for compensation for services rendered.

The 4th Qc developed by our Courts and not specifically provided for in the law is the action for
compensation for services rendered to a 3rd party. (servigi)

1. Negotiorum Gestio - sec 1013

Negotiorum Gestio occurs when a person without the instructions from his principal
interferes with the management of the principal's affairs. If the principal is unable or
incapable of managing his own affairs, the individual presumes that had the principal been
able or capable, he would have done such an act.

Eg of a NG: A sees a fire in B's house and he undertakes the obligation to call the firemen. A
voluntarily interferes in the management of B's affairs. Had B been present, he would have done
the same thing.

The conditions for the existence of negotorium gestio:

1. Agent must be of age and capable of contracting; the Negotiorum Gestor gives
rise to obligations at his charge and he must be capable of binding himself voluntarily.

With regard to the interested party, it is indifferent whether he is capable or not, for
although his consent is involved, it is only presumed and not real.

2. The affairs of the interested party assumed by the Negotiorum Gestor must be
lawful; what is unlawful cannot give rise to an obligation.

3. The intention of the voluntary agent to bind the interested party; if he meant to
perform an act of liberality, the juridical relationship between them would be one of
donation.

4. Agent must have acted freely i.e. without being bound as in case of a tutor or a
curator, and without a mandate.

5. Agent must have not undertaken the management of the affairs notwithstanding
the prohibition of the interested party; the presumption of consent of the interested
party, which is at the basis of our code, is incompatible with such prohibition.
NG is very similar to mandate. In NG, the individual acts on his own initiative and works on
behalf of the other without authority. In mandate, he acts on orders, he is given authority to act
on behalf of someone else.

A negotiorum gestor, since he has interfered voluntarily, must exercise the care of a bonus
paterfamilias - sec 1015. Once he interfered and damage is caused, he cannot raise the defence
that he was not capable and that he did his best. He will be responsible not only for dolus but
also for culpa laevis.

Section 1016 of the Civil Code provides that a greater degree of responsibility - more than the
standard of bonus paterfamilias - is required in these 3 instances:
1. Where agent has intermeddled with the business notwithstanding the prohibition of the party
interested;

2. where by reason of his intermeddling the business was not undertaken by a more competent
person;

3. where agent himself did not possess the requisite skill. ( a culpa in itself)

The law also recognizes that there are certain instances which require a mitigation of this
principle. Hence sec 1017 authorizes the court to examine the particular circumstances of the
case when awarding damages, even though the situations mentioned in sec. 1016 would have
applied.
Ex: If A sees B who is drowning, A tries to save B but fails. A cannot be punished because he
did not have the requisite skill. A cannot be held resp. for damages because there was a moral
resp. on his part to try and save B.

• The NG and mandate are however similar in that it sometimes happens that what starts off as
a NG ends as a mandate. If a person interferes in the affairs of another, this other subsequently
comes to know of what is being done and he gives his consent to the person to continue in that
administration.

• Once the Negotiorum Gestor has begun the administration of the affairs of B, the NG should
continue until B can take over the administration himself or, if B dies, until the heirs are in a
position to continue - sections 1013 and 1014. Interruption might be detrimental to the interested
party.

• It is the duty of the negotiorum gestor 'to do everything which is incidental to or dependent
upon those affairs, and he shall be liable to all those obligations which wld arise from a
mandate'. - sec 1013 For ex: Authors state that if the mandatory takes upon himself to gather the
produce of a land he must not only gather the produce but he must also see that it is sold on the
market. Simply gathering the produce and leaving it there, is not managing the affairs in a proper
way.

• On the completion of the business, he must render an account to the party interested and to
return all that he may have received during and on account of his management.
• Section 1018: if the business was well-managed, the party interested, shall even though the
management may have accidentally failed to benefit him, be bound to:
(i) perform the obligations contracted on his behalf by the agent,
(ii) to indemnify the said agent in regard to any obligation he may have contracted in his own
name, and
(iii) to reimburse him any necessary or useful expenses with interest from the day on which they
shall have been incurred.[1]

• Sec. 1019: the opposite situation from 1018.

Where the agent was under the impression that he was managing his own affairs, he shall
not be entitled to any indemnity beyond the benefits which the party interested may have actually
derived.

If the other party gets a benefit from the fact that I thought I was managing my own affairs, he
must compensate me.

If the other party did not get any benefit, no compensation is due since I thought I was managing
my own affairs.

• Sec. 1020: Where a person has intermeddled with the affairs of another person against
the express prohibition of such other person, he shall not be entitled to any indemnity.

Maltese courts have taken the view that when the law says that he is not entitled to any
indemnity, then it means that he is not entitled to any compensation if the affairs do not result to
the benefit of the principal. If the principal gets a benefit from my interference, I would be
entitled to sue for compensation on the basis that no-one should get a reward at the expense of
another without compensating that same other.

CASE: O'Flaherty v. Vassallo FH 26th July 1982

• There was a block of flats each owned by its respective owner while the common parts were
co-owned by all the co-owners of the flats.
• One of the co-owners A took it upon himself to redecorate the common parts of the block,
and when he contacted the others, they agreed to pay their share.
• One co-owner B was abroad for a very long time and was not contacted.
• In the course of the redecoration, B came from abroad. No-one told him and he did not query
what was going on.
• When the work was finished A asked the co-owners to pay their share, B did not want, saying
that he had not entrusted A to act on his behalf.
• Court held for A and said that the work carried out was for the benefit of all, and was
something which one could presume that B would have wanted hadn't he been abroad.
• Court ordered B to pay his share.
• Court held that when A took it upon himself to redecorate the block of flats, at that stage, it
was a negotiorum gestio. When B came back without objecting to the works, though having seen
them, that NG became a tacit mandate. This shows the affinity between NG and mandate.
• Court held that whether to treat the case as a NG or whether to treat the case as mandate, in
either case, B has to pay: either because there is a tacit mandate or because the work was carried
out to his advantage.

(such a case would today be regulated by the provisions of the Condominium Act).

CASE: Formosa vs. Colombo 27th July 1989

• A was building a house and engaged B a contractor to carry out the work. B ordered from C
concrete slabs but B did not pay for them.
• Supplier C sued A for payment, but the owner of the house raised a plea that he did not enter
into a contract with the supplier.
• Court held that the C had supplied the slabs for the benefit of the owner, and once A had
derived a benefit from that supply, he is bound to compensate the supplier for that benefit.
Otherwise he would be keeping the concrete material without making compensation.
• Although the contractor was a sort of go-between, still there was a voluntary interference
between the supplier and A, and hence there was a q-contract binding the owner to pay the
supplier for the material.

2. Indebiti solutio - sec. 1021

'A person who receives, whether knowingly or by mistake, a thing which is not due to him under
any civil or natural obligation, shall be bound to restore it to the person from whom he has
unduly received it'.

This quasi-contract comes into being when either:

1. a person pays something which is objectively not due - or
2. a person pays something due to a person who is not the creditor - or
3. the person who pays is not the debtor.

In either of these three situations, the person who has paid has a right to recover what he has
paid.

' .... which is not due under any civil or natural obligation'. The general view is that if I pay
even though I don't know that I am not bound to pay, if I pay voluntarily, that is a natural
obligation and I would not have a right to recover.

The conditions for the existence of this quasi-contract are the payment given with intent to fulfill
an obligation which is believed to exist.

1. the indebitum i.e. the absence of a cause of payment. Even the payment of a conditional
debt during the pendency of the condition, is an 'indebiti solutio' because until the condition
verifies itself there is no debt. But, the performance of an obligation before the lapse of time to
which it is subject is not an 'indebiti solutio'. In order to talk of an indebitum, the payment must
not be due, not only civilly but also naturally.
2. Mistake in the solutio i.e. person must have paid under the mistaken belief that such debt
was due by him. If one pays an indebitum knowingly there is no quasi-contract but it is held to
be a donation and there is no right for recovery.

If there is an error on the part of the receiver, this does not effect the existence of the quasi-
contract, saving the consequences of bad faith of the receiver.
Mistake must be of fact or of law and excusable otherwise it is natural to presume that the debt
was paid knowingly and voluntarily. „Excusable‟ means such a mistake which, with the use of a
normal degree of diligence, could not have been avoided.

Effects of the Indebiti Solutio

1. the restitution of the thing

The first duty of the person who receives the thing is to give it back to the person who paid it.

A. If it was money, he has to give money back. Sec 1023:

Receiver in good faith - restore capital only
Receiver in bad faith - restore capital and interest as from date of payment

B. If a person has received unduly a thing, and it is still in his possession, he cannot give its
equivalent in money. The restitution must be made if possible, in kind - sec 1024

If the thing is not in his possession

Receiver in bad faith - sec1025(1)

He must:
(i) return either the profits derived from the sale of the thing, or
(ii) at the option of the plaintiff, to pay him the greater amount between the value of the thing at
the time in which the receiver ceased to possess it and the value at the time of the demand,
notwithstanding that he shall not have derived any profit therefrom.

Receiver in good faith

he is bound to return only the value thereof, up to the amount of benefits which as a result of the
alienation or deterioration of the thing ,he may have derived therefrom.
Where he has not yet received the subject of the benefit derived from such alienation, he shall
only be bound to assign his right of action for the recovery thereof. - sec 1025(2)

2. Indemnity for deteriorations

Receiver in bad faith:

He must make good any deterioration, even though caused by a fortuitous event, unless he shows
that the thing would have equally deteriorated had he restored it. sec 1025(1)
Receiver in good faith:
He is only bound to make good deteriorations in case and up to the amount of any benefit he
derives therefrom. sec 1025(2)

3. Restitution of the fruits

Receiver in bad faith

He must restore all the fruits which he has collected or by the exercise of all the diligence of a
bonus paterfamilias, could have collected from the day of his unlawful occupation. (whether the
object be money or any other thing; in money, fruits consist of interest) sec 541

Receiver in good faith

He is only bound to restore those fruits collected after the judicial demand, and he acquires all
those which he has collected or could have collected before the demand.

4. Reimbursement of expenses

Receiver in good faith

Necessary expenses: may demand reimbursement
Useful expenses: either refund the cost of the work or a sum corresponding to the enhanced value
of the thing.
Decorative expenses: receiver is entitled to take them back, unless the other party desires to
retain them and pay him a sum corresponding to the profit that the latter might make by taking
them.

Receiver in bad faith

Necessary expenses and useful expenses which cannot be removed: receiver may demand
reimbursement provided the thing shall not have been obtained by theft or some other offence
which does not fall under the class of contraventions
Useful expenses which can be removed: owner may demand that they be removed at the expense
of the receiver or he may retain them refunding the cost thereof or a sum corresponding to the
enhanced value of the thing.
Decorative expenses: same as in good faith.

4. Extinction of the action to recover:

1. Sec 1027 - Prescription of 2yrs from the day on which the person to whom the action is
competent shall have discovered the mistake.

2. Sec 1022(2) - In a case where I pay but I am not the debtor, if the creditor is in good faith and
as a result of the mistaken payment, he deprives himself of proof of his credit or of the security
attached to the debt, then the 'mistaken debtor' cannot recover.
Ex: A pays B, and B is in good faith, believing A to be his debtor. If B receiving payment from
A, tears up a document proving the credit or cancels the hypothec which used to secure the
payment, then A discovering he is not the creditor, cannot recover.
'..... saving the right of the payer against the true debtor'. I.e. the person who paid mistakenly
would have an action against the real debtor.

Which type of action does the mistaken debtor has against the true debtor? A number of
jusrists agree that the available action is the actio de in rem verso.

5. Relations between the payer and third parties

Third parties with regard to whom a relation may arise from the payment of what is not due are
those to whom the receiver may have alienated the thing.

With regard to 3rd parties, the action for recovery cannot be exercised against them, under
whatever title they may have acquired the thing from receiver.

Indebiti solutio is a personal action, not a real action. The Actio de in Rem Verso is a real action
and can be exercised against any person in possession of the thing. In the IS, I can sue only you
if it's you that I have paid. Even if you dispose the thing in favour to a third party, I cannot sue
the third party, I can only sue you.
IS can only be exercised against the person who has received. If there is bad faith, I can get
compensation from the receiver. If he is in good faith, he is not bound to return me anything, he
may have given it away under title of donation, and I cannot get anything from him, because he
got no benefit.
IS is a personal action which cannot be exercised against the third party.

_______________________________________________________________

3. Actio de in rem verso

Development of the actio de in rem verso

• The 3rd quasi-contract is the actio de in rem verso. It is an action which is not found in our
Code, it existed since Roman times and it was developed through jurisprudence and doctrine.

• Even at the time of the Romans, there were 2 actions by means of which you could apply for
a remedy with the praetor whenever a dispute arose on which there was no remedy in the
Justinian code.
• From these two actions, the modern system has developed the actio de in rem verso (ADIRV)
which is applicable generally and it is applied whenever a remedy should be given but the law
does not provide for it. This is basically the idea behind the ADIRV. If all legal doors are closed,
but the court feels that this individual needs justice, the court will be free under the ADIRV to
give that remedy in the interests of justice.

• In various cases the Courts have confirmed the existence of this action. One of the leading
cases is Said vs. Testaferrata Bonnici 16th June 1936 . It deals systematically with the
ADIRV.

Judge Harding: 'Il-Kodici ma jsemmix esplicitament bhala rimedju generiku din l-azzjoni.
Eppure m'hemmx dubju li din l-azzjoni ghandha tigi ammessa bhala principju generali u
bhala mezz komuni biex jigi evitat l-arrikkiment indebitu....'.

This action is nothing more but the sanctioning of that important principle of equity: no
one must enrich himself unjustly at the expense of others

Three basic principles are at the root of the ADIRV and which emerge from this definition:

1. The action is a subsidiary one. It cannot be exercised as a principal remedy but it can be
exercised when ex contractu or ex quasi-contractu, there is no remedy.
It does not mean that before you exercise the ADIRV you have to exhaust all other possible
remedies. But it has to be shown that there is no remedy available ex contractu or ex-quasi
contractu in order to succeed with the ADIRV.

2. The consent of the defendant is not an element of this action. Had there been consent, it
would have been an action based on contract; but if I give you an advantage, your consent is
absolutely immaterial.

Conditions for the action to be exercised

The Code does not regulate the ADIRV, therefore the conditions necessary for the exercise of
this action do not emerge from the Code but from jurisprudence and doctrine.
The leading case is Said vs. Testaferrata Bonnici. This established that three conditions must
be satisfied before the action can be exercised:
1. l'arricchimento - the enrichment;
2. il vincolo di causalita - cause and effect.
3. il carattere ingiusto dell‟arricchimento.

1. Enrichment: it must be proved that defendant got some sort of advantage as a result of my
activity.

In an Italian case, a female shop assistant agrees to serve without a salary in

consideration of a promise on the part of her employer that he would marry her. The
latter changed his mind and the girl sued for remuneration for the services which she
had granted gratuitously.
In another similar case, a person worked gratuitously in a shop with the hope that the
owner would show his gratitude in his will, but this did not happen.
In both situations, the Italian court found against the plaintiff because it enunciated that
a patrimonial diminution corresponding to the patrimonial enrichment is required.

What if the defendant did not get a profit, but as a result of my effort, he did not make a loss?
Was that enrichment for the purpose of this section? Eg Defendant had property. Through my
action he did not enhance the value of that property, the value remained the same; but through
my efforts, the property did not deteriorate.
Doctrine and courts have accepted that this is an advantage which would satisfy this first
condition.

CASE: Grech vs. Gauci 38.1.1942

• Two brothers maintained their parents. Children have no obligation to maintain their parents
except under certain circumstances. 'Jekk il-genituri huma propjetarji ta' stabbli ma jistghux
jirriklamaw l-alimenti minghand uliedhom, u dawn ma humiex ritenuti jipprestawlhom l-
elementi.'
• In this case, these circumstances did not exist. Parents had sufficient property to maintain
themselves but these brothers gave a weekly or monthly allowance to their parents.
• On the death of the parents, the brothers sought to recover compensation from their other
brothers for the help they had given to their parents. 'L-ulied m'ghandhomx l-azzjoni solidali
kontra l-ulied l-ohra ghall-hlas ta' sehemhom minn dak il-manteniment imma jistghu
jirrepetu dak il-manteniment bis-sahha ta' l-ADIRV'.
• They based their action on the ADIRV and they argued that through their contribution, the
estate of their parents did not deteriorate and remained intact. They argued that had they not
maintained their parents, their parents would have utilized their estate with the result that at their
death, their estate would have been less than it was now.
• Court accepted their view and said that enrichment for the purpose of ADIRV need not be
financial; the estate was maintained as it was through their efforts, that satisfies the first
condition for the ADIRV.

2. Causality - There must be the relation of cause and effect between what I do and what you
get.

a. The issue arose: what if there is an intermediary, a 3rd party? My action and yr benefit are not
direct but a 3rd party has intervened to cause my act to benefit you. A causes a benefit to B but
as a result of the intervention of C.

CASE: Tennyson Ford vs. Galea 1940

• A 3rd party was involved in a traffic accident and he suffered certain injuries as a result of
which he did not go to work for a number of weeks.
• His employer continued to pay him the full wages and he then sued the person with whom the
employee was involved in an accident. Defendant argued that he had no relation with the
employer, no contractual relationship.
• But the court said that I paid a benefit to the employee, (the wages), had I not paid him the
wages, the employee himself would be entitled to sue the defendant for those wages and I was
therefore entitled to those wages from the defendant.
• What the 3rd party did is simply that of causing the plaintiff to do an act which procured an
advantage to the defendant. Court found in favour of plaintiff.

3. The Unjust Character of the Advantage

• Can the ADIRV exist in unlawful contracts?

When dealing with causa as an element of contracts, we said that if the causa is unlawful,
immoral or inexistant, then there is no contract. It is a principle of the law that it will not give a
remedy to a person who has broken it.

But is it fair that a person who has broken the law has no right to seek compensation when
through his acts, an advantage has accrued to the other party?
This covers foreigners and individuals working clandestinely/without proper registration.

There is no constant trend in the opinions of the courts. There are cases in which the court found
against the plaintiff suing for compensation for work done without a permit and in other cases
finding against him. In my opinion compensation should still be awarded on the strength of the
maxim Omnia Labor optat premium.

4. COMPENSATION FOR SERVICES RENDERED.

This quasi-contract has been developed by our courrts separately, and it has arisen esp. in family
situations. Strictly speaking services rendered have to be compensated because they grant an
advantage to an individual and hence they would fall within the ADIRV principle.

When compensation is granted for services (servigi) rendered, the crts do not look at enrichment
(Gain) or impoverishment (loss) as in the ADIRV. The criteria employed by the courts vary from
one case to another.
E.g.: if a person has left his job to take care of his mother. Compensation is not given to the
extent of his loss (he lost wages and hence is a considerable loss) neither to the extent of the gain
on his mother's side (there is no need to employ a nurse, and hence assets remain intact and this
makes considerable gain).
Are services to one's family presumed to be gratuitously done or are they done on the basis of
payment? Is it simply a liberality, a sense of duty, an intention to help or is one expecting
reimbursement?

Judgements before 1890: such services are rendered with the intention of compensation unless
there is clear proof that what I did was a liberality.
Judgements bet. 1890 and 1938: this presumption was reversed. Such services are deemed to be
gratuitous unless there is clear evidence that one had shown the intention to be compensated.
Judgements from 1938 - : reverted back to the original position that services to family are
presumed to have been done with the intention to be compensated.[2]

CASE: Ellul vs. Ellul 12th Feb 1980

Services rendered familiaritis causa are still considered to be carried out with the intention of
getting compensation unless there is clear evidence to the contrary.

CASE: Barbara vs. Buttigieg FH Mr.Justice Alberto Magri 1995

Plaintiffs (wife and husband) had accommodated elderly defendant in their house giving
him a place where to live and sleep under their 24 hour surveillance, for a period of
around five years.
Plaintiffs had in fact modified their house for defendant's use, including a new bathroom.
Defendant paid LM40 a month, Lm900 lump sum in order to cover expenses incurred in
the building of the new bathroom and for their assistance.
Defendant had even written a will whereby he left plaintiffs an undivided part of a
property.
One day, through no fault of plaintiffs, defendant left their house, cancelled the will and
filed a writ of summons ordering the return of the LM900, which in fact the First Hall had
conceded to.
Plaintiffs hence filed a writ of summons and requested the crt to order defendant to pay
for assistance and services rendered to him, less that part of it already paid as monthly
payments throughout the five year period.
Defendant pleaded that he did not have to pay plaintiffs anything since they had always
been satisfied with the monthly money.
Court noted all types of services rendered to defendant and considered whether in this
light the LM40 monthly was a just and fair compensation.
Amongst other things, court remarked that if defendant were to stay in a hotel for the
same period, obviously without the care and assistance needed for an elderly person,
he would definitely have paid much more.
Court noted that defendant had not said that compensation was not due to them
because of his relation to them but rather because the payment was sufficient.
After having taken into consideration commercial rates for services rendered, defendant
was ordered to pay plaintiffs an extra sum.

According to our Crts, the prescriptive period for this action is of five years even though the
services are continued: If A looks after his parents for 15 years, A can get compensation only for
the last five years - unless it can be proven that the debt has been interrupted or the debtor has
acknowledged the debt.

Criteria taken into consideration to determine the quantum of compensation:

CASE: Vassallo vs. Aquilina 29th June 1982

'Xorta u frekwenza tas-servigi
Mezzi tal-konvenuta (estate of defendant)
Parentela ta' l-attur mal-konvenut' (the closer the family tie, the lesser the compensation)

CASE: Cutajar vs. Vella 6th April 1982 FH

'Xorta ta' qadi
Qrubija bejn attur u konvenut
Beneficcji u kumpens moghti lill-qaddej.'

CASE: Buhagiar vs. Mifsud 1st February 1983 FH

Natura ta' qadi
Estensjoni taghhom
Eta' tal-persuna servjenti
Kapacita u livell ta' edukazzjoni taghha.

Conditions which are therefore usually taken into account are:

1. plaintiff who has already been awarded for his lost earnings
2. compensation hoped for by the plaintiff
3. degree of relationship between plaintiff and defendant
4. value of estate of defendant
5. benefit derived by defendant
6. deduction of any meals, accommodation enjoyed by person who rendered the service.
7. nature and extent of services rendered.

• The action of the person who rendered the services is either directed against the person to
whom services where rendered or against the heirs in most cases. Generally when services are
being rendered there are no disputes, but after the parents are dead, problems would generally
arise. E.g. one brother against the other members of the family.

Servigi as an alternative to „senserija‟ – if a person acting as a broker does not manage to

conclude the deal himself, but he would have rendered a service to the parties or either party
which such party/ies did accept and perhaps demand, compensation is also given and this also on
the basis of the maxim „omnia labor optat premium‟.
[2]

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Lecture 6 & 7
Il-Ġimgħa, 20 ta' Marzu 2009
14:14

Audio recording started: 14:14 Il-Ġimgħa, 20 ta' Marzu 2009

Il-Ħamis, 26 ta' Marzu 2009

07:05

CONSUMER AFFAIRS ACT AND RELATED LEGISLATION

Introduction

The notion of consumer affairs is as ancient as trade itself. Since the dawn of civilization, we
have always had, with very few exceptions, a society in which traders sell their goods to the
citizenry who on their part purchase their necessities from such traders. And ever since the need
for legislation in order to regulate the relations between traders and their clientele has been felt
and effectively addressed by the promulgation of codices of law regulating such relations.
Reference can be made to the Roman Law on the Institute of Sale which constitutes the basis for
our own Civil Code as well as that of numerous other continental European countries.

However, it was not before the event of mass consumerism that the need to introduce specific
measures especially designed to protect from consumers was felt. Modern means of
communication and transport meant that a wider audience was now open to a wider range of
goods and products. The phenomenon of mass urbanization and the aggregation of large
numbers of the population in cities and metropolies gave rise to the phenomenon of mass
consumerism. The incredible evolution which has been witnessed in the field of information and
mass communication offered enormous and unprecedented opportunities to traders and
businessman to offer their goods (and services) to the population and the phenomenon of
advertising on a mass scale was born. Consumers became constantly bombarded from all
directions and at all times of the day with a plethora of goods, products and services for their
consumption. With this rapid change in the way of doing and advertising business came the need
to protect consumers from unfair practices which these modern means helped to facilitate. Hence
the movement known as consumerism which is aimed to keep business in line was born, mainly
in the United States of America.

The first consumer movement was born in the early 1900s, fuelled by rising prices and scandals
in the drug industry. A second consumer movement in the mid-1930s was once again sparked by
an upturn in consumer prices during the Great Depression and by another drug scandal. The third
movement began in the 1960s when consumers had become better educated, goods and products
had become more complicated and hazardous, and people were unhappy with American
institutions. President John F. Kennedy declared that consumers had the right to safety and to
information, the right to choose and to be heard. Congress proposed the promulgation of
consumer-protection legislation and, since then, many consumer groups have been organized and
several consumer laws have been passed. The consumer movement spread internationally and
became very strong in Europe.

In Malta too consumer groups organized themselves in order to promote the rights of consumers
against unfair trading practices. These groups have been the catalysts for the introduction of
consumer protection legislation in Malta. As business became more complex it was felt that the
ordinary legislation and the redress which it provided, the „lex generalis‟, was no longer
sufficient and effective for the proper protection of consumers and their rights, and hence the
need for the promulgation of a „lex specialis‟, a special law specifically designed to cater for the
protection of consumer rights, was felt. The Consumer Affairs Act with the object “to provide
for the establishment and functions of the office of Director of Consumer Affairs and for the
establishment of a Consumer Affairs Council and of tribunals to be known as the Consumer
Claim Tribunal, , and for other matters ancillary or consequent thereto” was promulgated by
means of Act XXVIII of 1994.

The Consumer Affairs Act

The Consumer Affairs Act – Act XXVIII of 1994, as subsequently amended by Act V of 1996,
Act XXVI of 2000 and Act VI of 2001 – provides, inter alia, for the following –

1. the Establishment of a Director of Consumer Affairs as head of a Department of Consumer

Affairs;

2. the Establishment of a Consumer Affairs Council;

3. the Establishment of a Consumer Claims Tribunal;

4. a Declaration of Principles regarding Consumer Rights;

 5. The Recognition and Registration of Consumer Associations;

6. The Suppression and Prohibition of Unfair Practices, including the use of prohibited terms
in consumer contracts and misleading advertising;

7. Enforcement.

Director of Consumer Affairs

Section 3 of the Consumer Affairs Act (hereinafter referred to as „the Act‟) provides for the
establishment of a Director of Consumer Affairs (hereinafter referred to as „the Director‟).

The Director is a public officer chosen by the Prime Minister. The principal function of the
Director is to implement the policies set out by the Department of Consumer Affairs (hereinafter
referred to as „the Department‟), of which the Director is the head.

The Act enlists the principal functions of the Department, namely –

i. to provide information to consumers;

ii. to monitor trading practices;
iii. to take measures for the prevention and suppression of prohibited trade practices;
iv. to investigate complaints from consumers;
v. to redress justified consumer grievances; and
vi. to assist the Consumer Affairs Council in the proper performance of its functions.

The Director has the power to issue public statements and giving warnings or information about
goods which are dangerous or unsatisfactory, the persons supplying such goods, unsatisfactory
services, detrimental trade practices and any other matter which may adversely affect consumer
interests. Such statements and/or warnings are to be issued in concurrence with the Council.

Section 8 of the Act further provides that Government, the Director and any public officer acting
on his instructions is exempt from liability for acts done in good faith and this exemption
extends to all persons in any way communicating such public statements or warnings.

Consequently, if for example the Director issues a public statement asserting that a particular
product which is sold by a particular company is hazardous to health, if it results that such
information is incorrect, that company cannot sue the Director or any of his subordinates, nor
can it sue any newspaper, radio or TV stations announcing such public statement, unless that
company manages to prove that such a public statement was issued in bad faith, that is with the
intent of harming that company‟s business and with the knowledge that the information
contained in such public statement is incorrect. It is to be appreciated that this exemption is
necessary in order to protect the Director in the performance of his duties to the public at large
although the law also stipulates that when making such statements the Director must adhere to
the principles of fairness and objectivity.
The Director also has the power, when it appears to him that a trader has failed to comply with
his obligations under the Act (or any regulations), or engaged in conduct which constitutes a
breach of the provisions of the Act (or any regulations), rather than to institute proceedings
against him, to caution the trader and obtain an undertaking from him that he shall redress his
ways. This is solely at the discretion of the Director.

The Director is also responsible for the administration of the Trade Descriptions Act and the
Door-to-Door Salesman Act.

The Consumer Affairs Council

Section 4 of the Act provides for the establishment of a Consumers Affair Council (hereinafter
referred to as „the Council‟) which consists of –

i. a Chairman;
ii. a Deputy Chairman, being the Director;
iii. 5 other members, 1 of whom is chosen after consultation with registered consumer
associations and 1 of whom is chosen after consultation with those constituted bodies
(such as the GRTU) representing the interests of traders.

A non-voting secretary from the public service is appointed by the Minister.

The appointed members hold office for 3 years. Persons who are Members of Parliament, legally
interdicted or incapacitated, declared bankrupt or convicted of theft or knowingly receiving
stolen property, fraud, a crime against public trust or an offence against the Act itself or the
Weights and Measures Ordinance, the Customs Ordinance, the Trade Description Act or the
Door-to-Door Salesman Act is not eligible to hold such office.

Section 5 enlists the principal functions of the Council, namely –

i. to assist the Minister in the formulation of policy;

ii. to advise and assist the Minister on measures for the promotion and protection of
consumer interests;
iii. to monitor trading and business practices;
iv. to commission research necessary to promote consumer protection;
v. to monitor the working and enforcement of consumer protection laws;
vi. to draw up and review consumer protection directives;
vii. to monitor the development of consumer associations and determine whether they are
to be registered in terms of the Act or not.

Decisions of the Council are taken by majority of votes with the Chairman having a casting vote.
A member having a conflict of interest on any particular matter being discussed is to declare his
position. The law also provides for a confidentiality clause (Section 11) binding Council and
Commission members who are prohibited by law from divulging any information acquired by
them as a result of their office.

The Council can also establish Advisory Commissions which have a consultative and advisory
function, although their findings and recommendations are not binding. The main function of a
Commission is to act as a channel of communication between Council and the business sector in
respect of which it is established.

Minister‟s Power to make Regulations

Section 7 of the Act is an enabling provision which empowers the Minister responsible for
consumer affairs to make regulations, after consulting the Council, on any matter elating to
consumer affairs in order to give fuller effect to the provisions of the Act.

The law itself (Section 7) identifies those areas requiring regulation, namely –

i. the establishment of minimum service requirements and price indication requirements

– in this regard reference is to be made to Legal Notice 97 of 1997 which provides for
the display of price-lists at bars (including tuck-shops and snack bars situated within
factory premises) and kiosks (including movable sales outlets);
ii. the establishment of rules of practice for registered consumer associations;
iii. the regulation of advertising and similar practices;
iv. the regulation of gift schemes and sales promotional activities and offers;
v. the regulation of distance selling arrangements – in this regard reference is to be
made to Legal Notice 186 of 2001 (Distance Selling Regulations) which shall be
treated in greater detail at a later stage;
vi. the regulation of consumer credit offers.

Regulations made under this provision of law may (and do) provide for penalties for offences
committed against such regulations.

Proceedings

Proceedings for any offence under the Act can only be instituted at the instance of the Director
(Section 13). We find similar provisions in numerous other laws of a public policy nature, such
as the law regulating Vat and the Malta Tourism Authority Act. Consequently the Executive
Police may not proceed „ex officio‟ or on the complaint of the injured party (the „kwerela‟) but
must first seek and obtain the fiat of the Director.

The prosecution is conducted by an officer of the Department, usually with the assistance of a
police officer.

Apart from the penalty for the offence, the court may also be asked to issue a compensation
order whereby the defendant will be ordered to pay the injured party, as full or partial
compensation, a sum not exceeding Lm250 for any pecuniary loss and a sum between Lm15 and
Lm100 for moral damages (Section 14).

It is to be underlined that this is a novel concept in our law since our law only provides for
compensation for material damages actually suffered but does not envisage the notion for
material damages (although recent judgments are in a way and to a very limited extent providing
for moral damages and the notion of pain and suffering).

The compensation ordered will be deducted from any amount which may be awarded by a court
or tribunal vested with a civil jurisdiction to the injured party with regard to the same matter.

Reference is to be made to Section 3 of the Criminal Code which provides that “every offence
gives rise to a criminal action and a civil action”. The two are never to be confused. Hence, if an
offence is committed against the Act or any regulations made by the Minister in virtue of the
enabling Act, the injured party has the right to refer the matter to the Director in order for
criminal proceedings to be instituted against the offending trader. Furthermore, the injured party
has every right to institute civil proceedings against such trader for damages. One action
certainly does not exclude the other. What the law is stating here is that if in the judgment
delivered by the criminal court, a compensation order is issued against the defendant, the said
amount is to be deducted from any award against such trader which may given by the civil courts
in a cause for damages instituted against him by the injured party.

Section 14 of the Act further stipulates that a compensation order made by the criminal court
shall constitute executive title once the judgment becomes „res judicata‟. It is to be explained
that a judgment becomes „res judicata‟ when it is final and definitive, and a judgment becomes
final and definitive either if no appeal is lodged and the time for filing an appeal (in the case of
criminal proceedings, 8 working days) lapses, or if an appeal is filed once the Court of Criminal
Appeal pronounces its final judgment. At such point in time, the compensation order will be
deemed to be an executive title, and the injured party in whose favour the compensation order is
made may proceed to enforce such compensation order without the need of instituting any civil
proceedings against the trader and obtaining a judgment against him, as would be the case in the
normal course of affairs. Consequently, should the trader against whom the compensation order
is made fail to pay the injured party the amount awarded in such compensation order, ,the
injured party may proceed forthwith to file executive warrants against him in order to enforce the
payment. Executive warrants which may be instituted include an executive warrant of seizure
whereby movable property pertaining to the defendant is seized in order to be sold by judicial
auction so that the injured party may receive payment from the proceeds, or an executive
garnishee order whereby any person or institution (including commercial banks) holding monies
pertaining to the defendant will be called to deposit such monies under the authority of the court
in order for the injured party to enforce payment thereon.

The Consumer Claims Tribunal

Jurisdiction- Malta and Gozo

Section 16 of the Act provides for the establishment of a Consumer Claims Tribunal (hereinafter
referred to as „CCT‟) – in reality two of them, one for Malta and one for the islands of Gozo and
Comino.

How does one determine, in respect of a claim arising from a particular transaction, whether to
institute proceedings before the CCT (Malta) or the CCT (Gozo) ? In many cases the answer is
pretty clear; nevertheless the law provides the rules which determine jurisdiction.

In the event that a sale is concluded in the trader‟s premises, then the „lex situ‟ applies – the
transaction will be deemed to have taken place in the island where those premises are situated.
Hence, if I buy a product from a shop in Malta, and I want to take the trader in front of the CCT
because of a grievance relating to the product so purchased, I will take the case in front of the
CCT (Malta).

In the event that a sale is not concluded within the trader‟s premises, if the sale is not a direct
result of the trader‟s own solicitation, than once again jurisdiction will be determined by the
place where the trader‟s premises are situated, but in all other cases jurisdiction will be
determined by the place where the goods were delivered or the services provided. Hence, if I, as
a Maltese consumer, phone a trader whose premises are in Gozo to purchase a product from him,
and he sends me the said product, if I want to sue him I have to go in front of the CCT (Gozo).
However, if I buy such a product because for example I received a fax from such trader
advertising his product, then if I want to sue him I will take up the case in front of the CCT
(Malta) since the product was delivered to me in Malta.

These rules as to jurisdiction are dissimilar from those established in the Code of Organization
and Civil Procedure (hereinafter referred to as „the COCP‟) for lawsuits instituted in front of the
ordinary courts. Such rules are found in Section 767 et seq of the COCP and the basic rule is that
of the „privilegium fori‟, that is the case is to be filed in the court of the island where the
defendant is resident.

Composition

Section provides that the CCT is to be presided by one arbiter sitting alone.

In order a person to be appointed as arbiter, he must be at least 30 years of age and must have
held the warrant and practised the profession of advocate in Malta for a minimum of 5 years
(whereas for the office of Magistrate the time-frame is 7 years and for a judge 12 years).

A person having these requisites will nevertheless be disqualified from holding this post if he is
an MP or member of a local council, a trader or a person who has been convicted of theft or
knowingly receiving stolen property, fraud, a crime against public trust or an offence against the
Act itself or the Weights and Measures Ordinance, the Customs Ordinance, the Trade
Description Act or the Door-to-Door Salesman Act.

Section 17 also provides for the independence of the arbiter from the Executive, and states that
in the exercise of his functions the arbiter shall not be subject to the control or authority of any
person (neither the Director, Council nor the Minister) and may only be removed from office by
the Court of Appeal upon an application made by the Prime Minister on grounds of
misbehaviour or inability to perform his functions by reason of infirmity of body or mind.

This provision goes a long way to provide for the independence of the arbiter from the
Executive. The arbiter had a judicial function and hence must not be subjected to the whims of
the Executive, and this in line with the theory of Separation of Powers as defined by Montesqieu
and other political theorists and which, at the end of the day, constitutes the very basis and
essence of democracy.

It must also be stated that the grounds on which an arbiter may be removed are identical to those
on which a judge or magistrate may be removed as stipulated in Section 97(2) of the
Constitution of Malta. However, in the case of a judge or magistrate, understandably, the process
of removal is even more onerous since a two-thirds vote of all members of Parliament is
required.

Section 18 of the Act provides that the arbiter may abstain or be challenged in the same
circumstances as a judge of the superior courts. These circumstances are defined in Section 734
of the COCP and are the following –

i. if he is related by consanguinity or affinity in the direct line to one of the parties;

ii. if he is related by consanguinity to one of the parties in the degree of brother, uncle or
nephew, grand-uncle or grand-nephew or cousin, or by affinity to one of the parties in
the degree of brother, uncle or nephew;
iii. if he is the tutor, curator or presumptive heir of one on the parties;
iv. if he is or has been an agent to one of the parties;
v. if any of the parties is his presumptive heir;
vi. if he is the administrator of any establishment or partnership involved in the suit;
vii. if he had given advice on the cause;
viii. if he had previously taken cognisance of the cause as judge or arbitrator;
ix. if he has made any disbursements in respect of the cause;
x. if he has given evidence or any of the parties intends to call him as witness;
xi. if he or his spouses is directly or indirectly interested in the event of the suit.

Jurisdiction

The CCT has jurisdiction to hear and determine claims made by consumers against traders where
the value of the claim (excluding interest and costs) does not exceed the sum of Lm1,500, and
the claim arises, directly or indirectly, from the purchase or hire of goods by a consumer from a
trader or the rendering of a service by a trader to a consumer.

Hence, the CCT has the same jurisdiction as the Small Claims Tribunals which can only hear
and determine money claims where the value does not exceed the sum of Lm1,500. In the event
that the value exceeds the sum of Lm1,500 but does not exceed Lm5,000, jurisdiction is vested
with the Court of Magistrates, and where the claim exceeds the sum of Lm5,000 or is
indeterminate, jurisdiction rests with the First Hall of the Civil Court.

It is important to have regard especially to the definition of the terms „consumer‟ and „trader‟ in
order to determine whether a particular claim can be promoted in front of the CCT or otherwise.

Section 2 of the Act defines the term „consumer‟ as any individual who in a particular
transaction is not acting for purposes related to his trade, business, craft or profession and any
person who, not being the immediate purchaser of beneficiary of the product purchased or the
service received, may have consumed, used or benefited from such goods or services.

Hence, if a person is a trader by profession, and purchases a product for his personal use, then he
qualifies as a consumer and may sue the trader from whom he has purchased such product in
front of the CCT. On the other hand, if such trader has purchased such product for the conduct of
his own trade (eg a retailer purchasing goods from a wholesaler), then he would not be deemed
to be a consumer and such a transaction does not fall within the parameters of the CCT‟s
jurisdiction.

Section 2 of the Act defines a „trader‟ as any person (including any body corporate) acting for
purposes relating to his trade, business, craft or profession. The Act also embraces the definition
of „trader‟ stipulated in Section 4 of the Commercial Code, namely, “any person who, by
profession, exercises acts of trade in his own name, and includes any commercial partnership”.
Section 5 of the Commercial Code then gives an exhaustive list of what are “acts of trade”,
namely –

i. purchase of movable effects with the object of reselling them, and the sale or lease
thereof (whether in their natural state or manufactured);
ii. any banking transaction;
iii. any transaction relating to bills of exchange;
iv. any time-bargain in securities;
v. any transaction relating to commercial partnerships;
vi. any transaction relating to vessels and navigation;
vii. any undertaking relating to supplies, ,manufacture, construction, carriage, insurance,
deposits, public entertainment and advertising;
viii. purchase and re-sale of immovable property with the object of speculation;
ix. all transactions ancillary to or connected with any of the above.

Thus, a business deal between two traders can never be the subject of a suit brought in front of
the CCT.

With regards to the notion of „trader‟, reference is also to be made to the provisions of Legal
Notice 109 of 1997 which states that the following public corporations which provide goods or
services to consumers for a fee shall also be considered as a „trader‟ for the purposes of the Act –

Malta Development Corporation;

Malta Drydocks;
Telemalta Corporation (now Maltacom plc);
Enemalta;
Malta Freeport Corporation;
Employment and Training Corporation; and
Water Services Corporation.

The jurisdiction of the CCT is not exclusive, in the sense that it shall be at the option of the
consumer whether to bring the action in front of the CCT or in front of the ordinary courts.
When an action is brought by a consumer against a trader, even in front of the CCT, the trader
has the right to file a counter-claim, even if in reality his claim, had it been filed „marte propria‟,
would have fallen outside the parameters of the jurisdiction of the CCT.

By way of exemplification, if a consumer purchases a product from a trader on credit, and the
consumer fails to pay the balance due, the trader cannot sue the consumer in front of the CCT.
However, if the consumer sues the trader before the CCT because the product so purchased on
credit is defective, then the trader has the right to avail himself of the consumer‟s action and file
a counter-claim before the CCT asking the Tribunal to condemn the consumer to pay him the
balance due to him.

Procedure

When a claim is lodged, prior to being presented before the CCT, the case is referred to the
Director to try to reach an agreement on the issues in dispute; then, if no agreement is reached,
the case is referred to the Tribunal.

With regards to the procedure itself, reference is to be made to Legal Notice 8 of 1996 as
amended by Legal Notice 284 of 2000, which establishes in great detail the procedure which is
to be followed before the CCT.

Section 23 of the Act provides that the arbiter is to ensure that the case is decided if possible on
the same day; he shall inform himself as to the facts of the case as he deems most fit, and is not
bound by the rules of best evidence or hearsay; as far as possible is to refrain from appointing
technical referees to give expert evidence, although he has the faculty to do so; and he is not
bound to give extensive reasons for his decisions. This is all a clear effort to expedite
proceedings as much as possible and to avoid the bureaucracies and procedures in which cases
before the ordinary courts may be stalled.

Determination of Disputes and Appeal

Section 21 of the Act provides that the CCT is to determine the issues in dispute according to the
substantive merits and justice of the case and in accordance with equity. A similar provision is
found with regards to the Small Claims Tribunal, but not with regards to the ordinary courts
which must dispense justice according to the strict provisions of the law.
Let us give an example. If a purchaser files a suit against the vendor in front of the ordinary
court, asking the court to declare that the object sold to him was defective and asking the court to
condemn the vendor to reimburse him, the purchaser‟s action will be declared null and void in
the event that prior to the filing of the suit the purchaser fails to deposit the object under the
court‟s authority. This will not happen, however, if the purchaser institutes proceedings in front
of the CCT because the CCT is to determine the case according to its substantive merits and in
accordance with equity.

Section 21 however states that the issue of prescription is to be determined according to law, and
not on the basis of equity. Prescription is the period of time established by law whereby an
action becomes time-barred. For example, if a person lends money to another person, his right of
action becomes time-barred if 5 years elapse and prescription is not interrupted. Prescription is
interrupted either by a part payment made by the debtor, or the admission of the debt by the
debtor or the service of a judicial act on the debtor calling upon him to settle his dues. When
prescription is interrupted, the period of time starts running „de novo‟.

There is a right of appeal from decisions of the CCT. The appeal is to be filed before the Court
of Appeal (inferior Jurisdiction) within 18 working days from the date of the decision. (Section
22)

However, the right of appeal is very restricted and limited. Whereas from decisions of the
ordinary courts when can appeal both on points of fact as well as on points of law, from the
decisions of the CCT an appeal shall lie only if the tribunal has acted contrary to the rules of
natural justice and such action has seriously prejudiced the rights of the appellant.

The rules of natural justice are, essentially, the rule of „nemo iudex in causa propria‟ (one cannot
be a judge in his own case) and „audi alteram partem‟ – both parties are to be given the same
opportunity to argue their case. Hence, as one can easily decipher, the right of appeal is very,
very limited. In order to succeed, the appellant must prove that, for example, the Tribunal failed
to give him an equal opportunity (within the parameters of the rules of procedure) to air his case,
,and, not only so, he must further prove that such action was seriously prejudicial to his rights
and interests.

In the case „Anthony Friggieri –vs- Neville Borg‟ decided on the 20th of October, 2003 by the
Court of appeal (Inferior Jurisdiction) as presided by Mr. Justice Dr. Philip Sciberras LL.D., it
was explained that “huwa bil-wisq evidenti minn dan id-dispost (Section 22(2) of the Act) illi d-
dritt tal-appell taht din il-ligi specjali hu wiehed limitatissimu, konsentit biss ghas-sitwazzjonijiet
hemm kontemplati. Kif osservat drabi ohra, „din il-Qorti tara illi trid tirrispetta l-volonta‟ tal-
poter legislattiv tal-pajjiz li ha decizjoni li jikkrea Tribunal li ghandu funzjoniu mansjoni ferm
differenti minn dik ta‟ qorti tal-ligi u li ghandu jiddeciedi fuq bazi ta‟ gustizzja sostantiva tal-kaz
u skond l-ekwita, kif ukoll ghandha d-dover li tirrispetta l-volonta‟ tal-Parlament meta fil-
promulgazzjoni tal-Kap. 378 specifikament illimita d-dritt tal-appell ghal dawk il-kazijiet fejnit-
Tribunal ikunmar oltre d-dettami tal-gustizzja naturali u in oltre dik l-azzjoni tkun ippregudikat
b‟mod gravi l-jeddijiet ta‟ min jappella‟ („Romina Vella –vs- Renald Cachia (Phoenicia Laundry
& Dry Cleaning), Appell, ,24 t‟April, 2001; „Rita u Anthony Linstead –cs- C.E.F. Trading Co.
Ltd.‟, Appell, 10 ta‟ Jannar, 2003)”.
In the event that an appeal is upheld, the decision of the CCT is quashed and the Appeals Court
will determine the original claim itself.

Consumer Associations

Part IV of the Act provides for the recognition and registration of Consumer Associations.

Establishes the criteria which must be met for a consumer association to obtain registration, as
well as the procedure to be followed.

Outlines the functions and obligations of registered consumer associations.

Consultative capacity of registered consumer associations.

Exemption from liability when acting in good faith.

Cancellation of registered consumer associations.

Declaration of Principles

Part V of the Act contains a Declaration of Principles of Consumer Rights

These are not enforceable – similar to Chapter 2 of the Constitution of Malta (the right to work
etc)

Unfair Practices

Prohibition of use of unfair terms in consumer contracts

Draws a very extensive, but not exhaustive, list of „unfair terms‟

Defines the elements and characteristics of an „unfair term‟

The rule that in case of doubt the interpretation most favourable to the consumer is to prevail

Prohibition of misleading advertisement

The rule that advertising is misleading if it is of a deceptive nature

Rules relating to „Comparative Advertisement‟

Rules relating to „Special Offers‟

Prohibition of „Pyramid selling schemes‟

Liability for Defective Products

The rule that a producer shall be liable for the damage caused wholly or partly by a defect in his
product.

The injured party need not prove the fault of the producer but only the damage, the defect and
the casual relationship between the two

If the producer, or, in the case of an imported good, the importer, cannot be identified, then the
supplier will be treated as the producer

The rule that a product is defective if it fails to provide the safety which a person is entitled to
expect.

Product not to be deemed defective by comparison

Defences which a producer may bring forth

Recourse both to the CCT as well as to the ordinary courts

Prohibition of exclusion of liability of the producer

Joint and several liability between more than one producer

Contributory liability of consumer

Sale of Goods to Consumers

The rule that traders are obliged to deliver to consumers goods which are in conformity with the
description and specifications in the contract of sale.

Same applies with regards to the installation of goods.

Remedies available to consumers

The notion of commercial guarantee

The elements of a commercial guarantee

A commercial guarantee cannot exclude rights which the consumer might have under any other
law

Binding nature of a commercial guarantee

Penalty by way of pre-liquidated damages

Compliance Orders

The powers of the Director to issue compliance orders for the protection of consumers

Contents of a compliance order

A registered consumer association may demand the Director to issue a compliance order and if
he fails to do so may take the case before the ordinary courts

Trader against whom a compliance order has been issued may institute judicial proceedings to
have the compliance order revoked

Interim compliance order

Prior to issuing a compliance order, the Director must first seek voluntary compliance from the
offending trader

Enforcement

Very wide powers of the Director, including search of premises, taking any books or
documentation, taking goods, testing goods, powers of inspection.

Also the right to interrogate the suspected offender.

Penalties for offences against the Act.

3 years prescriptive period

Responding to the exigencies of the time

Distance Selling Regulations – Legal Notice 186 of 2001

Other Enactments intended for the protection of Consumers

Trade Descriptions Act (Chapter 313 of the Laws of Malta)

Doorstep Contracts Act (Chapter 317)

Product Safety Act (Chapter 427)

Food Safety Act (Chapter 449)

Malta Standards Authority Act (Chapter 419)

Competition Act (Chapter 379)

Insurance Business Act (Chapter 403)

Insurance Brokers and other Intermediaries Act (Chapter 404)

Auctioneers Act (Chapter 342)

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Lecture 8
Il-Ħamis, 26 ta' Marzu 2009
07:05

Il-Ħamis, 26 ta' Marzu 2009

07:06

Doorstep contracts act

Chapter 317 of the laws of Malta

Introduction

 Section 1347 of the Civil Code provides that a sale is complete when there‟s agreement on
the thing and the price. However, this rule suffers many exceptions.
Eg.: (a) immovable property cannot be sold simply by agreeing on the thing and the price,
because for the sale of immovable property ad validitatem you require a public deed;
(b) for the promise of sale of immovable property, a private writing is required;
(c) under the Merchant Shipping Act, a ship cannot be transferred unless by a bill of sale.
 The Doorstep Contracts Act goes way beyond that. It is not simply a particular object, or on
one particular type of thing on which a form is imposed. It is an Act which regulates certain
types of contracts and requires the written form; it provides also what is called as “a cooling-
off period”, i.e. a period within which a person who has signed an agreement, and has the
written form, still has the right to unilaterally declare that he doesn‟t want to purchase and
that he doesn‟t want to be bound by the contract of sale that has been concluded. That is
final. Therefore since the sale no longer exists, the seller can‟t from that moment demand the
performance of the normal obligations of the buyer, for the payment of the price for instance.

Definition of a doorstep contract

 The Door-to-Door Salesmen Act is applicable to what is referred to in the Act itself as a
doorstep contract. The Act defines such a contract in section 2 as “a contract between a
consumer and a trader made through a door-to-door salesman, and includes a unilateral
engagement by a consumer towards a trader, negotiations for which have been initiated
away from business premises”.

Main elements of a doorstep contract:

a) A contract between a consumer and a trader.

(i) The Act defines “consumer” as “a person who in transactions covered by this Act acts
otherwise than in a commercial or professional capacity”.

(ii) The Act does not define “trader”. In the Commercial Code we do have a definition of a
“trader” and also in the Consumer Affairs Act. However, for the purposes of the Door-to-
Door Salesmen Act one can simply say that the other party transacting the deal with the
„consumer‟ is the trader. One should take the definition of “consumer” and invert it so if the
consumer is a person who is not acting in the transaction in a commercial or professional
capacity, then the trader is presumably the person who is acting in a commercial or
professional capacity.

(b) A door-to-door salesman.

He is “a person who offers goods for sale in homes, whether the offer is unsolicited (i.e.
when he is not asked to do so) by the person to whom it is made, or is solicited by the latter
person in response to any advertisement”. The Act makes it clear that “it does not include
vendors of foodstuffs and drinks who sell their goods from door-to-door”.

(c) “negotiations for which have been initiated away from business premises”.
If the consumer goes to the trader‟s business premises and negotiations commence there and
then goes to his house or whatever, and the contract is concluded there, then this Act does
not apply because negotiations should have been initiated away from business premises.

“Business premises” is defined as being “the permanent place of business at which a trader
exercises his commercial or professional activity as well as stalls at fairs and markets”.

Application of this Act

Section 3 of the Act excludes a number of contracts from the purview of the Act. We find:

(a) “contracts which have been negotiated exclusively at the initiative of the consumer”.

Therefore when it is the consumer who takes the initiative and brings the salesman home,
then in that particular case it is not a doorstep contract. There is a proviso which says that
“the ordering of catalogues, patterns and similar items, a request by the consumer for a visit
or demonstration (many are those who ask someone to give them a demonstration on pots
and pans, food containers and many other things) and participation in an event organised by
the trader (sometimes these things are also sold by the trader organising an event in one
person‟s house, and a lot of people go to that house) shall not be considered as initiating
negotiations”.

(b) “contracts which have been negotiated solely in writing, not being doorstep contracts”.

(c) “contracts which are concluded before a court, notary, or other person who is under a
duty to inform both contracting parties of their rights and obligations”. This is obvious.

(d) “contracts relating to immovable property or any rights thereto”.

(e) “contracts under which the overall price payable by the consumer does not exceed
Lm20”.

The price is so small in those circumstances that you don‟t need bother with these
restrictions. There is also a proviso which covers a continuous supply. In the case of a
continuous supply, that is, where a person is selling, for eg. encyclopaedias volume by
volume, making them at less than Lm20 each and having a continuous supply which adds up
to Lm500, then the doorstep contract still applies.

(f) “contracts relating to the sale of such goods as the Minister (the one responsible for
Trade) may prescribe”.

(g) “contracts for the supply of services or works other than contracts for the provision of
insurance”.
This is an important exception because it essentially means that we‟re talking here of goods.
Goods in the sense of movable things. It doesn‟t cover the supply of services or for instance
someone who is selling you tours, except for insurance.

Even the definitions themselves seem to imply that this applies to the sale of goods, after all
the definition of door-to-door salesman says, “a person who offers goods for sales in
homes”. It doesn‟t say “goods and services”, or “products” which is a much more general
term. Even sec. 7(e) of the Act says “a description of the goods sold”. The law is making it
quite clear that supply of services or of works is not included within the Act, except for
insurance.

Is it necessary that the final offer is made at home?

First of all, the definition of a doorstep contract holds that negotiations should have taken
place outside the business premises, so it can be in the street etc. But a door-to-door
salesman is a person who offers goods for sale in homes. Perhaps this is a lacuna in the law;
however, if one looks at the intention of the Act, one would realise that it applies basically to
all contracts covered in the Act where negotiations have taken place away from the business
premises. Consequently it would transpire that if one is approached in the street, or on a
beach, not necessarily at one‟s home but definitely away from the trader‟s business premises,
the the provisions of this Act should apply.

Elements of a Doorstep Contract

(a) a contract between a consumer and a trader;

(b) a contract possibly for the sale of goods and possibly for insurance;
(c) made via a door-to-door salesman;
(d) not been negotiated solely, exclusively, at the initiative of the consumer. (The ordering of
catalogues, the request for a visit etc. are not initiatives of the consumer).
(e) negotiations should have commenced outside the business premises of the trader;
(f) the overall price payable by the consumer should exceed Lm20;
(g) the contract is not concluded before a notary, court or a person who is duty bound to
explain the terms of a contract.

Effects

Licensing

Under Section 4(1) of the Act the law requires that a door-to-door salesman must be in
possession of a licence from the Director of Trade. There are certain requirements for the
granting of a licence:

(a) the person must be of majority age;

(b) he must produce a good conduct certificate as well as such proof of reliability as the
Director of Consumer Affairs may require;
(c) he must have a place of trade at a permanent address which is open to the public at
regular hours, or is employed by such person.

The licence is personal and therefore non-transferable and valid for 1 year and therefore has
to be renewed on a yearly basis.

The Director of Consumer Affairs may suspend or withdraw the licence if the door-to-door
salesman is found to have acted in breach of the provisions of the Act.

Any person who acts as a door-to-door salesman without a licence or who employs such a
salesman who is not in possession of a licence issued by the Director, shall be liable to a fine
(not less than Lm100 but not exceeding Lm500) or to imprisonment for a term of not more
than 6 months, or to both of them.

Any doorstep contract concluded with or through a door-to-door salesman who does not hold
a valid licence under The Door-to-Door Salesmen Act, shall be annullable (sec. 5(2)).
However, this issue must be raised by the consumer within 1 month from the date when the
product to which the contract refers is delivered to him; if not raised within 1 month, then it
cannot be raised.

Distinction between nullity and annullability.

Sales to be concluded by private writing

Section 6(1) of the Act provides as follows – “no doorstep contract made by or through a
door-to-door salesman shall be valid unless it is concluded by a private writing which may
be cancelled as is provided in section 8 of this Act”.

Section 6(2) provides further that “one copy of the private writing shall be retained by the
door-to-door salesman and another copy shall be retained by the consumer. A cancellation
form shall be attached to the private writing retained by the consumer”.

The regulation of doorstep contract

The main purpose here is consumer protection.

(a) Sec. 8(1) states that “a doorstep contract shall not be binding and conclusive if it is
cancelled as hereinafter provided”.

(b) Sec. 8(2) provides that “cancellation of doorstep contract shall be made by the delivery
either by hand or by registered post at the permanent address of the door-to-door salesman
or his employer of a declaration of cancellation signed by the consumer”.
(c) Sec. 8(3) requires that the declaration of cancellation shall be in the form set out in
Schedule 1 to the Act. As already stated above, the cancellation form shall be attached to the
copy of the private writing retained by the consumer. If the consumer opts to cancel a
doorstep contract he shall sign such form and deliver it to the door-to-door salesman or his
employer, within 15 days from the date of the private writing, or within such longer period
as may be stipulated in the private writing.. As a consequence the sale is cancelled; it
becomes invalid.

Sec. 8(1) provides that if a doorstep contract is cancelled as above stated, then it is not
binding and conclusive. Here we have an exception to the normal rules on the institute of
Sales because normally when you conclude sale the buyer and the seller are bound even if
there‟s no delivery, even if there‟s no payment of price, in which case you can‟t cancel it
unilaterally.

However under The Doorstep Contracts Act you have a 15-day cooling off period, or as
otherwise stipulated, within which the buyer may cancel unilaterally.

Payment on doorstep contract price

Under Section 9 of the Act, the law provides that the vendor cannot request a deposit of
more than 10% of the price and that such deposit shall not be payable before the expiration
of the time within which it may be cancelled in accordance with Section 8 of the Act.

Section 9 also provides that the vendor cannot require payment of the balance before
delivery. Where the goods are delivered in parts, no payment shall be demanded except as
represents the price of the part delivered.

Right of cancellation

Sec. 10(1): “Where a doorstep contract has not been cancelled in accordance with Section 8
of this Act, the consumer shall not have a right to cancel the doorstep contract without just
cause, unless such right is stipulated in the private writing”.

Sec. 10(2): “Where such right to the cancellation is not stipulated, the doorstep contract
shall not be subject to cancellation except for a just cause”.

Burden of proof

The burden of proof shall lie with the trader in the case of any dispute relating to whether a
doorstep contract has been negotiated exclusively at the initiative of the consumer, or
whether it has been negotiated in writing or whether the provisions of the Act have been
complied with in the conclusion of the doorstep contract (Section 12 of the Act).
 This provision further extends the protection afforded by the Law to the consumer.

False statement by consumer

As sec. 13 states, the consumer is not barred from bringing an action or pleading a defence
under the Act on the ground of a false or incorrect date of conclusion of the private writing
or its cancellation, even where such falsity or incorrectness has been made by him or with
his knowledge and consent.

EC Directive

Section 15A of the Act provides as follows: “The purpose of this Act is partly to implement the
provisions of Council Directive 85/577/EEC of the 20th December, 1985 to protect the
consumer in respect of contracts negotiated away from business premises and the respective
provisions of this Act shall be applied and interpreted accordingly”.
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Lecture 11
Il-Ġimgħa, 8 ta' Mejju 2009
14:15

Audio recording started: 14:16 Il-Ġimgħa, 8 ta' Mejju 2009

Topics for exams:

Elements of Contract: especially consent

Notion of credit instruments : bills of exchange and its charatceristics
Contract of mandate : obligations of the mandate
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