Consideration has not an easy solution.
As we said in the last class, a contract needs 3 requirements:
* Specific content (objeto)
* Consideration (causa)
We will begin for consideration for two reasons:
1. The second requirement, content, it’s something that we know the problems regarding content (prestación de larelación obligatoria).
2. Because this course is in English, and the common law scholars study consideration prior to study content and agreement.
Four different cases:
1. I’m selling a house valued in 1M euros for only 10 euros.
2. HUSBAND-WIFE: I have a lot of debts, I’m not paying my debts because I don’t have liquid money but I have some houses and cars (goods, patrimonio). Inorder to avoid losing my goods, I make a sales contract with my wife and she buys all the goods I have, in order to make them officially from her. But she doesn’t pay anything to me.
3. TUTOR: under Spanish law, a tutor cannot buy the assets of the person he has in charge. Because people who are under a tutor are disable: minor or “incapacitados”. The final decision of the destination on theassets of the disable person depends on the tutor. So he can buy for himself the assets because there is a problem of conflict of interests.
I’m the tutor. If my client has many assets I’m interested in, I cannot buy them because I’m the tutor, but I can authorize to sell them to other people. Then I call my colleague and I ask him to sign a contract in which, he is buying the assets. Finally I payto my colleague and amount of money in exchange of the assets. So I have the assets in another way.
Also the example of SUGAR.
4. I can’t pay my debts to you. My only asset is my house. You tell me: give me your house. I decide to sell my house to you, but you cannot receive my house until the end of the year. But if I pay my debts to you before the end of the year, you won’t receive myhouse. GUARANTEE.
The day before after the contract, you are asking for my house.
The four cases have in common that they are formally, written in a contract and that doesn’t correspond with the real purposes of the parties.
All of them are sales.
Since the formal point of view they are correct.
But in all of these cases, the purpose of the seller was not only buying or selling something, orat least this purpose was not pure.
Why the parties have act in this way?
2. Selling my goods to the bank, ask for a mortgage
People try to do this kind of contracts for two possible reasons:
* They don’t know about contracts.
* In order to avoid taxes.
* Avoid having mortgagees
Why people don’t use the law and use institutions in adifferent way they are designed?
A judge would think that something is happening in any case, something that doesn’t work.
The solution of these 4 cases, is the requirement of CONSIDERATION.
The consideration requirement has been understood as the real motive that allows the law or that justifies the binding effects of these contracts.
1. Do you think that my creditors can go to thejudge and make the contracts without effects?
What the judge focus in when he has to decide if the contract has binding effects, is the consideration. Some years ago, he only paid attention on the other two requirements. Now, they realized it was necessary to focus in consideration (Buena fe). Consideration controls the real intention of the parties. And it’s for this reason that now it’s one of therequirements of a contract.
Before: Roman law was a rule according to which si tenia un precio mayor k el doble d lo k realmente valía, el contrato no era valido.
Now: the freedom of the parties of the contract was very important. Freedom of contract is the beginning and justification of contract. Spanish civil code there is nothing that says right price. A liberal conception of the freedom,...