Changes to the Civil and Commercial Code

Title X of the Emergency Decree 70/2023, called ‘Justice,’ and its Chapter I, include changes to the Civil and Commercial Code.

 

Here we will make a very brief comment on articles 250 to 254 of the DNU that modify articles 765, 766, 958, 960, and 989 of the Civil and Commercial Code (CCyC).

 

1. Compliance with obligations in foreign currency

 

The CCyC–in its original version–includes two provisions on how obligations in foreign currency are fulfilled. his are–or, rather, were–a compendium of errors, because article 765 refers to a category of obligations that does not exist (giving amounts of things) and its solution, the debtor can be lifted from their obligation by equivalent, is contradictory with what the following article states: the debtor “must deliver the corresponding amount of the designated species.”

 

These unfortunate rules gave rise to doctrinal and judicial controversy.

Specifically, it was debated whether the rule of compliance by equivalent was imperative or supplementary to the will of the parties. Both doctrine and jurisprudence concluded it was supplementary nature.

 

The other Issue was what type of exchange rate that should be used when the debtor was authorized to comply by equivalent. hiss brought about true chaos, because each court decided what they thought more aligned with the law or  fairer.

 

The reform returns to the regime of the repealed Civil Code reformed by the convertibility law. That is, after stating that the obligation is to give money, even a currency that is not legal tender in Argentina, it clearly establishes the debtor is only released from their obligation by delivering the species agreed upon. This implies no more compliance by equivalent in national currency, unless this is expressly agreed upon.

 

The curious thing is that article 7  of the convertibility law 23928, which imposes nominalism, has not been repealed. It is possible that the reason for keeping this rule is to induce the parties to contract in foreign currency, thus dispensing of adjustment or indexation clauses.

 

2.  Autonomy of the will (article 958)

 

The cCyC obviously recognizes the legal force of the parties’ will when defining the contract (article 957). But at the same time, it included –and as we will see, even after the reform it still includes– rules that imply a serious limitation on the autonomy of the parties to define their contracts,  vesting judges with excessive powers. The reforms the Emergency Decree introduced operate on the effect of mandatory laws and judicial powers.

 

The new text article 958 affects mandatory laws: ‘Freedom of contract. The parties are free to enter into a contract and determine its content, within the limits imposed by law or public order. Legal rules are always  of supplementary application to the will of the parties expressed in the contract, although the law does not determine it expressly for a specific contractual type, unless the norm is expressly imperative, and always with restrictive interpretation.’

 

The immediate effect is that the reference to morality and good customs that the original text included was deleted. And the presumption that laws are supplementary and not imperative allows us to overcome doubts regarding certain precepts of the cCyC itself, such as the case of article 1539 inc. a) in matters of bailment and many others.

 

In any case, it is necessary to point out that since article 962 remains, a conflict has been created, that will be up to the judges to resolve since the article says: ‘Character of the legal norms. The rules and laws relating to contracts are supplementary to the will of the parties, unless their mode of expression, their content, or their context makes them unavailable’'

 

3. Powers of the Judges (article 960)

 

In its original wording, article 960 authorized judges to modify the stipulations of the contract at the request of a party and when authorized by the law (for example, in the case of a defect of harm, or a case of excessive supervening onerousness), “or ex-officio when it manifestly affects the public order.” This last rule is suppressed, and we fully share the decision of the Executive on this point, since without a doubt this was an exorbitant and unjustified attribution, because when the contract affects public order, the sanction is absolute nullity.

 

4. Integration of the contract that suffers a partial nullity

 

Article 989 second paragraph of the CCyC required the judge to integrate the contract on what he had ordered as partially null, if that contract could not subsist without compromising its purpose.

 

This CCyC solution was manifestly wrong. If the contract could not subsist without the voided clause, it was simply not a case of partial nullity, but of total nullity. Judges were once again given the power to include stipulations outside the will of the parties, who had agreed on an invalid clause but do not necessarily want what the judge imposing on them. The problem is that the second paragraph of article 389 remains. This article states the same as the repealed part of article 989: “In case of partial nullity, if necessary, the judge must integrate the act according to its nature and the interests that can reasonably be considered pursued by the parties”.