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Civil Law

Explanation of Article 109

Explanation of Article 109

The defect is against safety. It refers to anything that diminishes the value or utility of an item according to the intended purpose as stated in the contract or as apparent from the nature of the item or the purpose for which it was prepared. The article establishes a general rule regarding defect liability, which is that contracts of exchange are concluded on the basis of an implicit obligation, namely that the contracting party guarantees the safety of the subject matter of the contract that they are obligated to execute from defects, except for what is customary to tolerate. If it becomes apparent that the execution of the obligation by the contracting party is defective with a defect that is not customary to tolerate and the other contracting party was not aware of this defect and did not consent to it, this is considered a breach by the debtor of their obligation. The article thus confirms that a breach of obligation, just as it can occur by non-execution or delay, can also occur by executing it defectively; thus, the provisions of breach outlined in Articles (107, 108) apply. The assumption that contracts of exchange are based on the principle of being free from defects is because safety is usually the demand of the contracting party in exchange; since their purpose is to benefit from the item subject to the contract, and their benefit is not complete unless it is safe. They did not bear the corresponding obligation except to receive the right free from any deficiency, so safety was implicitly conditioned in the contract; and because contracts of exchange are based on the interconnection between reciprocal obligations, if the execution of one is defective, it is just for the other party to be able to release themselves from their corresponding obligation. Based on what the article has established:

  1. The contracting party guarantees the defect in contracts of exchange such as sale, lease, and partnership, even if it is not stipulated in the contract. The stipulation by the buyer, lessee, or partner, for example, in the contract for the seller, lessor, or other partner to guarantee the defect is merely a confirmation of a right established by the system.
  2. The contracting party does not guarantee the defect in donation contracts such as gifts, loans, and lending. However, they guarantee the damage that befalls the other contracting party due to the defect if they deliberately concealed it or guaranteed the safety of the contracted item from it.
  3. The contracting party does not guarantee the defect that is customary to tolerate, even if it diminishes the value or utility of the item.
  4. The contracting party has the right under defect liability to either uphold the contract or request its annulment. The court may reject the request for annulment for the defect and limit the contracting party's right to compensation if the defect is of little importance relative to the total obligation if the annulment is judicial. However, if the annulment is contractual, the court's role is limited to verifying the condition necessitating annulment due to the defect; thus, when a statutory provision grants the creditor the right to request annulment of the contract for the defect, this does not prevent them from requesting its execution if possible.

The defect, according to what the article has established, is of two types: The first type: Non-impactful defect; which is what is customary to tolerate, or does not diminish the value or intended utility of the item; this type is not guaranteed by the contracting party. The second type: Impactful defect; which is anything other than the first type; this defect is guaranteed by the contracting party; and it has two degrees: A. If the deficiency caused by the defect is minor and not significant in view of the total obligation and does not affect the contracting party's consent to the contract; the court, if there is no resolutory condition, may reject the request for annulment and limit the contracting party's right to compensation; applying the rule of judicial annulment for breach of obligation. B. If the deficiency caused by the defect is significant enough to affect the contracting party's consent to the contract; the contracting party has the option to request annulment or execution.

  1. The contracting party, whether requesting execution of the contract or annulment, may request compensation for the damage caused by the defect; applying the rule of breach of obligation outlined in Article (107).

It is worth noting that defect liability, in addition to the provisions established for it under this article, is subject to the detailed provisions contained in this system and other systems, including the detailed provisions of defect liability in the contracts of sale and lease, which were not mentioned in the general theory because they do not apply to all contracts; they are more closely related to the contracts of sale and lease than to others such as agency, custody, and deposit contracts, in addition to donation contracts such as gifts, loans, and lending; therefore, the system detailed the provisions of defect liability in these two areas, taking into account the differences in the nature of each, in addition to the application of this general rule to them, and referred similar contracts to them according to their nature, such as partnership contracts.

Related To

Article 109

Contracts of exchange shall be deemed concluded on the basis that the subject of the contract is free from any defect other than defects accepted by custom. If a defect not accepted by custom is detected in such subject, this shall be deemed a breach of obligation.