Explanation of Article 372
The article clarified that the default in a gift contract is that the donor does not guarantee the entitlement of the gifted item, nor does he guarantee its freedom from defects, because the donor is a benefactor; thus, he is not combined with the loss of his property without compensation along with the guarantee. Accordingly, the donor is not obligated to compensate the donee for the decrease in the value of the gifted item due to its entitlement to others, whether wholly or partially; whether the entitlement is by right of ownership, usufruct, easement, or otherwise. Similarly, the donor is not obligated to compensate the donee for the decrease in the value of the gifted item or its benefit due to a defect.
The article clarified that the donor is responsible for the damage caused by the entitlement or defect to the donee in two cases: The first case: If the donor deliberately conceals the cause of entitlement or the existence of the defect from the donee. It is not sufficient for the entitlement that the donor declares to the donee that he owns the gifted item, but he must deliberately conceal the cause of entitlement. Similarly, it is not sufficient for the defect that the donor is aware of the defect, but he must deliberately conceal it. The second case: If the donor guarantees to the donee that the gifted item is free from entitlement or defect.
In these two cases, the donor is responsible for the damages caused by the entitlement or defect to the donee and is not responsible for the entitlement or defect itself; meaning he is obligated to compensate for the damage caused by the entitlement or defect without compensating for the decrease in the value of the gifted item due to the entitlement or defect.
Examples of damage caused by entitlement include the donee incurring beneficial expenses on the gifted item, such as building or planting; he can revert to the donor - if the donor deliberately concealed the cause of entitlement from him - for those expenses that the entitled party is not obligated to compensate the donee for, but he cannot revert to him for the value of the gifted item itself that was entitled.
Examples of damage caused by a defect include the gifted item being an animal with a contagious disease that was concealed from the donee, infecting the donee's animals, or the gifted item being a heater with a defect that was concealed, causing damage to the donee's property. The donor is liable for the damage caused by the defect without being liable for the defect itself.
Attention should be paid to three matters: First: If the gift is with compensation and the contract is subject to the rules of exchange as stated in Article (367), the provisions of guarantee for entitlement and defect in that contract apply. Second: If the gift is conditional upon an obligation on the donee, and the gifted item is entitled or a defect appears in it, the donee is released from his obligation to the extent that the entitlement or defect has caused a decrease in the value of the gifted item. If the entire gifted item is entitled, the donee is released from his entire obligation, and the donor's responsibility ceases at that point unless he deliberately concealed the cause of entitlement or defect, in which case he is responsible for the damage caused by the entitlement or defect. Third: The provisions of guarantee for entitlement and defect are not generally part of public order, so it is permissible to agree in the gift contract to increase the guarantee; for instance, they may agree that the donor's guarantee for entitlement or defect is not limited to the damage it causes but also includes the decrease in the value of the gifted item due to the entitlement or defect.
Related To
Article 372
A donor shall not warrant the ownership of the gift nor warrant such gift against any defect; he shall, however, be liable for any harm the donee sustains due to the deliberate concealment of the existence of issues relating to ownership or existence of defects or due to warranting the absence of such issues or defects.