Explanation of Article 398
The article illustrates a form of reconciliation; it is when two parties dispute over rights each claims against the other, and they reconcile by each retaining the right they possess and the other claims. These rights may be specific, such as when the first party claims a car in the possession of the other, who denies it, and the other claims equipment in the possession of the first, who also denies it. They reconcile by each retaining what is in their possession. Here, the contract is reconciliation, not barter, as it fulfills the elements of reconciliation. However, if the claimed rights are unknown and each party waives their claim to the other in exchange for the other waiving their claim, it is also valid because the ignorance here does not prevent delivery, provided that it is impossible to ascertain them within a short period, as stipulated in Article (395). For example, if they are partners in joint accounts and the funds have become mixed in such a way that it is impossible to determine what each owes the other within a short period, they avoid a potential dispute by each waiving their claimed right against the other in exchange for the other waiving their claimed right.
Related To
Article 398
If a contracting party claims a right held by the other contracting party and the latter makes a similar claim, such parties may reach reconciliation whereby each party retains the right held thereby.