Intellectual Property Law

The Essential Elements of a Contract under the Spanish Law

By IBLS Editor

Internet contracts usually subject the parties to arbitration proceedings or the law of a specific jurisdiction (choice of law) when legal disputes arise.  When choice of law clauses subject the parties to the jurisdiction of a European Union member state, it is advisable to get acquainted with that member state's contract laws. Indeed, EU directives set minimum standards to be followed by member states but domestic legislation may expand these standards without violating community law.  Following, there is a synopsis of contract law in Spain that regulates any contract, including Internet contracts.

Spain follows a civil law system.  Thus, contract laws are found in the Civil Code. Article 1261 of Spain Civil Code states that a contract requires three essential elements: (1) consent; (2) the object; and (3) consideration.  The specific wording of article 1261 says: ''[T]here shall be no contract without the following requisites: (1) the consent of the contracting parties; (2) a determined object which forms the subject matter of the contract; (3) consideration for the undertaking established.''

Consent.  Under Spanish contract law, consent is formed when there is an offer and acceptance regarding the subject matter and consideration. Consent must have four elements to be valid under the law: (1) the parties must have the capacity to enter into contractual relations (Civil Code art. 1263 (1996)). For instance, minors and those mentally incapacitated cannot properly provide consent; (2) the intent must be expressed without defects (Civil Code art. 1265).  Error, fraud, misrepresentation, violation are defects that affect a party's consent to a contract; (3) contractual will can be expressed through silence. Spanish jurisprudence holds that if a party remains silent when that party could and should have spoken his silence can be considered a manifestation of will; and (4) there must be harmony between the party's internal contractual will and the stated will.   An unconscious cause, e.i., error in the declaration of will, may affect the party's internal harmony to consent to a contract.  Also, a conscious cause, e.i., mental reservation, may affect that harmony.  These last two elements to consent may prove to be problematic to Internet contracts.  If a party clicks on the "I agree" bottom placed in an online agreement, the party has spoken out and silence is no longer an issue regarding its consent.  But, what about the harmony between the internal will and the stated will? 

The object of the contract.  Spanish Civil Code art. 1271 through 1273 regulates what is a legitimate object and subject matter of a contract.  For example, the contract subject matter must be legitimate (e.i., selling stolen property is not a legitimate subject matter. What about selling pirated online music, is this proper subject matter? Maybe not); impossible things or services cannot constitute the subject matter of a contract (e.i., I sell you the moon); the subject matter must be a specific thing or service; and the object of a contract must be part of private commerce no contrary to the law or good custom.  According to these requirements, contracts involving illegal matters do not properly constitute the object of a contract. 

Consideration. Spanish law calls consideration "causa."  That is, the reason for the parties' consent; each party is expecting a result.  The Spanish Civil Code arts. 1274 through 1277 regulate the consideration element.  For instance, (1) contracts without consideration or with an illegal consideration are void; (2) a false consideration invalidates the contract if there is no other genuine and legitimate consideration; consideration is presumed to exist and be legitimate under Spanish law, even if not expressly stated in the contract, unless there is prove to the contrary; consideration may be the provision or promise of something or the provision of a service or benefit.  Charitable agreements are deemed to include a consideration which is the contribution of the well-doer.

There is no specific form for a contract to be valid as long as it includes the three essential elements mentioned above (Civil Code art. 1278). Yet, there are some exceptions that require some contracts to appear in a public document or in a private document.  The contracts required to appear in public documents are (1) real estate property contracts; (2) real estate leases for six years or more; (3) pre and post nuptial agreements; transfer, repudiation or succession of marriage property; (4) general powers of litigation, powers to enter into a marriage, and special powers entered in legal proceedings; and (5) the transfer of securities or rights arising from a public instrument.   Contract required to appear in private documents are those involving a sum higher than ?9.01.  

The essential elements of a contract under Spanish law are closely similar to those in other legislations.  Yet, the consent elements include certain elements that are not found in many developed countries' contract law such as the effect of silence and the harmony between the party's internal and expressed will.  These two elements are worth to be analyzed by those drafting Internet contracts to which Spanish law applies. 

Full post as published by IBLS Internet Law Blog on January 28, 2009 (boomark / email).