Martin Raude: Is a Contract a Provable Fact or Applicable Law?

The Supreme Court has considered the time of conclusion of the contract, the price, and the performance of the contract as evidentiary matters, and the post-contractual rules (time limits for claims, limitations of liability, standard terms and conditions) as a matter of law. This practice has also been followed by the circuit court of appeal. In the opinion of Senior Associate Martin Raude, such a distinction is unnecessary and problematic, and it would be reasonable to treat the whole content of the contract as a matter of fact to be proven.

In accordance with subsections 67 (1) and (2) of the General Part of the Civil Code Act and subsection 8 (1) of the Law of Obligations Act, a contract is an act or a set of acts between two or more persons containing a declaration of intention intended to produce specific legal effects. Individuals are free to decide whether, with whom, and under what conditions to conclude contracts. While the law provides for the so-called default provisions, which relieve the parties of the burden of agreeing in each individual case how obligations, responsibilities, and risks are to be allocated, and which help to give substance to the legal relationship in the absence of any other agreement, it also provides for the possibility of agreements that derogate from or go beyond the law. What is agreed in the contract is of particular importance in so far as it concerns the deviation from the law or regulates matters not provided for by law.

Consequently, a contract is, on the one hand, the object of an agreement and, on the other hand, a source of rights and obligations replacing or supplementing the law. Whether a contractual regulation is to be regarded as an evidentiary fact or as the applicable law depends, inter alia, on who must rely on the contractual regulation and when. The article explains why, in the author’s view, it is reasonable to regard the contractual regulation as an evidentiary matter and why it is problematic to regard it as a matter of law.

The full article is available in Juridica.