Saturday, March 27, 2021

What Does Effects of Contract Mean?


 What Does Effects of Contract Mean? (Art.1731)

The two major principles of contract are freedom of contract and sanctity of contract. Sanctity of contract indicates that parities are bound by their agreement. To make a serious promise certainly involves a moral duty to keep it. There is Latin saying “pacta sunt servanda’ which means that a person is bound by his words.  There is also an equivalent   Ethiopian proverb, ‘failure to keep a word is worse than losing a descendant’ /የተናገሩት ከሚጠፋ የወለዱት ይጥፋ/. However, contract is binding not only morally but also legally.

Any agreement which parties did not intend to create legally binding obligation is not a contact (Art 1679). Therefore, once a contract fulfills the requirement of Art 1678, it becomes a law. Law is enforced by executive and interpreted by the judiciary. For a contact, the law makers are mainly parties but the executive is always the state and the judiciary is also normally a state (see Art.3325-3346 and Civil Procedure Code Art. 315-345 that provides about enforcement of arbitral awards). As law makers, parties to the contract, can repeal or amend the contract law must be implemented i.e. contract should be performed, violating a law entails punishment i.e. non- performance of contract leads to payment of damages. 

So, effect of a contract implies that it becomes the law of the nation in the sense that the executive has a constitutional duty to implement it and the judiciary has a constitutional duty to interpret it. Moreover, since it is a law it is modified (amended) by the law marker only (either the parties themselves or the legislative). So, effects of contract are interpretation, performance, court’s inability to vary contract and effects of non-performance.

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