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Diapositiva 1 - my.liuc.it

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Private and Public lawInvalidity and termination rights1.Invalidity: is an agreementvoid and nullor justvoidable?2.Termination of agreements3.Penalties and restoration of damages
Invalidity

Invalidity of agreements_________________________________
VALIDITY: the agreement formally complies with the general requirements set out by the law (e.g., real estate agreement must be incorporated in a written document; the subject matter must be lawful)ENFORCEABILITY: the agreement is effective and may be actually enforced and performed by the parties

Invalidity of agreements_________________________________
Invalidity:NULLITY: if an agreement is void andnull itmay not be enforced. Nullity arises by operation of law.VOIDABILITY: an agreement is voidable, but is still enforceable as long as none of the parties requests a Court to have it voided (declared as null).

Invalidity of agreements_________________________________
NullityAn agreement is null and void if:Conflict withmandatory provisions of lawBreach offundamental requirements of agreements in general(e.g., agreement; object; formal requirements, if any, etc.)The agreement was exclusively entered into in the light ofillicit reasons(which arecommonto both parties)The subject matterof the agreement wasnot clearly identified or identifiable

Invalidity of agreements_________________________________
A nullagreementis not enforceable(so ineffective). In case of uncertainty, either party may apply for a declaration of the Court (there is nostatutory period)Null agreementInvalid and unenforceable

Invalidity of agreements_________________________________
Voidability:Either party was not in a position to enter into the agreement(unable to acquire rights and obligations)The agreement was based ona party’s mistake, or his/her consent was obtained throughfraud or violence

Invalidity of agreements_________________________________
A voidableagreementis enforceable(so effective), but may be declared void (by virtue of a declaration of the Court): if so, it is no longer effectiveVoidable agreementInvalid but enforceable

Invalidity of agreements_________________________________
An agreement might be:invalid and unenforceable(null agreements)enforceable but invalid(voidable)…valid but unenforceable?

Invalidity of agreements_________________________________
Nullity:of the agreementas a wholeofspecific provisionsonly : what happens to the agreement? In such case:(A)the invalid clauses trigger nullity of the entire agreement;(B)the remaining clauses of the agreement survive

Invalidity of agreements_________________________________


More specifically:Nullityofspecific provisionscontained in the agreement (art. 1419 c.c.).In such case :the invalid clausestrigger invalidity of the entire agreement: the parties wouldn’t have signed the agreement without those clausesthe remaining clauses of the agreementsurvive: the parties would have signed the agreement anyway; orthe invalid clauses are replaced by other provisions by operation oflaw (e.g., 1815 c.c. on usury)

Invalidity of agreements_________________________________
Typicalclauses avoiding the whole agreement from being declared void.Example (A)“If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision in any other respect or under the law of any other jurisdiction will be affected or impaired in anyway”.

Invalidity of agreements_________________________________
Example (B)“Ifanylaw orregulationoranyjudgment,orderordirectionofanycourt,tribunalor authoritybindingupontheBankin thejurisdictioninwhichitisformedorhasitsprincipaloffice or the officeidentifiedagainstitsnamein X or inwhichanyactionisrequiredto beperformedbyitfor thepurposesofthisAgreement, ineachcasewhichcomesintoforce orbecomeseffectiveafterthe date ofthisAgreement,rendersitunlawfulorcontrarytoanyregulationfor theBanktocontributetoAdvancesor tomaintainor fund theFacilities,theBankshallpromptlyinformtheBorrowerandifitshallso beunlawfulorcontrarytoanyregulationfor theBanktocontributeto theAdvancesitsCommitmentshallbereducedto zero.Ifitshallso beunlawfulorcontrarytoanyregulationfor theBanktomaintainor fund theFacilitiestheBankshallgivenoticeto theBorrowerrequiringtheBorrowertoprepaythe TotalOutstandingson a futurespecifieddatenotbeingearlierthanthelatestdatepermittedbysuchlaw,regulation,judgment,orderordirectionand theBorrowershallprepaythe TotalOutstandingsinaccordancewith andsubjectto thetermsofsuchnoticeand theprovisionsofclauseX.Withoutprejudiceto thereductionof theCommitmentto zero or theobligationof theBorrowertomakesuchprepayment, theBorrowerand theBankshallnegotiatefor aperiodnotexceeding30dayswith aviewto theBankmakingavailableitsCommitmentand/ormaintainingthe TotalOutstandingsinwholeor part in amannerwhichisnotunlawfulorcontrarytoanyregulation”.
Terminationrights

Termination rights_________________________________
An agreement may be early extinguished in the following situations:Mutual agreementof the partiesIt isno longer possible to performthe obligations set out in the agreementAmaterial unbalanceof the parties’ rights has arisen after execution of the agreementTermination (breach of contract)

Termination rights_________________________________
Anagreement may be terminated (“risoluzione”):Abreach of contractmust have taken placeACourt decisionis requiredThe breach must haveasubstantial impacton the parties’ rights (“inadempimentodi nonscarsaimportanza”)“clausolarisolutivaespressa”: termination may happeneven in case that the defaulthas no real impactRequest for terminationvs.request for the agreement to be performedPerformance may be suspendedin case the the counterparty is in default
Typical termination clause:“TheParties hereby agree that upon the occurrence of any of the Events of Default contemplated in Clauses XXX (Non payment and breach of purpose), XXX (Breach of other obligations) other than the Events of Default contemplated in Clause XXX,the Lender shall have the right to rescind the Agreement(“risolvereilcontratto”)pursuant to article 1453 of the Civil Code. If an Event of Default listed in Clause XXX above is outstanding,the Lender may send a notice to the Borrower indicating that rescission eventhasoccurred pursuant to article 1453 of the Civil Code and giving a term of [15 days] for the Borrower to remedythe relevant Event of Default. If the Borrowerfails to remedythe Event of Default mentioned in the notice contemplated in Clause XXX above after the [15 day] term provided therein has expired,this Agreement shall automatically terminatewithno retroactive effect on the expiry date of such [15 day]term”.
Termination rights_________________________________


Termination rights_________________________________
“Solve etrepete” clauseA party may not refrain from performing his/her obligations, even in case that the counterparty is in default. No set-off rights or counterclaims may be raised to delay performance of the agreementExample:“Eachpayment to be made by the Borrower under the Finance Documents will be made in full, without any set-off ordeduction”.

Termination rights_________________________________
“Solve etrepete” clause -LIMITATIONS- such clause may not prevent apartyfrom claimingnullity orvoidabilityof the agreement;-the Court may at any time decide to suspend application of the “solve etrepete” clause (e.g., in case that the counterclaims raised by the non-defaulting party appear to be well-grounded)
Penaltiesandrestorationofdamages

Penalties_________________________________
Penaltyclause: the agreement sets out the amount which will be payable by the defaulting partythe non-defaulting party is not required to provide evidence that adamagewas created, nor of the damage amount

Penalties_________________________________
Penaltyclause– breach of contractFailure to perform contractual obligationsDelay in performing obligations

Penalties_________________________________
Penaltyclause–limitations/drawbacksThe non-defaulting party maynotobtainmorethan the amount specified in the penalty clauseThe defaulting party may apply to Court,to obtaina reduction of the penalty amount, in case that the latter is considered as ‘unbalanced’ or unfair, or if the obligations at stake were performed in part by the defaulting party

Penalties_________________________________
The deposit (‘caparra’)

Penalties_________________________________
The “deposit”may have several functionsto “confirm”either party’s obligations (the other party would be entitled toretain the deposit amount in case of default); but, if the defaulting party is the subject receiving the deposit, he/she must return the double of the deposited amount. The non-defaulting party may request restoration of any further damages –“caparraconfirmatoria”toallow either party tounilateralywithdrawfrom the agreement (by letting the other party retain the deposit) –“caparrapenitenziale”

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Diapositiva 1 - my.liuc.it