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Five years since the creation of the new Civil and Commercial Code: economic activity in times of crisis. By Ricardo Lorenzetti

The Civil and Commercial Code of the Nation has been put into effect five years ago, in 2015.

That process involved a huge amount of consensus. Let us remember the frustrations in the previous projects, and the impossibility of sanctioning other basic codes in an Argentina characterized by individual triumphs and collective failures. This work required an extraordinary effort of dialogues and the search for balances that were truly exceptional.

Its sanction has caused a great deal of transformation in the private law field due to the reception of great principles related to the protection of the persons, their freedoms, their assets, the environment, gender equality, families, contracts, economic activity, companies and consumers.

Its application will be essential in order to resolve some of the conflicts that the development of future economic activity will cause, in the context of the post-pandemic crisis.

As it has been demonstrated in the past, it is necessary to take into account two types of phenomena that occur during emergencies: how property rights are protected and how contracts adapt to changes.

Both aspects have been widely considered.

The constitutional protection of the contract

The code establishes that the “rights resulting from contracts integrate the property right of the contractor” (art 965).

History reveals that, during emergencies, not only the bases of the contract have been altered, but also its content, since the legislator rewrote the texts.

Hence, as the Supreme Court claimed, its protection is important, which “includes both the freedom to contract, which is an aspect of personal autonomy and is part of every citizen’s constitutional right (art. 19 of the Argentine Constitution), as well as the right to configure the content of the contract, which is an assumption of the right to exercise a lawful industry (art. 14 of the Argentine Constitution.) and economic freedom within competitive relations (art. 43 of the Argentine Constitution). The freedom to contract, to compete and to configure the content of a contract constitute a legal position that this Court must protect due to its role as a Court of constitutional guarantees. In this sense, the term ‘property’ must be interpreted from a constitutional perspective (art. 17 of the Argentine Constitution). “As a consequence, anyone who seeks to restrict constitutionally established property rights has the argumentative burden of justifying the legitimacy of their decision.”

The freedom to contract consequently has constitutional protection, and can only be regulated following principles that ensure proportionality and non-denaturation.

Contract renegotiation

Economic crises often have an impact on prices, payment terms and clauses of all kinds that are agreed during “normal” economic periods of times, all of which often requires renegotiation.

The Code establishes important principles and rules: keeping the contract’s clauses (art. 1066); protection of confidence (art. 1067); good faith (arts. 729 and 961); prevention of contractual damage (arts. 1031, 1032 and 1710); the non-aggravation and mitigation of the damage already caused (art. 1710, inc. b and c); contractual predictability (art. 1728); good faith and non-abusiveness in demanding compliance (art. 1732); the equitable adaptation of the contract when, due to circumstances beyond the control of the parties and due to its conclusion, an excessive onerousness is produced, injuring or frustrating the final cause of
the contract (arts. 332, 1090, 1075, 1091 and cc.).

In that order of things, in duration contracts, in which the parties are linked through time with a constant flow of reciprocal benefits, there is a duty to give the other party a reasonable opportunity to renegotiate in good faith, without incurring in the abusive exercise of rights (art. 1011 of the CCyC).

The Code takes into consideration the situation of contractors whose agreements are, beyond the risk assumed, immersed in extraordinary circumstances in relation to those existing at the moment of the contract’s celebration, allowing the affected contractor to request the total or partial termination of the contract, or an “equitable readjustment” of the originally agreed benefits (art. 1091).

Many contracts have been suddenly affected by the situation stemming from the pandemic.

They are cases of contracts in which, due to their object and purpose, their fulfillment (even if possible) has lost its reason for being, and therefore, the affected party has lawful actions
against it(art. 1090).

In any case, a capital rule of contractual legal relationships is that the debtor and creditor must act with care, foresight and according to the requirements of good faith (art. 729), respecting the trust and loyalty that the parties must reciprocally give to each other ( art. 1067).

In conclusion, this Code, which represents the original thinking of Argentine doctrine and jurisprudence, has provided useful and practical solutions, even for exceptional situations.

Numerous scientific meetings have been held, which have reflected on the legal system that we Argentines have built with so much community effort.

It is a new era for future generations.