Imperial Decree 701
IMPERIAL DECREE Nº 701
ON CONTRACTS
BY
HIS MAJESTY THE KAISER
Contents
Part I: Basic Principles of a Contract
Section 1: Formation
1.1 A contract is formed when an offer is made by one party to another and is subsequently accepted with consideration given by the other party and that there is an intention to enter into legal relations.
1.1 A person making an offer shall be called the offerer. A person seeking to accept an offer shall be called the offeree.
Section 2: Offers
2.1 The term 'offer' shall be given its ordinary, everyday meaning.
2.2 An offer can be construed from the offerer's conduct if;
2.2.1 Objectively considered the reasonable person would consider it an offer and,
2.2.2 The offeree considers it an offer and accepts it.
2.3An offer can be revoked at any time before acceptance is given.
2.3.1 Revocation of an offer must be communicated to the offeree.
2.3.2 Revocation may be carried out by a reliable third party known to both parties.
2.3.3 If an offerer promises to keep an offer open up for a stated period of time, and provides consideration as defined in section 6, then an offer cannot be revoked.
2.3.4 If a reasonable time has passed since the offer is made and it is not accepted, the offer may be revoked.
2.4 An enquiry into further details of the offer shall not constitute a revocation of the original offer.
2.5 A counter-offer by the offeree shall revoke the original offer.
Section 3: Invitations to Treat
3.1 An invitation to treat is an invitation to a potential offeree to consider an offer the offerer may make.
3.2 An invitation shall not be considered an offer.
3.3 Advertisements shall generally be regarded as invitations to treat.
3.4 Advertisements shall not be regarded as invitations to treat where they offer a reward for acting upon that advertisement.
3.5 A tender to perform services or supply goods or perform any other form of commercial or industrial act shall be considered an invitation to treat.
Section 4: Acceptance
4.1 An acceptance shall be a final and unqualified expression of assent to the terms of an offer.
4.2 For an offer to be accepted the offer must be known to the offeree.
4.3 For acceptance to be valid the terms of the offer and acceptance must be certain.
4.4 Silence shall not be constructed as acceptance to an offer.
4.5 An acceptance shall be communicated by the offeree or an authorised agent.
4.5.1 Communication must be made on a designated forum.
4.5.2 A registered forum shall be:
4.5.2.1 The forum where the contract is taking place.
4.5.2.2 The forum where either legal entity or person is registered. 4.5.3 An acceptance shall preferably be given publically but by no means shall this provision of the act forbid private acceptance subject to the provisions of section 4.5.2.
Section 5: Intention to enter into Legal Relations
5.1 For a contract to be formed both parties must have an intention to enter into legal relations.
5.2 There shall be presumption of an intention to enter into legal relations where the context of the contract is commercial.
5.2.1 This presumption is rebuttable by evidence presented by either party in legal proceedings.
Section 6: Consideration
6.1 For a contract to be valid consideration must be given.
6.2 Consideration may consist of some enforceable right or interest, monetary profit or benefit or detriment or loss.
6.3 Either party may state the form in which consideration is given.
6.4 Consideration does not need to be adequate but must be sufficient.
6.5 A promise shall not amount to any form of consideration.
6.6 Past consideration shall not be valid consideration.
6.7 Performing a contractual duty owed to a third party shall be considered sufficient consideration.
6.8 Performing a public duty shall not be considered as sufficient consideration.
6.8.1 Performing beyond a public duty shall be considered as sufficient consideration.
6.9 Performance of an existing contractual duty shall not be considered sufficient consideration.
6.9.1 Performance of an existing contractual duty shall only amount to consideration if the party due consideration acquires a practical benefit as a result.
6.10 Part payment of a debt shall not be considered sufficient consideration.
6.10.1 If the remaining part of the debt is substituted by another form of consideration this shall be sufficient consideration.
Section 7: Privity of Contract
7.1 Only parties privy to a contract shall be capable of enforcing it and be liable for it.
7.1.1 A contract may expressly provide a third party with the ability to enforce it but may never impose liability on him.
Section 8: Agency
8.1 A party to a contract may appoint an agent to carry out his contractual obligations or form a contract.
8.2 An agent must be appointed in writing.
8.3 An agent must be authorised in writing to carry out the functions he purports to.
8.4 The Party who authorises the agent shall be liable for the actions the agent carries out in accordance with his authorisation.
8.5 If a person purports to be an agent, or an authorised agent does acts beyond his authorisation, liability shall be established against the agent and not the authorising party.
Part II: Contractual Terms
Section 9: A Term
9.1 A contractual term shall either be a condition or a warranty.
9.2 A condition is a major term of a contract that is capable of terminating the contract if breached.
9.3 A warranty is a minor term of a contract which may be acted on upon but will have no bearing on the overall validity of the contract.
9.4 The Courts shall look to the intention of both parties in creating a condition or warranty and not the labels attached to the term.
9.4.1 A warranty may become a condition if it robs the innocent party of the contract of substantially the whole benefit of the contract.
Section 10: Previous Course of Dealings, Customs and Trade Usage
10.1 Local customs, trade usage and terms arising from a previous course of dealings relevant to a contract shall be implied as terms into a contract unless the contract specifically contradicts the local customs, trade usage or terms arising from a previous course of dealings.
Section 11: Implied Terms
11.1 The following conditions shall be implied into all contracts for the protection of buyers and sellers.
11.2 A buyer shall pay a reasonable price for goods or services bought if the contract is unclear or absent as to the issue of how much is owed to the seller.
11.3 The condition of goods or services sold must match the description of the goods or services which the buyer relied upon when purchasing them.
11.4 Goods or services sold must be of a satisfactory quality and be reasonably fit for the purpose for which they are intended.
11.4.1 A seller shall not be liable if the goods or services are not reasonably fit for an unusual purpose if he is not expressly made aware of the unusual purpose.
11.5 A supplier of a service must carry out his service with reasonable care or he shall be liable for any negligent actions.
11.6 A supplier of a service must carry out his service within a reasonable time if a contract does not specify the time frame for which the service is to be given.
11.7 If a buyer accepts the goods or services as they are, the seller shall not be held liable if it is reasonable in the circumstances for the buyer to have known of any defect.
11.7.1. If the defect is so slight that it does not rob the buyer of the substantial benefit of the contract then the buyer may not terminate the contract, and therefore reject the goods, but may instead seek damages.
Section 12: Exclusion Clause
12.1 A person may exempt himself of liability for breach of a contract if he incorporates a term in the contract which purports to do so.
12.1.1 A person may not exclude any liability for negligence.
Part III: Performance and Discharge of Contractual Duties
Section 13: Doctrine of Complete Performance
13.1 A person is not entitled to claim the complete benefit of a contract if he has not carried out the complete burden of the contract.
13.2 A person may be entitled to a reasonable sum (quantum meruit) for performing his contractual burden if;
13.2.1 He was wrongfully prevented from performing his contractual duty.
13.2.2 The other party voluntarily accepted his partial performance.
13.2.3. He had performed a substantial part of his contractual duties.
13.2.4. The contract had made provisions for divisible obligations which had been completed.
Section 14: Mutual Discharge of a Contract
14.1 A person may be discharged from a contract with the mutual acceptance of the other party.
Section 15: Discharge through Frustration
15.1 A contract may be discharged through frustration.
15.2 Frustration occurs where an event happens which makes the contract impossible to perform.
15.2.1 An event may be a frustrating event if it was beyond the contemplation of both parties and was beyond the control of both parties.
15.3 Frustration shall release both parties from all future obligations of the contract without liability.
15.4.Frustration shall not release either party from their past obligations under the contract.
15.4.1 A party may claim a reasonable sum for expenses incurred carrying out the contractual obligations before the frustrating event or for the other party obtaining a valuable benefit.
Section 16: Misrepresentation
16.1 A person shall be liable for a misrepresentation given in contractual negotiations if it induced the other party to enter into the contract.
16.2 A misrepresentation is a false preliminary statement.
16.2.1 The statement must be factual and not simply an opinion.
16.2.2 The statement must be made by one party to the other.
16.3 Silence shall not be a misrepresentation unless there is a duty to disclose the facts.
16.3.1 Disclosing certain facts and not others may still amount to a misrepresentation.
16.4. Failure to disclose a change of circumstances in regards to a statement may make the statement a false preliminary statement.
Section.17: Duress
17.1 A contract shall not be valid if entered into under duress.
17.1.1 Duress is illegitimate pressure, either physical or economic, which provides no alternative but enter into the contract.
Section 18: Undue Influence
18.1 A contract shall not be valid if entered into as a result of undue influence.
18.1.1 Undue influence may be actual or presumed.
18.1.2 There shall be a rebuttable presumption of undue influence between parties who share a fiduciary relationship.
Part IV: Remedies for Breach of Contract
Section 19: Damages
19.1 A party may claim damages with the aim of compensating himself for a breach of contract performed by the other party.
19.2 The aim of damages shall be to putting the wronged party in a position as if the contract had been correctly performed.
19.3 A person may not claim damages if the loss is too remote.
19.3.1 A loss is too remote if it is not in the reasonable contemplation of both parties unless the special circumstances which give rise to the loss are known by both parties before the contract is entered into.
19.3.1.1 A party shall not be considered to have all knowledge of the other party’ss business practices.
19.4 A person is under a duty to attempt to mitigate his losses.
19.5 A person may specify damages in a contract in the event of a breach of a specific term.
19.5.1 Specified damages must be reasonable.
19.5.1.1 To be reasonable the damages specified must not exceed the actual cost of the breach, be extravagant or be payable in the event of a number of different breaches.
Section 20: Specific Performance
20.1 A person may seek an order that a specific contractual duty is performed.
20.2 This may only be sought where damages are not an adequate remedy, where the contract does not require constant supervision and where the contract does not involve services.
20.3 A Specific Performance Order shall only be granted where it is just and equitable to do so.
Section 21: Injunction
20.4 A person may seek an injunction preventing a party from carrying out a specific action.
20.5 An injunction shall not be granted in an employment or service contract.
Section 22: Unjust Enrichment
22.1 A person may seek restitution, preventing the unjust enrichment of one party.
22.2 Restitution shall arise where there is a total failure of consideration and shall require the failing party to pay money already taken back to the wronged party.
Section 23: Rescission
23.1 A person may seek rescission of the contract in which the contract is voided and all property exchanged under the contract is given back to the original owner.
23.2 For rescission to take place notice must be given to the other party that by the rescinding party of their intention to rescind.
23.3 Rescission is barred in the following circumstances;
23.3.1 Where an innocent party has acquired an interest in property related to the contract before it is rescinded.
23.3.2 Where the contract has already been affirmed.
23.3.3 Where there has been undue delay.
23.3.4 Where is it impossible to restore the property related to the contract to its original state.
23.4 Rescission shall only be available where there has a been a misrepresentation, duress or undue influence.
Done at the Keep the twenty-fourth day of Silnuai in the year sixteen-hundred and twenty-one.
Ayreon III
