(Relations between lessee and seller or builder)
A lessee can exercise against a seller or builder, depending on the case, all
rights relating to the leased good or arising from the contract of purchase and
sale or from the building contract.
(Expenses)
Except if there is a stipulation to the contrary, expenses for transportation
and the respective insurance, assembly, installation, and repair of the leased
good, as well as the expenses necessary for its return to the lessor, including
those relating to insurance, if indispensable, shall be paid by the lessee.
(Risk)
Except if there is a stipulation to the contrary, the risk of loss or
deterioration of the good shall fall upon the lessee.
(Delay in payment of rent)
1. Delay in payment of a rent installment for more than 60 days permits the
lessor to rescind the contract, unless there is an agreement to the contrary in
favor of the lessee.
2. The lessee can preclude the right to rescission by the lessor, by paying
the amount in debt plus a compensation equal to the double of the amount due,
within eight days from the date of notification, by the lessor of the rescission of
the contract.
(Rescission of contract)
A leasing contract can be rescinded by any of the parties, under general
rules, on the basis of breach of obligations by the other party; the special
civil law norms on the rental contract do not apply.
(Specific cases of rescission of contract)
A leasing contract can also be rescinded by a lessor in the following cases:
a) dissolution or liquidation of the lessee company;
b) occurrence of any ground for declaring the lessee bankrupt;
c) termination of economic or professional activity by the lessee, except in
the cases regulated in paragraph 1 of article 899.
(Guarantees)
Any personal or real guarantees can be created in favor of the lessor, in
connection with the credit of rent and other charges or compensations eventually
due from the lessee.
(Anticipation of rent)
Anticipation of rent as guarantee cannot be for more than six or 18 months,
depending on whether the contract has as object, respectively, movable or
immovable goods.
(Provisional remedy of judicial delivery and cancellation of registration)
1. If, after a contract is extinguished by rescission, or by lapse, and the
purchase right has not been exercised, the lessee does not return the good to
the lessor, the lessor can request the court a provisional remedy, consisting in
its immediate delivery to the petitioner and, in the case of goods subject to
registration, the cancellation of the respective leasing registration.
2. With such petition, the lessor shall offer summary evidence of the
requirements mentioned in the previous paragraph.
3. Whenever the hearing will not cause a serious risk to the purpose or to
the effectiveness of the remedy, the court shall hear the defendant.
4. The court shall order the requested remedy if the evidence produced
reveals a serious probability of the occurrence of the requirements mentioned in
paragraph 1; however, it can demand that the lessor post an adequate bail.
5. Such bail can consist of a bank deposit to the order of the court, or be
of any another legally permissible means.
6. If remedy is granted, and independently of any appeal by the lessee, the
lessor can use the good in accordance with article 895.
7. The general rules of the Civil Procedure Code on provisional remedy
actions are applicable to this remedy, in everything that is not especially
regulated in this article.
8. The previous paragraphs apply to all leasing contracts, regardless of
their object.
(Operations previous to contract)
If, before the conclusion of a leasing contract, any interested party has
ordered goods with a view to a future contract, it is understood that it acts
for its own account and risk, and the lessor cannot in any way be held liable
for possible damage arising from the non-conclusion of the contract, without
prejudice to article 219 of the Civil Code.
GUARANTEE CONTRACTS
COMMERCIAL PLEDGE
(Commercial nature of pledge)
For a pledge to have commercial nature it is necessary that the debt secured
arises from the exercise of a commercial enterprise.
(Modalities of commercial pledge)
1. A commercial pledge can be created with or without dispossession.
2. The creation of a commercial pledge can only be done without dispossession
if it falls upon a good which is put to the use of an enterprise.
3. The creation of a commercial pledge shall always be without dispossession
if it falls upon a good essential to the functioning of an enterprise.
(Scope of the commercial pledge)
1. Only one commercial pledge can be created over all the machinery, movable
goods and tools installed and for use in the exercise of an enterprise.
2. For the purpose of the previous paragraph, boilers, furnaces that are not
an integral part of the immovable, chemical installations, and other fixed
materials put to the use of an enterprise shall be considered as machinery.
(Delivery to third party and symbolic delivery)
The delivery of a good that is the object of pledge can be made either to a
third party or symbolically by:
a) declaration or entry in the registration books of the public entities
where the goods object of pledge are deposited;
b) delivery or endorsement of the negotiable instrument representing the good object of pledge to the pledge creditor;
c) any other appropriate way to confer upon the pledge creditor an exclusive
power over the goods that are the object of commercial pledge.
(Form of pledge without dispossession)
1. The creation of a commercial pledge without dispossession must be made in
writing, with the signatures of the contracting parties certified by their
presence, to avoid nullity, and contain the following elements:
a) identification of the creditor and of the debtor and, if it is the case,
of the pledger;
b) indication of the good or goods object of pledge and the
elements indispensable to their identification;
c) place where the good or goods are to be found, and indication of the
enterprise in which they are put to use;
d) amount of the debt or elements that allow its determination;
e) place and date of payment.
2. The creation of a commercial pledge without dispossession is subject to
registration.
(Transfer or creation of guarantees over pledged goods)
1. The owner of goods pledged without dispossession shall be considered,
regarding the pledge right, possessor in another person's name, and incurs the
liability of fiduciary depositaries if he transfers, modifies, destroys, or
deviates the good without written agreement by the pledge creditor, and also if
he creates a new pledge without express mention in the new contract of the
existence of the previous pledge or pledges, which, in any case, have priority
according to the order of dates.
2. In the case of goods belonging to a collective person, the rules of the
previous paragraph apply to those who are charged with its administration.
FIDUCIARY TRANSFER IN GUARANTEE
(Effects and limits)
1. A fiduciary transfer in guarantee transfers to the creditor the
rescindable ownership [propriedade resolúvel] and the possession of the movable
good transferred, irrespective of effective delivery of the good; the debtor
becomes detainer and depositary, with all the responsibilities and duties that
he has in accordance with the law.
2. A fiduciary transfer in guarantee can only be made in favor of a
commercial entrepreneur and for credits arising from the exercise of the
respective enterprise.
(Form and publicity)
1. A fiduciary transfer in guarantee is valid if made in writing, with the
signatures of the contracting parties certified by their presence, unless other
form is required by the nature of the goods to which it applies.
2. A fiduciary transfer in guarantee must be entered in the commercial
register.
3. If a fiduciary transfer in guarantee covers goods subject to registration,
it must also be registered in the appropriate register in relation to each of
those goods, under penalty of not having effect against third parties.
(Minimum content)
The document creating a fiduciary transfer in guarantee must contain, under
penalty of nullity, the following elements:
a) the amount of the debt, or elements that allow its determination;
b) the place and date for payment;
c) a description of the good object of the fiduciary transfer in
guarantee, and elements indispensable to its identification.
(Fiduciary transfer in guarantee of property of third parties)
If by the date of conclusion of a contract of fiduciary transfer in
guarantee, the debtor does not yet own the good object of the
contract, its fiduciary ownership will be transferred to the creditor at the
moment in which the debtor acquires ownership of it, regardless of any
subsequent formality.
(Burden of proof)
If a good transferred in guarantee is not identified by numbers, marks, or
signals mentioned in the contract of fiduciary transfer, the fiduciary owner shall
bear the burden of proof against third parties of identification of the goods
that he owns in guarantee, which are in possession of the debtor.
(Non-performance)
1. In case of non-performance or delay regarding an obligation guaranteed,
the fiduciary owner can sell the goods to a third party without the need for
auction, public sale, previous appraisal, or any other judicial or extrajudicial
measure, unless the contract has an express provision to the contrary, and use
the price both for payment of his credit and the expenses of collection,
delivering the balance to the debtor, if any.
2. If the price of sale of goods is not sufficient to satisfy the credit and
the expenses of the fiduciary owner, in accordance with the previous paragraph,
the debtor remains personally obliged to pay the difference.
3. If no time limit was stipulated for the exercise of the right indicated in
paragraph 1, the debtor can set for the fiduciary owner a limit of no less than
30 days for that purpose; if such right is not exercised within this time limit,
the sale can only be made judicially.
4. A clause authorizing the fiduciary owner to keep the good sold in
guarantee, if the debt is not paid on maturity, shall be void.
(Forfeiture of benefit of time limit)
1. A creditor can use the means authorized by the previous article if:
a) the good transferred in guarantee is lost or becomes insufficient to
secure the debt, and the debtor is notified to replace or to reinforce the
guarantee and does not do so;
b) the debtor is declared bankrupt or insolvent;
c) the installments are not promptly paid in accordance with the stipulations
of the contract; in this case, the act of receiving late payment of matured
installments implies renunciation to the right granted in paragraph 1 of the
previous article.
2. The replacement or the reinforcement of the guarantee mentioned in
subparagraph a) of the previous paragraph follows, with the necessary
adaptations, the procedure for reinforcement or substitution of bail and other
special guarantees.
(Seizure of good)
1. A fiduciary owner can request, against either the debtor or a third party,
seizure of a good transferred in guarantee; it shall be immediately granted if
the debtor's non-performance or delay is proven.
2. The defendant will be notified to offer opposition within five days or, if
he has already paid 40% of the financed price, to request regularization of the
delay.
3. If regularization of the delay is timely requested, the judge shall set a
time limit of no more than 10 days for payment.
4. Whether or not the request is opposed, if the delay is not regularized
within the time limit set by the court, the judge will pronounce a decision
within five days.
(Liability of transferor in guarantee)
A debtor who transfers or creates guarantees for the benefit of third parties
over a good that he had already transferred in guarantee shall incur the
liability of fiduciary depositaries.
(Subrogation)
The giver of 'aval', the giver of a bond, or an interested third party who
pays the debt, shall be subrogated in the credit and in the guarantee consisting
in the fiduciary transfer.
(Bankruptcy of transferor)
In case of bankruptcy of a transferor, the right of the fiduciary owner can
be invoked against the bankrupt estate.
FLOATING CHARGE
(Concept)
1. A floating charge is a guarantee that covers all or part of the goods that
are or may be used in the exercise of an enterprise, with the exception of
immovables, and the effects of which are suspended until the moment at which the
creditor, as a consequence of the occurrence of grounds mentioned in the law or
in the contract, provokes the crystallization of the charge.
2. The floating character of the charge shall be expressly stipulated in the
act of creation.
(Limits)
A floating charge can only be created to secure obligations contracted in the
exercise of a commercial enterprise.
(Rights of holder of floating charge)
A floating charge confers upon the creditor the right to payment of his
credit, plus interest, if any, from the value of the goods over which the
guarantee crystallizes, with priority over other creditors who do not have real
guarantees created before the entry of the crystallization in the register.
(Form and publicity)
1. A floating charge is only valid if created in writing, with the signatures
certified by the presence of the parties, unless other form is required by the
nature of the goods to which it applies.
2. A floating charge only produces effects, even between the parties, after
entered in the commercial register; and, if it applies to goods subject to
registration, after entry in the appropriate register in relation to each of
such goods.
3. A floating charge cannot be invoked against third parties before
notification of the crystallization mentioned in article 934 is entered in the
commercial register.
(Minimum content)
Under penalty of nullity, the document in which a floating charge is created
must contain the following elements:
a) identification of the entrepreneur and the creditor;
b) identification of the enterprise or the part of the enterprise to which it
applies;
c) the amount of the debt, or elements that allow its determination;
d) the place and the date for payment.
(Clause forbidding transfer of goods object of floating charge)
1. The creation of a floating charge does not hinder acts of disposal of, or
the creation of charges over, goods that are within the normal exercise of the
enterprise.
2. The parties can only establish restrictions upon the right conferred in
the previous paragraph in writing.
3. The restrictions mentioned in the previous paragraph shall have effect
between the parties even before crystallization of the guarantee.
4. Breach of the provisions of the previous paragraphs causes the guarantor to
incur the liability of fiduciary depositaries.
(Crystallization)
Crystallization of a floating charge operates by means of notification by the
creditor to the debtor, indicating the respective grounds.
(Grounds for crystallization)
Besides the grounds mentioned in the contract, a floating charge can be
crystallized in the following situations, among others, and without prejudice to
agreement to the contrary:
a) in the cases mentioned in subparagraph c) of paragraph 1 of article 923;
b) dissolution or liquidation of a collective person commercial entrepreneur;
c) occurrence of any of the grounds for declaring the entrepreneur bankrupt;
d) termination of the exercise of the enterprise by the guarantor, except in
case of transfer of the enterprise.
(Effect of crystallization)
1. A floating charge, once crystallized, has the effect of a pledge or a
mortgage, depending on the nature of the good, regarding the rights that the
guarantor has in that moment over the goods covered by the guarantee.
2. The previous paragraph is applicable to goods that are put to the exercise
of the enterprise after crystallization of the floating charge.
(Effect of floating charge over credits)
1. A floating charge that applies to various credits produces its effect
towards the debtors of the secured credits from the entry of the notification of
the crystallization, provided that such notification is published.
2. The publication mentioned in the previous paragraph is not necessary if
the floating charge and the notification of crystallization can be invoked
against the debtors of the credits charged in the same manner as an assignment
of credits.
(Impossibility to invoke acts of temporary or definitive transfer of the
enterprise)
The temporary or definitive transfer of an enterprise cannot be invoked
against the holder of a floating charge.
(Effects of crystallization on other floating charges)
If there are various floating charges over the same goods, the
crystallization of one of them grants the right to creditors holding the others
to immediately crystallize their own floating charges.
(Priority)
Conflict between floating charges shall be decided by the priority of the
respective entry in the commercial register, and not by the priority of the
respective crystallization.
(Cancellation of crystallization)
1. As soon as the situation that was the ground for crystallization is
resolved, the creditor must, under penalty of liability for damage caused,
request at the commercial register the cancellation of the crystallization of
the floating charge.
2. The effects of crystallization cease with the entry of the cancellation of
the crystallization in the commercial register; the effects of the floating
charge become again suspended by the cancellation of the crystallization.
INDEPENDENT GUARANTEE
GENERAL PROVISIONS
(Concept)
Independent guarantee is a contract by which one of the parties undertakes to
pay to the other a determined or determinable amount of money, upon demand,
accompanied or not by certain documents relating to the obligation, for the case
of occurrence of a certain risk or event.
(Modalities)
An independent guarantee can have as object, among others:
a) to ensure compliance with a proposal presented in the framework of a
contract;
b) the good execution of a contract;
c) the recovery of amounts advanced for the execution of a contract.
(On whose request an independent guarantee is given)
An independent guarantee can be given:
a) at the request or under the instructions of the client of the guarantor;
b) in execution of instructions received from another guarantor.
(Methods of discharge)
In a contract of independent guarantee it is possible to stipulate that
payment shall be made in any manner admitted by the law, including:
a) payment in foreign currency or any unit of account;
b) acceptance of a bill of exchange;
c) deferred payment;
d) delivery of a good.
(Guarantor-beneficiary)
A guarantor can himself be the beneficiary if he is acting in favor of
another person.
(Independent guarantee)
A guarantee is independent if the obligation of the guarantor towards the
beneficiary:
a) is not dependent upon the existence or validity of the underlying
transaction, or upon any other contract;
b) is not subject to any clause not apparent from the guarantee, or to any
future and uncertain act or event, except presentation of documents or another
analogous act or event comprised in the normal course of the activity of the
guarantor.
(Form)
An independent guarantee is only valid if concluded in writing.
(Irrevocability)
Unless there is an agreement to the contrary, an independent guarantee is
irrevocable.
(Amendments)
1. Amendments to an independent guarantee are subject to the form required
for the guarantee.
2. An amendment to the guarantee can only be invoked against the beneficiary
if he has agreed to such amendment.
3. An amendment to an independent guarantee only binds the person that
requested it if such person has agreed to the amendment.
(Transfer of beneficiary's right)
1. The right of a beneficiary to demand payment of the amount stated in an
independent guarantee can only be transferred if it is authorized in the
guarantee, and only in the exact terms stated therein.
2. If a guarantee has been considered transferable, without specification of
whether the consent of the guarantor, or any other interested party, is required
for the transfer, neither the guarantor nor that person are obliged to accept
such transfer, except in the exact terms that they have expressly consented to
in the guarantee.
(Assignment of right to collect payment)
1. Except if there is a contractual stipulation or an agreement between the
guarantor and the beneficiary to the contrary, the latter can assign to a third
party any amounts due, or that may become due, to him, under the guarantee.
2. If a guarantor, or another person obliged to effect payment, has received
a notification from the beneficiary indicating that he has effected an
irrevocable assignment, payment to the assignee releases the debtor from his
liability under the independent guarantee, to the extent of such payment.
(Extinction of right to demand payment)
1. The right of a beneficiary to demand payment under a guarantee is
extinguished when:
a) the guarantor has received a statement from the beneficiary releasing him
from his liability;
b) the beneficiary and the guarantor have agreed the revocation of the
guarantee;
c) the amount mentioned in the independent guarantee has been paid, unless
the guarantee contract provides otherwise;
d) the guarantee has lapsed as a result of the expiry of its time limit, in
accordance with the following article.
2. Except if there is a contractual stipulation or an agreement between the
guarantor and the beneficiary to the contrary, the return of the document
embodying the independent guarantee is not necessary for the extinction of the
right of the beneficiary to take place.
(Lapse)
1. If the last day of the time limit of an independent guarantee is not a
business day, the independent guarantee only lapses on the following business
day.
2. If the extinction of an independent guarantee depends on the occurrence of
a certain fact or event, it shall lapse when the guarantor is notified of such
occurrence, under the terms foreseen in the guarantee.
3. If a time limit was not stipulated, an independent guarantee shall lapse
six years after its creation.
RIGHTS, OBLIGATIONS AND DEFENSES
(Determination of rights and obligations)
The guarantor and the beneficiary have the rights and obligations arising
from the law and from the contract of independent guarantee.
(General principle)
1. In discharging obligations arising from an independent guarantee or the
law, the guarantor shall act in good faith and with the necessary diligence,
having regard to the usage on independent guarantees.
2. Any clause exempting a guarantor from liability for acting against good
faith or with gross negligence shall be void.
(Demand)
1. The demand for payment of an independent guarantee shall be made in
writing, and in conformity with the terms mentioned in it.
2. Unless there is an agreement to the contrary, such demand shall be made
accompanied by the documents required in the guarantee and presented at the
place of issue.
3. It is deemed that a beneficiary, when demanding payment of the guarantee,
is acting in good faith and that none of the circumstances mentioned in
subparagraphs a), b) and c) of paragraph 1 of article 960 are present.
(Examination of demand and attached documents)
1. In examining a demand and the documents attached, the guarantor shall act
in accordance with paragraph 1 of article 956.
2. Unless there is an agreement to the contrary, the guarantor shall have a
maximum time limit of seven business days from the demand to:
a) examine the demand and any accompanying documents;
b) decide whether or not to pay;
c) if the decision is not to pay, notify the beneficiary.
3. If the decision is not to pay, it must be communicated to the beneficiary
by the most expeditious means possible, and shall indicate the respective
grounds.
(Payment)
1. Without prejudice to the provision of the following article, the guarantor
shall pay any demand that has been presented to him in accordance with article
957; payment shall be made as soon as possible, unless a time limit has been
agreed for such purpose.
2. Any payment in breach of the previous paragraph shall not bind the
applicant.
3. Unless there is an agreement to the contrary, the guarantor can make
payment by compensation, provided that the credit that he invokes has not been
assigned to him by the applicant or by his counter-guarantor.
(Defenses)
1. A guarantor shall refuse payment if it is manifest that:
a) any of the documents required by the independent guarantee is not genuine
or has been falsified;
b) payment is not due, according to the demand itself or to the presented
documents;
c) considering the type and purpose of the independent guarantee, the demand
totally lacks grounds.
2. For the purposes of subparagraph c) of the previous paragraph, it is
considered that the demand totally lacks grounds if:
a) it is indisputable that the event or risk that the independent guarantee
is designed to compensate did not take place;
b) the underlying obligation of the applicant has been declared invalid by
the court or by an arbitration tribunal, unless the guarantee indicates that it
is intended to apply even in such case;
c) it is indisputable that the underlying obligation has been fully
discharged to the satisfaction of the beneficiary;
d) the performance of the underlying obligation has been prevented by willful
misconduct of the beneficiary;
e) it is presented in accordance with a counter-guarantee, and the
beneficiary of the latter has made payment in bad faith in his capacity of
guarantor.
(Provisional court measures)
1. In the cases mentioned in the previous article, the applicant or the
counter-guarantor have the right to request provisional court measures to avoid
payment of the amount guaranteed.
2. Such provisional order can only be issued if the applicant presents clear
and precise evidence that the demand that the beneficiary presented, or will
present, suffers from any of the defects mentioned in the previous article.
3. The court shall only issue a provisional order in cases in which the
non-issuance of such order is likely to cause irreparable damage to the
applicant, and shall make it dependent upon the posting of a bond.
4. It is only possible to grant a provisional court measure to stop payment
of an independent guarantee on the basis of any of the grounds mentioned on the
previous article.
INSURANCE CONTRACT
GENERAL PROVISIONS
(Concept)
An insurance contract is that by which an insurer, against payment of a
premium, undertakes to compensate, within agreed limits, in case of occurrence
of an event covered, the damage caused to the insured, or to pay an amount of
money, or an annuity, or to perform other obligations mentioned in such
contract.
(Applicable rules)
The various types of insurance contract are regulated by the legal provisions
that, according to their nature, are especially applicable to them, and also by
the provisions of this Title that are compatible with them.
(Imperative nature)
Except if there is a legal provision to the contrary, the provisions of this
Title cannot be modified, except to the benefit of the insured.
(Subjects of the contract)
1. An insurance contract is agreed between an insurer and an insurance
holder.
2. The insured is an individual or collective person in whose interest the
contract is concluded, or a person whose life, health, or physical integrity is
insured.
3. The beneficiary of insurance is the addressee of the insurer's
performance.
(Formation and application of contract)
1. An insurance contract produces effect from the date of its conclusion.
2. However, the parties can condition the start of its effects to payment of
the premium, to subscription of the policy, or to any other facts.
3. In the case of individual insurance, of which the holder is an individual,
and without prejudice to the stipulation of a different time limit, the contract
is considered as concluded, in the proposed terms, 15 days after the reception
of an insurance proposal, if the insurer has not notified the proposer of its
refusal, or of the need to collect clarifications which are essential for
assessment of the risk, namely medical examinations or an on site inspection of
the risk or of the good insured.
(Evidence of contract)
1. An insurance contract, and any amendments to it, must be evidenced in
writing.
2. An insurer is obliged to deliver
to the insurance holder a policy or, provisionally, a cover note.
(Insurance policy: types)
1. An insurance policy can be nominative, to order, or to bearer.
2. The issue of an order or bearer policy must be agreed between the holder
of the insurance and the insurer.
3. If the policy is issued to order or to bearer, its transfer implies the
transfer of the credit against the insurer, with the effect of an assignment of
credits.
4. However, the insurer is released if, without intention or gross
negligence, it fulfills its obligation regarding the endorsee or bearer, even if
the latter is not the insured.
5. In case of loss, theft, or destruction of a policy to order or to bearer,
the insurer is not released if it performs its obligation after having been
notified of any of these facts.
(Requirements of policy)
1. The policy, dated and signed by the insurer, must be written in a clear
manner, in clearly legible characters, and must contain at least the following
elements:
a) identification and domicile of the parties, as well as, if applicable, of
the insured and the beneficiary;
b) nature of the insurance;
c) interest covered;
d) risks covered;
e) capital insured;
f) beginning and termination of the contract;
g) premiums and applicable additional amounts;
h) excesses, mandatory deductibles, and all other conditions agreed by the
parties.
2. Any clauses of the policy stating causes for rescission by the insurer, of
nullity, or voidability or exclusion of risks, only have legal effect if stated
in prominent characters.
3. If the content of the policy differs from the insurance proposal, or from
the conditions stipulated by the parties, the insurance holder can demand the
correction of the discrepancy, within one month from the date of delivery of the
policy.
(Interpretation of clauses of policy)
1. The general and special clauses of the policy shall be interpreted
according to the general principles on the interpretation of legal transactions.
2. In case of doubt, any general or special clauses drafted by the insurer
shall be interpreted in the sense most favorable to the insured.
3. The provisions of the previous paragraphs do not apply to general or
special clauses of uniform policies approved by law or regulation.
(Contract concluded without powers of representation)
1. An insurance contract concluded by a person without powers of
representation, in the name of another person, can be ratified by the interested
party, even after its lapse, or after the occurrence of the accident.
2. In a contract of insurance in the name of another person, concluded under
the terms mentioned in the previous paragraph, the person who concludes such
contract is obliged to perform the obligations arising from it, up to the moment
at which the insurer gains knowledge of its ratification or refusal.
3. The person who concludes such contract shall pay to the insurer the
premium corresponding to the period underway at the moment when the latter had
knowledge of the refusal of ratification.
(Insurance for account of a third party, or for account of whom it may
concern)
1. If it is not declared in the policy that insurance is for the account of a
third party, it shall be considered as contracted for the account of the person
who made it.
2. In insurance for the account of a third party, or for the account of whom
it may concern, it is the holder who has the duty to perform the obligations
arising from the contract, with the exception of those that can only be performed by the
insured himself.
3. Rights arising from an insurance contract benefit the insured; the holder,
even if he is in possession of the policy, cannot exercise these without express
agreement from the insured.
4. The defenses arising from an insurance contract or from the law can be
invoked against the insured.
5. The credit of the holder relating to premiums paid and expenses made with
the contract has priority over the amounts due from the insurer, and shall be
ranked after the credit of the victim of facts entailing civil liability.
(Declaration of risk)
1. The insurance holder must, up to the moment of conclusion of the contract,
declare to the insurer, in a complete and unequivocal manner, all circumstances
known to him or that he reasonably should know of, which may influence the
assessment of risk, irrespective of whether or not inserted in the questionnaire
that was sent to him.
2. Whenever the insurer has sent to the insurance holder a questionnaire to be
filled in by the latter, it is presumed that the circumstances mentioned in it
influence the assessment of the risk.
3. If, before the issue of the policy, the insurer formulates questions in
writing, namely by means of the questionnaire mentioned in the previous
paragraphs, it cannot invoke lack of clarity of a response if the question was
posed in a generic manner.
(Omission or misrepresentation in bad faith of risk)
1. If, in bad faith, the insurance holder has omitted or misrepresented any of
the circumstances mentioned in the previous article, the contract shall be voidable and the insurer can claim the return of any compensation already paid.
2. However, the insurer loses the right to invoke the voidability of the
contract if it does not inform the insurance holder of its intention, within one
month from the date at which it gained knowledge of such omission or
misrepresentation.
3. The insurer has a right to matured premiums, including those referring to
the period underway at the moment at which it informed the insurance holder of
its intention to invoke the voidability of the contract.
4. If the insurance concerns several persons or distinct interests, the
contract shall be valid in relation to those persons or those interests not
related to the omission or misrepresentation.
(Omission or misrepresentation of the risk without bad faith)
1. If the omission or misrepresentation of risk is not in bad faith, the
insurer can, within two months from the date at which it gained knowledge of
such, either rescind the contract by giving an advance notice of 15 days, or
propose a new premium to the insurance holder.
2. If, within 15 days, the holder does not reply, or refuses the premium
proposed, the insurer can rescind the contract within one month, by giving an
advance notice of 15 days.
3. If an accident occurs before the omission or misrepresentation comes to the
knowledge of the insurer, or before acceptance of the new premium by the
insurance holder, or before rescission takes effect, the performance of the
insurer shall be proportionally reduced to the difference between the premium
agreed and that which would be due if the risk had been correctly declared.
4. If the insurance concerns several persons or distinct interests, the
previous paragraph is not applicable in relation to those persons or those
interests not related to the omission or misrepresentation.
(Absence of risk)
1. An insurance contract shall be void if, at the moment of its conclusion,
the risk has already disappeared, or if the accident has already occurred.
2. The previous paragraph does not apply to contracts of carriage insurance,
unless the insurance holder knew of the termination of risk or, he or the
insured, knew of the occurrence of the accident.
3. If only the insurance holder or the insured knew of the occurrence of an
accident before the conclusion of the contract, the insurer has a right to
reimbursement of any expenses made.
(Termination of risk)
1. The contract shall lapse if, after its conclusion, the risk ceases.
2. However, the insurer has a right to the premium up to the moment at which
the insurance holder gives notice of the termination of risk.
3. If the parties have conditioned the beginning of the application of a
contract to a certain fact and the risk ceases before the occurrence of such
fact, the insurer is entitled to the reimbursement of expenses made.
4. If the risk ceases by the occurrence of the accident, the insurer has a
right to the premium corresponding to the period underway.
(Reduction of risk)
1. If an insurance holder communicates to the insurer a reduction of the risk
that may possibly influence the rate of the premium set, such premium shall be
reduced in accordance with the tariffs applicable at the moment of the conclusion of
the contract.
2. The lower premium is due from the moment at which the reduction of the
risk was communicated to the insurer by the insurance holder, or by the insured.
3. If the insurer refuses a reduction of the premium in accordance with
paragraph 1, the holder shall have the right to rescission of the contract.
4. A lack of reply by the insurer within the 15 days following the date at
which such communication was received is equivalent to a refusal.
(Increase of risk)
1. The insurance holder must communicate to the insurer, in a complete and
unequivocal manner, within the eight days following knowledge of its occurrence,
if another time limit is not stipulated, all circumstances that take place, or
come to his knowledge during the validity of the contract, that imply an
increase of the risk.
2. The insurer has the right to propose an increase of the premium, in
accordance with the tariffs applicable at the time of knowledge of the risk
increase, within one month from the day on which he knew of it.
3. If a new premium is agreed, it is due from the moment at which the
increase of the risk took place.
4. If the insurance holder refuses to accept such premium increase, or does
not reply within one month from the day on which he received the proposal, the
insurer has the right to rescind the contract within 15 days, with an advance
notice of an equal period.
5. The insurer has a right to premiums already matured, including that for
the period underway at the moment of the communication of rescission.
(Omission or misrepresentation of risk increase)
1. If, in bad faith, the insurance holder omits or misrepresents the risk
increase, in the case of accident the insurer shall be released from its
performance.
2. If the omission or misrepresentation of the risk increase is without bad
faith, and if the accident occurs before a new premium has been agreed, or
before rescission of the contract, the performance of the insurer shall be
proportionally reduced to the difference between the premium paid and the
premium that should have been paid after the increase.
3. The provisions of paragraph 4 of article 974 and of paragraph 4 of article
975 apply to the risk increase, with the necessary adaptations.
(Insurance in name of or for account of a third party)
In case of insurance in the name or for the account of a third party, if such
third party has knowledge of any omission or misrepresentation by the insurance
holder, the provisions of articles 974, 975, 979 and 980 shall apply.
(Accidents intentionally caused)
1. The insurer is not liable for damage arising from an accident intentionally
caused by the insured or by the beneficiary.
2. Accidents caused in the performance of a moral or social duty, or to
protect interests common to the insurer, are excluded from the previous
paragraph.
(Communication of accident)
1. Unless a longer time limit has been stipulated, the insurance holder, the
insured, or the beneficiary shall communicate to the insurer an accident or an
event, within eight days from the date on which it took place, unless they
demonstrate that they had no knowledge of it, in which case the time limit
starts from the moment when they gained knowledge.
2. The time limit mentioned in the previous paragraph is three days in case
of insurance against theft or robbery.
3. In case of civil liability insurance, the holder must also communicate any
claim from the victim, under the same conditions.
4. The non-performance of such duty of communication of an accident or event
grants to the insurer the right to reduce the performance due in accordance with
the damage suffered, unless it is proven that the insurer had knowledge of the
accident or event, by other means, within the time limits stated in paragraphs 1
and 2.
5. If such communication is not made in writing, it is for the insurance
holder to prove that the insurer had knowledge of it.
(Information on circumstances and consequences of accident)
1. The insurance holder, the insured, the beneficiary, or whoever shows
himself to have a right to the amount insured, must provide to the insurer, upon
its request, all information on the circumstances and consequences of an
accident or event that are in his knowledge.
2. Omission or the provision of incorrect or unclear information, due to
negligence, grants to the insurer the right to reduce its performance in
accordance with the damage suffered.
3. The insurer can, however, refuse to make payment if there is bad faith on
the part of the insurance holder, the insured, the beneficiary, or whoever shows
himself to have a right to the value of the insurance.
(Rescission of contract in case of accident)
1. Except in the case of compulsory insurance, an insurer can, if foreseen in
the policy, rescind the contract in case of accident, by means of a registered
letter with acknowledgement of receipt, to be sent to the insurance holder, the
insured, and the beneficiary, depending on the case.
2. Rescission only takes effect 30 days after the date of reception of the
registered letters mentioned in the previous paragraph.
3. The insurer must return the part of the premium corresponding to the
period during which the insurance ceased to apply.
(Payment of premium)
1. Insurance premiums shall be paid punctually by the insurance holder,
directly to the insurer or to another entity expressly appointed for such
purpose by the insurer.
2. The premium or initial fraction is due at the date of conclusion of the
contract.
3. If it is impossible to issue a receipt at the moment mentioned in the
previous paragraph, the initial premiums or fractions are due on the tenth day
after the date of issue of the receipt by the insurer.
4. The following premiums or fractions are due on the dates set in the
policy, without prejudice to the provisions of the following paragraphs.
5. In contracts with variable premiums, the following premiums or fractions
are due on the date of issue of the respective receipt.
6. In open policy insurance contracts, the premiums or fractions of the
successive applications are due on the date of issue of the respective receipt.
7. Unless the contract is annulled or rescinded, the premium corresponding to
each period of duration of the contract is due in its entirety, without
prejudice to the possibility of being divided for the purpose of payment, in
accordance with the respective policy.
(Notice for payment of premium)
1. The insurer is obliged, up to eight days before maturity of the premium, to
give notice in writing to the insurance holder, indicating the date and the
amount due; such notice is not necessary in the case of initial premiums or
fractions, if the validity of the contract is dependent upon the respective
payment.
2. The notice mentioned in the previous paragraph must mention the
consequences of lack of payment of the premium, namely the date from which the
contract shall be automatically rescinded in accordance with the following
article.
3. In case of doubt, the burden of proof regarding the notice mentioned in
paragraph 1 falls upon the insurer.
(Lack of payment of premium)
1. In case of lack of payment of the premium or fraction by the date indicated
in the respective notice, the insurance holder becomes in delay and, 30 days
from that date, the contract shall be considered automatically rescinded.
2. The contract remains fully in force during the period mentioned in the
previous paragraph.
(Unpaid premiums or fractions)
1. Rescission, in accordance with paragraph 1 of the previous article, does
not release the insurance holder from the obligation to pay the due premiums or
fractions that correspond to the period during which the contract was in force,
in addition to any penalties contractually agreed.
2. The insurer must include in the insurance contract proposal a declaration
by the insurance holder on whether the risk that he intends to insure has
already been covered, totally or partly, by any contract in relation to which
there are unpaid debits or premiums.
(Exclusion)
Articles 986 to 989 do not apply to life insurance or to temporary insurance
agreed for periods of less than 90 days.
(Obligation of insurer)
1. The insurer must make its performance promptly to whoever it may be due, in
accordance with the insurance contract.
2. If, for reasons imputable to the insurer, the performance is not fulfilled
within 60 days from the date at which the insurer gained knowledge of the
accident and of its circumstances and consequences, a compensation corresponding
to the double of the default interest rate shall be added to the amount due.
3. However, the creditor of the performance can prove that the delay by the
insurer in the fulfillment of the performance caused damage greater than the
amount mentioned in the previous paragraph.
(Duration of contract)
1. The period of insurance shall be one year, if no other is set by the law
or stipulated by the parties.
2. In the absence of communication to the contrary, the contract shall be
renewed for one-year periods.
3. The communication mentioned in the previous paragraph shall be made with
an advance notice of one month, by means of a registered letter or, regarding
the holder, either by means of a declaration presented to the insurer, or by any
other means stipulated in the policy.
4. Contracts agreed for an undetermined period of time can be rescinded by
any of the parties by means of an advance notice of three months in relation to
the end of each one-year period, counted from the beginning of the contract.
5. This article does not apply to life insurance.
(Limitation of actions)
1. All actions derived from an insurance contract shall be barred after two
years in case of insurance against damage, and within five years in case of
insurance of persons, counted from the day on which the fact that is the basis
of the claim took place, unless it is only later known by the interested party.
2. In civil liability insurance the period of limitation of actions by the
insurance holder against the insurer runs from the day on which a third party
asked the insured for compensation or initiated legal proceedings against him.
3. Communication to the insurer of a claim for compensation or initiation of
legal proceedings suspends the counting of time for the purpose of limitation of
actions, until the credit of the victim becomes liquid and claimable, by means
of a judicial decision that can no longer be appealed, or by acknowledgment of
debt, or by settlement between the parties.
4. In civil liability insurance, the action by the victim against the insurer
shall be barred in accordance with general rules.
(Lapse)
All actions derived from an insurance contract shall lapse 10 years from the
date of occurrence of the fact on which they are based, unless they are already
pending.
INSURANCE AGAINST DAMAGE
GENERAL PROVISIONS
(Insurable interest)
1. A contract of insurance against damages shall be void if, at the moment of
its conclusion, there is no interest of the insured in the compensation of the
damage.
2. Any direct or indirect economic interest that a person may have in the
non-occurrence of a risk can be the object of insurance.
3. If such interest is limited to a part of a good that is insured in its
totality, or to a right related to it, its insurance shall be considered as made
for the account of all interested parties.
(Defects of good insured)
1. Unless there is an agreement to the contrary, the insurer is not liable
for damage to insured goods arising from their own defects.
2. If a defect in the goods increased the damage, the insurer shall be liable
to the extent to which the damage would be compensated by it if the defect did
not exist.
3. If the damage results from a defect of the insured goods and from another
fact likely to generate liability of the insurer, the latter shall compensate in
proportion to the influence exerted by such fact on the occurrence of the
damage.
(Value of insured good)
1. The compensation due by the insurer to the insured cannot exceed the value
of the good at the time of the accident.
2. The parties can, when concluding a contract, agree in writing on the value
of the insured good; unless evidence to the contrary is produced, it shall be
deemed that such value corresponds to the real value of the good at the time of
the accident.
3. Parties can agree that the compensation to be paid by the insurer shall
correspond to the value of the insured good as if it was new.
(Loss of profits)
1. An insurer is only liable for loss of profits if it is expressly agreed.
2. In insurance of loss of profits, the compensation due by the insurer
corresponds, within the limits of the law and of the contract, to the value of
the economic income that could have been achieved by an act or activity, if the
accident mentioned in the contract had not occurred.
(Mandatory deductible)
1. The parties can stipulate that a certain amount or percentage of the
insured capital is mandatorily not covered, and should not be the object of
another insurance.
2. If, in bad faith, the stipulation mentioned in the previous paragraph is
not respected, the contract shall cease to produce effect and the insurer can
rescind it within one month from the date at which it gained knowledge of the
other insurance, having a right to the premium related to the period underway.
(Insurance of a value lower than insurable value)
1. If at the moment of the accident, the insured amount is lower than the
insurable value, the insurer shall compensate the damage in accordance with the
respective proportion.
2. The application of the rule of proportionality mentioned in the previous
paragraph can be excluded, by an express written agreement in the policy or
subsequently.
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