The “Foundations and Starting Points for the Freedom of the Argentineans” Bill (the “Bill”), which was referred in our previous publications (see link), includes several amendments to the Federal Civil and Commercial Code approved by Act N° 26,994 (the “CC&C”) with respect to obligations and contracts statutory rules (as well as to certain rules applicable to certain contracts in particular), to which we make reference below:
▪️ Exceptions to the automatic default provisions. Contrary to the current Section 887 CC&C, obligations without any specific term of performance contained in contracts requires a notice from the performing party to declare the default of the defaulting party whether the default is implied under the nature and circumstances of the obligation or not. In addition, the Bill revokes the presumption contained in the last paragraph of the Section 875 CC&C which stipulates that, in cases of doubt whether if an obligation has an implied or undefined term, it deemed to be subject to an implied term.
▪️ Preliminary contracts. The Bill revokes the one-year maximum term of the second paragraph of Section 994 CC&C which is applicable to all the preliminary contracts, including agreements to negotiate contracts and option contracts.
▪️ Long-term contracts. The Bill includes the amendment of Section 1,011 CC&C and, therefore, revokes the obligation to renegotiate long-term contracts when a party seeks for a unilateral termination.
▪️ Hardship (imprevisión). The Bill set forth that a party who is claimed for adequacy in the light of unforeseen events may be entitled to request the termination of the contract and that neither the termination nor the contractual adequation may proceed if the affected party is in default or incurred in gross negligence.
▪️ Contracts.
(i) Sale and Purchase Agreement. Preferential rights. The Bill amends Section 1,165 CC&C, which set forth that preferential rights in sale and purchase agreements are not assignable, establishing that the parties are entitled to agree for the non-assignability; which means, contrario sensu, that preferential rights are assignable.
(ii) Supply. The Bill stipulates that the provisions of the CC&C are applicable to supply agreements except otherwise is agreed by the parties and, in addition, it set forth a 20-years maximum statutory term (renewable or subject to the option of total or partial renewal) when the supply consist on natural produce of the soil, with or without a manufacturing process applied to them.
(iii) Agency. The Bill revokes the mandatory nature of the minimum notice term prior to termination without cause set forth in Section 1,492 CC&C and clarifies that this prior notice term shall be of one month for each year of the term of the contract only if the parties have not agreed any other term.
(iv) Concession. The Bill stipulates that the provisions of the CC&C are applicable to concession agreements except otherwise agreed by the parties and revokes the mandatory nature of the four-years minimum statutory term, which shall be applicable only if the parties have not agreed any term.
(v) Franchise. The Bill revokes the legal requirement for the franchised system to be a “proven system” of Section 1,512 CC&C. Furthermore, the prohibition for the franchisor to have any interest on or direct control over the franchisee’s business is released and survives the legal requirement for the franchisor to be the exclusive owner of (or at least being entitled to use and transfer to the franchisee) the intangible assets mentioned therein. The 4-years minimum statutory term applicable by reference to the franchise agreement is revoked, except the parties have not agreed any term. Last, the Bill revokes Section 1,519 CC&C which set forth a list of covenants that are null and void by law.
(vi) Loans. The Bill revokes the cross reference to Section 874 CC&C, which have impact in case the parties have not expressly agreed on the place of payment of the loan, and furthermore revokes the subsection c) of Section 1,531 which stipulates the provisions of the loans are applicable even if the contract stipulates a specific destination of the funds.
(vii) Lease/Bailment. The Bill revokes subsection 1,539:c CC&C but Section 1,539 has only two subsections. A clarification is expected from the Houses of the Congress or lege ferenda.
(viii) Settlement. It is proposed to amend Section 1,614 CC&C referred to the settlement agreement to waive the requirement of “mutual concessions” (the Bill only require mutual extinction of rights and liabilities), without requiring such rights or liabilities to be under discussion or controversy. It is further stated that the settlement agreement must be in writing “with the same formalities used in the contract”, which may imply that the settlement agreement must subject to the same formalities required to the main contract from which the settled rights and obligations arise.
(ix) Arbitration. The legal requirement of the disputes to be “of a private nature in which public order is not affected” contained in Section 1,649 CC&C and applicable to arbitration is released.
Should the abovementioned amendments under the Bill be enrolled by the Federal Congress, they will be complementary to the amendments already in force under the Emergency Decree No. 70/2023, e.g., regarding the foreign currency obligations, electronic domicile, lease agreements, credit card agreements or health insurance.
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