- Corte Suprema de Paraguay – Sala Civil y Comercial
- María José Ramírez de Aranda y otros v. Hernán Darío Ramírez Almada
LONG-TERM CONTRACTS - LEASE CONTRACT WITH A PURCHASE OPTION IN FAVOR OF LESSEE – BETWEEN TWO PARAGUAYAN INDIVIDUALS - REFERENCE TO THE UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (PARAGUAYAN LAW)
EXERCISE OF PURCHASE OPTION - SUBJECT TO CONDITION THAT PAYMENT WAS MADE WITHIN 12 MONTHS FROM THE CONCLUSION OF THE LEASE CONTRACT – PAYMENT IN TIME PREVENTED BY EVASIVE CONDUCT OF THE LESSOR - CONDUCT CONTRARY TO PRINCIPLE OF GOOD FAITH – REFERENCE TO ART. 5.1.3 UNIDROIT PRINCIPLES ON PARTIES´ DUTY TO COOPERATE
Two Paraguayan individuals had entered into a lease agreement with a purchase option. To exercise the “purchase option,” A, the lessee, had to pay a certain amount of money, in cash, at the address of B, the lessor, within 12 months from the signing of the lease agreement. The purchase option was expressly granted not only to A, but also to X & Co., his heirs.
A died three months after signing the lease agreement and X & Co. requested B to execute their right to purchase the property. B responded evasively, referring to conditions not agreed upon in the lease agreement, namely to prove their status of heirs of A, notwithstanding the fact that they were cousins of B (A was B's uncle). X & Co proved their status of A's heirs, but even then B did not respond to their request.
Therefore, X & Co. filed a lawsuit against B – 11 months after the lease agreement was signed – requesting B to fulfill his obligations under the lease agreement. B objected that the contractually stipulated deadline for payment had already elapsed by the time the judicial deposit was performed.
The First Instance Judge ruled in favor of B, on the ground that the judicial deposit of payment was made after the 12 month period agreed in the contract.
The Court of Appeal, in turn, overruled the decision of the First Instance Judge and granted X & Co.´s petition.
The ruling of the Court of Appeal was confirmed by the Supreme Court. Though acknowledging that the judicial deposit of payment made by X & Co. was late, the Court pointed out that the only reason for this delay was B´s evasive actions which were contrary to the general principle of good faith and fair dealing as stated in several provisions of the Paraguayan legislation. In support of its ruling the Court also referred to Art. 5.1.3 of the UNIDROIT Principles which lays down the parties´ duty of co-operation as a particular application of the principle of good faith.