- Tribunal de Apelación en lo Civil y Comercial – Terciera Sala
- Centro de Abastecimiento Katueté S.A. v. María Vidala Jara de Núñez
LAND LEASE CONTRACT - BETWEEN TWO PARAGUAYAN PARTIES - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (PARAGUAYAN LAW)
IMPLIED OBLIGATION - EXCLUSION - REFERENCE BY THE COURT TO ART. 1.8 UNIDROIT PRINCIPLES - UNIDROIT PRINCIPLES DEFINED AS "A MEANS OF INTERPRETATION IN THOSE LEGAL SYSTEMS THAT LEGITIMIZE THE GENERAL PRINCIPLES OF LAW AS A SOURCE OF LAW, AS IS THE CASE OF PARAGUAY" AND AN INSTRUMENT THAT HAS "AN UNDENIABLE HERMENEUTICAL VALUE, SINCE THEY PROVIDE REASONABLE AND EFFICIENT CRITERIA FOR DETERMINING THE COMMON WILL OF THE PARTIES"
A Paraguayan company (Claimant) and a Paraguayan individual (Respondent) concluded a land lease agreement for the construction of a gas station and carwash. According to contract, the Respondent assigned the use and usufruct of such property in favor of the Claimant. The contract also provided that Respondent would have to give its written consent in case of a change of the distinctive sign of the carwash. However, in the case of renewal, the Respondent's signature would not be required.
At the time of the renewal of the distinctive sign, Claimant argued that Respondent's reluctance to sign the respective contract with the third party implied a breach of contract. On the other hand, the Respondent argued that the contractual clause mentioned above required Respondent's authorization only in case of a change of the distinctive sign. In any case, the clause in question imposes an obligation on the Claimant, not on the Respondent.
The First Instance Judge, on one hand, rejected Claimant's request for contract performance and its subsidiary request for damages; on the other hand, the counterclaim for moral damages filed by Respondent was also dismissed. Both Parties appealed the First Instance decision.
The Court of Appeal, first of all, had to decide whether there was an implied obligation on the Respondent. Therefore, it resorted to the solutions provided by the Paraguayan Civil Code in order to interpret parties' common intention. In addition, the Court affirmed that in the case at hand it was appropriate to take into consideration the post-contractual conduct and the doctrine of "actos proprios", which is recognized by article 1.8 of the UNIDROIT Principles. The Court also highlighted that such Principles have already been used in previous rulings of various local courts and mentioned that they "have an undeniable hermeneutical value, since they provide reasonable and efficient criteria for determining the common will of the parties..." and that "...foreign doctrine has said that the UNIDROIT Principles constitute a means of interpretation in those legal systems that legitimize the general principles of law as a source of law - as is the case of Paraguay...".
In the case at hand, the Court resorted to Article 1.8 of the UNIDROIT Principles in order to determine that no factual circumstance could have led to a different conclusion regarding the scope of the contractual clause. In this sense, there was no breach of obligation on the part the Respondent.
The Court rejected the claims for damages proposed by both parties and confirmed the First Instance ruling on this point.