Law of Obligations and Contract Law
Scope of the domain
The obligations section tests Book Two of the Civil Code: formation, validity, performance, breach, damages, penalty and termination of contracts, plus agency and pre-contractual liability. The exam favours fact patterns where several remedies compete.
Core rules
- Freedom of contract is protected, but the contract must have a lawful object and comply with mandatory rules and good morals. Consideration is not a separate requirement; causa and lawful purpose matter.
- An offer becomes effective when received. Acceptance must be unconditional; a material change of terms is a counter-offer. Silence is not acceptance unless the parties or law so provide.
- Invalidity grounds include incapacity, material error, fraud, duress, simulation and violation of law. A void contract produces no performance obligation; a voidable contract may be avoided within the statutory period.
- On breach, the creditor may demand performance, cure, damages or termination. Damages aim to put the creditor in the position it would have occupied had the contract been performed (positive interest).
- A contractual penalty may be reduced by the court if it is excessive compared with the creditor's interest. Termination requires notice and, where required, a period for cure.
- Agency requires a power of attorney. A representative who exceeds authority may bind the principal only under the rules of apparent authority; otherwise the representative is liable.
Worked example
Seller offers to sell a machine for 50,000 GEL, delivery within 30 days. Buyer replies: 'I accept, but delivery must be within 10 days.' Seller does not answer. Buyer later claims breach when delivery occurs on day 25. Reasoning: the shortened delivery term is a material alteration, so the reply is a counter-offer, not an acceptance. No contract was formed on the original terms. Seller's silence is not acceptance. Buyer has no claim for breach; it may only claim reliance damages if the requirements for pre-contractual liability are met.
Traps
Do not assume a contract exists because the parties exchanged documents; match offer and acceptance precisely. Distinguish void from voidable contracts and their different consequences. Do not award both penalty and full damages without checking the statutory relationship between them. Termination is not automatic: notice and cure periods matter.