What are the rights of the creditor against the debtor in case the obligation is to deliver a determinate thing?

The Latin aphorism "pacta sunt servanda" (what is agreed obliges) is a key principle of the Spanish Civil Code, which establishes specifically that "the obligations arising from contracts have the force of law between the contracting parties, and must be complied with in accordance with their own terms" (article 1091 of the Civil Code). Contracts are valid and by mere consent, and from then on they oblige not only to what has been expressly set out, but also to the consequences which, according to their nature, can be expected in accordance with good faith, common usage and the law. (article. 1.258 CCiv)

2. DESPITE BEING BINDING CONTRACTS ARE BREACHED: WHAT IS THERE TO DO THEN?

Even though they are binding from the moment they are entered into, contracts are breached, as everyone knows.

2.1 So what can one do when the agreement you have entered into is breached by the other party?

•  The first thing to do is check what the contract itself says. In the exercise of freedom of will set out in article 1255 of the Civil Code the parties can set the terms and remedies they deem appropriate. And those apply first.
• In addition to the above article 1124 of the Spanish Civil Code gives the performing party in a contract with reciprocal obligations the right to terminate the agreement in the event of breach by the other party. This is the so-called "tacit termination condition". Even if the agreement does not say anything about this right, it exists by law although subject to certain conditions (that the breach is "essential", i.e. not non fulfilment of ancillary obligations of a lesser importance, that it has not been remedied and the party seeking termination was not in breach itself).

  Termination is not the only option, Spanish Civil Law also allows to seek specific performance, a reduction of the price in certain cases (i.e. partial compliance) and/or damages.

Other articles of the Code also authorize to request the fulfilment of an obligation assumed contractually. Thus, when the obligation is the delivery of a certain thing, Art. 1096 entitles the creditor to compel the debtor to make delivery or, if the thing is indeterminate or generic, to demand specific performance at the debtor's expense. Art. 1098 provides that if the obligor does not do something that is was obliged to do then, it shall be enforced at its own expense. The law also allows for the undoing something which should not have been done (art. 1099) also at the debtor's expense. Certain specific types of agreements such as sale and purchase agreements, assignments of rights, etc. have specific rules and remedies set out in the Civil and Commercial Codes for cases of non-compliance. Be sure to check with a lawyer to verify if your specific agreement has also specific remedies in addition to the above.

2.2 What if a party to an agreement demands payment from me even if they have not fulfilled their obligation, or have only partly done so?

• The "exceptio non adimpleti contractus" a jurisprudential construction according to which a party which has not fulfilled its reciprocal obligation cannot ask the other party to do so, or
• the "exceptio non rite adimpleti contractus" according to which a party which has not adequately performed cannot request performance either.

As a rule, in all reciprocal obligations "no one can demand fulfilment of an obligation without having done so itself". This is expressly set out in Supreme Court ruling of 27 December 1990. This means that if one party fails to perform its obligations, the other party may refuse to perform. This is the basis of the exceptio non adimpleti contractus - exception of unperformed contract - and its lesser sibling the exceptio non rite adimpleti contractus - exception of contract not accurately and completely performed. These exceptions are not expressly envisaged by the Civil Code, but are widely recognised case-law creations which are inferred from the collective interpretation of a number of articles (such as art. 1100, 1124, 1466 and 1467 of the Civil Code)

So, how can they be used when you are being asked to perform by a non performing party? There a certain requirements to take into account:

• For the exception to work the obligations must be truly reciprocal. It is not enough that they several obligations arise from the same agreement for them to be reciprocal. For example in a lease agreement which includes cleaning services lack of cleaning will not entitle the lessee to stop paying the rent, but just the part corresponding the cleaning services. The exceptions do not apply when the obligations are not correlative but autonomous.
• The claim of the party who invokes the exception must be due and payable. If not yet due, then there is no real lack of performance by the other party.
• It is also necessary that the obligations be simultaneous, i.e. that the party putting forward the exception is not obliged to perform first. For example if you are asked to pay for certain goods before they are delivered you will not be able to oppose a demand for payment alleging that the goods are yet to be delivered: you were meant to go first.

  However, in cases of agreements with of periodic obligations (for example, the monthly payment of a fee to use a gym) the person who must comply first in time is allowed to use the exception with regards with prior non-compliance by the other party. In the gym example: if you have paid the fee for January and the gym has not been open or available for you to use and they ask you to pay the fee for February you can use the exception.

• As to the nature of the alleged non-performance, it must be certain and material. Mere suspicions or fears of future breaches or breaches of accessory obligations are not sufficient.
• When it comes to mere defects in performance, then the correct exception is exceptio non rite adimpleti contractus. And not every defect will do. The Supreme Court (Ruling of 27 March 1991) has stated that the exception will not succeed "when what has been badly done or omitted lacks sufficient substance in relation to what has been done correctly" and when the interest of the party presenting the exception was sufficiently satisfied by the work delivered or offered. In those cases corrective remedies or a reduction in the price would be expected to be enough.
• In general, a price reduction is appropriate where the performance is defective. When the thing sold does not conform to the contract in terms of quality, the so-called estimate or quanti minoris action is appropriate (Art. 1486).

2.3 Will the exceptions free me from an obligation?
No they will not. They are only temporary relief as they allow to suspend the performance of an obligation for as long as the other party does not perform theirs. The plea of non-performance does not extinguish the right claimed, but only stops and neutralizes its effectiveness, subordinating payment to the correlative performance. This merely temporary effect makes the exception unsuitable when it is a question of definitively settling a relationship which can no longer continue. In that case what should be requested is contractual termination. Thus, when the non-performing party is no longer capable of performing or when correct performance can no longer satisfy the creditor, the exception is no longer the appropriate remedy. In those cases only termination will do. Both exceptions are asserted by way of a counterclaim. That is, there is a prior claim against which the defendant has to raise the exception, which is not examined ex officio. In the exceptio non adimpleti contractus, once invoked, it is up to the initial plaintiff to prove that he has complied so that the exception does not operate. In contrast, in the exceptio non rite adimpleti contractus, it is the party claiming the exception who must prove defective performance.

Please check with your lawyer to see if the exceptions are an appropriate defence for you and whether they are likely to succeed and/or provide the relief you need in your specific case.

3. WHAT ABOUT FORCE MAJEURE? DOES IT CHANGE ANYTHING?

Yes it does. Force majeure is an impediment to performance which may lead to the extinction of an obligation, the suspension thereof or simply exonerate the debtor from liability for damages.

(a) In unilateral obligations

• if the event of force majeure is a definitive and total impediment, such impossibility of performance determines the extinction of the obligation with the consequent release of the debtor (arts. 1182 and 1184 CC).
• In cases of temporary impossibility, there would be a suspension of the enforceability of the performance and the obligation would be suspended. In cases of partial impossibility, the obligation remains in place to the extent of the partial impossibility.

(b) In the case of bilateral or reciprocal obligations the debtor who is affected by force majeure is exempt from liability for failure to perform but the other party may terminate the agreement.

As an exception, in the case of generic obligations, the maximum "genus numquam perit" applies, according to which it is understood that the thing does not perish and, therefore, there is no impossibility of performance due to the loss of the things the debtor had counted on for performance. This applies for example to monetary obligations which case law usually determines cannot be affected by force majeure.

The maxim "genus nunquam perit" does not apply where parties have specified certain conditions in generic goods. If it is not just wine, but an specific bottle of wine from a certain vintage and winery, then force majeure, which prevents the debtor from obtaining such specific defined type of a genus also has the effect of freeing the debtor: it is not liable for failure to perform but the other party may terminate the agreement. So, generically, if due to an event of force majeure, the debtor is unable to perform, it will not have any liability for non-performance: the obligation would not be performed, but the debtor is not liable for it. This "non-performance" allows the other party to free itself from its obligations under the agreement by exercising the power of termination (Art. 1124 of Civil Code mentioned above), but without the right to claim damages. Note in any case that the agreement is not extinguished ipso facto; it requires express termination by the creditor. If the impossibility to perform is neither total nor definitive, then naturally the right to claim performance is not extinguished completely.

Whether your agreement is affected or not by force majeure is a matter of fact which needs to be ascertained on a case by case basis. For force majeure to be accepted by the courts certain specific requirements must be met. In cases where performance is not impossible but has become exorbitantly onerous the "rebus sic stantibus" doctrine may apply. Please do consult your lawyer.