Commentary on Judgment No. 8907 of 2024: Conflict of Interest and Annulability of the Contract

Judgment No. 8907 of April 4, 2024, issued by the Court of Cassation, addresses a crucial theme in contract law: the conflict of interest in representation situations. This decision fits into a legal context where the protection of the parties' interests is fundamental to ensuring the validity and effectiveness of contractual acts.

The Conflict of Interest According to Article 1394 of the Civil Code

According to the judgment in question, the conflict of interest that is capable of producing the annulability of the contract must be evaluated in concrete terms. Article 1394 of the Civil Code establishes that there is a relationship of incompatibility between the interests of the represented party and those of the representative. This incompatibility cannot be demonstrated in an abstract manner; it must be linked to the specific contractual act, where it is highlighted how the advantage for one party may derive from the sacrifice of the other.

CONFLICT OF INTEREST Incompatibility - Concrete evaluation of the individual act or contract - Conditions - Advantage for one party through the sacrifice of the other - Temporal reference to the moment of perfection of the contract - Necessity - Subsequent occurrences - Irrelevance. The conflict of interest capable, under Article 1394 of the Civil Code, of producing the annulability of the contract, requires the ascertainment of the existence of a relationship of incompatibility between the interests of the represented party and those of the representative, to be demonstrated not in an abstract or hypothetical manner but with reference to the individual act or transaction which, due to its intrinsic characteristics, allows for the creation of the benefit of one party through the sacrifice of the other; this situation, referring to a defect in the contractual will, must be verifiable at the moment of perfection of the contract, remaining irrelevant any subsequent occurrences that may modify the initial convergence of interests.

The Practical Implications of the Judgment

Judgment No. 8907/2024 reiterates the importance of analyzing the specific context in which a contract is perfected. This approach requires a meticulous evaluation of the circumstances at the time of the conclusion of the contract and not of any subsequent modifications or developments. It is fundamental that the parties involved are aware of the risks associated with representation and the potential conflict of interest.

  • Evaluation of representation: who represents whom and with what intentions?
  • Transparency in negotiations: how to avoid misunderstandings and future conflicts.
  • Documentation: keeping a written record of decisions and motivations.

Conclusions

Judgment No. 8907 of 2024 represents an important step forward in protecting the interests of the parties in a contract. It emphasizes that the conflict of interest must be addressed with seriousness and attention, requiring a concrete evaluation of individual contractual acts. Businesses and legal professionals are called to pay particular attention to these aspects to ensure valid contracts free from defects. Only in this way can one avoid annulability and other legal issues.

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