ARTICLE 1.3 - (Binding character of contract)

Article 1.3 - (Binding character of contract)

1. The principle pacta sunt servanda

3. Effects on third persons not dealt with

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Article 1.3 - (Binding character of contract)

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A contract validly entered into is binding upon the parties. It can only be modified or terminated in accordance with its terms or by agreement or as otherwise provided in these Principles.

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COMMENT

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1. The principle pacta sunt servanda

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This article lays down another basic principle of contract law, that of pacta sunt servanda.

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The binding character of a contractual agreement obviously presupposes that an agreement has actually been concluded by the parties and that the agreement reached is not affected by any ground of invalidity. The rules governing the conclusion of contractual agreements are laid down in Chapter 2 of the Principles, while the grounds of invalidity are dealt with in Chapter 3. Additional requirements for the valid conclusion of contracts may be found in the applicable national or international mandatory rules.

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2. Exceptions

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A corollary of the principle of pacta sunt servanda is that a contract may be modified or terminated whenever the parties so agree. Modification or termination without agreement are on the contrary the exception and can therefore be admitted only when in conformity with the terms of the contract or when expressly provided for in the Principles. See Arts. 3.10(2), 3.10(3), 3.13, 5.8, 6.1.16, 6.2.3, 7.1.7, 7.3.1 and 7.3.3.

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3. Effects on third persons not dealt with

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While as a rule a contract produces effects only between the parties, there may be cases where it also affects third persons. Thus, a seller may under some domestic laws be under a contractual duty to protect the physical integrity and property not only of the buyer but also of accompanying persons during their presence on the seller's premises; equally, the consignee of a cargo may be entitled to sue the carrier for non-performance of a contractual duty undertaken by the latter in its contract of carriage with the sender. By stating the principle of the binding force of the contract between the parties, this article does not intend to prejudice any effect which that contract may have vis-à-vis third persons under the applicable law. Similarly the Principles do not deal with the effects of avoidance and termination of a contract on the rights of third persons.

UNIDROIT Principles of International Commercial Contracts with Official Commentary [1994]

PREAMBLE

CHAPTER 1 - GENERAL PROVISIONS

CHAPTER 2 - FORMATION