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

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

Conflict of Interest According to Article 1394 of the Civil Code

According to the judgment in question, a conflict of interest capable of rendering a contract voidable must be assessed in concrete terms. Article 1394 of the Civil Code establishes an incompatibility between the interests of the represented party and those of the representative. This incompatibility cannot be proven abstractly; it must be linked to the specific legal act, where it is evident how the advantage for one party may arise from the sacrifice of the other.

OF INTEREST Incompatibility - Concrete assessment of the specific act or contract - Conditions - Advantage for one of the parties through the sacrifice of the other - Temporal reference to the moment of contract formation - Necessity - Subsequent events - Irrelevance. A conflict of interest capable, pursuant to art. 1394 of the Civil Code, of rendering a contract voidable, 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 proven not in an abstract or hypothetical manner but with reference to the specific act or transaction which, due to its intrinsic characteristics, allows for the creation of one party's benefit through the sacrifice of the other; this situation, referring to a defect in contractual will, must be ascertainable at the moment of contract formation, with subsequent events that may modify the initial convergence of interests being irrelevant.

Practical Implications of the Judgment

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

• Assessment of Representation: Who represents whom and with what intentions?
• Transparency in Negotiations: How to avoid misunderstandings and future conflicts.
• Documentation: Maintaining a written record of decisions and justifications.

Conclusions

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