The nullity of the contracts

Definition of nullity
A juridical act concluded with the observance of legal rules is a valid act.
Therefore, it can produce its legal effects provided by the law. Whenever the
juridical act concluded by the parties disregards certain express legal rules, it can
not produce any legal effects. In such cases, the act is void or avoidable. It means
that a juridical act concluded against the provisions of the law is sanctioned by a
specific civil sanction, which is the nullity.
As a definition, the nullity is the civil sanction which deprives the juridical
act of its effects that are contrary to the legal provisions stipulated for its valid
conclusion. It should be mentioned that, within the Romanian legal system, the
nullity does not destroy the act itself, but only its effects. Thus, a void or avoidable
act is not considered as non-existent. Actually, as a consequence of the nullity,
such an act is not able to produce any effects, due to the non-observance of legal
rules at the moment when the act was concluded.
However, once pronounced by a judge or declared by the parties, the nullity
applies from the moment when the act was concluded (ex tunc) and therefore the
parties are restored to the positions prior to their agreement.
Finally, it should be mentioned that, according to art. 1246, paragraph 3 of
the new Civil Code, the nullity may be declared by the parties of the juridical act.
If the parties are not able to reach an agreement concerning the nullity, it will be
pronounced by a judge.
The classification of nullity

The nullity of juridical acts may be classified according to several criteria.

1. The most important criterion for classifying the nullity is the nature of the
interests protected through this sanction. According to this criterion, the
nullity may be divided into absolute nullity and relative nullity.
Therefore, the absolute nullity sanctions the non-observance, at the
conclusion of the act, of legal provisions which protect public interests, the
interests of the entire community. Such an act is designated as null or void.
The following grounds lead to the absolute nullity of an act:
- the non-observance of the rules related to the capacity of the parties in several
cases as for example the non-observance of the principle of specialty of the
abstract capacity of legal persons having non-patrimonial goal;
- the consent is missing;
- the object of the juridical act is not valid;
- the consideration of the act is prohibited by law or public morals;
- the form requested by law ad validitatem has not been observed.
The relative nullity sanctions the non-observance, at the conclusion of the
act, of legal provisions which protect private, individual interests. Such an act is
designated as avoidable.
The following grounds lead to the relative nullity of an act:
- the vices of consent;
- the consideration of the act is missing;
- the discernment (the judgment) is missing at the moment of concluding the
juridical act;
- the non-observance of the rules related to the concrete capacity of the parties.

This classification has a particular importance due to the differences

between the rules governing the absolute nullity and the relative nullity.
Thus, the absolute nullity is regulated by the following rules:
1. anybody having a legal interest may claim the absolute nullity of a juridical act.
2. The absolute nullity can be claimed any time; there are no limits in time for
bringing an action in absolute nullity before a court of law. It means that the action
in absolute nullity is non-prescriptive, by means of action or by means of
exception.
3. The absolute nullity can not be ratified by the parties. It means that the defects
of a void act can not be covered in order for the act to be able to produce its
effects, despite the nullity.
The relative nullity is governed by the following rules:
1. the relative nullity may be claimed only by the person whose interest has been
disregarded at the moment of conclusion of the act, because the relative nullity
protects only private interests. For example, the party whose consent was not
genuine due to one of the vices of consent may claim the relative nullity.
2. The relative nullity can be claimed by means of action only within a specific
period of time, the so-called term of extinctive prescription (the general term of
extinctive prescription is 3 years). It means that the action in relative nullity is
prescriptive within 3 years. However, the relative nullity is non-prescriptive by
means of exception.
3. The relative nullity can be ratified by the parties and the ratification may be
either express or implied. It means that the defects of an avoidable act may be
covered by the parties, according to their will.
The ratification is express when the interested party concludes another
juridical act stating his will to ratify the former avoidable one.
The ratification is implied in the following cases:
-the interested party performs the avoidable act;
- the interested party does not bring the action in relative nullity within the term of
extinctive prescription of 3 years.
2. According to its extent, the nullity may be divided into partial and total
nullity.
The total nullity affects the whole act, while partial nullity affects only a part
of the juridical act. In case of partial nullity, the clauses of the act which are not
avoided by nullity still produce their legal effects, because they are not contrary to
the law.
Within the Romanian legal system, the partial nullity is the rule, and the
total nullity is the exception. Therefore, whenever it is possible, the intention must
be to save the act, and to avoid only those clauses that are contrary to the law.
However, the extent of the nullity depends on the ground of nullity (the non-
observance of the form requested ad validitatem leads to a total nullity), as well as
the complexity of the content of the juridical act (if the juridical act has several
clauses and may, therefore, produce several effects, it is possible to avoid only
some of these clauses and to keep the others).

The effects of nullity

As mentioned before, the nullity deprives the juridical act of its effects
which are contrary to the law. Therefore, the effect or the juridical consequence
of nullity is the elimination of those effects of the juridical act that are
contrary to the legal rules which regulate its valid conclusion.
The effects of nullity are governed by three principles, as follows:
1. the principle of retroactivity. According to this principle, void or
avoidable acts cannot produce any effects in the future, and the effects already
produced in the past must be eliminated. Therefore, this principle means the
elimination of those effects of the juridical act that have been produced between
the moment of concluding the act and the moment of the declaration of nullity.
Thus, once pronounced by a judge or declared by the parties, the nullity
applies in the past from the moment when the act was concluded (ex tunc) and
therefore the parties are restored to the positions prior to their agreement.
Nevertheless, there are some exceptions to this principle. For example, in
case of the legal person, its nullity does not produce any effects in the past and the
legal person ends its existence for the future.
2. the principle of restoring the parties into the positions they were
before the act was concluded (restitutio in integrum).
According to this principle, the parties must restitute to each other all the
promises already performed in accordance with the void act.
The exceptions to this principle are the same as those to the principle of
retroactivity, because the principle of restoring the parties into their prior positions
is a consequence of the principle of retroactivity of nullity’s effects.
 3. the principle of avoidance of the accessory acts. It means that the
nullity of a primary juridical act leads to the nullity of the subsequent accessory
acts, due to their relation with the former.
Nevertheless, there are some exceptions to this principle, which are justified
on another general principle of law, the principle of protecting the good faith. For
example, the avoidance of the ownership title of the seller of an immovable thing
does not lead to the nullity of the subsequent sale-purchase contract concluded
between the first buyer and a third party, if this third party has acted in good faith.