Article 280(1) of the Portuguese Civil Code provides:
“A legal transaction whose subject matter is physically or legally impossible, contrary to the law, or incapable of determination shall be void.”
The wording of this provision raises the question of what should be regarded as a subject matter that is incapable of determination. This is because contracts with an unspecified subject matter are frequently entered into, although these two situations — an indeterminable subject matter and an undetermined subject matter — are distinct and give rise to different legal consequences.
While a legal transaction whose subject matter is undetermined but capable of determination is valid, the fact remains that, although the subject matter has not been specifically identified at the time the contract is entered into — and is therefore undetermined — it can nevertheless be specified at a later stage, after the contract has been concluded.
An example of a contract with an undetermined but determinable subject matter would be an order for 10 cases of red wine, without identifying the characteristics of the wine, such as its brand or whether it is white or red wine. It would be entirely possible, at the time of performance, to specify the subject matter by determining the brand of the wine and whether it is white or red.
The situation is different where the subject matter of the contract is both undetermined and incapable of determination, that is, where there is no criterion allowing it to be specified after the contract has been concluded. In such circumstances, the contract is void.
This would be the case where abstract concepts are used to define the subject matter of the contract which, from a legal perspective, cannot be concretely defined or given any tangible form.
For example, consider a situation that is currently becoming increasingly common, particularly on social media, involving the conclusion of a services agreement under which, in return for the payment of a fixed fee, the service provider undertakes to provide personal development services, such as strategies for unlocking and achieving success in life, both personally and professionally, by identifying and removing the obstacles preventing the attainment of abundance and success.
Such a contract is void because its subject matter is both undetermined and incapable of determination. It is neither materially nor legally possible to provide tools that would enable a person to achieve success throughout their life and in all its dimensions. Accordingly, the subject matter of the transaction is physically and legally impossible, and it is not possible to establish the precise performance to which the service provider is bound.
Because the subject matter of such a contract is both undetermined and incapable of determination, it becomes impossible to apply to it the statutory rules generally applicable to contracts, including the rules concerning non-performance and delay in performance.
For example, under such a contract it would not be possible to determine when the service provider had failed to perform the services if the person who commissioned them did not achieve the abundance and success they had expected.
Accordingly, in such a case, the person who paid for the services may seek a judicial declaration that the contract is void, on the grounds set out above, and require repayment of the amount paid, without being required to return anything to the other party. This follows from Article 289(1) of the Portuguese Civil Code, under which a declaration of nullity takes effect retroactively as of the date on which the contract was concluded. Everything that has been provided must therefore be returned or, where restitution in kind is not possible, its equivalent value must be paid.
In the example given, this means that the amount paid should be refunded. Since restitution in kind of the service provider’s performance is not possible, its equivalent value would ordinarily have to be returned. However, because the performance in question is incapable of determination, it is not possible to assign it a value. Consequently, the party who commissioned the services has nothing to return.
Did you enjoy this article? Leave your comment below. Your opinion is important to us.
Subscribe to our blog to keep up to date with our latest news and information.
Do you have any questions? Please contact us.
