The unilateral declaration of rescission - an extrajudicial mean of terminating a contract

Based on the provisions of article 1169 of the Civil Code, the parties are free to conclude any contract; however, based on the principle of the mandatory force of contract, the parties are held to execute the contract as signed. According to article 1549 of the new Civil Code, in case the debtor fails to execute its obligations accordingly, the creditor is entitled to invoke one of the following remedies: execution by equivalent; foreclosure; rescission or termination of contract or the reduction of the debtor’s performance or the use of any other legal mean available in order to achieve his right. Rescission can manifest under any of the two forms: judicial and extrajudicial. Extrajudicial rescission also has two forms: unilateral rescission and conventional rescission. Unilateral rescission operates based on the unilateral declaration of rescission. At first sight, the creditor’s possibility to terminate the contract by rescission presents some practical issues regarding the conditions when it can be invoked, the form of the declaration, its legal effects (namely the real possibility of reinstating the parties in their previous position) and the statute of limitation of the right to invoke rescission. All these aspects were subject to our analysis, thus attempting to find the practical solution for enforcing this highly anticipated solution in the new social-legal context.