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Pacta sunt servanda: Definition, Example and Related Terms

What is Pacta sunt servanda ?

'Pacta sunt servanda' is a Latin phrase that translates to 'agreements must be kept.' It is a fundamental principle in contract law which means that the parties to a contract are bound by the terms of their agreement and must fulfill their contractual obligations. Think of it as the legal way of saying 'a promise is a promise.'

This principle ensures that once parties enter into a valid contract, they are legally obliged to perform their promises and duties as specified in that contract. It's crucial for maintaining trust and reliability in contractual relationships, providing a foundation for parties to rely on each other's commitments.

For example, if a company agrees to deliver goods to a client by a certain date, the principle of pacta sunt servanda requires the company to honor that commitment. If the company fails to do so, they may be held liable for breach of contract and the client may seek remedies such as damages or specific performance.

Understanding and adhering to the principle of pacta sunt servanda is vital for anyone involved in drafting, negotiating, or managing contracts. It underscores the importance of careful and precise language in contracts to clearly define the obligations and expectations of all parties involved.

While this principle is upheld in most legal systems around the world, there are exceptional circumstances where a contract may be set aside, such as cases involving fraud, duress, or other factors that undermine the validity of the agreement. But as a general rule, pacta sunt servanda ensures that contracts are honored and enforced.

Example(s)

  • Scenario Description
    A supplier agrees to provide a manufacturer with a consistent supply of raw materials every month for a year in exchange for a fixed price. Under the principle of pacta sunt servanda, the supplier must fulfill this obligation by delivering the raw materials as agreed, and the manufacturer must pay the price agreed upon. If either party fails to meet their obligations, they could be subject to legal action for breach of contract.
    A freelance graphic designer signs a contract with a publishing company to deliver cover designs for five upcoming books over the next six months. According to pacta sunt servanda, the graphic designer is legally required to create and deliver the cover designs as specified in the contract. Similarly, the publishing company is required to pay the designer the agreed-upon fee for their services. If either party breaches these terms, the other party can seek legal remedies.