What is Pacta Sunt Servanda ?
Pacta sunt servanda (sunt servanda or pacta servanda) is a Latin phrase that translates to English as “agreements must be kept” or “promises must be kept”.
In other words, when parties enter into a contract, they must respect the terms and conditions of the contract representing the expression of their agreement.
This principle refers to the binding nature of a contract and the parties’ subjective will to be bound by those terms.
Based on this principle, not only the parties to a contract must keep their agreement and be bound to one another but the courts must also uphold the will of the parties to be bound.
Both in international law along with civil and common law systems, to legally honour contractual obligations or an agreement is key.
The Origin of Pacta Sunt Servanda
The first time in recorded history where the principle of “pacta sunt servanda” was used appears to be in the writings of the canonist Cardinal Hostiensis dating back to the thirteen century AD.
The pacta sunt servanda has been considered fundamental to all legal systems for centuries.
This was an uncodified rule for centuries until it was expressed in multilateral declarations, such as in the Declaration of London of 1871, as of the middle of the nineteenth century.
The Doctrine of Pacta Sunt Servanda
International law
In international law, the notion of pacta sunt servanda (“agreements must be kept” or “treaties shall be complied with”) is one of the most important and oldest international principles governing international relations.
Under this doctrine, signatories to an international treaty must keep their agreement in such a way as to give the international treaty a binding effect.
Every state party to a treaty or convention must expect that the other states will keep their agreement and be expected to keep their agreement.
Civil law
In civil law jurisdictions, the doctrine is used to impose a duty to respect the terms of a contract and perform contractual obligations in good faith.
Some civil law jurisdictions have adopted further specific statutes with respect to good faith dealings in commerce and commercial contracts in such a way that they keep their promises and act on the expression of their agreement.
Trading parties must act according to the general legal principle of good faith in executing and upholding their agreement with one another.
Common law
In common law jurisdictions, just like in civil law systems, respect contractual agreements represent a foundational concept in contract law.
There are a few common law principles that may be considered in relation to pacta sunt servanda such as:
- Reasonableness standard
- Good faith and fair dealing
- Privity of contract
- Liberty to contract
When parties freely and voluntarily enter into a contract (liberty to contract), in accordance with the principles of pacta sunt servanda and privity of contract, the parties must honour their obligations.
To sign an agreement or enter into an oral contract, there is an understanding that the parties intend to abide by the terms of the contract and act in such a way as to give the agreement its intended meaning.
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