On December 21, 2023, Decree of Necessity and Urgency No. 70/2023 (the “DNU No. 70/2023”) was published in the Official Gazette, which, among many other amendments, amended Titles “I” (Obligations in general), “II” (Contracts in general) and ‘III’ (Contracts in particular) of the Argentine Civil and Commercial Code (“CCCN”), amended the Argentine Civil and Commercial Code (“CCCN”) in Titles “I” (Obligations in General), ‘II’ (Contracts in General) and “III” (Contracts in Particular) of its Third Book (Personal Rights), including the repeal of the Rent Law no. 27.551. In general terms, as will be developed below, the reforms seek to give primacy to the agreement between private parties, and at the same time to mark with greater certainty the limits established by the public order to the autonomy of will of the parties. DNU No. 70/2023 entered into force on December 30, 2023[1].
Amendments to Title I, Obligations in General
DNU No. 70/2023 amended Articles 765 and 766 of the CCCN with respect to obligations to give money to reintroduce the regime of the repealed Civil Code on payments in foreign currency.
The original wording of Section 765 of the CCCN provided that obligations to give money agreed in a currency that is not legal tender in the Argentine Republic would be considered as obligations to give quantities of things. Following this reasoning, it added that the debtor could be released from its obligation by delivering an equivalent value in legal tender. The new wording of Article 765 eliminates this power of the debtor, and expressly establishes that obligations to give money may be agreed in currencies that may or may not be legal tender in the Argentine Republic. At the same time, it adds that the debtor can only be released from its obligations to give money if it delivers the sums committed in the agreed currency. Finally (and in line with the amendments made to Articles 958, 969 and 989 of the CCCN), the power of judges to modify the form of payment or the currency agreed upon by the parties to an agreement was expressly and totally excluded.
An addition was also added to article 766 establishing that every debtor must deliver the corresponding amount of the specie designated in the agreement that binds it, “whether the currency is legal tender in the Republic or not”, in order to give consistency to the reform of article 765.
In conclusion, the reforms introduced by articles 765 and 766 of the CCCN raise to an undisputed first place the agreement of the parties in relation to the determination of obligations of damages.
In conclusion, the reforms introduced by articles 765 and 766 of the CCCN raise to an undisputed first place the agreement of the parties in relation to the determination of obligations to give money. They make it clear that the parties may not deviate from what they have agreed (except through a subsequent agreement, of course), and that a judge may not modify such agreement under any circumstances. In this way, the uncertainty existing since 2015, regarding the possible “pesification” of obligations agreed in foreign currency, is resolved.
Amendments to Title II, Contracts in general
DNU No. 70/2023 introduces substantial amendments to Articles 958, 960 and 989 of the CCCN, with the clear purpose of expanding the scope of freedom of contract, providing greater certainty with respect to those rules that could eventually limit it and restricting the power of the judiciary to modify contractual stipulations agreed between private parties.
- The original wording of Article 958 established as limits to the freedom of contract (i) the rules imposed by law, (ii) public order, (iii) morality and (iv) good customs. The new wording firstly eliminates the mention of morals and good customs. Secondly, it adds an express mention to the supplementary nature of the legal rules in the face of the autonomy of the will of the parties (reaffirming the precept already included in article 962 CCCN, which did not suffer any alteration). And, thirdly, it establishes as a general rule that only those rules that expressly provide for their mandatory nature will be considered mandatory, which will be subject to a restrictive interpretation. Thus, the new article 958 establishes that “[t]he parties are free to enter into a contract and determine its content, within the limits imposed by law or public policy. The legal rules are always of supplementary application to the will of the parties expressed in the contract, even if the law does not expressly determine it for a specific type of contract, unless the rule is expressly mandatory, and always with restrictive interpretation”.
- Article 960 established as a general principle that the judiciary had no power to modify the stipulations of contracts. As an exception, it established that contractual stipulations could be modified (i) at the request of a party when authorized by law, or (ii) ex officio when public order was manifestly affected. In its new wording, the article maintains the general rule and the exception (i), but eliminates the possibility for a judge to modify contractual stipulations ex officio.
- With regard to the judicial control of abusive clauses, the amendment introduced to article 989 maintains as a rule that the administrative approval of general clauses is not an obstacle to their judicial control. However, it eliminated the obligation of the judge to integrate a contract under the terms of the contract.
Amendments to Title III, Contracts in particular
In the area of nominated contracts, DNU No. 70/2023 introduced only (substantial) amendments to the rules on lease contracts. No amendments have been made to rules relating to other types of contracts.
In the first place, it repealed Law No. 27,551 (known as the “Rentals Law”, as it introduced reforms to the articles of the CCCN that regulate lease agreements) in its entirety. It also repealed articles 1202 (on the obligation of the lessor to pay for the necessary improvements made by the lessee to the leased property), 1204 (on the reduction of the lease price or contractual termination in case of loss of luminosity of the leased property), 1204 bis (which established that certain expenses and credits payable by the lessor could be compensated by the lessee with the lease fees) and 1221 bis (on the renewal of rents for housing) of the CCCN.
Secondly, it introduced amendments to articles 1196 (which contemplated restrictions to the lessor), 1198 and 1199 (which regulated the minimum term of lease agreements in general), and 1219 to 1221 (on the termination of lease agreements) of the CCCN:
- Article 1196, which previously established limitations to the lessor to demand advance rents, security deposits, payment of key value, among others, was replaced in its entirety to establish that “the parties may freely determine the amounts and currency delivered by way of deposit or security deposit, and the manner in which they will be returned at the end of the lease”. Moreover, the new article adds that “the parties shall freely agree on the frequency of payment, which may not be less than monthly”.
- Articles 1198 and 1199 established -as an unavoidable rule by the will of the parties- the minimum term of three years for the lease of real estate (whatever its destination), and the exceptions to such rule. Both articles were replaced in their entirety. In its new version, Article 1198 eliminates the aforementioned three-year term, and establishes as a general rule that the duration of leases for any purpose will be the one established by the parties. It also establishes that, in the absence of agreement on the term, (i) in the case of temporary leases, the term established by the customs and practices of the place where the leased property is located, (ii) in leases for permanent housing, with or without furniture, it will be two (2) years, and (iii) for other purposes it will be three (3) years. Article 1199 makes explicit (in line with the amendments to Article 765 CCCN) that rents may be established in legal tender or in foreign currency, at the free discretion of the parties. In addition, and in line with the amendment to article 766, it is clarified that the tenant may not demand that payment be accepted in a currency other than the one established in the lease agreement. Finally, it adds that the parties may agree to adjust the value of the rents on the basis of any index, and clarifies (as did the repealed Rent Law) that Law No. 23,928 (also known as the “Convertibility Law”) will not apply to rental agreements, as regards the general prohibition of indexation provided for therein.
- With respect to the termination of lease agreements, Articles 1219 to 1221 were amended to (i) expand the grounds for termination attributable to the lessee, (ii) specify the grounds attributable to the lessor and (iii) establish a new regime for early termination by the lessee.
First, subsection “d” was added to article 1219 to expand the grounds for termination of a lease agreement attributable to the lessee. In its original wording, said article established that the grounds -taxatively enumerated- were three: (i) change of destination or irregular use of the property; (ii) lack of conservation of the leased thing or its abandonment without leaving a substitute; and (iii) lack of payment during two consecutive periods. Secondly, it was clarified in article 1220 that the lessee may terminate the lease if the lessor fails to comply with the obligation to keep the thing fit for the agreed use and enjoyment, “except when the damage has been caused directly or indirectly by the lessee”. Finally, the text of Section 1221 was rewritten to provide that the tenant may, at any time, terminate the lease by paying the equivalent of ten percent (10%) of the balance of the future rental fee, calculated from the date of the notice of termination until the termination date agreed in the lease.
Validity of DNU No. 70/2023
Article 5 of the Civil and Commercial Code establishes that laws become effective after the eighth day of their official publication; therefore, considering that DNU No. 70/2023 was published on December 21, 2023, it became effective on December 30, 2023. On the other hand, the treatment of Decrees of Necessity and Urgency is regulated by Law No. 26,122. The law establishes that the Chief of Cabinet must submit DNU No. 70/2023 to the consideration of the Permanent Bicameral Commission within ten days of its enactment. The Permanent Bicameral Commission has ten working days to issue an opinion on the validity of DNU No. 70/2023 and send it to the plenary of both legislative chambers for its treatment. DNU No. 70/2023 will only become ineffective if both chambers reject it. The Senate and the Chamber of Deputies may only accept or reject DNU No. 70/2023, but may not introduce amendments, modifications or additions. The decision is made by an absolute majority of those present.
[1] For an analysis of the entry into force of the DNU, see Newsletter of January 3, 2024 “DNU No. 70/2023 – Comments on its entry into force”.
