The Tainan Branch of the Taiwan High Court rendered the Chung-Shang-61 Civil Decision of January 12, 2017 (hereinafter, the “Decision”), holding that parties may free enter into a nude contract to an extent that compulsory legal provisions and good social morals are not violated.
According to the facts underlying this Decision, the parties are half-brothers with the same father. Since the Appellee found that the Appellant had obtained a land from their father, the Appellee colluded with another person to coerce the Appellant to sign the promissory note at issue in an attempt to obtain benefits from the land registered under the Appellant’s name by way of compulsory enforcement based on the promissory note. The Appellant asserted that he was not required to be responsible for the literary meanings set forth in the promissory note for its lack of the fundamental causal relationship and sought a declaratory judgment that confirmed the claim reflected by the promissory note did not exist.
According to the Decision, although the typical contracts under the Civil Code are contracts with consideration, the parties may enter into a nude contract as long as the parties do not violate compulsory legal requirements and good social morals under the principle of contractual freedom. Such contract in which the consideration assumed by one party is not specified is certainly an act without consideration. Within the private law domain, the parties may pursue the economic objectives for the contract they seek to execute under the principle of contractual freedom based on the relationship of rights and obligations created as they deem fit after the parties have weighed their costs and benefits.
It was concluded in this case that since the Appellee asserted that the Appellant issued the promissory note for delivery to the Appellee for the purpose of settling the rents for using the land and distributing the inherited land and produced relevant evidence to that effect, the court further held that the Appellant’s issuance of the promissory note as a payment method to resolve the long-standing unresolved property disputes was a creditor-debtor relationship formed by mutual agreement between the parties. Therefore, the Appellee’s contention that there was no fundamental causal relationship between the parties with respect to the claim reflected by the promissory note at issue was groundless. Hence, the appeal was dismissed, and the previous decision against the Appellant was upheld.