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Fundamental principles of the new contractual law in the Czech Republic

Fundamental principles of the new contractual law in the Czech Republic

The new contractual law in the Czech Republic, which had been incorporated in one legal code (New Civil Code, the “NCC”), is based on the following fundamental principles:

  1. Principle of autonomous will
    According to this principle the parties may diverge from the statutory provisions to suit their needs, i.e. the statutory provisions will apply only as subsidiary.
  2. Less formalism
    This principle brings greater freedom of choice to the contractual parties to decide what form of contract they will use, unless the law or previous agreement of the parties stipulate otherwise (see below).
  3. Enforcement of relative invalidity over absolute invalidity
    The following consequences result from the above specified principle:
    • If the cause for the invalidity is only in the illegal determination of quantity, time, territorial or other extent, the court can change the extent so that it corresponds to the rightful arrangement of the rights and obligations of the parties and remedy the cause of the invalidity;
    • Failure to comply with the agreed form of contract can be objected only till the commencement with the performance of the respective contract. By start of the performance the absence of the agreed form of contract is remedied;
    • Provided the contract is not clear and understandable and its content cannot be determined by interpretation of the contract, the acts of the parties will be considered as so called apparent legal acts. The NCC regulates the possibility for the manifestation of will (particularly the contract offer and its acceptance) to be later clarified by the parties. In such case the defect of the legal acts will not be taken into consideration and it will be considered as legally perfect from the start of the contractual negotiations.
  4. Protection of weaker party
    The NCC provides for protection of a weaker party according to specific situation and circumstances of the contractual relation. This principle manifests itself mainly by the following:
    • General ban on missus of economic power of the entrepreneur against a weaker party – as a weaker party is always considered the contractual party which contracts in business relations outside the scope of its own business activities (Section 433 of the NCC)
    • Consumers protection (Section 1810 et seq. of the NCC)
    • Adhesion contracts statutory provisions (Section 1798 et seq. of the NCC)
    • Disproportionate abbreviation and usury statutory provisions.

Further details with respect to adhesion contract and consumer protection will be addressed in our following articles.

By: Jiří Spoust

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