NEW CODIFICATION OF PRIVATE LAW IN THE CZECH REPUBLIC

Impact on Contract Law

INTRODUCTION

New Code of private law under preparation

Changes in all areas of private law anticipated

New “default rules” set for contract law

Sources and inspiration:– Principles of UNIDROIT– Principles of European Contract Law– Private law legislation of major European states

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PRE-CONTRACTUAL LIABILITYgeneral rules

General rule: A party is free to negotiate and is not liable for failure to reach agreement unless it is doing so with no real intention to enter into contract.

No real intention to contract: Breaking off advanced negotiations without justifiable reason

Consequence: liability for damages up to loss from lost contract in similar cases

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PRE-CONTRACTUAL LIABILITYexchange of information

Exchange of necessary information prior to conclusion of contract is essential

Each party is authorized to keep record of information provided

Confidential information must be kept secret

Remedies for breach of confidentiality include surrender of enrichment

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FORMATION OF CONTRACT use of general conditions

A portion of contractual terms may be determined by reference to general conditions– known to the parties or appended to the offer/acceptance

of offer or– prepared by professional associations

In case of reference to conflicting general conditions contract is formed in the extent the conditions are not in conflict and conflicting conditions are „knocked out“– unless either party excludes this possibility

Express consent required for specific unforeseen clauses contained only in general conditions

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NON-PERFORMANCE AND REMEDIES

newly introduced selected issuesEmployer cannot refuse acceptance for individual minor defects not preventing use of construction

Remedies in case of defects may not be available if– apparent defects are not notified at handover– hidden defects are not notified immediately after their

discovery or after the defects should have been discovered, at the latest within 5 years from acceptance

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NON-PERFORMANCE AND REMEDIES

newly introduced selected issuesContractor is liable for defects caused by subcontractors as if performed by itself

Following persons are liable jointly and severally with contractor for their work– subcontractor unless proved the defect was caused solely

by decision of employer– provider of design unless proved that design did not cause

defect– provider of supervision unless proved that failure to

supervise did not cause defect 7

NON-PERFORMANCE AND REMEDIES

newly introduced selected issues

Remedies available for defects do not preclude claim for damages

Remedies under liability for defects (e.g. discount) cannot be claimed based of another legal title (e.g. as damages)

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