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 2

PRE-CONTRACTUAL LIABILITY general 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 3

PRE-CONTRACTUAL LIABILITY exchange 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 4

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 5

NON-PERFORMANCE AND REMEDIES newly introduced selected issues Employer 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 6

NON-PERFORMANCE AND REMEDIES newly introduced selected issues Contractor 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) 8