Contract

Legal Meaning

The formation of a contract depends on offer and acceptance agreeing on the essential points. Unless the law prescribes a special form, contracts are not subject to any form requirement; however, written form is important in most relationships for ease of proof. Special form requirements apply to immovable property, suretyship and certain consumer transactions.

A contract is interpreted not only by its title but on the basis of all its provisions, the parties’ real common intent, the purpose of the transaction and the rule of good faith. General terms and conditions, unfair terms, excessive advantage and mandatory provisions are examined separately.

Core Elements and Practical Criteria

• A mutual and corresponding declaration of intent is required.
• Freedom of contract is limited by mandatory rules.
• Special form requirements vary by type of contract.
• The real content and the parties’ intent, not the title, are decisive.

Practical Significance

If the scope of rights and obligations and the provisions on payment, delivery, default, termination, liability and dispute resolution are not drafted clearly, serious uncertainty may arise in practice. Legal review before signing is important for high-value transactions.

Commonly Confused Concepts

• A unilateral legal transaction does not require mutual agreement of intent; a contract is based on the agreement of intent of at least two parties.
• A preliminary contract creates an obligation to conclude the principal contract in the future and may be subject to the form of the principal contract.

Practical Example

In a software development contract, whether the source code will be delivered, usage rights, administrative rights, delivery of data, acceptance criteria and the scope of maintenance must be clearly regulated. It cannot be assumed that these elements will be transferred in the same way in every contract; the scope of the commitments is determined by the contract and the applicable law.

Frequently Asked Questions

Is an oral contract valid?

It may be valid where the law does not require a special form; however, problems of proof may arise as to its content and performance.

Is every provision written in a contract valid?

No. The limits of mandatory law, public order, personality rights, morality, impossibility and protective legislation apply.