LAWOF CONTRACT AND TORTS("Off. Gazette of SFRY", Nos. br. 29/78, 39/85, 45/89 - decision of the CCY and 57/89, "Off. Gazette of FRY", No. 31/93, "Off. Gazette of SM", No. 1/2003 - Constitutional Charter, and "Off. Herald of RS", No. 18/2020) |
GENERAL PART
BASIC PRINCIPLES
Contents of the Law
Article 1
The present Law regulates the obligation relations originating from contracts, causing injury or loss, acquiring without proper grounds, conducting transactions without authorization, unilateral expression of volition, and other matters specified by law.
Parties to Obligation Relations
Article 2
Parties to obligation relations can be natural and legal persons.
Art. 3-9
(Deleted)
Autonomy of Volition
Article 10
Parties to obligation relations shall be free, within the limits of compulsory legislation, public order and fair practices, to arrange their relations according to their volition.
Equality of Parties
Article 11
Parties to an obligation relation shall be equal.
Principle of Good Faith and Honesty
Article 12
In establishing obligation relations and realizing rights and duties out of these relations, the parties shall adhere to the principles of good faith and honesty.
Prohibition of Abuse of Rights
Article 13
(1) It shall be prohibited to exercise a right arising from obligation relations contrary to the purpose established or recognized by law regarding such right.
(2) (Deleted)
Prohibition of Creation and Abuse of a Monopoly Position
Article 14
In establishing obligation relations the parties shall not create rights and duties by which a monopoly position is created or used in the market.
Principle of Equal Considerations
Article 15
(1) In establishing bilateral contracts parties shall start from the principle of equality of mutual considerations.
(2) Cases shall be determined by law where violation of this principle invokes legal consequences.
Prohibition of Causing Injury or loss
Article 16
Everyone shall refrain from an act which may cause injury or loss to another.
Duty to Perform Obligations
Article 17
(1) Parties to an obligation relation shall perform their obligation and be liable for its performance.
(2) An obligation may be cease only by consent of volition by the parties to the obligation relation or by operation of law.
Conduct in Carrying Out Obligations and Exercising Rights
Article 18
(1) In carrying out his obligation, a party to an obligation relation shall act with the care required in legal transactions applicable to the relevant kind of obligation relation (duty of care of a good businessman, i.e. duty of care of a good master of the house).
(2) In carrying out obligation relating to his professional activity, a party to an obligation relation shall act with increased care, in line with professional rules and usage (duty of care of a good expert).
(3) In exercising his rights, a party to an obligation relation shall refrain from an act which could hinder the performance of the obligation of the other party.
Settling Disputes in a Peaceful Way
Article 19
Parties to an obligation relation shall try to settle disputes by reconciliation, mediation or in some other peaceful manner.
Dispositive Character of Law’s Provisions
Article 20
Parties may regulate their obligation relation in a way different from the one specified by the present Law, unless something else follows from a particular provision of the present Law, or from its general meaning.
Applicability of Fair Trade Usage
Article 21
(1) Parties to obligation relations shall act in legal transactions in accordance with fair trade usage.
(2) Trade usage shall apply to obligation relations if the parties to the obligation relations have stipulated their application, or if the relevant circumstances imply that they wanted such application.
Acting in Accordance with Bylaws
Article 22
(1) In establishing an obligation relation, legal persons shall act in accordance with their bylaws.
(2) However, a contract entered into, or some other legal action taken, contrary to these bylaws shall remain valid, unless the other party was aware of that, or must have been aware, or unless otherwise provided by the present Law.
Applicability of other Federal Laws
Article 23
Provisions of the present Law shall apply to obligation relations regulated by other federal laws in matters not regulated by these laws.
Article 24*
(Repealed by the decision of the CCY)
Application of Particular Provisions
Article 25
(1) Provisions of the present Law relating to contracts shall apply to all kinds of contracts, unless expressly otherwise determined for contracts in the sphere of the economy.
(2) In terms of the present Law, the contracts in the sphere of the economy shall be the contracts that companies and other legal persons that are engaged in economic activity, as well as shop owners and other individuals performing an economic activity through a registered profession, conclude among themselves in carrying out the activities that constitute the subject matter of their business or are connected to such activities.
(3) Provisions of the present Law relating to contracts shall in addition apply mutatis mutandis to other legal transactions.
ORIGIN OF OBLIGATIONS
CONTRACT
CONCLUDING A CONTRACT
When a Contract Is Concluded
Article 26
A contract shall be concluded when the contracting parties have come to an agreement about the essential elements of the contract.
Mandatory Conclusion and Mandatory Contents of a Contract
Article 27
(1) Should someone be under a legal duty to enter into a contract, the person interested may request that such contract be immediately concluded.
(2) Legislative provisions that, partially or entirely, determine the contents of contracts shall be the integral parts of such contracts, so as to supplement or replace contractual provisions not conforming to them.
Expression of Volition
Article 28
(1) Volition to conclude a contract may be expressed by words, usual signs or other conduct, on the grounds of which one may safely confirm its existence.
(2) Expression of volition shall be made freely and seriously.
Permission and Approval
Article 29
(1) When consent of a third party is required to conclude a contract, such consent may be expressed prior to concluding the contract, as permission, or after its conclusion, as approval, unless otherwise provided by law.
(2) Permission i.e. approval shall be expressed in the form prescribed for contracts for whose conclusion they are expressed.
(3) But, should consent be given for concluding a contract, for which a form of a publicly certified (solemnized) legal instrument or a notary deed has been prescribed, it shall be sufficient that the signature of the consent giver is verified.
Negotiations
Article 30
(1) Negotiations preceding the conclusion of a contract shall not be binding, and each party may interrupt them at any moment.
(2) However, a party conducting negotiations without intent to conclude the contract shall be liable for injury or loss caused by conducting such negotiations.
(3) A party conducting negotiations with intent to conclude a contract, but afterwards withdrawing without a justified reason, thus causing injury or loss to the other party shall also be liable for injury or loss.
(4) Unless otherwise agreed, each party shall bear their own expenses relating to preparations for concluding a contract, while joint expenses shall be shared equally between the parties.
Time and Place of Contract Conclusion
Article 31
(1) A contract shall be concluded at the moment when the offeror receives the statement of the offeree that the offer is accepted.
(2) A contract shall be considered concluded at the place at which the offeror had his seat of business, i.e. domicile, at the moment of making the offer.
Offer
Article 32
(1) An offer shall be a proposal for concluding a contract made to a specific person, which contains all essential elements of a contract, so that by its acceptance a contract could be concluded.
(2) Should contracting parties, after reaching agreement on essential elements of a contract, leave out some secondary items for later, the contract shall be considered concluded, while such secondary items - should contracting parties themselves fail to reach agreement on them - shall be regulated by a court taking into account the prior negotiations, established practice between the contracting parties, and usage.
General Offer
Article 33
A proposal to conclude a contract made to an unspecified number of persons, which contains essential elements of a contract for whose conclusion it is intended for, shall be valid as an offer, unless otherwise follows from circumstances of the case or from usage.
Display of Merchandise
Article 34
Display of merchandise with indication of a price shall be considered as offer, unless something else follows from circumstances of the case or from usage.
Sending Catalogues and Advertisements
Article 35
(1) Sending catalogues, price-lists, price rates and other information, as well as advertisements published in the press, presented by way of leaflets, by radio, television or in some other way, shall not represent an offer to conclude a contract, but only an invitation to make an offer under the terms annouced.
(2) However, a sender of such an invitation shall be liable for injury or loss that the offeror would sustain after failing, without a justified reason, to accept his offer.
Effect of an Offer
Article 36
(1) An offeror shall be bound by the offer unless he excluded his obligation to honor the offer, or if such exclusion implies from circumstances of the transaction involved.
(2) An offer may be withdrawn only if the offeree has received the withdrawal prior to receiving the offer or simultaneously with it.
Until when does the Offer Bind
Article 37
(1) An offer with an indication of the time limit for its acceptance shall bind the offeror until the expiration of that time limit.
(2) Should the offeror indicate the acceptance time limit in a letter or a telegram, it shall be considered that such time limit has commenced to run from the date indicated in the letter, i.e. from the day the telegram was handed over to the post-office.
(3) In the case of an undated letter, the time limit for acceptance of the offer shall run from the day when the letter was handed over to the post-office.
(4) An offer made to an absent person, wherein no acceptance time limit was indicated, shall be binding for the offeror in the course of a period usually needed for the offer to reach the person offered, for him to consider it, to decide on it, and for the answer confirming the acceptance to reach the offeror.
Form of an Offer
Article 38
(1) An offer for a contract for whose conclusion there are special statutory requirements regarding its form, shall be binding on the offeror only after being made in such form.
(2) The same shall also apply to acceptance of the offer.
Acceptance of Offer
Article 39
(1) An offer shall be accepted when the offeror receives a statement from the offeree that he accepts the offer.
(2) An offer shall also be accepted when the offeree delivers an item or pays the price, as well as when he does something else, which, based on the offer, established practice between the interested parties or usage, may be considered as a statement of acceptance.
(3) Acceptance may be withdrawn if the offeror acknowledges a statement of withdrawal prior to the statement of acceptance, or simultaneously with it.
Acceptance of a Direct Offer
Article 40
(1) An offer made to a person present shall be considered rejected if not accepted immediately, unless the circumstances of the case indicate that the offeree was entitled to a certain time to deliberate.
(2) An offer made by telephone, teleprinter or through direct radio communication shall be considered as offer made to a person who is present.
Acceptance of Offer with a Proposal to amend it
Article 41
Should the offeree state that he accepts the offer, but at the same time suggests that it should be somewhat amended or supplemented, it shall be considered that he rejected the offer and that he made a counter offer to his former offeror.
Silence of the Offeree
Article 42
(1) Silence of the offeree shall not mean that the offer was accepted.
(2) A provision in an offer according to which silence of the offeree, or some other omission on his part (for instance, failure to refuse the offer within the indicated time limit, or failure to return a sent item that is the subject of the offered contract, within the indicated time limit, and the like) can be considered as acceptance, shall be without effect.
(3) However, if the offeree is in permanent business relations with the offeror in respect of specific merchandise, it shall be considered that he has accepted the offer concerning such merchandise, if he has failed to reject it immediately, or within the indicated time limit.
(4) In the same manner, a person offering to carry out another's orders concerning the performance of specific transactions, as well as a person whose professional activity includes carrying out such orders, shall carry out the order received unless he has refused it immediately.
(5) Should, in the case specified in the preceding paragraph, the offer i.e. the order was not refused, it shall be considered that the contract has been concluded at the moment when the offer, i.e. the order has reached the offeree.
Late Acceptance and Late Submission of the Acceptance Statement
Article 43
(1) Delayed acceptance of an offer shall be treated as a new offer made by the offeree.
(2) However, should the acceptance statement made on time reach the offeror after the expiration of the acceptance time limit, and the offeror knew or should have known that such statement was submitted on time, the contract shall be concluded.
(3) However, the contract in such a case shall not be concluded should the offeror, immediately or at the latest on the following workday after acknowledging the statement, or even prior to acknowledgment of the statement and after the expiration of the time limit for acceptance of the offer, inform the offeree that, due to the delay, he does not consider himself bound by his own offer.
Death or Lack of Capacity of One Party
Article 44
An offer shall not lose its effectiveness if death or lack of capacity of one party appeared prior to its acceptance, unless the contrary follows from intent of the parties, usage, or the nature of the transaction.
Preliminary Contract
Article 45
(1) A preliminary contract shall be such a contract by which a duty is assumed to conclude, at a later time, the main contract.
(2) Legislation governing the form of the main contract shall also apply to the preliminary contract, should the prescribed form be a prerequisite for the validity of the contract.
(3) A preliminary contract shall be binding if it contains the essential elements of the main contract.
(4) At the request of an interested party, a court shall order the other party refusing to come forward and conclude the main contract, to act accordingly within the time limit to be ordered to such party.
(5) Conclusion of the main contract may be requested within a time limit of six months, beginning with the expiration of the time limit provided for its conclusion, and should such time limit not be provided for, beginning with the day on which, according to the nature of the transaction and circumstances of the case, such contract was supposed to be concluded.
(6) A preliminary contract shall not be binding should circumstances after its conclusion change to a degree that such preliminary contract would not have been concluded at all if such circumstances had existed at the time.
Notion and Features of Obligation’s Subject Matter
Article 46
(1) A contractual obligation may consist of giving, acting, failing to act, or enduring.
(2) It shall be possible, permitted, and specific, i.e. determinable.
Void Contract due to its Subject Matter
Article 47
When the subject matter of an obligation is impossible, unpermitted, unspecified or undeterminable, the contract shall be void.
Subsequent Possibility
Article 48
A contract conclude under a postponing condition or time limit shall be valid, should the subject matter of obligation, being impossible at the beginning, become possible prior to taking effect of such condition or expiration of the time limit.
When the Subject Matter of the Obligation is Unpermitted
Article 49
A subject matter of an obligation shall not be permitted if it is contrary to compulsory legislation, public order or usage.
When the Subject Matter is Determinable
Article 50
(1) A subject matter of an obligation shall be determinable if the contract contains the data whereby it can be determined, or the parties have left such determination to be effected by a third party.
(2) Should the third party be unwilling or unable to determine the subject matter of the obligation, the contract shall be void.
Permitted Grounds
Article 51
(1) Every contractual obligation must have permitted grounds.
(2) Grounds shall be unpermitted if they are contrary to compulsory legislation, public order or usage.
(3) It shall be presumed that an obligation has grounds even though they are not expressed.
Nullity of a Contract due to Grounds
Article 52
If the grounds do not exist of if they are not permitted, the contract shall be null.
Motives for Concluding a Contract
Article 53
(1) Motives from which a contract is concluded shall not affect its validity.
(2) However, if an unpermitted motive has substantially influenced the decision of one contracting party to conclude the contract, and if the other contracting party was aware of that, or should have been aware of that, such contract shall have no effect.
(3) A gratuitous contract shall also have no legal effect when one contracting party did not know that the unpermitted motive substantially influenced the decision of the other contracting party.
Legal Person’s Contracts
Article 54
(1) A legal person may conclude contracts in the sphere of legal transactions within the framework of its contractual capacity.
(2) A contract concluded contrary to the provision of paragraph 1 of the present Article shall have no legal effect.
(3) A party in good faith may seek damages for loss suffered through concluding a contract that has no legal effect.
Consent to Conclude a Contract
Article 55
(1) When it is stated in the bylaw of a legal person and entered in the register that its representative may conclude a specific contract only with consent of some of its bodies, such consent may be given in advance, simultaneously or subsequently, unless something else be entered in the register.
(2) The other party shall be entitled to call upon the legal person that its authorized body makes a declaration in an appropriate time limit whether it gives consent, and should such body fail to do so, it shall be considered that the consent has not been given.
(3) Subsequent consent shall have a retroactive effect, unless otherwise stipulated in the contract.
(4) If the consent has not been given, it shall be considered that the contract wasn’t concluded in the first place.
(5) Should according to the provisions of this Article the contract be considered not concluded, a party in good faith may request just compensation from the legal person involved.
(6) Provisions of the preceding paragraphs shall also apply should the bylaw of a legal person provide that its representative may conclude some contract only jointly with a specific body of such legal person.
Contract concluded by a Legally Incapable Person
Article 56
(1) In order to conclude a valid contract a contracting party must have contractual capacity otherwise required for concluding such a contract.
(2) A person having limited contractual capacity may conclude without approval by his legal representative, only contracts whose conclusion is permitted to such person by law.
(3) Remaining contracts of such persons, if concluded without his legal representative's approval, shall be rescindable, but can be made valid by his subsequent approval.
Right of a Contracting Party of a Legally Incapable Person
Article 57
(1) A contracting party of a person having no contractual capacity, who was not aware of his contractual incapacity, may repudiate the contract concluded with him without approval by his legal representative.
(2) The same right applies to a contracting party of a person having no contractual capacity, which was aware of his legal incapacity, but was deceived by him into believing that he had the approval of his legal representative.
(3) This right shall terminate upon expiry of thirty days after awareness of legal incapacity of the other party, i.e. of the lack of legal representative's approval, but it shall also terminate at an earlier date should the legal representative approves the contract prior to the expiration of that time limit.
Calling upon a Legal Representative to Make a Declaration
Article 58
(1) A contracting party of a person having no contractual capacity, who concluded a contract with him without his legal representative's approval, may call upon the legal representative to declare whether he approves such contract.
(2) Should the legal representative fail to declare within thirty days after such call for approving the contract, it shall be considered that he refused to grant approval.
Acquiring Contractual capacity by the Contracting Party after Contract’s Conclusion
Article 59
A person having contractual capacity may request that a contract be nullified, if concluded by him without necessary approval in course of his limited contractual capacity period, only after lodging an action with the court within three months beginning with the day of acquiring full contractual capacity.
Threat
Article 60
(1) Should a contracting party or a third person provoke by unpermitted threat the justified fear of the other party, so that the latter because of that concludes the contract, the other party may request that such contract be nullified.
(2) A fear shall be considered justified should it become evident, on the ground of the circumstances of the case, that there was a serious danger to life, body or other important property of the contracting party or a third person.
Substantial Mistake of Fact
Article 61
(1) A mistake of fact shall be substantial if relating to essential properties of the subject matter, to the person with whom the contract is to be concluded, should the contract is concluded regarding that person, as well as to circumstances considered decisive according to trade usage, or according to the intention of the parties, when the mistaken party would not otherwise have concluded a contract of such contents.
(2) A party mistaken in fact may request nullity of contract on the ground of substantial mistake of fact, unless such party failed to act with the care required in the sphere of trade at the moment of concluding the contract.
(3) Should a contract be nullified because of mistake of fact, the other party who had good faith shall be entitled to claim damages for loss sustained, regardless of lack of fault for the mistake of fact on the part of the mistaken party.
(4) A party mistaken in fact shall not invoke such mistake if the other party is ready to perform the contract as if the mistake in fact had not come about.
Mistake of Fact Relating to Motive in Case of Gratuitous Contract
Article 62
A mistake of fact about the motive as being decisive in assuming the obligation shall also be considered substantial in case of a gratuitous contract.
Misunderstanding
Article 63
Should parties believe they agree, while in fact a misunderstanding exists between them regarding the nature of contract or the grounds or subject matter of obligation, the contract shall not originate.
Indirect Statement
Article 64
A mistake of fact by a person through which a party has declared its volition shall be considered the same as the mistake of fact regarding the party’s own declaration of volition.
Fraud
Article 65
(1) Should one party mislead or continue to mislead the other party with the intention of thus inducing him into entering into contract, the other party may request rescission of the contract even if the mistake was not of a substantial nature.
(2) A party who concluded the contract because of fraud shall be entitled to request damages for loss sustained.
(3) Fraud being an act of a third person shall affect the contract if the other contracting party was aware, or should have been aware, of the fraud at the time of contract’s conclusion.
(4) A gratuitous contract may be also annulled if the fraud was committed by a third person, regardless of whether the other contracting party at the time of entering into contract was aware, or should have been aware, of the fraud.
Simulated Contract
Article 66
(1) A simulated contract shall have no effect for the contracting parties.
(2) But, should the simulated contract hide another contract, that other one shall be valid if the conditions for its legal validity have been met.
(3) The simulated nature of a contract may not be claimed against a third person who has had good faith.
Informality of a Contract
Article 67
(1) Entering into contract shall not be subjected to any form, unless otherwise specified by law.
(2) Any statutory requirement for the conclusion of contract in a specific form shall apply also to all subsequent alterations and supplements to the contract.
(3) However, subsequent verbal supplements regarding secondary matters, not mentioned in the formal contract, shall be valid, unless contrary to the purpose of prescribed form.
(4) Subsequent verbal agreements by which obligations of one or the other party are reduced or facilitated shall also be valid if the specific form was prescribed only in the interest of contracting parties.
Termination of Formal Contracts
Article 68
Formal contracts may be terminated by informal agreement, unless otherwise specified in some cases by law, or unless the purpose for the prescribed form for conclusion of the contract requires that the termination of contract must be performed in the same form.
Agreed Form
Article 69
(1) Contracting parties may agree that a specific form be a condition for validity of their contract.
(2) A contract for whose conclusion specific form is agreed may also be terminated, supplemented or altered in some other way by informal agreement.
(3) If the contracting parties have stipulated a specific form only to serve as evidence of their contract, or to reach some other purpose, the contract shall be concluded when agreement on its contents has been reached, while the contracting parties shall at the same time be bound to provide the contract with the stipulated form.
Sanction for Lack of Necessary Form
Article 70
(1) A contract not concluded in the prescribed form shall have no legal effect, unless something else transpires from the purpose of the regulation providing for the form.
(2) A contract not concluded in the form agreed upon shall have no legal effect if the parties have made the validity of contract dependent on the specific form.
Presumption of Completeness of Document
Article 71
(1) Should a contract be concluded in specific form, either on the ground of law or by volition of the parties, the only valid part shall be the one made in that form.
(2) However, the simultaneous verbal agreements concerning secondary items not mentioned in the formal contract shall be valid, provided they are not contrary to its contents or the reason why the form was prescribed.
(3) Also valid shall be the simultaneous verbal agreements by which obligations of one or both parties are reduced or eased, should the specific form be prescribed only in the interest of the contracting parties.
Making a Document
Article 72
(1) Should making a document in order to conclude a contract be necessary, the contract shall be concluded after such document is signed by all persons assuming obligations under it.
(2) An illiterate contracting party shall put his fingerprint on the document, followed by verification by two witnesses or by the court, i.e. by some other authority.
(3) In concluding a bilateral contract it shall be sufficient for both parties to sign one document, or for each party to sign a copy of the document intended for the other party.
(4) The requirement of the written form shall be met by the parties exchanging letters, or by their coming to agreement by way of teleprinter or some other means making possible the exact determination of the contents of their statements and of their identities.
In Case of Performing a Contract Lacking the Form
Article 73
A contract whose conclusion is made dependent on the written form shall be considered valid although not entered into in such form, after contracting parties have performed, entirely or substantially, the obligations arising from such contract, unless something else obviously results from the purpose of prescribing the form.
Conditions and their Effect
Article 74
(1) A contract shall be held conditionally concluded should its origination or termination depend on an uncertain fact.
(2) After being concluded under a postponable condition and after such condition is fulfilled, the contract shall take effect from its conclusion, unless something alse follow according to law, the nature of transaction, or the volition of the parties.
(3) After being concluded under a rescinding condition, the contract shall cease to be valid after such condition is fulfilled.
(4) A condition shall be considered fulfilled should its fulfillment, contrary to the principle of good faith and honesty, be prevented by the party with the burden of such condition while it shall be considered that it was not fulfilled should its fulfillment, contrary to the principle of good faith and honesty, be caused by the party in whose favour such condition is set forth.
Prohibited or Impossible Condition
Article 75
(1) A contract shall be void if it contains a postponable or rescinding condition which is contrary to compulsory regulations, public order or fair usage.
(2) A contract entered into under an impossible postponable condition shall be void, while an impossible rescinding condition shall be considered as non-existent.
Protecting a Right Made Dependent on a Condition
Article 76
In the case of a contract entered into under a postponable condition, the creditor whose right is thus made dependent may request adequate protection of such right if its realization is imperiled.
Calculation of Time
Article 77
(1) A time limit specified in days shall commence on the first day after the event serving as the beginning of calculating the time limit, and shall terminate with the expiry of the last day of the time limit.
(2) A time limit specified in weeks, months or years shall terminate on the day which coincides in name and number with the day when the event serving as the beginning of the commencement of the time limit happened, and should there be no such day in the last month, the end of the time limit shall fall on the last day of that month.
(3) Should the last day of the time limit fall on the day determined by law as a non-working day, the following workday shall be counted as the last day of the time limit.
(4) The beginning of the month shall mean the first day of the month, the middle - the fifteenth, and the end - the last day of the month, unless something else follows from the intent of the parties, or the nature of the contractual relationship.
Application of Rules Relating to Condition
Article 78
Where a contract becomes effective at a specified time, the rules relating to the postponing condition shall apply mutatis mutandis, while should the contract cease to be valid after the expiration of the specified time limit, the rules relating to rescinding condition shall apply mutatis mutandis.
IX Deposit and repudiation fee
Paying Back and Including the Deposit
Article 79
(1) Should at the moment of concluding a contract one party give to the other a certain amount of money or certain quantity of other generic things as a sign of the contract being concluded (a deposit), the contract shall be considered entered into after the deposit is given, unless something else has been agreed upon.
(2) If the contract is performed, the deposit must be given back or included in the performance of the obligation.
(3) Unless otherwise agreed, the party who gave the deposit may not withdraw from the contract by leaving the deposit to the other party, while the other party may not do the same by giving back the doubled deposit.
Breach of Contract
Article 80
(1) Should a party that gave the deposit be responsible for breach of contract, the other party may request, at his choice, the fulfillment of the contract, should this still be possible, or seek damages, while including the deposit in such redress, or may give it back, or stay satisfied with deposit already received.
(2) Should the party receiving the deposit be responsible for breach of contract, the other party may, at his choice, request the fulfillment of contract should this be still possible, or request damages and giving back the deposit, or request giving back the doubled deposit.
(3) In any case, after the other party requested fulfillment of contract, such party shall also be entitled to damages for loss caused by the delay.
(4) After a request by the interested party, the court may reduce an excessively high deposit.
In Case of Partial Performance of Obligation
Article 81
(1) In case of partial performance of an obligation, the creditor may not keep the deposit but may instead request performance of the remaining part of the obligation and demages for loss caused by the delay, or may request damages for loss caused by incomplete performance; in both cases, however, the deposit shall be included in the amount of damages.
2) Should the creditor terminate the contract and return what he has received as partial performance, he may choose one of the remaining claims belonging to one party where a contract is not performed through fault of the other party.
The Role of a Repudiation Fee
Article 82
(1) Contracting parties may agree that one or both parties be authorized to repudiate the contract by paying a repudiation fee.
(2) After a party in whose favor the repudiation fee was stipulated communicates to the other party his intention to pay the repudiation fee, such party may no longer request fulfillment of the contract.
(3) A party authorized to repudiate shall pay the repudiation fee simultaneously with a statement on repudiation.
(4) Should contracting parties fail to determine the time limit for the authorized party to repudiate the contract, such party may take such action until the expiration of the time limit determined for the performance of his obligation.
(5) This right of repudiation of contract shall also terminate after the party benefitting from it under the contract, begins to perform his obligations arising from that contract, or begins to accept performance by the other party.
Deposit as a Repudiation Fee
Article 83
(1) Should it be agreed that the deposit includes the right to repudiate the contract, the deposit shall be considered as a repudiation fee, and each party shall be entitled to repudiate the contract.
(2) In such a case, should a party that gave the deposit repudiate, such party shall lose it, and should a party receiving the deposit repudiate, such party shall give it back in double.
AGENCY
Possibility of Agency
Article 84
(1) A contract like any other legal transaction may be undertaken through an agent.
(2) Authority for agency shall be based on law, bylaw of a legal person, an act of a competent body, or on expression of volition of the person represented (authorization).
Effects of Agency
Article 85
(1) A contract concluded by an agent on behalf of the person represented, and within the limits of his authority, shall be directly binding for the person represented, and for the other contracting party.
(2) In addition and under the same conditions, other legal transactions of the agent shall produce direct legal effects on the person represented.
(3) An agent shall inform the other party that he acts on behalf of the represented person, but even after failing to do so, the contract shall produce legal effects on the represented person and the other party, should the latter one knew or was able, on the ground of relevant circumstances, to conclude that he has been acting as an agent.
Transferring Authority
Article 86
(1) An agent may not transfer his authority to another, unless entitled to do so by law or contract.
(2) As an exception, he may do the above if, due to some circumstances, he was prevented to personally perform the transaction, provided the interests of the represented person require an immediate performance of the legal transaction.
Transgressing the Limits of Authority
Article 87
(1) Should an agent transgress the limits of authority, the represented person shall assume an obligation only after approving of the transgression.
(2) Should the represented person fail to approve the contract within the time limit usually necessary for considering and assessing such kind of contract, the approval shall be considered denied.
(3) The approval specified in the preceding paragraph shall have retroactive effect, unless the parties decide otherwise.
(4) Should the other party not be aware, or should not have been aware of the transgression of authority, he may, immediately after becoming aware of the transgression, and not waiting for the statement of the represented person concerning the contract, declare that he does not consider himself bound by the contract.
(5) Should the represented person deny the approval, the agent and the represented person shall be jointly and severally liable for loss caused to the other party, provided such party was not aware, or did not have to be aware of the transgression of authority.
Entering Into Contract by Unauthorized Person
Article 88
(1) A contract concluded by a person, as agent, on behalf of another and without his authorization, shall be binding for the person represented without authority only after his subsequent approval of the contract.
(2) A party with whom the contract was concluded may request from the person represented without authority to declare within an appropriate time limit whether he approves the contract.
(3) Should the person represented without authority fail to approve the contract even in the indicated time limit, the contract shall be considered as not concluded.
(4) In such case, a party with whom the contract was concluded may claim damages from the person who, as an agent, concluded the contract without proper authorization, when, at the moment of concluding the contract, that party was not aware, or was not supposed to be aware, that such person had no authority to enter into contract.
Issuing an Authorization
Article 89
(1) An authorization shall be a power of agency issued by the person granting the authority by way of legal transaction, to the proxy.
(2) Existence and scope of authorization shall be independent of any legal relationship serving as grounds for issuing the authorization.
(3) A legal person may also be authorized to act as a proxy.
Particular Form of Authorization
Article 90
(1) The form prescribed by law for a contract or some other legal transaction shall apply also to the authorization for concluding such contract, i.e. for engaging in such transaction.
(2) But, when authorization is given for entering into a contract or engaging in some other legal transaction for which a form of a publicly certified (solemnized) document or a notarial deed has been prescribed, it shall be sufficient that the signature of the grantor of authority is verified.
The Scope of Authority
Article 91
(1) A proxy may undertake only those legal transactions which fall within the scope of his authorization.
(2) A proxy supplied with general authorization may undertake only those legal transactions which fall within the sphere of regular business.
(3) A transaction not falling within the sphere of regular business may be undertaken by the proxy only if he is particularly authorized to undertake that transaction i.e. that kind of a transaction.
(4) A proxy may not, without particular authorization extended for each separate case, assume an obligation relating to bills of exchange, conclude a contract on guarantee, on settling accounts, on an arbitration tribunal, as well as renounce a right without consideration.
Revocation and Restriction of Authorization
Article 92
(1) The person granting the authority may freely restrict or revoke the authorization, even after renouncing such right by contract.
(2) Revocation and restriction of any kind of authorization may be done by statement without particular form.
(3) Should revocation or restriction of authorization cause breach of a contract creating an order, or contract for specific services, or some other kind of contract, the proxy shall be entitled to damages for loss suffered.
Effect of Termination and Restriction of Authorization on Third Persons
Article 93
(1) Revocation of authorization, as well as its restriction, shall have no effect on a third person who has concluded a contract with the authorized person, or effected some other legal transaction, without being aware, or without having to be aware of the fact that the authorization has been revoked i.e. restricted.
(2) In such a case a person granting the authority shall be entitled to claim damages for loss from the proxy, sustained through the above, unless the proxy was not aware, or had not to be aware of the revocation, i.e. restriction of the authorization.
(3) The same shall also apply in other cases of termination of the authorization.
Other Cases of Termination of Authorization
Article 94
(1) An authorization shall terminate with the termination of a legal person authorized by it, unless otherwise prescribed by law.
(2) An authorization shall terminate in case of death of the proxy.
(3) An authorization shall be terminated with the termination of a legal person, i.e. after death of a person granting it unless a transaction already commenced cannot be interrupted without injury or loss to legal successors, or should the authorization continue to be valid also in case of death of the person granting it, either according to his volition or due to the nature of the transaction.
Who May Grant Authorization and its Contents
Article 95
(1) A business authorization may be granted within the limits of law by a company, i.e. other legal person, thus authorizing the proxy to conclude contracts and engage in other transactions which are usual in the performance of their business activity.
(2) A business proxy may not sell or mortgage real property, assume bill of exchange obligations, or obligations of guarantee, take loans and engage in litigation in court, unless particular authorization covering each of these transactions has been obtained.
(3) A business authorization may be restricted to a specific kind of business transactions, or to specified transactions, but these restrictions shall have effect on a third person only should such person was aware, or had to be aware of them.
Business Authorization of a Sole Trader
Article 96
(1) Provisions concerning business authorization shall apply mutatis mutandis to business authorization of a sole trader.
(2) A business authorization shall not terminate in case of a sole trader's death, or in case of his losing contractual capacity.
IV Authorities of a Travelling Salesman
Article 97
(1) A travelling salesman of a company shall be authorized to undertake only those transactions that relate to the sale of merchandise, and those listed in the authorization granted to him by the company.
(2) In case of doubt, a travelling salesman shall be considered not authorized to enter into contracts but only to collect orders; however, a contract concluded by him shall remain valid should the grantor of authority approve of it subsequently.
(3) A travelling salesman authorized to sell merchandise, shall not be authorized to collect payment or sell on credit, unless having particular authority to sell on credit.
(4) A travelling salesman shall be authorized to accept for the grantor of authority the complaints due to shortcomings of merchandise, and other statements relating to the performance of contract concluded through his mediation, including the taking of necessary measures on behalf of the grantor of authority, in order to preserve latter's rights stemming out of such contract.
V Authority of Persons performing particular affairs
Article 98
(1) Persons who work in such jobs that involve entering into and performance of specific contracts, such as salesmen in stores, persons that are engaged in specific catering services, persons doing teller jobs in post-offices, banks and the like, shall be authorized by that very fact to enter into and to perform such contracts.
(2) (Deleted)
INTERPRETATION OF CONTRACT
Implementation of Provisions and Interpretation of Disputable Provisions
Article 99
(1) Provisions of a contract shall be implemented in the way they are worded.
(2) In interpreting disputable provisions one should not follow the literal meaning of the terms employed, but inquire instead into the joint intention of contracting parties, so that the provision should be understood so as to be in accordance with principles of the law of obligations, as determined by the present Law.
Unclear Provisions in Particular Cases
Article 100
Should a contract be concluded according to content printed in advance, or prepared and proposed in some other way by one of the contracting parties, unclear provisions shall be interpreted so as to benefit the other party.
Supplementary Rule
Article 101
Unclear provisions in a gratuitous contract should be interpreted in the way less strict for the debtor, while in case of a contract with consideration - in the way which establishes an equitable relationship between mutual commitments.
Out-of-Court Interpretation of Contract
Article 102
(1) Contracting parties may provide that a third person shall interpret the contract in case of disagreement concerning the meaning and scope of contractual provisions.
(2) In such a case, unless otherwise specified by contract, the parties may not file an action with the court or other competent agency, prior to obtaining interpretation of the contract, unless the third person refuses to give an interpretation of the contract.
CONTRACT NULLITY
Nullity
Article 103
(1) A contract contrary to compulsory regulations, public order or fair usage shall be void unless the purpose of the rule violated refers to another sanction, or unless the law provides for something else in the specific case.
(2) Should entering into a particular contract be prohibited to one party only, the contract shall remain valid, unless otherwise provided by law for the specific case, while the party violating the statutory prohibition shall suffer corresponding consequences.
Consequences of Nullity
Article 104
(1) In case of nullity of contract each contracting party shall restitute to the other that what is received on the ground of such a contract, and should this be not feasible, or should the nature of that what has been performed prevent the action of restitution, an adequate redress in money shall be given according to prices at the time of passing the court decision, unless otherwise provided by law.
(2) However, should a contract be void because of its contents or purpose being contrary to compulsory regulations, public order or fair usage, the court may either, entirely or partially, deny the request of the party not being in good faith for the restitution of that what has been given to the other party, or decide that the other party must hand over the value received on the ground of the prohibited contract to the municipality in whose territory such party has its seat of business, i.e. domicile or residence.
(3) In deciding, the court shall take into account the good faith of one or both parties, the significance of endangered property or interests, as well as the existing conceptions of morality.
Partial Nullity
Article 105
(1) Nullity of a contractual provision shall not imply nullity of the entire contract, if it can stand without the null provision and should such provision be neither a requirement for contract nor a motive decisive for making it.
(2) But the contract shall remain valid even should the null provision be a requirement or a decisive motive of contract, after nullity was established exactly in order for the contract to be exempted from such provision and to become valid without it.
Conversion
Article 106
Should a null contract meet the requirements for validity of some other kind of contract, such other contract shall be valid for the contracting parties, should this be in conformity with the purpose envisage by the contracting parties at the moment of entering into contract, and should it be possible to presume that they would enter into such contract had they been aware of the nullity of their contract.
Subsequent Disappearance of the Cause of Nullity
Article 107
(1) A null contract shall not become valid if the prohibition or other cause of nullity subsequently disappeared.
(2) However, nullity shall not be claimed should the prohibition be of minor importance and after the contract has been performed.
Liability of Person at Fault for Nullity of Contract
Article 108
A contracting party at fault because of entering into a null contract shall be liable to the contracting partner for loss suffered due to nullity of contract, if the latter was not aware or, according to circumstances, did not have to aware, of the existence of the cause of nullity.
Claiming Nullity
Article 109
(1) The court shall keep in view the nullity ex officio, while it may be claimed by every person interested.
(2) A public prosecutor shall also be entitled to claim nullity.
Unlimited Right to Claim Nullity
Article 110
The right to claim nullity shall not expire.
When a Contract is Rescindable
Article 111
A contract shall be rescindable after being concluded by a party having a limited contractual capacity, should its conclusion be followed by shortcomings in terms of volition of the parties, or should this be determined by the present Law or a particular regulation.
Nullifying a Contract
Article 112
(1) A contracting party in whose interest the rescission was stipulated may request that the contract be nullified.
(2) But such party's contracting partner may request from him to declare, in a specified time limit not shorter than thirty days - as to whether he is going to honour the contract or not, since in the contrary case that partner shall consider the contract nullified.
(3) Should the contracting party being addressed fail to declare within the above time limit, or should he state that he shall not honor the contract, the contract shall be considered nullified.
Consequences of Annulment
Article 113
(1) Should on the ground of nullified rescindable contract some commitment be honoured, restitution shall be effected, and should this prove not feasible, or should the nature of that what has been honoured be incompatible with the restitution, a redress in money shall be realized.
(2) Redress in money shall be realized at the prices at the time of restitution, i.e. at the time of rendering the court decision.
Restitution and Redress in Case of Nullification of a Contract of a Person with Limited Contractual capacity
Article 114
After a contract is nullified due to limited contractual capacity of one contracting party, the contracting partner of such person may request only the restitution of that part of the honoured commitment which forms the property of the person with limited contractual capacity, or which was used to his benefit, as well as the restitution of that what was intentionally destroyed or transferred to another.
Liability for Nullification of a Contract
Article 115
A contracting party at fault for the cause of rescinding a contract shall be liable to his contracting partner for loss sustained due to the contract being annulled if the latter was not aware or did not have to be aware of existence of the cause of contract’s rescission.
Liability of a Person with Limited Contractual Capacity
Article 116
A person with limited contractual capacity shall be liable for loss caused by nullifying a contract if he cunningly persuaded his contracting partner that he was a person with contractual capacity.
Termination of Rights
Article 117
(1) A right to claim nullity of a rescindable contract shall terminate by expiration of one year period from becoming aware of the grounds for rescinding, i.e. after the termination of coercion.
(2) That right shall in any event terminate by expiry of a three year period from the day of entering into contract.
Art. 118-120
(Deleted)
BILATERAL CONTRACTS
I Liability for Substantive and Legal Failure of Performance7
Article 121
(1) In case of a contract with consideration, each party shall be liable for substantive failure of their own performance.
(2) In the same manner, a contracting party shall be liable for legal failure of performance too, and shall protect the other party against third persons' rights and claims, which might exclude or restrict that party's right.
(3) The provisions of the present Law concerning the liability of a seller for substantive and legal failure of performance shall apply mutatis mutandis to these obligations of the transferor, unless otherwise specified for a particular case.
II Non-Performance of Contract as a Ground of Objection
Rule of Simultaneous Performance
Article 122
(1) With bilateral contracts no party shall be bound to fulfill his obligation unless the other party fulfill, or is simultaneously ready to fulfill, his obligation, unless something else is agreed upon by contract, or determined by law, or unless something else results from the nature of transaction.
(2) However, if one party state at court that he is not bound to fulfill his obligation until the other party fulfills theirs, the court shall order him to meet his obligation simultaneously with the other party.
In Case of Becoming Uncertain of Performance of Obligation by One Party
Article 123
(1) Should it be stipulated that one party shall first fulfill his obligation and should, after making the contract, the financial situation of the other party deteriorate so that it becomes uncertain whether such party will be able to fulfill his obligation, the party who promised to fulfill his obligation first, may postpone their fulfillment until the other party fulfill his obligation, or until that party supply sufficient guarantee to fulfill it.
(2) The same shall also apply if the financial situation of the other party was equally serious even prior to making the contract, if the other contracting partner was not aware of this, or was not supposed to be aware.
(3) In such cases the party promising to be the first to fulfill his obligation may request a guarantee to be extended to him in an adequate time limit, while should such time limit expire without result, he may repudiate the contract.
III Termination of a Contract due to Non-Performance
Rights of One Party after the Other Fails to Perform His Obligation
Article 124
With bilateral contracts, if one party fails to perform his obligation, the other party, unless something else has been determined, may request performance of the obligation or, under the terms specified in subsequent Articles, may terminate the contract by simple statement, should termination of contract be not effected by operation of law, and in any case, such party shall be entitled to damages.
Where Performance within a Time Limit is an Essential Element of Contract
Article 125
(1) Should performance within a time limit be an essential element of a contract, and the debtor fails to meet his commitment within such time limit, the contract shall be terminated by operation of law.
(2) However, the creditor may maintain the validity of the contract by informing the debtor, immediately upon expiration of the time limit, that he requests performance of the contract.
(3) If the creditor requested for performance but did not get it within a reasonable time limit, he may state that he terminates the contract.
(4) These rules shall apply both in the case of contracting parties stipulating that the contract shall be deemed terminated unless performed within the specified time limit, and in the case where performing the contract within the specified time limit is an essential element of contract according to the nature of transaction.
Performance within Time Limit as a Non Essential Element of Contract
Article 126
(1) Should performance of obligation within a specified time limit be not an essential element of contract, the debtor shall preserve the right to perform his obligation even after the expiration of the time limit, and the creditor to request its performance.
(2) Should the creditor wish to terminate the contract, he shall leave the debtor an appropriate subsequent time limit for performance.
(3) Should the debtor fail to perform the obligation within the subsequent time limit, the same consequences shall take place as are otherwise applicable in the case of a time limit being an essential element of contract.
Termination of Contract without Leaving a Subsequent Time Limit
Article 127
A creditor may terminate the contract without leaving the debtor a subsequent time limit for performance, should the debtor's conduct indicate that he will fail to perform his obligation even in course of subsequent time limit.
Termination of Contract Prior to Expiration of the Time Limit
Article 128
Should prior to the expiration of the time limit for performing the obligation it become obvious that one party is not going to meet his contractual obligation, the other party may terminate the contract and claim damages.
Termination of Contract with Consecutive Obligations
Article 129
(1) Should in a contract with consecutive obligations one party fail to perform one obligation, the other party may, in a reasonable time limit, terminate the contract regarding all future obligations, should existing circumstances obviously indicate that they, too, are not going to be performed.
(2) That party may terminate the contract not only regarding future obligations, but also regarding obligations already performed should their performance alone be of no interest to him.
(3) The debtor may preserve the contract after supplying an adequate security.
Duty of Notification
Article 130
A creditor intending to terminate the contract due to the debtor’s failure to perform obligation, shall notify the debtor thereof immediately.
The Case of Impossible Termination
Article 131
A contract may not be terminated due to non-performance of a miniscule part of the obligation.
Effect of Termination
Article 132
(1) After a contract is terminated both parties shall be released from their obligations, except the obligation of compensating for subsequent loss.
(2) A party performing a contract entirely or partially shall be entitled to restitution of that what was given.
(3) If both parties are entitled to claim restitution of what was given, mutual restitution shall be executed according to rules of performance of bilateral contracts.
(4) Each party shall owe to the other compensation for benefits enjoyed in the meantime from that what he is obliged to restitute, i.e. compensate.
(5) A party paying back money shall pay default interest from the day of receiving the payment.
IV Termination or Alteration of Contract due to Changed Circumstances
Prerequisites for Termination
Article 133
(1) Should after concluding the contract circumstances emerge which hinder the performance of the obligation of one party, or if due to them the purpose of the contract can not be realized, while in both cases this is expressed to such a degree that it become evident that the contract meets no more the expectations of contracting parties, and that, generally speaking, it would be unjust to maintain its validity as it stands - the party having difficulties in performing the obligation, i.e. the party being unable, due to changed circumstances, to realize the purpose of contract, may request its termination.
(2) Termination of contract may not be requested if the party claiming the changed circumstances had a duty, at the time of entering into contract, to take into account such circumstances, or if he could have avoided or surmounted them.
(3) A party requesting termination of contract may not claim changed circumstances emerging after the expiration of time limit determined for the performance of his obligation.
(4) A contract shall not be terminated should the other party offer or accept that the relevant terms of contract be altered in an equitable way.
(5) After ruling to terminate contract, a court shall, at the request of the other party, impose a duty against the party requesting termination, to compensate the other party with equitable part of the loss sustained due to that.
Duty of Notification
Article 134
A party authorized due to changed circumstances to request termination of contract shall notify the other party on his intention to request termination, immediately after becoming aware of the emergence of such circumstances, and in case of not acting accordingly he shall be liable for loss sustained by the other party because of failure to be notified about the request on time.
Circumstances Relevant for Court Decision
Article 135
While deciding on termination of contract i.e. its alteration, the court shall be directed by principles of fair dealing, while especially taking into consideration the purpose of the contract, the normal risk involved with such contracts, general interest, as well as the interests of both parties.
Renouncing the Invocation of Changed Circumstances
Article 136
The parties may renounce in advance in their contract the invocation of changed circumstances, unless that is contrary to the principles of good faith and honesty.
V Impossibility of Performance
Impossibility of Performance Not Attributable to either Party
Article 137
(1) Should performance of obligation by one party in a bilateral contract become impossible due to an event not attributable to either party, the other party's obligation shall be terminated too, while a party performing part of his obligation may request restitution according to the rules of restitution in case of unjust enrichment.
(2) In case of partial impossibility of performance due to an event not attributable to either party, one party may terminate the contract should partial performance fail to meet his needs; otherwise the contract shall remain valid, but that party shall be entitled to request proportionate reduction of his obligation.
Impossibility of Performance Attributable to the other Party
Article 138
(1) Should performance of obligation by one party in a bilateral contract become impossibile due to an event attributable to other party, his obligation shall be terminated, while he shall maintain his claim against the other party; such claim, however, shall be reduced by an amount equal to the possible benefit from being released from his own duty.
(2) In addition, such party shall cede to the other party all rights that he would have against third persons relating to the subject of his obligation whose performance has become impossible.
Obvious Disproportion of Mutual Commitments
Article 139
(1) Should an obvious disproportion exist between commitments of contracting parties in a bilateral contract at the time of entering into contract, the party suffering loss may request that the contract be nullified if he was unaware, at the time, or did not have to be aware of the real value.
(2) The right to claim nullity of contract shall expire one year after its conclusion.
(3) Renouncing such right in advance shall have no legal effect.
(4) The contract shall remain valid should the other party offer to raise the commitment up to the real value.
(5) Such disproportion shall give no ground for nullifying a contract relating to games of chance, to auction sales, as well as where a higher price for the property has been paid out of particular affection.
Article 140
(Deleted)
Article 141
(1) A conteract shall be null and void by which someone, while taking advantage of another being in need or in poor material situation, or by using his insufficient experience, recklessness or dependence, stipulates for himself, or in favour of a third person, the benefit which is in obvious disproportion to that what he has given or done to the other, or what he has promised to give or do.
(2) Provisions of the present Law on consequences of nullity and partial nullity of contracts shall apply mutatis mutandis to the usury contract.
(3) Should a person sustaining injury or loss request that his obligation be reduced to a just amount, the court shall honor such request should this be possible, and in such a case the contract with the corresponding alteration shall remain valid.
(4) A person sustaining injury or loss may submit a request for reducing the obligation to a just amount within five years from entering into contract.
VIII General Conditions of Standard clause Contracts
Binding Character
Article 142
(1) General terms and conditions specified by one contracting party, either contained in a standard clause contract or being referred to by the contract, shall supplement particular deals established between contracting parties in the same contract and, as a rule, shall be binding as those.
(2) General terms and conditions must be published in a usual way.
(3) General terms and conditions shall be binding for a contracting party if they were known, or had to be known to such party at the moment of entering into contract.
(4) In case of discord between general terms and conditions and particular deals, the latter shall apply.
Nullity of some Provisions of General Terms and Conditions
Article 143
(1) Provisions of the general terms and conditions shall be null and void if contrary to the very purpose of contract which is concluded, or to fair business usage, even after such general terms and conditions containing them have been approved by a competent agency.
(2) A court may deny application of specific provisions of the general terms and conditions which preclude the other party to raise demurrers, or of those on the ground of which that party loses some contractual rights or loses time limits, or of those which are otherwise unjust or excessively strict towards that party.
Article 144
(Deleted)
Conditions of Assignment
Article 145
(1) Each party in a bilateral contract may, after obtaining the other party's assent, assign the contract to a third person who thus becomes a holder of all of that party’s rights and obligations arising from that contract.
(2) By assigning the contract, the contractual relationship between the assignor and the other party shall be transferred to the assignee and the other party at the moment of acceptance by the other party of the assignment, and if the other party has extended his assent in advance, at the moment of his being notified about the assignment.
(3) An assent to assignment of the contract shall be valid only after being expressed in the form prescribed by statute for the contract assigned.
(4) Provisions concerning secondary rights connected to the contract of assuming a debt shall apply mutatis mutandis to the assignment of contracts.
Liability of Assignor
Article 146
(1) An assignor shall be liable to the assignee for the validity of the contract assigned.
(2) He shall not guarantee to him that the other party shall perform his obligations out of the assigned contract, unless assuming specific duty thereof.
(3) He shall not guarantee to the other party that the assignee shall perform the obligations out of the contract, unless assuming specific duty thereof.
Objections
Article 147
The other party may raise against the assignee all objections arising from the contract assigned, as well as those he is entitled to out of other relationships with him, but not the objections he is entitled to against the assignor.
GENERAL EFFECTS OF CONTRACT
I Creation of Obligations for Contracting Parties
Effects of Contract as between Contracting Parties and their Legal Successors
Article 148
(1) A contract shall create rights and obligations for contracting parties.
(2) A contract shall also affect universal legal successors of the contracting parties, unless something else is contracted or something else result from the nature of contract itself.
(3) A right in favour of a third person may be instituted by contract.
II a Contract in favour of Third Person
Direct Right of Third Person
Article 149
(1) Should someone on his own behalf contractually stipulate a claim in favor of a third person, such third person shall acquire his own and direct right against the debtor, unless something else is stipulated or something else results from circumstances of the transaction.
(2) The contracting party shall be entitled to request that the debtor performs what is contracted in favour of such third person.
Revocation of Benefit to a Third Person
Article 150
(1) A party who contractually stipulated a benefit in favor of a third person may revoke or alter the benefit only until the third person declares his acceptance of what has been contracted in his favour.
(2) Should it be stipulated that the debtor shall perform his obligation to the benefit of the third person only after the death of the contracting party, that party may until then, and even by his will, revoke the benefit contracted in favour of the third person, unless something else result from the contract itself or from relevant circumstances.
Objections of Debtor against a Third Person
Article 151
A debtor may raise against a third person all objections he is otherwise entitled to against a contracting party on the grounds of a contract by means of which the benefit for the third person has been stipulated.
Refusal of a Third Person
Article 152
Should a third person refuse the benefit stipulated for him, or should the contracting party revoke it, the benefit shall belong to the contracting party, unless something else be stipulated or result out of the nature of transaction.
Promise of Action of a Third Person
Article 153
(1) A promise given to another that a third person shall do or shall refrain from doing something, shall not be binding for the third person, while the promiser shall be liable for eventual loss sustained by the other person because the third person is not willing to assume the obligation or execute or refrain from a specific action.
(2) A promiser shall not be liable if he has promised to the other that he shall only intervene with the third person to make him assume a duty to do or refrain from something, but he was not successful in spite of all efforts on his part.
TORTS
GENERAL PRINCIPLES
Grounds for Liability
Article 154
(1) Whoever causes injury or loss to another shall be liable to redress it, unless he proves that the injury or loss was generated without his fault.
(2) Liability shall ensue regardless of fault for injury or loss caused by objects of property or activities generating increased danger for the environment.
(3) Liability for injury or loss regardless of fault shall ensue also in other cases specified by law.
Injury or loss
Article 155
Injury or loss shall be a diminution of someone's property (simple loss) and preventing its increase (profit lost), as well as inflicting on another physical or psychological pain or causing fear (non-material damage).
Demand to Eliminate a Danger of Injury or loss
Article 156
(1) Everyone may demand from another to eliminate a source of danger threatening considerable injury or loss to him or to an unspecified number of persons, as well as to refrain from an activity causing disturbance or danger of loss, should the ensuing disturbance or loss be impossible to prevent by adequate measures.
(2) On the demand of an interested person, the court shall order the taking of adequate measures to prevent the emergence of injury or loss or disturbance, or to eliminate the source of danger, at the expense of the holder of the source of danger, should he himself fail to act accordingly.
(3) Should loss occur in the course of an activity undertaken in the interest of the general public, for which a permit was obtained from a competent agency, the only recovery to be demanded shall concern loss exceeding normal limits.
(4) However, even in such a case, it shall be possible to demand taking socially justified measures in order to prevent the emergence of injury or loss or to reduce it.
Demand to Cease with Violation of Individual Rights
Article 157
(1) Everyone shall be entitled to demand that the court or other competent agency order the cessation of an action which violates the integrity of human personality, personal and family life, and other rights pertaining to his person.
(2) A court i.e. another competent agency may order cessation of the action by threatening the payment of a certain amount of money, determined as a lump sum or per time unit, to the benefit of the person suffering injury or loss.
LIABILITY ON THE GROUND OF FAULT
Existence of Fault
Article 158
Fault shall exist after a tortfeasor has caused injury or loss intentionally or out of negligence.
Non-responsible Persons
Article 159
(1) A person who, due to a mental disease or retarded mental development, or for some other reason is unable to reason, shall not be liable for injury or loss caused to another.
(2) Whoever causes injury or loss to another being in the state of temporary inability to reason shall be liable for it, unless being able to prove that it was not his fault for coming into such state.
(3) If he came into such a state through fault of another; liability shall fall onto the person bringing him into such a state.
Liability of Minors
Article 160
(1) A minor of up to seven years of age shall not be liable for injury or loss caused by him.
(2) A minor of from seven to fourteen years of age shall not be liable for injury or loss, unless proven able to reason while causing the injury or loss.
(3) A minor of fourteen years of age shall be liable according to general rules of tort liability.
Justifiable Self-Defense, State of Emergency, Eliminating Danger from Another
Article 161
(1) Whoever in a justifiable defense causes injury or loss to an assailant shall not be liable to redress it, except in case of exceeding justifiable defence.
(2) Should someone cause injury or loss in a state of emergency, the person sustaining loss may demand recovery from the person at fault in creating the danger of injury or loss, or from persons from whom injury or loss has been eliminated, but from the latter not more than up to the amount of benefit they have obtained through such elimination.
(3) Whoever suffers injury or loss while eliminating a danger of injury or loss to somebody else shall be entitled to demand redress from him for the loss which he has been reasonably exposed to.
Permitted Self-Help
Article 162
(1) Whoever in case of permitted self-help inflicts injury or loss to a person who provoked the need for self-help shall not be liable to redress it.
(2) Permitted self-help shall mean the right of every person to eliminate violation of a right in face of an imminent danger, should such protection be necessary and should the way of eliminating the violation of right correspond to circumstances of emerging danger.
Assent of Person Sustaining Injury or loss
Article 163
(1) Whoever to his own detriment permits another to take an action, may not demand from him recovery of injury or loss caused by such action.
(2) A statement of a person sustaining injury or loss by which he has agreed that harm be done to him through an action forbidden by law shall be null and void.
LIABILITY FOR ANOTHER
Persons Mentally Ill and Mentally Handicapped
Article 164
(1) Liable for injury or loss caused by a person who, due to mental illness or retarded mental development, or for some other reasons, is not able to reason, shall be the person who, on the ground of law or decision by competent authority, or a contract has a duty to supervise him.
(2) Such person may exempt himself from liability after proving that he applied the prescribed supervision, or that injury or loss would have ensued even with applying diligent supervision.
Liability of Parents
Article 165
(1) Parents shall be liable for injury or loss caused to another by their child of up to seven years of age, regardless of their fault.
(2) They shall be exempted from liability should grounds exist for exclusion of liability according to the rules of liability regardless of fault.
(3) They shall not be liable should injury or loss occur while the child was under another person's care and if such person was liable for injury or loss.
(4) Parents shall be liable for injury or loss caused to another by their minor child of over seven years of age, unless proving that the injury or loss took place without their fault.
Joint and Several Liability
Article 166
Should, apart from parents, the child be liable for injury or loss too, their liability shall be joint and several.
Liability of another Person for a Minor
Article 167
(1) Liability for injury or loss caused to another by a minor, while under supervision of a guardian, school or other institution, shall be borne by the guardian, the school, i.e. the other institution, unless they prove that they supervised in the manner they were obliged to, or that injury or loss would have ensued even in spite of applying diligent care in supervision.
(2) Should a minor also be liable for injury or loss, liability shall be joint and several.
Special Liability of Parents
Article 168
(1) Should a duty to supervise a minor not be borne by parents but of some other person, the person sustaining injury or loss shall be entitled to request recovery from the parents should injury or loss be due to bad upbringing of the minor, bad examples or sinful habits transferred to him by his parents, or if the injury or loss can be attributed to the fault of parents in any way.
(2) A person whose duty is the supervision in this case shall be entitled to request from the parents the recovery of the amount of damages paid, if he has redressed the person suffering injury or loss.
Liability on the Ground of Equity
Article 169
(1) Should injury or loss be caused by a person otherwise not liable for it, but recovery cannot be obtained from the person having a duty to supervise him, the court may, should equity so require, and particularly due to material situation of the tortfeasor and the person suffering injury or loss - order the tortfeasor to pay damages, entirely or partially.
(2) Should injury or loss be caused by a mentally competent minor unable to redress it, the court may - should equity so require and more particularly due to material situation of parents and the person suffering injury or loss - obligate the parents to pay damages, entirely or partially, although not being at fault.
THIRD PARTY LIABILITY OF COMPANIES AND OTHER LEGAL PERSONS
Liability of a Company
Article 170
(1) Liable for injury or loss caused by an employee while working or in relation to work, to a third person shall be the company at which the employee was employed at the moment of causing the injury or loss, unless it is proved that the employee, in given circumstances, had proceeded as he should have.
(2) A person sustaining injury or loss shall also be entitled to demand recovery directly from the employee, if he caused the injury or loss with intent.
(3) The provision specified in paragraph 1 of the present Article shall not affect the rules of liability for injury or loss arising from a dangerous object of property or dangerous activity.
Liability of Other Persons
Article 171
(1) Provisions specified in the preceding Article shall also apply to other employers in relation to liability for injury or loss caused by their employees in the course of work or in relation to work.
(2) A person paying damages to a person who has suffered injury or loss caused by an employee, with intent or by gross negligence, shall be entitled to recover from such employee the amount paid.
(3) That right shall expire six months after the payment of damages.
Liability of a Legal Person for Injury or loss Caused by its Body
Article 172
(1) A legal person shall be liable for injury or loss caused by its governing body to a third person in performing or in connection to performing its functions.
(3) Unless otherwise specified by the law for a specific case, a legal person shall be entitled to recover against a person being at fault for injury or loss with intent or by gross negligence.
(3) That right shall expire six months after the payment of damages.
LIABILITY FOR INJURY OR LOSS CAUSED BY DANGEROUS OBJECTS OF PROPERTY OR DANGEROUS ACTIVITY
Presumption of Causality
Article 173
Injury or loss occurring in relation to a dangerous object of property i.e. dangerous activity, shall be treated as originating from such object i.e. activity, unless proven that these were not the cause of injury or loss.
Injury or loss Liability
Article 174
(1) The owner of a dangerous object of property shall be liable for injury or loss caused by it, while for injury or loss caused by a dangerous activity the person performing it shall be liable.
(2) (Deleted)
Unlawfully Seizing Dangerous Object of Property from Owner
Article 175
Should a dangerous object of property be seized from its owner in an unlawful way, the ensuing injury or loss from it shall not be blamed on him, but on the one seizing the dangerous object of property, should the owner be not responsible for that.
Handover of an Object of Property to a Third Person
Article 176
(1) Instead of the owner of object of property, a person to whom the owner has handed over the object of property for use or a person otherwise bound to supervise it, while not being employed by him, shall be liable in the same way as him.
(2) However, in addition to such person, the owner of the object of property shall also be liable, should injury or loss arise from some concealed deficiency or concealed feature of the object of property which were not pointed out to him.
(3) In such case the person liable who has paid damages to the person suffering injury or loss, shall be entitled to request from the owner the entire amount paid.
(4) An owner of a dangerous object of property who entrusts it to a person not trained or not authorized to handle it, shall be liable for injury or loss arising from that object of property.
Exemption from Liability
Article 177
(1) The owner shall be exempt from liability after proving that injury or loss originated from a cause outside of the object of property, whose effect could not have been foreseen, avoided or eliminated.
(2) An owner of the object of property shall also be exempt from liability after proving that injury or loss occurred entirely through an act of the person sustaining injury or loss or a third person, which act could not have been foreseen by him and whose consequences he was not able to avoid or eliminate.
(3) An owner shall be partially exempt from liability if the person sustaining injury or loss partially contributed to the occurrence of injury or loss.
(4) Should injury or loss be partially due to an act of a third person, such person shall be liable to the person suffering injury or loss jointly and severally with the owner of the object of property, while the recovery shall be borne by him proportionally to the degree of his fault.
(5) A person used by the owner while using the object of property shall not be considered as third person.
II Liability in Case of Accidents Caused by a Motor Vehicle in Motion
Article 178
(1) In case of an accident caused by a motor vehicle in motion and provoked entirely through the fault of one owner, the rules of liability on the ground of fault shall apply.
(2) If there is mutual fault, each owner shall be liable for the entire injury or loss suffered by them in proportion to the degree of their fault.
(3) Should neither party be at fault, the owners shall share the liability in equal portions, unless reasons of equity call for something else.
(4) Owners of motor vehicles shall be jointly and severally liable for injury or loss inflicted on third persons.
III Liability of Producer of Defective Objects
Article 179
(1) Whoever puts on sale an object manufactured by him, which due to a defect unknown to him may cause injury or loss to persons or property, shall be liable for injury or loss which could ensue due to such defect.
(2) Manufacturer shall also be liable for dangerous properties of an object after failing to take all necessary measures to prevent injury or loss, which he was able to foresee, by applying a corresponding warning, safe packaging or some other measure.
SPECIAL CASES OF LIABILITY
Liability Because of Terrorist Acts, Street Demonstrations or Public Events
Article 180
(1) A State whose agencies, in conformity to existing regulations, were bound to prevent the following kind of injury or loss, shall be liable for loss due to death, bodily injury or damaging i.e. destroying property of an individual due to acts of violence or terror, as well as in the course of street demonstrations and public events.
(2) Organizers, participants, instigators and helpers in the acts of violence or terror, street demonstrations and public events which are aimed at subverting constitutional order shall not be entitled to damages on these grounds.
(3) The State shall be entitled and shall have a duty to demand redress of the amounts paid, against a person causing the loss or injury.
(4) That right shall become time-barred within the limitation periods specified for the expiration of claims for damages.
Liability of Organizer of Performances
Article 181
An organizer of assemblies of large number of people in closed or open-air spaces shall be liable for loss occuring by death or bodily injury suffered by someone due to emergency circumstances which arise in such situations such as swaying of masses of people, general disorder, and the like.
Liability due to Refusal to Render Necessary Aid
Article 182
(1) Whoever without exposing himself to danger refuses to render aid to a person whose life or health are obviously threatened, shall be liable for damage ensuing it, if, according to the circumstances of the case, he had to foresee such damage.
(2) The court may, on the ground of equity, exempt such person from duty of compensating for the loss or injury.
Liability Relating to Duty to Conclude a Contract
Article 183
A person having a statutory duty to conclude a contract shall be liable for damages, after failing, at the request by an interested person, to conclude such contract immediately.
Liability Relating to Conducting Affairs of General Interest
Article 184
Companies and other legal persons that are conducting a public utility service or other activity of similar nature of general interest shall be liable for loss if they suspend or irregularly conduct their service without justified reason.
INDEMNITY
I Indemnity for damage to Property
Restitution and Indemnity in Form of Money
Article 185
(1) A responsible person shall be liable to re-establish the situation existing prior to the occurrence of injury or loss.
(2) Should re-establishing of the previous situation fail to eliminate the damage entirely, the responsible person shall be liable to pay an indemnity in money to cover for the rest of the damage.
(3) Should restitution be impossible, or should the court find it not necessary for the responsible person to do that, the court shall order such person to pay to the person suffering loss an adequate amount of money as compensation for loss.
(4) At the request of the person suffering loss, the court shall award compensation in money to him, unless the circumstances of the specific case justify the restitution.
When Duty of Compensation is due
Article 186
Obligation to compensate for damage shall be due from the moment of the damage taking place.
Indemnity in Case of Destruction of Object Being Unlawfully Taken Away
Article 187
After an object of property, otherwise unlawfully taken away from the owner, is destroyed due to Act of God, the person responsible shall provide compensation in money.
Indemnity in the Form of an Annuity
Article 188
(1) In case of death, bodily injury or damage to health, indemnity shall, as a rule, be determined in the form of an annuity, either for the life of the injured person or for a definite period.
(2) An awarded annuity as a form of damages shall be paid in advance in monthly installments, unless the court provide otherwise.
(3) The judgment-creditor shall be entitled to demand necessary guarantees for payment of annuities, unless according to circumstances of the case, this would be not justified.
(4) Should the judgment-debtor fail to supply guarantee ordered by the court, the judgement-creditor shall be entitled to demand payment of a lump sum instead of annuities, of an amount established according to the amount of annuities and probable duration of the judgment-creditor's life, after deducting corresponding interest.
(5) The judgment-creditor may also, due to serious causes in other cases, demand - immediately or subsequently - to be paid a lump sum instead of annuities.
II Scope of Indemnity for Damage to Property
Common Damage and Profit Lost
Article 189
(1) A person sustaining damage shall be entitled both to indemnity of common damage and compensation of profit lost.
(2) The amount of damages shall be determined according to prices at the time of the rendering court's decision, unless something else is ordered by law.
(3) In assessing the amount of the profit lost the profit which was reasondably expected according to the regular course of events or particular circumstances, and whose realization has been prevented by an act or omission of the tortfeasor shall be taken into account.
(4) Where an object of property is lost or damaged by a criminal offence committed with intent, the court may determine the amount of indemnity according to the value the object had for the person sustaining damage.
Complete Recovery
Article 190
While also taking into account the circumstances after the occurence of damage, the court shall determine damages in the amount necessary to restore the material state of the person sustaining damage into the state it would have been without the damaging act or omission.
Reducing Indemnity
Article 191
(1) The court may, while taking into account the material situation of the person sustaining loss, order the person liable to pay an indemnity which is lower than the amount of damages if it was not caused either wilfully or by gross negligence, and if the liable person is in poor material situation, so that payment of full indemnity would bring him into poverty.
(2) If the tortfeasor has caused damage while doing something to the benefit of the person sustaining loss, the court may order a lower indemnity, while taking into account the degree of care that the tortfeasor applies in his affairs.
Split Liability
Article 192
(1) A person sustaining loss or injury who has contributed to the occurrence of loss or injury or to its becoming larger than it would be otherwise, shall only be entitled to a proportionally reduced indemnity.
(2) Should it be impossible to establish which part of loss or injury comes from an act of the person sustaining it, the court shall award the indemnity while taking into account the circumstances of the case.
III Particular Provisions on Redressing Property Damage In Case of Death, Bodily Injury and Harm to Health
Salary Lost and Expenses of Medical Treatment and Funeral
Article 193
(1) Whoever causes another person's death shall reimburse the usual expenses of that person's funeral.
(2) He shall also reimburse expenses of that person's medical treatment for injuries inflicted, as well as other expenses relating to medical treatment, including the salary lost due to disability for work.
Right of a Dependent of the Deceased
Article 194
(1) A person who was supported or regularly assisted by the deceased, as well as the one entitled by law to request support from the deceased, shall be entitled to damages for loss sustained due to loss of support, i.e. assistance.
(2) Such loss shall be redressed by paying annuities the amount of which shall be established by taking in consideration all the circumstances of the case, but which shall not be higher than the amount which would have been received by the person sustaining damage from the deceased if he were alive.
Redressing Damage In Case of Bodily Injury or Damage to Health
Article 195
(1) One who inflicts to another bodily injury or impairs his health shall be liable to reimburse his medical expenses, as well as other related necessary expenses, including recovery of the salary lost due to inability to work during medical treatment.
(2) Should the injured person due to total or partial disability lose his salary, or should his needs become permanently increased, or should possibilities of his further development and advancement be destroyed or reduced, the person liable shall pay to the injured one specific annuities as damages for such loss.
Altering the Indemnity Awarded
Article 196
At the request by the person sustaining loss the court may raise the amount of annuities for the future, and it may, at the request by the tortfeasor, reduce or cancel it, should the circumstances be considerably changed which had otherwise been considered by the court in rendering the previous decision.
Non-Transferability of Right
Article 197
(1) The right to indemnity in the form of annuities, due to death of a close relative or due to bodily injury or harm to health, may not be transferred to another person.
(2) The amounts of damages due may be transferred to another person should the amount of indemnity be determined by written agreement between the parties, or by final court decision.
IV Particular Provisions for Redressing Property Damage In Case Of Insult to One's Honour and Spreading False Statements
Article 198
(1) Whoever insults another person's honour or whoever utters or conveys false statements concerning another person's past, knowledge and ability, or concerning anything else of the kind, although being aware, or must have been aware, that these are untrue, thus causing material damage to such person, shall be liable for damages.
(2) However, one shall not be liable for the loss caused who makes the false statement concerning another without knowing that it is not true, should he or the one acknowledging the statement have a serious interest in the matter.
V Indemnity for Non-Material Damage
Making a Judgment or Correction Public
Article 199
In case of violation of an individual right, the court may order that, at the expense of the tortfeasor, the judgment, i.e. the correction, be made public, or it may order that the tortfeasor take back the statement causing the violation, or order something else which would reach the purpose, otherwise apt to be achieved by indemnity.
Money Indemnity
Article 200
(1) For physical pains suffered, for mental anguish suffered due to reduction of life activities, for becoming disfigured, for offended reputation, honour, freedom or rights of personality, for death of a close person, as well as for fear suffered, the court shall, after finding that the circumstances of the case and particularly the intensity of pains and fear, and their duration, justifies it - award equitable damages, independently of redressing the property damage, even if the latter is not awarded.
(2) In deciding on the request for redressing non-material loss, as well as on the amount of such damages, the court shall take into account the significance of the value violated, and the purpose to be achieved by such redress, but also that it does not favour ends otherwise incompatible with its nature and social purpose.
Persons Entitled to Damages in Case of Death or Serious Disability
Article 201
(1) In case of death of a person, the court may award to members of his immediate family (spouse, children and parents) equitable damages for their mental anguish.
(2) Such damages may be also awarded to brothers and sisters should a permanent household unit exist between them and the deceased.
(3) In case of a particularly serious disability of a person, the court may award to his spouse, children and parents an equitable money indemnity for their mental anguish.
(4) The indemnity specified in paragraphs 1 and 3 of the present Article may also be awarded to cohabitee, if a permanent household unit had existed betwen the cohabitee and the deceased, i.e. injured person.
Satisfaction in Specific Cases
Article 202
A person being induced to unlawful intercourse or lewd act by deceit, force or misuse of a relationship of subordination or dependence, as well as a person being a victim of some other criminal offence in violation of personal dignity and morale shall be entitled to equitable damages for mental anguish suffered.
Recovery of Future Damage
Article 203
At the request by a person sustaining loss the court shall also award damages for future non-material loss if, according to regular course of events, it became certain that it will continue.
Inheriting and Assigning a Claim for Indemnity of Non-Material Damage
Article 204
(1) A claim for indemnity of non-material damage shall pass to a successor only after being recognized by a final court decision or by a written agreement.
(2) Under the same conditions such claim may be the subject of assignment, set-off and debt enforcement.
Split Liability and Reduction of Indemnity
Article 205
Provisions on split liability and reduction of indemnity applicable to material loss shall apply mutatis mutandis to non-material damage as well.
LIABILITY OF MULTIPLE PERSONS FOR THE SAME DAMAGE
Joint and Several Liability
Article 206
(1) For loss or injury caused jointly by multiple persons, liability of all participants shall be joint and several.
(2) An inciter and accomplice, as well as one assisting the liable persons in order to prevent discovery, shall be jointly and severally liable with them.
(3) Joint and several liability for loss shall also apply to the persons causing it when they acted independently from one another, should their shares in damage caused be impossible to determine.
(4) Should there be no doubt that damage is caused by one of the two or more specific persons who are in some way interconnected, and should it be impossible to establish who is liable for damage among them, such persons shall be liable jointly and severally.
Joint and Several Liability of Principal and Contractor
Article 207
A principal and a real property contractor shall be jointly and severally liable for loss inflicted to a third person in relation to the execution of such works.
Refunding a Payer
Article 208
(1) A debtor liable jointly and severally paying off an amount higher than his share of damages may demand from any of the remaining debtors the recovery of what he has paid for them.
(2) The court shall determine the amount of share of each individual debtor, considering the degree of their respective faults and the seriousness of consequences of their acts.
(3) Should it be impossible to establish the debtors’ shares, each shall bear an equal share, unless equity requires otherwise in proceeding with the specific case.
RIGHT OF PERSON SUSTAINING LOSS OR INJURY TO CLAIM FOR DAMAGES AFTER THE EXPIRY OF LIMITATION PERIOD
Article 209
After his claim for recovery becomes time-barred, the person sustaining loss or injury may request from the person liable to renounce to him, on the basis of rules applicable to acquiring without grounds, what he acquired by the act causing the loss.
ACQUIRING WITHOUT GROUNDS
GENERAL RULE
Article 210
(1) After part of a person's property is transferred in any kind of way to another, and such transfer has no grounds in any legal transaction or in the law, the one who acquires property in such a way shall be bound to restitute it, and should this be impossible - to compensate the value of benefits gained.
(2) The duty of restitution, i.e. compensation of value shall also arise if something is received on grounds which did not materialize, or which subsequently ceased to exist.
RESTORING RULES
When Restoring cannot be claimed
Article 211
Whoever effects payment while knowing that he is not obliged to pay, shall have no right to claim reimbursement unless he reserves such right or unless he is paying off to avoid duress.
Twofold Payment of a Debt
Article 212
Whoever pays the same debt twice, even if the first payment was made on grounds of an enforceable legal instrument, shall be entitled to claim reimbursement according to general rules of acquiring without grounds.
Fulfillment of a Natural Obligation or a Moral or Social Duty
Article 213
That what is given or done as fulfillment of a natural obligation or a moral or social duty may not be claimed back.
Scope of Restoring
Article 214
In restoring something which is acquired without grounds, the relevant obligation shall include fruit and payment of penalty interest, beginning with the day of acquiring, should the acquirer be dishonest, while otherwise beginning with the day of filing the claim.
Reimbursement of Expenses
Article 215
The acquirer shall be entitled to reimbursement of necessary and beneficial expenses, but if he is dishonest, the reimbursement of beneficial expenses shall be effected only up to the amount representing an increase in value at the moment of restoring.
When the Received Property Can Be Kept
Article 216
No claim can be made for restoring the amounts paid without grounds for damages for loss caused by bodily injury, damage to health or death, after the payment has been made to an honest acquirer.
Use of an Object for the Benefit of Another
Article 217
Should someone use his own or another person's object for the benefit of a third person, and the rules of doing business without an order do not apply, the third person shall be liable to restitute such object, or should this be impossible, to indemnify its value.
Expenses Incurred for Another
Article 218
Whoever pays for expenses or does something else for another person, which otherwise is a statutory duty of such other person, shall be entitled to claim recovery from such person.
Using another Person's Object to One's own Benefit
Article 219
Should someone use another person's object for his own benefit, the owner may, independently of the right to damages, or lack of damages, request that such person compensate for the benefits obtained from such use.
DOING BUSINESS WITHOUT ORDER
GENERAL RULE
Article 220
(1) Doing business without an order means carrying out the transactions of another person, whether legal or material, without order or authority, but on account of the one otherwise normally engaged in them, and for the purpose of protecting that person's interests.
(2) Doing other person's business without invitation is permissible only should the transaction need to be carried out without delay, because of possible immediate danger of damage or loss of an obvious benefit.
DUTIES AND RIGHTS OF A MANAGER WITHOUT ORDER
Duties of a Manager without Order
Article 221
(1) A manager without order shall notify the principal for whom he acts about his act as soon as possible and shall continue the business commenced, should this be reasonably possible, until his principal is able to take over the matter.
(2) After completing the business transaction he shall render account thereof and shall hand over everything he has acquired while doing his business to his principal.
(3) Unless otherwise ordered by statute, a manager acting without order shall have the duties of authorised person.
Due Attention and Liability
Article 222
(1) While doing another person's business, a manager without order shall act according to the real or probable intentions and needs of his principal.
(2) He shall proceed with the care of a good businessman or of a good head of household.
(3) The court may, having regard to the circumstances of someone's engaging in other person's business, reduce his liability or exempt him entirely from liability for negligence.
(4) The rules concerning contractual and tort liability of a legally incapacitated person shall apply to liability of a legally incapacitated manager.
Rights of a Manager without Order
Article 223
(1) A manager without order who has acted in all respects reasonably regarding the circumstances of the case, shall be entitled to request his principal to relieve him of all duties assumed by him because of that business, to take over all duties entered into on his behalf, to redress all his necessary and useful expenses, as well as pay for any eventual loss sustained by him, even should the expected result not be achieved.
(2) He shall also be entitled to adequate compensation for his efforts, after preventing losses of his principal, or after providing him with a benefit entirely corresponding to his intentions and needs.
Carrying on Business on Behalf of Another in Order to Help a Third Party
Article 224
Whoever carries on business on behalf of another in order to help a third party, while there are no grounds for applying the rules of doing business without order, shall be entitled to reimbursement of incurred expenses, but only up to the value of the benefit achieved by the other person.
Removal of Benefits
Article 225
Every manager acting without order or authority shall be entitled to take away objects which are the result of the increase of other person's property, otherwise not being covered in terms of relevant expenses, provided such additions may be separated from a principal object without damage; however, the person having the business may keep such additions after paying to the manager without order the amount of their current value, but not more than the amount of expenses incurred.
MANAGING OTHER PERSON'S AFFAIRS DESPITE A PROHIBITION
Article 226
(1) Whoever carries on business on behalf of another in spite of a prohibition by his principal shall not have the rights of a manager acting without authority, provided he was aware or had to be aware of the prohibition.
(2) He shall be liable for damage caused by interfering in other person's affairs, even should damage occur without his fault.
(3) However, should the prohibition to engage into the affair be contrary to law or morals, and in particular should someone prohibit the other person to fulfill his statutory duties which must not be postponed, the general rules of managing business without authority shall apply.
FALSE MANAGING
Article 227
(1) Whoever engages in other person's business intending to keep the achieved benefit, although being aware that the business belongs to another, shall render account at the request of his principal as a manager without authority, and shall hand over to him all achieved benefits.
(2) The principal may also request the restoring of objects into previous state as well as compensation of the loss sustained.
APPROVAL
Article 228
Should a person having the business subsequently approve of what has been carried out, the manager without authority shall be considered as person having received the authority, and as if he had acted from the beginning by authority of his principal.
UNILATERAL EXPRESSION OF VOLITION
PUBLIC PROMISE OF REWARD
When Binding
Article 229
(1) A promise of a reward made by public announcement to anyone who does something, accomplishes something, puts himself in a particular situation or, if a promise was made under some other condition, shall bind the promisor to make good on his promise.
(2) A promisor of a reward or of any other prize-winning competition shall determine a time limit for the competition, and should he fail to determine it, everyone willing to participate in the competition shall be entitled to request that the court determine an appropriate time limit.
Revocation of Promise
Article 230
(1) A promise may be revoked in the way it is made, as well as by individual statement, but the one doing the act and not knowing or not having to know that the promise is revoked, shall be entitled to claim the promised award, while the one incurring necessary expenses in order to carry out the act as determined in the public announcement, shall be entitled to reimbursement until the revocation, unless the promisor proves that such expenses were made in vain.
(2) A promise of an award may not be revoked if the time limit is determined in the advertisement for the act to be carried out, i.e. for notifying on the result achieved, or on taking place of a particular situation.
Who Is Entitled to Reward
Article 231
(1) The right to the reward shall belong to the one who is the first to carry out the act envisaged by the promise.
(2) Should several persons carry out the act simultaneously, each shall be entitled to an equal share of the reward, unless equity requires a different division.
In Case of an open Competition
Article 232
(1) In the case of an open competition, a decision on the reward shall be made by the organizer of the open competition, or by one or several persons designated by him.
(2) Should the terms of the open competition or other general regulations applicable to specific open competition contain rules for granting the reward, each participant in the open competition shall be entitled to request revocation of a decision on the reward should the reward fail to be granted in conformity with these rules.
(3) Ownership or other rights pertaining to the creation rewarded at an open competition shall be acquired by the organizer of the open competition only if this was indicated in the open competition announcement.
Termination of Obligation
Article 233
The obligation of the promisor of the reward shall be terminated should no one inform him, within the time limit determined in the announcement, that the act has been carried out or an achievement made, or the conditions otherwise fulfilled as set forth in the public announcement, and should the time limit not be determined, such obligation shall be terminated one year after the announcement.
SECURITIES
Notion
Article 234
Securities are written certificates by which their issuer assumes a duty to fulfill the obligation inscribed in such certificate to its legal owner.
Essential Constitutive Elements
Article 235
(1) Securities must contain the following essential constitutive elements:
1) Designation as to the kind of securities;
2) Indication of the firm, i.e. company name and registered office, i.e. name and domicile of the issuer of securities;
3) Indication of the firm i.e. company name or name of the person to whom, i.e. at whose order, securities are made out, or a designation that securities are made out to its bearer;
4) Exact designation of the obligation of the issuer resulting from the securities;
5) Indication of the place and date of issue of the securities, and in case of securities issued in series, their serial number;
6) Signature of the issuer of the securities, i.e. the facsimile of signature of the issuer of securities issued in series.
(2) For some kinds of securities other essential constitutive elements may also be determined by particular law.
(3) A certificate not containing any of the essential constitutive elements shall not be accepted as security.
(4) Securities issued in series and not containing any of the essential constitutive elements thereof, shall have no legal effect.
Making Out of Securities
Article 236
Securities may be made out to the bearer, to a name, or to order.
Creation of Obligation
Article 237
An obligation out of securities shall originate at the moment the issuer of securities hands them over to their beneficiary.
Particular Conditions of Issuing Securities in Series
Article 238
Other terms and conditions of issuing securities in series shall be determined by particular law.
Who Is Entitled to a Right Arising from Securities
Article 239
(1) A claim arising from securities shall be connected to the paper itself and shall belong to its legal possessor.
(2) A bearer of the securities made out to bearer shall be considered to be their legal possessor.
(3) A person to whom the securities are made out, i.e. one receiving duly transferred securities shall be a legal possessor of securities made out to name or to order.
(4) An honest acquirer of securities made out to bearer shall become their legal possessor and he shall be entitled to the claim inscribed on their face even after the securities go out of the control of their issuer, i.e. previous possessor without his agreement.
Who Is Entitled to Request Fulfillment
Article 240
Fulfillment of a claim arising from the securities may be requested, after their presentation for the purpose, only by their legal possessor, i.e. by a person authorized by him.
Transfer of a Right Arising from Securities Made out to Bearer
Article 241
A right arising from securities made out to bearer shall be transferred by their being handed over.
Transfer of a Right Arising from Securities made out to Name
Article 242
(1) A right arising from securities made out to name shall be transferred by way of assignment.
(2) It may be prescribed by particular law that a right arising from securities made out to name may also be transferred by endorsement.
(3) The transfer of a right arising from securities made out to name shall be put into effect by inscribing on the face of the paper an indication as to the firm, i.e. company name, i.e. name of the new possessor, by the transferrer's signature, and by inscribing an indication of the transfer into the securities register should such a register be kept by the issuer.
Transfer of a Right Arising from Securities made out to Order
Article 243
A right arising from the securities made out to order shall be transferred by endorsement.
Kinds of Endorsement
Article 244
(1) An endorsement may be full, general or made out to bearer.
(2) A full endorsement shall contain a statement of the transfer and an indication of the firm, i.e. company name or name of the person receiving the right arising from the securities transferred (the endorsee), and the signature of the transferor (the endorser), and it may also contain other data (such as place and date).
(3) A general endorsement shall contain only the signature of the endorser.
(4) In case of a transfer to bearer the word "to the bearer" shall be inscribed instead of the indication of the name of the endorsee.
(5) An endorsement made out to bearer shall be valid as a general endorsement.
(6) A partial endorsement shall be null.
Transfer of Authorization and Transfer for Pledge
Article 245
(1) Securities may also be transferred in the form of transfer of authorization, i.e. as a transfer for pledge.
(2) In the case of a transfer of authorization the clause "value in the authorization", while in case of transfer for pledge a clause - "value for pledge" or similar shall be indicated.
Effect of the Transfer of a Right
Article 246
(1) By transferring a right arising from securities their new possessor shall acquire all rights otherwise pertaining to the previous possessor.
(2) A transfer of a right arising from securities made out to name, effected either by assignment or endorsement, shall have no effect as regards the issuer unless he is informed thereof in writing, i.e. unless such transfer has been inscribed in the register for securities made out to name, should such register be kept by the issuer.
(3) A transferor i.e. endorser shall not be liable for an issuer's failure to fulfill the obligation, except in the case of a different statutory provision, or of a provision to the contrary inscribed on the face of the security.
Effect of Transfer of Authorization and of Transfer for Pledge
Article 247
A possessor of securities transferred to him as a "transfer of authorization" or "transfer for pledge" may effect all rights arising from such paper, but the paper may be transferred by him to another only as a transfer of authorization.
Proving the Legality of a Transfer
Article 248
(1) The last endorsee shall prove his right arising from securities by an uninterrupted series of endorsements.
(2) This rule shall also apply mutatis mutandis to the last assignor.
Prohibition of Transfer
Article 249
(1) A prohibition of transfer by endorsement of the securities made out to order shall be effected by inscribing the indication "not by order", or by putting a similar clause with the same meaning.
(2) A right arising from securities whose transfer by endorsement is prohibited may be transferred only by assignment.
(3) A transfer by endorsement may be prohibited by the issuer and the endorser.
(4) Every transfer of securities made out to name may be prohibited by particular law or by statement of the issuer inscribed on the face of such securities.
Alterations Effected by Issuer
Article 250
(1) Securities made out to bearer or to order may be altered by the issuer, at the request and at the expense of the possessor of the paper, into securities made out to name.
(2) Should alteration be not expressly prohibited by him, the issuer of securities made out to name may, at the request and at the expense of the possessor, alter them into ones made out to bearer or to order.
Alterations Effected by Possessor at Transfer
Article 251
(1) Securities made out to order may be transferred by the endorser by means of endorsement to the bearer, unless otherwise provided by particular law.
(2) Securities made out to name may only be transferred by the assignor, i.e. the endorser, to a specific person.
(3) Securities made out to bearer may also be transferred by endorsement to a specific person.
Compounding and Dividing of Securities
Article 252
(1) Securities issued in a series may, at the request and at the expense of the possessor, be compounded into single or several securities.
(2) Securities may, at the request and at the expense of the possessor, be divided into several securities of smaller amount, but they may not be made out to an amount lower than the lowest denomination of a security issued in such series.
V Performance of Duties out of Securities
Termination of Duty
Article 253
A duty from securities shall cease by their performance by the issuer of the paper to the legal possessor.
(2) A claim from securities shall also cease when they come into the issuer's possession unless otherwise provided by particular law.
(3) An honest issuer of securities made out to bearer shall be discharged from duty by performing them for the benefit of the bearer, even should such bearer fail to be legal possessor of the securities.
Prohibition of Performance
Article 254
(1) An issuer of securities made out to bearer knowing or having a duty to know that the bearer is not legal possessor of the securities or not authorized by the legal possessor, shall refuse performance, or shall otherwise be liable for ensuing loss.
(2) An issuer of securities may not validly perform his duties when this has been prohibited to do so by the competent agency, or if he knew or had a duty to know that proceedings for redemption or annulment of the securities were in progress.
Payment of Interest or other Profits after Payment of the Principal
Article 255
A debtor paying off the principal to the possessor of securities shall pay off also the interest coupons, i.e. other profits from the same paper submitted for payment, upon payment of the principal, should such claims not be time-barred.
Objections to Request for Performance of a Duty
Article 256
(1) An issuer of securities may only raise to a request by its possessor only those objections which are confined to the issue of the securities, such as forgery, objections stemming from the contents of securities, such as the time limits or conditions, and finally, objections he is entitled to against the possessor of the securities, such as settlement per contra, a defect in the acquisition of the securities and lack of authorization.
(2) An issuer may raise objection to the request by the possessor to whom he has assigned the securities, regarding a defect in the legal transaction being a ground for the transfer, but such defects may not be used against the request of a subsequent possessor.
(3) However, if the possessor of securities, while receiving the paper from his predecessor, knew or had a duty to know that the former was handing him over the securities only to avoid an objection against him by the issuer, the issuer may also raise such objection against the possessor of the paper.
(4) Other kinds of objections may also be established by a particular law regarding specific kinds of securities.
VI Identification Papers and Marks
Identification Papers
Article 257
Corresponding provisions covering securities shall apply mutatis mutandis to railway tickets, theater and other tickets, coupons and similar certificates incorporating specific duties of their issuer, which have no indication of the creditor on their face, and which, according to their nature and the circumstances of their issue may not be transferred to another.
Identification Marks
Article 258
(1) Checkroom or similar marks consisting of a piece of paper, metal or other material, usually with affixed number, or with an indication of the number of objects stored, and usually not containing specific indication as to the obligation of their issuer, shall serve only to indicate who is the creditor in an obligation relationship in the course of whose creation they have been issued.
(2) An issuer of an identification mark shall be discharged of his obligation if he performs it in good faith to the benefit of the bearer, but there shall be no presumption of the latter being a genuine creditor, or one authorized to request performance, so that in the case of dispute he shall be bound to prove his capacity.
(3) The creditor may request performance of an obligation although the identification mark has been lost by him.
(4) As to the rest, in each individual case the intention of the issuer and the recipient of the mark as well as common practice should be kept in mind.
Replacement of Damaged Securities
Article 259
A possessor of a damaged security not being fit to be put on the market, but whose authenticity and contents may be precisely determined, shall be entitled to demand issue of a new security certificate in the same amount, upon handing over the damaged security and paying for the expenses.
Redemption of Securities
Article 260
Lost securities may be redeemed only if made out to name or to order, unless otherwise provided by particular law.
Time-Barred Claim out of Securities
Article 261
The rules of the statute of limitations shall apply to the expiration of a claim out of securities, unless otherwise provided by particular law.
EFFECTS OF OBLIGATIONS
CREDITOR'S RIGHTS AND DEBTOR'S OBLIGATIONS
THE RIGHT TO DAMAGES FOR LOSS
Performance of an Obligation and Consequences of Failure to Perform
Article 262
(1) A creditor in an obligation relationship shall be authorized to request from a debtor the performance of an obligation, while a debtor shall be obliged to perform it in good faith and entirely as formulated.
(2) After a debtor fails to perform the obligation or is late in performance, the creditor shall also be entitled to claim damages for loss sustained as a consequence.
(3) A debtor obtaining from a creditor an adequate time limit for subsequent performance shall also be liable for loss due to delay in performance.
(4) A debtor shall also be liable for partial or complete impossibility of performance, even without being at fault, if such impossibility took place after his becoming unduly late.
(5) However, the debtor shall be released of liability for loss after proving that the subject stipulated in the obligation would have been lost by chance even if he performed his obligation on time.
Release of Debtor from Liability
Article 263
A debtor shall be released from liability for loss upon proving his inability to perform the obligation, i.e. that his delay in performing the obligation was due to circumstances taking place after entering into contract which he was unable to prevent, eliminate or avoid.
Extension of Liability by Contract
Article 264
(1) The liability of a debtor may also be extended by contract for a case not usually falling in the sphere of his liability.
(2) However, the fulfillment of such contractual provision may not be requested, if so would be in contravention of the principle of good faith and honesty.
Limitation and Exclusion of Liability
Article 265
(1) A debtor’s liability for intention or gross negligence may not be precluded in advance by contract.
(2) At the request by an interested contracting party, the court may, however, also annul the contractual provision on the exemption of liability for simple negligence, should such agreement be the result of the monopoly position of the debtor or, otherwise, of unequal mutual positions of the contracting parties.
(3) A provision of a contract shall be valid by which the highest amount of compensation is determined, unless such amount is in obvious disproportion to the damage and unless the law provides otherwise for the specific case.
(4) In case of limiting the amount of compensation, the creditor shall be entitled to full redress should the impossibility of performance of obligation be caused by willful misconduct or by gross negligence of the debtor.
Scope of Compensation
Article 266
(1) A creditor shall be entitled to compensation for simple damage and profit lost, which at the time of entering into contract must have been foreseen by the debtor as a possible consequence of breach of the contract, having regard to facts known to him at the time or which must have been known to him.
(2) In case of fraud or lack of performance through wilful misconduct, as well as of nonfulfillment due to gross negligence, the creditor shall be entitled to demand from the debtor compensation for the entire loss occuring due to breach of the contract, regardless of the debtor not being aware of particular circumstances causing the loss.
(3) Should in course of violation of the obligation, in addition to loss, a profit be realized for the creditor, it shall be taken into account to a reasonable degree in determining the amount of damages.
(4) A party claiming breach of the contract shall take all reasonable steps to reduce the loss caused by such breach, since otherwise the other party may request reduction of damages.
(5) The provisions of the present Article shall apply mutatis mutandis also to failure to perform the obligations not originating on the ground of contract, unless something else be provided for some of them by the present Law.
Fault of Creditor
Article 267
In case there is some fault of a creditor or person under his responsibility for the ensuing loss, or for the extent of such loss, or for making the debtor's position more difficult, the compensation shall be reduced proportionally.
Liability for Failing to Notify
Article 268
A contracting party responsible for notifying the other party of facts relevant for their mutual relationship shall be liable for loss sustained by the other party because of not being notified on time.
Application of Provisions on Torts
Article 269
Unless otherwise set forth by provisions of the present Subsection, the provisions of the present Law relating to tort liability shall apply mutatis mutandis to these damages.
General Rules
Article 270
(1) A creditor and a debtor may stipulate that the debtor shall pay to the creditor a specific sum or supply him with some other property benefit, should he fail to perform his obligation, or delay in performing it (liquidated damages).
(2) Unless something else results from contract, liquidated damages shall be considered as stipulated for the case of a debtor becoming late in performance.
(3) Liquidated damages may not be stipulated in relation to monetary obligations.
Method of Calculation
Article 271
(1) Contracting parties may determine the amount of liquidated damages as they please, either in form of a lump sum or as a percentage, or for each day of delay, or in some other way.
(2) They shall be stipulated in the form prescribed for the contract from which the obligation envisaged by it arises.
Accessory Character
Article 272
(1) An agreement on liquidated damages shall share the legal destiny of the obligation covered by them.
(2) The agreement shall lose its legal effect should the failure to perform or delay be a consequence of something not attributable to the debtor.
Creditor's Rights
Article 273
(1) Should liquidated damages be stipulated for breach of obligation, the creditor may request either the performance of obligation or liquidated damages.
(2) He shall lose the right to claim performance of obligation if he requests payment of liquidated damages.
(3) Should liquidated damages be stipulated for lack of performance, the debtor shall not be entitled to pay liquidated damages and repudiate the contract, unless this was the intent of the parties at the moment of stipulating the liquidated damages.
(4) Should liquidated damages be stipulated for the debtor's delay in performance, the creditor shall be entitled to demand both the fulfillment of obligation and the liquidated damages.
(5) The creditor may not demand liquidated damages due to delay after accepting performance of the obligation and failing to notify the debtor without delay on his reserving the right to liquidated damages.
Reducing the Amount of Liquidated Damages
Article 274
At the debtor's request the court shall reduce the amount of liquidated damages if it finds that they are excessively high compared to the value and significance of the subject of obligation.
Liquidated Damages and Damages
Article 275
(1) A creditor shall be entitled to request liquidated damages even should their amount exceed that of the loss sustained by him, as well as if he did not sustain any loss at all.
(2) Should the loss sustained by the creditor be higher than the amount of liquidated damages, he shall be entitled to demand the difference to cover the entire loss.
Compensation Determined by Statute and Liquidated Damages
Article 276
Should there be a statutory provision specifying the amount of compensation for non-performance of obligation or delay in performance under the terms: penalty, liquidated damages, compensation and the like, while the contracting parties have in addition stipulated liquidated damages, the creditor shall have no right to request both liquidated damages and compensation provided by the statute, unless this was allowed by the statute itself.
When Owed
Article 277
(1) A debtor being late in the performance of a pecuniary obligation shall owe, in addition to the principal, default interest, at the rate determined by federal law.
(2) Should the rate of stipulated interest be higher than the rate of default interest, it shall continue to run even after the debtor's delay.
Right to Full Redress
Article 278
(1) A creditor shall be entitled to default interest regardless of whether he has sustained loss due to the debtor's delay.
(2) Should the loss sustained by the creditor due to the debtor's delay be higher than the amount to be received by way of default interest, he shall be entitled to request the difference up to the full redress.
Compound Interest
Article 279
(1) Unless provided by statute, default interest shall not run on due but unpaid contractual or default interest, and on other due periodical payments.
(2) Default interest may be requested on the amount of unpaid interest only from the day of filing the request for its payment with the court.
(3) Default interest on due periodical payments shall run from the day of filing the request for their payment with the court.
REFUTING DEBTOR'S LEGAL ACTS
General Rule
Article 280
(1) Every creditor whose claim is due for payment, regardless of the date when it was generated, shall be entitled to refute a legal act of his debtor taken to the detriment of creditors.
(2) A legal act shall be considered to have been taken to the detriment of creditors if due to its performance the debtor is left without sufficient means to satisfy the creditor's claim.
(3) The term "legal act" shall also inlude an omission due to which the debtor has forfeited a substantive right of his, or incurred a substantive obligation for himself.
Terms of Refuting
Article 281
(1) A payable asset disposal may be refuted, if at the time of effecting the disposal, the debtor was aware or could have been aware that such action would do harm to his creditors, and if a third person benefitting from the legal act undertaken was aware of the fact, or could have been aware of it.
(2) If the third person is the debtor's spouse or a relative in lineal consanguinity or in collateral consanguinity up to the fourth degree, or an in-law relative up to the same degree, there shall be a presumption that such third person was aware of the fact that the debtor's disposal was to the detriment of creditors.
(3) In case of a gratuitous disposal and a legal act equal to it, the debtor shall be considered to have been aware that the disposal undertaken would do harm to creditors, so that in refuting such acts there shall be no requirement that the third person was aware, or was supposed to be aware of the fact.
(4) Renouncing an inheritance shall be considered as a gratuitous disposal.
Exclusion of Refuting
Article 282
It shall not be possible to refute, on the ground of being detrimental to creditors, usual gifts for an occasion, prize gifts, or gifts given out of gratitude and being commensurate to the financial possibilities of the debtor.
Refuting Procedure
Article 283
(1) Refuting may be effected either by action in the court or by objection.
(2) An action to refute shall be lodged against a third person being a party to the legal act, or to whose benefit the act to be refuted was undertaken, i.e. against his universal legal successors.
(3) Should a third person dispose, by a payable transaction, the benefit acquired through the disposal to be refuted, the action may be lodged against the acquirer only if the latter was aware that the acquisition of his predecessor was refutable, but if such benefit was transferred by a gratuituous transaction, the action may be lodged against the acquirer even if he was not aware of the fact.
(4) A defendant may avoid the refuting by performing debtor's obligation.
Effect of Refuting
Article 284
Should the court uphold the claim, the legal act shall become ineffective only as to the plaintiff and only to the degree necessary for meeting his claim.
Time Limit for Lodging the Action
Article 285
(1) An action to refute may be lodged within a year in case of the disposal specified in Article 281, paragraph 1, while in all other cases, within a three year time limit.
(2) The time limit specified in the preceding paragraph shall be computed from the day of undertaking the legal act being refuted, i.e. from the day on which the omitted act should have been taken.
RIGHT OF RETAINMENT
Effecting of the Right of Retention
Article 286
(1) A creditor with a claim due, in possession of an item belonging to the debtor, shall be entitled to retain it in possession until his claim is paid off.
(2) Should a debtor become unable to effect payments, the creditor may use his right of retention even though his claim is not yet due.
Exceptions
Article 287
(1) A creditor shall have no right of retention if the debtor requests the restoration of the property coming out of his possession against his will, or if the debtor requests the restoration of the property entrusted to the creditor for custody or use.
(2) He may neither keep an authorization obtained from the debtor, nor other legal instruments, identification papers, correspondence and similar items of the debtor, or other objects which cannot be put on sale.
Duty of Restoring Property Prior to Performance of Obligation
Article 288
A creditor shall restore the property to the debtor if the latter has supplied the former with corresponding security to cover his claim.
Effect of the Right of Retention
Article 289
A creditor in possession of a debtor's property on the ground of the right of retention shall be entitled to recover out of its value in the same way as a pledgee, but shall be bound, prior to proceeding with collection, to notify the debtor of his intention in due time.
CREDITOR'S RIGHTS IN SOME PARTICULAR CASES
The Case of Obligation Consisting of Giving Objects Specified by Kind
Article 290
Should an obligation consist of giving objects specified by kind, and the debtor delays performance, the creditor may, after notifying the debtor thereof procure at his own choosing the object of the same kind and request from the debtor both the recovery of price and the redress of loss, or demand the recovery of value of the object owed, and the redress of loss.
An Obligation Consisting in Doing
Article 291
Should an obligation consist in doing, and the debtor fails to perform such obligation on time, the creditor may, after notifying the debtor thereof, do himself, at the expense of the debtor, what the debtor was obliged to do, while requesting from the debtor the redress of loss caused by the delay, as well as other possible losses because of the manner of performance.
An Obligation Consisting in Omission to Act
Article 292
(1) Should an obligation consist of an omission to act, the creditor shall be entitled to damages due to the fact that the debtor proceeded contrary to his obligation.
(2) Should something be constructed contrary to an obligation, the creditor may request its demolition at the expense of the debtor, and that the debtor redresses the loss sustained by him in relation to the construction and the demolition.
(3) If the court finds it obviously more useful, while taking in consideration the interest of society and the justified interest of the creditor, the court may decide that there shall be no demolition of what has been constructed, ordering instead that redress of the creditor's loss must be effected in money.
Right to Claim Damages instead of that what is awarded
Article 293
(1) Should a debtor fail to perform his obligation within the time limit determined by a final court decision, the creditor may call him to perform it in an adequate subsequent time limit, and state that after the expiration of such time limit he will not accept performance, requesting instead the redress of loss caused by non-performance.
(2) After the expiration of the subsequent time limit the creditor may request only the redress of loss caused by non-performance.
Court Penalties
Article 294
(1) If the debtor fails to perform his non-monetary obligation determined by final decision on time the court may, at the creditor's request, determine a subsequent and adequate time limit for the debtor and may pronounce, with the purpose of inducing the debtor, and independ ently of any damages, that the latter, after failing to perform his obligation within such time limit, shall be bound to pay to the creditor a certain amount of money for each day of delay, or for some other time unit, beginning with the expiration of that time limit.
(2) After the debtor's subsequent performance of the obligation, the court may reduce the amount specified above, while taking into account the purpose serving as a ground for its payment.
TERMINATION OF OBLIGATIONS
GENERAL RULE
Article 295
(1) An obligation shall be terminated after being fulfilled, as well as in other cases provided by law.
(2) By termination of the principal obligation, the pledge, mortgage and other accessory rights shall also be extinguished.
FULFILLMENT
GENERAL RULES OF FULFILLMENT
I Who can fulfill and fulfillment expenses
Fulfillment by Debtor or Third Person
Article 296
(1) An obligation may be fulfillled not only by a debtor but also by a third person.
(2) A creditor shall be bound to accept fulfillment by every person having a legal interest in fulfilling the obligation, even should the debtor be opposed to such fulfillment.
(3) A creditor shall be bound to accept fulfillment by a third person should the debtor agree, unless according to the contract or the nature of obligation itself, the obligation should be fulfillled by the debtor personally.
(4) A creditor may accept fulfillment by a third person without the debtor's knowledge, and even if the debtor has notified him about his disagreement to the third person's fulfilling the obligation.
(5) Should, however, the debtor offer to immediately fulfill his obligation himself the creditor may not accept fulfillment by the third person.
Fulfillment by Person without Contractual Capacity
Article 297
(1) A debtor without contractual capacity may also duly fulfill an obligation should its existence be undoubtful and if its performance has become due.
(2) But fulfillment may be contested should such person pay off an expired debt or a debt coming out of a game or bet.
Fulfillment Expenses
Article 298
Fulfillment expenses shall be covered by the debtor, unless they were caused by the creditor.
Fulfillment by Transfer of Right to the Fulfiller (Subrogation)
Article 299
(1) In the case of fulfillment of another person's obligation each fulfiller may stipulate with the creditor, prior to the fulfillment or in course of it, that the claim which is fulfilled be transferred to him, together with all, or only some, of the accessory rights.
(2) A creditor's rights may be also transferred to the fulfiller on the ground of a contract between the debtor and the fulfiller concluded prior to fulfillment.
(3) In such cases the subrogation of the rights of the creditor to the fulfiller shall take place at the moment of fulfillment.
Statutory Subrogation
Article 300
If an obligation is fulfilled by a person having some legal interest in the matter, the creditor's claim shall be transferred to him by operation of law at the moment of fulfillment, together with all accessory rights.
Subrogation in Case of Partial Fulfillment
Article 301
(1) In case of partial fulfillment of the creditor's claim, all accessory rights by which such claim is guaranteed shall be transferred to the fulfiller, unless necessary for the fulfillment of the rest of creditor's claim.
(2) However, the creditor and the fulfiller may stipulate that they shall use the guarantees commensurately to their respective claims, while they may also stipulate that the fulfiller shall have the right of priority in effecting collection.
Evidence and Security Interest
Article 302
(1) A creditor shall be bound to hand over to the fulfiller the means by which the claim is proved or secured.
(2) Exceptionally, the creditor may hand over an object received in pledge from the debtor or from some other person, to the fulfiller only should the pledger agree; otherwise, the pledge shall stay with the creditor to hold and preserve to the account of the fulfiller.
How Much May Be Claimed against a Debtor
Article 303
A fulfiller receiving a transferred claim may not request from a debtor more than has been paid to the creditor.
Exemption from Liability of a Creditor for the Existence and Collectability of the Claim
Article 304
(1) A creditor who accepts fulfillment from a third person shall not be liable for the existence and collectability of the claim at the time of fulfillment.
(2) The above shall not exclude appliation of the rules of acquiring without ground.
III Persons to Accept Fulfillment
Authorized Person
Article 305
(1) The fulfillment must be effected to the creditor or to a person designated by law, court decision, contract between the creditor and the debtor, or the creditor himself.
(2) The fulfillment shall also be valid if effected to a third person, should subsequently it be approved by the creditor, or should he acquire benefit out of it.
Fulfillment to a Creditor without Contractual Capacity
Article 306
(1) The fulfillment effected to a creditor without contractual capacity shall exempt the debtor only after being to the benefit of the creditor or after the subject of fulfillment has remained in his possession.
(2) A creditor without contractual capacity may approve, after regaining contractual capacity, the fulfillment accepted by him at the time of his being without contractual capacity.
Contents of Obligation
Article 307
(1) The fulfillment shall consist of performing that which forms the content of obligation; so neither a debtor may effect fulfillment by something else, nor a creditor may request something else.
(2) There shall be no valid fulfillment should that which is delivered by the debtor as a matter owed, and accepted by the creditor as such, turn out not to be the real matter owed; and that the creditor shall be entitled to restitute that what has been delivered to him, and to request the subject owed to him.
Substitution of Fulfillment
Article 308
(1) An obligation shall be terminated should the creditor, by agreement with the debtor, acept something else instead of what was owed to him.
(2) In such a case the debtor shall be in the same manner liable as a seller for substantive and legal defects in the object delivered instead of what was owed by him.
(3) However, a creditor, instead of claiming on the ground of the debtor's liability for substantive or legal defects in the object, may request from the debtor - but no more from a guarantor - the fulfillment of the original claim and the corresponding damages.
Delivery for Sale
Article 309
Should a debtor deliver to a creditor an object or some other right to sell them and satisfy his claim out of the proceeds of sale, handing over the excess to the debtor, the obligation shall be terminated only after the creditor has collected the necessary amount from the proceeds of sale.
Partial Fulfillment
Article 310
(1) A creditor shall not be bound to accept partial fulfillment, unless the nature of obligation demands otherwise.
(2) A creditor shall, however, be bound to accept partial fulfillment of a monetary obligation, unless having a particular interest to refuse it.
Obligation to Deliver Objects Specified by Kind
Article 311
(1) Should objects be specified only according to their kind, the debtor shall be bound to deliver objects of average quality.
(2) However, should the purpose of the objects be known to him, he shall be bound to deliver objects of corresponding quality.
V Making Allowance for Fulfillment
Sequence of Making Allowance
Article 312
(1) Should several obligations of the same kind exist between the same parties and what is fulfilled by the debtor fail to satisfy the entire claim, should there be no agreement between the creditor and the debtor, the allowance shall be made in an order determined by the debtor, at the moment of fulfillment at the latest.
(2) Should there be no statement by the debtor on making allowance, the obligations shall be settled in the order of their becoming due for fulfillment.
(3) Should several obligations become due at the same time, the first to be settled shall be the ones supplied by weakest security, and should all of them be secured in the same way, the first to be settled shall be the ones representing the heaviest burden for the debtor.
(4) Obligations being entirely equal in all the above respects shall be settled in the order of their occurence, while in case of simultaneous occurence, what was done in order to effect fulfillment shall be distributed over all obligations proportionally to their amounts.
Making Allowance for Interest and Expenses
Article 313
Should a debtor, in addition to the principal owe interest and expenses, allowance shall be made so as to pay first the expenses, then the interest and, finally, the principal.
When a Time Limit is not determined
Article 314
When a time limit is not determined, and the purpose of the transaction, the nature of obligation and the remaining circumstances do not require a specific time limit for fulfillment, the creditor may request immediate fulfillment of the obligation, while the debtor, on his part, may request from the creditor an immediate acceptance of fulfillment.
Fulfillment before Time Limit
Article 315
(1) Should a time limit be stipulated solely in the interest of the debtor, he shall be entitled to fulfill the obligation even prior to the expiry of the time limit stipulated, but shall be bound to notify the creditor about his intention, while taking care that fulfillment be not effected in bad time.
(2) In other cases, should a debtor offer fulfillment before the time limit prescribed, the creditor may refuse the fulfillment, but may also accept it while retaining his right to claim damages, provided that he promptly notifies the debtor thereof.
Right of Creditor to Request Fulfillment before Time Limit
Article 316
A creditor shall be entitled to request fulfillment before the time limit should the debtor fail to supply him with a security promised, or should the debtor, at his request, fail to refill a security reduced without his fault, or should the time limit be stipulated solely in his interest.
When Determining a Time Limit Is Left to One Party
Article 317
Should determining the period for fulfillment be left to the volition of the creditor or the debtor, the other party may, should the authorized person fail to determine the time limit even after a corresponding warning, address the court to determine an adequate fulfillment time limit.
Monetary Obligation
Article 318
(1) Should payment be effected through a bank or other organisation keeping the creditor's account, the debt shall be considered settled unless contracting parties determine otherwise, if the bank i.e. organisation keeping the account has received remittance in favour of the creditor, or an order from the debtor's bank i.e. organization, to transfer the amount designated in the order to the creditor's account.
(2) Should payment by mail be stipulated, the parties shall be held to have agreed that payment of the amount due to the post-office shall mean the meeting of the debtor's obligation to the creditor, while should this manner of payment not be stipulated, the debt shall be settled when the remittance has reached the creditor.
(3) Should particular regulation or contract provide payment by banker check to a specific account, the parties shall be considered to have agreed that payment is effected when the debtor pays the amount due through banker check to the designated account.
General Rules
Article 319
(1) A debtor shall be bound to fulfill the obligation and the creditor to accept the fulfillment at a place determined by the legal transaction or by law.
(2) Should the place of fulfillment not be determined, and should it be impossible to determine it according to the purpose of transaction, the nature of obligation or other circumstances, the fulfillment of obligation shall be effected at the debtor's seat of business i.e. his domicile at the time of origination of obligation, and should there be no domicile, at his residence.
(3) However, in the case of a debtor being a corporate body which has several branches in various places, the seat of business of a branch obliged to effect the acts necessary to fulfill the obligation shall be considered as the place of fulfillment if the creditor was aware of these circumstances when negotiating the contract, or must have been aware of them.
Place of Fulfillment of Monetary Obligations
Article 320
(1) A monetary obligation shall be fulfilled at creditor's seat of business i.e. his domicile, and should there be no such domicile, at his residence.
(2) Should payment be effected by a transfer order, a monetary obligation shall be discharged at the registered office of the organisation keeping account of the creditor's monetary means.
(3) If a creditor has changed the place of his business seat, i.e. his domicile at the time of creation of the obligation, so that higher costs relating to fulfillment resulted, such increase shall be to the charge of the creditor.
Presumptions Relating to Receipt
Article 321
(1) Whoever fulfills an obligation entirely or partially shall be entitled to request that the creditor issues him a receipt thereof, at his own expense.
(2) A debtor paying his debt through a bank or a post-office may request the creditor to issue to him a receipt only after having a specially justified reason.
(3) Should a receipt be issued stating that the principal is entirely paid-off, it shall be presumed that interest, court and other expenses, if any, have also been paid.
(4) Likewise, should a debtor of periodical payments, such as rent and other claims accounted for from time to time, like ones resulting from the use of electric power or water, or use of telephone, possess a receipt confirming his payment of a later due claim, it shall be presumed that he has also paid out the ones previously due.
Refusal to Issue a Receipt
Article 322
Should a creditor refuse to issue a receipt, the debtor may deposit with the court the subject of his obligation.
Article 323
(1) After entirely fulfilling his obligation, a debtor may, in addition to a receipt, seek that the creditor restores the bond to him.
(2) Should the creditor be unable to restore the bond, the debtor shall be entitled to demand that the creditor issue to him an officially certified document stating that the obligation has been terminated.
(3) Should the bond be restored to the debtor, the obligation shall be considered completely fulfilled.
(4) A debtor fulfilling an obligation only partially shall be entitled to request such fulfillment be inscribed on the face of the bond.
DELAY
When a Debtor is Late with Fulfillment
Article 324
(1) A debtor shall be late if he fails to fulfill the obligation within a time limit specified for fulfillment.
(2) Should the fulfillment time limit be not specified, the debtor shall be late if requested to fulfill the obligation by the creditor orally or in writing, or by means of an out-of-court warning, or by initiating some proceedings whose aim is achieving fulfillment of the obligation.
When a Creditor Is Late
Article 325
(1) A creditor shall be late if he refuses without justified ground to accept the fulfillment, or if he prevents fulfillment through his conduct.
(2) A creditor shall also be late if being ready to accept fulfillment of the debtor's simultaneous obligation, but failing to offer fulfillment of his due obligation.
(3) A creditor shall not be late if he proves that the debtor was unable to fulfill his obligation at the time of offering fulfillment, or at the time determined for fulfillment.
Effects of Creditor's Delay
Article 326
(1) A creditor's delay shall exonerate the debtor from delay, so that the risk of accidental loss of the object or of its damage shall pass to the creditor.
(2) Interest shall stop running from the day of the creditor's delay.
(3) A late creditor shall be liable to redress the debtor for loss caused due to his delay, and to cover expenses of continued custody of the object.
DEPOSITING AND SALE OF THE OBJECT OWED
Depositing at the Court
Article 327
(1) Should the creditor be in delay, or unknown, or should it be uncertain who or where the creditor is or whether the creditor is without contractual capacity and without a representative, the debtor may deposit the object owed at the court for the creditor.
(2) The same right shall pertain to third persons having a legal interest in the fulfillment of the obligation.
(3) A debtor shall notify the creditor on the effected deposit, should he be aware of him and of his domicile.
A Court Competent for Depositing
Article 328
(1) A deposit shall be made at the court having subject-matter jurisdiction in the place of fulfillment, unless economical reasons or the nature of the transaction require a deposit to be made at the place where the object is located.
(2) Any other court having the subject-matter jurisdiction must accept the object in deposit, while the debtor shall redress the creditor for eventual loss sustained due to depositing at another court.
Deposit for Custody to Other Person
Article 329
(1) Should the subject of obligation be an object that cannot be left for custody at the court, the debtor may request that the court designate a person to whom he shall leave the object for custody, at the expense and to the account of the creditor.
(2) In case of an obligation arising from contract in the business sphere, delivering such object to a public warehouse for custody and to the account of creditor shall produce the effect of depositing at the court.
(3) A debtor shall notify the creditor on effected delivery for custody.
Taking Back a Deposited Object
Article 330
(1) A debtor may take back a deposited object.
(2) A debtor shall notify the creditor on taking back the object.
(3) The right of a debtor to take back the deposited object shall be terminated if the debtor renounces such right at court, if the creditor declares his acceptance of the object, or if established by a final decision that the deposit has met the conditions of due fulfillment.
Effect of Deposit
Article 331
(1) By depositing the object owed, the debtor shall be relieved from obligation at the moment of deposit.
(2) If the debtor was in delay in fulfillment, his delay shall be terminated.
(3) The risk of accidental loss or damage to the object shall pass to the creditor from the moment of depositing the object.
(4) Interest shall cease to run from the day of deposit.
(5) Should the debtor take back the object deposited, it shall be held that there was no deposit while his joint debtors and guarantors shall remain liable.
Depositing Expenses
Article 332
The expenses of a valid and unrevoked deposit shall be borne by the creditor, should they exceed the expenses of fulfillment which fall on the debtor.
Sale in Place of Depositing an Object
Article 333
(1) Should an object be unfit for custody, or should its keeping and maintenance require expenses not commensurate to its value, the debtor may sell it at public sale at the place designated for fulfillment, or at some other place, should this be in the interest of the creditor, while the amount obtained, after deducting sale expenses, shall be deposited by him at the court of that place.
(2) Should the object have a current price, or should its value be small in comparison to the public sale expenses, the debtor may sell it privately.
(3) Should the object be perishable, the debtor shall sell it without delay and in the most appropriate way.
(4) In any event the debtor shall notify the creditor of the sale intended whenever possible and, after the sale is effected, of the price obtained and of its deposit at court.
Handing over the Object to Creditor
Article 334
The court shall hand over the object deposited to the creditor under conditions set forth by the debtor.
Sale to Cover Custody Expenses
Article 335
(1) In case the custody expenses are not paid within a reasonable time limit, the court shall, at the request of the custodian, order that the object be sold, while determining also the manner of such sale.
(2) The sale and custody expenses shall be deducted from the amount obtained by sale, while the rest shall be deposited at the court for the creditor.
OTHER WAYS OF TERMINATION OF OBLIGATIONS
SET-OFF (COMPENSATION)
General Conditions
Article 336
A debtor may set-off the claim he has against a creditor with the one he claims from him, should both claims be of a monetary nature, or relate to other generic things of the same kind and quality, should both claims be due.
Set-Off Statement
Article 337
(1) Set-off shall not originate as soon as conditions for it are materialized; instead, one party must declare to the other his intention to claim set-off.
(2) After the set-off statement, it shall be considered that the set-off has taken place at the moment of materialisation of the relevant conditions.
Lack of Reciprocity
Article 338
(1) A debtor may not set-off what is owed to the creditor against what is owed by the creditor to his guarantor.
(2) However, the guarantor may set-off the debtor's obligation to the creditor with the debtor's claim against the creditor.
(3) If a party has given his own object as a pledge securing another person's obligation, he may request from the creditor the restitution of the object pledged when conditions for the termination of such obligation by set-off materialize, or if the creditor has missed the set-off through his own fault.
An Expired Claim
Article 339
(1) A debt may be offset against an expired claim only if such claim has not expired at the moment when conditions for the set-off materialized.
(2) Should conditions for set-off materialize after one of the claims has expired, the set-off shall not take place if the debtor of the expired claim has raised the objection of expiration due to statute of limitations.
Set-Off Against Assigned Claim
Article 340
(1) A debtor of an assigned claim may set-off those of his claims against the assignee which, until the notification of assignment, he could have set-off against the assignor.
(2) He may also set-off those of his claims against the assignor which he had acquired prior to notification of assignment and whose time limit for fulfillment has not become due at the moment of his being notified of the assignment, but only should that time limit fall before the time limit for fulfillment of the assigned claim, or co-incide with it.
(3) A debtor expressing no reserves to the assignee when accepting the assignment may not be able to set-off any of his claims with him against the assignor.
(4) Should the assigned claim be entered in the books of title, the debtor may effect the set-off against the assignee only should his claim be entered together with the assigned claim, or should the assignee be notified about the existence of such claim at the time of the assignment.
Cases when Set-Off is Excluded
Article 341
The following may not terminate by way of set-off:
1) A claim impossible to seize;
2) A claim relating to an object or to a value of the object delivered to the debtor for custody or for loan, or taken unlawfully by the debtor, or kept unlawfully by him;
3) A claim occurring due to intentional tort;
4) A claim for compensation of damage caused by harming health or causing death;
5) A claim arising from statutory duty of alimony.
Ban on Other Party's Claim
Article 342
A debtor may not effect set-off should his claim become due only after a third person has imposed a ban on the creditor's claim against him.
Making Allowance by Way of Set-Off
Article 343
Should several obligations exist between two persons that may be terminated by way of set-off, the set-off shall be effected under the rules otherwise applicable for making allowance for fulfillment.
REMISSION OF DEBT
Agreement
Article 344
(1) An obligation shall be terminated if the creditor declares to the debtor that he is not going to request its fulfillment, and if the debtor agrees accordingly.
(2) The validity of such agreement shall not depend on it being concluded in the form that the transaction giving rise to the obligation has been concluded.
Renouncing the Means of Security Interest
Article 345
Restituting a pledge and renouncing other means of security interest whereby fulfillment of obligation has been secured, shall not mean that the creditor renounced the right to demand its fulfillment.
Remission of Debt of a Guarantor
Article 346
(1) Remission of a debt of a guarantor shall not exempt the principal debtor, while remission of debt of the principal debtor shall exempt the guarantor.
(2) In case of several guarantors, after the creditor's exempting one of them, the others shall remain obligated, but their obligations shall decrease by the amount of the exempted guarantor's part.
General Remission of Debts
Article 347
A general remission of debts shall terminate of all the creditor's claims against the debtor, except ones unknown to creditor at the moment of effecting remission.
SUBSTITUTION (NOVATION)
Conditions
Article 348
(1) An obligation shall be terminated if a creditor and a debtor agree to substitute the existing obligation by a new one, and should the new obligation have a different subject matter or a different legal ground.
(2) The agreement between the creditor and the debtor by which a provision concerning time limit, place or way of fulfillment is amended or added, a subsequent agreement on interest, on liquidated damages, on securing fulfillment, or concerning any other supplementary provision, or agreement on issuing a new document of debt, shall not be considered as substitution.
(3) Unless otherwise stipulated, drawing a bill of exchange or cheque in consequence of an earlier obligation shall not be considered as substitution.
Intent to Effect Substitution
Article 349
There shall be no presumption of substitution, so should the parties fail to express their intent to terminate an existing obligation when creating a new one, the earlier obligation shall not terminate, and shall continue to exist alongside the new one.
Effects of Substitution
Article 350
(1) By contract of substitution, a previous obligation shall terminate, while the new one shall come into being.
(2) Together with the previous obligation, a pledge and a guarantee shall also terminate, unless something else has been stipulated with the guarantor or the pledger.
(3) The same shall apply to other accessory rights related to previous obligations.
Defect in Previous Obligation
Article 351
(1) Substitution shall have no effect if a previous obligation was null or already terminated.
(2) Should the previous obligation be only annullable, the substitution shall be valid if the debtor was aware of the defect in the previous obligation.
Effect of Nullity
Article 352
Should a contract of substitution be annulled, it shall be held that there was no substitution at all, and that the previous obligation did not terminate in the first place.
INTEGRATION (MERGER)
Article 353
(1) An obligation shall be terminated by integration if the same person becomes both creditor and debtor.
(2) Should a guarantor become a creditor, the obligation of the principal debtor shall not terminate.
(3) An obligation entered in the books of titles shall terminate by integration only after entering the corresponding cancellation.
IMPOSSIBILITY OF FULFILLMENT
Termination of Obligation Due to Impossibility of Fulfillment
Article 354
(1) An obligation shall terminate should its fulfillment become impossible due to circumstances for which the debtor is not to blame.
(2) A debtor shall be expected to prove the existence of the circumstances exempting him from liability.
If Objects Specified by Kind are the Subject of Obligation
Article 355
(1) Should subject of obligation be objects specified by kind, the obligation shall not terminate even should all of such objects, possessed by the debtor, be lost due to circumstances for which he is not to blame.
(2) However, should the subject of obligation relate to objects specified by kind which have to be taken out of a specific mass of such objects, the obligation shall come to an end should the entire mass be lost.
Assigning a Right against a Third Person Liable for Impossibility of Fulfillment
Article 356
A debtor owing a specific object, who is otherwise exempted from his obligation because of impossibility of fulfillment, shall assign to the creditor the right he would have against a third person as a result of such impossibility.
FLOW OF TIME, CANCELLATION
Time Limit in a Permanent Debt Relationship
Article 357
A permanent debt relationship with a specified period of duration shall terminate on the expiration of the relevant time limit, unless stipulated by contract or prescribed by statute that the debt relationship shall continue to be effective after the expiration of the time limit for an indefinite period, if not cancelled on time.
Cancellation of a Permanent Debt Relationship
Article 358
(1) Should the duration of a permanent debt relationship be not determined, each party may end it by cancellation.
(2) Such cancellation must be communicated to the other party.
(3) Cancellation may be effected at any time, but not at a bad time.
(4) A cancellable debt relationship shall terminate on the expiration of a cancellation time limit specified by contract, and should such time limit not be specified by contract, the relationship shall terminate on the expiration of the time limit specified by statute or trade practice, i.e. on the expiration of an appropriate time limit.
(5) The parties may stipulate that their debt relationship shall terminate by the fact of communicating the cancellation, unless something else is specified by statute for a specific case.
(6) The creditor shall be entitled to request from the debtor that what is due prior to termination of obligation on the ground of expiration of the time limit or cancellation.
DEATH
Article 359
In case of death of a debtor or a creditor, the obligation shall terminate only if created as a result of the personal characteristics of one of the contracting parties or of the personal capacity of the debtor.
LIMITATION PERIOD
GENERAL PROVISIONS
General Rule
Article 360
(1) A right to request fulfillment of an obligation shall terminate if time-barred by statute of limitations.
(2) Unenforceability due to the statute of limitations shall follow the expiration of the period specified by statute during which the creditor could have requested fulfillment of the obligation.
(3) The court may not consider the fact of an obligation being time-barred should the debtor fail to invoke it.
Starting Point of Limitation Period
Article 361
(1) The limitation period shall begin to run on the first day following the day the creditor was entitled to request fulfillment of the obligation, unless something else be provided by statute for specific cases.
(2) Should an obligation consist of a duty to not do something, to omit or to suffer, the limitation period shall begin to run on the first day following the day the debtor has proceeded contrary to his obligation.
Becoming Time-Barred
Article 362
Time-barring shall become effective after the expiration of the last day of the limitation period specified by statute.
Including into Account of Predecessor's Time
Article 363
The limitation period shall also include the time which has run in favour of the debtor's predecessors.
Ban on Alteration of Limitation Period
Article 364
(1) A longer or shorter limitation period than the one set forth by statute, may not be specified by way of a legal transaction.
(2) A temporary suspension of running of the limitation period may not be specified by way of a legal transaction.
Renouncing the Limitation Period
Article 365
A debtor may not renounce the limitation period prior to the expiration of time set forth for such limitation period.
Written Acknowledgment and Securing a Time-Barred Obligation
Article 366
(1) Written acknowledgment of a time-barred obligation shall be construed as the renouncing the statute of limitation.
(2) Providing a lien or other kind of security to cover a time-barred claim shall have the same offect.
Effect of Fulfillment of a Time-Barred Obligation
Article 367
After fulfilling a time-barred obligation, a debtor shall not be entitled to claim restitution, even if he was ignorant of the fact that the obligation was time-barred.
Creditor with a Secured Claim
Article 368
(1) After the expiration of time provided by the statute of limitations, a creditor with a claim secured by a pledge or mortgage may settle only out of the bailed object if in his possession, or when his right has been entered in the books of title.
(2) However, time-barred claims relating to interest and other periodical dues may not be settled even out of the bailed object.
Accessory Claims
Article 369
After a principal claim becomes time-barred, the accessory claims shall also become time-barred, such as claims relating to interest, yields, expenses, and liquidated damages.
When Rules of Limitation Periods shall not apply
Article 370
Rules of limitation periods shall not apply in cases where a statute specifies time limits for issuing court proceedings, or for performing specific act on pain of losing a right.
TIME NECESSARY FOR LIMITATION PERIOD
General Limitation Period
Article 371
Claims shall become time-barred after ten years, unless some other limitation period is provided by statute.
Periodical Claims
Article 372
(1) Claims relating to periodical levies becoming due once a year or in specified shorter periods (periodical claims), including even accessory periodical claims, such as claiming interest, or the ones by which a corresponding right itself is consumed, such as an alimony claim, shall become time-barred after a three year period, counting from the date each levy becomes due.
(2) The same shall apply to annuities by which principal debt and interest are paid off in equal, in advance set, periodical installments, the exception being deferred installment payments and other part payments.
Time-Barring of Right itself
Article 373
(1) A right itself being a ground for periodical claims shall expire after a five year period, counting from the date of maturity of the oldest non-fulfilled claim, after which the debtor failed to effect the levy.
(2) If a right being a ground for periodical claims has expired due to the statute of limitations, the creditor shall lose not only his right to claim future periodical levies, but also those that became due prior to such expiration.
(3) A right to alimony specified by statute may not become time-barred.
Mutual Contractual Claims in the Sphere of Sale of Goods and Services
Article 374
(1) Mutual contractual claims of legal persons in contracts on sale of goods and services, as well as claims relating to reimbursement of expenses made in connection to such contracts, shall expire due to the statute of limitations after a three year period.
(2) The limitation periods shall run separately for each supply of goods, performed work or service.
Claiming Rent
Article 375
A claim for rent, either to be paid periodically or in a lump sum, shall expire due to the statute of limitations after a three year period.
Claiming Damages
Article 376
(1) A claim for damages shall expire three years after the party sustaining injury or loss became aware of the injury and loss and of the tort-feasor.
(2) In any event, such claim shall expire five years after the occurence of injury or loss.
(3) A claim for damages caused by violation of a contractual obligation shall expire within the time specified for limitation period of such obligation.
Claiming Damages for Injury or Loss Caused by a Criminal Offence
Article 377
(1) Should loss or injury be caused by a criminal offence, and a longer limitation period is prescribed for the criminal prosecution, the claim for damages against the person liable shall expire upon the expiration of the time set for the limitation period of criminal prosecution.
(2) A discontinuance of the limitation period of criminal prosecution shall also involve the discontinuance of the limitation period relating to the claim for damages.
(3) The same shall apply for suspension of limitation period.
One-Year Limitation Period
Article 378
(1) The following shall become time-barred after one year:
1) Claim for charges for the supply of electricity and heating energy, those for gas, water supply, chimney sweeping services and garbage collection – when delivery i.e. service was effected for households;
2) Claim for radio and television station charges for the use of radios and television sets;
3) Claim for post-office, telegraph and telephone office charges for the use of telephones and post office boxes, as well as other claims by these offices collected quarterly or in shorter periods;
4) Claim for subscriptions to periodicals, counting from the expiration of the period they are ordered for.
(2) The limitation period shall continue to run although supply or services have continued.
Claims Determined by Court or Other Competent Agencies
Article 379
(1) All claims determined by a final court decision or decision of other competent agency, or by settlement at court, or at some other competent body, shall expire after a ten year period, including ones which are subjected by statute to a shorter limitation period.
(2) However, all periodical claims resulting from such decisions or settlements, and becoming due in the future, shall expire within the time limit otherwise provided for the expiration of periodical claims due to the statute of limitations.
Limitation Periods in Case of Insurance Contracts
Article 380
(1) Claims of an insurance contractor, i.e. of a third party specified in a life insurance contract, shall expire after five years, while those from remaining insurance contracts - after three years, counting from the first day following the calendar year of the origination of the claim.
(2) Should the interested person be successful in proving that until the day specified in the preceeding paragraph he was not aware of the occurence of the insured event, the expiration period shall begin to run form the day of his becoming aware, while in any event the claim shall expire in case of life insurance after ten years, and in case of the remaining insurance contracts after five years, beginning with the day specified in the preceeding paragraph.
(3) Claims of an insurer on the ground of an insurance contract shall expire due to the statute of limitations after three years.
(4) Should in the event of third party liability insurance a person sustaining damage demand compensation from the insured, or should he obtain it from him, the limitation period for the insured person's claim against the insurer shall begin to run on the day the person sustaining damage requested compensation through the court from the insured, i.e. on the day of his being compensated by the insured.
(5) A direct claim by a third party sustaining injury or loss against the insurer shall expire within the same limitation period as his claim against the insured person liable for damage.
(6) The limitation period of the insurer's claim against the third party liable for the occurence of the insured event, shall begin to run at the same time as the limitation period for the claim of the insured against such person, and shall be completed within the same time limit.
SUSPENSION OF LIMITATION PERIOD
Claims between Particular Persons
Article 381
The limitation period shall not run:
1) Between spouses;
2) Between parents and children during the validity of parental right;
3) Between a ward and his guardian, and a guardianship authority in the course of the guardianship relationship, and until relevant accounts are settled;
4) Between two partners living in cohabitation, during the course of such cohabitation.
Claims of Particular Persons
Article 382
The limitation period shall not run:
1) During mobilization, in case of imminent danger of war, or war - relating to claims of persons engaged in the military duty;
2) Concerning claims of persons employed in another person's household, against the employer or members of his family living with him in the same household - in the course of such employment.
Insurmountable Obstacles
Article 383
The limitation period shall not run for the entire time of creditor's inability due to insurmountable obstacles to institute court proceedings demanding the fulfillment of obligation.
Effect of the Cause of Suspension of Limitation Period
Article 384
(1) Should the limitation period be blocked due to a cause specified by statute, it shall begin to run after such cause has come to an end.
(2) Should the limitation period begin to run before the occurence of cause blocking its further course, it shall begin to run again after such cause has come to an end, while the time expired prior to blockage shall be accounted for in the limitation period provided by statute.
Claims against Persons without Contractual Capacity and Their Claims
Article 385
(1) The limitation period shall also run against a minor and other person without contractual capacity, regardless of whether they have a legal representative.
(2) However, time-barring of claims of minors having no representative and other unrepresented persons without contractual capacity shall not take place until the expiration of a two year period from their regaining full contractual capacity or from obtaining a representative.
(3) Should a period of time shorter than two years for time-barring of a claim be specified, and the creditor is a minor without a representative or other person without business capacity and without a representative, the limitation period relating to such claims shall begin to run after the creditor has gained contractual capacity, or after obtaining a representative.
Claim against a Person Serving his Military Term
Article 386
Limitation period against a person serving his military term, or being on maneuvers, may come about until the expiration of a three month period after completion of the military term or after the end of manoeuvers.
INTERRUPTION OF LIMITATION PERIOD
Acknowledging a Debt
Article 387
(1) Running of the limitation period shall be interrupted when a debtor acknowledges the debt.
(2) The acknowledgment of debt may be effected not only by a declaration to the creditor, but also in an indirect way, such as by an installment payment, payment of interest due, or providing security.
Instituting Legal Proceedings
Article 388
The limitation period shall be interrupted by instituting legal proceedings and by other motion of a creditor against a debtor at court or other competent agency, with the aim of confirming, securing or realizing the claim.
Dismissing, Rejecting or Losing Legal Proceedings
Article 389
(1) Should an interruption of the limitation period be effected by instituting legal proceedings or by some other motion of a creditor against a debtor at court or other competent agency, with the aim of confirming, securing or realizing the claim, it shall be considered that such interruption has not come about if the creditor dismisses the action or a motion he filed.
(2) It shall be held in the same manner that there was no interruption, if the creditor's action or claim is rejected or renounced, or if an obtained or undertaken measure of execution or security interest is cancelled.
Rejecting an Action on the Ground of Lack of Jurisdiction
Article 390
(1) Should an action against a debtor be rejected on the ground of lack of jurisdiction of the court, or by some other reason not related to the substance of the matter, and the creditor files another action within a three month period after finality of the decision rejecting the action, it shall be held that the limitation period was interrupted by the first action.
(2) The same shall apply to invoking protection and claiming set-off of amounts due in a dispute, as well as in the event of the court or other agency directing the debtor to effect his claim in the litigation proceedings.
Giving Notice to a Debtor
Article 391
The limitation period shall not be interrupted should the creditor merely give the debtor notice in written or oral form to fulfill the obligation.
Limitation Period in Case of Interruption
Article 392
(1) After the interruption the limitation period shall start to run anew, while the time expired prior to interruption shall not be accounted for into the statutory limitation period.
(2) If the limitation period is interrupted by debtor's acknowledgment, it shall start to run anew from the date of such acknowledgment.
(3) Should the limitation period be interrupted by instituting legal proceedings or invoking protection, or claiming set-off of claims in litigation, i.e. by filing the claim within some other proceedings, the limitation period shall begin to run anew from the day of closing the litigation in a regular or some other way.
(4) Should the limitation period be interrupted by filing a claim in bankruptcy proceedings, the limitation period shall begin to run anew from the day of closing of such proceedings.
(5) The same shall also apply should the limitation period be interrupted by a request for compulsory execution of institution of security interest.
(6) The limitation period beginning to run anew after the interruption shall be completed on the expiration of the period of time set by a statute for the limitation period which was interrupted.
Limitation Period in Case of Novation
Article 393
Should the interruption take place by the debtor's acknowledgment of the debt and the creditor and the debtor agree to alter the grounds or the subject of obligation, a new claim shall expire within the statutory limitation period set for its expiration.
VARIOUS KINDS OF OBLIGATIONS
MONETARY OBLIGATIONS
GENERAL PROVISIONS
Principle of Monetary Nominalism
Article 394
Should the subject of obligation be an amount of money, the debtor shall pay out the number of monetary units indicated on the face of the obligation, unless otherwise provided by statute.
Currency of Obligation
Article 395
Should monetary obligation be made out in a foreign currency or in gold, its fulfillment may be demanded in domestic currency, according to the rate of exchange valid at the moment of fulfillment of the obligation.
Article 396
(Deleted)
Sliding Scale
Article 397
In contracts by which one party assumes an obligation to manufacture and deliver specific objects, it shall be allowed to stipulate that the price will depend on the cost of material and labour, as well as on other elements influencing the production costs at a definite time and in a specific market.
Payment Ahead of Time
Article 398
(1) A debtor of a monetary obligation may fulfill it ahead of time.
(2) A contractual clause by which a debtor has waived such right shall be null and void.
(3) Should a monetary obligation be fulfilled ahead of time, the debtor shall be entitled to deduct from the amount of debt interest covering a period between the day of payment and the day of maturity of obligation, only after being authorized accordingly by contract or on the ground of business usage.
STIPULATED INTEREST
Rate of Stipulated Interest
Article 399
(1) The rate of interest stipulated between natural persons may not be higher than the standard deposit savings interest rate in the place of fulfillment.
(2) Provisions of a particular statute shall apply to the highest interest rate stipulated between legal persons.
(3) Should interest be stipulated but without determining either its rate or maturity time, the interest rate as between natural persons shall be the standard deposit savings rate in the place of fulfillment, while in the case of legal persons, the rate shall be the one payable i.e. stipulated for such or similar kind of transaction by a bank or other banking organization, and it shall become due after the expiration of the year, unless otherwise provided in a particular case.
(4) Should a higher interest than permitted be stipulated, the highest permitted interest rate shall apply.
Compound Interest
Article 400
(1) A clause in a contract shall be null and void if it stipulates that, should interest be not paid when due, compound interest shall be charged.
(2) However, it may be possible to stipulate in advance that the interest rate shall increase should the debtor fail to pay the due interest on time.
(3) The provisions of the preceeding paragraphs shall not apply to credit transactions of banks and other banking organisations.
Cessation of Interest
Article 401
(Deleted)
Interest in Non-Monetary Obligations
Article 402
The provisions of the present Law relating to interest stipulated shall apply mutatis mutandis to other obligations whose subject are objects specified by their kind.
MULTI-SUBJECT OBLIGATIONS
ALTERNATIVE OBLIGATIONS
Right of Option
Article 403
In an obligation with two or several subjects, where a debtor is obliged to deliver only one of them in order to free himself of it, the right of option, unless something else be stipulated, shall pertain to the debtor, so that the obligation shall be terminated when he delivers the subject he has chosen.
Irrevocability and Effect of the Option Exercised
Article 404
(1) An option shall be considered exercised if a party entitled to an option notifies the other party of his choice, so that from that moment on the choice may not be altered.
(2) After an option is exercised it shall be considered that the obligation was a simple one from the very beginning, and that its subject from the beginning was the object selected.
Option Period
Article 405
(1) A debtor shall be entitled to an option until one of the objects owed has been completely or partially delivered to the creditor to his own choice in the compulsory enforcement proceedings.
(2) Should the right of option pertain to the creditor and he fails to state his choice within the time limit determined for fulfillment, the debtor may give him notice to make his choice, leaving him an adequate time limit, after whose expiration the right of option shall be transferred to the debtor.
Option Entrusted to Third Party
Article 406
Should choice be left to a third party, and such party failed to act accordingly, each party may demand that the choice be made by the court.
Restriction to the Remaining Subject
Article 407
Should one of the subjects of obligation become impossible to realize due to an event not to be blamed on the parties, the obligation shall be restricted to the remaining subject.
Restriction in Case of Liability of One Party
Article 408
(1) Should one of the subjects of obligation become impossible to realize due to an event for which the debtor is liable, the obligation shall be restricted to the remaining subject should the right of option pertain to him, and should the right of option pertain to the creditor, he may demand, at his choice, the remaining subject or damages.
(2) Should one of the subjects of obligation become impossible to realized due to an event for which the creditor is to blame, the debtor's obligation shall be terminated; but should he be entitled to an option, he may demand damages and may fulfill his obligation through the remaining subject, while should the right of option belong to the creditor, he may provide compensation and request the remaining subject.
OPTIONAL OBLIGATION AND OPTIONAL CLAIMS
Authority of Debtor in an Optional Obligation
Article 409
A debtor whose obligation has a single subject, but is free to fulfill his obligation by supplying some other specific subject, may exercise this right only until the creditor, in proceedings for compulsory enforcement, acquires completely or partially the subject of obligation.
Authority of Creditor in an Optional Obligation
Article 410
(1) A creditor in an optional obligation may claim from the debtor only the subject of obligation, and not any other subject by which the debtor may, should he so wish, also fulfill his obligation.
(2) Should the subject of obligation become impossible to realize due to an event for which the debtor is not to blame, the creditor may claim only damages, but the debtor may free himself from his obligation by supplying the subject he is otherwise authorized to supply instead of the subject owed.
Article 411
(1) Should a contract or a statute provide that the creditor may, instead of the object owed, claim from the debtor some other specific object, the debtor shall deliver to him that object should the creditor so require.
(2) In remaining matters, such optional claims shall be subjected to corresponding rules on optional and alternative obligations, coordinated with the intent of contracting parties and the circumstances of the specific transaction.
OBLIGATIONS WITH SEVERAL DEBTORS OR CREDITORS
DIVISIBLE OBLIGATIONS
Dividing an Obligation and a Claim
Article 412
(1) An obligation shall be divisible if that what is owed can be divided and fulfilled into parts having the same features as the entire subject, and should what is divided lose nothing in value; otherwise, the obligation shall be indivisible.
(2) Should several debtors exist in a divisible obligation, such obligation shall be divided between them in equal shares, unless a different kind of division has been set, and each shall be liable for his share of the obligation.
(3) Should several creditors exist in a divisible obligation, the claim shall be divided between them in equal shares, unless something else has been set, and each creditor may request only his share of the claim.
Presumption of Joint and Several Liability
Article 413
Should several debtors exist in a divisible obligation ensuing out of a business contract, they shall be jointly and severally liable to the creditor, unless the contracting parties have explicitely eliminated joint and several liability.
JOINT AND SEVERAL OBLIGATIONS
I Joint and Several Liability of Debtors
Substance of Joint and Several Liability of Debtors
Article 414
(1) Each debtor of a joint and several obligation shall be liable to the creditor for the entire obligation and the creditor may claim its fulfillment from any of them until its complete fulfillment; but should one of the debtors fulfill the obligation, it shall cease to exist and all debtors shall be exempted.
(2) Out of several jointly and severally liable debtors, each may owe under a different time limit for fulfillment, or under different terms or generally speaking with different exceptions.
Set-Off
Article 415
(1) Each joint and several debtor may invoke set-off effected by his joint debtor.
(2) A joint and several debtor may set-off a claim of his joint debtor against the creditor with the creditor's claim, but only in amount equal to the share of debt of such joint debtor within the joint and several obligation.
Debt Remission
Article 416
(1) Debt remission executed in agreement with one of the joint and several debtors shall also relieve the other debtors from obligation.
(2) However, should the remission be intended to exempt from liability only the debtor participating in the matter, the joint and several obligation shall be reduced for the part which, according to mutual relations among debtors, belonged to such debtor, while the remaining debtors shall be jointly and severally liable for the rest of the obligation.
Novation
Article 417
(1) Novation effected by the creditor with one of the joint and several debtors shall also exempt the remaining debtors.
(2) However, should the creditor and the debtor restrict the novation to the part of the obligation belonging to such debtor, the obligation of the others shall not cease, but shall only be reduced by the value of such part.
Settlement
Article 418
Settlement agreed upon by one of the joint and several debtors with the creditor shall have no effect for the remaining debtors, but they shall be entitled to accept such settlement, provided that it is not limited to the debtor it has been agreed with.
Merger
Article 419
Should the capacity of a creditor and that of a debtor of the same joint and several obligation merge into one person, the obligation of the remaining debtors shall be reduced by the amount of his share.
Creditor's Delay
Article 420
Should a creditor be late regarding one of the joint and several debtors, he shall also be late as to the remaining joint and several debtors.
Delay of One Debtor and Acknowledging a Debt
Article 421
(1) Delay by one of the joint and several debtors shall have no effect on the remaining debtors.
(2) The same shall apply to acknowledging a debt executed by one of the joint and several debtors.
Suspension and Interruption of Limitation Period and Renouncing the Statute of Limitation
Article 422
(1) Should a limitation period stop running or should it be interrupted regarding one debtor, it shall continue to run as to the remaining joint and several debtors, and it may be completed; however, a debtor for whom the obligation has not expired and who has to fulfill it, shall be entitled to claim from the rest of the debtors to whom the obligation became time-barred, the recovery of value of their respective shares in the obligation.
(2) Renouncing a completed limitation period shall have no effect on the rest of the debtors.
Right to Recovery of a Person Fulfilling the Obligation
Article 423
(1) A debtor fulfilling the obligation shall be entitled to claim against each joint debtor recovery of their part of the obligation.
(2) The fact that the creditor has exempted one of the debtors, or that he has reduced his debt, shall have no effect on the matter.
(3) A share being at the charge of a debtor unable to provide recovery shall be distributed commensurately to all the debtors.
Division in Equal Shares and Exception
Article 424
(1) Unless something else is stipulated or otherwise result from legal relations between participants in a transaction, the shares of all debtors shall be equal.
(2) However, should a joint and several obligation be stipulated solely in the interest of one of the joint and several debtors, he shall recover the entire amount of obligation to a joint debtor who has satisfied the creditor.
II Joint and Several Creditors
No Presumption of Joint and Several Claim
Article 425
Should there be several persons on the creditor's side, they shall have a joint and several claim only if this has been stipulated by contract or specified by law.
Substance of Joint and Several Claim
Article 426
(1) Each joint and several creditor shall be entitled to claim from a debtor fulfillment of the entire obligation, and if one of them is satisfied, the obligation shall be terminated regarding the rest of the creditors as well.
(2) A debtor may fulfill an obligation to a creditor of his own choice, but only until the moment when one of the creditors requests fulfillment.
Set-Off
Article 427
(1) A debtor may set-off his obligation debt against his claim against a creditor who demands from him fulfillment of the obligation.
(2) Set-off of his claim against another creditor may be effected by the debtor only up to the amount of the share of the joint and several claim belonging to that creditor.
Remission of Debt and Novation
Article 428
By remission of a debt and by novation between a debtor and one of the creditors, the joint and several obligation shall be reduced by the amount of the share of that claim of the creditor.
Settlement
Article 429
Settlement stipulated by one of the joint and several creditors with the debtor shall have no effect on the rest of the creditors, but they shall be entitled to accept such settlement, unless it relates only to the share of the creditor it has been agreed with.
Integration
Article 430
Should the capacity of a joint and several creditor merge in one person with the capacity of debtor, each of the remaining joint and several creditors shall be entitled to demand from him only their own part of the claim.
Delay
Article 431
(1) Should a debtor be late in performance in relation to the one of the joint and several creditors he shall be late in relation to the rest of the creditors as well.
(2) Delay of one of the joint and several creditors shall also affect the rest of the creditors.
Acknowledgment of Debt
Article 432
Acknowledgment of a debt effected to one of the creditors shall be of use to all creditors.
Statute of Limitations
Article 433
(1) Should one of the creditors interrupt the limitation period, or should such period fail to run against him, this fact shall not be of use to the rest of the creditors and the limitation period shall continue to run against them.
(2) Renouncing the limitation period effected in relation to one of the creditors shall be of use to the rest of the creditors as well.
Relations between Creditors after Fulfillment
Article 434
(1) Each joint and several creditor shall be entitled to demand the delivery of his own share from a creditor who received fulfillment from the debtor.
(2) Unless something else results from the relations between the creditors, each of the joint and several creditors shall be entitled to equal share.
INDIVISIBLE OBLIGATIONS
Article 435
(1) Regulations concerning joint and several obligations shall apply mutatis mutandis to indivisible obligations where there are several debtors.
(2) Should there be several creditors in an indivisible obligation, while no stipulated or statutory joint and several liability exists between them, one of the creditors may demand that the debtor fulfills the obligation to him, only after being empowered by the rest of the creditors to accept the fulfillment; otherwise, each creditor may demand that the debtor fulfills the obligation to all creditors taken together, or to make a corresponding deposit at the court.
SUBSTITUTION OF CREDITOR OR DEBTOR
ASSIGNING OF CLAIMS BY CONTRACT (CESSION)
GENERAL PROVISIONS
Which Claims May Be Assigned by Contract
Article 436
(1) A creditor may assign his claim to a third person by contract entered into with such person, except a claim whose transfer is not permitted by statute, or which is restricted to creditor's person, or whose very nature is incompatible with transferring to another.
(2) A contract of assignment shall have no effect for a debtor if he and the creditor have stipulated that the latter shall not be able to assign the claim to another, or that he shall not be able to assign it without debtor's consent.
Accessory Rights
Article 437
(1 Accessory rights shall pass with the claim to the recipient, such as the right of preferential payment, mortgage, pledge, rights on the ground of contract with a guarantor, rights to interest, to liquidated damages, and the like.
(2) However, an assignor may deliver the object pledged to the recipient only should the pledger agree; otherwise, it shall remain with the assignor, to be kept by him for the account of the recipient.
(3) It shall be presumed that due and outstanding interest is assigned together with the principal claim.
Notifying a Debtor
Article 438
(1) Consent of debtor shall not be necessary for the assignment of a claim, but the assignor shall notify the debtor of the assignment effected.
(2) Fulfillment effected to the assignor before notification about the assignment shall be valid and shall relieve the debtor from obligation, but only if he was not aware of the assignment; otherwise, the obligation shall remain valid and he shall remain bound to fulfill it to the recipient.
Multi-Party Assignment
Article 439
Should a creditor assign the same claim to various persons, the claim shall belong to the recipient being the first notified as such to the debtor by the assignor, i.e. the recipient who was the first to contact the debtor.
RELATIONSHIP BETWEEN A RECIPIENT AND A DEBTOR
Article 440
(1) A recipient shall have the same rights against a debtor otherwise pertaining to the assignor against the debtor before the assignment.
(2) A debtor may raise against a recipient, in addition to objections he has against him, also those which he was able to raise against the assignor until the moment of his becoming aware of the assignment.
RELATIONSHIP BETWEEN ASSIGNOR AND RECIPIENT
Debt Legal Instrument and its Delivery
Article 441
(1) An assignor shall present to the recipient a bond or some other debt legal instrument, should such be in his possession, as well as other proof on the assigned claim and on accessory rights.
(2) Should the assignor transfer to the recipient only a part of the claim, he shall present to him a certified copy of the bond or of some other legal instrument proving the existence of the assigned claim.
(3) He shall, on recipient’s request, issue to him a certified acknowledgment of the assignment.
Responsibility for Existence of Claim
Article 442
Where assignment was effected by a contract with consideration, the assignor shall be liable if the claim did not exist at the moment the assignment was made.
Responsibility for Collectability
Article 443
(1) An assignor shall be liable for collectability of the assigned claim, provided that this was stipulated, but only to the amount received from the recipient, as well as for collectability of the interest, expenses relating to assignment and expenses of proceedings against the debtor.
(2) It shall not be passible to stipulate a higher liability of assignor being in good faith.
PARTICULAR CASES OF ASSIGNMENT OF CLAIMS
Assignment Instead of Fulfillment or for Collection Purposes
Article 444
(1) Should a debtor, instead of fulfilling his obligation, assign to a creditor his claim or a part of it, the debtor's obligation shall be terminated up to the amount of the assigned claim by the fact of entering into contract on assignment.
(2) However, should a debtor assign his claim to his creditor only in order to effect collection, his obligation shall be terminated, i.e. reduced, only after the creditor has collected the assigned claim.
(3) In both cases the recipient shall hand over to the assignor everything collected by him over the amount of his claim against the assignor.
(4) In case of assignment for the purpose of collection, the debtor of the assigned claim may fulfill his obligation also to the assignor, even after he has been notified of the assignment.
Assignment for the Purpose of Security
Article 445
Should assignment be effected for the purpose of securing the recipient's claim against the assignor, the recipient shall proceed as a good businessman i.e. good head of household, in seeing to the collection of the assigned claim and to hand over the surplus to the assignor after effected collection, after deducting the amount necessary for settling his own claim against the assignor.
SUBSTITUTION OF DEBTORS
ASSUMPTION OF DEBT
Contract of Assumption of Debt
Article 446
(1) An assumption of debt shall be effected if the creditor consents by a contract between a debtor and a person assuming the debt.
(2) Any of the two may notify the creditor on the contract concluded, and the creditor may extend his consent to either of them on the assumption of debt.
(3) It shall be presumed that the creditor has extended his consent after accepting without reservations some kind of fulfillment effected by the person assuming the debt in his own name.
(4) Contracting parties jointly, as well as each one of them separately may demand from the creditor to decide, within a specified time limit, whether to consent to the assumption of debt, and should the creditor fail to declare his decision, it shall be considered that his consent has not been extended.
(5) A contract of assumption of debt shall have the effect of a contract of assumption of fulfillment for the time of creditor's deciding about his consent to the contract of assumption of debt, as well as should he refuse his consent.
A Case of a Debt Secured by Mortgage
Article 447
(1) Where during disposal of real estate being under mortgage it is stipulated between the transferee and the transferor that the transferee shall assume a debt owed to the mortgage creditor, the mortgage creditor shall be considered to have extended consent to the contract of assumption of debt after not refusing it at the wirtten request by the transferor, within a three month time limit from the day of accepting such request.
(2) The written request to the creditor shall contain notification relating to this consequence, otherwise the request shall not be considered as being sent.
II Effects of Contract of Assumption of Debt
Substitution of Debtors
Article 448
(1) By way of debt assumption, a person assuming a debt shall substitute the previous debtor and the latter shall be relieved from the obligation.
(2) However, if at the time of creditor's consent to the contract of assumption of debt the person assuming the debt was over his head in debt, and the creditor was not aware of it, or had no duty to be aware, the previous debtor shall not be exempted from obligation, while the contract of assumption of debt shall have the effect of a contract of joining a debt.
(3) The same obligation which existed until then between the previous debtor and the creditor shall exist between a person assuming debt and the creditor.
Accessory Rights
Article 449
(1) Accessory rights which existed with the claim until then shall continue, but the guarantees, as well as pledges, supplied by third parties, shall be terminated should the guarantors and pledgers do not consent to be liable for the new debtor as well.
(2) Unless otherwise stipulated, the person assuming a debt shall not be liable for uncollected interest that became due prior to assumption of debt.
Objections
Article 450
(1) A person assuming a debt may raise against a creditor all objections arising from the legal relationship between the previous debtor and the creditor serving as a ground of the debt assumed, as well as objections pertaining to the person assuming debt against the creditor.
(2) A person assuming a debt may not raise against the creditor objections originating from his legal relationship with the previous debtor, where such relationship was the basis for the assumption of debt.
JOINING A DEBT
Contract of Joining a Debt
Article 451
A contract between a creditor and a third party by which the latter assumes the obligation to the creditor to fulfill his claim against the debtor, shall mean that the third party has joined in the obligation alongside the debtor.
Joining a Debt in Case of Accepting some Entity of Property
Article 452
(1) A person to whom the an entity of property of a natural or legal person is transferred on the ground of contract, or a part of that entity, shall be liable for debts relating to such entity i.e. its part, alongside the former owner, and jointly and severally with him, but only up to the value of such entity’s assets.
(2) A contractual clause by which liability specified in the preceeding paragraph would be excluded or limited shall have no legal effect as to the creditors.
ASSUMPTION OF FULFILLMENT
Article 453
(1) An assumption of fulfillment shall be effected by a contract between a debtor and a third person, in terms of which the latter assumes the obligation to such debtor to fulfill his obligation to his creditor.
(2) He shall be liable to the debtor after failing in due time to fulfill the obligation to the creditor, so that the latter has requested fulfillment from the debtor.
(3) But he shall not assume the debt in such a way, or shall not join it, and the creditor shall have no rights whatsoever against him.
CONTRACTS
SALE
GENERAL PROVISIONS
Notion
Article 454
(1) By a contract of sale a seller shall assume the obligation to transfer to a buyer the right of ownership of a sold object and to deliver it to him for that purpose, while the buyer shall assume the obligation to pay the price in money and to take over the object.
(2) A seller of some other right shall assume the obligation to provide a buyer with the right sold, and should exercising such right require possession of an object, also to deliver it to him.
Form of Sale of Real Property
Article 455
A contract of sale of immovable property must be entered into in form prescribed by a special law governing the turnover of immovable property, under penalty of annulment.
Risk
Article 456
(1) The risk of accidental loss or damage to the object until delivery to the buyer shall be born by the seller, and on delivery of the object the risk shall pass to the buyer.
(2) The risk shall not pass to the buyer if he has terminated the contract due to a defect in the object delivered, or if he has requested replacement of the object.
Passing of Risk in Case of Buyer's Delay
Article 457
(1) Should delivery of the object be not effected due to the buyer's delay, risk shall pass to the buyer at the moment he delays performance.
(2) Should objects specified in kind be the subject of contract, the risk shall pass to the buyer who delays performance when the seller has singled out objects obviously intended for delivery, and when he has notified the buyer accordingly.
(3) But should objects specified in kind be of such a nature that the seller can not single out one part of them, it shall suffice that the seller has done everything necessary to enable the buyer to take over the objects and that he has notified the buyer accordingly.
CONSTITUTIVE ELEMENTS OF THE CONTRACT OF SALE
OBJECT
General Rule
Article 458
(1) The object the contract is about must be tradable; hence a contract of sale of a non-tradable object shall be null and void.
(2) For the sale of objects whose trade is restricted, particular regulations shall apply.
(3) A sale may also relate to a future object.
If an Object is ruined before the Contract
Article 459
(1) A contract of sale shall have no legal effect should at the moment of its conclusion its object be ruined.
(2) Should at the moment of concluding a contract the object be only partially ruined, the buyer may terminate the contract or he may keep it after reducing the price proportionately.
(3) However, the contract shall remain valid and the buyer shall only be entitled to reduce the price, should the partial ruin of the object fail to hinder the purpose of the contract, or should such usage exist in relation to a particular object.
Sale of Somebody Else's Object
Article 460
A sale of somebody else's object shall be binding for contracting parties, but if buyer was not aware or had no duty to be aware of the fact that the object belonged to another, he may terminate the contract and demand damages should, due to the above, the purpose of the contract be impossible to be realized.
Sale of a Contested Right
Article 461
(1) A contested right may be a subject of a contract of sale.
(2) But a contract shall be null and void by which a practicing lawyer or any other recipient of instructions buys a contested right whose realisation was entrusted to him, or if he negotiates for himself a share in the amount awarded to his principal.
PRICE
If the Price is not determined
Article 462
(1) If the price is not determined by a contract of sale, and if the contract itself lacks sufficient data with the help of which the price could be determined, the contract shall have no legal effect.
(2) If the price is not determined by a commercial contract of sale and should it lack sufficient data with the help of which the price could be determined, the buyer shall pay the price otherwise regularly charged by the seller at the time of entering into contract, and should there be no such price, he shall pay a reasonable price.
(3) A price shall be considered reasonable if it is a current price at the time of entering into contract, and should it be impossible to determine, than it shall be the price that the court determines in conformity to the circumstances of the case.
Prescribed Price
Article 463
Should a higher price be stipulated by contract than the one prescribed by a competent government authority for specific kind of objects, the buyer shall owe only the amount of the prescribed price, and when he has already paid the price stipulated, he shall be entitled to demand a refund of the difference.
Should Current Price Be Stipulated
Article 464
(1) Should current price be stipulated, the buyer shall owe the price as determined by official records in the market at the seller's place of business and at the time when fulfillment should have taken place.
(2) Should no such records exist, the current price shall be determined on the basis of elements with the help of which prices are determined according to trade usages in the market.
If the Determination of Price Be Left to Third Person
Article 465
Should a third person being entrusted with determining the price refuse of be unable to determine it, and the negotiating partners fail to come to agreement subsequently on determination of price or to terminate the contract, it shall be considered that a reasonable price has been stipulated.
If the Determination of Price Be Left to One Contracting Partner
Article 466
A contractual clause by which the determination of price is left to volition of one contracting party shall be considered as not agreed at all, and the buyer in such a case shall owe a price as if no price has been determined.
OBLIGATIONS OF A SELLER
DELIVERY OF OBJECTS
Time and Place of Delivery
Article 467
(1) A seller shall deliver the object to a buyer at a time and in the place as specified by contract.
(2) As a rule, a seller has performed the duty of delivery to the buyer after handing over the object to him or after delivering a legal instrument to him by which the object may be taken over.
Subject of Delivery
Article 468
(1) Unless something else be stipulated or unless something else result from the nature of the transaction, the seller shall deliver the object to the buyer in working condition, together with corresponding accessories.
(2) Incomes in kind and other benefits stemming out of the object shall belong to the buyer from the day of seller's obligation to deliver them to him.
Delivery Being Stipulated within a Certain Period of Time
Article 469
Should it be stipulated that delivery of an object shall be effected within a certain period of time, and if not determined which party shall be entitled to determine the delivery date within the limits of such period, such right shall belong to the seller, unless circumstances of the case indicate that the determination of delivery date has been left to the buyer.
If Delivery Date was not Determined
Article 470
Should the date of delivery of an object to the buyer be not determined, the seller shall effect delivery within a reasonable time limit after the conclusion of contract, in conformity with the nature of the object and other circumstances.
If Place of Delivery was not Determined by Contract
Article 471
(1) Should the place of delivery not be determined by contract, the delivery of the object shall be effected at the place of the seller's domicile at the moment of entering into contract or, should there be no such domicile, at the place of seller's residence, and in case the seller has entered into contract while performing his regular business activity, the delivery place shall be his business address.
(2) However, if contracting parties were aware at the moment of entering into contract of the location of the object or of where it has to be manufactured - the delivery shall be effected at such place.
Delivery to a Carrier
Article 472
Should it be necessary according to contract to transport the object, and there be no indication in the contract as to the place of fulfillment, the delivery shall be considered effected by handing the object over to the carrier or to a person organizing the forwarding.
Organizing Transport
Article 473
Should the seller be bound to forward the object to the buyer, he must conclude, in a usual way and under usual terms and conditions, contracts necessary for effecting the transport to the designated place.
Expenses
Article 474
Hand over expenses, as well as those preceding it, shall be borne by the seller, but the expenses of carrying away the object and all other expenses after the delivery shall be borne by the buyer, unless something else be stipulated.
II Simultaneous Delivery of Object and Payment of Price
Postponing Delivery until the Payment of Price
Article 475
Unless otherwise stipulated or customary, the seller shall not be bound to deliver the object should the buyer fail to pay him the price simultaneously, or should he not be ready to do that simultaneously, but the buyer shall not be obliged to pay the price before being able to inspect the object.
Postponing Delivery in the Case of Transporting the Objects
Article 476
(1) Should delivery of the object be effected by handing them over to a carrier, the seller may postpone the forwarding of the object until payment of the price, or he may forward the object in such a way so as to reserve the right to control it in course of carriage.
(2) After reserving the right to control the object in the course of carriage, the seller may demand that the object not be delivered to the buyer at the place of destination until he has not paid the price, while the buyer shall not be bound to pay the price before being able to inspect the object.
(3) However, should it be provided by contract that payment is effected against presentation of corresponding legal instrument, the buyer shall not be entitled to refuse payment of the price after being unable to inspect the object.
Preventing Handover of the Forwarded Object
Article 477
(1) Should it turn out when the object is forwarded to the buyer that his material situation raises reasonable doubts as to his ability to pay the price, the seller may prevent handover of the object to the buyer even after the latter is already in possession of a legal instrument authorizing him to demand handover of the object.
(2) However, the seller may not prevent handover should it be demanded by a third party who has proper possession of the legal instrument authorizing him to demand handover of the object, unless the legal instrument contains reservations as to the effect of transfer, or unless the seller is successful in proving that a person in possession of the legal instrument, at the time of acquiring it, had acted wilfully to the detriment of the seller.
LIABILITY FOR SUBSTANTIVE DEFECTS
I Generally on Substantive Defects
Substantive Defects Being the Responsibility of Seller
Article 478
(1) A seller shall be responsible for substantive defects in the object existing at the moment of transfer of risk to the buyer, regardless of whether he was aware of the fact.
(2) A seller shall also be responsible for those substantive defects which arose after the transfer of risk to the buyer, should they be due to a cause which existed before that.
(3) An insignificant substantive defect shall not be taken into consideration.
When Do Substantive Defects Exist
Article 479
A defect shall exist:
1) Should the object fail to have necessary properties for its regular use of for being marketable;
2) Should the object fail to have properties necessary for its specific use being the buyer's reason for acquiring it, which use was known, or should have been known, to the seller;
3) Should the object fail to have the properties and characteristics which are explicitely or implicitly stipulated, i.e. prescribed by a regulation;
4) If a seller has delivered the object which is not in conformity with a sample or model, unless the sample or model was presented to him only for information purposes.
Defects outside Seller's Responsibility
Article 480
(1) A seller shall not be responsible for defects specified in items 1) and 3) of the preceding Article, if they were known to the buyer at the moment of entering into contract or if it was impossible for them to remain unknown to him.
(2) Defects shall be considered impossible to remain unknown to a buyer if they could have been easily noticed by usual inspection of the object by a diligent person having average knowledge and experience characteristic for a person of the same profession and education as the buyer.
(3) However, a seller shall be responsible even for defects which could have been noticed easily by the buyer, if the former declared that the object is free of all defects or that it had specific properties or characteristics.
Inspection of Objects and Visible Defects
Article 481
(1) A buyer shall inspect the received object in the usual way, or to have them inspected as soon as this is possible according to regular course of events, and to notify the seller of visible defects, within an eight day time limit, while in the case of commercial contracts, whithout delay, since otherwise he shall lose the right pertaining to him on that ground.
(2) After an inspection is effected in the presence of both parties, the buyer shall report immediately to the seller his remarks regarding visible defects, since otherwise he shall lose the right pertaining to him on that ground.
(3) Should the buyer forward the object further without transshipment, and if the seller at the moment of entering into contract was aware, or had a duty to be aware, of a possibility of such further forwarding, the inspection of the object may be postponed until its arrival at the new place of destination, and the buyer in such a case shall notify the seller of defects as soon as he could become aware of them through his clients in the regular course of events.
Concealed Defects
Article 482
(1) Should it turn out after the buyer accepts the object that the object has a defect which was impossible to discover by usual inspection when taking the object over (concealed defect), the buyer shall, under threat of forfeiting the right, notify the seller of such defect within eight days, counting from the day of his discovering the defect, while in case of commercial contracts without delay.
(2) A seller shall not be responsible for defects appearing six months after delivery of the object, unless a longer time limit has been stipulated by contract.
Time Limits in Case of Repair, Replacement, and the Like
Article 483
Should, due to a defect, object be repaired, other object be delivered, parts replaced, and the like, the time limit specified in the two preceding Articles shall begin to run from the moment of handover of the repaired object, of handover of other object, of replacement of spare parts, and the like.
Notifying of Defects
Article 484
(1) A buyer shall describe the defect more closely in the notification about a defect in the object and invite the seller to inspect the object.
(2) Should notification about the defect, otherwise sent to the seller by the buyer on time by registered mail, telegram or in some other reliable way, be late or should it entirely fail to reach the seller, the buyer shall be considered to have fulfilled his duty to notify the seller.
Significance of the Fact that Seller Was Aware of Defect
Article 485
A buyer shall not lose the right to claim a defect even after failing to meet his duty to inspect the object without delay, or a duty to notify the seller within a determined time limit, of the existence of a defect, as well as after such defect has appeared six months after handover of the object, if such defect was known to the seller or if it could not have remained unknown to him.
Contractual Limitation or Exclusion of Seller's Responsibility for Substantive Defects
Article 486
(1) Negotiating parties may limit or entirely exclude the seller's responsibility for substantive defects of the object.
(2) A contractual clause limiting or excluding responsibility for defects in the object shall be null and void if a defect was known to the seller, and he failed to notify the buyer thereof, or if the seller imposed such clause by using his particular monopoly position.
(3) A buyer forfeiting his right to terminate the contract due to a defect in the object shall keep the remaining rights on the ground of such defect.
Compulsory Public Sale
Article 487
An owner whose object was sold at a compulsory public sale shall not be liable for defects in the object.
Fulfillment, Price Reduction, Contract Termination, Damages
Article 488
(1) A buyer duly notifying a seller on time of a defect may:
1) Demand that the seller eliminates the defect or delivers him other object free of defects (fulfillment of contract);
2) Demand a reduction of the price;
3) Declare that he terminates the contract.
(2) In all the above cases the buyer shall be entitled to damages as well.
(3) In addition, and independently of the above, a seller shall also be liable to the buyer for compensating him for loss sustained by him because of a defect in the object which caused damage to other property of his, in which case general rules of tort liability shall apply.
Failing to Fulfill a Contract in a Reasonable Time Limit
Article 489
Should a buyer fail to obtain the demanded fulfillment of contract within a reasonable time limit, he shall keep the right to terminate the contract or to reduce the price.
When a Buyer May Terminate the Contract
Article 490
(1) A buyer may terminate the contract only after leaving the seller prior to that a subsequent reasonable time limit to fulfill the contract.
(2) A buyer may terminate the contract even without leaving a subsequent time limit should the seller, after notifying him about defects, inform him that he is not going to fulfill the contract, or should circumstances of the specific case obviously indicate that the seller will not be able to fulfill the contract even in the subsequent time limit.
Failing to Fulfill the Contract in the Subsequent Time Limit
Article 491
Should a seller fail to fulfill the contract in the subsequent time limit, the contract shall be terminated by operation of law, but the buyer may keep it valid after immediately declaring to the seller his intention to keep the contract in force.
Partial Defects
Article 492
(1) If only a part of the delivered object has defects, or if only a part of the object is delivered, i.e. a lesser quantity than stipulated, the buyer may terminate the contract in terms of the preceding Articles only relating to the defective part, or only relating to the part or quantity missing.
(2) The buyer may terminate the entire contract only should the stipulated quantity or the object delivered make an entity, or should otherwise the buyer have a justified interest in accepting the object or quantity stipulated in their entirety.
When a Seller Delivered a Larger Quantity to a Buyer
Article 493
(1) Should in the case of a commercial contract of sale a seller of objects specified by kind deliver to a buyer a quantity larger than stipulated, and should the buyer fail, within a reasonable time limit, to declare his refusal of the surplus, he shall be considered to have accepted such surplus as well, and he shall be bound to pay it at the same price.
(2) Should the buyer refuse to accept the surplus, the seller shall redress to the buyer the corresponding loss.
When One Price is Determined for Several Objects
Article 494
(1) Should several objects or a collection of objects be sold by one contract and at one price, and only some of them are defective, the buyer may terminate the contract only relating to such goods and not to the rest.
(2) However, should they make an entirety so that their separation would be damaging, the buyer may terminate the entire contract, but if, however, he declares his intention to terminate the contract only relating to defective objects, the seller, on his part, may terminate the contract relating to the rest of the objects.
Losing the Right to Terminate a Contract due to a Defect
Article 495
(1) A buyer shall lose the right to terminate the contract due to a defect in the object should it be impossible for him to return the object or to restore it to the state it was in when received by him.
(2) However, the buyer may terminate the contract due to some defect in the object should the object be entirely or partially ruined or damaged due to a defect which justifies the termination of contract, or due to an event not ensuing from him or from a person under his responsibility.
(3) The same shall apply should the object be entirely or partially ruined or damaged in connection with the duty of the buyer to inspect the goods, or should the buyer, before the defect was discovered, consume or alter part of the object in course of its regular use, or should damage or alteration be without significance.
Keeping the Remaining Rights
Article 496
A buyer who has lost the right to terminate the contract due to inability to return the object or restore it to the state it was in when received by him, shall keep the remaining rights given by law due to existence of a defect.
Effects of Termination due to a Defect
Article 497
(1) Termination of a contract due to a defect in the object shall produce the same effects as the termination of bilateral contracts due to lack of fulfillment.
(2) A buyer shall owe to a seller compensation for benefits from the object even if it is impossible for him to return it in its entirety or to return a part of it, while the contract was, however, terminated.
Price Reduction
Article 498
Price reduction shall be effected according to a ratio between the value of the object without defects, and the value of the object with defects, at the time of entering into contract.
Gradual Discovery of Defects
Article 499
A buyer obtaining a reduced price due to the existence of a defect may terminate the contract or demand a new reduction in the price should another defect be discovered subsequently.
Forfeiting a Right
Article 500
(1) Rights of a buyer notifying a seller in due time of the existence of a defect shall be forfeited after the expiration of one year, counting from the day of sending the notification to the seller, unless the buyer was prevented from using them because of seller's deceit.
(2) However, a buyer notifying the seller in due time of the existence of a defect may, after the expiration of this time limit, and if he has not yet paid the price, demand that the price be reduced or loss sustained by him compensated - in the form of an objection against seller's demand that the price be paid to him.
III Warranty for Correct Functionning of the Object Sold
Responsibility of a Seller and a Manufacturer
Article 501
(1) Should a seller of a machine, engine, apparatus of any kind, or of similar objects of a category of so-called technical goods, hand to a buyer a written warranty from the manufacturer covering proper functionning of the object within a specified period, counting from the moment of its handover to the buyer, the buyer may, should the object fail to function properly, demand both from the seller and the manufacturer that the object be repaired within a reasonable time limit or, short of this, that it be replaced with one functionning properly.
(2) These rules shall not affect the rules of liability of seller for deficiencies of the object.
Demanding Repair or Replacement
Article 502
(1) Because of improper functioning a buyer may demand from the seller i.e. manufacturer, repair or replacement of the object during the warranty period, regardless of the moment the defective functioning appeared.
(2) He shall be entitled to compensation for loss sustained by him being prevented from using the object from the moment of demanding repair or replacement to their effecting.
Extending the Warranty Period
Article 503
(1) In the case of a minor repair the warranty period shall be extended for the time the buyer was prevented from using the object.
(2) However, where due to improper functioning the object is replaced or thoroughly repaired, the warranty period shall begin to run anew from the day of replacement, i.e. return of the repaired object.
(3) Should only a part of the object be replaced or thoroughly repaired, the warranty period shall begin to run anew only regarding such part.
Termination of Contract and Reduction of Price
Article 504
Should a seller fail to repair or replace the object within a reasonable time limit, the buyer may terminate the contract or reduce the price and demand damages.
Expenses and Risk
Article 505
(1) A seller, i.e. manufacturer, shall transport at his expense the object to the place of repair, i.e. replacement, as well as deliver the repaired or replaced object to the buyer.
(2) A seller i.e. manufacturer shall bear the risk of loss or damage to the object during that time.
Liability of Subcontractors
Article 506
Should several independent manufacturers participate in manufacturing some parts of the object or in executing individual processes, their liability to the finishing stage manufacturer for the improper functionning of the object, caused by these parts or these processes, shall cease when the liability of the finishing stage manufacturer ceases in relation to the buyer of the object.
Forfeiture of Right
Article 507
Buyer's rights in relation to manufacturer on the ground of a warranty certificate shall be forfeited one year after the day of his demand that the seller effect repair or replacement of the object.
LIABILITY FOR LEGAL DEFICIENCIES (PROTECTION AGAINST FORFEITURE)
Legal Deficiencies
Article 508
(1) A seller shall be liable should the object sold be subjected to a third party's right which excludes, reduces or restricts a buyer's right, whose existence was not communicated to the buyer, and the buyer did not accept the object subjected to such right.
(2) A seller of some other right shall guarantee its existence and lack of legal obstacles for its realisation.
Notifying a Seller
Article 509
Should it turn out that a third party claims a right to the object, the buyer shall notify the seller thereof, unless the fact be already known to the seller, and he shall demand that he releases, in a reasonable time limit, the object from third party's right or claim, or, should the subject of contract be objects specified by kind, that he delivers to him another object free of legal deficiency.
Sanctions Relating to Legal Deficiencies
Article 510
(1) Should a seller fail to proceed according to buyer's demand and the buyer be deprived of the object, the contract shall be terminated by operation of law, and in case of reducing or restricting buyer's right, the buyer may, at his choice, either terminate the contract or request a proportionate price reduction.
(2) Should a seller fail to meet buyer's request to release, in a reasonable time limit, the object from a third party's claim or right, the buyer may terminate the contract, should, because of that, its purpose be impossible to achieve.
(3) The buyer shall in any case be entitled to compensation for loss sustained.
(4) However, should the buyer, at the moment of entering into contract, be aware of the possibility of being deprived of the object, or of reducing or restricting his right, he shall have no right to damages after such possibility has been realized, but shall still be entitled to demand return of the paid price i.e. its reduction.
Failure of a Buyer to Notify a Seller
Article 511
A buyer who, while failing to notify a seller, engages in unsuccessful litigation against a third party, may still invoke seller's liability for legal deficiencies, unless the seller is able to prove that he was in possession of means by which third party's demand could have been refuted.
When Right of a Third Party is obviously justified
Article 512
(1) A buyer shall be entitled to invoke seller's liability for legal deficiencies even after, without notifying the seller and without litigation, acknowledging an obviously justified right of a third party.
(2) Should a buyer pay to the third party an amount of money to renounce his obvious right, the seller may be exempted from his liability after compensating the buyer the amount paid and the loss sustained.
Contractual Limiting or Excluding Seller's Liability
Article 513
(1) Liability of a seller for legal deficiencies may be limited or entirely excluded by contract.
(2) However, if the seller was aware of a deficiency in his right, or if it could not have remained unknown to him at the time of entering into contract, the clause in the contract on limiting or excluding liability for legal deficiencies shall be null and void.
Restrictions of Public Law Nature
Article 514
A seller shall also be liable for particular restrictions of public law nature unknown to the buyer, if aware of them, or aware that they can be expected, and after failing to notify the buyer accordingly.
Forfeiture of Right
Article 515
(1) A right of a buyer on the ground of legal deficiencies shall expire one year after he becomes aware of the existence of a third party's right.
(2) However, if the third party, prior to expiration of such time limit, has started to litigate and the buyer has invited the seller to take part in the litigation, the right of the buyer shall expire only after a six month period following a final court decision.
OBLIGATIONS OF A BUYER
PAYMENT OF PRICES
Time and Place of Payment
Article 516
(1) A buyer shall pay the price at the time and in the place specified in the contract.
(2) Should there be no such clause in the contract or no other usage in the matter, the payment shall be done at the moment and in the place of handover of the object.
(3) If the price does not have to be paid at the moment of handover, the payment shall be made at the domicile, i.e. at the business headquarters of the seller.
Interest in Case of a Credit Sale
Article 517
Should the object sold on credit yield fruits or other benefits, the buyer shall owe the interest from the moment the object was handed over to him, regardless of whether his obligation to pay the price has become due.
Payment of Price in Case of Consecutive Deliveries
Article 518
(1) In case of consecutive deliveries a buyer shall pay the price for each delivery at the moment of taking it, unless something else is stipulated or result from circumstances of the transaction.
(2) When in case of a contract providing for consecutive deliveries the buyer has made an advance payment to the seller, first deliveries, unless something else is stipulated, shall be charged against such advance payment.
TAKEOVER OF OBJECTS
Article 519
(1) Takeover of objects shall consist of undertaking necessary actions in order to make handover possible, including the carrying away of objects.
(2) Should a buyer refuse without justified reason to take over the object whose handover is offered to him in stipulated or usual manner and in due time, the seller may, after having a justified reason to doubt that the buyer will pay the price, declare his intention to terminate the contract.
DUTY TO TAKE CARE OF OBJECTS FOR THE ACCOUNT OF A CONTRACTING PARTY
Cases of Duty of Taking Care
Article 520
(1) Should, due to a buyer's delay, the risk pass to the buyer prior to delivery of the object, the seller shall take care of the goods as a good businessman, i.e. good head of household, and to take necessary measures to that purpose.
(2) The same shall apply to a buyer after the object has been handed over to him, if he wants to return it to the seller, either because he has terminated the contract, or because he demands other object instead of the delivered one.
(3) In both cases the contracting party being bound to take measures of taking care of the object, shall be entitled to reimbursement of expenses needed for preserving the object.
When a Buyer Refuses to Accept the Object Forwarded to Him
Article 521
A buyer unwilling to accept object forwarded to him at the destination place and placed at his disposal at such place, shall take them over for the account of the seller, should the latter be not present at the destination place or fail to have someone else at the place to take them over for him, provided that this is possible without paying the price and without too much inconvenience of excessive costs.
Rights of a Party Obliged to Take Care of the Object
Article 522
A contracting party obliged under the preceding provisions to take measures to care for the object may, in conformity with the conditions and the consequences specified in the provisions of the present Law relating to depositing at the court and sale of the object owed, deposit it at the court, or hand it over to somebody else for custody, or sell them for the account of the other party.
REDRESSING LOSS IN CASE OF SALE TERMINATION
General Rule
Article 523
Should a sale be terminated due to a breach of contract by one of the contracting parties, the other party shall be entitled to damages according to the general rules of compensation for loss due to breach of contract.
When Object has a Current Price
Article 524
(1) After a sale is terminated due to breach of contract by one of the contracting parties, if the object has a current price, the other party may demand the difference between the price determined by contract and the current price, on the day of termination of contract, in the market of the place where the transaction was made.
(2) Should there be no current price in the market of the place where the transaction was made, in order to come to amount of damages, a current price shall be taken into account which exists in a market which could replace it in the given case, but increased by the difference in transportation costs.
When Sale or Purchase for Cover of Expenses was executed
Article 525
(1) Should the subject of sale be a certain quantity of objects specified in kind, and should one party fail to meet his obligation on time, the other party may execute a sale for cover of expenses, i.e. purchase with the same purpose, and may demand the difference between the price agreed by contract and the selling price, i.e. purchasing price obtained in the transaction for cover.
(2) The sale or purchase for cover must be done within a reasonable time and in a reasonable way.
(3) A creditor shall notify a debtor of the sale or purchase intended.
Compensation of Remaining Damage
Article 526
In addition to the right to damages according to the rules specified in the preceding Articles, a party faithful to the contract shall also be entitled to compensation of higher damage, if sustained by such party.
CASES OF PARTICULAR DEAL SALE
SALE WITH A RIGHT OF PRE-EMPTION
Article 527
On the ground of a contractual clause giving the right of pre-emption, a buyer shall be bound to notify a seller of his intention to sell the object to a specific person, as well as on the terms of such sale, and to offer him to purchase the object at the same price.
Time Limits for Executing the Right and for Payment of Price
Article 528
(1) A seller shall notify a buyer in a reliable way on his decision to use the right of pre-emption within a month, counting from the day of buyer's notification of intended sale to a third party.
(2) Simultaneously with stating that he is buying the object, the seller shall pay the price agreed upon with the third party, or deposit it at the court.
(3) If a time limit for paying the price is stipulated in the contract with the third party, the seller may make use of such time limit only after providing a sufficient guarantee.
Possibility of Inheriting and Disposing
Article 529
A right to pre-emption regarding purchase of movable property cannot be transferred to another or inherited, unless otherwise provided by law.
A Case of Compulsory Public Sale
Article 530
(1) In case of compulsory public sale a seller may not invoke his right of pre-emption.
(2) But a seller having his right of pre-emption registered in a public register may demand annulment of compulsory public sale if was not explicitly invited to be present.
Duration of the Right of Pre-Emption
Article 531
(1) The right of pre-emption shall expire five years after entering into contract, unless its earlier expiration is stipulated.
(2) A longer time limit stipulated, shall be reduced to the five year time limit.
Effecting Transfer of Ownership without Notifying a Seller
Article 532
(1) If a buyer has sold the object and transferred the ownership to a third party without notifying a seller, and if the third party was aware or could not have been unaware of the fact that the seller had the right of pre-emption, the seller may demand, within a six month time limit counting from the day of his becoming aware of this transfer, that the transfer be annulled and the object handed over to him under the same conditions.
(2) If the buyer has incorrectly notified the seller on terms and conditions of sale to the third party, and if the third party was aware of that or could not have been unaware, this six month time limit shall begin to run from the day of the seller's becoming aware of the correct terms and conditions of the contract.
(3) The right of pre-emption shall in any case terminate after the expiration of five years counting from the transfer of ownership of the object to the third person.
Statutory Right of Pre-Emption
Article 533
(1) The right of pre-emption may be established for particular persons by statute.
(2) The duration of statutory right of pre-emption shall not be limited.
(3) Persons entitled by statute itself to the right of pre-emption must be notified in writing of the sale intended and its relevant terms and conditions; otherwise, they shall be entitled to request annulment of the sale.
(4) The rules of sale with the right of pre-emption shall apply mutatis mutandis also to statutory right of pre-emption.
TRIAL PURCHASE
Notion
Article 534
(1) Should it be stipulated that a buyer is taking the object on condition that it be tested as to being suitable to his needs, he shall notify the seller as to his honouring the contract within the time limit specified by contract or usage, and should there be none - within a reasonable time limit determined by the seller; otherwise, it shall be considered that he has repudiated the contract.
(2) If an object is handed over to the buyer to be tested by him until a designated time limit, and if he fails to return it without delay after expiration of the time limit, or fails to declare to the seller that he repudiates the contract, it shall be considered that he remained in the contract.
An Impartial Trial
Article 535
Should trial be stipulated in order to find out whether the object has a specific feature or whether it is suitable for particular use, the survival of a contract shall not be dependent on the buyer's conduct, but on the fact whether the object really has such features i.e. whether it is suitable for particular use.
Risk
Article 536
The risk of accidental loss or damage to the object handed over to a buyer for trial shall be borne by the seller until the buyer states that he remains in the contract, i.e. until the expiration of the time limit in which the buyer had to return the object to the seller.
Purchase upon Inspection i.e. with a Trial Reservation
Article 537
Provisions on trial purchase shall apply mutatis mutandis to purchase upon inspection and to purchase with a trial reservation.
SALE BY SAMPLE OR MODEL
Article 538
(1) In case of sale by sample or model effected by a commercial contract if the object handed over by the seller to the buyer fails to conform to a sample or model, the seller shall be liable on the ground of regulations covering seller's liability for substantive defects in goods, while in other cases - on the ground of regulations covering liability for breach of obligation.
(2) There shall be no liability of a seller for lack of conformity if the sample i.e. model was submitted to the buyer only for information purposes and approximate determination of the features of object, without promising conformity.
SALE WITH SPECIFICATION
Article 539
(1) Should a right be reserved for the buyer in the contract to determine subsequently the shape, measurement or other details concerning the object, and the buyer fails to make this specification by the stipulated date, or until the expiration of a reasonable time limit counting from the day of a corresponding demand by the seller, the seller may declare that he terminates the contract or he may make a specification according to what was known to him concerning the buyer's needs.
(2) Should the seller alone make the specification, he shall notify the buyer of its details and determine for him a reasonable time limit for him to make a different specification.
(3) Should the buyer fail to take this opportunity, the specification made by the seller shall be binding.
SALE WITH RESERVING THE RIGHT OF OWNERSHIP
Conditions
Article 540
(1) A seller of a specific article of movable property may, through special clause in the contract, reserve the right of ownership even after handing the object over to the buyer - until the latter pays the price completely.
(2) Reserving the right of ownership shall affect buyer's creditors only after being made in the form of a certified legal instrument, prior to buyer's bankruptcy or prior to the seizure of his property.
(3) The right of ownership of articles of movable property which are filed in special public records may be reserved only if so provided by regulations covering the organization and keeping of such records.
(4) (Deleted)
Risk
Article 541
The risk of accidental loss or damage of the object shall be borne by the buyer from the moment the object has been handed over to him.
SALE BY PAYMENT IN INSTALLMENTS
Notion
Article 542
(1) By a contract of sale of an article of movable property by payment in installments, a seller shall assume the obligation to hand over to a buyer a particular article of movable property before the price is completely paid to him, while the buyer shall assume the obligation to pay its price in installments, i.e. in designated time intervals.
(2) The provisions of the present subsection concerning the sale against payment by installments shall apply only if the buyer is a natural person.
Form of Contract
Article 543
A contract covering the sale by payment in installments shall be made out in writing.
Essential Constitutive Elements of Contract
Article 544
(1) In addition to the indication of object and its price in a cash sale, the following has to be noted down in the document witnessing the contract, under threat of nullity, namely: the total amount of all installments, including the payment made at the moment of entering into contract, amounts of particular installments, their number and corresponding time limits.
(2) The document witnessing the contract, under threat of nullity, must include a clause authorizing the buyer to repudiate the contract if he notifies the seller accordingly in writing, within a three day time limit from the day of signing the document, and that the buyer cannot renounce this right in advance.
Right of a Buyer to Pay the Price in Full at Once
Article 545
(1) A buyer may always pay the remaining price due at once.
(2) Such balance shall be paid in net amount, without interest stipulated and without expenses.
(3) A contractual clause contrary to the above shall be null and void.
Termination of Contract and Demand for Full Payment of the Price
Article 546
(1) A seller may terminate the contract should the buyer be late with the initial installment payment.
(2) After the payment of the initial installment, the seller may terminate the contract should the buyer become late with at least two consecutive installment payments, which amounts to at least one eighth of the price.
(3) As an exception, the seller may terminate the contract should the buyer be late with the payment of only one installment, if no more than four installments have been provided for paying the price.
(4) In the cases specified in paragraphs 2 and 3 of the present Article, the seller may, instead of termination of contract, demand from the buyer the full payment of the rest of the price, but prior to such demand he shall be obliged to extend to the buyer a subsequent fifteen day time limit.
Extending Payment Time Limits by the Court
Article 547
At the buyer's request the court may, where circumstances of the case so justify, extend the time limits for payment of installments overdue - if the buyer supplies a guarantee for performing his obligations, and if the seller is not exposed to damage because of that.
Nullity of Stipulated Liquidated Damages
Article 548
A clause in the contract on liquidated damages shall be null and void in case of contract termination, or if the buyer is late in paying some of the price installments.
Termination of Contract
Article 549
(1) Should a contract be terminated a seller shall return to the buyer accepted installments, together with the statutory interest, from the day of their acceptance, and to reimburse the necessary expenses of the buyer he incurred related to the object.
(2) The buyer, on his part, shall return the object to the seller in the state it was in at the moment of delivery to him, and to pay a fee for its use until the termination of contract.
Application of Rules of Sale against Payment by Installments
Article 550
(1) The rules of sale against payment by installments shall also apply in case of other deals with similar essential nature, such as, the lease contract with a clause according to which ownership of the object leased shall pass to the lessee after his completing payment of the lease fee for a certain time period.
(2) These rules shall apply also in case of a loan extended to the buyer and intended for purchasing specific objects, if the lender and the seller have come to an agreement that for the object sold by the seller, the buyer shall pay the price to the lender in installments, according to a contract entered into between the buyer and the seller.
Nullity of Clauses not Favorable to Buyer
Article 551
Clauses of contract shall be null and void concerning a sale against payment by installments which would be more unfavorable for a buyer than the provisions of the present Chapter, except provisions on reserving the right of ownership.
EXCHANGE
Notion
Article 552
(1) By a contract of exchange each contracting party shall assume a duty to the other contracting party to transfer the ownership of an object and to hand it over to him for that purpose.
(2) The subject of exchange may also be other transferrable rights.
Effects of Contract of Exchange
Article 553
A contract of exchange shall create for each contracting party the obligations and the rights otherwise created for a seller by the contract of sale.
ORDER TO SELL
Notion
Article 554
(1) By a contract of an order to sell a party accepting the order shall assume the obligation to sell a specific object handed over to him by the principal at a designated price and within a specified time limit, or to return it to the principal within such time limit.
(2) An order to sell may not be revoked.
Risk of Loss and Damage of the Object
Article 555
Object delivered to a person accepting an order shall remain the principal's property, and he shall bear the risk of its accidental loss or damage, but shall not be able to dispose of it until returned to him.
When shall it be considered that a Person Accepting an Order Has Purchased the Object
Article 556
(1) Should a person accepting an order neither sell the object and remit the specified price to the principal within a designated time limit, nor return the object within that time limit, he shall be considered to have purchased the object.
(2) However, his creditors shall not be able to seize the object until he has paid off the price to the principal.
LOAN
GENERAL PROVISIONS
Notion
Article 557
By a loan contract the lender shall assume the obligation to transfer ownership to the borrower of a specific amount of money or other generic things, while the borrower shall assume the obligation to restitute after a certain time to him the same amount of money, i.e. same quantity of objects of the same kind and quality.
Interest
Article 558
(1) A borrower may assume an obligation to owe, in addition to the principal amount, interest as well.
(2) In the case of commercial contracts, a borrower shall owe interest even if it has not been stipulated.
OBLIGATIONS OF A LENDER
Handover of Objects Promised
Article 559
(1) A lender shall hand over the designated objects at the time stipulated, and should handover time limit be not specified – when the borrower asks so.
(2) The right of a borrower to demand handover of the designated objects shall be time-barred three months after the lender's being late with his duty and, in any event, one year after entering into contract.
Poor Material Situation of a Borrower
Article 560
(1) Should it turn out that the material situation of a borrower is such that it is uncertain whether he shall be able to pay off the loan, the lender may refuse to perform his obligation of handing over the objects promised, if he was not aware of that fact at the time of entering into contract, or if the deterioration of borrower's material situation took place after entering into contract.
(2) But he shall be bound to perform his obligation should the borrower or someone else on his behalf provide a sufficient guarantee.
Damage Due to Defects of the Objects Loaned
Article 561
(1) A lender shall compensate a borrower for loss which would be sustained by him due to substantive defects in the objects lent.
(2) But, should a loan be gratuitous, he shall pay damages only if defects were known to him, or if they could not remain unknown to him, and he has failed to notify the borrower thereof.
OBLIGATIONS OF A BORROWER
Time Limit for Restituting a Loan
Article 562
(1) A borrower shall be obliged to restitute, within a stipulated time limit, the same quantity of objects of the same kind and quality.
(2) Should the contracting parties fail to determine the time limit for restituting the loan, or should it be impossible to determine it according to circumstances of the loan, the borrower shall be bound to restitute the loan after the expiration of an appropriate time limit which may not be shorter than two months, counting from the lender's demand that the loan be restituted to him.
Option at Restituting a Loan
Article 563
(1) Should the subject of loan be not money, and should it be stipulated that the borrower shall restitute the loan by payment in money, the borrower shall nevertheless be authorized to make his choice as to whether to restitute the objects loaned or to pay an amount of money corresponding to the value of such objects at the time and in the place as specified by contract for the restitution.
(2) The same shall apply in a case when it is impossible to restitute the same quantity of objects of the same kind and same quality.
Contract Repudiation
Article 564
A borrower may repudiate the contract prior to handover of specified objects to him by the lender, but should the lender suffer loss due to that, he shall be obliged to redress it.
Restituting a Loan before the Time Limit
Article 565
A borrower may restitute a loan even before the time limit determined for restituting, but shall be bound to notify the lender about his intent in advance, and to redress loss suffered by him.
SPECIAL PURPOSE LOAN
Article 566
Should a purpose be determined by contract, for which the borrower may use the lent money, and he uses it for some other purpose, the lender may declare that he terminates the contract.
LEASE
Section 1
Notion
Article 567
(1) By a contract of lease a lessor shall assume the obligation to deliver a specific object to a lessee for use, while the latter shall assume the obligation to pay him in return a specified rent.
(2) The use shall also include enjoying objects (collecting yields), unless otherwise provided by contract or by trade usage.
Implementation of Particular Regulations
Article 568
The provisions of the present Chapter shall not apply to leases otherwise regulated by particular regulations.
OBLIGATIONS OF A LESSOR
Handover of Object
Article 569
(1) A lessor shall hand over to the lessee the leased object suitable for proper use together with its accessories.
(2) An object shall be considered as suitable for proper use if it is in the condition determined by contract, and should there be no contract, in a condition suitable to serve the purpose for entering into the relevant contract.
Maintenance of the Object
Article 570
(1) A lessor shall maintain the object in proper condition for use in course of the lease, which shall include a duty to make necessary repairs.
(2) He shall reimburse the lessor for expenses incurred by him for maintenance of the object, which would otherwise be at his own charge.
(3) Expenses for minor repairs incurred by regular use of the object, as well as those involved in the actual use, shall be borne by the lessee.
(4) The lessee shall notify the lessor of necessary repairs.
Termination of Contract and Reducing Rent Because of Repairs
Article 571
(1) Should necessary repairs of the leased object hinder its use to a considerable degree and for an extended time, the lessee may terminate the contract.
(2) He shall be entitled to a reduced rent in proportion to the restriction of use of the object because of such repairs.
Alterations of Leased Object
Article 572
(1) A lessor may not make alterations of the leased object in course of the lease without the lessor's consent, should this hinder the use of the object.
(2) Should, through alterations of the object, its use by the lessee be reduced to a certain degree, the rent shall be reduced accordingly.
Liability for Substantive Defects
Article 573
(1) A lessor shall be liable to the lessee for all defects in the leased object which hinder its stipulated or regular use, regardless of whether he was aware of them or not, and for defects in the features or characteristics specified expressly or implicitely by contract.
(2) Defects of minor importance shall not be taken in consideration.
Defects not Included in Lessor's Liability
Article 574
(1) A lessor shall not be liable for those defects in the leased object that were known to the lessee at the moment of entering into contract, or which could not have been unknown to him.
(2) However, the lessor shall be liable for a defect in the leased object which remained unknown to the lessee due to gross negligence, it he was aware of such defect and willfully failed to notify the lessee thereof.
Extending Liability for Substantive Defects
Article 575
A lessor shall be liable for all defects in the leased object if he purported that it had no defects at all.
Exemption or Limitation of Liability by Contract
Article 576
(1) Liability for substantive defects in the object leased may be excluded or limited by contract.
(2) A contractual clause excluding or limiting such liability shall be null and void if the lessor was aware of defects and wilfully failed to notify the lessee thereof, or if a defect was of such a nature as to prevent the use of the object leased, or if the lessor has imposed such a clause while taking advantage of his monopoly position.
Notifying a Lessor of Defects and Dangers
Article 577
(1) A lessee shall be bound to notify a lessor without unnecessary delay of any defect in the object leased which appears during the lease, unless the lessor is aware of the defect.
(2) He shall also notify the lessor of any unexpected danger which would threaten the object leased in the course of the lease, so that he could take necessary measures.
(3) A lessee failing to notify a lessor on the occuring of a defect or danger otherwise unknown to the latter, shall forfeit his right to compensation for loss eventually sustained by him due to the existence of the defect or the danger for the object leased, and he shall be liable to compensate the loss sustained by the lessor due to the above.
Rights of Lessee in Case of a Defective Object
Article 578
(1) If at the moment of handover the object leased has a defect impossible to eliminate, the lessee may, at his own choice, terminate the contract or demand reduction of rent.
(2) Should the object have a defect which may be eliminated without too much inconvenience for the lessee, if handover within a specific time limit was not an essential element of the contract, the lessee may demand that the lessor either eliminate the defect within a reasonable time limit or lower the rent.
(3) Should the lessor fail to eliminate the defect within a reasonable time limit determined subsequently by the lessee, the lessee may terminate the contract or demand reduction of the rent.
(4) The lessee shall in any case be entitled to damages.
When Defect Occurs in Course of Lease and when Object does not have stipulated or Usual Feature
Article 579
(1) The provisions of the preceding Article shall also apply in the case of a defect in the object occurring in the course of lease.
(2) They shall also apply in cases of an object leased having no feature it should have according to contract or usage, or in the case of such feature being lost in course of the lease.
Liability of a Lessor for Legal Defects
Article 580
(1) Should a third party claim to have a right regarding the object leased, or a right pertaining to a part of such object, and if such party addresses the lessee accordingly, or if he arbitrarily deprives the lessee of the object, the latter shall notify the lessor thereof, unless the latter was already aware of the fact; otherwise, he shall be liable for loss.
(2) Should it be established that a third party has a right which entirely excludes the lessee's right to use the object, the lease contract shall be terminated by operation of law, while the lessor shall redress the loss to the lessee.
(3) Should the third party's right only restrict the lessee's right, the latter may, at his own choice, terminate the contract or demand reduction of the rent and, in any case, request damages.
OBLIGATIONS OF A LEASE-HOLDER
Use of Object According to Contract
Article 581
(1) A lessee shall use the object as a good businessman, i.e. as a good head of household.
(2) He may use it only in the way stipulated in the contract or in accordance with the purpose of the object.
(3) He shall be liable for damage occuring in course of the use of the leased object contrary to contract or contrary to its purpose, regardless of whether the object was used by him or by a person acting under his order, a sub-lessee or another person he enabled to use the object.
Cancellation due to Use Contrary to Contract
Article 582
Should a lessee, even after the lessor's warning, continue to use the object contrary to contract or to its purpose, or neglect its maintenance, thereby causing danger of considerable loss to the lessor, the latter may cancel the contract without a cancellation period.
Payment of Rent
Article 583
(1) A lessee shall pay the rent within time limits specified by contract or by law, and should there be no contract or law, in the way practiced in the place of delivery of the object to the lessee.
(2) Unless otherwise stipulated or practiced in the place of delivering the object, the rent shall be paid every six months in case of an object leased for one or several years, and should it be leased for a shorter period - after the expiration of that period.
Cancellation Because of an Unpaid Rent
Article 584
(1) A lessor may cancel the contract of lease if a lessee fails to pay the rent even in the fifteen day time limit after lessor's demanding the payment from him.
(2) But the contract shall remain valid should the lessee pay off the amount of the rent owed before being notified on the cancellation.
Returning a Leased Object
Article 585
(1) A lessee shall take care of the object leased and return it undamaged after cessation of lease.
(2) The object shall be returned in the place of its handover.
(3) A lessee shall not be liable for wear and tear of the object resulting from its regular use, or for damage originating from its depletion.
(4) After effecting alterations to the object in course of the lease, the lessee shall restitute it to the state it was in when handed over to him for lease.
(5) He may take away the additions to the object realized by him, should it be possible to detach them from the object without damaging it, but the lessor may keep them after reimbursing the lessee for their value at the time of restitution.
SUBLEASE
When Objects May Be Subleased
Article 586
(1) Unless otherwise stipulated, a lessee may lease the object leased to another (sublease), or he may give it to the use of another on some other ground, but only if such action does not cause loss to the lessor.
(2) The lessee shall guarantee to the lessor that the sub-lessee shall use the object according to the lease contract.
When Lessor May Decline Permission
Article 587
Should permission by the lessor be necessary to sublease a leased object, he may decline it only on justified grounds.
Cancellation Due to Prohibited Sublease
Article 588
A lessor may cancel the lease contract should the object leased be subleased without his permission, if such permission was required according to law or the contract.
Direct Demand by a Lessor
Article 589
In order to effect payment of his claims from the lessee on the ground of a lease, a lessor may directly demand from the sub-lessee the payment of the amount due by the latter to the lessee on ground of the sublease.
Cessation of Sublease by Operation of Law
Article 590
A sublease shall cease in any event when the lease ceases.
ALIENATION OF THE OBJECT LEASED
Alienation after Handover for Lease
Article 591
(1) In case of alienation of an object previously leased to another, an acquirer of the object shall take the place of the lessor, so that subsequently the rights and duties out of the lease shall generate between him and the lessee.
(2) The acquirer may not demand from the lessee to hand the object over to him prior to the expiration of the lease period, and should that time be not determined by contract or by law, then, then prior to the expiration of the cancellation period.
(3) The person effecting transfer shall be liable as a joint and several guarantor for the acquirer's obligations to the lessee under the lease.
Right to Rent
Article 592
(1) Unless otherwise stipulated, an accquirer of the object leased shall be entitled to rent beginning from the first following time limit after the acquisition of object, and the person effecting transfer receiving such rent in advance shall assign it to him.
(2) From the moment of notification of alienation of the object leased, the lessee can pay the rent only to the acquirer.
Alienation of the Object Leased Prior to Handover to the Lessee
Article 593
(1) Should an object in relation to which a lease contract was concluded be handed over to an acquirer and not to a lessee, the acquirer shall take the place of the lessor, assuming his obligations towards the lessee, if he was aware, at the moment of entering into contract of alienation, of the existence of the lease contract.
(2) An acquirer not being aware at the moment of entering into contract of alienation of the existence of the lease contract shall not be bound to deliver the object to the lessee, and the lessee may only claim damages from the lessor.
(3) The person effecting transfer shall be liable as a joint and several guarantor for the acquirer's obligations towards the lessee under the lease.
Cancellation of Contract Because of Alienation of Object
Article 594
Should due to alienation of the object leased, rights and duties of the lessor be transferred to the acquirer, the lessee may in any case cancel the contract, while adhering to statutory cancellation periods.
CESSATION OF LEASE
Expiration of Designated Time
Article 595
(1) A lease contract entered into for a definite period shall cease by the expiration itself of the time covered by the contract.
(2) The same shall apply to cases in which, in the lack of volition of negotiating parties, the lease period is specified by law.
Implicit Renewal of Lease
Article 596
(1) Should after the expiration of time covered by contract of lease, the lessee continue to use the object, and the lessor does not object it, a new lease contract shall be considered to have been concluded for an indefinite period, and under the same terms and conditions as the previous one.
(2) Collaterals provided by third persons for the first lease shall cease by the expiration of that lease period.
Cancellation
Article 597
(1) A lease contract whose duration period is not determined or which can not be determined on the ground of circumstances of the case or local usage of trade, shall cease by cancellation which may be given by each party to the other, while honoring the determined cancellation period.
(2) Should the length of the cancellation period not be determined either by contract or by law, or by local usage of trade, it shall amount to eight days, provided that the cancellation may not be given at a bad time.
(3) Should the leased objects be dangerous to health, the lessee may cancel the contract without cancellation period, even if he was aware of that fact at the moment of entering into contract.
(4) The lessee may not renounce the right specified in paragraph 3 of the present Article.
Destruction of Object due to an Act of God
Article 598
(1) The lease shall cease should the object leased be destroyed by an Act of God.
(2) Should the object leased be partially destroyed or only damaged, the lessee may either terminate the contract or uphold the lease and demand an adequate reduction of rent.
Death
Article 599
In the case of death of a lessee or a lessor the lease shall be continued by their heirs, unless otherwise provided by contract.
CONTRACT FOR THE SUPPLY OF SERVICES
GENERAL PROVISIONS
Notion
Article 600
By a contract for the supply of services the person working (contractor, supplier) shall assume the obligation to perform a particular job, such as to manufacture or repair an object, or execute some physical or intellectual work, and the like, while the purchaser of the services shall assume the obligation to pay a fee for that.
Relationship to a Contract of Sale
Article 601
(1) A contract by which one party assumes an obligation to manufacture a specific movable object from his own material shall be considered, if in doubt, as a contract of sale.
(2) But it shall remain a contract for supply of services if the purchaser has assumed the obligation to provide a major part of the material needed for the manufacture of the object.
(3) Such a contract shall in any case be considered as a contract for supply of services if the contracting parties had the supplier's work particularly in mind.
Quality of Supplier's Material
Article 602
(1) When it is stipulated that the supplier should manufacture the object from his own material, and the quality is not determined, the supplier shall be bound to provide material of an average quality.
(2) He shall be liable to the purchaser for the quality of the material used in the same way as the seller.
SUPERVISION
Article 603
A purchaser shall be entitled to effect supervision over the performance of the job and to give instructions when appropriate as to the nature of the job, while the supplier shall make that possible to him.
MAKING A CONTRACT BY BIDDING
Invitation to Bid for the Price of Works
Article 604
(1) An invitation addressed to a specified or unspecified number of persons to compete for the performance of specific works, under specified terms and conditions, and with specific guarantees, shall bind the inviter to make a contract for such works with the one offering the lowest price, unless such obligation was excluded in the invitation to tender.
(2) In the case of excluding the obligation to make a contract, the invitation to tender shall be considered as an invitation to interested parties to submit their own offers of contract under terms and conditions published.
Invitation to Tender for Artistic or Technical Solutions for Works Intended
Article 605
An invitation addressed to a specified or unspecified number of persons to compete for an artistic or technical solution for intended works shall bind the inviter to conclude a contract, under the terms contained in the invitation to tender, with the participant in the tender whose solution is accepted by a commission, the composition of which was disclosed in advance, unless such obligation was excluded in the invitation to tender.
OBLIGATIONS OF A SUPPLIER
Defects in Material
Article 606
(1) A supplier shall draw the purchaser's attention to defects in the material handed over to him by the purchaser, which he noticed or must have noticed; otherwise, he shall be liable for damages.
(2) Should the purchaser demand that the object be manufactured from the material whose defects were indicated to him by the supplier, the supplier shall act according to his demand, unless it is obvious that the material is not suitable for the creation ordered, or that manufacturing from the requested material could harm the reputation of the supplier, in which case the supplier may terminate the contract.
(3) The supplier shall be obliged to warn the purchaser about defects in his order, and about other circumstances he is aware of, or must have been aware of, which may be of importance for the creation ordered, or for its performance on time; otherwise he shall be liable for damages.
Obligation to Execute the Work
Article 607
(1) A supplier shall carry out the work as stipulated and under the rules of the corresponding line of business.
(2) He shall execute it in the time specified and should such time be not specified, in the time reasonably necessary for such kind of work.
(3) He shall not be liable for delay caused by the purchaser's failure to deliver the material to him on time, or by the purchaser's demand for alterations, or by the purchaser's failure to pay to him the advance due and, in general, for delay caused by the conduct of the purchaser.
Terminating a Contract due to Breach of Terms Stipulated
Article 608
(1) Should it turn out in the course of performing the job that the supplier fails to adhere to the terms of contract and, in general, is not working properly, so that the creation, when completed, will be defective, the purchaser may warn the supplier accordingly and determine for him an adequate time limit for conforming his work to his obligations.
(2) Should the supplier fail to act according to the purchaser's demand within the above time limit, the purchaser may terminate the contract and claim damages.
Termination of Contract prior to Expiration of the Time Limit
Article 609
(1) If the time limit is an essential constituent element of the contract, and supplier's delay in commencing or completing the job obviously indicates that he will not complete it within the time limit, the purchaser may terminate the contract and claim damages.
(2) He shall also have such right should the time limit not be an essential constituent element of contract, if due to such delay the purchaser would obviously have no interest for contract fulfillment.
Entrusting Performance of Job to a Third Party
Article 610
(1) Unless something else results from the contract or the nature of the job, the supplier shall not be bound to perform the job personally.
(2) The supplier shall still be responsible to the purchaser for the execution of the work, even without performing it personally.
Liability for Associates
Article 611
A supplier shall be liable for persons taking part in the performance of work under his order, as if he himself had performed it.
Direct Claim by Supplier's Associates against the Purchaser
Article 612
In order to collect their claims against the supplier, his associates may address the purchaser directly and demand payment of such claims from him at the charge of the amount due at the moment to the supplier, should such claims be recognized.
Handover of a Manufactured Object to the Purchaser
Article 613
(1) A supplier shall hand the object manufactured or repaired over to the purchaser.
(2) The supplier shall be discharged from this obligation should the object he manufactured or repaired be lost for reasons which he is not liable for.
LIABILITY FOR DEFECTS
Inspection of the Work Executed and Notifying the Supplier
Article 614
(1) A purchaser shall inspect the work done, as soon as this became possible in the regular course of events, and to notify the supplier without delay about defects found.
(2) Should the purchaser, after being invited by the supplier to inspect and accept the work executed, fail to act accordingly without justified ground, the work shall be considered as accepted.
(3) After the inspection and acceptance of the work performed, the supplier shall no more be liable for defects which could have been noticed by usual inspection, unless he was aware of them, but did not show them to the purchaser.
Latent Defects
Article 615
(1) Should a defect arise later on which could not have been discovered by usual inspection, the purchaser shall still be entitled to claim it, but only if he notifies the supplier thereof as soon as possible, or within one month after such discovery at the latest.
(2) The purchaser shall not be entitled to claim defects by expiration of two years after accepting the work performed.
Cessation of Rights
Article 616
(1) A purchaser notifying the supplier of defects in the work performed on time may not enforce his right at court after the expiration of one year from the notification.
(2) But even after the expiration of that time limit, the purchaser may, after notifying the supplier of defects in due time, through an objection against the supplier's claim for payment, proceed with his own counter-claim for reduction of fees and for damages.
When a Supplier Forfeits the Right to Invoke the Preceding Articles
Article 617
A supplier may not refer to a provision of the preceding Articles should a defect relate to facts which were known to him, or could not have remained unknown to him, and which were not communicated by him to the purchaser.
Right to Demand Elimination of Defects
Article 618
(1) Purchaser who duly informed the supplier that the work performed is in some respect defective shall be entitled to demand from him the elimination of the defect, and to determine an appropriate time limit for that.
(2) He shall also be entitled to recover for loss sustained due to the above.
(3) Should elimination of the defects involve excessive expenses, the supplier may refuse to carry it out, but in such a case the purchaser shall be entitled to choose between the fee reduction or termination of the contract, which shall include damages as well.
Termination of Contract in a Special Case
Article 619
Should a job executed have such a defect which makes it unusable, or should it be executed contrary to express terms and conditions of the contract, the purchaser may, without demanding first the elimination of the defect, terminate the contract and claim damages.
Right of Purchaser in Case of Other Defects of the Work Executed
Article 620
(1) When the work executed has a defect due to which the creation is not unusable, i.e. when the work is not performed contrary to the express terms and conditions of the contract, the purchaser shall permit the supplier to eliminate the defect.
(2) The purchaser may give the supplier an appropriate time limit for the elimination of the defect.
(3) Should the supplier fail to eliminate the defect by the expiration of such time limit, the purchaser may, at his own choice, eliminate the defect at the expense of the supplier, or reduce the fee, or terminate the contract.
(4) In case of a minor defect, the purchaser may not make use of his right to terminate the contract.
(5) He shall in any case be entitled to claim damages.
Reducing the Fee
Article 621
Reducing the fee shall be effected proportionally between the value of the work done without a defect at the time of entering into contract, and the value which the work would have with the defect at that time.
OBLIGATIONS OF A PURCHASER
Obligation to Accept the Job Done
Article 622
A purchaser shall accept the work done according to the terms and conditions of the contract and to the rules of the line of corresponding business.
Charging and Paying the Fee
Article 623
(1) The fee shall be determined by contract, unless it is determined by a binding tariff or some other mandatory act.
(2) If the fee has not been determined, it shall be established by the court according to the value of work, according to time normally needed for such kind of work, and according to usual fee for such kind of work.
(3) The purchaser shall not be bound to pay the fee prior to inspecting and approving the work executed, unless otherwise stipulated.
(4) The same shall apply if the execution and delivery of work has to be effected, according to contract, in parts.
Estimate with an Express Guarantee
Article 624
(1) Should the fee be stipulated on the ground of an estimate backed by an express guarantee of the supplier regarding its accuracy, he may not demand the increase of fee even after investing more labor in the job and after performing it with expenses higher than foreseen.
(2) This shall not exclude the application of rules on termination and alteration of contract due to changed circumstances.
(3) Should the fee be stipulated on the ground of an estimate without express guarantee by the supplier regarding its accuracy, and should it turn out that, in the course of work, an overstepping of the estimate becomes inevitable, the supplier shall notify the purchaser thereof without delay; otherwise he shall lose every claim concerning the increased expenses.
RISK
In the Case of Supplier Supplying Material
Article 625
(1) In case the supplier supplied the material for manufacturing the object, and the object became damaged or lost, regardless of cause, prior to being handed over to the purchaser, the risk shall be borne by the supplier, so that he shall neither be entitled to remuneration for the material supplied, nor to remuneration for his work.
(2) If the purchaser has inspected the work performed and has approved it, the object shall be considered as delivered to him, and that it remained with the supplier to be looked after by him.
(3) If the purchaser is late in accepting the object offered to him, the risk of accidental loss or damage to the object shall pass to him.
When Purchaser Supplied Material
Article 626
(1) The risk of accidental loss or damage to the object shall be borne by the purchaser should he supply the material for the manufacture.
(2) In such a case, the supplier shall be entitled to a fee only if the object was ruined or damaged after the purchaser delayed his obligation, or if the purchaser failed to answer his proper invitation to inspect the goods.
Risk in Case of Delivery in Parts
Article 627
Should it be stipulated that the purchaser effect inspection and receival of individual parts as they are manufactured, the supplier shall be entitled to a fee covering the manufacture of those parts inspected and approved by the purchaser, even if they subsequently perish at the supplier's place without his fault.
RIGHT OF PLEDGE
Article 628
In order to secure payment on the ground of claims for remuneration for work done and cost of the material used, as well as for other claims regarding the contract of supply of services, the supplier shall have the right of pledge over objects he manufactured or repaired, as well as over other objects delivered to him by the purchaser in connection with his work, as long as he is in possession of them and until he willingly forfeits their possession.
CESSATION OF CONTRACT
Willful Contract Termination by the Purchaser
Article 629
All until the work ordered has not been completed, the purchaser may terminate the contract whenever he wants, but in such a case he shall pay to the supplier the remuneration stipulated, reduced by the amount of costs not incurred by the latter which would otherwise be incurred if the contract was not terminated, together with the amount of earnings the supplier realized doing other jobs, or which were intentionally missed by him.
CONTRACT OF CONSTRUCTION
GENERAL PROVISIONS
Notion
Article 630
(1) A contract of construction shall be a contracts for supply of services by which a contractor assumes the obligation to construct, according to a specific plan and within a stipulated time limit, a specific building on a specific land, or to perform on such land, i.e. on an already existing facility, some other civil engineering works, while the purchaser assumes the obligation to pay in return a determined price.
(2) A contract of construction must be concluded in written form.
Building
Article 631
In this Chapter, the term "building" shall include buildings, dams, bridges, tunnels, water supply installations, sewage systems, roads, railroad tracks, wells and other civil engineering facilities the manufacture of which requires large and more complex works.
Supervison over the Works and Quality Control of Materials
Article 632
A contractor shall enable the purchaser to effect permanent supervision over the works and the control of quantity and quality of the material used.
Departure from a Construction Plan
Article 633
(1) The contractor must have written approval from the purchaser for each departure from a construction plan, i.e. works stipulated.
(2) He may not demand increase of agreed price for works done by him without such approval.
Urgent and Unforeseen Works
Article 634
(1) Unforeseen works may be done by a contractor even without previous approval by the purchaser if, due to their urgency, he was not able to obtain such approval.
(2) Unforeseen works shall be works the undertaking of which is necessary in order to ensure stability of a facility, or to prevent damage, and which were caused by an unexpectedly less favourable quality of soil, unexpected occurence of water or other extraordinary and unexpected events.
(3) The contractor shall be bound to notify the purchaser without delay about such phenomena and of measures taken.
(4) The contractor shall be entitled to fair remuneration for the unforeseen works which had to be done.
(5) The purchaser may terminate the contract if, due to such works, the price stipulated would have to be considerably raised, while being obliged to notify the contractor accordingly and without delay.
(6) In case of termination of contract, the purchaser shall pay to the contractor a corresponding part of the price for works already carried out, as well as fair remuneration covering his necessary expenses.
Price of Works
Article 635
The price of works may be determined according to a measurement unit of the stipulated works (unit price) or as a lump sum for the entire facility (stipulated aggregate price).
Change of Price
Article 636
(1) Unless otherwise provided by contract concerning a change of price, a contractor fulfilling his obligation within a specified time limit may demand an increased price for the works done, if in the period between entering into contract and its fulfillment, prices have been raised of elements on the ground of which the price of works was agreed, so that it would be necessary that such price be more than two percent higher.
(2) Should a contractor through his fault fail to perform works within the time limit specified by contract, he may demand a price increase of works if, in the period between entering into contract and the day on which works had to be completed according to contract, the prices of elements on the ground of which the price of works was determined have been raised, so that it would be necessary that the price, as compared to new prices of such elements, be higher by more than five percent.
(3) In cases specified in the preceding paragraphs the contractor may request only the difference in price of works exceeding two, i.e. five percent.
(4) A contractor may not invoke the increased prices of elements on the ground of which the price of works was determined if such price increase took place after his delay in fulfilling obligations.
Provisions on Exchangeability of Prices
Article 637
(1) Should it be stipulated that the price of works shall not be changed if after entering into contract prices of elements on the ground of which it was agreed be raised, the contractor may, in spite of such contractual clause, demand a change of price of the works, if prices of the elements be raised to such a degree that it would be necessary for the price of works to be higher by more than ten percent.
(2) However, even in that case the contractor may demand only a difference in price which exceeds ten percent, unless the increase in price of elements took place after his becoming late in fulfillment of obligations.
Termination of Contract due to an Increased Price
Article 638
(1) If the price stipulated had to be raised considerably in the cases specified in the preceding paragraphs, the purchaser may terminate the contract.
(2) In case of termination of contract, the purchaser shall pay to the contractor a corresponding part of the price stipulated for the works completed up to that time, as well as fair remuneration covering necessary expenses incurred by him.
Right of a Purchaser to Demand Reduction of Stipulated Price
Article 639
(1) If in the period between entering into contract and fulfilling of the contractor's obligation, the prices of elements serving as a ground for determining the price of works have been reduced by more than two percent, and if the works were completed within the time limit specified by contract, the purchaser shall be entitled to demand a corresponding reduction of price of the works stipulated above such percentage.
(2) If it was stipulated that the price of works shall be unchangeable, and the works were completed within the time specified by contract, the purchaser shall be entitled to a reduction of the price stipulated, in case the prices of elements serving as a ground for determining the price were lowered to such a degree that the price would have been more than ten percent lower, which reduction shall amount to the difference in price over ten percent.
(3) In case of a contractor being late with the works, the purchaser shall be entitled to a proportionate reduction of the price of works for every reduction of price of elements serving as a ground for determining the price of works.
CONTRACT OF CONSTRUCTION WITH A SPECIAL CLAUSE
Article 640
(1) Should a contract of construction contain a "turn-key" clause, or some other similar clause, the contractor shall assume an independent obligation to perform all works necessary for the construction and use of a specific complete facility.
(2) In such a case the price stipulated shall also include the value of all unforeseen works and surplus works, while lesser volume of works shall not influence the price stipulated.
(3) If several contractors participate as the contracting parties in a “turn-key" contract, their liability to the purchaser shall be joint and several.
LIABILITY FOR DEFECTS
Application of Rules Covering Contracts for Supply of Services
Article 641
Unless otherwise specified in the present Chapter, the corresponding rules covering the contracts for supply of services shall apply to liability for defects in a building.
Transfer of a Right Arising from Liability for Defects
Article 642
Rights of purchaser against a contractor acquired on the ground of defects in a building shall pass to all subsequent acquirers of the building or its part, but subsequent acquirers shall have no new time limit for notification and instituting legal proceedings, so that the time limit of the predecessors shall be accounted to them.
Particular Rights of a Holder of Tenancy Right
Article 643
A holder of a tenancy right in an apartment in social ownership shall be entitled to demand that the contractor eliminate defects within the limits of his liability to the purchaser for defects of the building.
RESPONSIBILITY OF CONTRACTOR AND PROJECT DESIGNER FOR THE SOUNDNESS OF BUILDING
Notion
Article 644
(1) A contractor shall be liable for defects in the construction process of the building relating to its soundness, should such defects appear within a ten year period from the delivery and acceptance of the works.
(2) The contractor shall also be liable for defects in the land on which the building was raised, which would appear within ten years from the delivery and acceptance of works, unless a specialized organisation has supplied an expert opinion as to the suitability of the land for construction, and in the building process itself no circumstances appeared which would cast doubt as to the reliability of the expert opinion.
(3) The same shall apply to a project designer should a defect in the building be caused by a defect in the construction plan.
(4) They shall be liable according to the provisions of the preceding paragraphs not only to the purchaser but also to every other acquirer of the building.
(5) Their liability may not be excluded or limited by contract.
Duty of Notification and Forfeit of Right
Article 645
(1) A purchaser or other acquirer must notify the contractor and the project designer of defects within a six month time limit after discovering a defect; otherwise they shall lose the right to claim the defect.
(2) The right of the purchaser or other acquirer against the contractor, i.e. a project designer, on the ground of their liability for defects shall cease after a year, counting from the day of the purchaser's, i.e. acquirer's notifying the project designer, i.e. contractor, of the defect.
Reduction and Exclusion of Liability
Article 646
(1) A contractor shall not be exempted from liability if damage was caused through his proceeding with specific works according to the purchaser's request.
(2) However, if he warned the purchaser, prior to executing requested specific works, that there was a danger of damage, his liability shall be reduced and, according to circumstances of the case, may even be excluded.
Recourses
Article 647
(1) Should a contractor or a project designer be liable for damage, the liability of each one of them shall be determined commensurately to the scope of their respective fault.
(2) A project designer who has drafted the plans of a building and has been entrusted with supervision over the carrying out of planned works, shall also be liable for defects in the completed works which were caused through the fault of the contractor, provided that he could have noticed them by normal and reasonable supervision of works, but he shall be entitled to claim corresponding compensation from the contractor.
(3) If contractor compensates loss that originated due to defects in the works completed, he shall be entitled to claim compensation from the project designer to the degree in which the defects of the completed works originated from the defects in the construction plans.
(4) In case a responsible person entrusted by the contractor to carry out part of the works is liable for the defect, the contractor, while intending to claim damages from him, must notify him of the existence of the defect within a two month time limit, counting from the day he was notified by the purchaser about the same defect.
CARRIAGE
GENERAL PROVISIONS
Notion
Article 648
(1) By a contract of carriage a carrier shall assume the obligation to transport to a determined place a person or an object, while the passenger, i.e. consignor, shall assume the obligation to pay him an adequate carriage charge in return.
(2) In terms of the present Law the carrier shall mean both a person dealing with carriage as his regular business activity, and any other person assuming an obligation by contract to perform transport for remuneration.
Obligations of a Line Carriage Carrier
Article 649
(1) A carrier performing transport along a specified line (line carriage) shall maintain a scheduled line service regularly and orderly.
(2) He shall accept for transport any person and any object meeting requirements determined in the announced general terms and conditions.
(3) Should a number of regular transportation vehicles of a carrier be insufficient to meet all requests for transport, the priority shall be extended to persons and objects whose priority is specified by particular regulations, and further priority shall be determined according to the order of requests, while priority between simultaneous requests shall be determined according to longer distance of transport.
Contract Repudiation
Article 650
(1) A consignor, i.e. a passenger, may repudiate a contract prior to commencement of its performance, but he shall be liable to compensate loss eventually sustained by the carrier due to that.
(2) Should a carrier delay commencement of the transport to a degree that the other party becomes no longer interested for the stipulated transport, or if the carrier is unwilling or unable to perform the stipulated transport, the other party may repudiate the contract and demand restitution of the carriage charge paid.
Amount of Carriage Charge
Article 651
(1) Should the amount of carriage charge be determined by a tariff or other announced compulsory act, a higher carriage charge may not be stipulated.
(2) Should the amount of carriage charge not be determined either by tariff or other anounced compulsory act, or by contract, the carrier shall be entitled to a usual carriage charge otherwise practiced in such line of transportation.
(3) In all other aspects, the provisions covering a fee contained in the Chapter of the present Law relating to contracts for supply of services shall apply mutatis mutandis.
Restriction on Application of Provisions of the Present Chapter
Article 652
The provisions of the present Chapter shall apply to all kinds of transport, unless otherwise determined by law for particular kinds of transport.
CONTRACT OF CARRIAGE OF OBJECTS
GENERAL PROVISIONS
Handover of Object
Article 653
A carrier shall hand the object accepted for transport over at a designated place to a consignor or to a designated person (consignee).
Consignor’s Duty to Inform a Carrier
Article 654
(1) A consignor shall notify a carrier of the kind of shipment and of its contents and quantity, and to inform him about the place of destination of shipment, the name and address of the consignee, his own name and address, as well as anything else necessary for the carrier to fulfil his obligation without delay and difficulties.
(2) Should the shipment contain valuables, securities or other expensive objects, the consignor shall notify the carrier thereof at the moment of their handover for transport, including information as to their value.
(3) In case of transporting a hazardous object or an object requiring particular conditions of transport, the consignor shall to notify the carrier thereof on time, so that the latter could take corresponding special measures.
(4) Should the consignor fail to supply the carrier with data specified in paragraphs 1 and 3 of the present Article, or should he supply them in erroneous manner, he shall be liable for ensuing loss.
Bill of Lading
Article 655
1) Contracting parties may agree that a bill of lading be issued concerning the shipment delivered for transport.
(2) A bill of lading should contain the following: name and address of consignor and of carrier, kind, contents and quantity of shipment, as well as the value of valuables and other expensive items, place of destination, the amount of carriage charge, i.e. a note that such charge has been paid in advance, a provision about the amount whereby the shipment is encumbered, place and day of issuing the bill of lading.
(3) Other clauses of the contract of carriage may also be introduced into the bill of lading.
(4) A bill of lading must be signed by both contracting parties.
(5) A bill of lading may contain a clause "by order" or it may be made out to bearer.
Contract of Carriage and Bill of Lading
Article 656
The existence and validity of a contract of carriage shall be independent of the existence of a bill of lading and of its accuracy.
Consignment Note
Article 657
Should a bill of lading not be issued, a consignor may demand that a carrier issue to him a consignment note for the shipment he received for transport, containing data which should otherwise make a bill of lading.
RELATIONSHIP BETWEEN A CONSIGNOR AND A CARRIER
Packaging
Article 658
(1) A consignor shall pack the objects in a prescribed or usual way in order to prevent eventual damage or danger for safety of people and property.
(2) A carrier shall draw the consignor's attention to noticeable deficiencies in packaging; otherwise he shall be liable for damage in shipment resulting from such deficiencies.
(3) However, the carrier shall not be liable for damage in shipment should the consignor, after being notified of deficiencies in packaging, request the carrier to accept the shipment for transport with these deficiencies.
(4) A carrier shall refuse the shipment if deficiencies are of such a nature as to potentially endanger the safety of people and property, or be prone to cause damage.
(5) A carrier shall be liable for damage sustained by third parties due to deficiencies in packaging while the goods are still in his possession, but he shall be entitled to claim recovery from the consignor.
Carriage Charge and Expenses Connected with Transport
Article 659
(1) A consignor shall pay to the carrier a carriage charge and to cover expenses connected with the transport.
(2) Should there be no indication in the bill of lading that the consignor is to pay the carriage charge and to cover other expenses relating to transport, it shall be presumed that the consignor has directed the carrier to collect them from the consignee.
Disposing of Shipment
Article 660
(1) A consignor may dispose of the shipment and change the orders indicated in the contract, and order the carrier to suspend further transportation of the shipment, to return the shipment to him, to deliver it to another consignee, or to forward it to another destination.
(2) The right of a consignor to change the orders shall cease when the shipment arrives at the point of destination and the carrier hands the bill of lading over to the consignee, or when the carrier invites the consignee to take the shipment over, or if the consignee himself has demanded its handover.
(3) Should the bill of lading be issued with a clause "by order", i.e. "to bearer", the rights of a consignor specified in the preceding paragraph shall belong exclusively to the party in possession of the bill of lading.
(4) An authorized person using the right to give new orders to a carrier shall redress the expenses and damage incurred by him, as well as to supply him, at his request, with a guarantee to cover the payment of expenses and damages.
Direction of Transport
Article 661
(1) A carrier shall perform the transportation by a stipulated route.
(2) Should there be no stipulation as to the transport route, the carrier shall perform it by the route which best suits the consignor's interests.
Hindrances in Performing Transport
Article 662
(1) A carrier shall notify a consignor regularly of all circumstances relevant for the performance of transport, and he shall act according to instructions he has received from him.
(2) A carrier shall not be obliged to act according to instructions of the consignor should following them could endanger the safety of people and property.
(3) In a case not permitting any delay in waiting for consignor's instruction, the carrier shall proceed as a good businessman i.e. good head of household would in the same situation; he shall notify the consignor thereof and request further instructions.
(4) The carrier shall be entitled to reimbursement of expenses incurred by him due to hindrances occurring without his fault.
Carriage Charge in Case of Interruption of Transport
Article 663
(1) Should transport be interrupted for a reason within the responsibility of the carrier, he shall be entitled to a proportionate part of carriage charge for the effected transport, but shall also be liable for loss caused to the other party due to interruption of transport.
(2) Should transport be interrupted for a reason not within the responsibility of any person interested in the matter, the carrier shall be entitled to the difference between the carriage charge stipulated and carriage expenses from the place of interruption of transport to the destination place.
(3) A carrier shall not be entitled to even part of the carriage charge should the shipment perish in course of transport due to an Act of God.
Impossibility of Delivery
Article 664
(1) Should it be impossible to notify a consignee of the arrival of a shipment, or should he refuse to accept it and should it generally be impossible to hand over the shipment, or should the consignee fail to pay to the carrier the carriage charge due and the remaining shipment charges, the carrier shall notify the consignor thereof, to request instructions from him and to take measures necessary for preserving the goods on his behalf.
(2) Should an authorized person fail, within reasonable time, to take any measures relating to shipment, the carrier shall be entitled to sell it according to rules of the sale of goods owed in case of a creditor's delay, to collect his claim from the proceeds of sale, and to deposit the rest at the court for the authorized person.
Liability of Carrier to a Consignor
Article 665
If a carrier delivers the shipment to a consignee, but does not collect from him the shipment charges, he shall pay such amount to the consignor, but shall be entitled to claim redress against the consignee.
RELATIONSHIP BETWEEN A CARRIER AND A CONSIGNEE
Notifying a Consignee on Arrival of Shipment
Article 666
(1) A carrier shall notify a consignee without delay that the shipment has arrived, place it at his disposal as stipulated, and to sumbit to him the bill of lading, if issued.
(2) Should the bill of lading contain the clauses "by order" or "to bearer", he shall proceed according to the preceding paragraph only if there is an indication in the bill of lading as to a person at the point of destination who must be notified of the arrival of shipment.
Handover of Shipment when a Duplicate of a Bill of Lading was issued
Article 667
A carrier may refuse to hand over a shipment if he is not simultaneously presented with a duplicate of the bill of lading, containing an indication that the shipment has been accepted by the consignee.
Right of Consignee to Request Delivery of Shipment
Article 668
(1) A consignee may realize rights out of the contract of carriage against a carrier, and request to be presented with the bill of lading and the shipment, only when the shipment has arrived at its destination point.
(2) At the consignee's request the carrier shall be obliged to deliver to him the shipment prior to its arrival to the destination point only if authorized accordingly by the consignor.
(3) The consignee may realize the rights out of the contract of carriage, and request from the carrier delivery of the shipment only if he meets terms and conditions specified in the contract of carriage.
Establishing Identity and Condition of Shipment
Article 669
(1) An authorized person shall be entitled to demand that the identity of a shipment be established and recorded, and should the shipment be damaged, that the fact and nature of damage be entered.
(2) After establishing that a shipment is not the one handed over to the carrier, or that the damage is more serious than stated by the carrier, the expenses of establishing shall be borne by the carrier.
Duty of a Consigneee to Pay the Carriage Charge
Article 670
(1) By accepting shipment and the bill of lading if issued, a consignee shall assume a duty to pay to a carrier the carriage charge, unless otherwise stipulated in the contract of carriage or in the bill of lading, and to pay to him the shipment charges.
(2) Should the consignee consider that he is not obliged to pay to the carrier the amount required by him, he may realize the rights out of contract only after depositing at the court the contested amount.
LIABILITY OF CARRIER FOR LOSS, DAMAGE AND DELAY IN SHIPMENT
Loss or Damage of Shipment
Article 671
(1) A carrier shall be liable for loss or damage of the shipment which occurs from the moment of its takeover to its handover, unless caused by an act of the authorized person, by the properties of the shipment, or by external causes which could not have been foreseen, avoided or eliminated.
(2) Clauses in the contract of carriage, general terms and conditions of carriage, in tariffs or any other general act, shall be null and void if they seek to reduce such liability.
(3) But a clause by which highest amount of compensation of damage is determined in advance shall be valid, on condition that it not be in obvious disproportion to the damage.
(4) Such limit of the amount of compensation shall not apply should the damage be caused by the carrier through his wilful misconduct or gross negligence.
(5) Unless otherwise specified by contract, the amount of compensation shall be determined according to the market price of the shipment at the time and in the place of its handover for transport.
Loss or Damage of Shipment of Valuable Objects
Article 672
(1) In the case of loss or damage of a shipment containing valuables, securities, or other expensive items, the carrier shall redress the corresponding loss only if notified, at the moment of delivering the objects for transport, of the nature of such objects and of their value, or if he causes the loss through wilful misconduct or gross negligence.
(2) Should other goods be placed together in the shipment with the above mentioned objects, the carrier shall be liable for their loss or damage according to the general rules of carrier's liability.
Restitution of Carriage Charge Paid
Article 673
In the case of total loss of the shipment, the carrier shall, in addition to redressing the loss, restitute to the consignor the carriage charge if it was paid.
A Case of a Consignee Accepting the Shipment without Objections
Article 674
(1) If a consignee accepts a shipment without objections and pays the carrier the amount of his claim, the liability of the carrier shall cease, unless the damage has been established by way of record prior to acceptance of the shipment.
(2) The carrier shall remain liable for damage to the shipment which could not have been noticed at the moment of handover, if the consignee notifies him of such damage immediately after discovering it, but not later than eight days after handover.
(3) The carrier may not invoke the provisions of the preceding paragraphs if he has caused the damage through wilful misconduct or gross negligence.
Liability of Carrier for Delay
Article 675
A carrier shall be liable for loss or damage caused by delay, unless the delay was caused by a fact which excluded his liability for loss or damage of the object.
Liability for Assistants
Article 676
A carrier shall be liable for persons being engaged at his order in performing the transportation.
PARTICIPATION OF SEVERAL CARRIERS IN TRANSPORTING A SHIPMENT
Cases of Their Joint and Several Liability
Article 677
(1) A carrier entrusting complete or partial performance of the transport of shipment he has accepted for transportation to another carrier, shall still remain liable for its transportation from the moment of its acceptance until its delivery, but shall be entitled to be paid the carriage charge by the carrier to whom he has entrusted the shipment.
(2) Should the second carrier take over the bill of lading from the first carrier together with the shipment, he shall become a contracting party in the contract of carriage, with rights and duties of a joint and several debtor and joint and several creditor, whose share is proportionate to his participation in the transport.
(3) The same shall apply in the case of a contract for transportation of a shipment by several carriers performing the transportation one after another.
(4) Each of the several carriers shall be entitled to request that condition of shipment be established at the moment of his accepting it for transport in order to perform his part of the transportation.
(5) Joint and several carriers shall participate in covering loss in proportion to their shares in the transportation, except one being successful in proving that the damage did not occur while he was transporting the shipment.
(6) Objections raised against a subsequent carrier shall also be effective against all previous ones.
Divided Liability of Carriers
Article 678
Should performance of transportation of the same shipment be effected by several carriers one after the other, as designated by the consignor, each one shall be liable only for his part of the transportation.
RIGHT OF PLEDGE
Right of Pledge Pertaining to Carrier
Article 679
(1) In order to secure payment of carriage charge and of necessary expenses incurred by him in connection with transport, the carrier shall have the right of pledge over the objects delivered to him for transport, and in relation to the transport; the pledge shall be effective while these objects are in his possession or while he holds a legal instrument enabling him to dispose of them.
(2) After several consecutive carriers have participated in performing the transport, their claims in relation to such transport shall be also secured by such pledge, and the last of the carriers, unless the bill of lading states otherwise, shall collect all claims on the grounds of the bill of lading.
(3) The claims of an earlier carrier, as well as his right of pledge, shall be transferred, by operation of law, to the subsequent carrier who has paid to him such claims.
(4) The same shall apply if the carrier pays the forwarder's claims.
Colliding Rights of Pledge
Article 680
(1) Should, besides the right of pledge of a carrier, the same object be charged with simultaneous rights of pledge of a commission agent, forwarder and warehouseman, the priority in collection shall be with the claims of any of these creditors arising from forwarding or transport, and in the order opposite to their origination.
(2) The remaining claims of the commission agent and the warehouseman, as well as claims of the forwarder and the carrier, created by advance payments, shall be collected only after payment of claims specified in the preceding paragraph, and in the order of their origination.
CONTRACT OF TRANSPORTATION OF PASSENGERS
General Provisions
Article 681
A carrier shall perform the transportation of passengers safely in a transportation vehicle designated by the contract of transportation, and to provide such conditions of comfort and hygiene which are considered necessary according to the kind of the relevant transportation vehicle and the length of the journey.
Right of Passenger to Specific Seat
Article 682
A carrier shall provide the passenger with such seat and in such transportation vehicle as stipulated.
Liability of Carrier for Delay
Article 683
(1) A carrier shall transport the passenger to the specified place on time.
(2) He shall be liable for losses sustained by the passenger due to delay, unless delay was due to a cause impossible to be eliminated by him even after applying expert care.
Responsibility of Carrier for Safety of Passengers
Article 684
(1) A carrier shall be responsible for the safety of passengers from the commencement of transportation to its end, both in case of paid transportation and of free transportation, so that he shall compensate loss occurring through harm to health, injury or death of a passenger, unless these are caused by the action of the passenger or by an external cause which could not have been foreseen, avoided or eliminated.
(2) Clauses of a contract as well as those of general terms and conditions of transport, tariffs or other general act, by which such liability is reduced, shall be null and void.
Responsibility for Luggage Handed over for Transportation and for other Objects
Article 685
(1) A carrier shall transport the luggage handed over to him and at the same time as the passenger, and he shall present it to him when the transportation is over.
(2) A carier shall be liable for loss or damage to luggage handed over by a passenger to him, according to the provisions relating to the transport of objects.
(3) A carrier shall be liable for damage to objects a passenger holds as carry-on, according to the general rules of liability.
LICENSING AGREEMENT
GENERAL PROVISIONS
Notion
Article 686
By a licensing agreement a licensor shall assume the obligation to assign to a licensee, entirely or partially, the right of use of an invention, technical know-how and experience, trade-mark, sample or model, while the licencee shall assume the obligation to pay a specified fee in return.
Form
Article 687
A licensing agreement must be concluded in written form.
License Period
Article 688
A license for the use of a patented invention, sample or model, may not be concluded for a period longer than the one covered by statutory protection of such rights.
Exclusive License
Article 689
(1) A licensee shall acquire by licensing agreement an exclusive right of use of the subject of license only after this has been expressly stipulated (exclusive license).
(2) Other means of using the subject of license shall be reserved by the licensor.
(3) Should there be no indication in the licensing agreement as to the kind of license, it shall be considered that a non-exclusive license has been granted to him.
Area Limit of the Right of Use
Article 690
(1) A right to use the subject of license may be limited to certain area only if this is not contrary to regulations relating to the unified Yugoslav market.
(2) If there is no area limit in the licensing agreement of the right to use the subject of license, license shall be considered as not restricted in terms of area.
OBLIGATIONS OF LICENSOR
Delivery of the Subject of License
Article 691
(1) A licensor shall deliver to a licensee the subject of the license within the designated time limit.
(2) A licensor shall also deliver to a licensee the technical documentation needed for practical implementation of the subject of license.
Providing Instructions and Information
Article 692
A licensor shall provide a licensee with all instructions and information necessary for the successful use of the subject of license.
Duty of Guarantee
Article 693
A licensor shall guarantee to the licensee the technical feasibility and technical usability of the subject of license.
Guarantee
Article 694
(1) A licensor shall guarantee that the right of use which is the subject of the agreement belongs to him, that there no encumbrances on it and that it is not restricted in favour of a third person.
(2) Should the subject of agreement be an exclusive license, the licensor shall guarantee that he has not assigned the right of use to another, either entirely or partially.
(3) A licensor shall protect and defend the right which he has assigned to the licensee against all third parties' requests.
Duty of a Licensor of an Exclusive License
Article 695
Should an exclusive license be stipulated, the licensor himself may not in any way use the subject of license, or some of its parts, nor entrust that to another within the limits of territorial validity of license.
OBLIGATIONS OF THE LICENSEE
Use of the Subject of License
Article 696
A licensee shall use the subject of license in the way, within the scope, and in the limits stipulated.
Use of Subsequent Advancements
Article 697
Unless otherwise determined by law or by contract, a licensee shall not be authorized to use subsequent improvements in the subject of license.
Keeping Secret the Subject of License
Article 698
Should the subject of license be a non-patented invention or secret technical know-how, the licensee shall keep it confidential.
Quality
Article 699
(1) Should a manufacturing license be assigned together with a license concerning the use of a trade-mark, the licensee may put goods with such trademark on the market only if its quality is the same as the quality of goods otherwise manufactured by the licensor.
(2) A contrary agreement shall have no effect.
Labelling
Article 700
A licensee shall put an indication on the goods that they are manufactured according to a license.
Compensation
Article 701
A licensee shall pay to a licensor the fee stipulated, at the time and in the way provided for by the agreement.
Submitting a Report
Article 702
If a fee is determined in relation to the scope of use of the subject of license, the licensee shall submit to the licensor a report on the scope of use and effect the fee calculation each year, unless a shorter time limit is stipulated in the matter.
Changing a Stipulated Fee
Article 703
If the stipulated fee became obviously inadequate in relation to the revenue realized by the licensee through the use of the subject of license, the interested party may request a change in the stipulated fee.
SUBLICENSE
When can it be granted
Article 704
(1) A licensee of an exclusive license may issue to antoher the right of use of the subject of license (sublicense).
(2) A contract may provide that a licensee be precluded from granting a sublicense to another, or from granting it without the licensor's permission.
When a Licensor May Refuse Permission
Article 705
When permission by licensor is needed for granting a sublicense, he may refuse it to the licensee of an exclusive license for serious reasons only.
Cancellation due to a Prohibited Sublicense
Article 706
A licensor may cancel the licensing agreement without extending a cancellation period if a sublicense has been granted without his permission, should permission be necessary on the ground of law or contract.
Direct Request by a Licensor
Article 707
(1) A sublicensing agreement shall create no particular legal relationship as between the sublicensee and the licensor, even if the licensor granted the necessary permission to make the sublicensing agreement possible.
(2) But in order to collect his claims against the licensee on the ground of license, the licensor may request the payment of the amount owed to the sublicensor on the ground of sublicense directly from the sublicensee.
AGREEMENT’S CESSATION
Expiration of Time Specified
Article 708
A licensing agreement concluded for a definite period shall cease on expiration of the period stipulated, so that there shall be no need for cancellation.
Implicit Renewal of a License
Article 709
(1) Should after the expiration of a definite period specified as duration of the licensing agreement the licensee continue to use the subject of license, and the licensor fail to object, a new agreement shall be considered to have been made for the license covering an indefinite period, and under the same terms and conditions as the previous one.
(2) Collaterals supplied by third parties regarding the first license shall cease with the expiration of the validity period of that license.
Cancellation
Article 710
(1) A licensing agreement whose duration has not been stipulated shall cease by cancellation which may be given by either party, after honoring a determined cancellation period.
(2) Should the cancellation period not be stipulated by agreement, it shall amount to six months, provided the licensor may not cancel the agreement during the first year of its validity.
Death, Bankruptcy and Regular Liquidation
Article 711
(1) In the case of death of a licensor, the license shall continue to be effective for his successors, unless otherwise stipulated by the agreement.
(2) In the case of death of a licensee, the license shall continue to be effective for his successors who continue his activity.
(3) In the case of a bankruptcy or regular liquidation of a licensee, a licensor may terminate the agreement.
DEPOSIT OF OBJECTS OF PROPERTY
GENERALLY ON SUCH DEPOSIT
GENERAL PROVISIONS
Notion
Article 712
(1) By a contract of deposit of objects of property, the depositary shall assume the obligation to accept an object from the depositor, to store it and to restore it at the latter’s request.
(2) Only movables may be the subject of deposit of objects.
Deposit of another Person's Object
Article 713
(1) A contract of deposit of objects may be validly entered into also by a person, in his own behalf, who is not the owner of the object, and the depositary shall be bound to restore the object to him, unless he discovers that the object was stolen.
(2) Should a third party file an action with a court demanding the object from the depositary as an owner, the depositary shall inform the court from which person the object was accepted, and at the same time notify the depositor on the action filed.
OBLIGATIONS OF A DEPOSITARY
Duty of Storing and Informing
Article 714
(1) A depositary shall be bound to store the object as his own, and should the deposit be for a fee - as a good businessman, i.e. good head of household.
(2) Should the place or manner of storing the object be stipulated, the depositary may change them only if this is required by changed circumstances; he shall otherwise be liable for accidental loss or accidental damage to the object.
(3) A depositary shall notify a depositor about all changes noticed in the object, and about dangers threatening damage of any kind to it.
Delivering an Object to Another for Storing
Article 715
A depositary may not, without the depositor's consent or without necessity, deliver the object to another for storing; he shall otherwise be liable for both, its accidental loss or damage.
Using the Object
Article 716
(1) A depositary shall not be entitled to use the object entrusted to him for storage.
(2) In case of unpermitted use of the object, the depositary shall owe to the depositor corresponding compensation, and shall be liable for accidental loss or damage of the object which occurs.
(3) Should a non-consumable object be deposited and the depositary be allowed to use it, the relations between the contracting parties shall be governed by the rules of contract of making use of an object, while only the questions of time and place of restoring the object shall be regulated by the rules of contract of deposit, unless contracting parties have agreed otherwise.
Using and Delivering the Object to Another
Article 717
If a depositary uses the object without the depositor's consent, without necessity and contrary to contract, changes the place or manner of its storage, or delivers the object to another person for storage, such depositary shall not be liable for accidental loss or damage of the object which would ensue anyway in spite of his proceeding according to the contract.
Restoring the Object
Article 718
(1) A depositary shall restore the object immediately upon a corresponding request by the depositor, including all yields and other benefits arising from the object.
(2) Should a time limit be determined for restoring the object, the depositor may request that the object be restored to him even prior to the expiration of such time limit, except in a case where the time limit was not exclusively stipulated in the interest of the depositor.
(3) The restoration shall be effected at the place of delivery of the object to the depositary, unless another place was determined by contract, and in such case the depositary shall be entitled to reimbursement of expenses of transporting the object.
RIGHTS OF A DEPOSITARY
Reimbursement of Expenses and Compensation of Loss
Article 719
A depositary shall be entitled to request reimbursement from the depositor for expenses incurred justifiably by him in order to store the object, and to redress loss sustained due to such storing.
Compensation for Storing
Article 720
A depositary shall not be entitled to compensation for his efforts, unless compensation is agreed, and if the depositary is engaged in the business of storing, or if compensation could have been expected due to circumstances of the transaction.
Restoring the Object in Case of Depositing Free of Charge
Article 721
(1) A depositary assuming an obligation to store the object free of charge for a definite period, may restore it to the depositor prior to the expiration of the stipulated time limit, if the object would be exposed to danger of loss or damage, or if further storing could cause damage to him.
(2) Should a time limit not be stipulated, the depositary specified in the preceding paragraph may repudiate the contract at any time, but shall be obliged to the depositor to determine a reasonable time limit for taking the object over.
PARTICULAR CASES OF DEPOSIT
A Non Genuine Deposit
Article 722
Should generic things be entrusted for deposit with the right of the depositary to consume them and with a duty to restore the same quantity of objects of the same kind, his relations with the depositor shall be regulated by the rules of the loan agreements and only the questions of time and place of restoring the object shall be governed by rules of deposit, unless the contracting parties have stipulated otherwise in that respect.
Deposit in case of Emergency
Article 723
The one to whom an object is entrusted in case of an emergency, such as fire, earthquake or flood, shall be bound to keep it with increased care.
INNKEEPER'S DEPOSIT
Innkeeper as a Depositary
Article 724
(1) An innkeeper shall be considered as a depositary regarding objects brought in by guests, and shall be liable for their disappearance or damage up to a maximum amount to be determined by particular regulations.
(2) There shall be no such liability if the objects have perished or have been damaged due to circumstances which were impossible to avoid or eliminate, due to a cause inherent to the object itself, if they were lost or damaged due to the conduct of the guest himself, or due to the conduct of persons accompanying him, or of those who paid him a visit.
(3) The innkeeper shall owe a full compensation if the guest entrusted the object to him for storing, or if damage occured through his fault or the fault of persons under his responsibility.
Obligations of Innkeeper to Accept Objects for Storing
Article 725
(1) An innkeeper shall accept for storing the objects brought in by the guests willing to hand them over to him for storage, unless he has no adequate space for keeping them, or if such storage exceeds his resources for some other reason.
(2) An innkeeper unjustifiedly refusing to accept an object for storage shall owe full damages sustained by a guest.
Duty of Guest to Report Damage
Article 726
A guest shall report loss or damage of the object as soon as he becomes aware of it; he shall otherwise be entitled to damages only after proving that the damage was caused by the innkeeper's fault or by the fault of persons under his responsibility.
Notices on Excluding Liability
Article 727
Notices displayed in the premises of the inkeeper by which his liability is excluded, limited or made dependent on some conditions concerning objects brought in by the guests, shall have no legal effect.
Right of Retention
Article 728
An innkeeper accepting guests overnight shall be entitled to keep the objects brought in by the guests until complete payment of the claim covering the lodging and other services.
Extending the Application of Provisions on Innkeeper's Deposit
Article 729
The provisions on innkeeper's deposit shall apply mutatis mutandis to hospitals, garages, railway sleeping-cars, organized camping sites, and the like.
WAREHOUSING
GENERAL PROVISIONS
Notion
Article 730
(1) By a contract of warehousing the warehouse keeper shall assume the obligation to accept and store specified merchandise and to take necessary or stipulated measures in order to preserve it in the agreed condition, as well as to deliver it at the depositor's request, or at the request of other authorized person, while the depositor shall assume the obligation to pay to him in return an agreed fee.
(2) In delivering the merchandise the depositor shall provide all necessary information on the merchandise, and to state its value.
Exclusion of Liability and some Obligations of a Warehouse Keeper
Article 731
(1) A warehouse keeper shall be liable for damage to the merchandise, unless he proves that the damage was caused by circumstances which could not have been avoided or eliminated, or that it was caused by fault of the depositor, by defects or natural properties of the merchandise, or by inadequate packaging.
(2) A warehouse keeper shall warn the depositor about the defects or natural properties of the merchandise, i.e. about the inadequate packaging, due to which damage to merchandise may ensue, and he shall do that as soon as he becomes aware of such deficiencies, or as soon as he must have become aware of them.
(3) Should the merchandise be exposed to such irremediable changes so as to cause danger of perishing or loss, the warehouse keeper shall be bound, if the depositor is unable to timely sell the merchandise although being invited by him, to do it himself without delay and in the most convenient way.
(4) A warehouse keeper shall take action in order to preserve the rights of the depositor in relation to the carrier delivering the merchandise to him for the account of the depositor, if the merchandise is damaged or is defective.
When there is a Duty to Insure
Article 732
(1) A warehouse keeper shall insure the merchandise accepted for storage only should this be stipulated.
(2) Should there be no stipulation regarding the kind of risk to be covered by insurance, the warehouse keeper shall insure the merchandise against usual risks.
Limitation of Damages
Article 733
Damages which must be paid by a warehouse keeper due to loss, decrease or damage to the merchandise in the period between its acceptance and delivery may not exceed the real value of the merchandise, unless damage was caused by him wilfully or through gross negligence.
Mixing of Generic Things
Article 734
(1) A warehouse keeper may not mix the accepted generic things with things of the same kind and same quality, unless a depositor has agreed to that, or unless it becomes obvious that those things are of such a nature that there would be no danger to the depositor from mixing them.
(2) Should the things be mixed, the warehouse keeper may, at the request of an authorized person and without the participation of other authorized persons, set apart from the mixture of generic things the part belonging to him.
Inspection of Merchandise and Taking of Samples
Article 735
A warehouse keeper shall permit an authorized person to inspect the merchandise and take corresponding samples.
Warehouse Keeper's Claim and the Right of Pledge
Article 736
(1) In addition to the storage fee, the warehouse keeper shall be entitled to reimbursement of expenses which were needed for storing the merchandise.
(2) A warehouse keeper shall have the right of pledge over the merchandise, to cover his contractual claims of warehousing, and for other claims originating from the storage of merchandise.
Collecting of Merchandise and Sale of Uncollected Merchandise
Article 737
(1) A depositor shall be entitled to collect the merchandise even prior to the stipulated time limit.
(2) Should a depositor of merchandise fail to collect it after the expiration of the stipulated time limit, or one year after - should a time limit for storage be not stipulated - the warehouse keeper may sell the merchandise for his account at a public sale, but shall be obliged to notify him beforehand of his intention, and shall leave to him a subsequent minimum eight day time limit to collect merchandise.
Defects at the Acceptance of Merchandise
Article 738
(1) A consignee shall inspect the merchandise at the moment of its takeover.
(2) After noticing defects while taking the merchandise over, the consignee shall warn the warehouse keeper thereof immediately, otherwise the merchandise shall be considered to have been properly accepted.
(3) The consignee shall notify the warehouse keeper in a reliable way, within a seven day time limit, counting from the day of taking the merchandise over, of defects in the merchandise which could not be established at the moment of takeover, otherwise merchandise shall be considered as having been properly accepted.
Application of the Rules of Deposit
Article 739
The rules of deposit shall apply mutatis mutandis to the contract of warehousing, unless otherwise regulated by the rules of warehousing.
WAREHOUSE WARRANT
Duty of Issuing a Warehouse Warrant
Article 740
A warehouse keeper being authorized by law to issue a warehouse warrant covering the merchandise accepted for storage, shall issue such warrant to the depositor at his request.
Elements and Contents of Warehouse Warrant
Article 741
(1) A warehouse warrant shall consist of a receipt and a mortgage-deed.
(2) The receipt and the mortgage-deed shall include the following: company name, i.e. personal name and profession of the depositor, his business address, i.e. domicile, company name and business address of the warehouse keeper, date and number of the warehouse warrant, location of the warehouse, kind, nature and quantity of merchandise, information concerning the amount the merchandise is insured for, as well as other data necessary to identify the merchandise and to determine its value.
(3) The receipt and mortgage-deed shall refer to each other.
A Warehouse Warrant for Parts of the Merchandise
Article 742
(1) A depositor may demand that the warehouse keeper separates the merchandise into specific parts and issue to him a separate warehouse warrant for each such part.
(2) After he has already obtained a warehouse warrant covering the entire quantity of merchandise, he may demand thar the warehouse keeper separates the merchandise into specific parts and issues him, while replacing the already obtained warehouse warrant, the separate warehouse warrants covering each part of the merchandise.
(3) A depositor may demand the warehouse keeper to issue him the warehouse warrant for only one part of the generic merchandise left by him at the warehouse keeper.
Right of a Holder of the Warehouse Warrant
Article 743
(1) A holder of a warehouse warrant may demand that the merchandise indicated therein be handed over to him.
(2) He may dispose of the merchandise indicated in the warehouse warrant by transferring the warehouse warrant.
Transferring the Receipt and the Mortgage-Deed
Article 744
(1) A receipt and a mortgage-deed may be transferred by endorsement, together or separately.
(2) In effecting such transfer a date must be indicated for each transfer.
(3) At the request of the recipient of the receipt or the mortgage-deed, the transfer effected to his benefit shall be recorded in the warehouse ledger, where also his business address i.e. his domicile, shall be noted.
Right of a Holder of the Receipt
Article 745
(1) A transfer of a receipt without a mortgage-deed shall entitle the recipient to request the handover of merchandise only after paying the holder of the mortgage-deed, or depositing the amount which should be paid to him on the day of maturity of the claim to the warehouse keeper for the holder of the mortgage-deed.
(2) A holder of the receipt without the mortgage-deed may request that the merchandise be sold, if the price to be achieved covers the amount to which the holder of the mortgage-deed is entitled, on condition that the surplus realized be remitted to him.
(3) In case of generic objects, the holder of the receipt without the mortgage-deed may request that the warehouse keeper deliver to him one part of the merchandise, on condition that he deposits a corresponding amount of money to the warehouse keeper for the account of the holder of mortgage-deed.
Rights of a Holder of the Mortgage-Deed
Article 746
(1) A transfer of the mortgage-deed without the receipt shall entitle the recipient to a pledge over the merchandise.
(2) On the occasion of the first transfer the mortgage-deed shall include the company name i.e. personal name and profession of the creditor, his business address, i.e. domicile, the amount of his claim, including the interest, and the maturity date.
(3) The first recipient of the mortgage-deed shall notify without delay the warehouse keeper that the mortgage-deed is transferred to him, while the warehouse shall record such transfer into the warehouse ledger, indicating on the face of the mortgage-deed the fact of making such record.
(4) Without performing the actions specified in the preceding paragraph, it shall not be possible to transfer further the mortgage-deed by endorsement.
(5) A mortgage-deed without the indication as to the amount of claim of the pledgee, shall bind in favor of the pledgee the entire value of the objects indicated therein.
Protest for Failing to Pay and Selling of Merchandise
Article 747
(1) A holder of the mortgage-deed without the receipt, whose claim secured by the mortgage-deed is not paid in the specified time, shall, under threat of losing the right to demand payment from the transferors, file a protest in conformity with the Law on the Bills of Exchange.
(2) A holder of the mortgage-deed who has filed the protest may, after the expiration of eight days from the maturity of the claim, demand the sale of the mortgaged merchandise, and the same right shall also pertain to a transferor who has paid to the mortgage-deed holder the claim secured by the mortgage-deed.
(3) The amount achieved by the sale shall serve to cover the sale expenses, the warehouse keeper's claim under the contract of warehousing, and other claims of the warehouse keeper connected to the stored merchandise, as well as for covering payment of the secured claim of the mortgage-deed holder, while the remainder shall belong to the holder of the receipt.
Requesting Payment from Transferors of the Mortgage-Deed
Article 748
(1) A holder of the mortgage-deed may demand payment from a transferor only if he was not able to achieve full settlement by selling the mortgaged merchandise.
(2) Such request must be filed within the time limit set by the Law on the Bills of Exchange in case of request against the endorsers, and that time limit shall begin to run from the day of selling the merchandise.
(3) The mortgage-deed holder shall lose the right to demand payment from the transferors after failing to request the sale of merchandise at the latest within a time limit of one month from the day of protest.
ORDER
GENERAL PROVISIONS
Notion
Article 749
(1) By a contract of order the person accepting the order shall assume the obligation to the orderer to undertake specific transactions for his account.
(2) At the same time the person accepting an order shall be authorized to undertake such transactions.
(3) The person accepting an order shall be entitled to remuneration for his effort, unless otherwise provided by the contract or resulting from the nature of the mutual relations of the parties.
Persons Obliged to Respond to Offering an Order
Article 750
One professionally engaged in performing other persons' transactions, or in making public offers to perform such transactions, shall be bound, if unwilling to accept an offered order relating to such transactions, to notify without delay the other party thereof, otherwise he shall be liable for loss sustained by such party.
OBLIGATIONS OF THE PERSON ACCEPTING AN ORDER
Performing an Order as It Stands
Article 751
(1) A person accepting an order shall perform the order in conformity with instructions received, and with the care of a good businessman, i.e. head of household, while remaining within the limits of the order and, generally, taking care of the orderer's interests which shall serve as his guidelines.
(2) Should the person accepting the order consider that following the order according to instructions received would be harmful to the orderer, he shall draw his attention to that and request new instructions.
(3) Should the orderer fail to supply specific instructions concerning the job to be done, the person accepting the order shall, while being guided by the interests of the orderer, proceed as a good businessman i.e. head of household, and should the order be free of charge, he shall proceed as he would with his own matters under the same circumstances.
Departures from Order and from Instructions
Article 752
(1) A person accepting an order may depart from the order and instructions accepted only in agreement with the orderer, and should it be impossible, due to shortage of time or some other reason, to demand the orderer's consent, he may depart from the order and instructions only if, assessing all the circumstances, he is able to reasonably conclude that this is required in the interests of the orderer.
(2) Apart from the case referred to in the previous paragraph, should the person accepting the order exceed the limits of the order or depart from the instructions received, he shall not be considered as a person accepting an order, but as a manager without order, unless the orderer subsequently approves what was done by him.
Substitution
Article 753
(1) A person accepting an order shall perform the order personally.
(2) He may entrust the performance of the order to another only after obtaining permission from the orderer, or if compelled by circumstances to do that.
(3) In such cases he shall be liable only for the choice of person substituting him and for the instructions communicated to such person.
(4) In remaining cases he shall be liable for the work of his substitute, and for accidental loss or damage to the object, which occurs with the person substituting him.
(5) The orderer in each case may demand, directly from the substitute, the carrying out of the obligation in the order.
Rendering Account
Article 754
A person accepting an order shall render account of the transaction performed, while handing over to the orderer without delay everything he received on the ground of the affairs performed, regardless of whether what was received by him for the orderer was owed to the latter or not.
Submitting Reports
Article 755
A person accepting an order shall, at the orderer's request, submit a report concerning the state of affairs, and render account even prior to the designated time.
Liability for Use of Orderer's Money
Article 756
If a person accepting an order uses for his own needs the money received for the orderer, he shall pay interest at the highest permitted contractual rate, counting from the day of use, and regarding other money owed and not handed over on time, he shall pay default interest, counting from the day he was obliged to hand the money over.
Joint and Several Liability of Persons Accepting an Order
Article 757
Should performing a transaction be entrusted by the same order to several persons to perform it jointly, they shall be jointly and severally liable for obligations in such order, unless otherwise stipulated.
OBLIGATIONS OF ORDERER
Advance Money
Article 758
At the request by person accepting an order, the orderer shall pay to him a sum of money to cover anticipated expenses.
Reimbursement of Expenses and Assuming Obligations
Article 759
(1) An orderer shall reimburse a person accepting the order, even if his effort was not successful without his fault, all necessary expenses incurred by him in performing the order, together with interest from the day of expenditure.
(2) He shall assume the obligations that the person accepting the order took while engaging on his own behalf in affairs entrusted to him, or shall disengage him from obligations in some other way.
Damages
Article 760
An orderer shall compensate the person accepting the order for loss suffered in carrying out the order through no fault of his own.
Amount of Remuneration
Article 761
Unless otherwise stipulated, the orderer shall owe a usual amount of remuneration and should there be no trade usage in this respect, he shall owe equitable amount.
Payment of Remuneration
Article 762
(1) Unless otherwise stipulated, the orderer shall pay the remuneration to the person accepting the order when his job is done.
(2) Should the person accepting the order, without fault on his part, complete the order only partially, he shall be entitled to a proportionate part of the remuneration.
(3) Should remuneration stipulated in advance be in obvious disproportion to services rendered, the orderer may request its reduction.
Right of Pledge
Article 763
In order to secure remuneration and recovery of expenses, the person accepting the order shall be entitled to pledge over the orderer's movables received under order, and over the sums of money he has collected for the account of orderer.
Joint and Several Liability of the Orderers
Article 764
Should several persons entrust the performance of an order to a person accepting the order, they shall be jointhy and severally liable to him.
CESSATION OF ORDER
Repudiation of Contract
Article 765
(1) An orderer may repudiate a contract.
(2) In case of repudiation of a contract providing for compensation to the benefit of the person accepting the order, the orderer shall pay to the latter a corresponding part of compensation, as well as redress loss sustained by him due to withdrawing from the contract - should there be no well-grounded reasons for repudiation.
Cancellation
Article 766
(1) A person accepting an order may cancel it whenever he chooses so, but not at a bad time.
(2) He shall redress the loss to the orderer, if sustained by the latter because of cancellation of the order at a bad time, unless well-grounded reasons existed for cancellation.
(3) The person accepting the order shall continue, after the cancellation, with performance of the transactions not permitting postponement, until the orderer becomes able to take care of them.
Death, Termination of a Legal Person
Article 767
(1) An order shall cease by the death of a person accepting it.
(2) Successors of the person accepting the order shall notify the orderer of his death without delay, and to take measures necessary for protection of orderer's interests, until he becomes able to take care of them himself.
(3) An order shall cease by death of the orderer only if so provided in the contract, or if the person accepting the order accepted it because of his personal relations with the orderer.
(4) In such case the person accepting the order shall continue with the entrusted transactions, to prevent eventual loss for the successors, until they become able to take care of them.
(5) If either the orderer or the person accepting the order is a legal person, the order shall come to an end on the termination of that person.
Bankruptcy, Loss of Contractual Capacity
Article 768
An order shall cease on the bankruptcy of the orderer or person accepting the order, or if either of them loses contractual capacity.
Moment of Cessation of Order
Article 769
(1) If the orderer repudiates the contract, or in the case of his death or bankruptcy, or if he completely or partially loses contractual capacity, the order shall come to an end at the moment the person accepting the order becomes aware of the event causing the cessation of order.
(2) Should written authorisation be issued to the person accepting the order, he shall be bound to return it after the cessation of the order.
Exceptions
Article 770
Should an order be given to enable the person accepting it to achieve fulfilment of some of its claims against the orderer, the orderer shall not be entitled to repudiate the contract, and the order shall not come to an end by death or bankruptcy of either the orderer or the person accepting the order; nor shall it come to an end should one of them be deprived, entirely or partially, of contractual capacity.
COMMISSION BUSINESS
GENERAL PROVISIONS
Notion
Article 771
(1) By a contract of commission business the commission agent shall assume the obligation to perform, for remuneration (fee), on his own behalf and for the account of the client, one or several transactions entrusted to him by the client.
(2) A commission agent shall be entitled to commission fee even if it has not been stipulated.
Application of Rules of the Contract of Order
Article 772
The rules relating to orders shall apply to the contract of commission business, unless the rules of commission business provide otherwise.
Concluding a Transaction under Terms Different from an Order
Article 773
(1) Should a commission agent enter into a transaction under terms less favourable than the ones determined by the order, when not allowed to do so, he shall reimburse the difference to the client and redress the loss caused.
(2) In the case specified in the preceding paragraph, the client may refuse to accept the concluded deal, provided that he immediately notifies the commission agent thereof.
(3) However, the client shall forfeit that right if the commission agent is reday to pay the difference immediately and redress the loss caused.
(4) Should a deal be concluded under more favorable terms than determined by the order, all gains resulting thereof shall belong to the client.
Sale of Merchandise to an over-indebted Person
Article 774
A commission agent shall be liable to a client for losses if he sold the merchandise to a person of whose over-indebtedness he was aware or could have been aware.
A Case of Commission Agent himself Purchasing Client's Merchandise or selling him His Own Merchandise
Article 775
(1) A commission agent entrusted to sell or buy merchandise being quoted at the stock exchange or in the market, may, with the client's permission, keep the merchandise for himself as a purchaser i.e. deliver it as a seller, at the price effective at the time of executing the transaction entrusted.
(2) In such case the relations stemming out of contract of sale shall ensue between the commission agent and the client.
(3) Should the stock exchange price i.e. market price and the price determined by the client fail to coincide, the commission agent-seller shall be entitled to the lower of the two prices, while the commission agent-buyer shall pay the price which is higher.
OBLIGATIONS OF COMMISSION AGENT
Preserving and Insuring
Article 776
(1) A commission agent shall preserve the merchandise entrusted to him with the care of a good businessman.
(2) He shall also be liable for accidental loss or damage of the merchandise, if he failed to insure it although obliged to do that in terms of the order.
Notification about Condition of the Merchandise Accepted
Article 777
(1) On the occasion of taking over the merchandise from a carrier, forwarded to him by the client, a commission agent shall establish its condition and notify the client without delay on the date of arrival of the merchandise, as well as on visible defects or shortage, otherwise he shall be liable for loss caused to the client due to such omission.
(2) He shall take all necessary measures to preserve the rights of the client against the liable person.
Notification about Changes of Merchandise
Article 778
A commission agent shall notify the client about all changes to the merchandise by which it could lose in its value, and if there is no time to wait for instructions, or if the client is late in sending the instructions, where there is danger of considerable damage to the merchandise, the commission agent shall sell it in the most adequate way.
Notifying the Client on Names of the Contracting Partners
Article 779
(1) A commission agent shall notify the client on the name of person with whom he has effected the transaction entrusted to him by the client.
(2) This rule shall not apply in the case of sale of items of movable property in the commission shops, unless otherwise provided by the contract.
Rendering Account
Article 780
(1) A commission agent shall render account of the transaction performed, without unnecessary delay.
(2) He shall hand over to the client everything he has received under the transaction effected for his account.
(3) A commission agent shall transfer to the client the claims and other rights acquired by him against a third party with whom he effected the transaction in his own behalf and for the account of the client.
Del Credere
Article 781
(1) A commission agent shall only be liable for fulfillment of the obligations of his contracting partner if he specifically guaranteed that the latter shall do so (del credere), in which case he shall be jointly and severally liable with the partner.
(2) A commission agent guaranteeing the fulfilment of obligations of his contracting partner shall be entitled to a special fee (del credere commission fee).
OBLIGATIONS OF CLIENT
Remuneration (Fee)
Article 782
(1) The client shall pay to the commission agent a fee when the transaction effected by the commission agent has been performed, as well as when performance of the transaction was prevented due to a cause within the scope of client's responsibility.
(2) In case of gradual performance, the commission agent may demand a proportionate part of the fee after each partial fulfilment.
(3) Should the concluded transaction not be performed due to a cause outside the responsibility of the client and the commission agent, the commission agent shall be entitled to a corresponding fee for his effort.
(4) A commission agent disloyal towards his client shall not be entitled to a fee.
Amount of Fee
Article 783
(1) Should the amount of fee be not determined by contract or a tariff, the commission agent shall be entitled to a fee in conformity with the transaction effected and the result achieved.
(2) Should in a specific case the fee be disproportionally large in relation to the transaction effected and the result achieved, the court may, at the client's request, reduce it to an equitable amount.
Reimbursement of Expenses
Article 784
(1) A client shall reimburse to the commission agent the expenses which were necessary for performing the order, including interest from the day of expenditure.
(2) A client shall pay to a commission agent special compensation to cover the use of his storehouses and transportation facilities, should this be not included in the commission fee.
Advance Payment to the Commission Agent
Article 785
Unless otherwise provided by the contract of commission, the client shall not be bound to make advance payments to the commission agent relating to performing the transaction stipulated by contract.
RIGHT OF LIEN
Article 786
(1) A commission agent has the right of lien relating to objects that are the subject of the commission contract while they are in his possession, or in the possession of someone holding them on his behalf, or while he remains the holder of a legal instrument enabling him to dispose of them.
(2) A commission agent shall be entitled to collect, from the value of the objects, before other creditors of the client, his claims on the ground of all commission transactions with the client, as well as under loans and advance payments granted to the client, regardless of whether they were created in connection with those objects or some other.
(3) The right of precedence in collecting shall pertain to the commission agent out of claims acquired by him for the account of client while carrying out his order.
RELATIONS WITH THIRD PARTIES
Client's Right to Claims Originating from a Transaction with a Third Party
Article 787
(1) A client may demand fulfilment of claims from the transaction entered into by a commission agent with a third party and for his account, only if the commission agent has assigned them to him.
(2) However, in terms of the relation between a client and a commission agent and his creditors, such claims shall be treated from their inception as the client's claims.
Limitation of Rights of Commission Agent's Creditors
Article 788
Commission agent's creditors may not, in order to collect their claims, even in case of his bankruptcy, take measures of execution against rights and objects of property acquired by the commission agent in performing the order on his own behalf but for the account of the client, except in the case of claims which originated in relation to acquiring these rights and objects of property.
Bankruptcy of a Commission Agent
Article 789
(1) In case of a commission agent's bankruptcy, the client may request separation of goods handed over by him to the commission agent to be sold on his account out of the bankrupt's assets, as well as of goods acquired by the commission agent on his account.
(2) In such case the client may request from a third party to whom the commission agent has delivered the objects, payment of their price i.e. any unpaid part thereof.
THE CONTRACT OF COMMERCIAL REPRESENTATION
GENERAL PROVISIONS
Notion
Article 790
(1) By a contract of commercial representation a representative shall assume the obligation to take permanent care that third persons enter into contracts with his principal, and to mediate in that respect between them and the principal, as well as to enter into contracts, after obtaining authorization, with third persons on behalf and for the account of the principal, while the principal shall assume the obligation to pay to him, for each contract concluded, an agreed fee (brokerage).
(2) A principal may have several representatives in the same area for the same kind of business.
(3) One representative may not, without his principal's consent, assume the obligation to work for another principal regarding the same kind of business in the same area.
Form
Article 791
A contract of commercial representation must be concluded in written form.
Concluding Contracts on Behalf of a Principal
Article 792
A representative may conclude contracts on behalf and for the account of his principal only after obtaining from him a corresponding particular or general authorization.
Accepting Fulfillment
Article 793
A representative may not demand nor accept fulfillment of his principal’s claim, unless particularly authorized.
Statements to Representative for the Principal
Article 794
Should a contract be concluded by mediation of a representative, a contracting partner of the principal may validly make statements to the representative concerning defects in the subject of contract, as well as other statements relating to such contract - with the purpose of preserving or realizing rights from the contract.
Statements on Behalf of the Principal
Article 795
In order to preserve the rights of his principal, a representative shall be authorized to make necessary statements to his contracting partner.
Security Interest
Article 796
In order to protect the interest of the principal, a representative may demand that necessary security interest be instituted.
OBLIGATIONS OF A REPRESENTATIVE
Taking Care of the Interests of the Principal
Article 797
(1) A representative shall take care of the interests of the principal and shall proceed in all transactions undertaken by him with the care of a good businessman.
(2) In doing that, he shall conform to the instructions given by the principal.
(3) He shall supply the principal with all necessary information concerning the market situation, and particularly those significant for each particular transaction.
Participation in Concluding Transactions
Article 798
A representative shall participate, according to the instructions of the principal, in concluding transactions and in their complete execution.
Confidentiality
Article 799
(1) A representative shall keep those business secrets of his principal which become known to him in connection with the transaction entrusted.
(2) He shall be liable if he uses them or discloses them to another even after the termination of contract of commercial representation.
Restitution of Objects Given to Be Used
Article 800
After termination of the commercial representation contract, the representative shall restitute to the principal all objects handed over by him for use in the course of the contract.
Particular Case of Liability
Article 801
(1) A representative shall be liable to the principal for fulfillment of obligations arising from the contract concluded through his mediation, or concluded by him based on authorization, on behalf of the principal, only if he gave a particular written guarantee in that respect.
(2) In such a case he shall be entitled to a special fee (del credere fee).
OBLIGATIONS OF THE PRINCIPAL
Material and Documentation
Article 802
Should specific material or specific documentation be necessary for the representative to do his business, the principal shall provide them to him.
Duty of Informing
Article 803
(1) A principal may accept or reject as he pleases the conclusion of a contract prepared by the representative, but shall inform the representative about his decision without delay.
(2) A principal shall inform the representative without delay on the need to reduce the scope of transactions concluded through his mediation to a scope smaller than the representative could have reasonably expected, so that the latter could reduce his own business efforts to an adequate degree on time; the principal shall otherwise be liable for loss sustained by the representative in this respect.
Fee (Commission)
Article 804
(1) A principal shall pay to the representative a fee for contracts concluded through his mediation, as well as for contracts concluded by the representative himself, if authorized accordingly.
(2) A representative shall also be entitled to a fee for contracts concluded directly by the principal with clients found by the representative.
Acquiring the Right to a Fee
Article 805
Unless otherwise stipulated between the contracting parties, the representative shall acquire the right to a fee after the contract has been performed, but such right shall belong to him even if the contract remains unfulfilled, if this is due to a reason for which the principal is to blame.
Fee Size
Article 806
(1) Should the amount of fee be not agreed either by contract or a tariff, the representative shall be entitled to a usual fee.
(2) Should the fee in a specific case be excessively high in comparison to the service rendered, the court may, at the principal's request, reduce it to an equitable amount.
Special Fee
Article 807
A representative, who successful collected a claim of the principal after being authorized accordingly, shall be entitled to a special fee from the amount collected.
Expenses
Article 808
(1) A representative shall not be entitled, unless otherwise stipulated, to reimbursement of expenses originating from regular performance of brokerage.
(2) He shall, however, be entitled to remuneration for special expenses incurred by him to the benefit of the principal or at his order.
THE RIGHT OF LIEN
Article 809
In order to secure collection of his due claims originated in connection with the contract, a representative shall have a right of lien against the amounts collected for the principal, under his authorization, as well as regarding all objects of the principal received from principal, or from another person, in connection with the contract while these objects remain in his possession, or in possession of another holding them for him, or while he remains in possession of a legal instrument enabling him to dispose of them.
CESSATION OF CONTRACT
Termination of Contract Concluded for an Indefinite Period of Time
Article 810
(1) Should the period of validity of a contract of commercial representation be not determined by contract, or if it cannot be determined by circumstances of the transaction, each party may terminate the contract at the end of each calendar quarter.
(2) Termination notice must be communicated to the other party at least one month prior to expiration of the calendar quarter, and if the contract has lasted for three years, the other party must be given notice two months prior to expiration of the calendar quarter.
(3) Contracting parties may provide for different time limits of termination notice and of cessation of contract, but a minimum one month time limit must be left between the termination notice and the cessation of contract.
Termination of Contract without Time Limit for Notice
Article 811
(1) Each party may terminate the contract without a period of notice on the ground of serious causes, which must be stated.
(2) Should the statement of termination of contract be made with no serious reasons, it shall be considered as a cancellation with the regular period of notice.
(3) A representative whose activity is interrupted due to an unfounded termination shall be entitled to compensation to cover his lost commission, and if he was the one who cancelled the contract without grounds, the right to redress shall belong to the principal.
(4) An unfounded notice shall entitle the other party to terminate the contract without a period of notice.
Cessation of Contract Concluded for a Definite Period of Time
Article 812
(1) Should a contract of commercial representation be agreed for a definite period of time, it shall cease by the expiration of the time specified.
(2) Should such contract be implicitely extended, it shall be treated henceforward as a contract agreed for an indefinite period.
BROKERAGE
GENERAL PROVISIONS
Notion
Article 813
By a contract of brokerage the broker shall assume an obligation to try to find and connect his principal with a person who will negotiate with him to enter into a specific contract, while the principal shall assume the obligation to pay to him a particular fee should such contract be concluded.
Applying Provisions of Law regarding Contracts for Supply of Services
Article 814
Should it be stipulated that the broker shall be entitled to particular remuneration even should his effort remain without result, such contract shall be judged according to the provisions applicable to contracts for supply of services.
Accepting the Fulfilment
Article 815
(1) An order for brokerage shall not imply authorization for the broker to accept fulfillment for his principal of an obligation originating from a contract concluded through his brokerage.
(2) A written authorisation shall be needed for the above.
Revocation of a Brokerage Order
Article 816
A principal shall be entitled to revoke a brokerage order whenever he pleases, if he did not renounce such right and on condition that the revocation is not contrary to good faith.
Absence of Duty of Principal to Conclude a Contract
Article 817
A principal shall neither be obliged to engage himself in negotiations for concluding a contract with a person found by the broker, nor shall he be obliged to conclude a contract with him under terms related to the broker, but he shall be liable for damages if he does not act in good faith.
OBLIGATIONS OF THE BROKER
A Duty to Look for an Opportunity
Article 818
(1) A broker shall look for an opportunity to conclude a particular contract and to direct the principal to it with the care of a good businessman.
(2) A broker shall mediate in negotiations and try to broker a contract, if he has assumed a specific obligation in that respect.
(3) He shall not be liable if, in spite of necessary care applied, he fails in his endeavor.
Duty to Inform
Article 819
A broker shall notify his principal of all circumstances relevant to the intended transaction which are known to him or which must have been known to him.
Liability of Broker
Article 820
(1) A broker shall be liable for loss eventually sustained by one or the other party involved in his mediation, which occurs because of his brokerage on behalf of a person without contractual capacity, whose incapacity was known, or could have been known to him, or on behalf of a person of whose incapacity to meet the contractual obligations he was aware, or must have been aware, and shall generally be liable for all loss caused through his fault.
(2) A broker shall be liable for loss sustained by his principal if he informs a third party of the substance of the order, on negotiations going on, or on terms and conditions of a contract concluded, without his principal's permission.
Broker’s Day Book and Sheet
Article 821
A commercial broker shall note down in a particular book (broker's day book) essential data about a contract entered into by his mediation, and shall issue an excerpt from such book signed by him (broker's sheet).
OBLIGATIONS OF THE PRINCIPAL
Remuneration
Article 822
(1) A broker shall be entitled to remuneration even if it is not stipulated.
(2) Should the amount of remuneration be not determined either by a tariff or other general enactment, or by contract or trade usage, it shall be determined by a court according to the broker's effort and the service rendered.
(3) The stipulated broker's remuneration may be reduced by the court at the principal's request, if it finds that it is excessively high in relation to the broker's effort and the service rendered.
(4) Reduction of the stipulated remuneration may not be requested if paid to the broker after entering into a contract mediated by him.
When a Broker Is Entitled to Remuneration
Article 823
(1) A broker shall acquire the right to remuneration at the moment of entering into contract he has mediated, unless otherwise stipulated.
(2) However, should a contract be concluded with a postponing condition, the realisation of such condition shall be a prerequisite to the broker's acquiring the right to remuneration.
(3) Should a contract be concluded with a rescinding condition, the realisation of the condition shall not affect the broker's remuneration.
(4) In case of a void contract, the broker shall be entitled to remuneration if the cause of invalidity was unknown to him.
Reimbursement of Expenses
Article 824
(1) A broker shall not be entitled, unless stipulated to the contrary, to reimbursement of expenses incurred in carrying out the order.
(2) But should his right to reimbursement of expenses be recognized by contract, he shall be entitled to such reimbursement even if the contract has not been concluded.
Brokerage for both Parties
Article 825
(1) Unless otherwise stipulated, a broker who receives an order for brokerage by both parties, may request from each only half of the broker's remuneration, and reimbursement of half of his expenses, should reimbursement of expenses be stipulated.
(2) A broker shall care for the interests of both parties he is mediating between as a good businessman.
Forfeiture of the Right to Remuneration
Article 826
A broker working for the other party contrary to the contract or contrary to the interests of his principal shall forfeit his right to remuneration and to the reimbursement of expenses.
FORWARDING (SHIPPING)
GENERAL PROVISIONS
Notion
Article 827
(1) By a contract of forwarding a forwarding agent shall assume the obligation to conclude, in order to effect the transport of a specific object, on his own behalf and for the account of his principal, a contract of carriage and other contracts necessary for effecting transport, as well as to perform other usual transactions and actions, while the principal shall assume the obligation to pay particular remuneration to him.
(2) If provided by contract, the forwarding agent may enter into a contract of carriage and take other legal actions on behalf and for the account of his principal.
Contract Repudiation
Article 828
A principal may repudiate the contract if he wishes, but in such case he shall reimburse to the forwarder all expenses incurred by him until that moment, and to pay to him a corresponding part of remuneration for the work done.
Application of the Rules of Commission Business or of Commercial Brokerage
Article 829
The rules governing contract of commission business i.e. commercial representation shall apply mutatis mutandis to relations between a principal and a forwarding agent which have not been regulated by the present Chapter.
OBLIGATIONS OF THE FORWARDING AGENT
Warning about Defects in the Order
Article 830
A forwarding agent shall warn the principal about defects in his order, and more particularly about those exposing him to higher expenses or loss.
Warning about Deficiencies in Packaging
Article 831
If an object is not packed or otherwise not sufficiently ready for transport, the forwarding agent shall warn the principal about such deficiencies, but if waiting for the principal to eliminate them would be damaging to him, the forwarding agent shall eliminate them at the expense of the principal.
Preserving the Interests of the Principal
Article 832
(1) A forwarding agent shall in any occasion proceed according to the interests of the principal, and with the care of a good businessman.
(2) He shall notify the principal without delay of damage to the object, as well as about all events relevant to him, and take all necessary measures in order to preserve his rights against a liable person.
Proceeding According to the Principal's Instructions
Article 833
(1) A forwarding agent shall follow instructions relating to itinerary, means and manner of transportation, as well as other instructions received from the principal.
(2) Should it be impossible to proceed according to instructions in the order, the forwarding agent shall request new instructions, and should there be no time or possibility to wait for them, the forwarding agent shall proceed as the interests of the principal require.
(3) A forwarding agent shall notify his principal without delay of every departure from the order.
(4) Should the principal fail to determine either the itinerary or the means, i.e. the manner of transportation, the forwarding agent shall determine them according to the interests of the principal in a given case.
(5) Should a forwarding agent depart from instructions received, he shall also be liable for damage caused by Act of God, unless successful in proving that the damage would have occured even if he had followed instructions.
Liability of Forwarding Agent for Other Persons
Article 834
(1) A forwarding agent shall be liable for the choice of carrier, as well as for other persons he has entered into contract with, while performing the order (such as storage of goods and similar), but shall not be liable for their work unless he has assumed that responsibility by contract.
(2) A forwarding agent entrusting the performance of order to another forwarding agent, instead of doing it himself, shall be liable for his work.
(3) Should the order include, either expressly of impliedly, an authorisation to the forwarding agent to entrust the performance of the order to another forwarding agent, or if this was obviously in the interest of the principal, he shall be liable only for the choice thereof, unless having assumed the responsibility for his work.
(4) Liabilities specified in the preceding paragraphs of the present Article may not be excluded or limited by contract.
Customs Clearance Procedures and Payment of Customs Duty
Article 835
Unless otherwise specified by contract, an order to forward goods over a state border shall include the forwarding agent's duty to follow necessary customs clearance procedure and pay customs duty for the account of the orderer.
A Case of a Forwarding Agent Performing Transport or other Matters Himself
Article 836
(1) Unless otherwise stipulated, a forwarding agent may also perform, entirely or partially, the transport of objects whose forwarding is entrusted to him, himself.
(2) Should the forwarding agent perform the transport himself or part of the transport, he shall obtain the rights and duties of a carrier and in such case shall be entitled to a corresponding carriage charge, in addition to remuneration for forwarding, and to reimbursement of expenses incurred in relation to forwarding.
(3) The same shall apply in respect to other jobs included in the order, trade usage, or general terms and conditions.
Insurance of Shipment
Article 837
(1) A forwarding agent shall insure the shipment only if this is stipulated in the contract.
(2) Should the kind of risk to be covered by insurance not be specified in the contract, the forwarding agent shall insure the goods against usual risks.
Rendering Account
Article 838
(1) A forwarding agent shall render an account to the principal after job done.
(2) If so requested by the principal, the forwarding agent shall also render account in the course of carrying out the order.
OBLIGATIONS OF THE PRINCIPAL
Payment of Remuneration
Article 839
A principal shall pay to the forwarding agent remuneration according to the contract, but if remuneration is not included in the contract, according to tariff or other general provisions, but in lack of thereof remuneration shall be determined by the court.
When a Forwarding Agent May Request Remuneration
Article 840
A forwarding agent may request remuneration after fulfilling his obligations from the forwarding contract.
Expenses and Advance Payment
Article 841
(1) A principal shall reimburse the forwarding agent necessary expenses incurred in order to carry out the order to forward the objects.
(2) A forwarding agent may demand reimbursement of expenses immediately after effecting them.
(3) At the forwarding agent's demand, the principal shall make an advance payment to him to cover expenses necessary to carry out the order for forwarding the objects.
Stipulation that Remuneration Be Paid by the Consignee
Article 842
If provided by contract that the forwarding agent shall collect his claims from the consignee, the forwarding agent shall keep the right to demand remuneration from the principal should the consignee refuse to pay it to him.
Dangerous Objects and Valuables
Article 843
(1) A principal shall notify the forwarding agent of properties of objects which could jeopardize the safety of people and property, or cause damage.
(2) Should a shipment contain valuables, securities, or other expensive items, the principal shall notify the forwarding agent accordingly, and inform him of their value at the moment of delivery for forwarding.
PARTICULAR CASES OF FORWARDING
Forwarding with Fixed Fee
Article 844
(1) Should a lump sum be determined by forwarding contract for carrying out the forwarding order, such sum shall include, unless otherwise stipulated, the remuneration for forwarding and payment for the transport, as well as reimbursement of all other expenses.
(2) In such a case, the forwarding agent shall also be liable for the work of the carrier and other persons engaged by him with corresponding authorization in the contract.
Collective Forwarding
Article 845
(1) While carrying out orders received, a forwarding agent may organize collective forwarding, unless this is excluded by contract.
(2) After achieving a difference in the transport fee to the benefit of the principal by collective forwarding, the forwarding agent shall be entitled to special additional remuneration.
(3) In the case of collective forwarding, the forwarding agent shall be liable for loss or damage of the object in transport, which otherwise would not take place if it were not for the collective forwarding.
FORWARDING AGENT'S RIGHT OF LIEN
Article 846
(1) In order to secure the collection of his claims originated in relation to the forwarding contract, the forwarding agent shall have the right of lien regarding the objects handed over for forwarding and in relation to forwarding, while he keeps them in his possession or while he is in possession of a legal instrument entitling him to dispose of them.
(2) Should yet another agent participate in effecting the forwarding, he shall take care of collecting the claims and realizing the right of lien of the previous forwarding agents.
(3) Should another forwarding agent pay off the forwarding agent's claims against the principal such claims and the forwarder's right of lien shall be transferred to him by operation of law.
(4) The same shall apply, should the other forwarding agent pay off the carrier's claims.
CONTRACT OF CONTROL OF MERCHANDISE AND SERVICES
Notion
Article 847
(1) By a contract of control of merchandise one contracting party (controller) shall assume the obligation to perform, professionally and impartially, the stipulated control of merchandise, and issue a certificate thereof, while the other party (principal) shall assume the obligation to pay for the control effected a stipulated fee.
(2) The control of merchandise may consist of determining the identity, quality, quantity and other characteristics of the merchandise.
Scope of Control
Article 848
A controller shall effect control within the scope and in the manner specified in the contract, and should nothing be specified in the contract in that respect, within the scope and in the manner corresponding to the nature of the object.
Nullity of some Clauses of Contract
Article 849
(1) Clauses of a contract by which duties are imposed on the controller which could affect the impartiality of control or correctness of the certificate on the control effected shall be void.
(2) The control shall be considered effected only after issuing the certificate.
Storing the Merchandise or Samples
Article 850
(1) A controller shall store the merchandise handed over to him by the principal in order to carry out the control provided by contract, and shall take care to prevent substitution.
(2) Unless otherwise stipulated, the controller shall keep samples handed over to him for at least six months.
Duty of Notifying the Principal
Article 851
A controller shall timely notify the principal of all significant circumstances in course of control and storage of merchandise, and, more particularly, about necessary and useful expenses effected for his account.
Remuneration
Article 852
(1) For the performed control and storage of merchandise, the controller shall be entitled to a stipulated i.e. usual fee.
(2) A controller shall also be entitled to reimbursement of all necessary and useful expenses incurred for the account of the principal.
The Right of Lien
Article 853
In order to secure the stipulated or customary fee and the reimbursement of necessary and useful expenses, the controller shall have the right of lien over the merchandise entrusted to him for control.
Entrusting Control of Merchandise to another Controller
Article 854
(1) A controller may entrust performing of stipulated control to another, unless the principal has expressly forbidden it.
(2) A controller shall be responsible to his principal for the work of the other controller.
Control of Merchandise with Undertaking Legal Work
Article 855
(1) On the ground of an express order by the principal, the controller shall be entitled, in addition to carrying out the control of merchandise as stipulated by contract, to undertake some legal work on behalf and for the account of the principal.
(2) A controller shall be entitled to special customary or stipulated remuneration for performing certain legal matters on behalf and for the account of the principal.
Control of Merchandise with a Guarantee
Article 856
(1) A controller may guarantee unchangeability of properties of the controlled merchandise within the stipulated time limit.
(2) For the guarantee assumed in relation to properties of merchandise, the controller shall be entitled to special, stipulated or customary remuneration.
Control of Services and Goods not Intended for Trade
Article 857
Should performance of control relate to services or objects not intended for trade, the controller and the principal shall have the same rights and duties as in the case of control of merchandise.
Termination of Contract
Article 858
A principal may state that he terminates the contract all up to the moment when the ordered control has been carried out, but in such case he shall pay to the controller a proportionate part of remuneration and reimburse necessary and useful expenses incurred, as well as redress the loss sustained by him.
CONTRACT OF ORGANIZATION OF TRAVEL
GENERAL PROVISIONS
Notion
Article 859
By a contract of organization of travel a travel organizer shall assume the obligation to procure to a traveler a set of services consisting of transportation, stay and other services relating to them, while a passenger shall assume the obligation to pay to the organizer a total sum (flat sum) as a price.
Issuing a Travel Certificate
Article 860
(1) At the moment of concluding the contract, the travel organizer shall issue a travel certificate to a traveler.
(2) The travel certificate should include the following: place and date of issue, designation and address of the travel organizer, name of the traveler; place and date of departure and of the end of journey, dates of stay, necessary details concerning transportation and stay as well as other services included in the total price; the minimum number of travelers needed for the travel; the total price for the set of services provided for by the contract; terms under which the traveler may demand contract termination, as well as other data deemed useful to be included in the certificate.
(3) If prior to issuing a travel certificate to the traveler he was served with a travel program containing data specified in the preceding paragraph, the travel certificate may include only reference to that program.
Relationship between Contract and a Travel Certificate
Article 861
(1) The existence and validity of a contract of organization of travel shall be independent of the existence of the travel certificate and its contents.
(2) However, the travel organizer shall be liable for all losses sustained by the other party due to his failing to issue the travel certificate or because of its incorrectness.
Presumption of Correctness of the Certificate
Article 862
Everything indicated in the certificate shall be considered correct as long as the contrary is not proved.
OBLIGATIONS OF THE TRAVEL ORGANIZER
Protection of Traveler's Rights and Interests
Article 863
A travel organizer shall provide the traveler with services that have the substance and features otherwise specified by contract, by certificate, i.e. program of travel, and shall take care of the passenger's rights and interests in accordance with fair trade practices in this line of business.
Duty of Notification
Article 864
A travel organizer shall provide the traveler with necessary information concerning prices and terms of transportation, stay and particular services, as well as with information relating to quality of the means of transportation and lodging, transportation schedule, routes, state borders and customs formalities, and to sanitary, monetary and other administrative regulations.
Duty of Confidentiality
Article 865
Information received about the passenger, his luggage and his whereabouts may be related to third parties by the travel organizer only after obtaining permission from the traveler, or at the request of a competent authority.
Liability for Organizing Travel
Article 866
A travel organizer shall be liable for loss caused by him to a traveler by total or partial failure to fulfill the obligations relating to the organization of travel provided for by the contract and the present Law.
Liability of Travel Organizer Performing himself Particular Services
Article 867
Should he himself supply services of transportation, lodging and other services relating to carrying out organized travel, the organizer shall be liable for loss caused to the passenger, on the ground of regulations covering such services.
Liability of Travel Organizer when he entrusted the Performance of some Services to Third Parties
Article 868
(1) A travel organizer entrusting the performance of transportation services, lodging and other services relating to realization of travel to third parties shall be liable to the traveler for loss occurring due to total or partial failure to fulfill such services, in accordance with regulations relating to them.
(2) But, even if the services have been performed in concordance with the contract and regulations relating to them, the organizer shall be liable for loss sustained by the traveler in relation to their performance, unless successful in proving that he acted as a careful travel organizer in making his choice of persons performing such services.
(3) The traveler shall be entitled to demand directly from the third party liable for damage, the entire or additional compensation for loss he has suffered.
(4) To the degree of his redressing the loss sustained by the traveler, the travel organizer shall acquire all rights which would otherwise pertain to the traveler against the third party liable for such loss (the right of redress).
(5) The traveler shall give the travel organizer the documents and everything necessary to exercise the right of redress.
Price Reduction
Article 869
(1) Should services arising from a contract of travel organization be incomplete or of low quality, the traveler may demand a proportionate price reduction, on condition that he raises the objection against the travel organizer within eight days from the day of termination of travel.
(2) The demand for a price reduction shall not affect the traveler's right to request damages.
Exclusion and Limitation of Travel Organizer's Liability
Article 870
(1) Clauses of a contract of travel organization by which liability of the travel organizer is excluded or limited shall be void.
(2) However, a written clause in the contract shall be valid by which the highest amount of compensation is determined in advance, on condition that it be not in obvious disproportion to the loss.
(3) Such limitation of amount of compensation shall not be applicable if the organizer caused damage by wilful misconduct or gross negligence.
OBLIGATIONS OF THE TRAVELER
Payment of Price
Article 871
A traveler shall pay to the travel organizer the stipulated price of the travel, at the time as stipulated or as customary.
Duty of Supplying Information
Article 872
At the organizer's request a traveler shall timely supply all information necessary for the organization of travel, and more particularly that necessary for obtaining tickets for transport, lodging reservations, as well as documents needed for crossing state borders.
Meeting Requirements Set Forth by Regulations
Article 873
A traveler shall make sure that he personally, his identity documents, and his luggage meet the state borders and customs requirements, sanitary, monetary and other administrative regulations.
Traveler's Liability for Damage
Article 874
A traveler shall be liable for loss caused to the travel organizer by his failure to perform his obligations stemming from contract and the provisions of the present Law.
PARTICULAR RIGHTS AND OBLIGATIONS OF CONTRACTING PARTIES
Replacing a Traveler with another Person
Article 875
Unless otherwise stipulated, a traveler may determine another person to use the services instead of him, on condition that such person meets particular requirements for the specific travel, and that such passenger reimburse to the travel organizer the expenses incurred by the replacement.
Raising a Stipulated Price
Article 876
(1) A travel organizer may demand an increase of the stipulated price only if, after entering into contract, the foreign currency exchange rate or carrier's tariffs affecting the price of travel have been changed.
(2) The right to increase the stipulated price as specified in the preceding paragraph may be realized by the travel organizer only after being provided for in the certificate of travel.
(3) Should the increase of stipulated price exceed ten percent, the traveler may terminate the contract without being obliged to redress the loss.
(4) In such a case the traveler shall be entitled to restitution of the amount paid to the travel organizer.
Traveler's Right to Repudiate the Contract
Article 877
(1) A traveler may at any time repudiate the contract, entirely or partially.
(2) Should the traveler repudiate the contract prior to the commencement of the travel within a reasonable time limit, which shall be determined with regard to the kind of package deal (withdrawing on time), the travel organizer shall be entitled only to reimbursement of office expenses.
(3) In case of untimely contract repudiation, the travel organizer may request from the traveler compensation in a percentage of the stipulated price, which shall be determined in proportion to the time left over before commencement of the travel, and which must be justified economically.
(4) The travel organizer shall be entitled only to reimbursement of expenses incurred, if the passenger repudiates the contract due to circumstances impossible to avoid or eliminate by him, and which - had they existed at the time of entering into contract - would have amounted to a justified ground for him not to enter into contract, as well as in the case where the traveler has provided a corresponding replacement for him, or the replacement has been found by the organizer himself.
(5) Should the traveler repudiate the contract after the travel has commenced, and the reasons for that were not the circumstances specified in the preceding paragraph of the present Article, the organizer shall be entitled to the full amount of the stipulated price of the travel.
Right of Travel Organizer to Repudiate the Contract
Article 878
(1) A travel organizer may repudiate the contract, entirely or partially, without being obliged to redress losses, should prior or in course of performing the contract extraordinary circumstances take place which could not have been foreseen, avoided or eliminated, and which - had they existed at the time of entering into contract - would have amounted to a justified ground for the travel organizer not to enter into contract.
(2) The travel organizer may also repudiate the contract without being obliged to redress the loss should there be no minimum number of travelers as anticipated in the certificate of travel, on condition that the organizer notifies the traveler accordingly and in due time, which time shall not be shorter than five days prior to the scheduled date of travel.
(3) In case of contract repudiation prior to its being performed, the organizer shall restitute to the traveler the entire amount received by him.
(4) Should the organizer repudiate the contract in course of its performance, he shall be entitled to equitable compensation to cover the realized stipulated, while being obliged to take all necessary measures to protect the interests of the traveler.
Change of Travel Program
Article 879
(1) Changes in the travel program may be effected only if caused by extraordinary circumstances which could not have been foreseen, avoided or eliminated by the travel organizer.
(2) Expenses caused due to changes in the program shall be at the charge of the travel organizer, while reduction of expenses shall be to the credit of the traveler.
(3) Changing the stipulated lodging may be effected only by using a facility of the same category, or by using the premises of a higher category in the place of lodging as stipulated by contract - at the charge of the organizer.
(4) Should essential changes be made to the travel program without justified ground, the travel organizer shall restitute to the traveler the entire amount paid to him if the traveler withdraws from travel due to the above.
(5) Should essential changes in the program be made in the course of performing the contract, the traveler - if he repudiates the contract - shall bear only actual expenses of the services realized.
INTERMEDIARY CONTRACT OF TRAVEL
Notion
Article 880
By an intermediary contract of travel, the intermediary shall assume the obligation to conclude, on behalf and for the account of a passenger, a contract of organizing a travel or a contract of performing one or several particular services making possible a travel or stay, while the passenger shall assume the obligation to pay in return a corresponding fee.
Duty of Issuing of a Certificate
Article 881
(1) Should an obligation be assumed by the intermediate contract of travel to conclude a contract of travel organization, the intermediary shall, at the conclusion of contract, issue a certificate of travel which, in addition to data relating to the travel itself and an indication of the travel organizer and his address, must include the indication and address of the intermediary, as well as information that he is acting in such role.
(2) Should he fail to indicate in the acknowledgment of travel his capacity as intermediary, the intermediary in the organization of travel shall be considered as the travel organizer.
(3) Should the intermediate contract of travel be related to concluding a contract of a specific service, the intermediary shall issue a certificate relating to such service, indicating the amount paid for the services.
Proceeding According to Instructions of the Traveler
Article 882
(1) The intermediary shall proceed according to instructions given to him on time by the traveler, if such instructions are in accordance with the contract, with the usual business activity of an intermediary, and with the interests of other travelers.
(2) Should a traveler fail to supply necessary instructions, the intermediary shall act in the way most appropriate for the traveler in the given circumstances.
Choice of Third Parties
Article 883
An intermediary shall choose in good faith third parties who are to perform services provided by the contract, and shall be responsible to the passenger for such choice.
Mutatis Mutandis Application of Provisions of the Contract of Travel Organization
Article 884
The provisions of the present Law relating to the contract of travel organization shall apply mutatis mutandis to the intermediate contract of travel, unless otherwise specified by provisions of the present Chapter.
THE CONTRACT OF ENGAGING CATERING CAPACITIES (CONTRACT OF ALLOTMENT)
GENERAL PROVISIONS
Notion
Article 885
(1) By a contract of allotment, the caterer shall assume the obligation to place at the disposal of a tourist agency, in course of a specified period of time, a number of beds in a designated facility, to provide catering services for persons sent by the agency, and to pay to it a specified fee, while the agency shall assume the obligation to endeavor to fill those capacities i.e. to inform, within the determined time limits, that this is not possible, and to pay the price for services supplied, if it used the engaged hotel capacities.
(2) Unless otherwise provided by the contract, the lodging catering capacities shall be considered placed at disposal for one year.
Form of Contract
Article 886
The contract of allotment must be concluded in written form.
OBLIGATIONS OF A TOURIST AGENCY
Duty of Notification
Article 887
(1) A tourist agency shall notify the caterer about the course of filling up of accommodation capacities.
(2) If not able to fill up all engaged accommodation capacities, a tourist agency shall notify, within stipulated or customary time limits, the caterer of the fact, and to send him the list of guests, as well as to determine in such notification the time limit up to which the caterer may freely dispose of the capacities engaged.
(3) The catering capacities which are not designated in the guest list as filled up, shall be considered vacant from the day of receiving of such a list by the hotel, for the period covered by the list.
(4) After the expiration of such a time limit, the tourist agency shall again acquire the right to fill up the engaged capacities.
Duty of Complying with Prices Provided for in the Contract
Article 888
A tourist agency may not charge higher prices for catering services to persons sent by it to a catering facility, than the ones provided by the contract of allotment or by the caterer's price list.
Duty of Payment for Catering Services
Article 889
(1) Unless otherwise provided by contract, the price of the provided catering services shall be paid by the tourist agency to the caterer after the services have been provided.
(2) The caterer shall be entitled to demand an adequate advance payment.
Duty of Issuing a Particular Legal Instrument
Article 890
(1) A tourist agency shall issue to persons sent by it, on the ground of an allotment contract, a particular legal instrument (particular legal instrument).
(2) The particular legal instrument shall be made out to name or to a specific group; it shall not be transferable and shall contain an order to the caterer to supply services indicated therein.
(3) The particular legal instrument shall serve as proof that the person is a client of the tourist agency which concluded the contract of allotment with the caterer.
(4) The particular legal instrument shall serve as a ground for settling mutual claims between the tourist agency and the caterer.
OBLIGATIONS OF A CATERER
Duty of Making Available the Stipulated Accommodation Capacities
Article 891
(1) A caterer shall assume a final and irrevocable obligation to make available, during a specified period of time, the stipulated number of beds and to supply the persons sent by the tourist agency with services indicated in the particular legal instrument.
(2) The caterer may not make an agreement with another tourist agency for engaging capacities which have been already reserved on the ground of an allotment contract.
Duty of Non-discrimination
Article 892
A caterer shall supply persons sent by the tourist agency with services under the same terms as the ones extended to persons with whom he has entered into a direct agreement on catering services.
Duty of a Caterer not to Change Prices of the Services
Article 893
(1) A caterer may not change stipulated prices unless he notifies the tourist agency accordingly at least six months in advance, except in case of change in the foreign currency exchange rate affecting the price stipulated.
(2) New prices may be applied after the expiration of one month from the day of their delivery to the tourist agency.
(3) The new prices shall not apply to services for which the guest list has already been delivered.
(4) In any case the changed prices shall not affect the bookings confirmed by the caterer.
Duty of Payment of Fee
Article 894
(1) A caterer shall pay to a tourist agency a fee against turnover effected on the ground of the contract of allotment.
(2) The fee shall be determined as a percentage of the price of the catering services which were provided.
(3) Should the percentage fee not be determined by contract, the tourist agency shall be entitled to a fee as specified by general terms and conditions of the tourist agency’s business, or, in the absence of such terms and conditions, by corresponding trade usage.
A RIGHT OF TOURIST AGENCY TO REPUDIATE THE CONTRACT
A Right to Withdraw from Engaged Lodging Capacities
Article 895
(1) A tourist agency may temporarily withdraw from the use of engaged lodging capacities, and still not repudiate the contract of allotment, and not create its own obligation to redress loss to the caterer, if it notifies the caterer on the withdrawal from use within the stipulated time limit.
(2) Should the time limit for notification on withdrawal be not specified by contract, it shall be determined on the grounds of catering business trade usage.
(3) Should the notification of withdrawal not be communicated within the specified time limit, the caterer shall be entitled to damages.
(4) A tourist agency may repudiate the contract in its entirety, without being bound to redress loss, if it communicates notification of repudiation within the stipulated time limit.
Duty of a Tourist Agency to Fill the Engaged Capacities
Article 896
(1) An allotment contract may include a special clause binding the tourist agency to fill the engaged catering capacities.
(2) Should it fail in such a case to fill the engaged catering capacities, the tourist agency shall pay to the caterer compensation against unused beds per day.
(3) The tourist agency in such a case shall have no right to repudiate the contract by timely notification, either entirely or partially.
INSURANCE
JOINT PROVISIONS FOR PROPERTY AND LIFE INSURANCE
GENERAL PROVISIONS
Notion
Article 897
By a contract of insurance an insured person shall assume the obligation to pay a specific amount to an insurance organization (insurer), while the organization shall assume the obligation, should an event take place which represents the case covered by insurance, to pay to the insured person, or to a third party, compensation, i.e. a stipulated amount, or to do something else.
Insured Event
Article 898
(1) An event serving as a ground for concluding insurance (an insurance event) must be a future event, uncertain and entirely independent of the contracting party's will.
(2) A contract of insurance shall be void if, at the moment of its conclusion, the insurance event has already materialized, or is at the point of occurring or if it is certain that it is going to occur, or if, then already, there was no possibility of its occurring.
(3) However, after stipulating that the insurance shall encompass a specified period of time preceding the conclusion of contract, the contract shall be null only if, at the moment of its conclusion, the interested party was aware that the case covered by insurance had already taken place, i.e. that even then the possibility of its taking place had ceased to exist.
Exclusion of some Kinds of Insurance
Article 899
(1) Provisions of the present Chapter shall not apply to navigation insurance, or to other kinds of insurance subject to the rules of navigation insurance.
(2) Mentioned provisions shall not apply to the insurance of claims either, or to relations arising from re-insurance.
Departure from Provisions of the Present Chapter
Article 900
(1) It may be possible to depart by contract from those provisions of the present Chapter which expressly permit such departure, as well as from those which allow the contracting parties the option to proceed as they wish.
(2) Departure from the remaining provisions, if not prohibited by the present Law or some other law, shall be permitted only if it is to the unquestionable interest of the person insured.
CONCLUDING A CONTRACT
When a Contract is Concluded
Article 901
(1) A contract of insurance shall be concluded after the contracting parties have signed the insurance policy or the list of coverage.
(2) A written offer made to an insurer to enter into a contract of insurance shall be binding on the offeror, unless he has determined a shorter time limit, for eight days after the offer has reached the insurer, and should medical examination be necessary, then in course of thirty days.
(3) Should the insurer fail, within that time limit, to decline the offer which does not differ from terms and conditions of his usual provision of the proposed insurance, he shall be considered as having accepted the offer and that the contract has been concluded.
(4) In such case the contract shall be considered as concluded at the moment of the offer reaching the insurer.
Policy and the List of Cover
Article 902
1) The following must be indicated in the policy: contracting parties, the insured object, i.e. insured person, risk covered by insurance, duration of insurance and period of cover, amount of insurance or an indication that the insurance is unlimited, insurance premium or allowance, date of issue of the policy, and signatures of contracting parties.
(2) The insurance policy may be temporarily substituted by a list of cover, which shall include the essential constituent elements of contract.
(3) The insurer shall warn the person concluding a contract of insurance that the general and particular terms and conditions of insurance make a component part of the contract, and hand over to him the relevant text, should such terms and conditions not be printed on the insurance policy itself.
(4) The performance of obligation specified in the preceding paragraph must be expressly indicated as done in the insurance policy.
(5) In the case of discrepancy between a provision of the general or particular terms and conditions, and an insurance policy clause, the clause of the policy shall apply, while in the case of discrepancy between a printed clause of an insurance policy and a clause which is handwritten, the latter shall apply.
(6) The contracting parties may agree that a policy be made out either to a specific person, by order or to the bearer.
Insurance without Policy
Article 903
Terms and conditions of insurance may provide for cases in which contractual relation of insurance shall generate by bare payment of premium.
Unauthorized Conclusion of Contract on Behalf of Another
Article 904
(1) A person concluding a contract of insurance on behalf of another without his authorization, shall be liable to the insurer for obligations stemming out of such contract, until the person on whose behalf the contract is concluded has accepted them.
(2) The party interested may approve of the contract even after the case covered has taken place.
(3) Should approval be declined, the person concluding the insurance shall owe the premium for the period of insurance within which the insurer was notified of declining the approval.
(4) But a manager without instructions shall not be liable for obligations stemming out of the insurance if he notifies the insurer of his acting without authorization and on behalf of and for the account of another.
Insurance for another Person's Account or for the Account of the Party Interested
Article 905
(1) In case of insurance on another person's account or for the account of the party interested, the duties of payment of insurance premium and other contractual obligations shall be met by the person concluding the insurance, but he shall not be entitled to effect rights on the ground of insurance, even after being in possession of the policy, without the consent of the person whose interest is insured and who is the holder of these rights.
(2) The person concluding the insurance shall not be obliged to hand over the policy to the interested party, unless he is reimbursed for the amount paid for the premium to the insurer, together with the expenses of the contract.
(3) The person concluding the insurance shall have the right of priority in collecting these claims out of compensation due, and the right to demand their payment directly from the insurer.
(4) Against every user of the insurance for another person's account an insurer may raise all objections otherwise pertaining to him on the ground of the contract against the person who concluded the contract.
Insurance Agents
Article 906
(1) Should an insurer authorize someone to represent him, while not specifying the scope of his powers, such agent shall be entitled to conclude, on behalf and for the account of the insurer, the contracts of insurance, to negotiate and conclude alterations of contracts or extend their validity, to issue insurance policies, to collect premium payments, and to accept statements communicated to the insurer.
(2) Should the insurer limit his agent while this fact is not known to the person entering into the insurance contract, such limitations shall be considered as nonexistent.
OBLIGATIONS OF AN INSURED PERSON, i.e. PERSON ENTERING INSURANCE CONTRACT
I REPORTING THE CIRCUMSTANCES MATERIAL IN ASSESSING THE RISK
Duty of Reporting
Article 907
A person concluding the insurance shall report to the insurer, at the conclusion of the contract, all circumstances which are material in assessing the risk, and which were known, or could not have been unknown, to him.
Deliberately Incorrect Reporting or Suppressing Facts
Article 908
(1) Should a person concluding the insurance deliberately file an incorrect application, or intentionally withhold a circumstance being of a nature which would induce the insurer, if he knew the real situation, not to enter into contract, the insurer shall be entitled to seek nullity of contract.
(2) In the case of nullity of contract on the ground of reasons specified in the preceding paragraph, the insurer shall keep the collected insurance premiums, and shall be entitled to request payment of the premium for the insurance period within which he has requested the nullity of contract.
(3) The insurer's right to request nullity of contract of insurance shall cease if within a three month period from the day of his becoming aware of the incorrectness of the application or of suppressing the facts, he fails to notify the person concluding the insurance of his intention to use such a right.
Unintentional Incorrectness or Incompleteness of Application
Article 909
(1) Should a person entering insurance contract unintentionally make an incorrect application or omit to supply necessary information, the insurer may, at his choice, within one month after becoming aware of the incorrectness or incompleteness of the application, state that he is terminating the contract, or propose an increase of the insurance premium, proportionally to the higher risk involved.
(2) In such a case the contract shall cease on the expiration of fourteen days from the day of the insurer's notifying the person entering insurance contract of termination, while in the case of the insurer's proposal for insurance premium increase, the termination shall take effect by operation of law, should the person entering insurance contract fail to accept the proposal within the fourteen day period after receiving it.
(3) In case of termination, the insurer shall restitute the part of insurance premium relating to the remaining share of the insurance period.
(4) Should the insured event take place prior to finding the incorrectness or incompleteness of the application, or after that but prior to the contract termination, i.e. prior to reaching an agreement on the premium increase, the compensation shall be reduced proportionally between the rate of the paid insurance premiums and the rate of insurance premiums which would have to be paid according to the real risk.
Extending the Application of the Preceding Articles
Article 910
The provisions of the preceding Articles concerning the consequences of incorrect application or of suppressing circumstances relevant for assessing the risk, shall also aply in cases of insurance concluded on behalf and for the account of another, or to the benefit of a third party, or for the account of a principal, or for the account of who might be concerned, should such persons be aware of incorrectness of the application or of suppressing the circumstances relevant for the assessment of risk.
Cases Where the Insurer is Unable to Invoke Incorrectness or Incompleteness of Application
Article 911
(1) An insurer who, at the moment of entering into contract, was aware, or could not have been unaware, of circumstances relevant for assessing the risk, which were incorrectly notified or suppressed by the person entering into insurance contract, may not invoke incorrectness of the application or the fact of suppression.
(2) The same shall apply if the insurer becomes aware of these circumstances in course of the insurance period, but fails to use his legal rights.
II PAYMENT OF INSURANCE PREMIUM
Duty of Paying and Accepting the Insurance Premium
Article 912
(1) It is a duty of a person entering insurance contract to pay the insurance premium, but the insurer shall accept payment of the premium from any person having a legal interest that it is paid.
(2) The premium shall be paid within the stipulated time limits, and should it be paid as a lump sum, it shall be paid on entering into contract.
(3) The place of payment of the insurance premium shall be the place where the company seat of the person entering insurance contract is located, i.e. his domicile, unless another place is designated by contract.
Consequences of Failing to Pay the Insurance Premium
Article 913
(1) Should it be stipulated that the premium be paid on entering into contract, the duty of the insurer to pay compensation or the amount specified by contract, shall commence on the day following the day of payment of insurance premium.
(3) Should it be stipulated that the insurance premium be paid after entering into contract, the duty of insurer to pay the compensation or the amount specified by contract shall commence from the day determined in the contract as a day of commencement of insurance.
(3) But should the person entering insurance contract fail to pay the premium which becomes due after entering into contract until its maturity, or should this not be done by another interested person, the contract of insurance shall cease by operation of law after the expiration of thirty days from the day the person who entered the insurance contract receives a registered letter of the insurer, notifying him of the maturity of the premium, provided that such time limit cannot run out prior to the expiration of a thirty day period from the day of maturity of the insurance premium.
(4) In any event, the insurance contract shall cease by operation of law if the premium is not paid within one year time counting from the maturity.
(5) The provisions of the present Article shall not apply to life insurance.
III NOTIFYING THE INSURER ON CHANGES OF RISK
Increase in Risk
Article 914
(1) A person entering insurance contract shall, in case of property insurance, notify the insurer of every change in circumstances which may be relevant for assessing the risk, and in case of life insurance, only if the risk has increased because the insured person has changed his occupation.
(2) He shall notify the insurer without delay of the increase in risk should the risk be increased by an act on his part, and should the increase of risk take place without his participation, he shall notify the insurer accordingly within fourteen days after becoming aware of the fact.
(3) Should the increase in risk be of such scope that the insurer would not have concluded the contract if such situation had existed at the time of its conclusion, he may terminate the contract.
(4) But if the increase in risk is of such scope that the insurer would have concluded the contract but only with an increased premium, if such situation existed at the time of entering into contract, he shall be entitled to propose a new rate for the insurance premium to the person who concluded the insurance contract.
(5) Should the person who entered the insurance contract decline the new rate of premium within a fourteen day time limit after receiving the proposal of the new rate, the contract shall cease by operation of law.
(6) But the contract shall remain valid and the insurer may no longer avail himself of the right to propose a new rate of insurance premium to the person who entered the insurance contract or to terminate the contract, if he fails to use such rights within a one month time limit from the day of his becoming aware, by whatever means, of the increase in risk or if, even prior to the expiration of such time limit, he shows in some way his consent to the continuation of contract (by accepting payment of the premium, by paying for the insured event which happens after such increase of risk, and the like).
Should an Insured Event Take Place in the Meantime
Article 915
Should an insured event take place prior to the moment the insurer was notified about the increase in risk, or after he was notified of the increase in risk, but prior to the termination of contract by him or reaching agreement with the person who concluded the insurance contract regarding the increase of insurance premium, the compensation shall be reduced proportionately to the premiums already paid and those which would have to be paid according to the increased risk.
Reduction of Risk
Article 916
(1) Should after entering into contract of insurance, a reduction of risk take place, the person who concluded the insurance contract shall be entitled to demand a corresponding reduction of premium, counting from the day of his notifying the insurer of such reduction.
(2) If the insurer fails to accept the reduction of premium, the person who concluded the insurance contract may terminate the contract.
Duty to Notify on the Occurrence of an Insured Event
Article 917
(1) Except in the case of life insurance, the insured person shall notify the insurer about occurrence of the insured event, within three days at the latest, counting from the day of his becoming aware of it.
(2) Should he fail to fulfill this obligation within the designated time, he shall compensate the insurer for loss sustained due to the above.
Nullity of Clauses of Forfeiture of Right
Article 918
Clauses of a contract which provide for the forfeiture of the right to compensation or to the amount insured, should the insured person, after the occurrence of the insured event, fail to execute some of the prescribed or stipulated obligations, shall be void.
OBLIGATIONS OF THE INSURER
Payment of Compensation or of the Amount Stipulated
Article 919
(1) When the insured event takes place, the insurer shall pay the compensation or the amount specified by contract within the stipulated time limit which may not exceed fourteen days, counting from the moment the insurer receives notification of the occurrence of the insured event.
(2) But should some time be needed to establish the existence of the insurer's obligation or its amount, such time limit shall begin to run from the day when the existence of his obligation and its amount has been established.
(3) Should the amount of insurer's obligation not be established within the time limit specified in paragraph one of the present Article, the insurer shall, at the request of an authorized person, pay the amount of the undisputed part of his obligation as an advance payment.
Exclusion of Liability of the Insurer in Case of Willful Misconduct or Fraud
Article 920
If the person entering an insurance contract, the insured person or the beneficiary of insurance provoked the insured event by their willful misconduct or fraud, the insurer shall have no obligation whatsoever, while a contractual clause contrary to that shall have no legal effect.
Objections of the Insurer
Article 921
(1) The insurer shall be entitled, against the request by the bearer of the policy, as well as against the request of any other person referring to the policy, to raise all objections otherwise at his disposal on the ground of contract towards the person with whom he has concluded the contract of insurance.
(2) As an exception, the insurer may raise only those objections which originated prior to the occurrence of the insured event, against a request by the third party in case of voluntary liability insurance, and request by holders of specific rights to the insured object, whose right has been passed by operation of law from the destroyed or damaged object to the insurance compensation.
DURATION OF INSURANCE
Commencement of Effect of the Insurance
Article 922
(1) Unless otherwise stipulated, the contract of insurance shall begin to take effect as of the twenty-fourth hour of the day designated in the insurance policy as the day of commencement of insurance, and shall continue to be effective until the end of the last day of the time limit stipulated for the insurance.
(2) If the validity period of insurance is not provided by contract, each party shall be entitled to terminate the contract on the day of maturity of the premium, after notifying the other party accordingly in writing, three months before the maturity of the premium, at the latest.
(3) Should insurance be stipulated for a period exceeding five years, each party may, after the expiration of that time limit, notify the other party in writing of its intent to terminate the contract, honoring the six month termination notice period.
(4) It shall not be possible to exclude by contract the right of each party to terminate the contract as specified above.
(5) The provisions of the present Article shall not apply to life insurance.
Effect of Bankruptcy on Insurance
Article 923
(1) In the case of bankruptcy of the person who entered the insurance contract, the insurance shall continue, but each party shall be entitled to terminate the contract of insurance within a three month time limit from the institution of bankruptcy proceedings, in which case the party's insolvent assets shall be increased by the part of the paid insurance premium corresponding to the remaining time of insurance.
(2) In the case of bankruptcy of the insurer, the insurance contract shall cease thirty days after the institution of bankruptcy proceedings.
PROPERTY INSURANCE
GENERAL PROVISIONS
The Interest in Insurance
Article 924
(1) Property insurance may be concluded by any person having an interest that the insured event does not take place, since otherwise such person would suffer a material loss.
(2) The insurance rights may pertain only to persons having material interest that the insured event does not take place at the moment of occurrence of damage.
The Purpose of Property Insurance
Article 925
(1) Property insurance shall ensure compensation for the damage to the property sustained by the insured person due to occurrence of the insured event.
(2) The amount of compensation cannot exceed the damage suffered by the insured person at the occurrence of the insured event.
(3) In the case of crop and fruit insurance, or insurance of other agricultural products, the amount of damage shall be determined in relation to the value they would have at the time of harvest, unless otherwise provided by contract.
(4) Clauses of a contract by which the amount of compensation is limited to a sum which is lower than the amount of damage shall be valid.
(5) In assessing the amount of damage, the profit lost shall be taken in consideration only if so provided by contract.
(6) Should in course of the same period of insurance several insured events take place one after another, the insurance compensation for each one of them shall be determined and paid off entirely by taking in consideration the total amount insured, without reducing it by the amount of compensation previously paid within such period.
(7) Should the value of the insured object be determined by agreement, the compensation shall be determined according to such value, unless the insurer is successful in proving that the value stipulated is excessively higher than the real walue, and that there is no justified ground for such difference (for instance, insuring a used object at the value of a new one, or insuring a subjective, personal, value).
Preventing the Insured Event, and Salvage
Article 926
(1) An insured person shall take regulated, stipulated and all other necessary measures to prevent the occurrence of the insured event, and if such event does take place, he shall take every possible measure within his power to limit its consequential damage.
(2) The insurer shall compensate expenses, losses, and other damage caused by reasonable attempt to eliminate the imminent danger of occurrence of the insured event, including that caused by attempt to limit its damaging consequences, even if such attempts were not successful.
(3) The insurer shall pay such compensation even if, taken together with compensation of damage from the insured event, it exceeds the amount of insurance.
(4) Should the insured person fail to fulfil his obligation to prevent the occurrence of the insured event, or the obligation of salvage, while having no excuse for that, the obligation of the insurer shall be reduced by an amount equal to the increase of damage due to such omission.
Abandoning the Damaged Insured Object
Article 927
Unless otherwise provided by contract, the insured person shall not be entitled to leave the damaged object to the insurer after the insured event has occurred and to request from him the payment of the full amount of insurance.
Loss of Object due to an Event not provided for in the Insurance Policy
Article 928
(1) Should an insured object or object whose use is the ground of concluding a liability insurance is lost in course of the insurance period, due to an event not provided for in the insurance policy, the contract shall cease to be valid for the future, while the insurer shall restitute to the person who concluded the insurance contract a part of the insurance premium, proportionate to the remaining time period.
(2) Should one of several objects encompassed by one contract be lost due to an event not provided for in the insurance policy, the insurance shall remain in force regarding the remaining objects with necessary amendments due the reduction of the subject of insurance.
LIMITATION OF INSURED RISKS
Damage Covered by Insurance
Article 929
(1) The insurer shall compensate loss which occurred accidentally, or through fault of the person who concluded the insurance contract or the beneficiary of the insurance, unless regarding specific damage such obligation of the insurer be expressly excluded by the contract of insurance.
(2) He shall not be liable for damage caused by such persons through wilful misconduct, so that an insurance policy clause which would specify such liability of the insurer shall be void.
(3) But if the insured event has taken place, the insurer shall compensate every loss caused by a person under the responsibility, on any ground whatsoever, of the insured person, regardless of whether the loss was caused by wilful misconduct or negligence.
Damage Caused by Defects in the Insured Object
Article 930
The insurer shall not be liable for damage to the insured object which originated due to its defects, unless otherwise provided by contract.
Damage Caused by War Operations and Rebellions
Article 931
(1) An insurer shall not be obliged to redress a damage caused by war operations or rebellions, unless otherwise provided by contract.
(2) The insurer shall be bound to prove that the damage is caused by some of these events.
OVERINSURANCE AND A CONTRACT WITH SEVERAL INSURERS
Overinsurance
Article 932
(1) Should at conclusion of the contract one party deceive the other, stipulating an amount of insurance which is higher than the real value of the insured object, the other party shall be entitled to request nullity of contract.
(2) Should the stipulated amount of insurance be higher than the value of the insured object, and if neither party has proceeded in bad faith, the contract shall remain valid and the amount of insurance shall be reduced to the real value of the insured object, while the premium shall be reduced proportionally.
(3) In both cases an insurer in good faith shall keep the insurance premiums received, and shall be entitled to a non-reduced premium for the current insurance period.
Subsequent Reduction of Value
Article 933
If the insured value is reduced in course of insurance period, each contracting party shall be entitled to a corresponding reduction of insurance amount and of premium, beginning from the day such party communicated to the other party the request for reduction.
Multiple and Double Insurance
Article 934
(1) Should an object be insured with two or more insurers against the same risk, for the same interest and for the same period of time, so that the sum of the insured amounts does not exceed the value of such object (multiple insurance), each insurer shall be responsible for complete performance of obligations created out of the contract he has entered into.
(2) Should, however, the sum of the insurance amounts exceed the value of the insured object (double insurance), and the person who concluded the insurance contract did not act in bad faith, all such insurances shall remain valid, and each insurer shall be entitled to the stipulated premium for the current insurance period, while the insured person shall be entitled to demand from each insurer the compensation according to the contract entered into with him, but no more, in total, than the amount of damage.
(3) After the occurrence of the insured event, the person who concluded the insurance contract shall notify thereof each insurer of the same risk and communicate to him the names and addresses of the remaining insurers, together with information on the amounts of insurance provided in particular contracts concluded with them.
(4) After paying compensation to the insured person, each insurer shall bear the part of compensation in proportion between the insurance amount he is obliged to pay and the sum of insurance amounts, so that the insurer paying more shall be entitled to demand from other insurers reimbursement of the surplus paid.
(5) Should a contract be concluded without indicating the insurance amount or with an unlimited coverage, it shall be considered as a contract concluded with the highest amount of insurance.
(6) The remaining insurers shall be liable for the part of an insurer who is unable to pay, proportionally to their respective parts.
(7) If a person entered an insurance contract which lead to double insurance, while not knowing about a previously concluded insurance, such person may request - regardless of whether the previous insurance was concluded by himself or by another - within one month from his becoming aware of such insurance, a corresponding reduction of the insured amount and of the premiums of the subsequent insurance, but the insurer shall keep the already received premiums and shall be entitled to the premium for the current period.
(8) If the double insurance has taken place due to the reduction of value of the insured object in the course of the insurance period, the person who concluded the insurance contract shall be entitled to corresponding reductions in the insurance amount and the premiums, from the day he communicated his request to the insurer.
(9) If in the event of double insurance the person who entered the insurance contract acted in bad faith, each insurer may request nullity of contract, keep the premiums received and demand the nonreduced premium for the current period.
Co-insurance
Article 935
Where a contract of insurance is concluded with several insurers who have agreed on joint bearing and distribution of risk, each insurer designated in the insurance policy shall be liable to the insured person for the entire compensation.
SUB-INSURANCE
Article 936
(1) Should it be established that at the beginning of a relevant period of insurance, the value of the insured object was higher than the amount of insurance, the amount of compensation owed by the insurer shall be proportionally reduced, unless otherwise provided by contract.
(2) The insurer shall be liable to pay the entire compensation up to the amount of insurance, if it is stipulated that the relationship between the value of the object and the amount of insurance shall have no relevance in determining the amount of compensation.
TRANSFER OF CONTRACT AND PAYMENT OF INSURANCE COMPENSATION TO ANOTHER
Transfer of Contract to the Acquirer of an Insured Object
Article 937
(1) In the case of alienation of the insured object, as well as of the object in relation to whose use liability insurance has been concluded, the rights and duties of the person who entered the insurance contract shall pass by operation of law to the acquirer, unless otherwise provided by contract.
(2) But should only one part of the insured objects be alienated which, in terms of insurance, do not make a separate whole, the contract of insurance regarding the alienated objects shall come to an end by operation of law.
(3) Should, due to the alienation of the object, the probability of occurrence of the insured event be increased or reduced, the general provisions on increasing or reducing of risk shall apply.
(4) If a person who entered the insurance contract fails to notify the insurer that the insured object has been alienated, such person shall remain obliged to pay premiums becoming due even after the day of alienation.
(5) The insurer and the acquirer of the insured object may withdraw from the insurance, honouring a fifteen day period of notice, on condition that their notice is submitted within thirty days of becoming aware of the alienation, at the latest.
(6) The contract of insurance may not be terminated should the insurance policy be issued to bearer or on order.
Granting of Compensation to Holders of Lien and Other Rights
Article 938
(1) After the occurrence of an insured event, a right of lien and other rights existing previously in relation to the insured object shall have as their subject the compensation owed, both in the case of insuring one's own object, and in the case of insuring other person's objects because of a duty to store and return them, so that the insurer may not pay compensation to the insured person without the consent of the holders of such rights.
(2) These persons may directly demand the insurer to pay them their claims within the limits of the amount of insurance, and according to the statutory order of payment.
(3) However, if the insurer at the moment of payment was not aware, or could not have been aware, of such rights, the payment of compensation to the insured person shall remain valid.
TRANSFER OF INSURED PERSON'S RIGHTS AGAINST THE LIABLE PERSON TO THE INSURER (SUBROGATION)
Article 939
(1) On payment of compensation from insurance, the insurer shall acquire, by operation of law, all rights of the insured person against the person liable for damage on whatever ground, up to the amount of compensation paid.
(2) Should such transfer be made entirely or partially impossible through the fault of the insured person, the insurer shall be released correspondingly from his obligation towards the insured person.
(3) The transfer of right from the insured person to the insurer may not be to the detriment of the insured person, so that should compensation received by the insured person from the insurer be, on whatever ground, lower than the damage sustained by him, the insured person shall be entitled to reimbursement from liable party's means for the remaining part of compensation, prior to the payment of insurer's claim on the ground of rights which have been transferred him.
(4) As an exception to the rules of transfer of an insured person's rights to the insurer, these rights shall not pass to the insurer if damage was caused by a person in lineal kinship with the insured person or person under the care and responsibility of the insured person, or a person living with him in the same household, or a person who is an employee of the insured person, unless such persons caused the damage by wilful misconduct.
(5) However, should a person specified in the preceding paragraph be insured against liability, the insurer may demand from his insurer the redress of the amount paid to the insured person.
LIABILITY INSURANCE
Liability of the Insurer
Article 940
(1) In case of liability insurance, the insurer shall be liable for damage caused by the insured event only if the third party sustaining damage requests compensation.
(2) The insurer shall bear, within the limits of the amount of insurance, the expenses of litigation over the liability of the insured person.
Personal Right of the Person Sustaining Damage and Direct Action
Article 941
(1) In case of liability insurance the person sustaining damage may request the compensation for loss sustained due to an event falling within the sphere of liability of the insured person directly from the insurer, but only up to the amount of the insurer's obligation.
(2) The person sustaining damage shall have, from the day of occurence of the insured event, his own right to compensation from the insurance, so that any subsequent change in the insured person's rights in relation to the insurer shall have no effect on the right of a person sustaining damage to compensation.
INSURANCE OF PERSONS
GENERAL PROVISIONS
Determination of the Insured Amount
Article 942
In contracts of insurance of persons (life insurance and accident insurance), the amount of insurance to be paid by the insurer on the occurrence of the insured event, shall be determined in the insurance policy by agreement between the contracting parties.
Life Insurance Policy
Article 943
(1) In addition to elements which are constituent for every insurance policy, the life insurance policy shall include indications of the first and the last name of a person whose life is insured, his date of birth and event or time limit being a prerequisite for establishing a right to request payment of the amount insured.
(2) The life insurance policy may be made out to a specific person or to order, but it may not be made out to bearer.
(3) For an endorsement of the insurance policy made out to order to be full and valid, it must contain an indication of the name of the beneficiary, the date of endorsing and the signature of the endorser.
Incorrect Reporting of Age of the Insured Person
Article 944
As an exception to the general provisions of the present Chapter and consequences of incorrect applications or of suppressing the circumstances relevant for the assessment of risk, the following rules shall apply regarding incorrect reporting of age in life insurance contracts:
1) A life insurance contract shall be void and the insurer shall in any case to repay all received premiums, should at the moment of its conclusion the age of the insured person has been incorrectly stated, while his real age exceeded the limit up to which the insurer, by his terms and tariffs, enters into life insurance transactions.
2) Should it be incorrectly reported that the insured person is of a lower age, but his real age does not exceed the limit up to which the insurer enters into life insurance transactions, the contract shall be valid, but the insured amount shall be reduced in proportion to the stipulated insurance premium and the insurance premium provided for the life insurance of a person of the age of the insured person.
3) Should the insured person be of lower age than reported in the application to enter into contract, the insurance premium shall be reduced by a corresponding amount, while the insurer shall repay the difference between the premiums received and the premiums he is entitled to.
Consequences of Failing to Pay Premium and Reduction of the Insured Amount
Article 945
(1) Should a person who concluded the life insurance contract fail to pay some of the premiums when due, the insurer shall not be entitled to demand payment by instituting legal proceedings.
(2) Should a person who concluded the insurance contract, invited by the insurer by means of registered mail, fail to pay the due premium within the time limit indicated in insurer's letter - such time limit may not be shorter than one month, counting from the day of delivery of the letter - or should such payment not be made by another interested party, the insurer may, if at least three annual premiums have been paid by then, only state to the person who concluded the insurance contract that he is reducing the insurance amount to the level of repurchase value of insurance, or that, in a contrary case, he shall terminate the contract.
(3) Should the insured event occur prior to termination of contract or reduction of the insured amount, it shall be considered that the insured amount has been reduced, i.e. the contract terminated, depending on whether insurance premiums were paid for at least three years or not.
Insuring a Third Party
Article 946
(1) Life insurance may relate to the life of the person who concluded the insurance contract, and it may relate to the life of a third party.
(2) The same shall apply to the accident insurance.
(3) Should insurance relate to the death of a third party, the validity of contract shall depend on his written consent, indicated on the face of the insurance policy, or in a separate written document at the moment of signing the insurance policy, with an indication of the insured amount.
Insurance in Case of Death of a Minor and of Persons Deprived of Contractual Capacity
Article 947
(1) An insurance against a death of a third party younger than fourteen, or a person completely deprived of contractual capacity shall be null and void, and the insurer shall be bound to repay to the person who concluded such insurance contract all insurance premiums received under such contract.
(2) The validity of insurance against death of a third party older than fourteen shall depend on the written consent by his legal representative, as well as the written consent of the insured person himself.
Cumulating Compensation and the Insured Amount
Article 948
(1) In the case of insuring persons, an insurer paying the insured amount may have no right whatsoever to compensation against a third party liable for the occurrence of the insured event.
(2) The right to compensation against a third party liable for the occurrence of the insured event shall belong to the insured person, i.e. beneficiary, independently of his right to the insured amount.
(3) Provisions of the preceding paragraphs shall not apply to a case where insurance covering the consequences of an accident was stipulated as liability insurance.
EXCLUDED RISKS
Suicide of the Insured Person
Article 949
(1) The contract of insurance covering the case of death shall not include the risk of suicide of the insured person, if it happened in the first year of the insurance period.
(2) If the suicide happens within a three year period from the day of entering into contract, the insurer shall not be obliged to pay to the beneficiary the insured amount, but only the mathematical reserve of the contract.
Premeditated Murder of the Insured Person
Article 950
An insurer shall be released from obligation to pay to the beneficiary the insured amount if he wilfully caused the death of the insured person, but if until then at least three annual insurance premiums have been paid, he shall be obliged to pay the mathematical reserve to the person who concluded the insurance contract, and should he be the insured person, the payment shall be made to his heirs.
Wilful Causing of Accident
Article 951
An insurer shall be released from obligation in the insurance contract covering an accident, if the insured person wilfully caused the accident.
War Operations
Article 952
(1) Should death of the insured person be caused by war operations, the insurer - unless otherwise provided by contract - shall not be bound to pay to the beneficiary the insured amount, but shall pay to him the mathematical reserve from the contract.
(2) Unless otherwise provided by contract, the insurer shall be released from obligation from the accident insurance contract, if the accident was caused by war operations.
Contractual Exclusion of Risks
Article 953
Other risks may also be excluded from insurance by contract of insurance against death or accident.
RIGHTS OF THE PERSON WHO CONCLUDED THE INSURANCE CONTRACT PRIOR TO OCCURRENCE OF THE INSURED EVENT
Repurchase
Article 954
(1) Upon demand by the person who concluded the life insurance contract for the period of the lifetime of the insured person, the insurer shall pay to him the repurchasing value of the insurance policy, if at least three annual insurance premiums have been paid.
(2) The insurance policy shall include conditions on which the person who concluded the insurance contract may request payment of its repurchase value, as well as an indication of the method of calculation of that value, in accordance to the insurance terms and conditions.
(3) The rights to request repurchase may not be realized by the creditors of the person who concluded the insurance contract, or by the beneficiary of insurance, but the repurchase value shall be paid to the beneficiary at his request, if the designation of the beneficiary is irrevocable.
(4) As an exception to the preceding paragraph, the repurchase of the insurance policy may be demanded by a creditor who received the policy as lien, if the claim supported by such lien has not been settled at maturity.
Advance Payment
Article 955
(1) On request by a person who concluded the life insurance contract for the period of the lifetime of the insured person, the insurer may pay to him in advance a part of the amount insured, up to the repurchase value of the insurance policy, which part may be subsequently repaid by the person who concluded the insurance contract.
(2) The person who concluded the insurance contract shall pay determined interest for the advance payment received.
(3) Should the person who concluded the insurance contract be late with payment of the interest due, it shall be treated as if he requested repurchase.
(4) As provided for by insurance terms and conditions, the insurance policy must indicate the terms of granting the advance payment, the possibility of paying back the amount accepted as advance payment to the insurer, the amount of interest rate, together with the consequences of failure to pay the interest due.
Pledging the Insurance Policy
Article 956
(1) A life insurance policy may be pledged.
(2) Pledging the insurance policy shall affect the insurer only if he has been notified in writing that the policy has been given as pledge to a specific creditor.
(3) Should a policy be made out to order, the pledging shall be done by endorsement.
LIFE INSURANCE FOR THE BENEFIT OF A THIRD PARTY
Designation of a Beneficiary
Article 957
(1) A person who enters the life insurance may designate in the contract, as well as in a subsequent legal transaction, including a will, a person who shall acquire the rights out of contract.
(2) Should the insurance relate to the life of another person, the designation of the beneficiary shall also need his written consent.
(3) A beneficiary need not be designated by name, since it shall suffice that the deed contains data necessary for designation.
(4) Should children or descendants be designated as beneficiaries, the benefit shall also accrue to those who are born later, while the benefit intended for a spouse shall accrue to a person married to the insured person at the moment of his death.
Sharing the Benefit among Several Beneficiaries
Article 958
If childern, descendants and, in general, heirs are designated as beneficiaries, and the person who concluded the insurance contract has not determined the way of distribution of benefit among them, such distribution shall be done proportionally to their inheritance shares, and if beneficiaries are not heirs, the amount insured shall be distributed in equal shares.
Revoking a Clause Designating a Beneficiary
Article 959
(1) A clause by which the insurance benefit is granted to a specific person may be revoked only by the person who concluded the insurance contract, and such right may neither be carried out by his creditors, nor by his legal heirs.
(2) The person who concluded the insurance contract may revoke the clause on benefit until the moment the beneficiary states, in any way whatsoever, that he accepts it, after which it shall become irrevocable.
(3) However, the person who concluded the insurance contract may revoke the benefit clause even after beneficiary's statement of acceptance, if the beneficiary has attempted to murder the insured person, and if the benefit is granted without consideration, the revocation shall be subjected to provisions regulating the revoking of a gift.
(4) The beneficiary shall be considered as having refused the benefit intended for him, if he fails, after the death of the person which concluded the insurance contract, on the invitation of his heirs, to make a statement of acceptance within one month.
Personal and Direct Right of the Beneficiary
Article 960
(1) The insured amount to be paid to the beneficiary shall not enter into the total estate of the person which concluded the insurance contract, even if the designated beneficiaries are their heirs.
(2) The right to the insured amount shall pertain to the beneficiary only, notably from the moment the insurance contract was concluded, and regardless of the way and time of his being designated for beneficiary, and regardless of whether he has stated his acceptance prior to or after the death of the insured person, hence he may request payment of the insured amount directly from the insurer.
(3) If the person who concluded the insurance contract has designated his children, his descendants and, generally, his heirs as beneficiaries, each one of thus designated beneficiaries shall be entitled to a corresponding part of the insured amount, even if they have renounced the inheritance.
Creditors of an Insured Person and Person who concluded the Insurance Contract
Article 961
(1) Creditors of the person who concluded the insurance contract and of the insured person shall have no right whatsoever to the insured amount contracted for the beneficiary.
(2) However, if premiums paid by the person who concluded the insurance contract were disproportionally high, compared to his possibilities at the moment of payment, his creditors may request the surrender of the part of the premium which exceeds his possibilities, if requirements are met by which the creditors are entitled to challenge the debtor's legal actions.
Assignment of the Insured Amount
Article 962
A beneficiary may transfer his right to the insured amount to another, even prior to the occurence of the insured event, but shall need for that a consent in writing from the person who concluded the insurance contract, where the name of the assignee must be indicated, and should the insurance relate to life of another person, the same consent shall be necessary from that person as well.
Death of Designated Beneficiary Prior to Maturity
Article 963
If a person designated without consideration as a beneficiary dies prior to the maturity of the insured principal or annuity, the insurance benefit shall not belong to his heirs, but to the next beneficiary, and should one be not designated, then to the estate of the person who concluded the insurance contract.
Insurance for the case of Death without a Designated Beneficiary
Article 964
Should a person who concluded the insurance for the case of death fail to designate a beneficiary, or should the clause on determining the beneficiary remain ineffective due to revocation, or to refusal by the designated person, or due to some other reason, and the person who concluded the insurance contract fail to designate another beneficiary, the insured amount shall belong to the estate of the person who concluded the insurance contract, and its shall pass, as integral part thereof, together with his remaining rights, to his heirs.
Good Faith Payment of the Insured Amount to an Unauthorized Person
Article 965
(1) Should the insurer pay the insured amount to a person who would be entitled to it if the person who concluded the insurance contract did not designate the beneficiary, he shall be released from his obligation from the contract of insurance if, at the moment of payment, he was not aware, or could not have been aware, that the beneficiary was designated by a will, or by some other deed not delivered to him, but the beneficiary shall be entitled to request repayment from the person who has accepted the amount insured.
(2) The same shall apply in case of replacement of the beneficiary.
PLEDGE
GENERAL PROVISIONS
Notion
Article 966
By a contract of pledge a debtor or a third party (pledger) shall assume the obligation to a creditor (pledgee) to deliver to him a movable object in relation to which there exists the right of ownership, so that he can, before other creditors, effect collection out of its value, should his claim not be paid when due, while the creditor shall assume the obligation to keep the accepted object and return it to the pledger undamaged after the termination of his claim.
Article 967
(Deleted)
Acquiring the Right of Pledge
Article 968
A pledgee shall acquire the right of pledge when the object referred to by the contract is handed over to him.
Capacity
Article 969
To conclude a valid contract of pledge it shall be necessary for the pledger to have the capacity to dispose of objects he is giving as pledge.
Pledge of an Object Already Pledged to Another
Article 970
(1) A contract of pledge may be concluded regarding an object already pledged to another.
(2) In such case the right of pledge shall generate when the pledger notifies the creditor holding the object of the conclusion of contract of pledge with another creditor, and when he orders him to deliver the object to that creditor after settling his own claim.
Pledge Given for a Future Obligation or One under Condition
Article 971
A pledge may be given for a future obligation, as well as for a conditional one.
Extending Pledge to other Obligations of the Pledger
Article 972
A pledge which secures fulfilment of an obligation shall be extended also to contractual obligations which would ensue between the pledgee and the pledger after concluding the contract of pledge, such obligations becoming due for payment prior to settling the claim covered by the pledge.
Prohibited Clauses
Article 973
(1) A clause of a contract of pledge shall be void by which a pledged object is transferred to the property of the creditor if his claim is not settled at maturity, as well as a clause by which the creditor in such a case could sell the pledged object at a price fixed in advance, or keep it for himself.
(2) However, should the price of the pledged object be prescribed by law, the contracting parties may agree that the creditor can sell the pledged object at a price which is prescribed, or keep it for himself at that price.
PLEDGING AN OBJECT
OBLIGATIONS OF THE PLEDGER
Article 974
(1) A pledger shall hand over to the pledgee, or to a third party designated by them by mutual consent, the object which makes the subject matter of the contract, or a legal instrument giving its holder the exclusive right to dispose of the object.
(2) Contracting parties may agree that the object or the legal instrument be kept jointly by them.
OBLIGATIONS OF THE PLEDGEE
Keeping the Secured Object
Article 975
(1) A pledgee shall look after the object, applying the care of a good businessman, i.e. good head of household.
(2) He shall restitute it as soon as the debt has been paid.
Using a Pledged Object
Article 976
(1) A pledgee shall not be entitled to use the pledged object or to hand it over to another for use, or give it as sub collateral, unless permitted to do so by the pledger.
(2) A pledgee using the object without the pledger's permission, or handing it over to another, or pledging it over, shall also be liable for ensuing accidental loss or damage of the object.
Fruits of Pledged Object
Article 977
(1) Should an object given as pledge produce fruits, and if not provided by contract whom they will belong to after being detached from the object, the creditor may keep them for himself if he so wishes.
(2) In such case the net income from the fruits shall be deducted from the expenses the creditor is entitled to, then from the interest due and, finally, from the principal amount.
(3) The same shall apply to benefits resulting from the use of the pledged object.
Taking away the Pledged Object from the Pledgee
Article 978
At the pledger's request the court shall order that the pledged object be taken away from the pledgee and handed over to a third party to be kept by him for the pledgee, if the latter failed to look after the object properly, if he used it without the pledger's permission, or if he has given it to another to use it, or failed to use it in conformity with the obtained consent and, in general, if he treated it contrary to the contract or the law.
RIGHTS OF THE PLEDGEE
When a Pledged Object Has a Defect
Article 979
Should it turn out that pledged object has a material or legal defect, so that it fails to make a sufficient guarantee for settling the claim, the pledge creditor shall be entitled to demand from the pledger other corresponding pledge.
Selling the Pledged Object
Article 980
(1) If creditor's claim is not settled when due, the creditor may request a court order for the object to be sold at public sale, or at the current price if the object has a stock-exchange or market price.
(2) Should public sale expenses turn out to be disproportionally high compared to the value of the pledged object, the court may decide that the creditor sell the object at a price determined by expert's assessment, or that he keeps it for himself at such price, if he so wishes.
Selling a Pledged Object against a Claim from a Commerical Contract
Article 981
(1) Should a debtor fail to settle a due claim originating from a commercial contract, the creditor shall not be obliged to go to court; instead, he may proceed to selling the pledged object at a public sale, after the expiration of an eight day time limit, counting from the warning to that respect communicated to the debtor, and to the pledger - if they are not the same person.
(2) The creditor shall timely notify both persons about the date and the place of sale.
(3) Should the pledged objects have a market or stock-exchange price, the creditor may sell them at such price, upon expiration of eight days from the warning in that respect communicated to the debtor and the pledger.
Premature Sale of a Pledged Object due to Perishing or Losing Value, and its Replacement
Article 982
(1) If the pledged object is prone to perishing or otherwise losing its value, so that there is a danger of its becoming inadequate to secure the creditor's claim, the court may decide, at the request of the pledgee or the pledger, and after hearing the other party, that the object is to be sold at a public sale, or at stock-exchange or market price, if there is any, and that the price or a sufficient part of the price is to be deposited with the court in order to secure the pledgee's claim.
(2) The court shall decline pledgee's request if the pledger offers to deliver to the pledgee, instead of the pledged object, another object of the same value, whose keeping does not require more effort and care than keeping the previous pledged object.
(3) At the request by the pledger, the court shall under the same conditions permit the replacement of the pledged object if the pledgee is not requesting its sale.
Premature Sale of the Pledged Object at Pledger's Request
Article 983
(1) At the request by the pledger, the court may permit the sale of the pledged object to a specific person at the specified price, if it finds that the price is satisfactory and that the justified interests of the pledgee shall thus be preserved.
(2) The price obtained, or a sufficient part of the price to be determined by the court while permitting the sale, shall substitute the pledged object and shall be deposited with the court to secure collection of the creditor's claim.
Right to Priority Payment
Article 984
A pledgee shall be entitled to collect his claim prior to other creditors, from the price obtained by selling of the pledged object, together with interest due, the amount of expenses incurred in keeping the pledged object, as well as the amount of expenses relating to the process of collection.
The Order of the Pledge Rights
Article 985
When one object is given as pledge to several creditors, the order of paying their claims from the value of the pledged object shall be determined according to the date of origination of their respective rights of pledge.
CESSATION OF THE RIGHT OF PLEDGE
Cessation of the Right of Pledge after Losing Possession
Article 986
(1) A creditor's right to priority collection from the value of the pledged object shall cease on termination of his possession thereof.
(2) That right shall be re-established if the creditor repossesses the object.
Cessation of the Right of Pledge upon Cessation of the Claim
Article 987
If the claim whose fulfilment was secured by the pledge ceases, the creditor shall restitute the pledged object to the pledger.
Expiration of Mutual Claims
Article 988
Claims of a pledger against a pledgee for damages due to deterioration of the object, as well as claims of the pledgee against the pledger for reimbursing expenses incurred in improving the object, shall expire due to statute of limitations one year after the day the object is restituted.
PLEDGING CLAIMS AND OTHER RIGHTS
PLEDGING CLAIMS
Notifying a Debtor and Handing over a Legal Instrument
Article 989
(1) In order to acquire the right of pledge over a claim, the debtor needs to be notified in writing on conclusion of contract of pledge.
(2) The pledger shall hand over to the pledgee a legal instrument indicating the pledged claim.
Pledging a Claim Based on Securities
Article 990
(1) A creditor shall acquire the right of pledge over a claim inscribed on the face of securities made out to bearer, if such securities are handed to him.
(2) Pledging a claim on the ground of securities made out to order shall be done by endorsement, with an indication that they are given as pledge.
Duty to Preserve the Claim
Article 991
A pledgee shall take measures necessary to preserve the secured claim.
Collection and Inclusion of Interest
Article 992
(1) Should a pledged claim entitle to the interest or other periodical dues, the pledgee shall be bound to collect them.
(2) The amounts collected in such a way shall be offset against the expenses recognized to the pledgee, against the interest owed to him and, finally, against the principal amount.
Collecting the Pledged Claim
Article 993
(1) After the pledged claim becomes due for payment, the pledgee shall be bound to collect it.
(2) By fulfilment of the pledged claim, the right of pledge shall pass to the object by which the claim has been fulfilled.
(3) Should the subject of the pledged claim be money, the pledgee shall, at the pledger's request, deposit the amount collected at court, but should the subject of his claim also be money, and if such claim has become due for payment, the pledgee may keep for himself the amount owed, while being obliged to hand over the rest to the pledger.
Objections of the Debtor of the Pledged Claim
Article 994
A debtor of the pledged claim may lodge objections with the pledgee which otherwise may be lodged in case of the assignment of the claim by the debtor of the assigned claim with the assignee.
GIVING OTHER RIGHTS AS PLEDGE
Manner of Pledging
Article 995
(1) In addition to claims, other rights may also be given as pledge.
(2) Giving such rights as pledge shall be effected in the way otherwise provided for their transfer to another, unless otherwise prescribed by law for a specific case.
APPLICATION OF PROVISIONS ON GIVING OBJECTS AS PLEDGE
Article 996
The provisions on giving objects as pledge shall apply also to pledges of claims and other rights, unless otherwise provided by law for such cases.
GUARANTEE
GENERAL PROVISIONS
Notion
Article 997
By a contract of guarantee the guarantor shall assume an obligation to a creditor to fulfil a valid and due obligation of a debtor, should the latter fail to do so.
Form
Article 998
A contract of guarantee shall produce an obligation for the guarantor only after his statement on guarantee is made in writing.
Capacity for Guaranteeing
Article 999
Only a person with full contractual capacity may assume an obligation by contract of guarantee.
Guaranteeing for a Person without Contractual Capacity
Article 1000
Whoever assumes an obligation as a guarantor for a person without contractual capacity shall be liable to the creditor in the same way as a guarantor of a person with contractual capacity.
The Subject of Guaranteeing
Article 1001
(1) A guarantee may be given for every valid obligation, regardless of its substance.
(2) It shall also be possible to guarantee for a conditional obligation and a specific future obligation.
(3) A guarantee for a future obligation may be revoked prior to occurrence of such obligation, if a time limit was not provided for such an obligation to occur.
(4) A guarantee may also be given for an obligation of another guarantor (guarantor's guarantor).
Scope of Guarantor's Liability
Article 1002
(1) A guarantor's obligation may not exceed the obligation of the principal debtor, and if it is stipulated that it will exceed this, it shall be reduced to the scope of debtor's obligation.
(2) A warrantor shall be liable for fulfillment of the entire obligation he has guaranteed, if his liability is not limited to a part of it, or is not subjected in some other way to less strict conditions.
(3) He shall be liable to reimburse the necessary expenses incurred by the creditor in order to collect the debt from the principal debtor.
(4) The warrantor shall also be liable for every increase in obligation ensuing from the debtor's delay or fault, unless otherwise provided by contract.
(5) He shall be liable only for the interest stipulated as becoming due after entering into the contract of guarantee.
Transfer of Creditor's Rights to the Guarantor (Subrogation)
Article 1003
A creditor's claim, settled by a guarantor, shall pass to him along with all secondary rights and guarantees for its fulfilment.
RELATIONSHIP BETWEEN A CREDITOR AND A GUARANTOR
Forms of Guarantee
Article 1004
(1) Fulfilment of an obligation may be demanded from a guarantor only after the principal debtor fails to fulfil it within the time limit specified in written notice (subsidiary guarantee).
(2) A creditor may demand fulfillment from a guarantor although he has not previously invited the principal debtor to fulfil the obligation, should it be obvious that its fulfilment cannot be effected out of the principal debtor's means, or if the principal debtor has gone bankrupt.
(3) Should a guarantor assume an obligation as a guarantor-payer, he shall be liable to the creditor as a principal debtor for the entire obligation, and that the creditor may demand its fulfilment either from the principal debtor or the guarantor or from both of them at the same time (joint and several guaranteeing).
(4) Unless otherwise stipulated, a guarantor for an obligation created on the ground of a commercial contract shall be liable as a guarantor-payer.
Joint and Several Guaranteeing
Article 1005
Several guarantors for a debt shall be jointly and severally liable, regardless of whether they have guaranteed together, or each one of them has assumed a separate obligation to the creditor, unless their liability is regulated differently by contract.
Loss of the Righ to Time Limit
Article 1006
Unless otherwise stipulated, if a debtor has forfeited the right to a time limit for fulfillment of his obligation, a creditor shall still not be entitled to demand fulfillment from the guarantor prior to expiration of that time limit.
Principal Debtor's Bankruptcy
Article 1007
(1) In case of bankruptcy of a principal debtor, the creditor shall file his claim in the bankruptcy proceedings, and inform the guarantor thereof; otherwise he shall be liable to the guarantor for the ensuing loss sustained by the latter.
(2) Reducing the obligation of the principal debtor in bankruptcy proceedings or in proceedings of compulsory settlement of accounts, shall not result in a corresponding decrease in the guarantor's obligation, thus the guarantor shall still be liable to the creditor for the entire amount of his obligation.
The Case of Reduced Liability of Debtor's Heir
Article 1008
A guarantor shall be liable for the entire amount of obligation he has guaranteed also in a case where payment could be demanded from the debtor's heir only in the part which corresponds to the value of inherited property.
Guarantor's Objections
Article 1009
(1) A guarantor may raise against creditor's claim all objections otherwise pertaining to the principal debtor, including the objection of setoff, but not purely personal objections belonging to the debtor.
(2) If the debtor renounces an objection or recognizes a creditor's claim, this shall have no effect on a guarantor.
(3) A guarantor may also raise his personal objections against a creditor, such as nullity of guaranty contract, time-barred creditor's claim against him, or the objection relating to set-off of mutual claims.
Duty of Notifying the Guarantor on Debtor's Omission
Article 1010
Should a debtor fail to fulfil his obligation on time, a creditor shall be obliged to notify the guarantor thereof, otherwise he shall be liable for the ensuing loss sustained by the guarantor.
Releasing a Guarantor due to Creditor's Procrastination
Article 1011
(1) A guarantor shall be released from liability if a creditor at the invitation of the guarantor after maturity of the claim, fail to demand fulfilment from the principal debtor within a month after such invitation.
(2) Should the time limit for fulfilment be not determined, the guarantor shall be released from liability if the creditor, at his invitation after the expiration of a year since entering into contract of guarantee, fail to make a statement necessary for determining the date of fulfillment, within a time limit of one month from such invitation.
Releasing a Guarantor due to Abandonment of Guarantees
Article 1012
(1) Should a creditor abandon a pledge or any other right by which fulfilment of his claim is secured, or should he lose it by his negligence, thus preventing the passing of such right to the guarantor, the latter shall be released from his obligation to the creditor for the amount he could earn by effecting such right.
(2) The rule specified in the preceding paragraph shall apply both in case of the right originating prior to entering into contract of guaranty, and in the case of its origination afterwards.
RELATIONSHIP BETWEEN A GUARANTOR AND A DEBTOR
The Right to Demand Compensation from a Debtor
Article 1013
(1) A guarantor who has paid a creditor’s claim may demand from the debtor compensation for everything he paid for the debtor’s account, including interest from the day of payment.
(2) He shall be entitled to reimbursement of expenses suffered in litigation against the creditor from the moment of his notifying the debtor about such litigation, and for compensation for losses, if any.
The Right of a Guarantor of a Joint and Several Debtor
Article 1014
A guarantor of one of several joint and several debtors may demand compensation of the amount he has paid to the creditor from any of them as well as reimbursement of expenses.
The Right of a Guarantor to Preliminary Security
Article 1015
Even prior to meeting his duty toward a creditor, a guarantor assuming an obligation after corresponding knowledge or permission of the debtor, shall be entitled to demand that the debtor supply him with necessary security interest for eventual requests in the following cases: if the debtor has failed to fulfil his obligation when due, if the creditor has demanded from the court the collection from the guarantor, or if the financial situation of debtor has considerably deteriorated since entering into the contract of guarantee.
Loss of the Right to Compensation
Article 1016
(1) Against a guarantor who has paid out creditor's claim without the debtor’s knowledge, a debtor may use all legal means which were at his disposal at the moment of such payment to deny creditor's claim.
(2) A guarantor who has paid out a creditor's claim, while failing to notify the debtor thereof, so that the latter, not knowing of such payment, paid the same claim again, shall not be able to demand compensation from the debtor, but shall be entitled to request from the creditor the repayment of sum paid to him.
The Right to Repayment
Article 1017
A guarantor who, without the knowledge of a debtor, has paid a creditor's claim which was subsequently cancelled at the debtor's request, or settled by setoff, shall be entitled only to demand the corresponding repayment from the creditor.
REDRESS OF THE PAYER AGAINST THE REMAINING GUARANTORS
Article 1018
Should there be several guarantors, and one of them pays the claim due, such guarantor shall be entitled to demand that each of the remaining guarantors compensate the part corresponding to him.
LIMITATION PERIOD
Article 1019
(1) After an obligation of the principal debtor becomes time-barred, the obligation of the guarantor shall also expire.
(2) If the limitation period of the principal debtor’s obligation is longer than two years, the guarantor's obligation shall become time-barred upon expiry of two years from the maturity of the principal debtor’s obligation, except where the guarantor has been jointly and severally liable with the debtor.
(3) The interruption of the limitation period of the claim toward the principal debtor shall affect the guarantor as well, only if the interruption took place due to a proceeding of the creditor before court against the principal debtor.
(4) The stoppage of the limitation period of principal debtor's obligation shall have no effect upon the guarantor.
DIRECTING (ASSIGNATION)
CONCEPT OF THE CONTRACT
Article 1020
By directing (assigning) a person, the director (assigner), shall authorize another party - the directee (assignee), to perform something on his account for the benefit of a third party, the recipient of the direction (recipient), while authorizing him to accept such performance in his own name.
RELATIONS BETWEEN A DIRECTION’S RECIPIENT AND A DIRECTEE
Acceptance by the Directee
Article 1021
(1) A recipient of the direction shall acquire the right to demand performance from the directee only after the latter notifies him that he accepts the direction.
(2) Acceptance of the direction may not be revoked.
Objections of the Directee
Article 1022
(1) Upon accepting the direction a debt relationship shall arise between the recipient and the directee, independent of the relationship between the director and the directee, as well as the relationship between the director and the recipient of the direction.
(2) A directee who accepted the direction may raise against the recipient of the direction only those objections which relate to validity of acceptance, objections based on the contents of acceptance or on the contents of the direction itself, as well as objections he has personally against him.
Transferring the Direction
Article 1023
(1) A recipient of the direction may transfer the direction to another even prior to acceptance by the directee, and the transferee can transfer it further, except when the direction itself or specific circumstances indicate that it is non-transferable.
(2) If a directee declared to the recipient of the direction that he accepts the direction, such acceptance shall be effective with respect to all persons to whom the direction might subsequently be transferred.
(3) Should the directee declare to the transferee to whom the recipient of the direction has transferred the direction, that he accepts it, he may not raise against the transferee personal objections that he has against the recipient of the direction
Limitation Period
Article 1024
(1) The right of a recipient of the direction to demand performance from the directee shall be time-barred after one year.
(2) Should the time limit for performance be not provided, the limitation period shall commence to run when the directee accepts the direction, and if he accepted it before it was delivered to the recipient of the direction, then when it is delivered to the latter.
RELATIONSHIP BETWEEN A RECIPIENT OF A DIRECTION AND A DIRECTOR
If the Recipient of Direction is a Creditor of the Director
Article 1025
(1) A creditor shall not be obliged to consent to a direction made for him by a debtor as fulfillment of his obligation, but he shall have a duty to immediately notify the debtor of his refusal; otherwise, he shall be liable to him for loss.
(2) A creditor who has consented to the direction shall be obliged to call upon the directee to perform it.
A Direction is not Performance
Article 1026
(1) After a creditor has consented to a direction made by his debtor with the aim of fulfillment of the obligation, that obligation shall not cease, unless otherwise stipulated by contract, neither by his consent to the direction, nor by its acceptance by the directee, but only after performance by the directee.
(2) A creditor who has consented to a direction made by his debtor can demand from the director to perform what is owed to him only if he has not received performance from the directee within the time determined in the direction.
Duty of a Recipient of the Direction to Notify the Director
Article 1027
Should a directee decline his consent to a direction, or refuse the performance demanded from him by the recipient of the direction, or state in advance that he will not perform it, the recipient of the direction shall immediately notify the director thereof; otherwise, he shall be liable to him for loss.
Renouncing an Accepted Direction
Article 1028
A recipient of the direction who is not a creditor of the director and who does not want the benefit of the direction, may renounce it even if he has already stated his acceptance, but he shall have a duty to notify the director thereof without delay.
Revocation of Authorization Given to the Recipient of the Direction
Article 1029
A director may revoke the authorization given to a recipient by means of a direction, unless he issued the direction with the aim of satisfaction of his own debt to him, and generally, if the direction was issued in the interest of the recipient.
RELATIONSHIP BETWEEN DIRECTOR AND DIRECTEE
If a Directee is Director’s Debtor
Article 1030
(1) A directee shall be under no duty to accept the direction, even if he is a debtor of the director, unless he promised it to him.
(2) However, where the direction was issued on the basis of the directee's debt to the director, the directee shall be bound to perform it up to the amount of that debt, provided it is not more difficult for him than performance of his obligation to the director, for any reason.
(3) By performing the direction issued on the basis of the directee's debt to the director, the directee shall be released in the same measure from his debt to the director.
Revocation of Authorization Given to Directee
Article 1031
(1) A director may revoke the authorization given to a directee by means of a direction, all until the directee notifies the recipient of the direction that he accepts the direction, or until he performs it.
(2) He may revoke it even if the direction itself provides that it is irrevocable, or if by revocation some obligations of his to the recipient of the direction would be violated.
(3) Instituting bankruptcy proceedings against the director's property shall bring with it revocation of the direction by operation of law, except if the directee had already accepted the direction prior to instituting the bankruptcy proceedings, or if, at the moment of acceptance, he did not know or must not have known of that bankruptcy.
DEATH AND DEPRIVATION OF CONTRACTUAL CAPACITY
Article 1032
Death of a director, of a recipient of a direction, or of a directee, as well as deprivation of contractual capacity of any of them, shall have no effect on the direction.
A DIRECTION IN A SHAPE OF A BEARER PAPER
Article 1033
(1) A written direction can be made out to bearer.
(2) In that event, every holder of the paper shall have the position of a recipient of the direction with respect to the directee.
(3) The relations by the direction between the recipient of the direction and the director shall arise in this case only between each individual holder of the paper and the person who assigned the paper to him.
A DIRECTION IN SHAPE OF A PAPER MADE OUT TO ORDER
Article 1034
A written direction that relates to money, to securities, or to generic things can be issued with the provision "to order", if the directee is a person engaged in economic activity, and if what should be performed is within the scope of that activity.
MONEY DEPOSITS IN A BANK
MONEY DEPOSIT
Notion
Article 1035
(1) A contract of money deposit shall be concluded when a bank assumes the obligation to accept, and the depositor to deposit at the bank, a specific amount of money.
(2) The bank shall acquire by such a contract the right to dispose of the deposited money and shall be bound to repay it under the terms provided for by contract.
Opening an Account
Article 1036
(1) On the ground of a contract of money deposit, the bank shall open an account to the benefit and to the charge of which it shall enter all claims and debts from transactions with the depositor, or for his account with a third party.
(2) The claims i.e. debts which are agreed by the contracting parties to be excluded shall not be entered in the account.
Eliminating Owed Balance
Article 1037
(1) The bank shall effect payments from the account within the limits of available means.
(2) Should the bank effect one or more in and out payments within the scope of the contract of deposit, which make the account passive, it shall notify the depositor thereof without delay, and the latter shall be bound to take immediate measures to eliminate the debt.
Kinds of Money Deposits
Article 1038
(1) A money deposit may be a sight deposit or a fixed-term deposit, with or without period of notice, with special purpose or without purpose.
(2) Unless the contrary be provided by contract, a money deposit account shall be considered as a sight deposit, so that the depositor of the account shall be entitled to dispose at any moment of the part or of the entire amount of balance.
Statement of Account
Article 1039
(1) A bank shall notify the depositor on every change in his account’s balance.
(2) By the end of every year the bank shall send a statement of the account (amount of balance) and, if provided by contract or it is customary, it shall do this more frequently.
The Place of Paying in and Paying out
Article 1040
Unless otherwise agreed between the contracting parties, orders for paying in and out of the depositor's account shall be directed to the registered address of the bank in which the account was opened.
Existence of Several Accounts
Article 1041
Should the same person have several accounts with one bank, or with several of its branches, each of these accounts shall be independent.
Payment of Interest
Article 1042
(1) The bank shall pay the interest on funds deposited with it, unless otherwise provided by law.
(2) The amount of interest shall be determined by the contract of deposit of funds, and if there is no indication in the contract to that respect, statutory interest shall be paid.
SAVINGS DEPOSIT
Savings Book
Article 1043
(1) Should a money deposit be accepted as a savings deposit, the bank i.e. the savings and credit institution, shall issue a savings book to the depositor.
(2) A savings book may be issued only in the name of the specific person or to the bearer.
Entry in the Book
Article 1044
(1) All deposits and withdrawals of money shall be entered into the savings book.
(2) Entries in the book confirmed by the bank's seal and signature of the authorized person shall serve as proof of deposits i.e. withdrawals in the relations between the bank and the depositor.
(3) A contrary agreement shall be void.
Payment of Interest
Article 1045
Interest shall be paid on savings deposits.
Kinds of Savings Deposits
Article 1046
Savings deposits may be sight deposits or fixed-term deposits, with or without a period of notice.
DEPOSITING SECURITIES
Notion
Article 1047
By a contract of securities deposit a bank shall assume the obligation to take over the securities for a fee, in order to look after them and to exercise the rights and duties required in relation to that.
Exercising Rights
Article 1048
Unless otherwise stipulated, the bank may exercise the rights out of the deposited securities only for the account of the depositor.
Duties of the Bank
Article 1049
(1) The bank shall ensure the keeping of securities with care required from a depositary against compensation, and to take all actions for the account of the depositor necessary for preserving and realizing his rights out of the securities.
(2) Unless otherwise stipulated by the contracting parties, the bank shall collect the interest due, the principal amount and, generally, all amounts which lodged securities entitle the holder to, as soon as they become due for payment.
(3) The bank shall place at the disposal of the depositor the amounts collected, and if the latter has an account with the bank with a money deposit, to enter them to the credit of such account.
Restitution of Securities
Article 1050
(1) At depositor's request the bank shall be bound to restitute the securities at any time.
(2) The restitution shall be effected, as a rule, at the place of depositing.
(3) The subject of restitution shall be the securities themselves, unless the contracting parties have agreed that it can be effected by paying a corresponding amount.
(4) The restitution may be made only to the depositor or his legal successors, or to persons designated by them, even if it is obvious from the securities themselves that they belong to a third party.
Third Parties' Requests
Article 1051
The bank shall notify the depositor about every request by a third party regarding the deposited securities.
BANK CURRENT ACCOUNT
Notion
Article 1052
By a contract of bank current account the bank shall assume the obligation to open a particular account to a person, and to accept through it all in and out payments within the limits of his funds and credit granted.
Form of Contract
Article 1053
A contract of opening a current account shall be concluded in writing.
Funds in the Current Account
Article 1054
(1) Money assets in a current account shall be loaded by depositor's payments and by collecting money amounts for his account.
(2) The bank shall make payments from the current account for the depositor, even when the account is without funds, notably within the scope provided for by contract of opening the current account, or by special agreement.
(3) Such an obligation of the bank may be excluded by the contract of opening the current account.
Balance Settlement of Several Accounts
Article 1055
If a depositor has several current accounts with the same bank, the plus and minus balances of these accounts shall be mutually offset, unless otherwise provided by contract.
Disposing of Balance
Article 1056
The user of a current account can at any moment dispose of the balance figuring on the account to his credit, unless a period of notice is provided by contract.
Applying the Rules of the Contract of Order
Article 1057
(1) A bank shall be liable for carrying out orders of the depositor according to the rules of the contract of order.
(2) If an order should be carried out at a place where the bank has no business branch, it may perform the transaction through another bank.
Duration of Account
Article 1058
If the contract of opening the current account did not determine its duration period, each party may terminate it while honoring a fifteen day period of notice.
Bank Commission and Compensation of Expenses
Article 1059
(1) A bank shall be entitled to charge commission for performed services rendered that are included in the contract of the current account, as well as to repayment of particular expenses incurred in relation to these services.
(2) These claims of the bank shall be entered by the bank to its credit in the current account, unless otherwise stipulated by the contracting parties.
Delivering Statements of Account
Article 1060
(1) At every change of the balance in the current account the bank shall issue a statement of the account, with an indication of balance, and to deliver it to the client in the way agreed upon.
(2) The statement of account shall be considered as approved if not contested within the agreed time limit or, in the absence of the relevant agreement, within a fifteen day time limit.
(3) Even after its approval, the statement of account may be contested because of a mistake in writing or in accounting, or omission or duplication, but such contesting must be effected within one year, at the latest, from the day of receiving the account on settling the balance after the closing of the current account; otherwise, such right shall be forfeited.
THE CONTRACT OF SAFE-DEPOSIT BOX
Notion
Article 1061
(1) By a contract of safe-deposit box, a bank shall assume the obligation to provide a beneficiary with a safe-deposit box to use it for a definite period of time, while the beneficiary shall assume the obligation to pay in return a specified fee.
(2) The bank shall take all necessary measures to ensure the good condition of the safe-deposit box and to provide supervision over it.
Admittance to Safe-Deposit Box
Article 1062
(1) Admittance to a safe-deposit box may be permitted only to the beneficiary or to his representative.
(2) The bank shall not be allowed to keep a duplicate of key or keys handed over to the beneficiary.
Objects which are not Allowed to Be Placed in the Safe-Deposit Box
Article 1063
(1) A beneficiary shall not be allowed to place in his safe-deposit box an object or a product which could imperil the safety of the bank or other safe-deposit boxes.
(2) Should the beneficiary fail to adhere to that obligation, the bank may declare to terminate the safe-deposit box contract.
Rights of a Bank in case of Failure to Pay
Article 1064
(1) Should a beneficiary fail to pay to the bank even a single installment of the charge due, the bank may terminate the contract upon expiry of a month after warning the beneficiary, by registered mail, about the payment due.
(2) After terminating the contract, the bank may invite the beneficiary to empty the safe-deposit box and hand the key over, and should the beneficiary fail to act accordingly, the bank may demand that the safe-deposit box be opened via court, that its contents be established officially, and that objects found be placed at the court or be entrusted to the bank for keeping.
(3) The bank shall be entitled to the priority collection of the fee that originated from the contract of the safe-deposit box - from the money found in the safe-deposit box, as well as from the proceeds obtained through the sale of other valuables found in the safe-deposit box.
THE CONTRACT OF CREDIT
Notion
Article 1065
By a contract of credit the bank shall assume the obligation to place at the disposal of a credit user a specific amount of money, for a definite or indefinite period of time, and for specific purpose or without such purpose, while the user shall assume an obligation to pay to the bank the stipulated interest and repay the received amount of money, at the time and in the way determined by contract.
The Form and the Contents
Article 1066
(1) A contract of credit must be concluded in written form.
(2) The following shall be specified by a contract of credit: the amount, terms and conditions of opening, using and repayment of credit.
Cancellation by the Creditor
Article 1067
(1) A bank may cancel the contract of credit prior to the expiration of the stipulated time limit, if the credit is used contrary to its purpose.
(2) The bank may also cancel the contract of credit prior to the expiration of the stipulated time limit in the event of insolvency of the user, even if it has not been established by court decision, or in the event of termination of a legal person, or death of the user, if in such cases the credit grantor would be placed into a substantially more difficult position.
Contract Repudiation and Repayment of Credit Ahead of Schedule
Article 1068
(1) A credit user may repudiate the contract before beginning to use the credit.
(2) The credit user may repay the credit even before the time limit set for repayment, but shall notify the bank thereof, in advance.
(3) In both cases the credit user shall compensate for the loss if sustained by the creditor.
(4) In the case of repayment of the credit ahead of schedule, the bank shall not charge the interest for the period from the day of repaying the credit until the day specified by contract as the day of repayment.
THE CONTRACT OF CREDIT ON THE GROUND OF PLEDGING THE SECURITIES
Notion
Article 1069
By a contract of credit on the ground of pledging of securities, a bank shall grant credit in a specified amount, secured by a pledge of securities belonging to the credit user or to a third person giving his consent to the matter.
The Form and the Substance
Article 1070
The contract of credit on the ground of securities’ pledge must be concluded in written form, and shall contain the specification of securities pledged, a company name i.e. the firm and registered office, i.e. domicile of the holder of securities, the amount and terms of the credit granted, as well as of the amount and value of the securities taken in consideration in granting the credit.
When a Bank May Sell the Pledged Securities
Article 1071
Should the user fail to repay the credit due for payment, the bank may sell the pledged securities.
LETTERS OF CREDIT
Duties of a Bank Opening a Letter of Credit and Form of the Letter of Credit
Article 1072
(1) By accepting the request of the orderer for opening a letter of credit, the bank opening it shall assume the obligation to pay to the user of the letter of credit a specified amount of money upon compliance, within the time specified, with the terms and conditions specified in the order for opening the letter of credit.
(2) A letter of credit must be made in written form.
When the Obligation towards the User is Created
Article 1073
(1) A bank shall assume the obligation towards the user from the day he was notified of the opening of the letter of credit.
(2) Orderer shall be bound by the issued order from the moment of arrival of the order to the bank.
Independence of Letter of Credit from another Legal Transaction
Article 1074
A letter of credit shall be independent from the contract of sale or any other legal transaction in relation to which the letter of credit has been opened.
Documentary Credit
Article 1075
A documentary credit shall exist if a bank is under a duty to pay out to the user of the letter of credit a specific amount of money, on condition of being presented with documents specified by the terms and conditions of the letter of credit.
Duty of a Bank Opening the Documentary Credit
Article 1076
A bank opening documentary credit shall execute the clauses of payment under the conditions specified in the letter of credit.
Kinds of Documentary Credit
Article 1077
(1) Documentary credit may be revocable or irrevocable.
(2) Unless otherwise expressly stipulated, the documentary credit shall always be revocable, even if opened for a specified period of time.
Revocable Documentary Credit
Article 1078
A revocable documentary credit shall not bind the bank to the user, so that it may alter it or revoke it at the request of the orderer, or at its own initiative, at any moment, should this be in the interest of the orderer.
Irrevocable Documentary Credit
Article 1079
(1) Irrevocable documentary credit shall contain an independent and direct obligation of the bank to the user.
(2) This obligation may be cancelled or altered only by agreement of all interested parties.
(3) Irrevocable documentary credit may be confirmed by some other bank which, through that, shall assume an independent and direct obligation to the user, in addition to the bank which opened the documentary credit.
(4) Notifying the user of the documentary credit by some other bank shall not, in itself, confirm such documentary credit.
Duty of the Bank Regarding the Documents
Article 1080
(1) The bank shall inspect whether the documents entirely conform to the requirements of the orderer.
(2) After receiving the documents, the bank shall notify the orderer thereof in a shortest period possible, while pointing out to him eventual irregularities and deficiencies.
Limits of Bank's Liability
Article 1081
(1) The bank shall assume no liability if submitted documents appear to be in conformity with instructions of the orderer.
(2) It shall assume no obligation regarding merchandise being the subject of the opened documentary credit.
Transferability and Divisibility of a Documentary Credit
Article 1082
(1) Documentary credit shall be transferrable and divisible only if the bank, which opened the documentary credit at the benefit of the user designated by the orderer, is authorized in the instructions of the first user to pay entirely or partially one or several third parties.
(2) Documentary credit may be transferred, on the ground of express instructions, only by the bank opening it and, unless the contrary has been stipulated, it may do this only once.
BANK GUARANTEE
Notion
Article 1083
(1) By a bank guarantee a bank shall assume the obligation to a recipient of the guarantee (user) to settle an obligation of a third party to the user, if such party fails to fulfill the obligation on maturity, provided that the terms and conditions specified in the guarantee are met.
(2) A guarantee must be issued in writing.
Settling an Obligation from a Guarantee in Money
Article 1084
A bank shall settle an obligation from a guarantee in money, even in the event of a guarantee securing a non-pecuniary obligation.
Confirmation of a Guarantee (Super-guarantee)
Article 1085
Should another bank confirm an obligation from a guarantee, the user may submit his requests on the ground of guarantee either to the bank issuing the guarantee or the one confirming it.
Assignment of Right from the Guarantee
Article 1086
A user may assign his rights from the bank guarantee to a third party only together with the assignment of the claim secured by the guarantee and with the transfer of his obligations relating to the secured claim.
Guarantee "Without Objections"
Article 1087
(1) Should a bank guarantee be with the clauses "without objection" and "at the first call", or contain words of the same meaning, the bank may not file against the user objections which the orderer as a debtor can file against the user under the secured obligation.
(2) The orderer shall pay to the bank every amount paid by the bank on the ground of guarantee issued with the clause specified in the preceding paragraph.
(3) The user of the guarantee shall owe to the orderer the amount received on the ground of guarantee which he otherwise would not be entitled to due to justified objections by the orderer.
APPLICATION OF PROVISIONS OF BANKING BUSINESS
Article 1088
The provisions of Articles 1035 to 1087 of the present Law shall apply mutatis mutandis also to other legal persons which are, in conformity to the law, authorized to engage in specific banking transactions.
SETTLEMENT
Notion
Article 1089
(1) By a contract of settlement, persons having mutual dispute or being uncertain about a legal relationship, by applying mutual compromise, shall discontinue the dispute i.e. eliminate the uncertainty, and determine their mutual rights and obligations.
(2) An uncertainty shall also exist when realization of a specific right is uncertain.
The Contents of Mutual Compromise
Article 1090
(1) A compromise may consist, among other things, of partial or total honoring of a request of the other party or renouncing of an own request; of assuming a new obligation for oneself; of reducing the interest rate; of extending a time limit; of consenting to partial installment payments; of granting a right to a repudiation fee.
(2) The compromise may be conditional.
(3) If only one party gives in to the other, recognizing, for instance, a right of the other party - this is not a settlement, thus the rules of settlement shall not apply.
Capacity
Article 1091
For concluding a contract of settlement the capacity to dispose of the right being the subject of settlement shall be necessary.
Subject
Article 1092
(1) The subject of settlement may be any disposable right.
(2) It shall be valid to settle over the consequences of a criminal offence regarding impact to the property.
(3) Disputes relating to status relationships may not be the subject of settlement.
Applying the Provisions on Bilateral Contracts
Article 1093
(1) A contract of settlement shall be governed by general provisions on bilateral contracts, unless provided otherwise.
(2) If parties effect some other transaction and name it settlement, their relations shall not be governed by provisions of the law applicable to settlement, but by those relating to the transaction actually effected.
Excessive Damage
Article 1094
It shall not be possible to request annulment of the settlement on the ground of excessive damage.
Effect of Settlement on Guarantors and Pledgers
Article 1095
(1) If by means of a settlement a novation of an obligation was carried out, the guarantor shall be released from liability for its fulfillment, and the pledge given by a third party shall cease as well.
(2) Otherwise, the guarantor and the third party who has given his object as pledge shall remain obligated; while their liability may be reduced by the settlement, it may not be raised, unless they have consented to the settlement.
(3) Should a debtor admit a contested claim by settlement, the guarantor and the pledger shall retain the right to file against the creditor objections renounced by the debtor through settlement.
Settlement about a Transaction which may be annulled
Article 1096
(1) A settlement about a legal transaction whose annulment could have been requested by one of the parties shall be valid if such party was aware of such possibility at the moment of settlement.
(2) But the settlement shall be void if it relates to a void legal transaction even if the contracting parties were aware of the nullity and wanted to eliminate it by settlement.
Nullity of the Settlement
Article 1097
(1) A settlement shall be void if based on erroneous belief by both contracting parties that a legal relationship exists, which, in fact, does not exist, and if without such erroneous belief there would be no dispute or uncertainty between them.
(2) The same shall apply should the erroneous belief of the contracting parties relate to common facts.
(3) Renouncing such nullity shall have no legal effect, and what is given with the purpose of fulfilling the obligations on the ground of such settlement may be demanded back.
Nullity of One Clause of the Settlement
Article 1098
The clauses of settlement shall form an entirety, so that if one clause is void, the entire settlement shall be void, unless the settlement itself indicates that it consists of independent parts.
THE LAW APPLICABLE IN THE EVENT OF CONFLICT BETWEEN THE LAWS OF THE REPUBLICS
Application of the Present Part of the Law
Article 1099
The provisions of the present part of the Law shall apply to the obligation relations regulated by the laws of the republics.
The Law Applicable to Real Property
Article 1100
The rights and duties relating to real property shall be governed by law of the republic, in whose territory the real property is situated.
The Law Applicable to Contractual Relations
Article 1101
(1) The rights and duties arising from contract shall be governed by law of the republic which is chosen by the contracting parties.
(2) If contracting parties have not chosen the applicable law, the law of the republic in whose territory the contract has been concluded shall apply.
The Law Applicable to Torts
Article 1102
(1) The rights and duties arising from tort, outside a contractual relationship, shall be governed by the law of the republic in whose territory the damaging action was committed, or where harmful consequences have ensued.
(2) The rights and duties arising from tort, outside a contractual relationship, committed by successive actions, or characterized by multiple consequences, shall be governed by the law of the republic in whose territory the action was at least partially undertaken, or the consequence has at least partially ensued.
(3) Should a person sustaining damage due to a criminal offence be a minor or other person with essentially reduced work or life capacity, or one to whom the harmful action provoked such consequences, the obligation of the liable person to compensate the loss and injury may also be governed by the law of the republic in whose territory the domicile of the person sustaining damage is located i.e. whose citizen such person happens to be.
(4) The agency competent to decide on damages, while making choice between several applicable laws, shall apply that law which is the most convenient for the person sustaining damage.
The Law Applicable to the Remaining Obligation Relations
Article 1103
The rights and duties arising from a unilateral statement of volition, acquiring without grounds, doing business without order, and from other legal facts, shall be governed by law of the republic in whose territory such transactions were undertaken or in whose territory such facts were generated.
The Law Applicable to Limitation Period
Article 1104
The limitation period for the rights and duties shall be governed by the law which is applicable to the substance of these rights and duties.
Obligation Relations Arising outside the FRY
Article 1105
The rights and duties which did not arise in the territory of the Federal Republic of Yugoslavia, if the participants in the obligation relations did not choose the applicable law, shall be governed by law of the republic in whose territory such rights and duties are realized, and if the rights and duties are realized in the territory of several republics, or if they are realized outside the Federal Republic of Yugoslavia, the law of the republic which has the closest tie with the contract, i.e. with other obligation relation, shall be applicable.
TRANSITIONAL AND CONCLUDING PROVISIONS
Application of the Present Law
Article 1106
The provisions of the present Law shall not apply to obligation relations which arose prior to coming into force of the present Law.
Application of Usages
Article 1107
(1) A provision of the general or special usages by which the presumption is determined that the contracting parties have agreed to apply the usages, unless excluding them by contract, shall not apply after coming into force of the present Law.
(2) The General Usages of Trade ("Official Gazette of the FPRY", No. 15/1954) shall not apply after coming into force of the present Law concerning the matters regulated by it.
(3) If general or special usages or other trade practices and customs are contrary to the dispositive norms of the present Law, the provisions of the present Law shall apply, unless the parties have expressly stipulated the application of usages, i.e. other trade practices and customs.
Termination of Validity of other Regulations
Article 1108
On the day of coming into force of the present Law, the Law on Time-barred Claims ("Official Gazette of the FPRY", Nos. 40/1953 and 57/1954) shall be repealed.
Coming into Force of the Present Law
Article 1109
The present Law shall come into force on October 1, 1978.
Independent Articles of the Law on Amendments and Additions to the Law of Contracts and Torts
("Off. Gazette of the SFRY", No. 39/85)
Article 6
The provisions of Article 2 of the present Law shall also apply to damages occurring as of 1 January 1981.
Article 7
The present Law shall come into force on the eighth day from the date of publication in the "Official Gazette of the SFRY".
Independent Articles of the Law on Amendments and Additions to the Law of Contracts and Torts
("Off. Gazette of the FRY", No. 31/93)
Article 58
Article 34 of the present Law shall also apply to obligation relations occurring prior to entry into force of the present Law, if a five-year limitation period has not expired up to its entry into force.
Article 59
Article 36 of the present Law shall also apply to pecuniary obligations occurring prior to entry into force of the present Law, if they were not fulfilled up to its entry into force.
Article 60
The present Law shall come into force on the eighth day from the date of publication in the "Official Gazette of the FRY".
Independent Articles of the Law on Amendments and Additions to the Law of Contracts and Torts
("Off. Herald of the RS", No. 18/2020)
Article 4
The present Law shall come into force on the eighth day from the date of publication in the "Official Herald of the Republic of Serbia".
PUBLISHER’S NOTE
* The provisions of Article 24 of the Law of Contract and Torts ("Off. Gazette of the SFRY", Nos. 29/78 and 39/85) have been repealed on July 10th, 1989 based on the Decision of the Constitutional Court of Yugoslavia U No. 363/86, published in the "Off. Gazette of SFRY", No. 45/89 on July 28th, 1989.