Civil Code

What it means

The Civil Code is Act No. 40/1964 Zb. and carries the whole of private law: ownership, co-ownership, lease, gift, damages, unjust enrichment and succession. It applies wherever a special statute is silent, including the three-year limitation period.

It is not marginal for a company. Consumer relations fall under it even when a business stands on the other side, and an unfair term in a consumer contract is void whatever the parties may have agreed.

A contract need not be in writing unless the law or the parties require it. An oral agreement is valid, just hard to prove; written form is mandatory, for instance, for transferring real estate or for creating a lien over it.

How it works in practice

A contract starts by picking the regime: a contract for work exists in both the Civil Code and the Commercial Code, and the choice decides the warranty, the liability for defects and the length of the complaint periods.

A property transfer rests on it entirely: the contract must be in writing, the transferor’s signature officially certified, and ownership passes only on entry in the land register, not on signature and not on payment.

When a customer pays an invoice twice by mistake, or money arrives from someone who owes the company nothing, the refund is handled as unjust enrichment under the Civil Code. So we do not leave such overpayments hanging in the sub-ledger; with the client we return or set them off straight away.

What to watch out for

A buyer pays at signature and waits. Until the land register allows the entry the seller is still the owner, and if enforcement or a lien reaches the property first the money is gone: that is why the price sits in escrow.

Property held in the spouses’ community of property can usually be reached by a creditor of the spouse in business even when only one of them signed the contract. A sole trader in a riskier line of business therefore sorts out the family property arrangements before a debt arises, not once enforcement starts.