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Has the time come!? – Rules of entry into force of the new Civil Code II

In my first post on the entry into force of the new civil code, I presented the transitional provisions relating to legal persons. The act containing entry into force provisions also includes special rules for other cases the most important of which I summarized below.

Old contract – Old Civil Code

The general rule for contracts and obligations is that the new act is applicable for the facts arising and the legal declarations made after the entry into force of the Civil Code (i.e. 15 March). The provisions of the former Civil Code continue to apply for the contracts concluded before the entry into force and the same rule applies for legal declarations made in relation to legal relationships or contracts which were already in place at the time of entry into force.

A special regulation provides for the cases when a party under a contract concluded before the entry into force is obliged to transfer something or grant possession of something and this takes place after the entry into force of the new Civil Code. In this case, the rules of the former Civil Code apply to the transfer or the granting of possession. The reason for this provision is the general principal that the former rules are applicable to contracts concluded before the entry into force and the legislator found that the parties applying different legal regulations to the contract and the contract’s actual performance would not be justified.

Special provisions apply to insurance contracts according to which, if the insurance is concluded based on a proposal made before the entry into force, but risk cover starts after 15 March and the contract otherwise complies with the provisions of the new Civil Code, it shall be governed by the rules of the new Civil Code.

A new legal concept introduced by the act is that of grievance fee, which is the indemnification of non-financial damages suffered in the case of a violation of personality rights and, based on the new rules of liability insurance, the insured may also claim reimbursement for such a violation. In this regard, based on the transitional rules, a release from grievance fee may only be claimed based on claim events occurring after 15 March under liability insurance contracts concluded before this date and to the extent that the insurer would have been liable to indemnify the client for non-financial loss based on the old Civil Code.

Placing of existing contracts under the effect of the new Civil Code

According to the transitional rules, the parties may also agree to place their contract concluded before 15 March 2014 completely under the effect of the new Civil Code. A modification of an existing contract after the entry into force of the new Civil Code in itself does not submit the entire agreement to the new regulation; a separate declaration of the parties in this regard is necessary for this.

However, an agreement in this regard should be considered carefully from a number of aspects. The new Civil Code applies a system of liability different from the former regulation, for instance, for breaches of contract under which a release from liability for breach may become more difficult. On the other hand, a restriction or exclusion of liability for breaches of contract became more flexible under the new code, which may, in certain cases, justify a transfer to the new rules.

The rules relating to the content of contracts and general contract terms were supplemented, which should also be considered when placing a contract with continuous performance under the effect of the new Civil Code.

You will receive detailed information on the above mentioned changes in our upcoming posts.

Liability for damages

A question may also arise as to which rules are applicable in the case of damages caused outside a contract (torts). The non-contractual (tort) liability rules of the new Civil Code are applicable for the acts or failures to act causing the damage following the entry into force.

However, if damage is caused on a continuous basis commencing before the entry into force and stopping only after entry into force of the new Civil Code, it shall be judged under the old Civil Code.

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