Contract formation

According to Article 1 of the Swiss Code of Obligations, the conclusion of a contract requires the mutual and concurring expression of the will of the parties. Not only the expression of will is decisive, but also the real will of the parties. If the real will of the parties coincides, there is a natural consensus and the contract is valid with no issue. If the real will of the parties and their expressions of will do not coincide, there is a dissent and no contract is formed.

The situation is problematic if there are concurring expressions of intent, but the actual intentions of the parties do not correspond to one another. Then the principle of trust is applied. If one of the parties is to be protected in their understanding of the expression of the will of the other party according to the principle of trust, there is a ‘normative consensus’ and a contract arises without the parties having a concurring will. If neither party’s understanding is to be protected, there is dissent and thus no contract. Whether the principle of trust applies in an individual case can be difficult to determine and may require the expertise of business lawyer in Zurich, St. Gallen or Frauenfeld.

If the parties have agreed on all essential points of the contract, it is presumed that the reservation of subsidiary points does not prevent the contract from being binding (Art. 2 CO). If the parties cannot agree on the subsidiary points later, a judge must decide on them. A further prerequisite for the conclusion of a contract is that the parties’ will is legally bound, as well as their legal capacity and the capacity to act of the contracting parties. Attorneys for business law in St. Gallen, Zurich and Frauenfeld will be happy to provide you with further information on this subject.

INTERPRETATION OF THE TREATY (ART. 18 cO):

If a contract has come into existence and must be interpreted, the real intention of the parties must be taken into account, rather than an incorrect designation or form of expression. It is not relevant here whether the parties made the incorrect expression of intent by mistake or intentionally.

CONTENT OF THE CONTRACT:

Nullity (Art. 20 CO): Due to the freedom of contract applicable in Switzerland, the parties can determine the content of the contract themselves. This is within the limits of the law. Not permissible are contract contents that violate the provisions of the law, public order, good morals or the right of personality. A lawyer for business law in Frauenfeld, St. Gallen or Zurich can provide you with information as to whether the contents of a contract which has been drawn up are permissible. Simply put, a contract which is impossible, unlawful or immoral is void.

Unfair Advantage (Art. 21 CO): A contract is unilaterally non-binding if there is an obvious discrepancy between the performance and performance in return, set out in the contract. The conclusion of this contract must have been brought about by exploiting the distress, inexperience or carelessness of the other party in order to qualify as unfair advantage, even if there is an obvious disproportion between the two performances. If the conditions are met, the party who has been taken advantage of can, within one year of the conclusion of the contract, declare that they will not keep the contract and demand the return of what has already been paid. In case of doubt, contact a business lawyer in Switzerland to determine whether a contract constitutes an unfair advantage in a specific case.