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The Swiss Code of Obligations provides for the basic principle of freedom of contract. Accordingly, parties to the contract can decide, within the limits of the law, with what content and with whom a contractual relationship is to be entered into. If you have any questions regarding contract law, the team at Teichmann International in St. Gallen, Zurich and Frauenfeld will be pleased to help you. The various components of freedom of contract are listed and explained below.
In principle, the contracting parties are free to conclude the contract or not. This right derives from the freedom of conclusion. There are two effects of this freedom, the positive and the negative. The positive freedom of conclusion is the right to conclude a contract, whereas the negative freedom of conclusion is the right not to conclude a contract. Closely related to the freedom to conclude a contract is the freedom to choose a contract partner. According to this freedom, every person may freely choose their contracting partner. Accordingly, no one can be forced to conclude a contract with a certain person.
Based on Art. 19 CO, freedom of type implies the right to combine and modify the existing types of contracts in the Code of Obligations as desired or to create new types of contracts. However, the limits of the law must be respected here. If the contract type is regulated by the legislator, this is called a nominal contract. If one makes use of the freedom of type and modifies, combines or creates a new contract type, it is a so-called innominate contract.
According to Art. 19 para. 1 CO, the contracting parties are free to choose the contractual content within the limits of the legal system.
According to the freedom of form under Art. 11 CO, the parties may freely conclude, amend or cancel their contract. A special form may be prescribed if the law so provides or if the parties have agreed on such a form requirement. The second case is that of so-called voluntary form bindingness. If a certain form is prescribed, all objectively essential points must comply with these provisions. It should also be noted that if a preliminary contract is concluded, it must contain the formal requirements of the actual intended contract in order for it to acquire legal force.
Not only is it a right of the parties to decide whether to enter into a contractual relationship, the parties themselves may also decide, under certain conditions, whether to terminate that contractual relationship. A contract may be terminated either unilaterally or jointly by mutual agreement. Examples of contracts that may be cancelled unilaterally are rental contracts and employment contracts. The mutual cancellation or amendment is basically possible at any time.
One barrier to the freedom to conclude contracts and choose partners is the obligation to contract. The obligation to contract is a restriction of the freedom to conclude a contract by contractual or legal obligations to conclude a contract. Thus, one can be obligated to conclude a contract if a preliminary contract has been agreed upon according to Art. 22 CO or if a framework contract exists. There may also be certain legal obligations to enter into a contract. In order for the obligation to enter into a contract to apply, certain conditions must be met cumulatively.
There are also limits to the freedom of content. Thus, the law may provide for restrictions on content based on Art. 19 para. 2 CO. There are mandatory norms in the law from which no deviation is permitted. In addition, it is prohibited that the content of a contract is contrary to moral or public order. Art. 20 para. 1 CO states that the contract is void- therefore without legal force- if the content is impossible, unlawful or immoral. In addition, according to Art. 27 para. 2 CO, the content must not excessively bind the personality in an infringing manner.
The freedom of form can be restricted either by law or by arbitrary formal requirements. The purpose of limiting freedom of form is to protect against haste and to ensure legal certainty. If a certain form is prescribed or agreed, all subsequent amendments must also comply with this form.
If you have any questions regarding the conclusion, amendment or termination of a contractual relationship, the attorneys of Teichmann International in St. Gallen, Zurich and Frauenfeld look forward to assisting you in these matters.