As is known, from the beginning of next calendar year, a new regulation of private law is to take effect in the Czech Republic, including a new Civil Code (Act No. 89/2012 Coll.). In this contribution, we shall address the issue of how this regulation will affect the use of standardised contractual documents in practice, particularly terms and conditions of business. We shall also briefly address certain interpretative difficulties which this new legal regulation brings.

The regulation in the area of use of standardised contractual documentation will differ according to the position of the contracting parties. It will be different in cases where the contracting parties are entrepreneurs, in cases where it concerns a relationship between an entrepreneur and a consumer (hereinafter we refer to it as a consumer relationship) and in other cases (for example, contractual relationships of legal persons established for a purpose other than business, etc.). It is therefore necessary to reckon with three different legal regimes.

For all relationships in general, particularly the provision of Section 1751(1) of the new Civil Code applies, which more or less takes over the regulation of the current Commercial Code (Act No. 513/1991 Coll., as amended), concerning the use of terms and conditions of business. The provision of Section 1751(1) reads as follows: “part of the content of a contract may be determined by reference to terms and conditions of business which the offeror attaches to the offer or which are known to the parties. Divergent agreements in the contract take precedence over the wording of the terms and conditions of business.” The term “offer” is a so-called legislative abbreviation of a proposal for the conclusion of a contract, which, however, is not consistently observed by the legislator in the text of the Code. In relationships between entrepreneurs, it will continue to be possible to use a reference to “terms and conditions of business prepared by professional or interest organisations”.

In principle, therefore, the obligation to attach the terms and conditions of business to the proposal for the conclusion of a contract remains preserved, provided that their content is not known to the contracting parties before the conclusion of the contract. It will therefore apparently continue to be insufficient to provide merely a hypertext link to the text of the terms and conditions of business, etc. However, this requirement does not apply in the case of concluding licensing agreements for subjects protected by copyright law, where special regulation has been adopted. Specifically, this concerns the provision of Section 2373(1) of the new Civil Code: “the content of a contract or part thereof may also be determined by reference to licensing terms which are known to the parties or publicly available.” Here, therefore, it is a certain concession to models used in the distribution of free software and Open Source software, where it should suffice that the licensing terms are “publicly available”. However, we believe that this possibility will be very difficult to apply to consumer relationships, particularly with regard to the existence of information and instruction obligations of the trader towards the consumer and regulation of the manner of their fulfilment. In this context, it is possible to draw attention to the recent judgment of the Court of Justice of the EU in the matter of Content Services Ltd v. Bundesarbeitskammer (C-49/11), which addresses the question of the manner in which these obligations are to be fulfilled by the trader towards the consumer. Within the framework of this judgment, the Court of Justice of the EU reached the conclusion that these obligations cannot be fulfilled by the trader merely by placing (publishing) information on a website.

The provision of Section 1753 of the new Civil Code should also apply to all the aforementioned relationships. This provides that “provisions of terms and conditions of business which the other party could not reasonably expect are ineffective unless this party has accepted them expressly; contrary agreement shall be disregarded. Whether it concerns such a provision shall be assessed not only with regard to its content, but also to the manner of its expression.” The explanatory memorandum to this regulation mentions that “it is not only provisions with unexpected content, but also provisions expressed for the other party unclearly, or in small, poorly legible writing, if they alter or supplement the content of the contract in a manner which the other party could not reasonably expect.” Although the intention of the legislator is relatively clear, the consequences for practice are, in our opinion, problematic. Specifically, it will be very difficult to establish the boundary of which provision is reasonably unforeseeable for the other party (for example, in the case of more complex financial products, new web services, etc.). It is also not entirely clear what is meant by express acceptance of such an unexpected provision. Whether it will, for example, suffice to include a numerical list of these potentially “unforeseen” provisions of the terms and conditions of business by the other party directly in the text of the contract (referring to these terms and conditions of business) or not.

A very frequently discussed topic is then the admission of the possibility of unilateral change of terms and conditions of business in the case of longer-lasting contractual obligations, according to the provision of Section 1752(1) of the new Civil Code. This is a substantial difference from the current legal regulation, which permits unilateral change of rights and obligations from an already concluded contract only in very specific cases regulated by special legal regulation (banks referring to a price list, etc.). Regardless of this fact, a number of organisations already under the current legal regulation attempt to achieve changes to terms and conditions of business unilaterally, most often by constructing various automatic expressions of will of the other party. Probably also under the influence of these persons, the possibility of unilateral change of contractual rights and obligations has also been included in the new Civil Code. Nevertheless, despite this effort, in our opinion, this unilateral change of terms and conditions of business will apparently not be possible to implement within the framework of consumer relationships. The special regulation in the provision of Section 1814(g) of the new Civil Code establishes that “in particular, agreements are prohibited which permit the trader to change the rights or obligations of the parties of his own volition.” We shall not address in more detail the interpretation of individual statutory prerequisites for unilateral change of terms and conditions of business, as this topic would be sufficient for several separate articles.

The regulation of so-called contracts concluded by way of adhesion will also generally apply, except in those cases where traders expressly exclude this regulation between themselves (whilst observing the conditions set out in Section 1801). What is meant by a so-called adhesion contract at all? According to the provision of Section 1798(1) of the new Civil Code, an adhesion contract is that contract whose “basic terms have been determined by one of the contracting parties or according to its instructions, without the weaker party having a real opportunity to influence the content of these basic terms.” More or less, therefore, it concerns those contracts whose content is not individually negotiated. The provision of Section 1798(2) of the new Civil Code adds that “if a contractual form used in commercial dealings or another similar means is used to conclude a contract with the weaker party, it shall be deemed that the contract was concluded by way of adhesion.” In our opinion, therefore, the regulation of adhesion contracts will have an impact on the majority of contracts which in practice are dealt with using terms and conditions of business.

Within the framework of the provision of Section 1798, we encounter the term “weaker party”, with which the new Civil Code is peppered. Who will be considered the weaker party, however, is unfortunately not entirely clear at this moment, because apart from the provision of Section 433(2), the Civil Code does not provide further explanation (it is deemed that the weaker party is always a person who acts towards an entrepreneur in economic dealings outside the context of its own business). Practically in every contractual relationship, one party is necessarily “weaker” (particularly with regard to the marked information asymmetry which in modern society is practically ubiquitous).

What does the aforementioned regulation of adhesion contracts specifically contain? The provision of Section 1799 of the new Civil Code provides that “a clause in a contract concluded by way of adhesion which refers to terms stated outside the actual text of the contract is valid if the weaker party was familiarised with the clause and its meaning or if it is proved that it must have known the meaning of the clause.” The interpretation of this provision will, in our opinion, be problematic. If such a clause is understood to mean any contractual agreement (see Section 1800) which refers outside the actual text of the contract (for example, therefore, to terms and conditions of business), then naturally the question arises of how to proceed in practice so that the weaker party is unambiguously familiarised with the clause and its meaning or how to prove that the weaker party must have known the meaning of the clause.

The regulation of adhesion contracts then continues further with the provision of Section 1800 of the new Civil Code. Its paragraph 1 establishes that “if a contract concluded by way of adhesion contains a clause which can only be read with special difficulties, or a clause which is incomprehensible to a person of average understanding, this clause is valid unless it causes detriment to the weaker party or if the other party proves that the meaning of the clause was sufficiently explained to the weaker party.” Determining which agreement is comprehensible to a person of average understanding may not be entirely simple. Paragraph 2 then provides that “if a contract concluded by way of adhesion contains a clause which is particularly disadvantageous to the weaker party without there being a reasonable ground for it, particularly if the contract deviates seriously and without special reason from the usual terms agreed in similar cases, the clause is invalid…”.

In conclusion, therefore, it is possible to summarise that if the new regulation of civil law actually enters into effect, it will be necessary when using terms and conditions of business in practice to deal with certain interpretative problems. Apart from assessing whether the other party is “weaker” or not, it will also be necessary to pay attention to which provisions can be considered in the given relationship unforeseeable or particularly disadvantageous for the other party. Particularly at the outset, there will probably prevail amongst entrepreneurs and their legal advisers a considerable degree of uncertainty regarding these generally formulated provisions. To this, it is necessary to add that we shall obtain a reasonable judicial interpretation of these concepts at the earliest within the horizon of several years, if not dozens of years.

article originally published on the server LUPA

This text was translated from Czech to English using an AI translator.