1. INVALIDITY AND ADJUSTMENT OF CONTRACTS

2. CONTRACTS ARE BINDING, BUT….

3. INVALIDITY OF A CONTRACT
Nullity
Contract is originally invalid, null and void
Voidability (contestability)
Contract becomes valid unless contested within a stipulated period of time
Invalidity based on objection
Contract remains valid, unless one of the parties makes a plea (allegation) objecting its validity

4. GROUNDS FOR OBJECTION Contract can be claimed invalid on basis of
SMALL GENERAL CLAUSE 33§
having been concluded under circumstances that would render it incompatible with honor for anyone knowing of those circumstances to invoke the contract
DURESS 29§
= threat to a person’s freedom, reputation or property
GRAVE DURESS 28§
= use of physical violence or a threat
concerning life or health

5. 6) SIMULATED TRANSACTION 34§
FRAUD 30§
= inducing another to enter into a contract by deliberately giving dishonest or misleading information or concealing relevant information
UNDUE INFLUENCE 31§
= taking advantage of another’s difficult situation, lack of understanding, imprudence or position of dependence and acquires disproportionate benefits
6) SIMULATED TRANSACTION 34§
= a right having been received by means of a false document and the receiver has transferred it to third party, the assignment is binding if the third party was in good faith

6. 7) MISTAKE 32§
1. Error in the expression of intent / mistake in utterance
=> the erroneous communication shall not bind the sender if the recipient knew or should have known of the mistake when the contract was concluded
2. Error in transmission
=> the erroneous message shall not bind the sender even if the recipient acted in good faith

7. ADJUSTMENT OF CONTRACT
GENERAL CLAUSE OF ADJUSTMENT 36§
A contractual term that is unfair or leads to an unfair result may be
adjusted or
Ignored
BAN ON PROHIBITION OF COMPETITION 38§
A contract that prevents or restricts a person’s right to engage in business or to work as an employee
Does not bind the person, so far the contract unreasonably restricts his freedom

8. BONA FIDE
One is in GOOD FAITH if one
Did not know
and
Should not have known
about the circumstances