How to conclude a contract simply and validly?

Chapters of the article

• The contracting process
• Do you need to meet to conclude a contract?
• Let’s agree to agree
• Forms of contracts
• Different contract types
• What if we don’t agree?

A contract is far from being just a document drawn up by lawyers and bearing the certified signatures of both parties. In fact, entering into a contract can be an extremely simple act that anyone can do. It requires two or more parties and their expression of intent to bind each other and to be bound by the content of the contract.

You can never enter into a contract only unilaterally and, conversely, you cannot make a unilateral act a contract. So if someone tells you that they have entered into a “termination of employment by agreement”, that is inaccurate to say the least. On the other hand, a gift agreement is indeed a contract, even though it may seem to you that the donee is not significantly active.

Contracting process

In practice, a contract begins to be concluded when one of the parties sends an offer to the other, from which it is clear, apart from the content itself, who has made it and to whom. If the offer is accepted by the other party in time, the content of the offer is agreed and the contract is concluded.

The offer may take various forms and need not be formal. If the waiter asks you, “Would you like a beer?” and you nod, a contract has been formed. And if he asks, “Would you like another?” and you say yes: “Yes, but only a small one,” the contract is also formed, since a reply with an amendment or deviation from the original proposal is admissible for the formation of a contract if the other party accepts it.

At other times, the offer may be in the same form whatever the counterparty. The law speaks in this context of a contract of adhesion. It is typically encountered in entities such as banks, operators or energy suppliers that conclude thousands or hundreds of thousands of contracts and need to simplify the process as much as possible. They offer their clients a uniform form, often with reference to their terms and conditions, and the other party has the option of either accepting its content without further ado or going to a competitor (which usually has a very similar proposal). As a client, you can of course choose a mobile tariff or apply for a mortgage of a certain amount, but discussing payment options other than the prescribed ones, for example, is rather naive.

As this makes clients the weaker party with little influence on the content of the contract, the law protects them with special provisions. For example, if the contract refers to extensive terms and conditions, the other party must be informed of them in advance. If the bank relies on your poor eyesight or laziness and writes the essential terms and conditions on page ten in tiny print, this miniature content will be valid if it has been sufficiently explained to you or if it does not cause you any harm.

Even though you know you can’t change anything about the contract, it’s not a good idea to resign yourself to reading its contents. On the contrary, ignorance of possible penalties, contractual fines or deadlines can backfire badly. Often overlooked is the so-called contract extension, which indicates for fixed-term contracts how long the contract will extend beyond the original expiry date.

Do we need to meet to conclude the contract?

Nowadays it is not a problem to conclude a contract remotely. Although you live in Aš, you can buy goods from the Ostrava e-shop via the Internet. Similarly, you can also place an order by phone or choose from a catalogue.

Such contracts are called distance contracts. As this is most often the case with consumer contracts concluded by a business, the weaker party is also protected by special provisions. The entrepreneur must provide relevant information in advance (e.g. about the obligation to pay a deposit, the costs of returning the goods in the event of withdrawal, etc.) and that the consumer may withdraw from the contract within 14 days.

Let’s make a deal, let’s make a deal

In some cases, it can be expected that agreeing the content of the contract will be legally complex and lengthy, or that at the time the parties decide to enter into the contract they do not yet know all the details that the contract should contain (e.g. details of the mortgage in the case of a contract for the sale of a property). However, in order to ensure that both parties have some insurance for their further actions (applying for a mortgage, insuring the apartment to be purchased), a contract for a future contract is concluded in such cases.

The parties agree at least on the general content of the future contract and on the obligation to enter into such a contract upon request. The obligation to conclude the contract upon request may also be enforced in court in the event of the other party’s insistence.

Do I need paper or not?

As we have indicated above, you do not need any formalities to conclude a large number of contracts.
The most common form of contract is oral, where the parties verbally define between themselves what rights and obligations they have (“I lend you CZK 10,000 and you pay me back within a month”).

An oral contract is therefore acceptable in terms of form, but it goes without saying that it is better to insist on a written contract in more serious situations in terms of security. In the event of any ambiguity or even dispute between the parties to the contract, the short answer is ‘what is written is given’.

On the other hand, for some cases, the written form of the contract is even mandatory – this applies in particular to real estate contracts (typically a real estate purchase contract). Moreover, in the case of the transfer of real estate, registration in the Land Registry is also required, as it is only through registration that the right of ownership is created.

Sometimes, however, you do not even need to speak for a change to enter into a contract, as long as the intention of the parties is clear from the circumstances. In that case, the conclusion is made by implication, by the very conduct of the parties to the contract. The public transport ride mentioned in the introduction already implies an implied consent to the terms and conditions of carriage and the contract of carriage. You do not have to contact the transport company.

When concluding contracts with a selected group of entities, such as municipalities, regions, the Czech Republic or a public university, the contracts are recorded in the Register of Contracts maintained by the Ministry of the Interior.

Subsequent amendments to the contracts, if necessary, are usually also concluded in the agreed form. The law establishes a rebuttable legal presumption that the parties do not wish to be bound if this form is not followed.

Individual contract types

The above rules apply to contracts in general. In addition, there are a number of individual types of contract, which have special requirements and rights and obligations arising from their conclusion.

Frequently used types of contracts are:

• Contractof sale – the seller delivers a certain thing to the buyer for an agreed purchase price.
• Alease agreement – the landlord provides the tenant with the use of a certain thing, e.g. an apartment, for a specified period of time and for a rent.
• Gift contract – the donor gives something to the donee free of charge.
• Loan agreement – the borrower gives the lender a certain thing for temporary use free of charge.
• Loan agreement – the lender temporarily transfers a fungible item, especially money, to the borrower.
• Insurance contract – an insurer provides an agreed financial benefit to the policyholder in return for an insurance premium (paid periodically) in the event of a contingency.
• Commission contract – the commission agent procures a matter for the principal, typically selling the principal’s property.
• Works contract – the subject matter is the construction, maintenance, repair or alteration of a thing, which the contractor undertakes to do at the direction of the client.
• Accommodation contract – the accommodation provider will provide temporary accommodation for the client.
• Barter contract – this is used for barter trade

In addition to the types of contracts defined by law, you can also enter into a different contract, where you adjust the rights and obligations at your own discretion and need. Your relationship will be governed primarily by the agreed content and only in matters where nothing has been agreed will the provisions for the nearest contract type or the general provisions on contracts apply by analogy. Such contracts are referred to as innominate or unnamed contracts. Such contracts include, for example, a volunteer contract or a reservation contract.

It is precisely in view of the lack of legal regulation in such cases that you should take particular care in the wording of the contract and consider consulting a specialist in the case of contracts of a more substantial impact (such as a property reservation).

What if we disagree?

If we have different ideas about the agreed rights and obligations, or if the other party acknowledges them but does not fulfil them, we usually go to court. An exception is the possibility of going to an arbitrator or arbitration court if we have concluded an arbitration agreement that establishes their jurisdiction.

Models of individual contracts can be found on the internet, but many refer to earlier legislation and generally it is not advisable to consult a professional. Particularly for contracts of a more fundamental nature (such as a real estate purchase, a works contract, a commercial contract, a contract for the transfer of a business share, etc.), a general model cannot cover all the details and individual variations of your particular case.