Business Terms Redressed

    View Authors May 2014

    As with many other areas of the private law, the regulation of business terms has been affected by the new Civil Code. Introduced as of 1 January this year, there have been three substantial changes made to this area of law. These include the possibility of a unilateral change in business terms, protection against unreasonable provisions and solving of the conflict of business terms.

    Change in Business Terms

    After many years of legal uncertainty, the new Civil Code stipulates the rules under which parties may agree for one party to unilaterally change the business terms. However, such a procedure is admissible only in the case of long-term business relations that involve repeated transactions. Moreover, the other party must be informed about the contemplated change in the business terms in advance and must be given the opportunity to reject the change and terminate the contract.

    Unreasonable Provisions

    The new Civil Code makes it possible to invalidate provisions that the other party could not have reasonably expected – either with respect to their contents or to the method they have been expressed. This is a significant change in regulation of business terms.

    Thus, for example, provisions inappropriately damaging or benefiting one of the parties and/or provisions written in a way difficult to interpret may represent a problem. Invalidity might also be taken into consideration in the case of business terms that are hard to understand due to their distribution in a number of documents, amendments or annexes.

    Solving Conflicting Business Terms

    Thirdly, the new regulations cover instances where parties can determine an agreement despite conflicting business terms. Previously, a party could not establish an agreement using their own business terms. Now, however, the content of the contract can be create through the use of the two sets of business terms that are not contrary to each other.

    Despite the introduction of these changes, only upcoming practice will determine whether and to what extent the above new regulations are beneficial.

    *This article was first published in Czech monthly E15 Pravo & Byznys 4/2014.