🤝Contracts Law
Contract law
Preface
In a libertarian State, it is not a task for the government to decide for the Parties how they may do business between themselves. However, even a State built on the principles of individual liberty provides the services of Law enforcement, and it must set up clear rules under which parties may access their Courts and under which shall their actions be deemed enforceable. This Law sets up the terms and conditions under which the State Courts in Liberland will enforce certain promises made between Persons and other entities such as Companies, Charities or States. By doing so, the law also sets up the general rules under which the Administration will recognize contracts and will make contracts regarding third parties.
Definitions
Acceptance is a clear, direct and purposeful response to an offer that signals that the accepting party agrees to the terms that were laid out in the offer, and wishes to form a legally binding contract under that arrangement.
Child is a Natural Person between birth and puberty, a Person who has not yet attained the maturity required fully to comprehend an action or its consequences. There is no legal age of maturity in Liberland, as not all people attain maturity at the same age. For this Law, the person generally stops being a child when they attain 18 years of age. They are no more children for most dealings by the time they reach 16 years of age. Conversely, they are generally considered children for most affairs when under 13 years of age, unless their "unusual" maturity is proven otherwise.
Courts in the sense of this Law are the State Courts of Liberland.
Contract is a legally binding promise containing certain specific elements, and therefore being enforceable by Courts. The line between a promise and a Contract is called Completion, which means the Contract contains the required Elements as listed in this Law.
Damages are a reward in money or in natura compensating a Party that has incurred a loss. Damages can include compensation for the loss of revenue where that has been clearly established based on evidence.
Delivery in the sense of this Law may either have the colloquial meaning, for the purpose of the Sales of Goods contracts; or special meaning, signifying any action based on the Contract in pursuance of its fulfilment. The Delivery of one Party is the precondition for Enforceability of the Contract.
Elements are in this Law the qualities a promise must have in order to be Enforceable by Courts.
Employment is the providing of a specific service where one of the parties, 'the employee', engages themselves towards the opposite party, 'the employer', to perform work for a period of time or indefinitely in service of this opposite party in exchange for payment,
Enforceability is a quality of the Contract that must be present in order for the State Courts of Libeerland to be open to enforcing the Contract and applying the Remedies as set out in this Law.
Good Faith is a general presumption that the parties to a contract will deal with each other honestly, fairly, and in good faith, so as to not destroy the right of the other party or parties to receive the benefits of the contract.
Goods are all things (including specially manufactured goods) which are movable at the time of identification to a Sales Contract other than the money in which the price is to be paid or investment securities.
Guarancy means that a Party may contract or otherwise solicit a third person or entity to act as a guarantor of their performance in a contract, of possible damages or other consequences of a contract. Where the guarantor performs instead of the Party, the guarantor shall be entitled to recompense from the Party.
Hindrance is a situation in which a Party objectively cannot fulfil its contractual obligations.
Liability is an obligation for which a Person is responsible.
Mental capacity is the ability of a Party to understand the consequences of their actions; in the case of this law, their ability to understand the terms and the consequences of a Contract.
Natural obligation Where a Promise is not enforceable, it may still bind the person who has made it in honour and conscience. Where the promise fulfils all the elements of a Contract but is not enforceable, it shall be known as a natural obligation.
Offer is a direct and purposeful act in which one party approaches another with the intention of forming a contract.
Obligation is a duty to do or not to do something.
Party is a Person or an entity that makes a promise which, if it fulfils the criteria making it Complete according to this Law, is a Contract.
Rational Actor, Rational Person, Rational Behaviour etc. seek to denote the expected, typical behaviour of human beings acting with the knowledge of one well informed, with purpose and care to actually accomplish the purpose.
Remedies are actions that the Court can apply to resolve a dispute regarding a Contract. Any Contract in Liberland is written with an implicit intention to allow the Court to apply those legal remedies in case of a dispute, at least in potential. Of course, the Parties could choose as the forum a Private Court and there, the Remedies or other measures of recourse will be different; but some kind of Remedy will typically be present as an implicit condition to any Contract, in order to ensure that disputes can have an orderly and peaceful resolution.
Services are any duty or labour performed for another person.
Stipulation is a formal legal acknowledgment and agreement made between opposing parties
Terms are the conditions and warranties agreed upon between parties to the contract. Contract terms may be verbal or in writing. Conditions are those terms which are so important that one or more of the parties would not enter into the contract without them.
Book One: General Stipulations
Section 1: Enforceable Promises
Art. 1: Contract
Contracts are promises that are legally binding because they contain certain specific elements that are enforceable by courts. This law outlines the elements required to complete a Contract and sets up the conditions under which a complete Contract is enforceable.
Art. 2: Enforceability
§ 1
Courts shall only enforce a complete Contract where one party has already delivered, in part or in full, what was promised in ways stipulated by the contract and lawfully.
The delivery can be in goods and in services and the court shall only enforce the contract where the party has incurred a loss at either their time or something material, at least in consequence.
§ 2
This doesn't need to be only the delivery of the goods or services directly stipulated in the contract but also other actions taken as a result of the party's attempt to fulfill the contract, provided that
a) such actions could have in good faith been seen at the time the party acted as conducive for the fulfilment of the contract;
b) a rational actor might be expected to take such actions or these actions were in the given case necessary for the fulfilment of the contract; and
c) the party has incurred costs that are not insignificant.
Art. 3: Natural obligation
§ 1
Where the Promise is not enforceable, it may still bind the person who has made it in honor and conscience. Where the promise fulfills all the elements of a Contract but is not enforceable, it shall be known as a natural obligation.
A natural obligation shall in itself be neither illegal nor seen as any less before the law compared to an enforceable Contract, except that the Court won't enforce it.
§ 2
Where the contract is a Natural Obligation with respect to one party only, the risks associated with the refusal of that party to fulfill the contract's terms are fully borne by the Party for which the contract is binding, regardless of stipulations to the contrary and other considerations.
Art. 4: Dispositive and Cogent Norms
§ 1
Where this Law sets up norms which apply to all contracts, Parties may stipulate otherwise in their Contract and then the stipulation of the Parties applies over the text of this Law. Such norms are known as Dispositive Norms.
This is not the case where this Law states by such norms that the legal stipulation applies regardless of contractual stipulations to the contrary, or by other norms of this Law which are not construed as Dispositive to begin with; these norms shall be known as Cogent.
§ 2
The Book One of this Law shall be entirely Cogent except for the Section 4, which is Dispositive.
The Book Two of this Law shall be entirely Dispositive except for the Section 1 which is Cogent.
Section 2: Building blocks of complete Contracts
Art. 5: Number of Parties
§ 1
Where the promise is made by one party, be it addressed to a specific party or parties or to the general public, without expecting or receiving a reciprocal promis from a counterparty, the resulting contract is unilateral.
§ 2
Where the promise of one party is followed by a counterpromise of another party or parties, the resulting contract is bilateral or multilateral.
Art. 6: Type of Communication
§ 1
Where the parties communicate their promise clearly and specifically so that a reasonable person might understand it as an intention to form a contract, and where the terms of the promise are likewise explained in this manner, at least to a degree, the resulting Contract is explicit.
§ 2
Contracts in which the parties express the mutual understanding of the terms by their actions instead of their words, where they communicate their promises other than explicitly, are implied contracts.
Art. 7: Contractual elements
The Courts shall review the following elements of contracts:
a) the intention to contract;
b) the offer to contract;
c) the acceptance of the offer;
d) something of value promised by one party to the other, a consideration;
e) clear terms that make sense to both parties and certain enough to be interpreted by a court.
Where the Court finds all the elements present, it shall recognize the promise as a complete Contract.
Art. 8: Intention to contract
§ 1
An agreement is enforceable only when the parties intend to create a legally binding relationship.
§ 2
Parties entering into a contract in a business setting shall be presumed to have had an intention to contract, unless proven otherwise.
Conversely, where there is a sufficiently close relationship between the parties, such as between family members, spouses or close friends, the Court shall presume that there is no intention to make an enforceable contract, unless proven otherwise.
Art. 9: Offer
§ 1
An Offer is a direct and purposeful act in which one party approaches another with the intention of forming a contract. The Offer must clearly indicate the terms of the contract.
The court shall not discount any form an Offer may take, as long as the offer is clearly recognizable to rational persons and to the court as an offer.
§ 2
While the promise remains in the state of the Offer without an Acceptance, it is not yet a contract.
Art. 10: Acceptance
§ 1
The Acceptance is an equally clear, direct and purposeful response to an offer that signals that the accepting party agrees to the terms that were laid out in the offer, and wishes to form a legally binding contract under that arrangement.
The court shall not discount any form an Acceptance may take, as long as the acceptance is clearly recognizable to rational persons and to the court as an offer.
No contract can be changed unilaterally by tacit agreement of other parties. All parties must actively agree to any change in the contract in which they are included and have initially agreed to sign.
§ 2
An acceptance is only valid provided:
a) the offer is still open for acceptance;
b) the acceptance is under the same or nearly the same terms as the original offer;
c) the acceptance is communicated expressly or by other conduct that clearly shows the party has accepted the offer; and
d) the offer is accepted by the person to whom the offer was made, or a person authorized to accept it on that person's behalf.
§ 3
If the acceptance is for terms that differ sufficiently from the original offer to be significant, the Court may deem it a counter-offer rather than an acceptance of the original offer
§ 4
An acceptance in itself doesn't make the contract enforceable without one party having spent resources in fulfilling the contract, as stated in this Law and without the fulfilment of other requirements of this section. An Acceptance is however a necessary condition for enforceability.
Art. 11: Consideration
Consideration is what each person promises the other, and each party must give consideration for a contract to be valid. In that sense, each party is both a promisee and a promisor, even though the promise each makes may be different.
A court recognizes a consideration if:
a) the person who makes the promise has to get a benefit for the making of the promise; or b) the person to whom the promise is made has to experience some detriment at the request of the promisor.
Art. 12: Clear terms
§ 1
In order for a contract to be complete, its terms must be clear and complete such that both contracting parties understand their meaning.
§ 2
Courts will deem a contract incomplete if the terms fail to specify certain obligations under the contract, or if important information is missing from the terms.
§ 3
In situations where a contract has uncertain or incomplete terms, Courts will not disregard them outright and will attempt to interpret the terms of the contract by looking at the language of the document itself and trying to determine the meaning.
If ambiguity remains, a court will then consider other factors to determine what the parties intended their agreement to be.
Courts will however not work out the terms of the agreement if there is clearly not enough information to guide them.
Section 3: Lawful Considerations
Art. 13: Contracts with children
§ 1
Contracts where one party is a child and the other an adult shall be for the children natural obligations, but shall be fully binding on the adults.
§ 2
Courts will always grant children the ability to exit a contract when they take away their consent, regardless of terms to the contrary or other considerations like past performance or past confirmations of the child that they want to keep fulfilling the contract.
Where the adult counterparty can prove that the true beneficiary of a contract with a child is another adult, the Court will effect by way of a remedy the succession of rights and obligations from the child to that adult and the contract will become fully binding on them.
Art. 14: Mental capacity
§ 1
A court may find that an individual does not have the capacity to enter the given contract on a permanent basis based on a mental illness or disability that prevents them from understanding the terms, meaning and consequences of entering into a contract.
A person may also be found to lack the capacity to contract temporarily due to intoxication, temporary illness or other impairments if it were to a level this had impaired the person's ability to appreciate the nature and terms of the contract.
The Court will consider this in judging the contract's validity and will issue remedies where this impairment is judged as significant.
Where the Court judges the mental capacity of a Party diminished in full or almost in full below that required to understand the contract fully, the Court will declare the contract a natural obligation.
Art. 15: Misdirection
Where a Party enters a contract based on misdirection of the other Party that significantly impaired their ability to objectively judge the benefits and dangers of the contract or a part thereof or its likely consequences, the Court shall judge the contract or the particular terms affected by misdirection to be Natural Obligations for the deceived Party; the affected contract or terms shall remain enforceable with respect to the Party who engaged in misdirection.
Art. 16: Mistake
Where a party can prove to the Court that they entered a contract by mistake, the court shall issue a remedy to mitigate the results of the mistake.
Where the mistake was so profound that the Party would have clearly not accepted certain terms or the entire contract without having made the mistake, the Court shall declare these terms or the entire contract a natural obligation for both parties.
Where the counterparty has already acted upon the contract and has incurred loss because of this, they are entitled to compensation should the party decide not to comply with the Natural Obligation or similar results of other Remedies.
Art. 17: Gross Negligence and Malintent
Where a Party can prove that the other Party has infringed the performance of the Contract either by malintent or by gross negligence, the other Parties shall be entitled compensation proportional to the measure in which the malintent or gross negligence infringed the performance of the Contract for the given Party.
Art. 18: Frustration
Sometimes contracts cannot be carried out for reasons that are not the fault of either party. The Court shall remedy this situation where the Party can prove that this frustration is caused by circumstances wholly or predominantly out of their control.
Art. 19: Illegality
§ 1
Contracts that are formed or carried out for illegal purposes will not be enforced and shall not be made Natural Obligations, but they shall be deemed invalid against all.
Contracts formed or carried out for purposes which the Court deems against individual liberty, public morality or public health shall be declared Natural Obligations.
§ 2
Where there was a clear element of coercion and the party having been coerced is without a doubt weaker than the other, the Court shall declare the Contract or the parts of it affected by the coercion a Natural Obligation for the weaker party, while the terms which are not illegal or clearly against individual liberty, public morality or public health shall remain enforceable against the coercing party.
Art. 20: Undue Influence, duress
§ 1
Where someone in a special relationship based on trust and confidence exploits that relationship to induce someone to enter into a contract, or where that happens in a relationship between an overwhelmingly stronger and a clearly weaker Party, the Court shall declare the Contract or the parts of it affected by the undue influence a Natural Obligation for the induced party.
§ 2
The Court shall do the same where the coercion happens under duress, a threat or the use of physical force or similar measures.
Art. 21: Silence
Silence given in response to an offer or to a proposal where there is no complete contract between the Parties shall be seen as full rejection.
Where no reply is given in a reasonable time, in general at least in ten working days, to a proposal made upon a complete contract between the given parties, the proposal is presumed to have been accepted in full according to the terms of the proposal.
Section 4: Default Stipulations
Art. 22: Pacta Sunt Servanda
All Parties in all contracts are obliged to perform according to the stipulations of contracts they enter, unless those stipulations are illegal or immoral. This shall apply even where the contract stipulates to the contrary.
Art. 23: Prudence
All Parties in all Contracts are obliged to behave how a prudent and a rational person would behave in the given circumstances. This shall apply even where the contract stipulates to the contrary.
Art. 24: Good Faith
All Parties in all contracts are presumed and obliged to behave in good faith, with honesty and sincerity of intentions, towards their counterparties and towards third parties. This shall apply even where the contract stipulates to the contrary.
Art. 25: Liability
§ 1
All Parties are liable with all their property in case of their non-performance to each other and to third parties.
§ 2
If two or more debtors are jointly indebted, then each of them is liable for an equal part.
Art. 26: Joint and Several Liability
§ 1
If the performance is undividable or if from law, common practice or a juridical act results that the debtors each are liable for the whole debt, then they are joint and several liable.
§ 2
The creditor is towards each debtor entitled to demand full performance of the entire obligation.
§ 3
A settlement of the joint obligation by one of the solidary debtors discharges also the other solidary debtors against the creditor. The same applies when the joint obligation is performed by means of a setoff or the acceptance of a new debt by one of the solidary debtors under an agreement with the creditor.
Art. 27: Guarancy
A Party may contract or otherwise solicit a third person or entity to act as a guarantor of their performance in a contract, of possible damages or other consequences of a contract. The Guarantor shall be jointly and severally liable for the obligation.
Art. 28: Sanctions
§ 1
Where a Party, out of negligence or malintent, causes damage to the other Party, that Party shall effect restitution to the damaged Party, to the best of their abilities, of both the real damages and the lost revenue, where applicable.
§ 2
Should the damage be caused repeatedly or in a manner that clearly indicates the other Party's unwillingness or inability to fulfill the contract, or where the actions of the other Party are judged as immoral, illegal or clearly warranting the loss of trust in that Party, the other Party might Irregularly Terminate the Contract.
§ 3
The Parties may agree otherwise on additional Sanctions, but the Court shall always grant a claim of Sanctions according to this Law, despite any contractual stipulations to the contrary.
Art. 29: Duration
§ 1
Where the Parties don't stipulate the duration of the Contract, it shall be for one calendar year with an automatic prolongation, unless one or more Parties deliver a written Notice of Termination to the other Parties. A Notice of Termination shall be delivered at the latest
a) at the end of the month preceding the month in which the Prolongation Date occurs; or
b) thirty days before the Prolongation Date,
whichever time period is longer.
§ 2
Where the Court finds indications of tacitly assumed duration other than that, based on the logical interpretation of the contract provisions or the conduct of the Parties, the Court is at the liberty to interpret the contract accordingly.
Where all the Parties agree on the duration of a Contract, even for an otherwise written contract, the duration of their agreement shall be the duration of the Contract. Where only some parties agree, the Court is at the liberty to interpret the contract accordingly.
§ 3
A contract with the duration that is not for an unlimited time shall end without the need of a Party to terminate it, by Expiration. The Expiration takes effect by the passing of the last day for which the contract is valid.
Art. 30: Regular Termination
§ 1
Unless stipulated otherwise in the Contract or in this Law, it shall be possible for eahc Party to terminate each contract Regularly or Irregularly.
§ 2
Regular Termination shall be the termination that occurs
a) by the term of the contract passing without prolongation, or
b) where the Party delivers a Written Notice to the other Party of its intention to Regularly Terminate the Contract.
The Written Notice shall be delivered at least
a) at the end of the month preceding the month in which the Prolongation Date occurs; or
b) thirty days before the Prolongation Date,
whichever time period is longer.
Art. 31: Notice Period
The Regular Termination shall have a notice period of one calendar month after the month in which the Notice of Termination is delivered to the last counterparty.
Art. 31: Irregular Termination
A Party may terminate a contract irregularly with respect to a specific counterparty with immediate effect where
a) the counterparty has grossly violated the terms of the contract and there is no realistic hope for restitution or the resumption of a regular performance;
b) the counterparty has caused damage to the Party with respect to the object or the performance of the Contract out of gross negligence or malintent.
Art. 32: Survival
Regardless of what the Parties agree upon in the Contract, the Sanctions listed by this Law shall always survive the termination of the Contract.
Art. 33: Choice of Forum
Where there is no other choice made by the Parties, the Contract shall be adjudicated according to Liberland's Jurisdiction and at a Liberland State Court.
Section 5: Remedies
Art. 34: Damages
Damages are a reward in money or in natura compensating a Party that has incurred a loss. Damages can include compensation for the loss of revenue where that has been clearly established based on evidence.
Art. 35: Specific performance
The Court may order a Pary or a third person in some way attached to a Contract to perform a certain action or actions in a certain time horizon or face a penalty.
The Court may also order a Party or a third person in some way attached to a Contract to refrain from certain actions, such as actions that are prohibited by the stipulation in the Contract.
Art. 36: Annulment
The Court may cancel a contract or certain contract stipulations in situations like misrepresentation, mistake frustration, coercion, duress or illegality.
Art. 37: Replacement
The Court may replace a part of a contract by its own judgement, which will then be binding between the Parties as if it had been agreed upon by them. This is used in situations where the contract itself is complete and valid, but certain parts of the contract are not.
Art. 38: Restitution
The Court may return the legal situation between the Parties or towards third persons to a situation that had previously applied.
Book 2: Special Provisions
Section 1: Rules of Application
Art. 39: Types of Contracts
§ 1
In order to safeguard the reasonable expectations of the Parties and to promote legal certainty and expediency in commerce, the Court shall treat certain common types of contracts according to the provisions of this Law.
Where the specific contract differs from these types, the Court may differ its interpretation, based on a well-reasoned distinction.
§ 2
The Court shall always attempt to treat a contract named, directly or indirectly, after a listed type, according to that type. Where the naming similarity is absent, the Court shall consider the specificities of the contract which is the object of the Case and where the Contract is similar to one or more types, the Court shall use those for its interpretation.
Art. 40: Subsidiary Application
§ 1
Where a contract has been typified and it is silent in a matter prescribed by this Law for the given type of contract, the legal provision shall apply as if the Parties had agreed on it.
Where the Parties stipulate contrary to the prescriptions in this Law for a given contract type, they bear the risk of the court Replacing their different stipulation in cases where these lead to unjust outcomes towards weaker or otherwise disadvantaged Party or third person.
§ 2
The Court shall set aside any stipulations in a contract designed, in full or in part, to avoid the subsidiary use of this Law.
Art. 41: Analogy
Where a contract doesn't fall or doesn't fall clearly into one of the listed types, the Court shall nontheless wherever possible use analogically the stipulation regarding the nearest applicable type to the given contract or a part of the Contract.
The Court may combine analogical application of institutes from various types, but never where this would deny the efficacy of one of the institutes.
Art. 42: Court Costs
The Parties setting up Contracts which markedly differ from the listed types place themselves at risk of incurring higher Court Costs and prolonging the process that may result, as the Court may need more time and expend more resources interpreting and adjudicating their Case.
Section 2: Sale or Lease of Goods
Art. 43: Contract of Sale or Lease of Goods
§ 1
A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.
A contract of sale may be absolute or conditional. There may be a contract of sale between one part-owner and another.
§ 2
It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale.
Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions; that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods.
§ 3
What applies to a contract for sale of good applies also to a contract for a lease of goods, mutatis mutandis.
Art. 44: Present or Future Goods
§ 1
The goods that form the object of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.
There may be a contract for the sale of goods, the acquisition of which by the seller depends on a contingency that may or may not happen.
§ 2
If by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.
§ 3
A contract for the sale of specific goods is void if, without the knowledge of the seller, the goods have perished at the time when the contract is made.
If there is an agreement to sell specific goods, and subsequently the goods, without any fault on the part of the seller or buyer, perish before the buyer incurs a loss on behalf of their fulfilment of the contract, the agreement is avoided.
Art. 45: The Price
§ 1
The price in a contract of sale may be
a) set explicitly by the contract,
b) left to be set explicitly as agreed in the contract, or
c) determined implicitly by the course of dealing between the parties.
§ 2
If the price is not determined explicitly or implicitly, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each case.
Art. 46: Warranty
§ 1
Sale of any goods or related services is subject to an implied warranty that the goods have the quality and fitness to fulfil common purposes for which a rational person might be expected to use those goods.
In any case the goods sold are implied to be free of any defect rendering them thus unmerchantable which would not be readily apparent by pre-sales observation given the particular circumstances.
3) If there is a sale of goods by description, there is an implied condition that the goods must correspond with the description. For sale by sample as well as description, the goods must correspond to both the sample and the description and the buyer must have the option of comparing the sample with the bulk of what is being sold.
§ 2
Where faulty goods, or goods that don't look or work as advertised are sold, the buyer has a two year period to return the goods free of charge for repair or a replacement; where repair or replacement is impossible or impractical for the seller or the buyer, the seller shall instead return, in full or in part according to the severity of the defect, the price to the buyer.
This right is waivered in cases where the seller can prove that the buyer must have known of the defect before they bought the goods.
§ 3
The buyer my return within 14 days free of charge and without stating reasons any goods bought by means of electronic communication, via the telephone or under circumstances of duress, like door to door sales or in any other high pressure environment.
§ 4
Where goods are sold in a retail manner, by means of electronic communications, via the telephone or under circumstances of duress or where there is use made of adhesive contracts, where the seller denies the buyer the possibility to negotiate fully or near-fully, any waivers or limitations of these warranties shall be void.
Art. 47: Conditions
§ 1
Whether a stipulation in a contract of sale is a condition the breach of which may give rise to a right to treat the contract as repudiated, or is a warranty the breach of which may give rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract.
§ 2
If a contract of sale is not severable and the buyer has accepted the goods or part of them, or if the contract is for specific goods the property in which has passed to the buyer, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.
Art. 48: Transfer of Property
§ 1
The Property transfers on delivery of the goods at the time and place according to the delivery method stipulated in the contract.
§ 2
The seller shall choose the most expedient method which guarantees the delivery on time and doesn't incur a risk of damaging the goods beyond acts of higher power or human mistakes.
The delivery shall be executed without unnecessary delay. The place of delivery shall be the place which, knowing the buyer, the seller can reasonably assume to be the correct place. In absence of this, it shall be the place where the buyer is known to habitually do business or, where there is none or none is known, their residence.
§ 3
The goods remain at the seller's risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyer's risk, whether delivery has been made or not.
If delivery has been delayed through the fault of either buyer or seller, then despite subsection (1), the goods are at the risk of the party in fault as regards any loss that might not have occurred but for that fault.
Art. 49: Registered Property
For Property registered in a public Registry, the transfer of ownership takes place only after the Registrar of the respective Registry writes in the new owner and publishes them in their Registry. This applies despite any contractual stipulations to the contrary.
Art. 50: Buying From a Non-Owner
§ 1
If goods are sold by a person who is not the owner of them, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner's conduct precludes the owner from denying the seller's authority to sell.
§ 2
Where the seller of goods has a voidable title to them, but the seller's title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, if they are bought in good faith and without notice of the seller's defect of title.
§ 3
If goods have been stolen by the seller or obtained by fraud or any other criminal means and the offender is prosecuted to conviction, the property in the goods stolen revests in the person who was the owner of the goods, or that person's personal representative, despite any intermediate dealing with them.
§ 4
Where a good has been transfered from a non owner, and four years have passed in case of a moveable object, and ten years in case of a non movable object, the obligation to return the object becomes a natural obligation.
The posessor, however, shall not become an owner by the passage of time and by having been informed of the true nature of the matter becomes a possesor in bad faith should they refuse to return the object of the property to the true owner.
A posessor in bad faith retains only the right of regular use and the right to objectively improve the property where this is marginal or accompanied by the increasing of the market value of the property. They retain no other rights the owner would have, in particular the right to relinquish, to destroy or to damage the property, whether by intent or by negligence.
The posessor in bad faith retains for the duration of their possession in bad faith all the obligations of the owner attached to the property.
Art. 51 Ramifications of Delivery
§ 1
If the seller delivers to the buyer a quantity of goods less than the seller contracted to sell, the buyer may reject them. If the buyer accepts the delivered goods, the buyer must pay for them at the contract rate for the actual amount delivered.
§ 2
If the seller delivers to the buyer a quantity of goods larger than the seller contracted to sell, the buyer may
a) accept the goods included in the contract and reject the rest, or
b) reject the whole.
If the seller delivers to the buyer a quantity of goods larger than the seller contracted to sell and the buyer accepts the whole of the goods delivered, the buyer must pay for them at the contract rate for the actual amount delivered.
§ 3
If the seller delivers to the buyer the goods the seller contracted to sell mixed with the goods of a different description not included in the contract, the buyer may
a) accept the goods that are in accordance with the contract and reject the rest, or
b) reject the whole.
§ 4
Unless otherwise agreed, the buyer of goods is not bound to accept delivery by instalments.
§ 5
If, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for transmission to the buyer is deemed, unless there is evidence to the contrary, to be a delivery of the goods to the buyer.
Art. 52: Acceptance and Rejection of Goods
§ 1
The buyer is deemed to have accepted the goods when
a) the buyer intimates to the seller that the buyer has accepted them,
b) the goods have been delivered to the buyer, and the buyer does any act in relation to them which is inconsistent with the ownership of the seller, or
c) after the lapse of a reasonable time, the buyer retains the goods without intimating to the seller that the buyer has rejected them.
§ 2
Unless otherwise agreed, if goods are delivered to the buyer and the buyer refuses to accept them, having the right so to do, the buyer is not bound to return them to the seller, but it is sufficient if the buyer intimates to the seller that the buyer refuses to accept them.
Section 3: Lease Contract
Art. 52: Lease Contract
A Lease Contract is a Contract under which one of the parties, 'the Lessor', engages himself towards the other party, 'the Tenant', to grant him the use of an immovable or movable property or of a part of such thing, opposite to which the Tenant engages themselves to perform a counter performance.
Art. 53: The Tenant
§ 1
The Tenant may use the leased property in the stipulated manner or, where no stipulation is made, in a manner in which a rational person would use it.
The Tenant may improve the property without changing its nature and purpose, where that clearly leads to the increase of a market value of the property, at their own expense, even without informing the Lessor. The Tenant is not entitled recompense from the Lessor.
3 The Tenant retains the right to modify the object at their own expense and to changing its nature and purpose, but that right is contingent upon an explicit agreement by the Lessor to the given modification. Where such an agreement is not given within two weeks of the Tenant asking, the silence means a rejection.
§ 2
The Tenant shall be responsible for the safety and the condition of the property for such a time as it is in their possession.
The Tenant shall prevent or, where impossible, restore any damage incurred on that object as incurred by their negligence or malintent.
The Tenant shall be entitled to let third persons of their choosing interact with the leased property, but they shall become full guarantors for any behaviour of said third persons and its consequences with respect to the leased property.
Art. 54: Rent
The Lessor has the right to a regular pecuniary Rent as the counterperformance. The Rent shall be paid in the amount and currency as common for similar properties in the given area and at the given time.
The Rent shall be a fixed amount denominated in the given currency and shall be payable monthly, for the past month and at the last day of the given calendar month.
Art. 55: Entitlement to Fruits
Unless stipulated otherwise, the Tenant shall be fully entitled to the fruits of the leased property and they shall become their property upon their separation from the leased property.
Art. 56: Inspection
The Lessor may, at will, make an inspection visit.
Art. 57: Public Registry
Where a property in a Public Registry is rented out, the Lessor shall ensure that this fact is mentioned in the Public Registry, including at least the duration of the Rental Contract and the name or Company Name and address of the Tenant.
Art. 58: Duration
Where there is no mention of the duration of the Rental Contract, the Contract shall be made for an unlimited time.
Art. 59: Duties of the Lessor
The Lessor shall have the following duties:
a) To ensure that the object of the Lease is transfered to the Tenant in state and in the manner so that the Tenant may, as soon as possible, use it for the purpose as agreed, and where none is agreed upon, for any purpose a rational person would use it for;
b) To maintain the object of the Lease in a state wherein it can continue being used as agreed or as this Law stipulates.
c) To allow the Tenant to use the object of the Lease without disturbance for the duration of the contract.
Art. 60: Sanctions
§ 1
Where the Lessor doesn't fuflil one of their duties according to the contract or according to this Law, the Tenant may, besides applying any other contractual or legal Sanctions, request a discount of the Rent.
§ 2
Where the issue in question is such that it makes it impossible or nearly so for the Tenant to use the object of the Lease and it becomes apparent that the Lessor is not going to address it without unnecessary delays, the Tenant needs not pay the Rent until Lessor adequately resolves the situation; the Lessor may not Irregularly Terminate the contract on the grounds of this non-payment. Alternatively, the Tenant may effect an Irregular Termination of the contract.
§ 3
Where third persons disturb the use of the object and it is beyond the power of the Tenant to stop this disturbance by proportional means, the Tenant may request a discount of the Rent.
Art. 61: Changes in Ownerhip
The Lease Contract survives any changes in ownership of the Property. A buyer who purchases a leased Property shall become the new Lessor and succeeds the old Lessor in their particular rights and duties regarding the Lease Contract, even where the seller hadn't informed him about the fact.
Art. 62: Sublease
Unless agreed otherwise, the Tenant retains the right of sublease to the object of lease, but the specifics, including and not limited to who the sub-Tenant will be and what the purpose and degree of the sublet are conditional upon the explicit agreement of the Lessor.
Art. 63: Notice Period
The Regular Termination of the Rental Contract shall have a notice period of
a) one month after the month of delivery of the Notice of Termination, where the contract's object is movable property; or
b) three months after the month of delivery of the Notice of Termination, where the contract's object is immovable property.
Art. 64: Prolongation
Where the Tenant after the Rental Contract ends keeps on using the property and the Lessor doesn't object for a full calendar month, and the Tenant pays the Lessor the usual Rent, the Rental Contract shall be prolonged. The prolongation shall be initially for one year; where there is further no objection from the Lessor, the contract resumes for unspecified period.
Art. 65: Lease of a Home
Where a Home is leased, a space used by the Tenant for their own residency, the Lessor may only increase the price once per year; in addition, this increase may only be up to what is reasonable for the place and the time of the increase.
The Lessor may only increase the Rent once per year with respect to the given property; where the increase already took place for the given year and there is a new contract made or even a new tenant, the Lessor may not increase the Rent further for that year.
The provisions of this article shall apply even where the contract may stipulate to the contrary.
Section 4: Employment Contract
Art. 66: Employment
An employment agreement is an agreement under which one of the parties, 'the employee', engages themselves towards the opposite party, 'the employer', to perform work for a period of time or indefinitely in service of this opposite party in exchange for payment, henceforth "wage".
A person who, in exchange for remuneration, performs work on behalf of another person or entity for three consecutive months, weekly or for at least twenty hours per month, shall be presumed to perform such work pursuant to an employment agreement.
Art. 67: Limited Liability
The employee shall be responsible solely to the employer and not to third parties, and the employer shall indemnify and hold them harmless regarding any claims of third parties.
The employer shall respond to possible acts of disobedience, lack of professionality, underperformance, causing damage to the employer or other parties, etc., solely by the sanctions as outlined in the employment contract or in this Law.
Art. 68: Presumption of Working Hours
Where an employment agreement has lasted for at least three months, the contracted working hours in one month are presumed to equal the average working hours per month over the three preceding months.
Art. 69: Place of Work
The Place of Work shall be any place where the work can realistically be performed by the given employee, according to the stipulations in the contract and the description of the work and the workplace designated by the employer. Where this is impossible to determine, the place of work shall be the home or the personal workplace of the employee.
The employee shall be responsible for the setting up and the maintenance of their workplace, unless they are bound to work in a workplace set up and maintained by the employer, in which case this responsibility shall be the employer's.
Art. 70: Readiness
The employee shall ensure that they are available to receive instructions and provide their services as much as possible. This shall include maintaining telephonic and internet connections.
Should the employee suspect that this should prove temporarily impossible, the employee shall inform the employer and do what is reasonably possible to restore his Readiness as soon as possible.
Art.71: Professional Conduct
§ 1
The employee shall perform their duties in a professional manner, as a rational and knowledgeable person skilled in the given trade would.
The employee shall communicate and act civilly and politely towards the employee and their colleagues, towards all relations, clients and suppliers. They shall in all his dealings keep and uphold the highest standards of professionality.
§ 2
The employee shall ensure that they are available to receive instructions and provide their services as much as possible. This shall include maintaining telephonic and internet connections at their own expense and on their own accord.
Should the employee suspect that this should prove temporarily impossible, the employee shall inform the employer and do what is reasonably possible to restore his Readiness as soon as possible.
§ 3
The employee shall ensure that their communications, both public and private, reflects well on the employer and do not damage their reputation.
Where the employer disagrees with a piece of the employee's communication, they shall instruct them to remove that communication from public space. The employee shall comply without questioning and to the best of their ability.
The employer shall be required to disclose the reasons for their disagreement only to the extent to instruct the employee in ways how to prevent similar incidents from occurring in the future.
Art. 72: Wage
§ 1
The wage shall be what one may reasonably expect for the type of work and the working hours in the given time and place. The wage shall be payable in Liberland Dollars (LLD) to the Liberland Dollar address belonging to the Liberland account of the employee.
§ 2
Wages shall be payable monthly for the preceding month, always on the last day of the month.
Art. 73: Allowance
§ 1
The employer shall provide to the employee and allowance necessary to perform the tasks expected of the duties the employee assumes according to this Contract.
This entails matters like travel allowance, allowance for business trips required by the employer, providing special tools not expected to be owned by a professional of the given vocation and other such expenses.
§ 2
The employee shall make an honest effort to the best of their ability to ensure that the costs are made efficiently on a cost-effective basis.
Art. 74: Prohibition of Child Labour
§ 1
Child Labour shall be, in general, prohibited, despite contractual stipulations to the contrary.
§ 2
Persons over 13 years of age may enter employment contracts where their legal guardian agrees with that arrangement. These contracts remain natural obligations for such an underage employee while being binding for the employer.
Persons over 16 years of age may enter employment contracts, and where the legal guardian doesn't object to this, they are assumed to have given their consent. In general, the contract is not a natural obligation towards them unless it contains abusive or unusual stipulations or the wage is less than usual in the given place and time.
Art. 75: Hindrances
§ 1
In general, no wages are due over the period during which the employee has not performed the contracted work.
The employee preserves the right to wages if they have not performed the contracted work due to a hindrance which, reasonably, should be for the account of the employer.
§ 2
Where the employee is incapable of working due to circumstances beyond their control, such as sickness, pregnancy or an accident, the employee shall preserve the right to 70 per cent of their wages for 100 weeks. After that period, the employer shall be entitled to terminate the contract.
§ 3
Where the employee is sick, they shall take their utmost care to become better. Healing shall be their highest priority, so that they are able to resume their duties as an employee as soon as possible; they shall do so at their own expense and on their own accord.
Art. 76: Paid Leave
§ 1
The employee has a right to 10 working days of paid holiday leave per year. Unused paid holiday leave shall transfer to the following year. The choice of those days is contingent upon the agreement with the employer. The employee shall inform the employer in time, at least a month in advance where possible.
Ultimately, the employer shall not block the use of these working days and shall try to accommodate the legitimate needs of the employee regarding their family or the seasons in which they want to take a holiday.
§ 2
Where they work remotely, the employee has a right to further 15 working days of paid holiday leave per year where the employer might call them to perform work, provided that work doesn't disrupt the leisure character of the free days.
§ 3
Where they work on-site, the employee has the right to 10 more working days of paid holiday leave per year.
Art. 77: Unpaid Leave
§ 1
In addition to paid holiday leave, the employee may ask for unpaid leave, but shall not be entitled to it. Instead, the granting of any unpaid leave shall be contingent upon a specific agreement with the employer. The employee shall inform the employer in time, at least a month in advance where possible.
§ 2
Where the employee is elected into a Public Office, they shall be entitled to unpaid leave to the extent to which that is necessary for them to perform their duties of office.
Art. 78: Sick Days
The employee shall have three paid sick days per year. These days shall not be used as a holiday, but the employee might use them when they are temporarily incapacitated. This use shall be possible without informing the employer in time, provided the employee announces their use of sick leave before the beginning of the work shift the employee calls in sick for.
Art. 79: Protection from Termination
The employer shall not terminate an employment contract where the employee is on paid or unpaid leave, where they suffer from a hindrance caused by the employer and where they are on a sick day or where they suffer from a hindrance due to circumstances beyond their control.
Art. 80: Non-Discrimination
§ 1
The employer shall ensure that there is no discrimination in the workplace, be that for gender, sex, sexual orientation, nationality, skin colour, social background, religious reasons, political opinions, or for any other such category.
In addition, there shall also be no discrimination based on whether an employee works full time or part-time or whether they work for an indefinite period or temporarily and no sexual or other harassment based on power differences between persons in the workplace.
§ 2
Discrimination both direct and indirect shall be equally prohibited; where indirect discrimination entails the situation in which an apparently neutral provision, standard or method affects, in comparison to other persons, in particular persons of a certain disposition as per this article.
§ 3
The employer shall set up channels for reporting discrimination and to ensure that all such reports are treated seriously. In particular, the employer shall ensure that there is no adverse treatment of employees who invoke the non-discrimination clause.
§ 4
The provisions of this article shall apply even where the contract stipulates to the contrary.
Art. 81: Sanctions
§ 1
Where the employer sees the employee underperforming significantly without any mitigating circumstances and judges them unworthy of their full Wage for the given month, the employer may cut their Wage proportionally to the differential between the employer's expectation and the solid performance. The employee shall suffer this punishment and shall strive for improvement.
§ 2
Should the underperformance persist for longer than two months in ways that lead to a cut of more than 60 per cent on average, the employer shall give the employee a final warning.
Should there be no improvement allowing the performance of at least 70 per cent of the expected level, the employer may terminate the contract by notice. The contract terminates by the end of the month after the month in which the notice has been given.
§ 3
Should the employee be guilty of causing damages to the employer or a third party directly and hereby indirectly to the employer, the employer shall have the right to apply the following Sanctions:
a) Should they judge the damages under five times the employee's monthly Compensation, they shall deduce the damages from their future Compensation, but by no less than 50 per cent per month, so that the employee shall be able to survive and continue working.
b) Should the damage be greater than five times the monthly Compensation, the employer may terminate the contract by notice. The contract terminates by the end of the month after the month in which the notice has been given.
Art. 82: Regular Termination
The employment contract may be terminated regularly by the employer for the following reasons:
a) repeated underperformance as described in this law;
b) repeated refusal to perform work where attempts to mitigate the disagreement have proven unsuccessful;
c) repeated culpable conduct causing damage to the employer;
d) excessive absence where the employee abuses the institute of hindrance described in this law; and
e) reorganisation or company closure.
The employer shall document the reasons for possible regular termination of the contract and shall confront the employee with them, offering them the possibility to remedy the situation.
Where possible, the employer shall make an effort to find a new role for the employee within their organization, resorting to termination only where that should prove impossible.
Art. 83: Irregular Termination
The employer might irregularly terminate the employment contract where the employee in malintent or gross negligence causes serious damage or serious danger to the employer, their property or to others or their property in the workplace and refuses to make amends and rectify the situation by giving it their utmost and urgent effort.
Section 5: Partnership
Art. 84: Partnership
A partnership is a contract under which two or more persons agree to share in all assets, profits, and financial and legal liabilities of a jointly-owned business. The contribution of a partner may consist of money, property, the right to use and enjoy property, labour, or anything else the Partners might find of value.
Art. 85: General and Special Partnership
§ 1
A general partnership shall consist only of what the partners during the existence of their partnership, under whatever name, shall acquire as a result of their activities.
§ 2
A special partnership is a partnership which relates only to specific property or to the use or the benefits thereof or to a specific enterprise or the conduct of a specific business or profession.
Art. 86: Start of a Partnership
The partnership starts as of the moment of the conclusion of the contract, if no other starting point has been specified in that contract.
Art. 87: Liability
Under partnership, every partner agrees to be liable for all debts and obligations of the partnership.
Art. 88: Profits and Losses
Where the share of each partner in the profits and losses has not been determined in the partnership contract, the share of each partner shall be in proportion to what he has contributed to the partnership.
In regard of the partners who have only contributed their labour capacity and skills, their share in the profits and losses is equal to the share of the partner who has contributed the least.
Section 6: Construction Agreement
Art. 89: Construction Agreement
Construction agreement is an agreement under which one of the parties, the Constructor, engages themselves towards the other party, the Principal, to make and deliver a tangible construction on another basis than an employment agreement, in exchange for a price to be paid in money by the principal.
Art. 90: Subcontractors
The constructor is entitled to let subcontractors perform the work under their guidance and directions and to give them, with regard to certain parts of the work, direct control, notwithstanding his liability towards the principal for a proper performance of the construction agreement.
Art. 91: Cost-Increasing Circumstances
When, after the conclusion of the construction agreement, cost-increasing circumstances arise or come to light that cannot be attributed to the constructor, the Constructor shall be entitled to receive a proportional compensation for these.
This applies only if the constructor has warned the principal as soon as possible of the need of a price increase, so that the principal either can accept this, or can make a proposal to restrict or simplify the work to be performed to avoid the extra costs.
Art. 92: Warning
The constructor must, not only at the moment on which they enter into the construction agreement but also during the performance of this agreement, warn the principal of any inadequacies in the construction or work that is assigned to them as far as these are known to them or reasonably should have been known to them.
The same applies in case of defects or the unsuitability of things which are coming from the principal, including the land on which the principal lets others perform the work, as well as in case of errors or shortcomings in plans, drawings, designs, calculations, specifications, estimations or implementing regulations which are supplied by the principal.
Art. 93: Additional Work Performed
In the event that the principal has asked for additives or changes in comparison to the agreed work, the constructor may only then demand an increase of the agreed price when they have pointed out in time to the principal that this will necessarily lead to a price increase, unless the principal should have understood of their own accord that such an increase would necessarily result from this.
Art. 94: Dissolution of the Construction Agreement prior to the Completion of the Work
§ 1
If it becomes probable even before the determined time of completion of the work that the construction will not be completed in time or will not be completed properly, the Principal shall have the right to Terminate the Contract.
§ 2
If it becomes probable even before the completion of the work that the principal will not or not properly comply with his obligations or that the constructor will not be able to perform the construction as a result of circumstances which cannot be attributed to them, the Constructor shall have the right to Terminate the Contract.
Art. 95: Impossibility to Perform the Work
Where it becomes impossible to perform the work because the thing with regard to which that work must be performed perishes or is lost due to a reason not attributable to the Constructor, the Constructor is entitled to a proportional part of the fixed price on the basis of the work already performed and the costs already made.
Art. 96: Completion and Delivery of the Construction
§ 1
The Construction is completed when
a) the Constructor has made clear that the construction is completed and ready for delivery; and
b) the Principal has inspected the Construction and has confirmed that the Construction is made according to the specifications.
§ 2
After the Completion, the construction is at the risk of the Principal. Therefore they must pay the agreed price, irrespective whether the construction will perish or decline due to a cause not attributable to the Constructor.
§ 3
The Constructor is released from their liability for construction defects which the principal reasonably should have discovered at the moment of the delivery of the completed construction.
Last updated