Contract analysis - what to pay attention to?

Service

A contract is the most common legal event, which is also a legal act because it has a specific effect. The contract is the source (basis) of obligations and so is its purpose. It is supposed to shape the relationship between the parties. The contract comes into effect by a joint declaration of will of two or more parties, i.e. by consensus. Therefore, the characteristics of contracts often indicate whether it is consensual or not. However, there are cases when the mere declaration of will (oral, telephone, handshake gesture) is not enough to conclude a contract, which should be remembered. You need a specific form, such as a written or notarial deed. Moreover, the lack of certain, obligatory provisions in the contract may render it invalid. What exactly should the contract analysis look like - what should you pay attention to?

Contract analysis - Stage I, i.e. determining the type of contract

You are able to conclude contracts if you have legal capacity, i.e. you are neither a minor nor incapacitated. Otherwise, the concluded contracts will not be valid. The four-stage contract analysis process is presented below, which should contribute to self-examination of the correctness of the contract.

Types of contracts in economic law

It is worth starting the analysis of the contract by answering the question what the effect of a legal act should be. We should define what we expect from the contract. Here it will be helpful to break down the types of contracts by effect. There are three types of obligation contracts:

  • obligatory - it creates an obligation for one party to perform the performance for the other,

  • disposing - transfers, encumbrances or abolishes property law,

  • with a double effect - obligating and disposing.

Due to the assessment of the correctness of the causy, i.e. the reason for the conclusion of the contract, the contract may have the following character:

  • causal - when there is a rational reason for concluding a contract, whether there is one, i.e. what is the reason that the parties decide to conclude a contract. It may be a reduction in liabilities resulting from debt repayment, a gratuitous contribution as a donation, security, e.g. by a mortgage or an increase in assets - a contract of sale. Generally speaking, causa determines the legal cause, the goal;

  • abstract - such an agreement can be regarded as an exception that proves the rule, as there is no justification for the parties to be bound by the agreement for legal reasons.

Another important issue is the answer to the question of how the burden of performance is distributed in the contract. There are three possibilities:

  • unilaterally binding - the obligation to provide benefits applies only to one person,

  • bilaterally binding - the obligation to provide is "something for something" on both sides of the contract,

  • mutual agreement - the performance of both parties is exactly the same, there is the so-called the equivalence of benefits.

Another element is to indicate whether the contract brings financial benefit, due to it, the contract can be distinguished:

  • payable - the party performing the activities receives a financial benefit,

  • free of charge - the party performing the activities does not receive any financial benefit in return.

The last element of the first stage is to define the nature of the contract and the scope of its regulation. As already mentioned, some contracts are explicitly specified in the Civil Code, so you do not have to think about what to do when concluding a contract to make it valid. The regulations provide precise guidelines. Therefore, if a specific contract that we want to conclude is included in the Code, it is worth using these regulations.

So the breakdown is as follows:

named - indicated in the Civil Code

  • sales agreement,

  • exchange agreement,

  • delivery contract,

  • cultivation contract,

  • contract work,

  • construction works contract,

  • lease agreement,

  • lease,

  • lease agreement,

  • lending agreement,

  • loan agreement,

  • bank account agreement,

  • contract of mandate,

  • an agency agreement,

  • commission contract,

  • contract of carriage,

  • insurance contract,

  • storage agreement,

  • warehouse contract,

  • surety agreement,

  • donation agreement,

  • life contract,

  • company agreement

  • preliminary agreement,

  • contract for the provision of services by a third party,

  • an agreement to release the debtor from the obligation to provide services,

  • contract for the provision of services to a third party,

unnamed - content reconciliation,

  • mixed - using the model for another contract with additional own arrangements, includes elements of various contracts.

Attention!

These and other contracts along with free templates for download in pdf and docx format are available in the Entrepreneur's Guide in the Contract templates tab.

It should be noted that the consumer, when signing a contract with an entrepreneur who uses standard contracts, concludes a contract of an adhesive nature, i.e. by the act of accession itself. These are contracts for mass services, e.g. with gas suppliers. He does not negotiate the provisions of the contract. It is worth paying attention to whether the provisions of such a contract - such a pattern - do not contain prohibited clauses - prohibited contract provisions, then these provisions of the contract do not bind the consumer - they are invalid by operation of law. When analyzing such a contract, one should pay attention first of all to the unambiguity of the formulated provisions and whether such a template was provided before the conclusion of the contract.

Service impossible to fulfill

It is also worth considering whether the service indicated in the contract is possible at all. If it turns out that not - the contract will be invalid. It is therefore worth considering these issues before signing the contract.

If we know that the performance is impossible and we mislead the other party, we will be obliged to compensate the damage suffered by the other party. Of course, there may be an inability to provide the benefit at a later time, the so-called Consequential, non-primary impossibility as indicated above.

Attention!

There is a rebus sic stantibus clause in civil law, which in exceptional cases allows for a change or termination of an obligation under a contract by bringing an action and a court decision. There must be an unusual event, with no possibility of predicting it in advance, serious difficulties in meeting or risk of gross loss, e.g. flood.

Exploitation and contract

There are different contractors. They do not always show loyalty and sincere intentions in contracting. It happens that one side takes advantage of ignorance or a weaker position (less experience of the other stroy). Therefore, an exploitation will be a contract where the performance is not commensurate with the payment to a gross degree. The key to recognizing exploitation is the notion of gross disproportion and deliberate unethical action.

Important!

The exploitation may be invoked in court for a maximum of 2 years from the date of the contract.

Contract analysis - stage II, i.e. determining the form of concluding the contract

As already mentioned, the source of the obligation is a legal act. It may take the form of a contract. According to Art. 353 prime 1 of the Civil Code, the parties may freely shape the legal relationship as long as the purpose does not contradict the law and the principles of social life. As a rule, a declaration of intent may be made in any way, even implicitly, as long as it sufficiently discloses the will.

  • no form reservation - no special form is required to conclude a contract, what is important is a consensus, i.e. a joint declaration of will by the parties. the legislator does not order the actual signing of the document with the provisions, the confirmation may be an invoice or a receipt, or even a receipt. Always in the case of additional arrangements, it is worth drawing up a written contract for evidence purposes and possible evidence in the event of a court dispute;

  • written form for evidence purposes - failure to do so does not make the contract invalid, but it may be a problem to find out what the arrangements between the parties were in the event of a dispute before a court;

  • written form under pain of nullity - failure to sign the contract in physical form makes the contract invalid.Therefore, such a contract cannot be concluded verbally or by telephone.

Below, the required form for a specific type of contract named in the Civil Code.

sales agreement

no form reservation

swap agreement

no form reservation

delivery contract

written form for evidence purposes

cultivation contract

written form for evidence purposes

contract work

no form reservation

construction works contract

written form for evidence purposes

lease agreement

no reservation of form, but for a rental agreement of real estate / premises for a period longer than one year in writing - if it is concluded, the agreement is considered as concluded for an indefinite period

lease

no reservation of form, but for a rental agreement of real estate / premises for a period longer than one year in writing - if it is concluded, the agreement is considered as concluded for an indefinite period

lease agreement

in writing, otherwise null and void

lending agreement

no form reservation

loan agreement

no form restriction, but for a loan exceeding PLN 500, the written form is reserved for evidence purposes

bank account agreement

written form for evidence purposes

contract of mandate

no form reservation

insurance contract

should be stated in writing

an agency agreement

no objection to the form, but it should be in writing if the agent is to have commission del credere

commission contract

no form reservation

warehouse contract

no form restriction, but there is a receipt

surety agreement

no form restriction, but the surety is made in writing under pain of nullity

donation agreement

the form of the notarial deed, and if it was made before signing the contract, it is valid

civil partnership agreement

written form for evidence purposes

 

Whenever the subject of the contract is real estate (sale, donation), the form of a notarial deed will be appropriate.

Contract analysis - stage III, i.e. checking the most important elements, the so-called essentialia negotii of the contract

If the Civil Code requires a specific form, then it should be checked in the contract whether it contains the most important provisions - provisions. Without them, the contract will not be valid.

delivery contract

  1. defining a thing to be made

  2. method (time) of delivery

  3. price

cultivation contract

  1. the quantity and type of agricultural products

  2. price

construction works contract

  1. commitment to hand over the object made in accordance with the design

  2. remuneration

lease agreement

  1. specification of the return of goods / real estate

  2. definite / indefinite time

  3. the amount of rent

lease

  1. specification of the return of goods / real estate

  2. definite / indefinite time

  3. the amount of rent

lease agreement

  1. obligation to purchase things and hand them over for use

  2. remuneration

loan agreement

  1. transfer of ownership of things

  2. obligation to return

bank account agreement

  1. the bank's obligation to keep the funds

an agency agreement

  1. concluding contracts on behalf of the ordering party

  2. commission del credere

insurance contract

  1. obligation to make a cash payment in the event of circumstances

surety agreement

  1. the obligation of the guarantor towards the creditor to perform the obligation of the debtor in the event that he himself does not perform it

donation agreement

  1. free benefit at the expense of your property

civil partnership agreement

  1. definition of the economic goal

  2. the partner's obligation to act

Contract analysis - stage IV, i.e. document circulation

The contract is signed in two identical copies, which is also worth mentioning in the final provisions of the contract, in one of its last paragraphs.

It is important that each party has the original signed agreement. Of course, if the contract is signed in the presence of both parties, the issue of the originals will not raise any doubts.

Nowadays, distance contracts are more and more often concluded, and a scan of the signed contract is sent via e-mail. It is worth making sure that the original contract is sent.

The internal procedure for the circulation of such documents in the organization is a very important issue. It should also include completing documents, their proper division and arrangement.

It should be remembered that traders sometimes have different rules than between the trader and the consumer. It should be borne in mind that in the case of sales to which entrepreneurs are parties, even a contract concluded over the phone will be valid.