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Act V of 2013 on the Civil Code

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Act IV of 1959
on the Civil Code of the Republic of Hungary
PART ONE

INTRODUCTORY PROVISIONS
Purpose of this Act
Section 1.
(1) This Act governs the financial and certain personal relations of the citizenry, the state, local
governments, economic and civic organizations, and other persons. Other statutes pertaining to the
aforementioned relations shall, unless th ey stipulate otherwise, be construed in concert with this Act and in
consideration of its provisions.
(2) The provisions of this Act shall be construed in concert with the economic and social structure of the
Republic of Hungary.
Section 2.
(1) This Act shall protect the property rights, inherent rights, and lawful interests of all persons.
(2) This Act shall ensure the freedom of all persons to exercise the rights to which they are entitled in
accordance with the social function of these rights.
Section 3.
(1) This Act shall protect all of forms of ownership acknowledged in the Constitution.
(2)-(3)
Exercising Rights and Fulfilling Obligations
Section 4.
(1) In the course of exercising civil rights and fu lfilling obligations, all parties shall act in the manner
required by good faith and mutual respect, and they shall be obliged to cooperate with one another.
(2)-(3)
(4) Unless this Act prescribes strict er requirements, it shall be necessary to proceed in civil relations in a
manner deemed reasonable under the given circumstances. No person shall be entitled to refer to his own
actionable conduct in order to obtain advantages. Whosoever has not proceeded in a manner deemed
reasonable under the given circumstances shall be entitled to refer to the other party’s actionable conduct.
Section 5.
(1) This Act shall prohibit the abuse of rights.
(2) Exercising any right directed to ward an objective that is incompatible with the social function of that
right shall be regarded as an abuse of rights, particularly if it would lead to damaging the national economy,
harassing persons, impairing their rights and legal interests, or acquiring undue advantages. (3) Where the abuse of a right is ma nifested in the repudiation of a statement required by law and this
conduct does injury to an important public interest or a private interest deserving special consideration, the

court is entitled to substitute its judgment for the party’s legal statement, provided there is no other way of
averting the injury. A court judgment may be substituted for a statement, especially if the statement had
been made contingent upon the bestowal of an illegal advantage. Section 6.
The court may award damages payable in full or in part by a party whose willful conduct has explicitly
induced another bona fide person to act in a manner that has brought harm to this person through no fault of
his own.
Section 7.
(1) Each and every government agency shall be obliged to protect the rights provided by law. Unless
otherwise stipulated by law, these rights shall be enforced in the court of law.
(2) Parties may resort to arbitration instead of litiga tion if at least one of them is professionally engaged
in an economic activity, if the legal dispute is in conn ection with that activity, and if the parties are able to
freely dispose over the subject of the proceeding.
PART TWO
PERSONS
Title I
MAN AS A SUBJECT AT LAW
Chapter I
Legal Capacity
Section 8.
(1) All persons in the Republic of Hungary shall have legal capacity; all persons shall be entitled to have
rights and obligations. (2) Legal capacity shall be equal re gardless of age, sex, race, ethnic background, or religious affiliation.
(3) Contracts and unilateral statements limiting legal capacity shall be null and void.
Section 9.
Legal capacity shall be due each person, if born alive, from the day of concep tion. The three hundredth
day preceding the date of birth shall be considered the day of conception, which, however, may be proved
to have occurred earlier or later. The day of birth shall be included in the aforementioned period.
Section 10.
If it is necessary for the protection of a child’s rights, pa rticularly if there is a conflict of interest between
the child and its legal representative, a conservator must be appointed before the child is born.
Chapter II
Legal Competency

Section 11.
(1) Everybody whose competency is not limited or disqualified by the law is legally competent.
(2) Whosoever is competent is entitled to conclu de contracts and make other legal statements.
(3) Any contract or a unilateral statement restri cting legal competency shall be null and void.
Limited Capacity and Legal Incompetency of Minors
Section 12.
Persons who have not yet reached the age of eight een years shall be deemed minors, unless they are
married. Adulthood shall not be conferred upon marriage if it is annulled by court order owing to the
absence of the guardian’s consent, where one is re quired due to the lack of competency or minority.
Section 12/A.
(1) A minor shall be of limited capacity if he or sh e has reached the age of fourteen years and is not
incompetent. (2) Unless otherwise provided by law, the legal statement of a minor with limited capacity shall not be
deemed valid without the consent or subsequent approval of that person’s legal representative. If and when
minors of limited capacity become competent, they shall be entitled to make their own decisions
concerning the validity of their pending legal statements. (3) Minors of limited capacity shall, without the pa rticipation of their legal representatives, be entitled
a) to make legal statements of a personal nature for which they are authorized by legal regulation;
b) to conclude contracts of minor importance aimed at satisfying their everyday needs;
c) to dispose of the earnings they acquire through work and undertake commitments up to the extent of
their earnings; d) to conclude contracts that only offer advantages.
(4) With the permission of the guardian, legal representatives shall be entitled to refuse gifts – in
accordance with Paragraph d) – that are promised or given to minors of limited capacity. If the guardian
declines to approve the legal representative’s statement of refusal, the guardian’s such decision shall replace
the legal representative’s statement of acceptance. (5) Legal representatives shall be entitled to issue le gal statements in the name of minors of limited
capacity, except when the law requires the statement to be made by the minor with limited capacity
himself/herself or when the statement c oncerns earnings acquired through work.
Section 12/B.
(1) Minors under the age of fourte en years are legally incompetent.
(2) Minors over the age of fourt een whom the court has placed unde r conservatorship precluding legal
competency shall also be legally incompetent. The procedure for placing a minor under conservatorship
shall be governed by the provisions of Section 15. Conservatorship shall come into effect when reaching
legal age, however, the minor loses his/her legal competency on the date on which the relevant decision
becomes legally binding.
Section 12/C.
(1) Legal statements made by incompetent minors shall be null and void; their legal representatives shall
proceed on their behalf.
(2) Contracts of minor importance that are generally concluded in large numbers and do not require
special consideration and have been concluded directly by incompetent minors and have already been
performed shall not be considered null and void.
Section 12/D.

As regards any statement of a legal representative that effects the person or property of a minor, it shall
be made with a view to the minor’s opinion if he /she is of limited capacity, or if deemed legally
incompetent but is not impaired mentally.
Common Provisions Pertaining to Mino rs of Limited Capacity or Legal
Incompetency

Section 13.
(1) The approval of the guardian is required for the validity of statements made by legal representatives,
if the legal statements concerns a) the waiver of maintenance of a minor,
b) rights or obligations that, by virtue of inheritance, are conferred upon a minor; and refusals to inherit
any property that can be individually refused, c) the transfer or any form of en cumbrance of the real property of a minor, with the exception when any
beneficiary right is established simultaneously upon acquiring a real property without consideration, d) the assets of a minor surrendered in accordance with specific other legislation,
e) any other property of a minor, tangible or intangible, the value of which exceeds the amount limit
prescribed in specific other legislation. (2) The approval of the guardian is not required for the validity of a legal statement that has been judged
valid by a court or notary public.
Section 13/A.
(1) A minor shall not be entitled, even with the approval of his/her guardian, to make valid legal
statements by which he/she gives gifts, undertakes ob ligations without adequate consideration, or waives
his/her rights without consideration. (2) This provision shall not prevent minors of limited capacity from having control over the earnings that
they acquire through work; nor shall it exclude usual and customary gift giving.
Section 13/B.
(1) Nullity on the basis of incompetence or limited capacity can only be cited in the interest of a person
who is incompetent or of limited capacity.
(2) Any person who misleads another party regarding his/her legal competence shall be held accountable
for such conduct and may be compelled to perform the contract under such liability.
Competency Limited or Preclude d by Order of Conservatorship
Section 14.
(1) Persons of legal age shall be of limited capac ity if a court has placed them in the custody of a
conservator to that effect. (2) Conservatorship may be requested by the spouse, registered partner, next of kin, the brother or sister
of a person of legal age, or by the guardian or the public prosecutor’s office. (3) The guardian shall initiate the conservatorship procedure upon r eceiving notice that it is necessary to
place a person in the custody of a conservator, if it is not initiated by a close relative referred to in
Subsection (2) within sixty (60) days of the guardian’s receipt of notification concerning the requirement
for legal action. (4) Persons whose necessary discretionary ability for conducting their affairs is – owing to their mental
state, unsound mind, or pathological addiction – generally, or in respect of certain matters, permanently or
recurrently diminished shall be placed by a court un der conservatorship that limits their competency.

(5) If the loss of discretionary ability is only partial the person under conservatorship shall
himself/herself be able to make legal statements in all matters concerning which the court did not limit their
competency in its ruling re stricting legal competency.
(6) The legal competency of person s placed under conservatorship may be completely restricted by court
order regarding the following matters: 1) applying for social security, welfare and unemployment benefits and disposition over such benefits
and any income received for work, whet her by employment contract or other relationship of the like, that is
in excess of the measure defined in Paragraph c) of Subsection (2) of Section 14/B; 2) right of disposition over movable and immovable property;
3) making legal statements related to family affairs, such as
a) statements related to the assets and proper ty of married persons and registered partners,
b) statements in connection with descent,
c) naming his/her child or changing the name of his/her child,
d) consent for the adoption of his/her child;
4) decision concerning the financial aspects of obligation to provide support;
5) statements in connection with the rental of a residence (conclusion and termination of contract);
6) probate matters;
7) statements in connection with placement in a social institution;
8) exercise of rights in connection with health care;
9) selecting a place of domicile.
Section 14/A.
(1) The court ruling on restricting the legal competency of a person shall specify the date by which to
initiate the statutory review of conservatorship; this date must be fixed within five years from the date when
the ruling becomes legally operative. (2) The review procedure shall be initiated by th e guardian. The petition for review may request the
termination of conservatorship, the extension of conservatorship, the transfer of conservatorship of limited
competency to preclude legal compet ency, the transfer of conservatorship of precluded competency to
allow limited competency, or the revision of the sphere of rights that cannot be exercised by a person under
conservatorship of limited competency.
Section 14/B.
(1) By general principle or in respect of the matters specified in the court ruling – with the exception of
what is defined in Subsection (2) – the legal statement of a person with limited capacity shall not be deemed
valid without the consent or subsequent approval of that person’s conservator. Any disagreement between
the conservator and the person in his custody shall be resolved by the guardian court. If and when persons
of limited capacity become competent, they shall be entitled to make their own decisions concerning the
validity of their pending legal statements. (2) Persons of limited capacity shall, without the participation of their conservator, be entitled
a) to make legal statements of a personal nature for which they are authorized by legal regulation;
b) to conclude contracts of minor importance aimed at satisfying their everyday needs;
c) to dispose over 50 per cent of their income r eceived for work, whether by employment contract or
other relationship of the like, social security, welfare and unemployment benefits, and assume obligations
up to the same percentage; d) to conclude contracts that only offer advantages.
(3) A ward with limited capacity may grant overall authority in a public document to his conservator,
provided the conservator consents, to act in his/her name and on his/her behalf, and to make legal
statements with the exception of those defined in Su bsection (2), and with the exception of the matters
where legal statement is only accepted by law from the person of limited capacity.
(4) The person under conservatorship may revoke the overall authorization referred to in Subsection (3)
by way of a private document of fu ll probative force, of which the conservator must be informed as well.

(5) In matters requiring prompt attention, or as defined in another law, the conservator shall be entitled to
act in the name and on behalf of a person in his cu stody in the absence of the agreement referred to in
Subsection (3).
Section 15.
(1) Persons of legal age whom the court has placed in a conservatorship precluding legal competency are
legally incompetent.
(2) Conservatorship may be requested by the spouse, registered partner, next of kin, the brother or sister
of a person of legal age, or by the guardian or the public prosecutor’s office. (3) The guardian shall initiate the conservatorship procedure upon r eceiving notice that it is necessary to
place a person in the custody of a conservator, if it is not initiated by a close relative referred to in
Subsection (2) within sixty (60) days of the guardian’s receipt of notification concerning the requirement
for legal action. (4) Persons of legal age whose necessary discretionary ability for conducting their affairs is – owing to
their mental state or unsound mind – completely and perpetually absent shall be placed by a court under
conservatorship that limits their competency.
(5) The court ruling of limited legal competency shall specify the date by which to initiate the statutory
review defined in Section 14/A, unless the lack of discretionary ability of the person affected appears
permanent, which shall be attested by a forensic medical expert.
Section 15/A.
(1) Legal statements made by incompetent persons, w ith the exception set forth in Subsection (2), shall
be null and void; their conservator sh all proceed on their behalf. Prior to making a decision the conservator
shall hear the views and requests of the person in his custody, if he/she is of sound mind, i.e. regarding
his/her place of domicile, and shall abide by such re quests if possible. A conservator who repeatedly
breaches this obligation shall be subject to dismissa l in accordance with Subsection (2) of Section 19/C.
(2) Incompetent persons can themselves conclude contracts of minor importance that are generally
concluded in large numbers and do not require special consideration.
Common Provisions Concerning Person s of Limited Capacity or Legal
Incompetency by Order of Conservatorship

Section 16.
(1) The approval of the guardian is required for the validity of statements made by the conservator of an
incompetent person or by a person of limited capacity and his/her conservator, if the legal statement
concerns a) the maintenance of a person who is incompetent or of limited capacity,
b) rights or obligations that, by virtue of inheritance, fall upon a person who is incompetent or of limited
capacity,
c) the transfer or any form of encu mbrance of real property of a person who is incompetent or of limited
capacity, with the exception when any beneficiary right is establishe d simultaneously upon acquiring a real
property without consideration,
d) the assets of a person who is incompetent or of limited capacity surrendered in accordance with
Section 20/B, e) other property, whether tangible or intangible, of a person who is incompetent or of limited capacity,
the value of which exceeds HUF 50,000 or the amount specified in the order of conservatorship. (2) If justified by the relevant circumstances the guardian may approve
a) upon the request of the conservator of a person wh o is incompetent or upon the joint request of the
conservator and the person in his custody if he/she is of limited capacity, for a descendant of the person
under conservatorship to establish and uphold his/her own household or to achieve some other vital

objective as financed from the assets of the person under conservatorship; this support, however, shall not
exceed the compulsory share of inheritance of the descendant;
b) upon the joint request of the conservator and the person in his custody if he/she is of limited capacity,
for the person under conservatorship to surrender any property as gifts or to surrender any of his/her rights
without consideration or donate such for public pur poses, if such transaction does not endanger the
livelihood of the person under conservatorship.
(3) The approval of the guardian is not required
a) for the validity of a legal statement that has been judged valid by a court or notary public,
b) if the legal capacity of the pe rson placed under conservatorship of limited capacity by court order is
not restricted by that order in respect of the legal statements referred to in Subsection (1).
Section 16/A.
(1) Nullity on the basis of incompetence or limited capacity can only be cited in the interest of a person
who is incompetent or of limited capacity. (2) Any person who misleads another party regarding his/her legal competence shall be held accountable
for such conduct and may be compelled to perform the contract under such liability.
Incapacity without Conservatorship
Section 17.
(1) Persons who completely lack the mental ability, either permanently or temporarily at the time of
making a legal statement, to conduct their affairs are le gally incompetent even if they are not placed in the
custody of a conservator. (2) Legal statements made by incompetent persons who have not been placed in the custody of a
conservator shall be null and void, with the exception set out in Subsection (3).
(3) Legal statements, exclusive of testamentary disp ositions, made by incompetent persons of legal age
who have not been placed in the cu stody of a conservator shall not be considered null and void on the
grounds of incompetence, if the contents and circumst ances of any legal statement lead to the conclusion
that the statement would also have been justified had the party been legally competent.
Sequestration and Appointment of a Temporary Conservator
Section 18.
(1) If legal action for the placement of a person under conservatorship to limit or preclude competency is
justified, and the protection of the assets of this person demands urgent action, the guardian shall order
sequestration and shall appoint a sequestrator . A writ of sequestration cannot be appealed.
(2) Sequestration and the actions of sequestrators shall be governed by the provisions of the Chapter of
the Judicial Execution Act pertaining to th e implementation of precautionary measures.
Section 18/A.
(1) In cases demanding immediate action, the guardian may appoint a temporary conservator to persons
of legal age whose necessary discretionary ability for conducting their affairs is – owing to their mental
state or unsound mind – completely and perpetually absent and if their interests cannot be protected by
other means, by sequestration in principle. An order of appointment of a temporary conservator cannot be
appealed. (2) The guardian shall specify in its order of appointment of a temporary conservator the particular
matters, from among those defined under Subsection (6) of Section 14, concerning which the temporary
conservator has powers to act in the name and on behalf of the person in his custody.

Section 18/B.
The guardian shall file for legal action for placemen t under conservatorship within eight (8) days from
the order of sequestration or the appointment of a temporary conservator; the court on the other hand shall
review the sequestration or the appointment of a tem porary conservator within thirty (30) days following
receipt of said petition.
Appointment of a Conservator
Section 19.
(1) The guardian shall appoint a conservator for the person placed under conservatorship by court order.
The detailed regulations concerning the appointment of conservators are laid down in specific other
legislation. (2) Any person of legal age with legal competency can be appointed a conservator. The person appointed
a conservator must accept the office for the appointment to be valid.
Section 19/A.
(1) For the office of conservator the person designated by the person placed under conservatorship in a
public document before losing legal capacity, or if this is not possible, his or her spouse or registered
partner living in the same household, shall be appointed, if it is within his interest. In the absence of such
person, or if having his/her spouse or registered partner appointed would jeopardize the interest of the
person under conservatorship, the guardian shall appo int a person for the office of conservator who appears
competent in view of all applicable circumstances.
(2) For the office of conservator, of the persons deem ed competent, the parents or the person named in a
public document or in their will by the parents in the event of their death shall be preferred, or, in the
absence of such persons, other relatives shall be granted equal treatment, provided they are able and willing
to provide care should it be necessary. (3) If a conservator cannot be appointed in accordance with Subsectio ns (1) and (2), a career conservator
shall be appointed for the person under conservatorship. Career conservators must have clean criminal
records. Persons recommended by non-governmental organizations (e.g. societies) from their members
providing care to persons with disabilities, persons of pathological addiction or psychiatric patients may
also be appointed career conservators.
(4) A person cannot be appointed conservator if an objection to such person is expressly made by the
person under conservatorship.
Section 19/B.
(1) Under special circumstances more than one conservator may be appointed to a person under
conservatorship, if
a) both parents or two close relatives of the person under conservatorship accept the office of
conservator, or b) management of the assets or handling certain other matters of the person under conservatorship
requires special expertise. (2) As regards Paragraph b) of Subsection (1), the guardian court shall define the separate duties of each
conservator.
(3) In addition to a conservator the guardian may al so appoint a substitute conservator for the person
under conservatorship. The substitute conservator sha ll have powers to proceed in matters which concern
the person under conservatorship and which require immediate attention if the conservator is absent or is
unable to carry out his duties for other reasons.
Section 19/C.

(1) The guardian shall relieve a conservator from office
a) if the court has terminated conservatorship,
b) upon the death of the person under conservatorship,
c) if so requested by the cons ervator citing substantial reasons,
d) if any reason serving grounds for exclusion of the conservator’s appointment arises subsequently.
(2) The guardian shall remove the conservator from office, preceded by suspension in cases for which
prompt action is required, if the conservator fails to fulfill his obligations or if he engages in conduct by
which to cause serious injury to or endanger the interest of the person under conservatorship. (3) When a conservator is relieved from office pursuant to Paragraph b) of Subsection (1) the guardian
shall notify the court ordering conservatorship of the death of the person under conservatorship in order to
have the death registered in the register of persons under conservatorship.
Activities of Conservators
Section 20.
(1) By general principle or in respect of the matters specified in the court order limiting competency, the
conservator shall manage the assets of the person in his custody and shall be the official representative of
this person.
(2) If so required by the circumstances the conservator – if agreed in principle – shall also provide care
for the person in his custody.
Section 20/A.
Conservators shall be supervised by the competent gua rdian. Conservators shall be required to report to
the guardian concerning the condition of the persons in their custody when so requested or on an annual
basis.
Section 20/B.
Upon the guardian’s request the conservator sha ll submit the assets (money, securities and other
valuables) of the person in his custody if such assets are not immediately required for ongoing expenses
according to the rules of financial management a nd with due observance to Section 20/C. For any
transaction concerning the assets deposited with the guardian the guar dian’s prior consent is required.
Section 20/C.
The conservator shall manage the assets of the person in his custody so as to best serve the well being of
that person. The conservator shall be obliged to hear the personal requests of the person under
conservatorship and shall satisfy such requests as appropriate depending on the funds available.
Section 20/D.
(1) With the exception set forth in Subsection (2), cons ervators shall file annual statements of accounts
on the management of assets. If the conservator is a close relative of the person under conservatorship and
his/her financial situation requires no accounting as a normal course, the guardian shall authorize simplified
accounting.
(2) With the exception of career conservators, an an nual statement of accounts is not required if the
person in the conservator’s custody has no assets, and if the monthly amount of his/her income from
employment, pension or other benefits is below the limit prescribed in specific other legislation. (3) If the person under conservatorship is the member (shareholder) of an economic organization, the
conservator shall request the guardian’s approval for any commitment to be assumed by the person in his
custody that is in excess of 50 per cent of his capital contribution or HUF 100,000. If the economic

organization in question is subject to reporting according to the Accounting Act, the conservator shall
submit a copy of this report to the guardian together with the annual statement of accounts.
(4) The guardian shall be entitled to order any conservator, in addition to the requirements specified in
Subsections (1) and (3), to produce ad hoc accounts. Such order can also be issued if requested by the
person under conservatorship to whom it pertains. (5) The detailed regulations concerning the management of assets by conservators are laid down in
specific other legislation.
Termination and Revision of Conservatorship
Section 21.
(1) The court shall terminate conservatorship conc erning competency if the grounds on which it was
ordered no longer prevail.
(2) Petition for the termination of conservatorship may be filed by the person under conservatorship
himself/herself, by his/her spouse, registered partner, next of kin, brother or sister, by the guardian or by the
public prosecutor’s office.
(3) Legal action for the termination of conservatorshi p may also be initiated before the statutory review
procedure defined in Section 14/A.
(4) The parties referred to in Subsection (2) may, in addition to the termination of conservatorship, also
request the revision of the sphere of matters in connection with which the court has restricted the
competency of the person under conservatorship, as well as the transfer of conservatorship of limited
competency to preclude legal competen cy, or the transfer of conservatorship of precluded competency to
allow limited competency.
Chapter III
Cessation of Legal Capacity; Legal Declaration of Death
Section 22.
Legal capacity ceases upon death.
Section 23.
Missing persons may be declared legally dead by the court five years after the date of disappearance if
there has been no information of any kind during this five-year period to indicate that they are alive.
Section 24.
(1) The court shall declare the date of death upon due consideration of the circumstances.
(2) If consideration of the circumstances fails to be conclusive, the date of death shall be the fifteenth day
of the month following the month of the person’s disappearance.
Section 25.
(1) A person declared legally dead shall be considered dead until there is evidence to the contrary.
(2) If it is conclusively resolved that the person declared legally dead had disappeared before or after the
date indicated in the relevant decision, and the cond itions for the declaration of death are otherwise valid,
the court shall amend the legal declaration of death acc ordingly. In this case, the legal consequences shall
change in accordance with the revised ruling. (3) If it has been conclusively resolved that a person declared legally dead had disappeared after the date
indicated in the relevant decision and the conditions for the legal declaration of death are not valid, the

court shall repeal the decision pertaining to the declaration of death. Unless an exemption is granted by law,
the legal consequences that have proceeded from the decision shall be null and void. (4) If a person who has been declared legally dead is found, the decision shall be set aside, and, unless a
exemption is granted by law, the legal consequen ces proceeding therefrom shall be null and void.
Title II
Chapter IV
Sections 26-27.
Title III
LEGAL PERSONS
Chapter V
Legal Capacity; Establishment a nd Termination of Legal Persons
Section 28.
(1) The State, when a party to any relationship concerning property, shall be deemed a legal person.
Unless otherwise prescribed by law, the minister ve sted with powers to oversee State property shall
represent the State in civil relations. (2) The State shall be required to honor obligations of restitution, reimbursement and compensation and
commitments to bona fide persons even in the absence and in excess of budgetary appropriations.
(3) According to the legal regulations that govern them, state, local government, economic, social, and
other organizations shall also have legal personalities. (4) All legal persons have legal capacity. Unless otherwise provided by legal regulations, the legal
capacity of legal persons shall cover all rights and ob ligations that do not inherently pertain solely to
individual human beings.
Section 29.
(1) The conditions for establishing and terminating legal persons shall be defined by law for each type of
legal person. Legal persons may also be created by virtue of law. (2) The name, activity, headquarters, and (unless stipulated in specific other legislation) the
representatives of each legal person shall be describe d in the legal regulation, resolution, or document
pertaining to the foundation of the legal person. (3)
(4) Where the creation of a legal person is rendered contingent upon registration by statutory provision,
any change in the registered data shall only be effective in respect of third parties if it is registered.
Section 30.
(1) Unless otherwise provided by legal regulation or, on the basis of authorization granted by such legal
regulation, a declaration of foundation or charter, the organizational units of a legal person (factories,
branch offices, business premises, plants, offices, local representations or groups, basic units, sections, etc.)
shall not have legal personality. (2) The head of an organizational unit shall act as the representative of the legal person in the area
determined by the intended operation of the unit. A le gal regulation, declaration of foundation or charter
may provide otherwise.

Chapter VI
Special Provisions Pertaining to Different Types of Legal Persons
1. State-Owned Companies
Section 31.
(1) State-owned companies are legal persons.
(2) State-owned companies shall independently manage the assets entrusted to them in a manner and
with the responsibility prescribed by law. (3) State-owned companies shall bear responsibility for their obligations with the assets entrusted to
them.
(4) The state shall govern and supervise the management and other activities of companies in the manner
prescribed by legal regulation.
(5) The name of a state-owned company shall generally refer to the activity of the company. The name of
a company shall be selected so as to distinguish the company from other economic organizations. (6) State-owned companies are represented by thei r directors. Directors may, on occasion or with
respect to a specific category of affairs, transfer this power to one of the company’s employees.
Section 32.
(1) The general management of state-owned companies is provided by
a) the company council,
b) the general meeting or assembly of delegates of the company’s employees, or
c) the director.
(2) Directors shall act independently and with personal responsibility with regard to matters that do not
fall within the realm of corporate jurisdiction. (3) State-owned companies shall not be deprived of the assets they manage; although legal regulations
can stipulate otherwise.
Section 33.
The specific rules pertaining to state-owned companies shall be prescribed in a separate law.
2. Trusts
Section 34.
(1) A founding body may establish a trust to promote the efficient operation and development of several
companies under its control and direct these companies. The trusts and the companies managed by the trust
are legal persons. (2) The companies managed by a trust shall be lis ted in the trust’s declaration of foundation.
(3) The specific regulations pertaining to trus ts shall be prescribed in a separate law.
3. Other State-Owned Economic Organizations
Section 35.
Unless otherwise provided by legal regulations, the provisions pertaining to state-owned companies shall
govern the legal personality of other state-owned economic organizations as well.

4. Budgetary Agencies
Section 36.
(1) Budgetary agencies are legal persons.
(2) Each budgetary agency shall be represented by the head of the agency, who may, on occasion or with
respect to a specific category of affairs, transfer this power to one of the agency’s employees.
Section 37.
(1) Budgetary agencies shall be under the obligation to make restitution, reimbursement and
compensation and shall also bear responsibility for commitments to bona fide persons, even to an extent
that exceeds their budgets.
(2) In such cases, funding by the central budget sh all be provided in accordance with the regulations
governing the management of the central budget.
5. Cooperatives
Section 38.
A cooperative is an economic operator with legal pe rsonality that is established with investment fund
share capital whose amount is specified in its charter; it operates under the principle of open membership
and variable capital with the objective of lending assist ance to its members so as to satisfy their economic
and other needs (cultural, educa tional, social and healthcare).
Section 39-50.
Section 51.
The specific rules pertaining to cooperatives shall be established by a separate law.
6. Business Associations with Legal Personality
Section 52.
(1) The state, legal persons, unincorporated business associations and natural persons may found
economic associations with their ow n corporate names to pursue and promote economic activities within a
business partnership. (2) Joint enterprises, limited liability companies, and joint-stock companies are business associations
that operate as legal persons. (3)
Section 53.
(1)
(2) Joint enterprises are business associations, founded by their members, which are liable for their
obligations primarily to the extent of their assets. Should the assets of the company be insufficient to cover
debts, the members shall, as sureties, be jointly liable, in the percentage of their capital contributions, for
the debts of the joint enterprise.
(3) Limited liability companies are business associations founded with an initial capital (subscribed
capital) consisting of capital contributions of a predetermined amount, in the case of which the members’
obligations to the company extend only to the provision of their capital contributions, and to other possible

contributions as set forth in the articles of incorporation. With the exceptions defined by law, members
shall not bear liability for the company’s obligations. (4) Joint-stock companies are business associations founded with a share capital (subscribed capital)
consisting of shares of a predetermined number and nomin al value, in the case of which the obligations of
members (shareholders) to the joint-stock company extend to the provision of the nominal value or issue
value of shares. With the exceptions defined by law, shareholders shall not bear liability for the obligations
of a joint-stock company.
Section 54.
(1) Articles of incorporation (charter) shall be requ ired for the foundation of a business association,
while the foundation of a joint-stock company requires bylaws (charter).
(2) Articles of incorporation shall include the following:
a) name and registered address of the company,
b) members of the company including, with the exception of shareholders in the bylaws, name (corporate
name) and domicile (registered address),
c) the company’s sphere of activities,
d) the company’s subscribed capital and the method and date of provision of the subscribed capital
(members’ contributions),
e) the method of signing for the company,
f) the name and domicile of executive officers,
g) the duration of the business association, if founded for a fixed period of time, and
h) any other information required by the Act on Business Associations for each form of business
association. (3) Business associations come into existence on the day on which they are entered into the register of
companies.
Section 55.
Business associations are represented vis-a-vis thir d persons and before courts and authorities by the
director (in joint enterprises), the managing director (in limited liability companies), or the members of the
board of directors (in joint-stock companies).
Section 56.
(1) Business associations shall be terminated, if
a) the time of operation defined by the articles of incorporation (or bylaws) has expired or another
condition of termination has occurred;
b) they resolve to terminate themselves without a legal successor;
c) they resolve to terminate themselves with a legal successor (transformation);
d) if the number of their members falls to one, with the exception of limited liability companies and
joint-stock companies, and no new member is registered at the court of registry within the period prescribed
by law;
e) the court of registry declares them terminated;
f) the court of registry orders their cancellation ex officio;
g) the court terminates them in the course of liquidation;
h) the provisions of the Act on Business Associations relating to certain forms of business associations
so prescribe. (2) The specific regulations pertaining to business asso ciations shall be determined by a separate law.
7. Non-profit Companies
Section 57-60.

8. Societies and Public Corporations
Section 61.
Societies are voluntarily established self-governing organizations that are formed for the purposes
defined in their statutes, have registered member ship, and organize their members’ activities in
order to achieve their objectives . Societies are legal persons.
Section 62.
(1) The bylaws of societies shall include provis ions regarding the society’s name, objective,
registered office, and orga nizational structure.
(2) Societies come into existence when they are registered by the court.
(3) Societies shall manage their assets indepe ndently. Societies may not be formed with the
principal objective of performing economic activities.
(4) Societies shall be liable for their debts with their own assets. The members, above and beyond
the payment of membership dues, shall not be responsible for the liabilities of the society with their
own assets.
Section 63.
Societies shall cease to exist if
a) their dissolution or merger with other societies is re solved by its supreme body;
b) they are dissolved or declared terminated by a duly authorized agency.
Section 64.
For the purposes of this Act, the provisions pertai ning to societies shall govern civic organizations
formed on the basis of th e right of association.
Section 65.
(1) Public corporations are self-governing or ganizations with registered membership whose
establishment has been ordered by law. Public co rporations perform public duties related to their
membership and/or the activities performed by th eir membership. Public corporations are legal
persons.
(2) Public corporations are, in particular, the Hungarian Academy of Sciences, the chamber of
commerce, and professional associations.
(3) The law can prescribe certain public duties that must be performed by public corporations.
Public bodies have the authorization, conferred by law, to fulfill public duties, and they shall exercise
such rights through self-management.
(4) The law may prescribe that certain public duties be performed exclusively by public
corporations and that certain activities may only be performed by members of public corporations.
(5) Data relating to public duties performed by public corporat ions are of public interest.
(6) Unless otherwise provided by law, the provisions pertaining to societies shall be duly applied to
public corporations.
National Sports Associations
Section 66.

(1) The national association of a specific sport (hereinafter referred to as ‘sports association’) is a self-
governed organization with registered members, that is established by associations of the specific sport
according to the conditions laid down in specific other legislation.
(2) The sports association shall perform the duties la id down in specific other legislation and in its
charter. The association is a legal person. (3) Certain duties which are to be performed exclusively by sports associations may be defined by law.
Sports associations are vested with all necessary authorizations defined by law, and shall exercise these
powers by way of self-government. (4) Unless otherwise prescribed by law, the provisions on societies shall be applied to sports
associations.
Section 67-69.
9. Companies of Certain Legal Persons
Section 70.
(1) Local governments and the national association of cooperatives shall be entitled to establish
companies. Such companies are legal persons. (2) Societies shall only be entitled to establish comp anies if the authority to do so is granted by the
society’s statutes.
Section 71.
(1) A company’s charter must specify, in addition to the facts and circumstances defined in Subsection
(2) of Section 29, the name of the founding legal person, the company’s starting assets, and other facts and
circumstances stipulated by legal regulations. (2) The name of a company shall contain an indication of the company’s activities and its name shall be
selected so as to distinguish the co mpany from other economic organizations.
(3) Companies are deemed establis hed upon registration in the register of companies and they are
deemed terminated upon being stricken from the register of companies.
Section 72.
(1) The founding legal person shall, within the limits of the law, determine the sphere of activities of a
company and shall provid e the assets necessary for such activities.
(2) The founding legal person may r eceive a share of the company’s prof its remaining after obligations to
the state budget have been met to the extent determined in the charter. (3) The founding legal person is responsible for the liabilities of the company as surety.
(4) The director of a company is appointed and removed by the founding legal person, which exercises
other employer’s rights regarding the director’s employment.
(5) The founding body shall be entitled to stipulate that the general management of the company be
carried out by an executive body (in addition to the appointed director). The order of establishing the
executive body, the number of its members, and the scope of its authority must be prescribed in the charter,
and this and the other matters pertaining to its operation must also be included in the organizational and
operating regulations. (6) The founding legal person shall be entitled to terminate the company.
(7) If the company is terminated without a legal successor (with the ex ception of liquidation), there shall
be a final settlement. The provisions of Act VI of 1977 on State-Owned Companies (frequently amended)
shall be applied to the manner in which the final settlement is conducted, with the difference that any
remaining assets may be claimed by the founding body.
Section 73.

(1) The director represents the company vis-a-vis third persons, before courts and other authorities. The
director shall be entitled to transfer such authority occasionally, or with respect to specific categories of
affairs, to employees of the company. The authority to represent and sign for the company shall be
registered in the proxy book.
(2) The organizational and operating regulations of a company shall be determined by the director in
order to ensure the most appropriate organizational structure possible for carrying out the company’s
activities.
10. Subsidiaries
Section 74.
(1) Economic organizations and other legal persons engaged in economic activities, defined in legal
regulations, shall be entitled to establish subs idiaries. Subsidiaries are legal persons.
(2) The charter of a subsidiary sh all prescribe, in addition to the facts and circumstances defined in
Subsection (2) of Section 29 and in Subsection (1) of Section 71, the manner in which the subsidiary and
the founding body will cooperate as well as the rights and obligations of the founding body and the
subsidiary in connection with their cooperation. (3) The provisions pertaining to the companies of certain legal persons shall be applied to subsidiaries
with the exception that, unless otherwise provided by legal regulation, the prior consent of the minister in
charge of public finances is not required for the establishment of a subsidiary.
(4) Additional provisions pertaining to subsidiaries are contained in specific other legislation.
11. Foundations
Section 74/A.
(1) Private persons, legal persons, and uninco rporated business associations (hereinafter referred
to collectively as ‘founders’) shall be entitled to form a foundation in a charter in order to serve a
long-term public interest. A foundation may not be formed for the principal purpose of performing
economic activities. A foundation shall have allocate d sufficient assets for achieving its objectives. A
foundation is a legal person.
(2) A foundation is deemed established once it has been registered by the court. Registration
cannot be refused if the charter is in conformity with the requirements prescribed in this Act. The
foundation may commence operations on the operativ e date of the resolution on its registration.
(3) A founder may not withdraw a foundation after registration.
(4) A foundation is registered by the county court of where the foundation’s registered office is
situated or by the Metropolitan Court of Budape st (hereinafter referred to collectively as ‘court’).
The application for registration shall be submitted to the court by the founder with the documents
decreed by the minister in charge of the judicial system attached.
(5) The court shall adopt its decisions concerning registrations in nonlitigious proceedings. The
court shall also send a copy of its decision on registration to the public prosecutor’s office.
(6) A foundation is deemed termi nated upon removal from the register. The relevant provisions
concerning the registration of a foundation shall be duly applied to removal.
Section 74/B.
(1) The charter of a foundati on shall contain the fund’s
a) name,
b) objective,
c) assets and the manner in which they are to be utilized, and
d) registered address.
(2) The founder may stipulate in the charter the conditions for joining the foundation and other
options.

(3) A founder shall, in the charter, be entitled to confer legal personality upon an organizational
unit of the foundation, if such organizational unit has an independent administrative and
representative body, and if it has the necessary assets allocated from the assets assigned for the
purposes of the foundation.
(4) If a founder allows others to join the foundation (open foundation), anybody may join the
foundation under the conditions set forth in the charter. The assets provided upon the creation of an
open foundation must be sufficient fo r the foundation to commence operations.
(5) A founder shall be entitled, in justified cases, to amend the charter, without causing any injury
to the foundation’s name, purpose, or assets. When implementing such amendments the provisions
on the registration of a foundation shall be duly observed.
(6) The provisions governing the financial management of societies [Subsection (3) of Section 62] shall be applied to the financia l management of foundations.
Section 74/C.
(1) A founder shall be entitled to designate a mana ging body in the charter or create a separate
organization for such purpose. The managing body (o rganization) shall be the official representative
of the foundation. The founder may install a clause in the charter – within the framework laid down
in Subsection (3) – to render the term of the managing body (organization), or the term in office of a
member of such body, for a fixed period or subject to a specific condition. This provision, however,
shall become effective only when the new managing body (org anization) or the new member is
registered by the court, even after the fixed peri od has expired or the aforementioned condition has
occurred.
(2) The court shall order the appointment of a managing body (organization) if the founder has
failed to provide for one or if the managing body (organization) declined to undertake to perform
this task.
(3) A managing body (organization) in which th e founder is entitled, directly or indirectly, to
exercise any controlling influence regarding the utilization of the foundation’s assets may not be
appointed or established.
(4) The founder, if establishing a separate or ganization for the management of the foundation,
shall prescribe the composition thereof in the ch arter and designate the person authorized to
represent the foundation. If more than one person is authorized to represent the foundation, the
founder shall also prescribe the manner and extent to which the right of representation can be
exercised. Any limitation on the righ t of representation shall have no effect vis-a-vis bona fide third
persons. The founder may install a clause in the ch arter to entitle the managing body (organization)
to authorize an employee of th e foundation to represent the foundation specifying the manner and
extent to which the right of representation can be exercised.
(5) The foundation shall be liable for any damages caused to a third person by the managing body
(organization) or an officer (member) thereof in th e course of fulfilling its/his responsibilities. An
officer (member) who causes damage to the foundation shall be liable for the damage caused in that
capacity in accordance with the general rules of civil law.
(6) If the activities of the managing body (org anization) jeopardize a foundation’s objectives, the
founder shall be entitled to dismiss the managing body and appoint another body (organization) to
replace it.
(7) The founder may install a clause in the charte r to designate a person to exercise his rights
provided by this Act in his name and on his behalf under specific circumstances, such as his death or
dissolution. The said person shall be subject to the same provisions as the founder. This clause may
not be withdrawn after the foundation is registered. In the absence of the founder or a designated
person to exercise his rights, such rights shall devolve upon the court, following notification by the
managing body (organization) or the public prosecutor’s office.
Section 74/D.

If a foundation has been endowed by will, the court shall be notified thereof; such foundation shall
be deemed a public interest enjoinder if its endowment is not in conformity with the conditions
prescribed by law.
Section 74/E.
(1) The court shall remove a foundation from the register if:
a) the objective defined in the charter has been realized;
b) the period of time defined in the charter has elapsed;
c) the condition defined in the charter has occurred.
(2) A foundation shall also be removed from the register if the court orders it to be terminated or
merged with another foundation.
(3) On the basis of a petition filed by the pub lic prosecutor’s office, the court shall order the
termination of a foundation if it has become impossible to achieve its objective, or if the foundation’s
registration is to be refused owing to a change in th e law. If requested by the founder, the court shall
order the termination of a foundation if it has become impossible to achieve its objective.
(4) The court may terminate a foundation if any of the activities of the managing body
(organization) jeopardize the objective of the foundation and the founder, despite a court order, fails
to dismiss the managing body and appoint another body (organization) to replace it.
(5) Unless otherwise stipulated in the charter, the assets of a terminated foundation shall be
allocated by the court for the support of another foundation with a similar purpose.
(6) Upon the joint request of the founders, the co urt shall, for the purpose of establishing a new
foundation or merging with another foundation, be entitled to order the merger of the foundations, if
such merger is in consonance with realizing the objectives of the foundations concerned. For the
court proceeding, the new or duly amended charter, containing stipulations for the succession of the
terminated foundation, shall also be attached to the applicatio n for the merger of foundations, while
the provisions pertaining to the registration of foundations shall be applied with regard to other
issues.
Section 74/F.
(1) The public prosecutor’s office shall, in accordance with the relevant regu lations, have judicial
supervisory competence over foundations.
(2) The public prosecutor shall be entitled to file for court action if the legitimacy of a foundation’s
activities cannot be otherwise ensured. The court shall order the foundation’s management to restore
the lawful operation of the foundation by a sp ecific deadline. The court shall terminate the
foundation if the management fails to comply by the aforementioned deadline.
Section 74/G.
12. Professional Associations
Section 74/H.
(1) A professional association is an incorporated cooperative association founded by its members in
order to improve the efficiency of their financial management, to coordinate their economic activities, and
represent their professional interests. A professional association shall not aim for profit; its members shall
sustain unlimited joint and several liability for any liabilities exceeding its assets. (2) A professional association may also pursue other service and joint economic activities in support of
its coordination duties.
(3) Professional associations come in to existence when they are entered into the register of companies,
effective as of the day of registration. (4) The designation ‘professional association’ shall be indicated in the corporate name of the cooperative
association.

(5) The detailed regulations on professional associations shall be established in a separate law.
Title IV
PROTECTION OF PERSONS UNDER CIVIL LAW
Chapter VII
Inherent Rights and Rights Related to Intellectual Products
Inherent Rights
Section 75.
(1) Inherent rights shall be honored and respected by everyone. Inherent rights are protected by law.
(2) The provisions on the protection of inherent rights shall also apply to legal persons, unless such
protection, by virtue of its very nature, can only be given to private persons.
(3) Inherent rights shall not be deemed violated by conduct that is approved by the holder of the rights,
provided the granting of such approval is not in violation or breach of the interests of society. Any contract
or unilateral statement that otherwise restricts inherent rights is null and void.
Section 76.
Any breach of the principle of equa l treatment; any violation of the freedom of conscience; any unlawful
deprivation of personal freedom; injury to body or hea lth; contempt for or insult to the honor, integrity, or
human dignity of private persons shall be deemed as violations of inherent rights.
Section 77.
(1) Everybody has the right to bear a name.
(2) Scientific, literary, or artistic activities or activities accompanying public performances may be
pursued under an assumed name without injuring the rights and legal interests of other persons.
(3) The name of a legal person must be different from the names of other previously registered legal
persons who are engaged in similar activities in the same field of endeavor. (4) The illegal use of another person’s name or a name similar to that of another person shall be deemed a
violation of the right to bear a name. A person engage d in scientific, literary, or artistic activities, if his
name can be confused with the name of another person who has already been engaged in similar activities,
shall not even be entitled to use his own name without a distinctive addendum or omission while engaged
in such activities.
Section 78.
(1) The protection of inherent rights shall also include protection against defamation.
(2) The statement, publication, or dissemination of an injurious untrue fact pertaining to another person
or a true fact with an untrue implication that pertains to another person shall be deemed defamation.
Section 79.
(1) If a daily newspaper, a magazine (periodical), the radio, the television, or a news service publishes or
disseminates false facts or distorts true facts about a person, the person affected shall be entitled to demand,
in addition to other actions provided by law, the p ublication of an announcement to identify the false or
distorted facts and indicate th e true facts (rectification).

(2) The rectification shall be published within eight days of receipt of the relevant demand in the case of
daily papers, in the next issue of a periodical or a news service in the same manner, or (also within eight
days) at the same time of the day if the defamation had been broadcast over radio and television.
Section 80.
(1) Any misuse of the likeness or recorded voice of another person shall be deemed as a violation of
inherent rights.
(2) With the exception of public performances, the cons ent of the person affected shall be required for
the public use of his/her likeness or recorded voice. (3) A likeness (recorded voice) of a missing person or a person under criminal prosecution for a felony
offense may be used for substantial public interests or a justifiable private interest with the permission of
the authorities.
Section 81.
(1) Any person who has violated the sanctity of the mails or has come into the possession of a private or
business secret and publishes such secret without authorization or abuses it in any other manner shall be
construed as having violated an inherent right.
(2) Business secrets shall comprise all of the facts, information, conclusions or data pertaining to
economic activities that, if published or released to or used by unauthorized persons, are likely to imperil
the rightful financial, economic or market interest of the owner of such secrets – other than the State of
Hungary -, provided the owner has taken all of the n ecessary steps to keep such information confidential.
(3) Any data that is related to the central budget; the budget of a local government; the appropriation of
moneys received from the European Communities; any subsidies and allowances in which the budget is
involved; the management, control, use and appropriation and encumbrance of central and local
government assets; and the acquisition of any rights in connection with such assets shall not be deemed
business secrets, nor shall any data that specific other legislation, in the public interest, prescribes as public
information. Such publication, however, shall not include any data pertaining to technological procedures,
technical solutions, manufacturing processes, work organization, logistical methods or know-how that, if
made public, would be unreasonably detrimental for the business operation to which it is related, provided
that withholding such information shall not interfere with the publication of public information in the
public interest. (4) Any person entering into a financial or business relationship with a sub-system of the central budget
shall, upon request, supply information in connection with such relationship that is deemed public under
Subsection (3). Disclosure of info rmation may take place on the website or in the registered publication
medium of the person concerned. In the event of non-compliance or if the information supplied is deemed
insufficient by the party requesting it, a judicial oversight proceeding may be initiated at the competent
agency.
Section 82.
The rights pertaining to private dwellings and to the premises used by legal persons are protected by law.
Section 83.
(1) Data management and data processing by computer or other means may not violate inherent rights.
(2) Information from recorded data may only be disclosed to duly authorized bodies or persons (in
addition to the person concerned). (3) If any registered fact or datum is false, the pe rson affected shall be entitled to demand that the false
fact or datum be corrected in a manner pr escribed in specific other legislation.
Section 84.

(1) A person whose inherent rights have been violated shall have the following options under civil law,
depending on the circumstances of the case: a) demand a court declaration of the occurrence of the infringement,
b) demand to have the infringement discontinued and the perpetrator restrained from further
infringement; c) demand that the perpetrator make restitution in a statement or by some other suitable means and, if
necessary, that the perpetrator, at his own expense, make an appropriate public disclosure for restitution; d) demand the termination of the injurious situation and the restoration of the previous state by and at the
expense of the perpetrator and, furthermore, to have the effects of the infringement nullified or deprived of
their injurious nature; e) file charges for punitive damages in accordanc e with the liability regulations under civil law.
(2) If the amount of punitive damages that can be impos ed is insufficient to mitigate the gravity of the
actionable conduct, the court shall also be entitled to penalize the perpetrator by ordering him to pay a fine
to be used for public purposes. (3) The above provisions shall also apply if the infringement occurred through the publication of an
illegal advertisement.
Section 85.
(1) Notwithstanding the provisions of Subsections (2) and (3), inherent rights may only be enforced
personally. A person with limited capacity may take action himself in the protection of his inherent rights. (2) The legal representative of an incompetent person , or the relative or conservator of a missing person
whose whereabouts are unknown shall be entitled to proceed in the protection of that person’s inherent
rights. (3) In the case of injury to the me mory of a deceased person, the relative and/or the person having been
named heir apparent in the will of the deceased shall be entitled to file for court action. If conduct causing
defamation to a deceased person (former legal person ) infringes upon the public interest, the public
prosecutor shall also be entitled to enforce this inherent right.
(4) If a legal injury has been duly evidenced and de lay might result in irreparable damage, the court shall
be entitled to take provisional measures, in the course of which it shall be entitled to issue an injunction to
seize the instruments of legal injury.
Rights Related to Intellectual Products
Section 86.
(1) Intellectual products are protected by law.
(2) In addition to the provisions of this Act, protectio n is prescribed for certain specified types of works
and creations and for related activities by copyright law, industrial rights protection (patent, trademark,
certification of origin and design protection) and legal regulations protecting the producers of sound
recordings. (3) Intellectual products that are not regulated in other legislation but which can be used by the general
public and have not yet become part of the public domain shall also be protected by law. (4) Persons shall also be entitled to protection with respect to their economic, technical, and
organizational knowledge and experience that has pecuniary value. The beginning and duration of the
period of protection shall be determined by a legal regulation.
Section 87.
(1) A person whose rights with regard to intellectual products have been violated may file charges under
the civil law titles governing violations of inherent rights (in addition to the protection prescribed in
specific other legislation).
(2) Within the sphere of protection provided for intellectual products that do not fall within the scope of
other legal regulations and for economic, technical, and organizational knowledge and experience of

pecuniary value, obligees may also demand a share of the financial proceeds from persons who have
expropriated or used their achievements.
PART THREE
OWNERSHIP
Title I
GENERAL RULES OF OWNERSHIP
Chapter VIII
Sections 88-90.

Section 91.

Sections 92-93.

Chapter IX
Objects of Ownership
Section 94.
(1) There may be ownership of all things which are capable of appropriation.
(2) Unless otherwise provided by law, the provisions pertaining to ownership shall duly apply to money
and securities as well as to natural resources th at can be utilized in the same way as things.
Section 95.
(1) Ownership extends to everything that is permanently joined with a thing in such a way that
disjunction would cause the thing or its disjoined part to be destroyed or would significantly reduce its
value or usefulness (components).
(2) In the case of doubt, ownership shall also extend to parts that are not components but are usually
necessary or beneficial for the proper use or maintenance of a thing (accessories).
Section 96.
The ownership of land shall not extend to the ‘treas ures of the earth’, nor does it extend to natural
resources.
Section 97.

(1) Ownership of a building may be claimed by the owner of the land.
(2) Ownership of a building may be claimed by the builder if so prescribed by law or by a written
agreement concluded with the owner of the land.
(3) The owner of the land shall have right of preemption in respect of the building, while the owner of
the building shall have right of preemption in respect of the land.
Chapter X
Content and Protection of Ownership
Right of Possession
Section 98.
An owner has the right of possession and is entitled to protect the possession.
Usufruct and of Collection of Proceeds
Section 99.
An owner is entitled to use and to collect the proceeds from a thing; he bears the liabilities attaching to
the thing as well as the damages for which no one can be obliged to make compensation.
Section 100.
An owner is obliged, while using a thing, to refrain from any conduct that would needlessly disturb
others, especially his neighbors, or that would jeopardize the exercise of their rights.
Section 101.
(1) An owner may not deprive the neighboring build ing from its necessary ground-support without
providing another appropriate means of securing it. (2) An owner may keep the fruits fallen from branches reaching over his land if they are not gathered by
the owner of the tree; he is not entitled to cut branches bending over or roots spreading over his land, unless
they prevent him from the proper use of his land, and the owner of the tree does not remove them in spite of
being requested to do so.
Section 102.
(1) An owner shall permit entrance to his property for compensation if it is necessary for doing works of
public interest, harnessing animals, gathering fruit from branches reaching over his land, removing
branches or roots, or for other important reasons. (2) An owner may use the neighboring land for compensation if it is necessary for the construction,
demolition, reconstruction or maintenance of a building located on his land.
Section 103.
(1) If two parcels of land are separated by a fence (hedge) or field boundary, the affected neighbors shall
be entitled to use it jointly.
(2) Costs of maintenance shall be borne by neighbors in proportion to their statutory obligation to erect a
fence. If it is not prescribed by lega l regulation, costs shall be borne in proportion to the length of the land
to be enclosed.

Section 104.
(1) A tree or bush standing on the boundary of two plots of land and the fruit thereof may be claimed by
the affected neighbors in equal proportions. Maintenan ce costs are borne by the affected neighbors in the
same proportions. (2) If a tree or bush standing on the boundary of two plots of land impedes the proper use of one of the
plots of land, the affected owner shall be entitled to demand its removal, the costs of which shall be shared
jointly by the owners.
Section 105.
A stray animal may be withheld by the user of the land until compensation is provided by its owner for
any damage that has been caused.
Section 106.
A legal regulation or an agreement of the parties may depart from the provisions of this Act that pertain
to neighbors’ servitude.
Section 107.
(1) In the event of danger (emergency) constituting a di rect threat to the life, safety or property of
another person that cannot be prevented in any other way, an owner shall tolerate his thing to be used,
utilized or damaged to the extent necessary for abolishing the emergency situation. This obligation shall be
binding on an owner in the case of an emergency endangering another person’s property only if the
imminent damage is estimated to su bstantially exceed the damage likely to be caused to the owner as a
consequence of the intervention.
(2) Owners shall be entitled to demand compensation fr om persons in an emergency and indemnification
from persons who caused unjustifiably great damage in the course of eliminating the emergency. (3) If a danger that threatens the liv es or properties of several persons is prevented by sacrificing some
endangered articles, the damage orig inating therefrom shall be borne jointly by the affected persons in
proportion to their risked interests, if such sacrifice was necessary; this provision shall also apply to the
sharing of costs necessary for preventing the danger.
Section 108.
(1) The owner of a real property is obliged to tolerate agencies authorized by specific other legislation to
use the real property for a period of time, obtain servient tenement or restrain ownership rights in other
ways to the extent that is necessary for the performan ce of their professional tasks. In such cases, the owner
of the real property shall be entitled to compensation according to the extent of the hindrance (restraint).
(2) If the servitude or another restraint terminates or considerably impedes the proper use of the real
property, the owner may request that the real property be purchased or expropriated.
(3) Provisions pertaining to production, construction, health care, water management and other issues
concerning the exercise of ownership rights are prescribed in specific other legislations.
Section 109.
(1) If an owner had a house built beyond the boundary line of his land in good faith, the neighbor shall
be entitled to demand the builder either a) pay compensation for damages for the use of the part of land occupied and for the depreciation in
value caused therewith,
b) purchase the part of the land occupied if the land is divisible, or
c) purchase the entire parcel of land.
(2) A neighbor may demand that the builder purchase his entire land if

a) the construction has rendered the remaining part of the land unusable,
b) the exercise of a right or profession related to the land has become impossible or considerably more
expensive due to the construction.
Section 110.
(1) If the builder has acted in bad faith or the neighbor has protested against the construction at a time
when restoration of the original state would not have caused unreasonable damage to the builder, the
neighbor shall, in addition to the options prescribed in Subsection (1) of Section 109, be entitled to demand
the builder either a) transfer ownership of his land and the building in return for proper compensation of actual gains, or
b) demolish the building.
(2) A neighbor may demand the demolition of a building if it is not against the requirements of
reasonable management. The costs of demolition and of th e restoration of the original state shall be borne
by the builder; however, he shall have possession of the material recovered.
Section 111.
(1) A court decision may resolve the consequences of construction in a manner that differs from the
neighbor’s choice; however, such a decision may not prescribe a solution that is protested by both parties. (2)
Right of Disposition
Section 112.
(1) An owner has the right to surrender the possession, use or usufruct of a thing to another person, to
use it as security or encumber it in another way, and, furthermore, to transfer or abandon ownership. (2) The ownership of real property may not be abandoned.
Section 113.
If ownership of a building may be claimed by the owner of the land, the ownership of the building may
only be transferred or encumbered together with the ownership of the land.
Section 114.
(1) If a legal regulation or court decision excludes or restricts the right of disposition, any disposition
contrary to this prohibition or restriction shall be null and void.
(2) The right to alienate or encumber property may be restricted or excluded by contract only in the event
of the transfer of ownership and only for the purpose of securing the right of the transferor or another
person in respect of the thing. With regard to real pr operty, the right secured by the prohibition shall also be
indicated in the real estate register. (3) Any disposition contrary to a prohibition of alienation or encumbrance stipulated by contract shall be
null and void provided that a) the prohibition has been entered in the real estate register,
b) the person claiming a right for disposition has otherwise acted in bad faith, or
c) the disposition did not include any consideration.
Protection of Ownership Rights
Section 115.

(1) Ownership claims shall not lapse.
(2) Pursuant to the regulations on the protection of possession, an owner may arbitrarily restrain or
prevent any and all illegal intrusion or influence that impedes, restricts, or obliterates the exercise of his
ownership rights.
(3) An owner may demand the termination of illegal intrusions or influences and, if things have been
removed from his possession, to have them returned.
Section 116.
(1) The owner of a real property, if he has acquired ownership title from an owner other than the holder
of record, may request to have his ownership indicated in the real estate register.
(2) If other legal regulations do not make exceptions, the real estate register shall be deemed authentic
certification of the existence of ownership and other entitlements.
(3) The detailed provisions on real estate registra tion are prescribed in specific other legislation.
Chapter XI
Acquisition of Ownership
Acquisition by Transfer
Section 117.
(1) If other laws do not make exceptions, ownership by transfer may be acquired only from the owner of
the thing. (2) For the acquisition of ownership, in addition to the contract for transfer and other legal titles, the
thing must be surrendered. Surrendering shall be accomplished by the actual transfer of possession of the
thing or in any other way to substantiate beyond doubt that control of the thing has been conveyed from the
transferor to the transferee. (3) Registering the change of owners in the real esta te register as well as providing the contract for
transfer and other legal titles are required in order to transfer ownership of a real property.
(4) In the event a real property is sold more than once, the buyer taking first possession of the property in
good faith or, if there is no such person, the previous buyer may demand his ownership registered in the
real estate register, except if the ownership of the su bsequent buyer has already been entered in the real
estate register. This provision shall also be applied to multiple donations.
Section 118.
(1) A bona fide buyer shall acquire ownership of a thing that has been sold commercially, even if the
dealer was not the owner of the thing.
(2) A person who has, outside of commercial circulation, acquired a thing in good faith and for
consideration from a person to whom the thing was entrusted by its owner, shall obtain ownership.
However, the owner may reacquire the thing within one year of the initial acquisition by refunding the
consideration. Otherwise the rules of bona fide posse ssion without legal grounds shall apply to the parties’
legal relationship.
Section 119.
A transferee of cash or a bearer se curity shall become the owner, even if the transferor was not the
owner.
Acquisition of Ownership by Means of Official Resolution or Auction

Section 120.
(1) A person who has acquired a thing in good faith by means of official resolution or auction shall gain
ownership irrespective of the previous owner. This provision shall not apply to the sale of real property by
auction.
(2) The state, if it acquires ownership pursuant to a court decision or other official resolution without
indemnification, shall be liable for the obligations of the ex-owner existing at the time of acquisition of
ownership to a bona fide person on the basis of a legal regulation, court decision, or other official
resolution or a commutative contract to the extent of the value of the property. However, the state shall be
liable only if the attachment of other property items of the ex-owner has been unsuccessful.
(3) Acquisition of ownership by the state shall not affect the rights of a bona fide third person that have
been entered in the real estate register.
Adverse Possession
Section 121.
(1) A person who has continuously had possession of a real property for fifteen years, or any other
object for ten years as his own, shall acquire ownership through adverse possession. (2) A person who has taken possession of a thing by committing a crime or in another violent or
treacherous way shall not acquire ownership through adverse possession. (3)
(4) Ownership of real property shall not be acquired through adverse possession, if the conditions of
adverse possession exist only for a section of the land and that parcel of land is indivisible. (5) An adverse possessor, in the event of failure to have his ownership registered in the real estate
register, shall not be entitled to claim acquisition of ownership against a person who has acquired a right on
the real property for payment of a considerati on, as relying upon the real estate register.
Section 122.
A new possessor shall be entitled to add to the period of his own adverse possession the time that
qualified as time of adverse possession during the possession of his predecessor.
Section 123.
If an owner is not in the position to exercise his ownership rights for a reason that can be justified,
adverse possession shall not take place for one year fr om the termination of the impediment, even if the
time of adverse possession has elapsed or there is less than one year left.
Section 124.
(1) Adverse possession is discontinued, if
a) the owner summons the possessor in writing to surrender the thing or files a lawsuit thereto,
b) the owner has control of the thing (Section 112),
c) the possessor loses the property against his will a nd does not acquire it again within one year or does
not file for court action within one year to have the thing returned by its new possessor.
(2) If adverse possession is discontinued, the time of adverse possession that has elapsed up to that date
may not be taken into consideration, and the period of adverse possession begins again following the
termination of the reason for discontinuance.
Appropriation of Products, Produce, and Progeny
Section 125.

(1) A person who has a right in respect of a thing of another person which entitles him to take possession
of products, produce, or progeny, shall acquire ownership by separation, if he has not previously acquired
ownership thereof. If the entitled person does not possess the thing from which the product, produce, or
progeny originates, he shall become owner by taking possession thereof. (2) If the right of a person entitling him to acquisition of ownership of a product, produce, or progeny
ceases before he acquires ownership thereof, such pe rson may demand that the owner deliver the products,
produce, or progeny primarily in kind, in proportion to his work, and up to the extent of his expenses that
cannot be recovered from elsewhere. (3) A bona fide possessor acquires ownership of products, produce, or progeny of a thing by separation
up to the day on which he becomes mala fide, or the thing is reclaimed from him before a court or town
(city, metropolitan district) clerk.
Accretions
Section 126.
The owner of a parcel of land shall acquire ownership of everything that has become part of the land
subsequently (accretions). This provi sion shall not apply to products, produce, and progeny if these can be
claimed by another person on the basis of a legal relationship.
Acquisition of Abandoned Property
Section 127.
If a thing has no owner, anybody may acquire ownership by taking possession thereof.
Acquisition of Ownership of Game and Fish
Section 128.
(1) Game, the fish living in rivers and natural lakes, and other useful aquatic animals comprise the
property of by the state, unless otherwise prescribed by law.
(2) Game that perishes or is killed or captured in hunting grounds shall be owned by a party authorized
to hunt. (3) The ownership of fish and other useful aquatic animals caught by persons authorized to exercise
fishing rights shall be acquired by the person authorized to exercise fishing rights, unless otherwise
prescribed by law. The ownership of fish and other useful aquatic animals caught by unauthorized persons
shall be acquired by a person authorized to exercise fishing rights, unless otherwise prescribed by law.
Found Property
Section 129.
(1) A person who finds a thing that is presumably owned by somebody else and claims ownership
thereof shall acquire ownership, if
a) he has done everything prescribed by law in order to return the thing to its rightful owner, and
b) the owner has not come forward to take possession of the thing within one year of the day on which it
was found.
(2) The finder shall not acquire ownership of objects found in offices, companies, or other buildings or
rooms open to the public or on the vehicles of a public transportation company. In such a case, the office or
company shall be entitled to sell the thing after keeping it for three months; the owner shall be entitled to
demand that the thing or its purchase price be deliver ed within a year of the day on which it was found.

Section 130.
If a thing that has been found is of substantial value and its finder does not acquire ownership thereof, he
shall be entitled to a reasonable finder’s fee on condition that he has done everything prescribed by law to
have the thing returned to its owner.
Section 131.
If the owner of a thing that has been found does not come forward within a period of one year, and the
finder does not acquire ownership thereof, ownership or the purchase price received for the sale of the thing
may be claimed by the state.
Section 132.
(1) If a person finds a valuable thing which has been hidden by unknown persons or the ownership of
which has otherwise been forgotten, he shall be obliged to offer it to the state. (2) If the state does not claim the thing, it shall beco me the property of the finder; otherwise the finder
shall be entitled to a finder’s fee proportionate to the value of the thing. (3) If the found thing described in Subsection (1) is a museum piece or a historical relic, its ownership
may be claimed by the state. The rules of procedure related to the finding of such objects and the extent of
the finder’s fee shall be determined in specific other legislation.
Processing and Assembling
Section 133.
(1) A person who manufactures a new thing for himself in good faith by processing or converting
another person’s thing shall reimburse the value of the thing or surrender ownership of the new thing in
return for reimbursement of the value of his work, whichever is chosen by the owner of such thing. (2) If the value of the work signifi cantly exceeds the value of the proce ssed or converted thing, the owner
of the thing shall not have the right to choose, as he may claim only reimbursement for the value of the
thing. (3) If the person performing the processing or conversion has acted in bad faith, the right to choose shall,
in all cases, belong to the owner of the material; if the owner of the material chooses ownership of the new
thing, he shall pay reimbursement only up to the extent of his actual gains.
Section 134.
(1) If the objects of several persons are merged or combined in a way that the separation of such objects
may only be accomplished by inflicting substantial damage or unreasonably high cost or if it cannot be
accomplished at all; ownership of the fi nal product shall be claimed jointly by the persons affected. If either
of the owners should wish not to participate in joint ownership, the person whose thing was more valuable
before the combination shall be entitled to choose whether to assume ownership of the thing by
recompensing the other owners or to surrender it to them in return for compensation. (2) The right to choose may not be claimed by the pe rson causing the merger or combination himself in
bad faith. In such case the mala fide ex-owner may demand reimbursement only up to the extent of actual
gains.
Section 135.
(1)
(2) If ownership of a converted, processed, merged or combined thing is claimed by neither of the
parties, it shall be sold; and the r eceived price shall be distributed as appropriate among the entitled parties.

(3) In such a case, the party who is entitled to claim compensation only up to the extent of his actual
gains shall be entitled to no more than the part of the received price remaining after the satisfaction of those
entitled to full indemnification.
Section 136.
(1) If a person uses another person’s material for construction on his land or on the land used by him, he
shall acquire ownership of the built-in material, bu t shall make reimbursement for the value thereof.
(2)
Section 137.
(1) If a person builds a structure on another person’s land without authorization, ownership of the
structure shall be acquired by the owner of the land; however, he shall reimburse the encroachment builder
to the extent of his actual gains. The court shall be entitled to compel such builder to buy the land or a part
thereof (if the land is divisible) at the request of the land’s owner.
(2) The encroachment builder shall acquire ownership of the land or an adequate part thereof if the value
of the building considerably exceeds the value of the land or the relevant part of the land. At the request of
the landowner, the court may resolve that the builder has acquired ownership of the building alone; in such
a case, the builder shall have usufruct on the land. (3) If a person builds an extension or new addition to a building owned by another person or reconstructs
such a building, or if there is an existing building on the other person’s land; ownership of the final product
of such encroachment shall be claimed jointly by the persons affected, unless there is an agreement to the
contrary. The builder’s share of the property shall be determined on the basis of the value of the new
addition in proportion to the total value of the real property.
(4) The provisions pertaining to the acquisition of ownership by encroachment [Subsections (2) and (3)] shall not apply if the builder has acted in bad faith or if the owner of the land has protested against the
construction at a time when the restoration of the original state would not have caused unreasonably great
damage to the builder.
Section 138.
(1) If an encroachment builder acquires ownership of the land or the relevant part of the land, he shall be
obliged to compensate the owner of the land for the market value of the land; if the builder acquires
usufruct on the land, he shall be obliged to pay a cons ideration for use of the land. If the builder does not
acquire ownership of the entire parcel of land, he shall also pay the owner of the land compensation for the
loss in value caused by the construction. (2)
(3) The rules of overconstruction must otherwise be applied to encroachment.
Chapter XII
Joint Ownership
Section 139.
(1) Ownership of the same thing, by specific shares, can be claimed by two or more persons.
(2) In the event of doubt, the property sh ares of the joint owners shall be equal.
Section 140.
(1) Each co-owner has the right to possess and use the thing; however, none of them shall exercise this
right if it adversely effects the rights and rightful in terests of the others in connection with the thing.

(2) Unless otherwise provided by law, co-owners shall decide by majority vote on issues of possession,
use, utilization and expenses not ex ceeding standard measures; each co-owner has the right to vote in
proportion to his ownership share.
Section 141.
Proceeds from a thing shall be claime d by the co-owners in proportion of their ownership shares; costs of
maintenance and other expenses related to the thing, as well as obligations originating from co-ownership,
and any damage to the thing shall be borne by the co-owners in the same proportion.
Section 142.
Any of the co-owners is entitled to carry out wo rks that are essential for the preservation and
maintenance of the thing, and each co-owner shall be ob liged to bear his share of such costs. However, if
possible, the co-owners shall be notified before such expenses are incurred.
Section 143.
(1) If a majority decision is required by law and if such decision infringes reasonable management or
substantially violates the rightful interests of the minority, the minority shall be entitled to contest the
decision in court. The contest shall not prevent execution of the decision; however, the court shall be
entitled to suspend execution on reasonable grounds. (2) This provision shall also be applied if there is disagreement among the co-owners as to whether the
proposed work is absolutely necessary for the preservation and maintenance of the condition of the thing. (3) If a majority decision is required by law and there is no such decision, the court shall pass a decision
on matters related to possession, use, or utilization at the request of either of the co-owners.
Section 144.
A unanimous decision by the co-owners shall be required for
a) expenses in excess of standard measures,
b) transferring ownership of the entire thing, surrendering it for usufruct or use, pledging it as security or
collateral, or encumbering it in any other way.
Section 145.
(1) Each of the co-owners may freely di spose of his share of the property.
(2) The other co-owners shall have the right of preemption before third persons to buy, rent, or lease the
property share of a co-owner.
(3) Unless otherwise prescribed by law, the right of preemption provided for other persons in specific
other legislation shall precede the preemption rights of co-owners.
Section 146.
Any of the co-owners may act independently in protection of his proprietary rights.
Termination of Co-Ownership
Section 147.
Any of the co-owners may demand termination of co-ownership; any waiver of this right shall be null
and void.

Section 148.
(1) Objects of co-ownership shall be divided primarily in kind.
(2) The objects of co-ownership, or a part thereof, may be given by court into the ownership of one or
several co-owners in return for the payment of an approp riate consideration if it is justified with regard to
the conditions of the co-owners. This requires the agreement of the co-owner acquiring ownership, unless
ownership of part of a real property is transferred by court order to the co-owner residing on such property
and such action does not violate the reasonable interests of the tenant.
(3) If co-ownership cannot be otherwise terminated, or division in kind would cause a significant
decrease in value or prevent proper use, the objects of co-ownership shall be sold and the price received
shall be appropriately divided among the co-owners. Co-owners shall have the right of preemption in
respect of selling as well before third persons. (4) A mode of termination of co-ownership against which all of the co-owners launch a protest shall not
be applied by the court.
Condominium
Section 149.
(1) Co-ownership of a building may also be established by having specific sections of the building,
primarily apartment units, separately owned by the co-owners (condominium). (2) An agreement of the co-owners incorporated in a charter, and the registration of the condominium
property in the real estate register are required for the establishment of a condominium property.
(3) Transformation of a joint property into condominium property may be ordered by the court at the
request of any of the co-owners. In such a case, th e court decision shall function in lieu of the charter.
(4) The provisions pertaining to joint ownership shall be applied to condominium properties with the
exceptions prescribed in specific other legislation.
Chapter XIII
Rights of Use
Sections 150-154.
Land Use
Section 155.
If ownership rights for a building are acquired by the builder [Subsection (2) of Section 97, Subsection
(2) of Section 137], the owner of the building shall have usufruct in respect of the land (part of the land) for
the life of the building.
Section 156.
(1) The owner of a building is entitled to use the land (p art of the land) and to collect its proceeds, and he
shall be liable for all maintenance costs thereof by virtue of his usufruct of the land granted on the basis of
an agreement or a court decision. (2) In the event of acquisition of ownership of a building by inheritance or conveyance, the new owner
of the building shall have usufruct of the land under the same conditions.
Beneficial Interest and Usufruct

Section 157.
(1) A person may possess, use, and collect the proceeds of a property owned by another person by virtue
of beneficial ownership.
(2) For the duration of beneficial ownership, the owner may exercise the right of possession, use, and
collection of proceeds only if the hol der of beneficial interest does not exercise his rights thereto.
(3) Beneficial interest shall remain in force ev en if ownership of the property is transferred.
(4) Beneficial ownership shall be granted for only a limited period of time, not to exceed the lifetime of
the holder of beneficial interest.
Section 158.
(1) On the basis of a contract, beneficial ownership enters into effect upon delivery of the property, or, in
respect of real properties, upon the beneficial interest being re gistered in the real estate register.
(2) Beneficial interest in a real property, if granted pursuant to legal regulation or by virtue of a court
decision or official resolution, sha ll be registered in the real estate register; in the absence thereof,
beneficial interest shall be enforceable only against a ma la fide acquirer of the property or an acquirer who
has not given any consideration for the property.
Section 159.
(1) The holder of beneficial interest shall act in accordance with the rules of normal management when
exercising his right thereto and sha ll be liable for the maintenance costs thereof, with the exception of
extraordinary repairs and renovations, and, furthermore, for the obligations related to the use of the thing as
well as for all public dues.
(2) The holder of beneficial interest may not transf er his right to such interest; however, he may allow
another person to exercise this right. The right to exercise beneficial interest may be surrendered for a
consideration only upon the owner’s waiver of using the property under the same conditions. (3) The holder of beneficial interest shall notify th e owner of any imminent danger to the property and
any damage incurred, including any attempt by a third party to obstruct him from exercising his beneficial
right; he shall, furthermore, tolerate the owner to take the necessary measures to prevent any potential
danger or to eliminate the consequences of the damage. (4) The holder of beneficial interest shall return the property upon the termination of his beneficial right.
The holder of beneficial interest is liable for any damages in the property, unless he is able to prove that he
has acted in a manner that can generally be expected in the given situation. The holder of beneficial interest
shall not be liable for reimbursing any regular depreciation resulting from the use the property.
Section 160.
The holder of beneficial interest may dispose of the expendable objects, business equipment, and
livestock existing at the time the beneficial right is established to a degree justified by normal management;
however, he shall replace these when the beneficial right is terminated or, if replacement is not possible,
reimburse the value thereof.
Section 161.
(1) Owners are entitled to regularly inspect the exercise of beneficial ownership.
(2) If the holder of beneficial interest uses the property improperly, damages it or otherwise jeopardizes
the return of the property after the termination of th e beneficial right, and if the owner has protested to no
avail; the owner may demand security. (3) If the holder of beneficial interest fails to provide security, the court shall be entitled, upon the
owner’s request, to order the suspension of the exercise of beneficial rights until such security is provided.
(4) An owner shall also have these rights against the person to whom the exercise of beneficial right has
been surrendered by the holder of beneficial interest.

Section 162.
(1) The holder of beneficial interest shall be entitle d to have extraordinary repairs or renovations made
upon the owner’s failure, despite the request of the holder of beneficial interest, to do so.
(2) Upon the termination of beneficial ownership, the holder of beneficial interest may demand
reimbursement from the owner for the necessary expens es, less the appropriate depreciation. The owner, if
his actual gains are in excess of the amount so determined, shall refund the difference as well.
Section 163.
(1) If a thing is destroyed entirely or to a significant extent, the owner shall not be obliged to restore it.
(2) If the owner restores the thing, the beneficial in terest shall be consequently reestablished; however,
the owner may request a limitation of beneficial rights in proportion to the costs of restoration. (3) If the owner does not restore the thing, the beneficial interest shall be abrogated; however, if the
object of beneficial interest is replaced by another thing, the beneficial right shall extend thereto. If the
thing has been replaced by a sum of money, the holder of beneficial interest may demand that sum be spent
on the restoration or re placement of the thing.
Section 164.
(1) Concerning the beneficial owne rship of interest-bearing receivables and other profit-yielding rights,
the provisions pertaining to the beneficial ownership of things shall be duly applied.
(2) A right encumbered by benefici al interest may be canceled or amended to the disadvantage of the
holder of beneficial interest with a contract having an effect extending to the beneficial right, but this may
be done solely upon the consent of the holder of beneficial interest.
Section 165.
(1) Persons entitled to beneficial use may use a thi ng and collect its proceeds up to an extent not
exceeding his own needs and those of his relatives living in the same household. The exercise of the right
of beneficial use may not be surrendered to another person. (2) In respect of other issues, the provisions on beneficial ownership shall be applied regarding the right
of beneficial use.
Easement
Section 166.
(1) Easement may be granted to and held by the possessor of a real property on another person’s real
property to use such property to a specific extent or to demand the possessor of the servient tenement to
refrain from otherwise rightful conduct proceeding from his entitlement.
(2) Easement may be granted for the purpose of passage, supply and drainage of water, building a cellar,
installing pylons, buttressing a building or other similar purpose benefiting the holder of the easement.
Section 167.
If a piece of land is not connected to a suitable pub lic road, neighbors shall tolerate the holder of an
easement to pass through their land.
Section 168.
(1) The provisions on the establishment of beneficial ownership of real property shall be applied to the
granting of easement.

(2) The possessor of a real property shall obtain easement by adverse possession if the possessor of the
other real property has not protested against its use for ten years. The exercise of a right allowed as a favor
or until withdrawal shall not lead to adverse possession.
(3) Easement per se shall not be subject to transfer.
Section 169.
(1) Easement may be exercised by due respect to the interests of the possessor of the servient estate.
(2) If the grant of easement also involves the use of any equipmen t or instruments, the costs of
maintenance shall, unless otherwise agreed, be born e by the holder and grantor of the easement in the
proportion of their respective use of the equipment or instruments.
Section 170.
(1) The court shall be entitled to cancel or suspend ease ment if it is not required for the proper use of the
real property of the holder of such easement.
(2) Easement shall be abrogated if the easement’s holder, despite his ability to do so, does not exercise
the easement for a period of ten years or if he has endured being prevented from exercising it for the same
period of time.
Right of Use
Section 171.
(1) For due compensation, servitude or another right of use may be imposed upon a real property by the
decision of a state agency acting in the public interest, to the benefit of agencies authorized under specific
other legislation. (2) The cases in which the right of use may be gran ted and the provisions on compensation shall be laid
down in specific other legislation.
Title II
SPECIAL RULES RELATING TO PUBLIC PROPERTY
Chapter XIV
State Ownership
Objects of State Ownership
Section 172.
Unless otherwise provided by law, the following shall remain under exclusive state ownership:
a) the ‘treasures of the earth’,
b) underground waters, the natural basins of underground waters, rivers and natural lakes, and the beds
thereof, c) abandoned riverbeds and newly evolved islands of rivers,
d) national public roads, railroad lines of the national main network, international commercial airports,
and the airspace over the territory of the country, e) frequencies to be used for telecommunications purposes,
f) the full range of authentication codes used for communication networks, for the provision of
communication services, and for cooperation between communication networks and services.

g) Section 173.
(1) The following are not subject to trade:
a) things owned exclusively by the state,
b) other things prescribed by law.
(2) Any alienation of the things specified in Subsection (1) shall be deemed null and void.
Management of State Property
Section 174.
The state, in a manner regulated by law, shall be entitled to surrender the possession, use, and the right to
collect the proceeds of a thing owned excl usively by the state to another person.
Section 175.
The state may entrust some of its property items to th e care of another person, in which case such person
shall, in accordance with the provisions of legal re gulations, exercise the rights and fulfill the obligations of
the owner by virtue of civil relations.
Section 176.

Expropriation
Section 177.
(1) Real property may be expropriat ed in special cases and in the public interest, for the reasons and in
the manner prescribed by law. Full, unconditional, and prompt compensation shall be made for
expropriated real properties. (2) The specific provisions on expropriation shall be prescribed in a separate law.
Section 178.
Protection of State Property
Sections 179-180. Section 181.
(1) A person who suffers a loss in consequence of performing appropriate activities in order to protect
state property or prevent imminent hazards of extr aordinary proportions shall be entitled to request
compensation therefor, unless he is under immediate obligation to perform such activities as part of his
duty. In the event of such person’s death in the line of duty, his dependents and/or those whom the person
had been required by law to provide for shall be taken care of, if necessary.
(2) The aforementioned claims shall not be affected by the qualification of the injury as an occupational
accident or by whether the aggrieved person had acted to prevent the loss, as this can generally be expected
in the given situation.

(3) Compensation shall be paid by the manager of the state property or, if the damage incurred in
connection with the prevention of imminent hazards of extraordinary proportions, by the state.
Chapter XV
Sections 182-186.
Title III
Possession
Chapter XVI
Possession and Protection of Possession
Possession
Section 187.
(1) Possession shall be acquired by the person who takes a thing to himself or secures control over a
thing in any other way (possessor). (2) The person temporarily losing control of a thing to another person, and the person whose land is
burdened with an easement is also deemed a possessor.
Protection of Possession
Section 188.
(1) If a possessor is deprived of his possession without legal grounds or is restrained in maintaining such
possession (illicit power), he shall be entitled to protection of his possession. (2) A possessor is entitled to protection of his possession against anybody, with the exception of the
person from whom he has acquire d the possession by illicit power.
(3) A possessor shall, on the basis of his title, be entitled to protection of possession against the person
from whom his possession originates or to whom such possession was temporarily surrendered.
Section 189.
(1) In the event of jo int possession, protection of possessi on may be claimed by each possessor
individually, and each possessor shall be entitled to demand the thing to be rendered available for joint
possession.
(2) On the basis of their relationship, joint possessors are also entitled to protection of possession against
each other.
Section 190.
(1) A possessor shall be entitled to use his own might and power to avert an attack directed against his
possession to the extent necessary for protection of the possession.
(2) A person shall be allowed to act on his own might and power in the interest of reacquiring a lost
possession only if the time lost through the use of other means of protection would frustrate protection of
the possession.

Section 191.
(1) A person who is deprived of his possession or is restrained in its enjoyment shall, within one year, be
entitled to file a request with the town clerk for the rest oration of the original state of possession or for the
discontinuance of restraint. (2)
(3) The town clerk shall restore the original st ate of possession and prohibit the trespasser from
continuing in this conduct, unless it is obvious that the person who has requested protection of possession is
not entitled to possession or has been obliged to tolerate such restraint. The town clerk may also resolve the
issues of profits, damages, and costs. (4) There is no remedy through st ate administration channels against the decision of the town clerk;
decisions on the issue of possession shall be executed within three days.
Section 192.
(1) The party who finds the decision of the town clerk prejudicial may appeal to the court within fifteen
days of receipt of the decision to have the decision overturned.
(2) After one year, a possessor shall be entitled to re quest the restoration of the original state of
possession or the discontinuance of restraint directly fro m the court. A possessor may also resort directly to
the court if the title of possession is also disputed in the case.
(3) The court shall resolve lawsuits concerning posse ssion claims on the basis of eligibility for holding
possession; eligibility of the party disturbed in peaceful possession shall be presumed.
Possession Without Legal Grounds
Section 193.
(1) Any person who possesses a thing without legal grounds shall be obliged to surrender the thing to its
legitimate possessor. (2) A possessor may refuse to surre nder a thing until his demands claimed in connection with possession
are satisfied; the provisions on responsible custody shall apply to his legal status. The possessor who has
acquired the thing by committing a felony offense or in another violent or treacherous way may not refuse
to surrender the thing.
Section 194.
(1) A possessor under obligation to surrender a thing shall be entitled to demand reimbursement
regarding the necessary expenses related thereto, with the exception of minor expenses normally required
for the maintenance of the thing, and shall be entitled to remove the furnishings and accessories installed by
him. (2) A possessor, if acting in good faith, may also demand reimbursement for his useful expenses that are
not covered by proceeds, while a mala fide possess or may demand compensation according to the rules of
unjust enrichment. (3) The right of removal shall be exercised only without damaging the condition of the thing.
Section 195.
(1) A possessor shall be obliged to yield the existing proceeds from a thing to the party entitled thereto,
unless he has acquired possession in return for a consideration and has acted in good faith.
(2) A bona fide possessor shall not be liable for pr oceeds and damages for the duration until possession
is reclaimed from him in front of a town clerk or the court. As of the date of reclamation the general
provisions shall apply regarding his liability, unless he has obviously become a mala fide possessor, and the
provisions on responsible custody shall be authoritative regarding his right of use and his right to collect
proceeds.

(3) A mala fide possessor shall pay the value of the proceeds consumed by him or which he has failed to
collect, and shall be liable for all damages that would not have occurred in the thing had it been with the
entitled party.
Responsible Custody
Section 196.
(1) A person who keeps a thing in the interest of another person without being entitled or obliged thereto
by a special legal relationship shall provide for the safekeeping of the thing at the cost and risk of the
entitled party until such party takes over the thing from him (responsible custody). A responsible custodian
may retain the thing until his expenses are reimbursed. (2) A responsible custodian shall not use the thing during the period of responsible custody, unless its
use is required for maintenance. If he uses the thing in spite of such prohibition, he shall be liable to the
entitled party for all damages that would not otherwise have occurred. (3) A responsible custodian shall surrender the exis ting proceeds of a thing and reimburse the value of
the proceeds consumed or not coll ected by him, less his claims proceeding from the custody.
Section 197.
(1) If an entitled party fails to remove a thing within a reasonable period of time, despite being requested
to do so, and the relocation of the thing would involve unreasonable difficulties or require an advance on
costs, the responsible custodian shall be allowed to sell or utilize the thing. (2) Perishable things, whenever possible, shall be sold or utilized.
(3) The sum received from the sale or consideration of a utilized thing shall be due to the entitled party.
PART FOUR
OBLIGATIONS
Title I
CONTRACTS
Chapter XVII
General Rules
Section 198.
(1) A contract constitutes an obligation to perform se rvices and an entitlement to demand such services.
(2) Conclusion of a contract can be rendered obligatory by legal regulation.
(3) An obligation or an entitlement to services may be constituted, by virtue of statutory provision or
official order, without the conclusion of a contract if so ordered by a legal regulation or an authority with
proper authorization, and if the obligor, the obligee, an d the service are accurately specified. In such case,
the provisions on contracts shall be duly applied, unle ss otherwise provided by the legal regulation or the
authority in question.
Section 199.

Entitlement to demand services shall be established from a unilateral statement only in the cases defined
by legal regulations; unless otherwise provided by law, the provisions on contracts shall be duly applied to
unilateral statements.
Section 200.
(1) The parties to a contract are free to define the contents of their contract, and they shall be entitled,
upon mutual consent, to deviate from the provisions pertaining to contracts if such deviation is not
prohibited by legal regulation.
(2) Contracts in violation of legal regulations and contracts concluded by evading a legal regulation
shall be null and void, unless the legal regulation stipulates another legal consequence. A contract shall also
be null and void if it is manifestly in contradiction to good morals.
Section 201.
(1) Unless the contract or the applicable circumstan ces expressly indicate otherwise, a consideration is
due for services set forth in the contract. (2) If at the time of the conclusion of the contract the difference between the value of a service and the
consideration due, without either party having the intention of bestowing a gift, is grossly unfair the injured
party shall be allowed to contest the contract. (3) Subsection (2) shall apply, furthermore, if the difference between the value of the service the lender
promises to provide under contract and the annual percentage rate of charge for credit is grossly unfair
taking into account all relevant circumstances of the contract.
Section 202.
If a contracting party has gained excessive benefit or unfair advantage at the conclusion of the contract
by exploiting the other party’s situation, the cont ract shall be null and void (usurious contract).
Section 203.
(1) A contract by which the basis for satisfying a third person’s claim has been deprived entirely or in
part shall have no legal force in respect of such third person if the other party acted in bad faith or had a
gratuitous advantage origin ating from the contract.
(2) If a person concludes such a contract with a relativ e or with a legal person with which this person is
associated by way of majority control, or conclude s such a contract with a member or executive employee
of the legal person or one of their relatives, bad faith and/or gratuitous promise shall be presumed. Bad
faith and/or gratuitous promise shall also be presumed when a contract is concluded between legal persons
that are controlled by the same natural or legal person, regardless of whether or not majority control is
exercised directly or indirectly.
(3) A party who has lost the gratuitous advantage originating from a contract in a manner for which he is
not accountable shall not be held liable towards the third person.
Section 204.
(1) The following claims may not be enforced in the court of law:
a) claims originating from gambling or betting, unless the gambling or betting operation has been
authorized by the state; b) claims originating from a loan promised or granted explicitly for the purposes of gambling or betting;
c) claims that may not be enforced thro ugh a state agency by virtue of law.
(2) A contract signed for securing a claim which cannot be enforced in the court of law shall be null and
void; however, voluntary performan ces shall not be reclaimed.
(3) Where a claim cannot be enforced in the court of law it must be recognized ex officio. Unless
otherwise provided by legal regulation, this provision shall not apply to lapsed claims.

Chapter XVIII
Conclusion of Contracts
Contractual Intent and the Expression Thereof
Section 205.
(1) Contracts are concluded upon the mutual and congruent expression of the parties’ intent.
(2) It is fundamental to the validity of a contract th at an agreement is reached by the parties concerning
all essential issues as well as those deemed essential by either of the parties. The parties need not agree on
issues that are regulated by statutory provisions. (3) Parties shall cooperate during the conclusion of a co ntract, and they shall respect each other’s rightful
interests. Parties shall in form each other regarding all essential ci rcumstances in relation to the proposed
contract before the contract is concluded.
(4) If there is discrepancy between contract statemen ts where contracting is obligatory the parties shall
be required to attempt to reconcile their positions.
Section 205/A.
(1) Any term that had been drafted in advance by one of the parties in the context of a pre-formulated
standard contract, and the other party has therefore not been able to influence the substance of the term and
that has not been individually negotiated shall be construed as a standard contract condition.
(2) Where any party claims that a st andard term has been individually negotiated, the burden of proof in
this respect shall be incumbent on him. This provision shall also apply where there is no agreement
between the parties as to whether a contractual term that has been drafted in advance by the party entering
into a consumer contract with the consumer had been individually negotiated or not. (3) The extent of contractual terms, the way they ha ve been formulated and fixed, and whether they are
integrated into the written contract or provided in a separate document is irrespective of whether a
contractual term should be considered a standard contract condition.
Section 205/B.
(1) Contract terms which have not been individually negotiated shall become part of a contract only if
they have previously been made available to the othe r party for perusal and if the other party has accepted
the terms explicitly or through conduct that implies acceptance.
(2) The other party shall be explicitly informed of any standard contract conditions that differ
substantially from the usual contract conditions, the regulations pertaining to contracts, or any stipulations
previously applied by the same parties. Such conditio ns shall only become part of the contract if, upon
receiving special notification, the other party has explicitly accepted it.
Section 205/C.
If a standard contract condition and another condition of the contract differ from one another, the latter
shall be integrated into the contract.
Section 206.
(1) Should the parties fail to reach an agreemen t under contracting obligation, the court, unless
otherwise provided by legal regulation, shall be entitled to bring the contract into existence and determine
its contents. The court shall not establish a contract if the party that is subject to the contracting obligation
provides proof that it is incapable of performing the contract or that the performa nce of the contract would
be detrimental to the national economy.

(2) Within the scope of contracting obligations the court may amend, terminate, cancel, or validate
contracts in order to accommodate the interests of national economy. (3)
(4) If the parties’ agreement does not include an issue of minor importance, and if this issue is not
addressed by any legal regulation or other statutory provision, the court shall, with due regard to the
purpose and contents of the contr act, be entitled to supplement such a contract on the basis of standard
measures.
Section 207.
(1) In the event of a dispute, the parties shall, in light of the presumed intent of the person issuing the
statement and the circumstances of the case, construe statements in accordance with the general accepted
meaning of the words. (2) If the meaning of a standard contract condition or the contents of a consumer contract cannot be
clearly established by the application of the provisions set out in Subsection (1), the interpretation that is
more favorable to the consumer or to the party entering into a contract with the person imposing such
contractual term or condition shall prevail. (3) The interpretative provision referred to in Su bsection (2) shall not apply with respect to any
contractual terms or standard contract condition contested in proceedings opened according to Section
209/B or Subsection (5) or (6) of Section 301/A.
(4) Should a person waive his rights in part or in full, such a statement cannot be broadly construed.
(5) The parties’ secret reservations or concealed mo tives shall be immaterial with regard to the validity
of the contract. (6) A false contract shall be null and void, and if such contract is intended to disguise another contract,
the contract is to be judged on the basis of the disguised contract.
Preliminary Contract
Section 208.
(1) Parties may agree in principle on concluding a c ontract at a later date (preliminary contract). The
preliminary contract shall be concluded in the form stipulated for the contract and shall be binding for the
parties to conclude a contract. (2) Conclusion of a preliminary contract can be rendered obligatory by legal regulation.
(3) If no contract is concluded, the court shall be entitled, if so requested by either party, to bring a
contract into existence and determine its content. The court shall also be entitled to establish a contract if
the preliminary contract does not contain an agreement concerning the key issues of the contract, provided
that, in due consideration of the interests of the parties and the national economy, the content of the
contract can be determined on the basis of the parties’ negotiations and pre-existing contracts and all of the
circumstances of the case. (4) Under special circumstances the court may bring a contract into existence by modifying the terms
specified in the preliminary contract if it is justified by the interests of the national economy or any interest
of the parties deserving special consideration.
(5) Either party shall be entitled to refuse to conc lude a contract if it provides proof of inability to
perform the contract by virtue of a circumstance that has occurred afte r the conclusion of the preliminary
contract or if the performance of the contract would be detrimental to the national economy, or if, on the
basis of such a circumstance, avoidance or termination of the contract might apply. (6) Concerning other issues, the provisions pertaining to a contract to be concluded on the basis of an
agreement in principle sha ll be duly applied regarding the preliminary contract.
Unfair Contractual Terms
Section 209.

(1) A standard contract condition or a contractual term of a consumer contract which has not been
individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith and honesty,
it causes a significant and unjustified imbalance in th e parties’ rights and obligations arising under the
contract, to the detriment of the party entering into a contract with the person imposing such contractual
term or condition. (2) The unfairness of a contractual te rm shall be assessed, taking into account the nature of the services
for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the
circumstances attending the conclusion of the contract and to all the other terms of the contract or of
another contract on which it is dependent.
(3) Other legal regulations may define the contractual terms and conditions that are regarded to be unfair
in respect of a consumer contract or that sha ll be regarded as unfair until proven otherwise.
(4) A standard contract condition or a contractual term of a consumer contract which has not been
individually negotiated shall be regarded as unfair if they are not drafted in plain, intelligible language.
(5) The provisions relating to unfair contractual terms shall not apply to the definition of the main
subject matter specified in the contr act or to the ratio between the price determined, on the one hand, and
the services provided in exchange, on the other, in so far as these terms are in plain intelligible language. (6) The contractual terms defined by legal regulation, or established in accordance with the provisions of
legal regulations shall not be deemed unfair.
Section 209/A.
(1) An unfair contractual term that has been incorporated into the contract as a standard contract
condition may be contested by the injured party. (2) A contractual term that has been drafted in advance by the party entering into a consumer contract
with the consumer and which has not been individually negotiated but is incorporated into the contract as a
standard contract condition, shall be null and void. Nullity can only be cited in the interest of the consumer.
Section 209/B.
(1) A contractual term that has been incorporated into the contract as a standard contract condition may
be contested in accordance with Subsection (2) of Sec tion 209/A in the court of law by an organization
described in specific other legislation. The court may declare the unfair term null and void in favor of all of
the parties with which the party imposing the condition has a contractual relationship. (2) The organization described in specific other legislation may request to have a standard contract term
or condition declared unfair, that has been defined for consumer contracts and made available to the general
public, regardless of whether or not the term or co ndition in question had in fact been applied or not.
(3) The court, in its proceedings under Subsection (2), if it finds the contested contractual term or
condition unfair, shall declare it null and void for future purposes in favor of all of the parties with which
the party who has made the term or condition in question available to the public has a contractual
relationship. Following such judgment the user of the unfair term or condition shall satisfy any claim the
consumers may have against him. The court’s judgment may also contain a clause banning the party who
made the term or condition in question available to the public from the further use of such. (4) The lawsuit referred to in Subsection (2) may be launched against any party who publicly
recommends the use of any unfair standard contract term or condition that has been defined for consumer
contracts and made available to the general public. The court, if it finds the contested contractual term or
condition unfair, shall declare it null and void for future purposes and shall ban any further
recommendation for use.
Section 209/C-D.
Mistake, Deception, Intimidation
Section 210.

(1) A person acting under a misapprehension regarding any essential circumstance at the time a contract
is concluded shall be entitled to contest his contract st atement if his mistake had been caused or could have
been recognized by the other party.
(2) A contract statement may be contested on the grounds of misapprehension of a legal issue if such
misapprehension is deemed significant and if the advice of legal counsel, acting within the scope of his
competence, to the parties affected ha s been patently erroneous in terms of the contents of legal regulations.
(3) If the parties had the same mistaken assumption at the time the contract was concluded, either of
them may contest the contract. (4) A person who has been persuade d to conclude a contract by deception or duress by the other party
shall be entitled to contest the contract statement. This provision shall also apply if deception or duress was
committed by a third person and the other party had or should have had knowledge of such conduct. (5) A gratuitous contract may be contested on the grounds of mistake, deception or duress even if these
circumstances could not have been recognized by the other party.
Concluding Contracts
Section 211.
(1) A person who offers to conclude a contract sha ll be bound by his offer, unless the offer contained a
clause to the contrary. (2) The offeror may specify the period for his offer to remain binding. In the absence thereof, an offer
made personally or by telephone shall cease to be binding unless the other party accepts the offer
immediately. An offer made to an absent person sha ll cease to be binding upon the expiration of the period
of time within which the person who made the offer can expect (in light of the nature of the services
specified in the offer and the manner in which the offer was delivered) to receive a response under normal
conditions. The period in which an offer is binding can be otherwise regulated by law.
Section 212.
(1) By disclosing the necessary details and sending the necessary documents, the obligee may request the
person who is subject to contracting obligation (oblig or) to make an offer. The obligor shall present his
offer within thirty days of receipt of the request. (2) If the request for an offer does not contain the necessary details or documents, the obligor shall
request these details and/or documents to be furnished within fifteen days of receipt of the request. In this
case, the deadline for presenting the offer shall commence upon the provision of the missing details and/or
documents.
(3) The deadlines may be determined differently by legal regulation or, if allowed by legal regulation, by
the parties under mutual consent.
Section 213.
(1) A contract comes into existence between persons who are present at the moment the contract is
concluded, while, for thos e who are not present, it comes into ex istence when the offeror receives the
statement of acceptance. (2) An acceptance with contents that deviate fr om the offer shall be deemed a new offer.
(3) If a contract is concluded by persons who are not present, the pl ace where the contract is concluded
shall be the offeror’s domicile or registered office (premises).
Section 214.
(1) A contract statement, if made orally or by verbal message, shall become operative when it becomes
known by the other party. A written statement or one se nt by telegraph must be delivered to and received
by the other party in order to be valid.

(2) An as yet inoperative statement can be withdrawn. The statement of withdrawal must reach the other
party or be made known to him no later than the arrival of the withdrawn statement. (3) If both parties are economic organizations, the pa rty assuming to pay consideration (purchase price,
fee) may withdraw its statement befo re the conclusion of the contract; however, that party shall reimburse
the expenses of the other party. (4) If the statement of an offeree made in due time is belatedly receive d by the offeror, the offeror shall
immediately notify the other party that the contract has not been concluded. Failure to do so shall validate
the contract.
Section 215.
(1) If the consent of a third party or official approval is required for the validity of a contract, the contract
shall not be concluded until this has been given; however, the parties shall be bound by their statements.
Either party shall be relieved from obligation if the thir d party fails to give its consent or the authority fails
to grant its approval before the applicable dead line as communicated by one party to the other.
(2) Once consent and/or approval has been received, th e contract shall become effective as of date on
which it is signed, unless otherwise prescribed in legal regulation. (3) In the absence of consent and/or approval, the legal consequences of invalidity shall apply to the
contract.
Formal Requirements
Section 216.
(1) A contract may be concluded either verbally or in writing, unless otherwise provided by legal
regulation. The intent to conclude a contract can also be expressed by conduct that implies such intent. (2) Failure to make a statement, if it is not implic it conduct, shall be deemed as acceptance only if legal
regulation has so prescribed or the parties have so agreed.
Section 217.
(1) A legal regulation may prescribe definite forms for contracts. A contract concluded in violation of
formal requirements shall be null and void, unless otherwise provided by legal regulation. (2) A form stipulated by the parties shall be a condition to the validity of a contract, if the parties have
expressly so agreed. In such cases, the contract shall become valid by acceptance of performance or partial
performance, even if no formal requirement had been stipulated.
Section 218.
(1) If a written form is prescribed by legal regulation or an agreement, at least the essential content of the
contract must be put in writing. (2) If written form is prescribed by legal regulation an d the contracting party is illiterate or is unable to
write, a public document or a private document with full probative force shall be required for the validity of
the contract. (3) If the validity of a contract is tied to a definite form determined by legal regulation or the agreement
of the parties, termination or cancellation of the contract concluded in such form shall also be valid only in
the specified form. Termination or can cellation of the contract by disregarding the specified form shall also
be valid, if the actual state of affairs conforming thereto has been established upon the parties’ mutual
consent.
Chapter XIX
Representation

Section 219.
(1) It shall be possible to conclude contract or make other legal statements through another person
(representative), unless it is provided by legal regulation that the legal statement can only be made in
person. Persons with limited capacity shall be entitled to represent competent persons.
(2) The person who is represented shall become an ob ligor or obligee on the basis of his representative’s
actions.
Section 220.
(1) Employees or members of a legal person that is regularly engaged in buying or selling goods or
providing other services who work in the customer area of the legal person shall be regarded as
representatives of that legal person in concluding and performing the contracts that are customary in that
place, unless otherwise provided by legal regulati on or otherwise indicated by the circumstances.
(2) Restrictions on the scope of authority of an employee or member shall be inoperative towards third
persons, unless the third person is or could have been aware of the restrictions. (3) These provisions shall also apply to the employees of private persons.
Section 221.
(1) A person who transgresses the scope of his authority to represent in good faith or who has concluded
a contract in the name of another person without having the right to represent and the person in whose
name he has proceeded does not approve his action, such shall pay compensation to the other contracting
party for damages incurred in result of the conclusion of the contract. However, the court shall be entitled
to grant exemption from such indemnification, particularly if the person had previously been a
representative and was, through no fault of his own, unaw are of the cessation of his right to represent at the
time the contract was concluded. (2) A mala fide false representative shall be liable for full recompense.
(3) A representative shall not proceed if the opposite or otherwise interested party is himself or a person
whom he also represents. The representative, if a legal person, shall also be allowed to proceed in a case of
conflicting interests with the express consent of the person represented.
Power of Attorney
Section 222.
In addition to representation that is based on the law, official orders, or statutes; the right to represent
may be established by a statement (power of attorney) addressed to the representative, the other party, or
the authority involved.
Section 223.
(1) A power of attorney shall be subject to the same formal requirements as prescribed by legal
regulation for contracts to be concluded on the basis of the power of attorney. A general power of attorney
shall not be valid unless it is written. (2) A power of attorney shall be valid until withdraw n, unless otherwise provided; its withdrawal that
concerns a bona fide third person shall be operative only if he has been informed thereof. The right of
withdrawal cannot be validly waived. (3) A power of attorney shall cease to ex ist with the death of either party.
Representation of Persons Who are Unable to Conduct their Affairs
Section 224.

(1) Upon request, the guardian shall appoint a conservator for a person who is unable to conduct his
affairs, particularly if th e whereabouts of that person are unknown, or if the whereabouts of the person are
known, but he is under duress.
(2) The appointment of a conservator shall not affect the legal competency of the person in the custody
of a conservator. (3) Conservators shall, within the scope of their power to represent, manage the property of the persons
in their custody and perform the duties conferred on them by specific other legislation. Furthermore, the
conservator of an absentee may take any measure, with the prior consent of the guardian , in order to
protect the person in his custody from damages. Approval by the guardian shall not be required for
imminently urgent measures; however, the guardian shall be notified thereof as soon as possible.
Ad Hoc Conservatorship
Section 225.
(1) If, owing to a conflicting interest or physical obstacle, a parent, guardian , or conservator is not able
to proceed pursuant to a legal regulation or a conservator’s orders, the guardian shall appoint an ad hoc
conservator. (2) An ad hoc conservator shall also be appointed if
a) measures are urgently required and the person who is incompetent or of limited capacity has no legal
representative, or if the identity of the le gal representative cannot be determined, and
b) it is necessary for the protection of the rights of a person who is unknown, absent, or otherwise unable
to conduct his affairs. (3) An ad hoc conservator shall act with the same authority as a guardian or conservator.
(4) The authority of a parent exercising parental supervision, a guardian, or a conservator shall not apply
to the affairs for which an ad hoc conservator has been appointed.
Chapter XX
Content and Subject Matter of Contracts
Section 226.
(1) Legal regulations can prescribe certain content elem ents of contracts and provide that such elements
shall constitute a part of a contract ev en if the parties provide otherwise.
(2) Legal regulations can amend the content of contracts that have been concluded prior to the date on
which the legal regulations enter into force only under special circumstances. If the amended content of a
contract injures any substantial and rightful interest of any of the parties, the party so affected shall be
entitled to request the court to amend the contract, or , unless otherwise provided by legal regulation, the
party shall be entitled to rescind from the contract. (3) The provisions on establishing official prices are contained in specific other legislation.
(4)-(5)
Section 227.
(1) Services stipulated in contr acts can be aimed toward the provision of some thing, an activity,
abstaining from an activity , or some other conduct.
(2) Contracts aimed toward impossible services shall be null and void.
Conditions and Terms
Section 228.

(1) If the parties have made the effective date of a contract contingent upon an unpredictable future event
(condition precedent), the contract shall beco me effective when such condition occurs.
(2) If the parties have made the termination of a contract contingent upon an unpredictable future event
(condition subsequent), the contract shall expire when such condition occurs. (3) Incomprehensible, contradictory, illegal or unattainable conditions shall be null and void; the
provisions of limited invalidity (Section 239) shall apply to contracts with such conditions.
Section 229.
(1) As long as a condition is pending, neither party shall be entitled to do anything that would infringe
upon or violate the other party’s rights upon the reali zation or frustration of the condition. This provision
shall not affect the rights of third persons acquired in good faith and for consideration.
(2) Persons who have actionably caused the realization or frustration of a condition shall not be entitled
to establish any right thereupon.
(3) The provisions pertaining to conditions shall also be duly applied in the event the parties have linked
the validity or termination of a contract to a certain date.
Alternative Services
Section 230.
(1) If the parties have defined several services as the subject matter of a contract in a manner that makes
it possible to choose among the services, the obligor shall have the right to choose, unless otherwise
prescribed by legal regulation. This right of the ob ligor shall pass to the obligee upon the expiration of the
performance deadline stipul ated by court decision.
(2) If the obligee is presented with a choice, but he is late in making it, this right shall pass to the obligor.
Cash Debt, Interest
Section 231.
(1) A cash debt shall, unless otherwise stipulated, be repaid in the legal tender of the place of
performance. (2) A debt specified in a different currency or in gold shall be converted on the basis of the exchange rate
(price) prevailing at the pl ace and time of payment.
(3)
Section 232.
(1) Contractual relations, unless otherwise provided by legal regulation, shall entail interest. Interest
shall be due in the contractual relations of private persons only if so stipulated. (2) In connection with any payment obligation assumed vis-à-vis third persons under any subsystem of
the central budget, or payable from any subsystem of the central budget to third persons, including the
payment obligations stemming from any assistance contract, any contractual te rm for the exclusion of
interest payment or for payment of interest at a rate below the legal limit is null and void, unless the
relevant legislation contains provisions to the contrary. This provisions shall also apply to payment
obligations assumed in agreements for the appropriation of assistance provided from the subsystems of the
central budget, or by bodies exercising public functions by authorization conferred under the strength of
law, which are established by a body governed by public law, or in which such body has majority control.
(3) The annual interest rate shall be the same as the central bank base rate unless otherwise prescribed by
legal regulation. The interest payable shall be calculated for the entire calendar half-year period by using
the base rate in effect on the last day prece ding the calendar half-year to which it pertains.
(4) Any unreasonably excessive interest rate established by the parties may be reduced by the court.

Contracts Concluded in Favor of a Third Party
Section 233.
(1) If the parties have concluded a contract for services to be performed for a third party, the third party
will be an immediate beneficiary only if the parties have expressly stipulated. (2) A third party shall be entitled to exercise the rights stipulated in its favor as of the date on which it
receives notice of the contract from either party. If these rights are declined by the third party, they shall
become the property of the party that has made the contract in its favor. (3) The obligor shall be entitled to enforce his objections to the contract in respect of third persons, as
well.
Chapter XXI
Nullity and Avoidance
Section 234.
(1) Unless otherwise provided by law, anybody shall be entitled to plead the invalidity of an annulled
contract without a time limit. No special procedur e is required for the establishment of invalidity.
(2) If a nullified contract is in conformity with the validity requirements of another contract, this latter
contract shall be valid, unless it is in contradiction with the presumed intent of the parties.
Section 235.
(1) An avoidable contract shall, in consequence of being avoided, become invalid as of the date on which
it is concluded. (2) The aggrieved party and persons with a legitimate interest in the avoidance of a contract shall be
entitled to do so.
Section 236.
(1) The other party shall be given written notifica tion of avoidance within one year, and if the
notification is not successful, the avoidance shall be immediately enforced in court.
(2) The time limit for avoidance shall commence
a) upon recognition of th e mistake or deception;
b) in the case of unlawful men ace, upon the cessation of duress;
c) in the event of any apparent di screpancy between the services of th e parties or an unfair contractual
condition [Subsection (1) of Section 209/A and Subsection (4) of Section 301/A], on performance by the
injured party (in the case of performance by installments at the time of first performance) or, if this party
was under duress at the time of performance, upon cessation thereof.
(3) The provisions pertaining to the abeyance and interruption of limitation shall be duly applied to the
time limit for avoidance. The party entitled to avoid a contract shall be entitled to enforce this right by
challenging a claim originating from the contract, even if the time limit for avoidance has already expired.
(4) The right of avoidance shall be suppressed if the party entitled to avoid the contract confirms the
contract in writing or otherwise waives his right to do so in writing after the expiration of the time limit for
avoidance.
Section 237.
(1) With regard to invalid contracts, the state of affairs having existed prior to the conclusion of the
contract shall be restored.

(2) If the state of affairs having existed prior to the conclusion of the contract cannot be restored, the
court shall declare the contract valid for the period up to the date of judgment. An invalid contract may be
declared valid if the cause of invalidity can be abolishe d, in particular by eliminating the excessive benefit
in the case of a usurious contract or the unreasonable advantage between th e services of the parties. In such
cases, it shall be necessary to provide for the return of any services that might remain without
consideration. (3) With regard to usurious contracts, the court may cancel reimbursement in full or in part if, even in
those cases in which installation payments are permitted, the aggrieved party would find itself in dire
straits. Nevertheless, the party who caused the injury shall be obliged to reimburse the aggrieved party for
that part of the received services that is equivalent to the excessive advantage.
(4) Based on a motion filed by the public prosecutor , the court shall be entitled to award to the state the
performance that is due to a party who has concluded a contract that is contrary to good morals, who has
deceived or illegally threaten ed the other party, or who has otherwis e proceeded fraudulently. In the case of
a usurious contract, the performance to be returned to the party who caused the injury shall be awarded to
the state. Allotments du e the state shall usually be awarded in cash.
Section 238.
(1) If an invalid contract is declared valid, the contracting parties shall be liable for the breach of contract
as if the contract had been valid from the very beginning. (2) A person who has, in good faith, believed in the existence of an invalid contract can demand
compensation from the parties for damages that originat e from the conclusion of the contract. However, if
invalidity is attributable to the conduct of one of the parties, the court shall not condemn the other party. If
either of the parties has acted in bad faith towards the third person, such party shall be liable for full
compensation for damages even if invalidity is not attributable to his conduct. The court shall also be
entitled to award such indemnification by maintaining the validity of the contract either in part or in full.
Section 239.
(1) In the event of limited invalidity of a contract, the entire contract shall fail only if the parties would
not have concluded it without the invalid part. Legal regulation may provide otherwise. (2) In the event of limited invalidity of a consumer contract, the entire contract shall fail only if the
contract cannot be performed without the invalid part.
Chapter XXII
Amendment of Contracts, Acknowledgment of Debts
Amendment by Contract and Composition
Section 240.
(1) Unless otherwise provided by legal regulation, the parties shall be entitled to amend the content of a
contract by mutual consent or change the legal title of their commitment. (2) The parts of a contract not affected by amendment in terms of content or legal title shall remain
unchanged. Any lien or suretyship pledged as security for the obligation shall prevail; however, this cannot
result in regress of the position of the lien holder or the obligor without his consent, and his objections
made prior to the amendment shall also remain in force. (3) A contract may also be amended by composition. Composition shall be construed as the parties’
settlement of disputed or indeterminate contract issues by making mutual concessions to one another. (4) The validity of contract amendment by composition shall not be affected by any misapprehension of
the parties regarding a circumstance that was disputed or deemed indeterminate. Th is also applies to cases

in which the dispute or uncertainty could have been avoided by evidence uncovered after the composition
had been made.
Amendment of Contracts by Court
Section 241.
The court may amend a contract when it is injurious to any substantial rightful interest of one of the
parties in consequence of a circumstance arising in th e long-term relationship of the parties following the
conclusion of the contract.
Acknowledgment of Debt
Section 242.
(1) Acknowledgment of debt shall not change the le gal title of a debt; however, the burden of proof lies
with the person making the acknowledgment to demonstrate that he has no debt, the debt cannot be
judicially enforced, or that the contract is invalid. (2) A debt is acknowledged by a written statement addressed to the other party.
Chapter XXIII
Collateral Commitments for Securing Contracts
Earnest
Section 243.
(1) Earnest may be given when a contract is concluded as a sign of commitment.
(2) A sum of cash or another thing that is delivered at the time the contract is concluded shall be
construed as earnest only if this intent is expressly indicated in the contract.
Section 244.
If a contract is performed, the earnest shall be include d in the consideration for the service, however, if
the earnest cannot be included in the co nsideration or if the contract is terminated for reasons attributable to
neither or both of the parties, the earnest shall be returned.
Section 245.
(1) The person responsible for the failure of performance shall forfeit the earnest that he has given, or he
shall refund twice the amount of the earnest he has received.
(2) Waiver of the right to demand a refund of earnest or the double repayment of the earnest shall not
constitute an exemption from the consequences of br each of contract; however, the amount of the earnest
shall be included in the indemnification.
(3) An excessive earnest may be reduced by court.
Liquidated Damages
Section 246.

(1) An obligor may pledge to pay a certain sum of money in case he fails to perform the contract or his
performance is not in conformity w ith the contract for reasons attributable to him (liquidated damages). A
clause stipulating liquidated damages shall only be deemed valid if made in writing. Any interest attached
to liquidated damages shall be null and void.
(2) The obligee shall be entitled to demand payment of liquidated damages even if he sustains no
damage, and he shall be entitled to enforce payment for those of his damages exceeding the liquidated
damages as well as other rights resulting from the breach of contract. The obligee shall be entitled, in
accordance with the relevant regulations, to demand compensation for damages caused by the breach of
contract, even if he has not enforced his claim for liquidated damages.
(3) Enforcement of liquidated damages stipulated for nonperformance precludes any demand for
performance. Payment of liquidated damages stipulated for late performance and lack of conformity shall
not constitute an exemption from performance. (4)
Section 247.
(1) Excessive liquidated damages can be reduced by court.
(2) The provisions on default interest shall be applied to default penalties for late payment of cash debts.
(3) Liquidated damages stipulated as security for a claim that cannot be judicially enforced cannot be
enforced in the court of law.
Guarantee
Section 248.
(1) Where guarantee is to be provided under contract or legal regulation for the faultless performance of
a contract, the guarantor shall be released from liabilit y during the guarantee period if he is able to prove
that the cause of the defect occurred after performance. This guarantee sh all not affect the consumer’s legal
rights. (2) The guarantor shall be subject to liability in accordance with the conditions laid down in the
guarantee statement of the contract to which the guarantee pertains, the applicable legal regulation, or the
relevant advertising. (3) For consumer contract s, the guarantee shall specify the name and address of the guarantor, the
contents of the guarantee and the duration and territori al scope of the guarantee as well as the essential
particulars necessary for making claims under the guaran tee; it shall also state that the consumer has legal
rights under applicable legislation. At the consumer’s request, the guarantee statement shall be made
available in writing or in another durable medium available and accessible to him. Concerning the
guarantee statement, additional requirements may be stipulated by legal regulation where it is made
mandatory. Noncompliance with the provisions set out in this Subsection shall not affect the validity of the
guarantee obligation. (4) Consumers shall be allowed to communicate a co mplaint at any time within the guarantee period.
(5) The legal provisions on exercising warranty rights shall be duly applied concerning the application of
binding guarantees.
Bank Guarantee
Section 249.
Banks shall be entitled to assume obligations to effect payment to a beneficiary up to a specific amount
within a predetermined time limit under certain conditions, such as the occurrence or absence of a certain
event or the submission of documents.
Stipulation of Forfeiture of Right

Section 250.
(1) Parties shall be entitled to agree in writing that th e party responsible for any breach of contract shall
forfeit a right or a benefit to which he would be entitled on the basis of the contract.
(2) If the forfeiture of a right afflicts the obligor excessively, such adverse disposition may be mitigated
by the court.
Lien
1. Common Rules
General Provisions
Section 251.
(1) Upon the obligor’s failure to perform, a lien hold er shall be entitled, in the absence of any provision
of law to the contrary, to seek satisfaction prior to other claims against a property pledged as security for
his claim that has been stipulated or can be stipulated in monetary terms. The creation of a lien as security
for a claim that cannot be enforced in court shall be null and void.
(2) Liens may also be created for s ecuring future or conditional claims.
(3) The scope of liability through a lien shall be ad justed to the claim for which it was pledged as
security. It shall include interest, the costs of enforc ing the claim or lien, and the necessary expenditures in
connection with the property pledged as security.
(4) A lien shall be transferred to the new obligee when the claim is transferred. In the absence of any
provision of law to the contrary, a lien can on ly be transferred together with the claim.
Pledged Property
Section 252.
(1) A lien may be put on all things which are capable of appropriation, and on any transferable right or
claim. (2) If so agreed by the parties, a lien can also be put on the proceeds from the pledged property. If,
however, the pledged property is not held by the lien holder, the pledge shall not include any separated
proceeds, unless the pledged property had previously been placed under attachment.
Section 253.
(1) If a lien is put on more than one pledged property to secure the same claim, all of the pledged
properties shall, in the event of any doubt, serve as security for the entire claim. (2) If the pledged property is owned by several persons from whose relationship does not imply
otherwise, the owners shall bear liability in proportion to the value of the pledged property. Whoever is
obliged to make satisfaction in excess of this proportion shall be entitled to demand reimbursement for the
excess share from the other owners accordi ng to their respective ownership shares.
Creation of a Lien
Section 254.
(1) Liens are created under contract or pursuant to legal regulations and on the basis of court ruling and,
if so prescribed by law, other official decisions.

(2) Lien contracts shall be concluded in writing. For the creation of liens on certain properties, additional
formal requirements may be prescribed by law.
Enforcement of Liens
Section 255.
(1) Unless otherwise provided by law, satisfaction from the pledged property shall take place on the
basis of court order by a writ of execution. (2) Agreements that are concluded before the claim is due and grant the lien holder the right to acquire
ownership of the pledged property in the event of the failure to fulfill the obligation shall be null and void.
Section 256.
(1) The right of satisfaction shall not be affected by any rights acquired after pledging, unless otherwise
prescribed by law. If the same pledged property is encu mbered by more than one lien, the lien holders shall,
unless otherwise provided by law, be satisfied in th e order in which the liens were created (order of
priority).
(2) If a lien is put on several things, the lien holder may determine the order of satisfaction. Sale,
however, can only involve as many pledged pr operties as necessary to provide satisfaction.
Section 257.
(1) The parties can agree in writing to sell the pledge d property together before the claim to which it
pertains falls due by establishing the lowest sale pr ice or a formula for calculating the sale price, and a
deadline from the date on which the claim falls due. If the pledged property cannot be sold before the
deadline and/or under the conditions set forth in the agreement, the agreement for joint sale shall become
inoperative. (2) If the pledged property has an official market price or if the lien holder is engaged in providing loans
against security commercially (in terms of claims secured by lien, including all credit institutions), the
parties can, before the claim is due, agree, under th e terms and conditions prescribed in Subsection (1), to
permit the lien holder to sell the pledged property himself without judicial execution.
(3) If the provisions set forth in Subsection (2) cannot be applied or if the parties decide not apply them,
the parties can agree, under the terms and conditions pr escribed in Subsection (1), to permit the lien holder
to appoint a person who is commercially or ex officio engaged in providing loans against security or
organizing auctions to sell the thing.
(4) The parties may agree, under the terms and conditions prescribed in Subsection (1) above, in the sale
of the pledged goods by the simplified enforcement procedure as well.
Section 258.
(1) A person authorized to sell a pledged property or have an agent do it [Subsections (2) and (3) of
Section 257], shall be entitled – on the basis of such auth orization – to transfer title to the pledged property
instead and on behalf of the owner of such property. If the pledged property is not in his possession, he may
request that it be surrendered for the purpose of sale. (2) Prior to selling the pl edged property, the obligor shall be no tified regarding the mode, place and time
of the sale. (3) The lien holder shall be entitled to claim the proceeds from the sale of the pledged property; however,
the lien holder shall settle all accoun ts with the obligor and surrender any proceeds exceeding the amount
of the claim, any interest and the costs of sale. Any agreement to exempt the obligor from the obligation to
keep records that is made prior to the termination of the lien shall be null and void. (4) Legal regulation may prescribe further provisions pertaining to sale by means other than judicial
execution.

Termination of a Lien
Section 259.
(1) If the owner of a pledged property and the obligor are not the same person (individual obligor) and if
the lien holder has been satisfied from the pledged property, the lien shall be extinguished, and the claim,
together with its other securities, shall be transferred to the owner.
(2) If a lien holder is not otherwise satisfied by the i ndividual obligor, the lien shall be transferred to the
person providing satisfaction up to the extent of the claim or to the demand for reimbursement created on
the basis of satisfaction. This person shall be entitle d to demand the surrender of the pledged property or
the required statement for having the lien registered in his favor. (3) A lien shall be terminated upon the termination of the claim or if the claim is transferred without the
transfer of the lien, unless a provis ion of law prescribes that the lien be retained as security for the
reimbursement claim. (4) A lien shall, furthermore, be terminated if the lien holder acquires ownership of the pledged property
or the lien holder acquires the claim that is secured by lien; liens, however, if the new owner of the claim is
not deemed an individual obligor, shall remain for the holders of subordinate liens. (5) A lien shall be terminated if so prescribed by la w as part of an execution or some other proceeding.
Section 260.
(1) A lien shall also be terminated if the pledged property is destroyed.
(2) If the pledged property is destroyed or depreciated owing to reasons attributable to the owner, and,
furthermore, if the pledge has been attached under an obligation to provide security and the lien holder is
not responsible for the damages, an adequate new pledged property or additional security to cover the
depreciation can be demanded from the party obliged to provide security. (3) A security deposit, reimbursement, or other value provided as alternative security for the destruction
or depreciation of the pledged proper ty shall replace the pledged property or supplement the lien security.
In the case of mortgages, both the owner and the mortgage holder shall be entitled to demand such amount
to be spent on the restoration of the pledged property.
(4) If a pledged property is sold to avoid damages, the sale price shall replace the pledged property. The
owner’s consent is required for such sale, if there is no insurmountable obstacle thereto.
2. Lien on Things
Mortgage
Section 261.
(1) In respect of mortgages, the pledged property remains in the possession of the obligor, who is entitled
to use and utilize the property; however the obligor shall maintain such pledged property in good condition.
In the event the obligor or a third person is endangering the condition of the pledged property, the lien
holder shall be entitled to demand that the endangering act be prohibited and that an order be issued to take
the necessary measures to eliminate the danger. (2) If any deterioration in the condition of the pledge d property jeopardizes the satisfaction of a claim,
the lien holder may demand replacement of the pledged property or security that corresponds to the degree
of endangerment. Should the obligor fail to comply with request of the lien holder within due time, the lien
holder may enforce his right to satisfaction. (3) Mortgages cannot be put on fractions or parts of a property; however, the full share of ownership
held by the obligor in a joint property may be pledged as security. In the case of real property, a lien may
only be put on the entire property that is registered in the real estate register or on the full title of ownership
to the obligor’s property.

Section 262.
(1) Real property may be pledged as security only in the form of a mortgage. A mortgage shall be
considered valid only if contracted in writing and recorded in the real estate register.
(2) For the creation of a mortgage on other things, the lien contract shall, unless otherwise provided by
legal regulation, be documented in front of a notary public, and the lien shall be recorded in the register
maintained by the Hungarian Association of Notari es Public (lien register) in accordance with the
provisions of a separate law. If a lien is put on seve ral properties, or if the pledged property cannot be
labeled in itself, the pledged property or the group of properties may be described by type and quantity or
by elaborate description. (3) The records referred to in Subsections (1) and (2) must contain – in addition to the data and
information prescribed by the regulations on such records – the amount of the claim (or, in the case of
future claims, the largest amount intended to be secu red) and the appurtenances covered by the lien; the
latter two may also be specified by reference to the c ontents of the lien contract. Any reduction in the claim
or the termination of the claim shall affect the lien regardless of the contents of the record on file.
(4) The owner of a real property may have recorded in the real estate register his intention to mortgage
his property within a year at or below the amount specified. If an application for registration of such
mortgage is submitted before the deadline specified, it shall be recorded as consistent with the order of
priority (ranking) previously recorded. (5) A lien may also be registered in the lien register on a thing (contingent upon the effective date of the
right of disposition), which shall be acquired by the obligor after the lien contract has been concluded. The
ranking of such lien shall be determined by the date on which it is registered; however, this provision may
not be cited with regard to a person on whose behalf the former holder of the right of disposition has filed
the lien. (6) A mortgage registered in the lien register shall be terminated if the pledged property is sold in
commercial circulation or under normal measures to a bon a fide buyer. It shall also be terminated if such
bona fide buyer acquires, for consideration, ownership of a thing generally used for everyday needs.
Section 263.
(1) Should parties create a lien to secure claims that ha ve originated or are likely to originate from a legal
relationship or a legal title stipulated in the lien contract, the record shall describe the legal relationship or
the title and the largest amount within which the lien holder may seek satisfaction from the pledged
property (limited security lien). (2) If a new obligor is admitted into an already existing relationship, the limited security lien shall serve
as security for the claims that are stipulated in the legal relationship to be borne by the new obligor as well
as those that had previously been established by the legal relationship.
(3) If the relationship stipulated in a lien contract is terminated and the obligor’s debt originating from
such lien contract or from a claim created under a title specified in the lien contract no longer prevails, the
obligor shall be entitled to demand that the lien holder forfeit his limited security lien.
Section 264.
(1) An mortgage shall be terminated upon the expiration of the claim.
(2) The owner may create a new mortgage at the place of ranking of the terminated mortgage and in the
extent of termination simultaneously with the termina tion of the recorded mortgage and not to exceed the
amount thereof, or he may retain the ranking of the canceled record for one year. The owner shall be
entitled to waive this right in favor of a third person or a person holding a lien in the next rank. In this case,
the owner shall be entitled to exercise the rights connect ed with such ranking with the consent of the person
in whose favor it was waived.
Possessory Lien
Section 265.

(1) To create a possessory lien, it shall be necessary to conclude a lien contract and to surrender the
pledged property. Such property may also be delivered into the hands of a third person (pledge holder). In
commercial circulation, liens can be acquired in good faith even if the person providing the pledged
property is not the owner. (2) Possessory liens cannot be put on fractions or parts of a thing nor on the ownership of such thing.
Nothing excluded by law from being pledged property can serve as a pledge.
(3) The holder of a possessory lien shall maintain the pledged property in good condition and return it
upon the termination of the lien. (4) The lien holder, unless otherwise provided by legal regulation, shall not be entitled to use or utilize
the pledged property. He shall, however, be entitled and required to reap the proceeds therefrom. Such
proceeds shall be primarily for covering the necessary expenses. The lien holder shall be obliged to account
for all proceeds.
(5) Should there be any possibility of a deteriora tion in the condition of the pledged property or a
substantial decrease in the value of the pledged property, the obligor or the owner shall be entitled to
request the return of the pledged property, while offering adequate security in replacement.
(6) A possessory lien shall be terminated when the lien holder returns the pledged property to its owner.
A possessory lien shall also be terminated if the lie n holder fails within one year to recover a pledged
property that has been removed from his possession without his consent and he does not go to court
therefor.
3. Lien on Financial Assets
Section 266.
(1) The creation of a lien on the financial assets of a legal entity or an unincorporated business
association, whether on the whole or on a strategic business unit (asset) – without having to specify the
things, rights and claims comprising it (property) – shall be made in a lien contract and documented in front
of a notary public, and the lien shall be registered in the lien register. Such lien shall apply to any and all
property acquired by the obligor after the contract has entered into effect, commencing with the date on
which the obligor acquires the right of disposition; it sh all, however, cease when the property in question is
no longer in the obligor’s possession.
(2) Once the claim is due, the holder of a lien on financial assets shall be entitled to seek satisfaction
from the assets of the obligor, given that the assets are maintained intact, or he shall be entitled to convert
the lien on the property to a lien on specified property items with a written statement addressed to the
obligor. This statement shall not replace any further co nditions made necessary under the lien contract for
creating the liens to be established by it.
(3) The holder of a lien on financial assets or a lien created through a conversion statement shall be
entitled to seek satisfaction on the basis of the rank ach ieved by the date of registration. However, the lien
holder shall not be entitled to cite this provision with regard to any person who has, on any property item
that is construed part of the entire assets,
a) acquired a lien before it became part of such assets,
b) acquired a lien registered in r ecords other than the lien register,
c) acquired, in good faith, a possessory lien in commercial trade or a lien on a claim or right.
(4) In the event of any depreciation in the assets on which the lien was put to an extent jeopardizing
satisfaction, the lien holder shall be entitled to make the conversion statement before the claim is due.
(5) In the event of any depreciation in the assets on which the lien was put to an extent jeopardizing
satisfaction, the obligor must notify the lien holder. Pa rties may include a clause in the lien contract in
which they stipulate the extent of depreciation that is considered to jeopardize satisfaction. Parties may also
agree to stipulate the lien holder’s right to inspect the manner in which the obligor cares for the pledged
property. (6) In respect of other issues, the provisions on mortgages shall be applied regarding liens on financial
assets.
4. Lien on Rights and Claims

Section 267.
(1) A lien can be put on a right or claim by contract. It may include future rights and claims that may be
created in favor of the obligor. The ri ghts and claims pledged may be specified by elaborate description. If
the right or claim is substantiated by some official r ecord, the lien shall be construed effective at the time
when recorded. Liens can also be put on a specific part of a divisible claim. (2) For enforcing the lien, the obligor of the right or claim shall be notified when the lien is created. The
lien holder shall be entitled to dema nd that the obligor surrenders the documents necessary to enforce the
lien. (3) In respect of a lien on a claim or right, the obligor, with a force extending to the lien, shall, with the
consent of the lien holder, be entitled to make a legal statement to terminate or adversely alter the lien
holder’s grounds for satisfaction. This provision shall be applied to a lien on a claim prevailing on the basis
of a bank account contract, regard ing the right of disposition of the account holder, if it is expressly
stipulated by the parties in the lien contract.
Section 268.
(1) If a claim encumbered by a lien becomes due befo re the lien is to be satisfied from the pledged
property, the obligor of the claim shall only be able to pay the lien holder and claimant together, unless
otherwise stipulated in the lien contract; money claims, however, shall be placed in court deposit in favor of
both the lien holder and the claimant if so requested by either one of them. If a claim encumbered by a lien
is for the delivery of a thing and if, by agreement of the parties, the lien holder is entitled to possession of
the pledged property, the obligor of the claim may pay just the lien holder. (2) If a claim encumbered by a lien becomes due af ter the lien is to be satisfied from the pledged
property and if it was not sold in the course of enforc ing the lien, the obligor of the claim can pay just the
lien holder, unless otherwise stipulated in the lien contract.
(3) If a pledged property is to be delivered into the hands of the lien holder, the provisions on security
deposits shall apply in respect of money claims, while the provisions on possessory liens shall apply to
other things. (4) If the maturity of a claim encumbered by a lien or the exercise of a right depends on the legal
statement of the claimant or on a condition to be performed by him, the lien holder shall be entitled, after
the claim is due, to make the legal statement or perform the condition required for maturity. (5) If the pledged property is a right or claim, within the meaning of the common rules on liens, the
owner of the pledged property shall be understood as the beneficiary of the right or claim, and the
ownership right to the pledged property shall be understood as the right or the claim.
Independent Liens
Section 269.
(1) Liens can be created so as to encumber the pled ged property without any personal claim. In this case,
the lien holder shall be entitled to se ek satisfaction, up to the amount specified in the lien contract including
interest, solely from the pledged property to which the lien pertains. (2) To satisfy the lien holder, the independent lien is to be cancelled by notice from the obligor or lien
holder, unless otherwise agreed by the parties. The term of notice shall be six months, unless the parties
agree otherwise.
(3) Independent liens are negotiable. The obligor sha ll enforce his rights and complaints from the legal
relationship serving as the basis for the independent lien solely in respect of the person or the successor of
such person who has directly acquired the independent lien without consideration and who was aware of
the legal relationship on which it was based. (4) An independent lien can be converted into a secured lien and vice versa if so agreed by the parties,
under the same ranking. If the lien in question is registered in the lien register, the conversion shall be
considered effective when it is recorded. For the above-specified conversion, the consent of lien holders of
the same or lower ranking shall not be required.

(5) In respect of other issues, the provisions of Sections 251-268 shall be duly applied regarding
independent liens.
Security Deposit
Section 270.
(1) Financial collateral may be provided under a financial collateral arrangement to secure a claim in the
form of cash, money on account, security and othe r financial instruments specified in specific other
legislation, upon delivery of the collateral. If the financial collateral pledged is some other thing, the
regulations on liens shall apply. (2) Delivery shall mean any procedure upon which th e financial collateral is transferred from the
possession or from under the control of the collateral provider to the possession or control of the collateral
taker or otherwise designated so as to be in the possession or under the control of the collateral taker, such
as when credited to the bank account, securities account or securities deposit account of the collateral taker
or of a person acting on the collateral taker’s behalf. If the collateral is not delivered the regulations on liens
shall apply. (3) Parties may agree to grant the right of the collatera l taker to use and dispose of the financial collateral
as the owner. Where a collateral taker exercises a right of use, he thereby incurs an obligation to transfer
equivalent collateral to replace the original financia l collateral at the latest on the due date for the
performance of the relevant financial obligations covered by the financial collateral arrangement. The
equivalent collateral shall replace the original financial collateral. (4) “Equivalent collateral” in relation to money on account, means a payment of the same amount and in
the same currency. In relation to securities and other financial instruments, it means securities and financial
instruments of the same issuer or debtor, forming part of the same issue or class and of the same nominal
amount, currency and description or, where a financial collateral arrangement provides for the transfer of
other assets following the occurrence of any event re lating to or affecting any security or financial
instruments provided as financial collateral, those other assets.
(5) By way of derogation from Subsection (3), partie s may agree that the collateral provider may, on the
due date for the performance of the relevant financial obligations, set off the value of the equivalent
collateral against or apply it in discharge of the relevant financial obligations. (6) Parties may agree to stipulate the right for the collateral provider to replace the original financial
collateral with other equivalent collateral at the latest on the due date for the performance of the relevant
financial obligations. The equivalent collateral shall be treated the same as the original financial collateral.
(7) Parties may stipulate an obligation to provide additional financial collateral in order to take account
of changes in the value of the financial collateral or in the amount of the relevant financial obligations, and
that the collateral taker is required to release any excess collateral to the collateral provider. The additional
collateral shall be treated the same as the original financial collateral.
Section 271.
(1) Upon the due date for the performance of the releva nt financial obligations the collateral taker shall
be able to realize the financial collateral if it is cash, money on account, security or other financial
instrument whose market price is listed publicly or can be determined at that time independent from the
parties. The collateral taker shall be able to realize the financial collateral provided in other forms of
security or financial instruments if the parties have so agreed in the financial collateral arrangement and
have stipulated the method of valuation of the financial instruments. (2) If the financial collateral arrangement contains an agreement for the valuation of the securities and
other financial instruments, sale and appropriation sha ll be subject to the terms of the financial collateral
arrangement.
(3) The collateral taker shall settle all accounts with the collateral prov ider within reasonable time, and
shall surrender any proceeds exceeding the amount of the claim and any interest, and the costs of sale
where applicable, to the collateral provider.

(4) If the agreement between the parties contains any clause for realization that is considered
commercially unreasonable, it may be contested by the party whose right or lawful interest is injured
thereby. (5) Any party whose right or lawful interest is injured by the manner of realization, particularly any
failure to abide by the obligation referred to in Subsection (3), shall be able to demand compensation for
damages from the collateral taker. The collateral taker sha ll be relieved if able to evidence that he has acted
in a commercially reasonable manner.
Section 271/A.
In respect of other issues concerning financial collateral arrangements, the common provisions on liens
shall be duly applied with the exception to what is contained in Subsection (2) of Section 254.
Suretyship
Section 272.
(1) With a contract of suretyship, the surety assumes the obligation of performance to the creditor in the
event of nonperformance by the principal debtor.
(2) Suretyship shall be treated valid if made in writing.
Section 273.
(1) The obligation of a surety shall be adjusted to the obligation for which he has promised to answer; he
may effect the same objections that can be en forced by the debtor against the creditor.
(2) The obligation of a surety shall not and cannot s ubsequently exceed the original obligation; however,
it shall include the accessory services that fall due after the suretyship is undertaken. A surety shall be
liable for court costs and execution costs only if he has been invited to perform prior to taking legal action.
(3) No claim can be enforced in c ourt against the surety of a claim th at cannot be enforced in court.
Section 274.
(1) A surety shall be entitled to refuse performance as long as the claim can be recovered from the debtor
and/or from other sureties who assumed suretyship before him and without regard to him. This provision
shall not prevent joint litigation to be filed against the debtor and the sureties.
(2) A surety shall not be entitled to demand that the creditor recover his claim from the debtor first
(absolute suretyship) if
a) the parties have so agreed,
b) suretyship has been assumed for indemnification,
c) suretyship has been assumed by a bank.
Section 275.
If suretyship is concurrently or jointly promised by more than one person for the same liability, the
sureties shall, if there is any doubt, be subject to joint and several liability.
Section 276.
(1) In the event of a surety satisfying the creditor, th e claim shall devolve on him together with the rights
securing the claim and with those created prior to th e assumption of suretyship, as well as the right of
execution. (2) A surety shall be released if the creditor waives the right securing the claim, on the basis of which the
surety could have received satisfacti on of the claim devolving on him, or if the claim has become otherwise
irrecoverable for reasons attr ibutable to the creditor.

Chapter XXIV
Performance and Setoffs
Performance
Section 277.
(1) Contracts shall be performed as stipulated, at the place and time set forth and in accordance with the
quantity, quality, and range specified therein. Services, at the time when supplied,
a) shall be suitable for their intended purpose and in conformity with other services of the like, and
b) shall be of a quality and performance that are normal in services of the same type and that the
consumer can reasonably expect, gi ven the nature of the services and taking into acco unt any public
statements on the specific characteristic s of the services made about them by the guarantor, the seller, the
producer or his representative, particularly in advertising or on labeling, and
c) shall be for any particular purpose for which th e consumer requires them and which the consumer
made known to the seller at the time the contract was concluded and which the seller accepted, and
d) shall comply with the description given by the gua rantor and possess the qualities of the services the
guarantor presented to the consumer as a sample or model. (2) The guarantor shall not be bound by the public statements referred to in Paragraph b) of Subsection
(1) if he demonstrates that
a) he was not and could not reasonably have been aware of the statement in question, or
b) the statement had been adequately corrected by the time the contract was concluded, or
c) the decision to enter into the contract could not have been influenced by the statement.
(3) Within the meaning of Paragraph b) of Subsection (1), any person purporting to be a producer or
manufacturer by placing his name, trademark or other distinctive sign on the consumer goods shall be
regarded as a producer or manufacturer. (4) The parties shall be under obligation to cooperat e in the performance of a contract. The obligor shall
act to perform the contract in the manner that can generally be expected in the given situation, while the
obligee shall promote performance in the same manner. (5) The parties shall be under ob ligation to inform each other of all important circumstances affecting
performance of the contract. (6) In the case of a contract concluded for the supply of a thing, the obligor shall mark the thing in a way
suitable for identification, and he shall provide all of the necessary information and instructions for the
proper use and utilization of the th ing, in accordance with the provisions of legal regulations and
professional standards. If the obligor is an economi c organization, it shall also be obliged to certify the
quality of the thing.
Place of Performance
Section 278.
(1) The place of performance is the domicile or re gistered place of business of the obligor, unless
a) it is otherwise provided by legal regulation,
b) the object or purpose of th e service suggests otherwise,
c) the object of the service is at a different location, which is known to the parties.
(2) If the object of a service is to be sent to a place other than the domicile or registered place of
business of the obligor, and if such place or an intermed iate location has not been stipulated as the place of
delivery, performance shall be deemed accomplished when the obligor delivers the object of service to the
beneficiary, a shipping agent, or a carrier. In the case of consumer cont racts, performance shall be deemed
effected upon delivery to the consumer. (3) If the obligor delivers the thing by its own means of transportation or through its representative, the
place of performance shall be the domicile or re gistered place of business of the latter.

(4) Regarding contracts between economic organizations, the place of performance shall be the
registered office (place of business) of the beneficiary, unless otherwise re quested by the beneficiary, or the
destination if performance is effected through a carrier. Legal regulations can prescribe otherwise.
Place of Domicile
Section 279.
(1) If one of the contracting parties changes his domicile or registered address prior to performance, that
party shall bear the extra ex penses resulting therefrom.
(2) Risk of damages shall fall on the other contracting party upon performance, unless otherwise
provided by law.
Time of Performance
Section 280.
(1) If the time of performance is not specified,
a) either of the parties may demand simultaneous performance by the other party,
b) in the case of a gratuitous contract, the benefici ary shall be entitled to invite the obligor to tender
performance at any time.
(2) An obligor shall effect perf ormance after the preparation ti me necessary for performance.
(3) Alimony, life annuities, and accident compensation sh all be paid in advance for each time period.
Beneficiaries shall not be entitled to initiate court action to demand any payments that are six months
overdue and have not bee enforced without substantial reason.
Section 281.
(1) If on the basis of legal regulation or contract, the parties are bound to simultaneous performance,
neither party shall be compelled to perform his own service until the other party offers his service. (2) The contracting party who is required to perform first shall be entitled to withhold his service, in the
absence of security, if
a) the service is to be performed in phases or continuously and the other party is tardy with his own
service, for as long as the delay subsists; b) the reciprocal service is jeopardized by any substantial deterioration in the other party’s financial
conditions; c) the other party has outstanding debts owed to him owing to financial insolvency.
(3) The party entitled to refuse the service shall be entitled to rescind the contract if he sets an
appropriate deadline for the provision of security and it passes to no avail. (4) Concerning other issues pertaining to the rights a nd obligations of the party that is entitled to refuse
performance, the provisions on responsible custody shall be applied.
Section 282.
(1) The day on which the contract is concluded shall not be included in the performance period; if the
last day of the performance period falls on an official holiday the performance period shall expire on the
next working day. (2) An obligor may complete performance before the deadline or prior to the initial date of the
performance period with th e consent of the obligee. In the absence of consent, the obligee shall proceed in
observation of the provisions on responsible custody.
Mode of Performance

Section 283.
(1) Unless otherwise provided by legal regulation, th e obligee shall, within the shortest possible time,
verify whether performance is as contracted.
(2) When taking delivery of a thing, it is not necessary to inspect those characteristics whose quality has
been certified or those that are covered by warranty.
(3) Unless otherwise provided by legal regulation, th e costs of physical delivery, including the costs of
packaging and measuring, shall be borne by the obligor, while the costs of receiving delivery shall be borne
by the obligee.
Section 284.
(1) The obligor shall be entitled to demand a receipt upon performance, and he shall be entitled to
demand the return of his promissory note. (2) The costs of a receipt shall be borne by the oblig or, unless the obligee fails to return the promissory
note. (3) A person presenting a receipt bearing the signature of the obligee shall be construed as a person
authorized to accept performance, unless this is rendered doubtful by any apparent circumstance.
Section 285.
If a service is divisible, the obligee shall also accept partial performance, unless he has excluded partial
performance in the contract or if partial pe rformance damages his fundamental interests.
Section 286.
(1) The obligee shall also accept performance offered by a third person if the obligor has given consent
thereto and the service is not bound to a specific person , and if it does not require any expertise or skill that
is not possessed by the third person. The obligor’s c onsent shall not be required if the third party has a
lawful interest in completing performance.
(2) In such case, the collateral securing the claim shall remain in force if the claim passes to a third
person who effects performance or if such third person is entitled to demand reimbursement from the
obligor.
Section 287.
(1) If the identity of the obligee is uncertain, his domi cile or registered place of business is unknown, or
if he is late, an obligation to pay cash or deliver securities or other documents can also be performed
through deposit in court.
(2) When making the deposit, the obligor shall be entitled to stipulate that the deposit can only be
surrendered to the obligee upon his performance of consideration or upon the provision of security therefor;
the deposit may be withdrawn until the obligee is notified thereof.
(3) The deposit shall be effected at the court of ju risdiction for place of performance or the domicile or
registered office of the obligor. The costs of performance for deposit in court shall be borne by the obligee.
Performance of Services Defined by Type and Quantity
Section 288.
If the parties have not stipulated the quality of the object defined by type and quantity, performance must
be made in accordance with commercially available things of standard good quality.
Section 289.

If a person undertakes an obligation for the delivery of a specific type of thing of his own production but
is unable to deliver it in its entirety or in part, he shall not have to procure the missing thing from another
source in order to effect performance. This provisio n shall not apply to liability for breach of contract.
Section 290.
(1) If an obligor has several debts to an obligee and his performance does not cover all of these debts,
the performance shall be reckoned in accordance with the obligor’s instructions, and, in the absence of such
instructions, it must be applied to offset the debt for which the obligor has discernibly intended it. (2) If an obligor has not issued instructions thereto and his intention is indiscernible, performance shall
be applied to offset
a) the claim that expired the earliest,
b) in the case of simultaneous maturity, th e claim more burdensome for the obligor,
c) the least secured claim from among equally burdensome debts.
(3) Equally secured claims shall be proportionally reduced by performance.
Section 291.
(1) If a person is to deliver a specific type and quantity of things to the same person but to different
locations, and he is unable to deliver the entire quantity; he shall distribute the available quantity as
instructed by the obligee. (2) If the obligee fails to issue instructions in spite of being requested to do so, the obligor shall reduce
the quantities allocated to any location proportionately, unless the interests of the national economy as
known to him justify another distribution.
Performance of Cash Debts
Section 292.
(1) Unless otherwise provided by legal regulation, the place of performance of a cash debt is the
obligee’s domicile or registered place of business. (2) The obligee shall also accept perf ormance that is provided before the deadline or prior to the initial
date of the performance period; in such cases, no interest or compensation is due for the period between
performance and the deadline. Any agreement between the parties conc erning interest or compensation, as
they are not permitted by law, shall be null and void; invalidity shall not affect other provisions of the
contract.
Section 293.
If an obligor owes both interest and costs and the sum paid is insufficient to cover the entire debt, this
sum shall be applied to offset the costs first, then the interest, and, finally, the principal debt. Any
instructions given by the obligor to the contrary shall be inoperative.
Section 294.
The provisions pertaining to paym ents by organizations included in the system of accounts of state
financial institutions shall be contained in a separate legal regulation.
Legal Statements
Section 295.
If there is an obligation to make a legal statement, performance shall be substituted by a court decision.

Setoffs
Section 296.
(1) Unless otherwise provided by legal regulation, an obligor shall be entitled to include those of his
overdue claims that are of the same type due from the obligee to offset his debts by a statement addressed
to the obligee or issued in the course of court proceedings. (2) Obligations shall cease to exis t up to the value of setoffs.
Section 297.
(1) No setoffs can be applied against a service that is to be allocated for a definite purpose on the basis of
an agreement or, with the exception of overpayment, against claims for support, life annuity, or accident
benefits, as well as for compensa tion for willfully caused damages.
(2) Obligees shall not be entitled to include claims that cannot be enforced in court; they may, however,
offset their lapsed claims if they have not yet laps ed by the time the counterclaim comes into existence.
(3) Only claims originating from the same legal title can offset claims which are exempt from execution.
(4) Only counterclaims of the same nature or those incorporated in a public document can offset claims
established by a writ of execution or by composition.
Chapter XXV
Breach of Contract
Default by the Obligor
Section 298.
An obligor shall be in default
a) if the time of performance, as stipulated in the contract or as can be inferred beyond doubt from the
intended purpose of the service, has elapsed without any result;
b) in other cases, if he does not perform his obligatio n in spite being requested to do so by the obligee.
Section 299.
(1) The obligor shall reimburse the obligee for damages caused by his default, unless he is able to prove
that he has acted in the manner that can generally be ex pected in the given situation in order to prevent such
default. (2) If the obligor is unable to offer any reasonable excuse for his default, he shall be liable for all
damages incurred in the object of the service during the period of default, unless he is able to prove that
such damage would have occurred regardless.
Section 300.
(1) An obligee shall be entitled to demand performance, or, if performance no longer serves his interest,
he shall be entitled to rescind from the contract irrespective of whether or not the obligor has offered an
excuse for his default.
(2) It shall not be necessary to prove the cessation of an interest in performance if, according to the
agreement of the parties or due to the imminent purpose of the service, the contract had to be performed at
a definite time and none other, or if the obligee has stipulated a reasonable deadline for subsequent
performance and this period too elapsed without result. (3)

Section 301.
(1) In respect of a monetary debt, the obligor, unless otherwise provided by law, shall pay an annual
interest at the central bank base rate in effect on th e last day preceding the calendar half-year to which it
pertains, even if the debt is otherwise free of interest . The obligation to pay interest shall be effective even
if the obligor justifies his default. (2) In the event of any delay in connection with a payment obligation assumed vis-à-vis third persons
under any subsystem of the central budget, or payable from any subsystem of the central budget to third
persons, the provision relating to the nullity of any contractual term for the exclusion of interest payment or
for payment of interest at a rate below the legal limit shall apply to default interest as well. (3) If, on the basis of a legal regulation or contract, any interest is due to the obligee up to the date of
default, the obligor, unless otherwise provided by law, sh all be liable to pay additional interest as of the due
date at a rate equal to one-third of the central bank base rate in effect on the last day preceding the calendar
half-year to which it pertains, and the combined amount of these shall be no less than the interest specified
in Subsection (1).
(4) The court shall be entitled to reduce the rate of the default interest if the interest fixed by parties is
excessive. (5) Obligees shall be entitled to demand compensation for losses in excess of the default interest.
Section 301/A.
(1) The provisions on interest for late payment shall apply to economic organizations with the exceptions
laid down in this Section.
(2) Interest for late payment shall be calculated by the central bank base rate in effect on the last day
preceding the calendar half-year to which it pertains, plus seven per cent. (3) Interest shall become payable thirty days following the date of the debtor’s receipt of the invoice or
an equivalent request for payment or thirty days after the date of receipt of the goods or services if the
debtor receives the invoice or the equi valent request for payment earlier than the goods or the services or if
the date of the receipt of the invoice or th e equivalent request for payment is uncertain.
(4) By way of derogation from Subsections (2) and (3), a contractual term which has been adopted to
establish the amount or due date of any interest for late payment contrary to the requirement of good faith
and honesty, and if it causes a significant and unjustified imbalance in the parties’ rights and obligations
arising under the contract to the detriment of the debtor, may be contested by the debtor. (5) A contractual term that has been incorporated into the contract as a standard contract condition
according to Subsection (4) may be contested in the cour t of law by an organization described in specific
other legislation. If found substantiated, the court may declare the contractual term in question null and
void in favor of all of the parties with which the party imposing the condition has a contractual relationship.
Having the term declared null and void by the court sha ll not affect the contracts that have already been
performed prior to the date on which the contention was filed. (6) The organization described in specific other legislation may request to have a standard contract term
or condition referred to in Subsection (4) declared unfa ir, that has been defined for consumer contracts and
made available to the general public, regardless of whether or not the term or condition in question had in
fact been applied or not. The court’s judgment may also contain a clause banning the party who made the
contested term or condition available to the public from the further use of such. (7) Any statutory deviation from the provisions of Subsection (2) and (3) must be made to the benefit of
the creditor.
(8) If the rate of interest determined by the parties is substantially lower than what is defined in
Subsection (2) or if the due date of the interest for late payment differs from that specified in Subsection
(3), they may be corrected by court order unless deviation from statutory provisions have been necessitated
by the circumstances prevailing at the time of contracting.
Default by the Obligee
Section 302.

An obligee is in default if
a) he refuses to accept performance offered according to the terms of the contract;
b) he fails to take measures or make the required statements for enabling the obligor to perform his
obligation properly; c) he does not issue a receipt or does not return the securities.
Section 303.
(1) An obligee shall pay reimbursement to the obligor fo r those of his losses originating from the default,
unless he is able to prove that he has acted in the manner that can generally be expected in the given
situation in order to prevent the default.
(2) An obligee, irrespective of whether he has been able to excuse his default,
a) shall reimburse the expenses originating from obligor’s responsible custody;
b) shall bear the risks for the destru ction, loss, or damage of a thing as if he had accepted performance;
c) shall not be entitled to demand any in terest for the duration of his default.
(3) Default of the obligee excludes any simultaneous default of the obligor.
Section 304.
The provisions pertaining to the default of the obligee must also be applied if a service has been
specified by type and quantity, even though the parties have marked the things designated for performance
or have separated them from similar things for the obligee.
Lack of Conformity
Section 305.
(1) On the basis of a contract in which the parties owe mutual services to one another, lack of conformity
occurs on the part of the obligor if the goods provided do not, at the time of perf ormance, correspond to the
requirements stipulated by law or by the contract. (2) Any lack of conformity resulting from incorrect installation of the consumer goods shall be deemed
to be equivalent to lack of conformity of the goods if installation forms part of the contract of sale of the
goods and the goods were installed by the obligor or under his responsibility. This shall apply equally if the
product, intended to be installed by the consumer, is installed by the consumer and the incorrect installation
is due to a shortcoming in the installation instructions. Any clause of a consumer contract that deviates
from these provisions to the detriment of the consumer shall be null and void.
(3) The obligor shall be subject to liability for lack of conformity (implied warranty).
Section 305/A.
(1) If the consumer was or could reasonably have been aware of a defect at the time the contract was
concluded, the obligor shall be excused of liability. The obligor shall also be excused of liability if lack of
conformity has its origin in materials supplied by the consumer, provided that the consumer had been
informed that the material was defective. (2) Unless proved otherwise, any lack of conformity that becomes apparent within six months of delivery
of the goods shall be presumed to have existed at the time of delivery unless this presumption is
incompatible with the nature of the goods or the natu re of the lack of conformity. Any agreement of the
parties to the contrary shall be null and void.
Section 306.
(1) In the case of non-conformity with the contract,
a) consumers shall, in the first place, be entitled to choose either re pair or replacement unless this is
impossible or it results in disproportionate expenses on the part of the obligor as compared to the

alternative remedy, taking into account the value the goods would have had there been no lack of
conformity, the significance of the lack of conformity, and whether the alternative remedy could be
completed without significant inconvenience to the consumer;
b) if the consumer is entitled to neither repair nor re placement or if the obligor refuses to provide repair
or replacement or is unable to meet the conditions de scribed in Subsection (2), the consumer may require
an appropriate reduction of the price or have the contract rescinded. The consumer is not entitled to have
the contract rescinded if the lack of conformity is minor.
(2) Any repair or replacement shall be completed w ithin a reasonable time and without any significant
inconvenience to the consumer, taking account of the nature of the goods and the purpose for which the
consumer required the goods.
(3) If the obligor is unable or unwilling to repair the goods within a reasonable time, the consumer shall
be entitled to repair the goods himself or have them repaired by others at the expense of the obligor.
(4) Until repair or replacement is completed, consum ers shall be entitled to withhold a proportionate
portion of the purchase price of the goods in question.
(5) Any clause in a consumer contract that deviates from the sequence of statutory guarantee rights to the
detriment of the consumer shall be null and void.
Section 306/A.
A consumer shall be entitled to switch from the remedy he has selected to the alternative remedy. The
costs of the obligor incurred thereby shall be reim bursed unless it was made necessary by the obligor’s
conduct or for other reasons.
Section 307.
(1) Consumers shall be required to inform the obligor of any lack of conformity within the shortest time
permitted by the prevailing circumstances.
(2) In the case of consumer contracts, if notification of the lack of conformity is made within two months
of the time it is detected, it shall be deemed that notification was made in due time. Any agreement of the
parties to the contrary shall be null and void. (3) The consumer shall be liable for any damage that results from late notification.
Section 308.
(1) The consumer shall be entitled to enforce his guarantee rights in a six-month limitation period that
commences upon delivery of the goods or services. If the minimum useful life is determined by official
regulation, standard, or statutory technical specifications (statutory use period) and it is less than six
months, this time period shall apply to the enforcement of the claim. (2) In the case of contracts for the delivery of animals, the limitation period shall last for sixty days from
the date of delivery.
(3) The limitation period shall be suspended for the time during which the goods are being repaired and
the consumer cannot use them. If the goods or any major component of the goods is replaced or repaired,
the guarantee period shall recomme nce for the goods or major components that have been replaced or
repaired as well as for any defect resulting in consequence of the repair. (4) By way of derogation from Subsections (1) and (2), the consumer shall, in the case of consumer
contracts, be entitled to enforce his guarantee rights in a two-year period of limitation that commences upon
delivery of the goods or services. Any clause stipulating a shorter period shall be null and void. If the goods
supplied under contract are second- hand, the parties may agree on a shorter limitation period, which may
not be less than one year.
Section 308/A.
(1) If the consumer is unable to enforce his claim for an excusable reason, particularly if lack of
conformity, owing to its character or the nature of the goods, is not apparent within the time limit described

in Section 308, the consumer may enforce his guarantee rights within one year or, in the case of goods
designated for long-term use, within three years of delivery. If the statutory use period exceeds three years,
this time limit shall apply to the enforcement of such claim. The omission of these time limits shall result in
forfeiture of rights.
(2) Any clause in consumer contracts stipulating a period shorter than the three-year period defined in
Subsection (1) shall be null and void.
Section 308/B.
Any guarantee claim that is made for a specific defect shall be deemed satisfied in due time for all other
associated defects. If, however, the consumer files a guarantee claim only for a specific (in terms of the
given defect) part of the item, the guarantee claim shall not be deemed as having been made for the item’s
other parts.
Section 308/C.
Guarantee rights can be enforced, as an exception, against a claim originating from the same legal
grounds, even after the time limit.
Section 309.
(1) The costs incurred in bringing goods into conformi ty with the guarantee, particularly the costs of
postage, labor and materials shall be borne by the obligor . In the case of consumer contracts, any agreement
of the parties to the contrary shall be null and void. (2) When the goods are replaced or the contract is rescinded, the consumer shall not be liable to
compensate for the loss in value resulting from proper use.
Section 310.
Apart from guarantee rights, consumers shall be entitled to demand reimbursement for damages resulting
from lack of conformity under the rules of indemnification.
Section 311.
(1) If lack of conformity in a consumer contract is the result of non-conformity by a third party (previous
obligor) acting under contract with the obligor, the ob ligor of the consumer contract shall be entitled to
demand compensation from the previous obligor for those costs of bringing the goods into conformity that
are attributable to the previous obligor, provided that the obligor has fulfilled his obligation to conduct a
quality inspection. (2) The obligor of a consumer contract shall be entitle d to enforce the claim referred to in Subsection (1)
within sixty days of the date of bringing the goods into conformity. The limitation period for enforcing
such claims shall be five years from the date of deliver y by the previous obligor; failure to do so within the
above deadline shall result in forfeiture of this right. (3) The previous obligor shall also be entitled to demand compensation pursuant to Subsection (1) from
the previous obligor who was contracting with him within the deadlines specified in Subsection (2).
Section 311/A.
The provisions pertaining to the legal consequences of non-conformity shall be duly applied to the
supply of services as well; in such cases, replacement shall be construe d as repeated performance of the
service.
Impossibility of Performance

Section 312.
(1) If performance has become impossible for a reason that cannot be attributed to either of the parties,
the contract shall be extinguished. The party gaining knowledge of the impossibility of performance shall
immediately notify the other party thereof. The party failing notification shall be liable for damages
originating therefrom. (2) If performance has become impossible for a reason for which the obligor is liable, the obligee may
demand indemnification for nonperformance. (3) If performance has become impo ssible for a reason for which the obligee is liable, the obligor shall
be relieved of his obligation and shall be entitled to demand compensation for damages therefrom.
(4) If performance of any of the alternative services becomes impossible, the contract shall be limited to
the other services. (5) If the party who has no right to choose is liable for subsequent impossibility, the other party may
choose either the possible service or the consequences of subsequent impossibility.
(6) If the remnants of the object of a service that ha s become impossible have remained in the possession
of the obligor, or if the obligor has received or might demand comp ensation instead of the object of the
service from another person, the obligee shall be entitled to demand surrender of the remainder or
compensation against a proportional part of the consideration.
Withholding Performance
Section 313.
If an obligor withholds perf ormance without legitimate reason, the obligee shall be entitled to apply the
consequences of either default, or subsequent impossibility.
Common Provisions Pertaining to Breach of Contract
Section 314.
(1) Liability for a breach of contract damaging life, physical integrity or health that has been caused
willfully, by gross negligence, or by a felony offense cannot be validly excluded. (2) Unless otherwise prescribed by law, liability for breach of contract shall not be excluded or
restricted, unless the disadvantage incurred thereby can be offset by the adequate reduction of the
consideration or by some other advantage. (3) Legal regulations on domestic contracts connect ed with foreign trade contracts can provide for
breach of contract and for its consequences differently from this Act and can allow limitation or exclusion
of liability with the exception contained in Subsection (1).
Section 315.
A person who employs another person to perform his obligations or exercise his rights shall be liable for
the conduct of that person.
Section 316.
(1) If an obligee accepts performance wh ile having knowledge of a breach of contract, he can later raise
a claim on the basis of the breach only if he has retained his rights to that effect.
(2)
Section 317.

(1) In the case of a breach of contract concerning a part of a divisible service, the consequences of breach
shall stand only in respect of that part. However, the obligee shall be entitled to exercise his rights
originating from the breach of contract with regard to the entire contract if he is able to prove that further
performance no longer serves his inte rest due to the breach of contract.
(2) If a breach of contract concerns a part of an indivisible service, its consequences shall stand in respect
of the entire contract.
Section 318.
(1) The provisions of tort liability shall be applied to liability for breach of contract and to the extent of
indemnification, with the difference that such indemnification may not be reduced, unless otherwise
prescribed by legal regulation.
(2) The enforcement of claims based on a breach of contract is compulsory if the consideration
stipulated in the contract is performed in part or in whole from the central budget. Unless otherwise
provided by legal regulation, an obligee shall be entitled to forebear enforcement of a claim, if he has made
certain on the basis of available information that the br each of contract is the consequence of conditions for
which the obligor is not liable, or if the breach of contract has no significance in terms of the national
economy and cooperation between the parties. (3) If the enforcement of claims based on a breach of contract is compulsory and the obligee fails to
perform this obligation without good reason, a monetary claim (indemnification, liquidated damages, price
reduction) can be enforced on behalf of the state by the financial institution making the payments from the
central budget.
Chapter XXVI
Extinction of Contracts
Period of Limitation
Extinction of Contracts
Section 319.
(1) Parties shall be entitled to terminate or cancel contracts by mutual consent.
(2) In the case of termination of a contract, the cont ract shall be extinguished for future purposes, and the
parties shall not owe further services. Contractual monetary considerations for services performed before
termination shall be paid off, and if the other party has not yet performed the reciprocal service for a
monetary service that has already been performed, the money shall be refunded. (3) In the case of cancellation of a contract, the contract is extinguished with retroactive effect as of the
date of conclusion, upon which the services already performed shall be returned.
Section 320.
(1) A person who is entitled to avoidance on the basis of a contract or legal regulation shall exercise this
right by making a statement to the other party. Avoidance terminates the contract. (2) Parties shall also be entitled to stipulate the ri ght of avoidance for payment of earnest money; the
court shall be entitled to reduce the sum of the earnest, if it is unreasonably high. (3) Parties who cannot return servi ces already received or are able to do so only in a considerably
diminished value shall not be entitled to exercise their contractual right of avoidance.
Section 321.

(1) A person authorized to rescission by virtue of a contract or a legal regulation shall exercise such right
by issuing a statement to the other part y. Rescission terminates the contract.
(2) Where rescission is not of immediate effect the contract shall remain in force until the notice period
stipulated in the contract or provided by law has lapsed.
Section 322.
A contract shall be extinguished if the same person becomes the obligor and the obligee. Extinction of
the contract shall not affect the rights and obligations of third persons.
Section 323.
(1) A contract shall not be extinguished upon the death of the obligor, unless it concerns a service that
can only be performed personally. (2) The death of the obligee shall te rminate a contract if the service was specifically intended for his
support or was used exclusively to meet his personal needs.
Period of Limitation
Section 324.
(1) The period of limitation for claims shall be five years, unless otherwise prescribed by law.
(2) If the principal claim lapses, all of the dependen t collateral claims shall also lapse. The principal
claim shall not be affected when in dependent collateral claims lapse.
(3) The lapse of a claim shall not prevent satisfacti on from the pledge placed in security thereof.
Section 325.
(1) A lapsed claim may not be enforced in court.
(2) Parties shall be entitled to agree on a shorter period of limitation; the agreement shall be valid only in
writing. If the period of limitation is shorter than one year, the parties shall be entitled to extend it to a
maximum of one year in writing; otherwise, an agreement on the extension of a period of limitation shall be
null and void.
Section 326.
(1) The period of limitation commences upon the due date of the claim.
(2) If the obligee is unable to enfo rce a claim for an excusable reason, the claim shall remain enforceable
within one year from the time when the said reason is eliminated or, in respect of a period of limitation of
one year or less, within three months, even if the period of limitation has already lapsed or there is less than
one year or less than three months, respectively, remaining therein. This provision shall also apply if the
obligee has granted a respite for performance after expiration.
Section 327.
(1) A period of limitation shall be suspended by a written notice for performance of a claim, the judicial
enforcement of a claim, the amendment of a claim by agreemen t (inclusive of composition), and the
acknowledgment of a debt by the obligor. (2) The period of limitation shall recommence afte r suspension or following the non-appealable outcome
of a suspension proceeding. (3) If a writ of execution is issued in the course of a suspension proceedin g, the period of limitation shall
be suspended only by the acts of enforcement.

Chapter XXVII
Assignment and Assumption of Debt
Assignment
Section 328.
(1) An obligee shall be entitled to transfer his clai m to another person by contract (assignment).
(2) Claims that are bound to the person of the obligee and claims whose assignment is not permitted by
legal regulation shall not be assigned. (3) The obligor shall be notified of assignments; th e obligor is entitled to tender performance to the
assignor before notification.
(4) If the obligor is notified by the assignor, the obligor shall be allowed to tender performance only to
the new obligee (assignee) after notification; in the case of notification by the assignee, the obligor shall be
entitled to demand certification of the assignment. In the absence thereof, he shall be entitled to tender
performance to the person who acted as assignee solely at his own risk.
Section 329.
(1) An assignee shall subrogate th e original obligee through the assignment, and the rights proceeding
from the lien and suretyship that secu re the claim shall also pass to him.
(2) Notification of the obligor regarding assignment suspends the period of limitation.
(3) An obligor shall be entitled to enforce the objections and offset the counterclaims against the
assignee that arise with regard to the assignee on th e legal grounds prevailing at the time of notification.
Section 330.
(1) The assignor shall, as a surety, be liable for the obligor’s services to the assi gnee, up to the value of
the consideration received in return for assignment, unless
a) he has assigned the claim to the assi gnee expressly as an indefinite claim;
b) he has otherwise excluded his liability.
(2) Otherwise, the provisions on contracts of sale sh all apply to assignments against consideration, while
the provisions on donations shall apply to gratuitous assignments.
Section 331.
If a claim is transferred to another person on the basis of a legal regulation or official order, unless
otherwise prescribed therein, the provisions on assignment shall be duly applied. In such case, the liability
of the previous obligee, as surety, shall be maintained only if so prescribed by a specific provision.
Assumption of Debt
Section 332.
(1) If a person agrees with an obli gor to assume his debts, he shall request approval from the obligee; and
if the obligee refuses to grant such approval, he shall make arrangements to enable the obligor to perform at
maturity. (2) If the obligee approves the assumption of debt, the person assuming the debt shall subrogate the
obligor. Such person shall be entitled to all rights to which the obligor was entitled in respect of the
obligee; however, he shall not be entitled to offset the previous obligor’s existing claims against the obligee.

(3) The suretyship and liens securing a claim shall cease to exist upon the assumption of debt in the
absence of statements of approval from the surety and the obligor of the lien.
Section 333.
If an obligation passes to another person by virtue of a legal regulation or official order, unless otherwise
provided therein, the provisions on the assumption of a debt shall be duly applied.
Chapter XXVIII
Multiple Obligees or Multiple Obligors in Contracts
Section 334.
(1) If a service is owed by several persons or can be claimed by several persons and this service is
divisible, each obligor shall owe only his own share, and each obligee may claim only his due share, unless
provided otherwise by legal regulation. In case of doubt, the share of the obligors or obligees shall be equal. (2) If a service is indivisible, performance can be demanded from any or all of the obligors (joint and
several liability of obligors). (3) If several persons are entitled to demand an indivisible service, it shall be performed into the hands of
all of them (collectivity of obligees). Any of the obligees may demand the service to be deposited in court
to the benefit of all of them.
Section 335.
(1) If a claim is due to several obligees in such a manner that each is entitled to demand the entire service
but the obligor is bound to a single service (joint and several obligees), the obligation to each obligee shall
cease to exist if any of them is satisfied. (2) Each obligee shall be affected by the default of an obligee, the impossibility of a service or a legal
statement from any of the parties that is a condition of enforcement of a claim or performance of a service,
particularly a notice of termination, a warning, and the exercise of the right to choose. (3) A claim shall not lapse in respect of any of the obligees until the conditions of the period of limitation
have materialized in respect of all of them. (4) If any of the obligees files for legal action regarding performance, the obligor may refuse
performance to the other obligees, without being exempted thereby from the legal consequences of default,
until the non-appealable conclusion of the action.
Section 336.
Obligees shall be entitled to equal shares of a claim, unless their legal relationship suggests otherwise.
Section 337.
(1) In the case of joint and severa l liability, each obligor owes the entire service; however, should any of
them perform or terminate the obligation by offset, the obligation of the other obligors towards the obligee
shall also cease to exist. (2) Persons under joint an d several liability shall also be liabl e for each other’s breach of contract.
(3) Each obligor shall be entitled to refer to objections due the others only as far as these objections are
connected with the sa tisfaction of the obligee. Ho wever, the claims of co-obligors cannot be used for
offsetting.
(4) Default of an obligee towards one of the ob ligors shall stand in respect to all obligors.
Section 338.

(1) Persons under joint and several liability shall bear obligations in equal shares, unless their legal
relationship implies otherwise. If a co-obligor has performed a service for the obligee that exceeds his own
obligation, he shall have a claim for reimbursement from the other co-obligors up to the value of their share
of the claim. (2) None of the obligors may refer to an advantage against the others that he has received from the
obligee.
(3) The rights due the obligee that also serve as security for the performance of the other obligors shall
pass to the obligor who has effected performance to the obligee, if he is entitled to demand reimbursement
from the other obligors.
Chapter XXVIII/A
Securities
Section 338/A.
(1) A person who makes out (issues) a security on a pecuniary claim shall undertake an unconditional
and unilateral obligation that he himself or another pers on named in the security shall provide a certain sum
of money to the security’s obligee in exchange for the security.
(2) A security is a document bearing the requisites prescribed by legal regu lation or data recorded,
registered, and forwarded in some other way, as specified by legal regulation, and the printing and issuing
of which, or publication in such form, is permitted by legal regulation. (3) Securities can be issued as either bearer and regi stered securities, unless otherwise provided by legal
regulation.
Section 338/B.
(1) Any claim specified in a security can only be enforced, dispos ed of, or encumbered by the security
and in possession thereof, unless otherwise prescribed by law.
(2) Unless otherwise prescribed by law, ‘bearer secu rity’ shall mean when the security does not indicate
the name of the holder, or when it is registered, but contains instructions to render it payable on demand to
the bearer, whether or not such person is the registered holder (payable to order). Ownership of bearer
securities is transferred by conveyance of possession.
(3) Printed certificates of regi stered securities can be transferred by special or blank endorsement.
(4) Special endorsement is a written statement, whic h bears the holder’s signature and is made on the
negotiable instrument itself or on an attached sheet (a ttachment) declaring the holder’s intention to transfer
the security and specifying the name of the transferee. Such endorsement is not a prerequisite to render a
contract of transfer valid (agreement in principle).
(5) Blank endorsement is a written statement which be ars the holder’s signature and is made on the back
of the security or on an attachment, declaring the holder’s intention to transfer the security, however it does
not specify the name of the transferee. The holder’s signature on the back of the security or on the
attachment shall also be co nstrued a blank endorsement.
(6) When a security is transferred by blank endorsement the holder of such security may
a) make the endorsement out in his or somebody else’s name,
b) transfer the security again, e ither by blank endorsement or by fu ll endorsement specifying the name of
another person, c) hand over the security to a third person without filling out the blank endorsement or affixing a new
endorsement. (7) Legislation may authorize the issuer to install restrictive clause in the security, hence to make it non-
negotiable by endorsement (negativ e endorsement). Such instruments can be transferred within the
facilities of assignment. (8) Dematerialized securities are considered transf erred when credited to the securities account of the
transferee in accordance with the regulations laid down in specific other legislation.

(9) Legal regulations specific to securities may depart from the provisions laid down in this Section
concerning the transf er of securities.
Section 338/C.
(1) The beneficiary of rights afforded by a negotiable instrument shall mean
a) the person having possession in respect of bearer securities;
b) in respect of registered securities
1)the person whose name is indicated in the original printed certificate, or who is named in the chain of
endorsements as the transferee, even if the endorsement is blank. If a blank endorsement is followed by
another endorsement in succession, the signatory of the latter shall be considered to have obtained the
instrument by way of blank endorsement;
2)the person on whose securities account the instrument is registered in respect of dematerialized securities.
(2) All rights originating from a bearer security or from a registered security that does not contain a
negative endorsement shall pass to the new holder upon the transfer of the security irrespective of the
transferor’s previous rights.
(3) Apart from the objections evident from the contents of the security, the obligor of the security may
not cite any other objections, which are based on his personal relationship with a previous holder of the
security. (4) Unless otherwise prescribed by law, the rights of a bona fide person who qualifies as beneficiary
under Subsection (1) shall be in force irrespective of whether a previous transfer was illegitimate, or it took
place under invalidated or void title.
Section 338/D.
Securities can also be issued, in accordance with ot her legal regulations, on ownership or other rights
concerning a thing or on an entitlement proceeding from membership. The provisions on securities for
pecuniary claims shall be duly applied to these secu rities, unless a legal regulation provides otherwise.
Title II
TORT LIABILITY AND LIABIL ITY FOR UNJUST ENRICHMENT
Chapter XXIX
General Rules of Indemnification
Section 339.
(1) A person who causes damage to another person in violation of the law shall be liable for such
damage. He shall be relieved of liability if he is able to prove that he has acted in a manner that can
generally be expected in the given situation. (2) The court shall, under special and equitable circumstances, be entitled to grant partial exemption
from liability to a person liable for damages.
Section 340.
(1) In order to prevent or mitigate damages, the aggrieved person shall act in a manner that can generally
be expected in the given situation. No liability shall apply to the portion of the damage incurred due to the
failure of the aggrieved person to perform this obligation.
(2) The aggrieved person shall be liable for any omission by the persons for whose conduct he is
responsible.

Section 341.
(1) In the event of the presence of imminent danger, the endangered person shall be entitled to request
the court to restrain the person imposing such danger from continuing such conduct and/or to order such
person to take sufficient preventive measures and, if necessary, to provide a guarantee.
(2) This provision shall be applied also if the danger of imminent damage has been caused as a result of
unfair economic activities.
Section 342.
(1) Any contractual clause shall be null and void if it beforehand limits or excludes liability for damage
proceeding from willful or gross negligence; injury to life, physical integrity, or health; or the consequences
of a crime. (2) No compensation shall apply if the damage is cau sed with the assent of the aggrieved person and the
damage does not injure or endanger any social interest.
Section 343.
Any damages caused to an assailant in order to prevent an unlawful assault or a threat suggesting an
unlawful direct assault shall not be compensated for if the defender did not use excessive measures to avert
the assault.
Section 344.
(1) If the damages are caused jointly by two or more persons, their liability shall be joint and several
towards the aggrieved person, while their liability towards one another shall be divided in proportion to
their respective degree of responsibility. (2) Liability for damages shall be divided in equal proportions among the responsible persons if the
degree of their responsibility cannot be established. (3) The court shall be entitled to put aside a declar ation of joint and several liability and condemn the
persons having caused the damage in proportion to their respective contributions, if a) doing so does not jeopardize or considerably delay compensation for damage, or
b) the aggrieved person has himself contributed to the occurrence of the damage or has procrastinated in
enforcing his claim without any excusable reason.
Chapter XXX
Definition of Liability
Damages Originating from Hazardous Operations
Section 345.
(1) A person who carries on an activity involving considerable hazards shall be liable for any damage
caused thereby. Being able to prove that the damage occurred due to an unavoidable cause that falls beyond
the realm of activities involving cons iderable hazards shall relieve such person from liability. These
provisions shall also apply to persons who cause damage to other persons through activities that endanger
the human environment. (2) Damage shall not be compensated for to the extent that it originates from an activity attributable to
the aggrieved person. (3) Any exclusion or limitation of liability shall be null and void; this prohibition shall not apply to
damage caused to a thing.
(4) The period of limitation for claiming damages shall be three years.

Section 346.
(1) If damage is caused by two or more persons through activity that involves considerable hazard, the
general rules and regulations governing liability shall apply to their relationship with one another.
(2) If the cause of damage is not attributable to either party, but it derives from a malfunction that
occurred within the realm of activity involving consider able hazard performed by one of the parties, that
party shall be liable for paying damages.
(3) If the cause of damage is a malfunction that occurred in the sphere of both parties’ activity involving
considerable danger and, furthermore, if such malfunc tion cannot be attributed to one of the parties, each
party shall, since individual responsibility cannot be established, bear liability for his own loss.
(4) The regulations pertaining to liability for occupational accidents are established by separate legal
regulations.
Liability for Damage Caused by Pers ons With Deficient or No Mental
Capacity

Section 347.
(1) A person with deficient or no mental capacity shall not be held liable for his actions. Liability for his
actions shall be borne by his custodian, unless he is able to prove that, in the interest of performing his
custodianship, he has acted in a manner that can generally be expected in the particular situation. (2) If a person causing damage has no custodian or the liability of the custodian cannot be established,
under special circumstances the person causing the damage can be ordered to provide total or partial
compensation if it is clearly warranted by the circumstances of the case and the financial conditions of the
parties. (3) A person causing damage may not allege his mental incapacity or impairment if such condition was
inflicted by the person himself. (4) If damage has been caused by a minor with sufficient mental capacity who nevertheless has an
appointed custodian, and it is proved that the custodian has knowingly breached his obligations, the
custodian as well as the person who caused the damage shall be subject to joint and several liability.
Damages Caused by Employees, Memb ers of Cooperatives, Representatives,
and Agents

Section 348.
(1) If an employee causes damage to a third person in connection with his employment, the employer
shall bear liability towards the injured person unless ot herwise provided by law. This provision shall also
apply in the instance of a member of a cooperative who causes damages to a third person in connection
with his membership. (2)
Section 349.
(1) Liability for damages caused within the jurisdiction of government administration shall be
established only if the damage cannot be abated by common legal remedies or the aggrieved person resorts
to the ordinary legal remedies for the abatement of damages.
(2)
(3) Unless otherwise provided by legal regulation, these provisions shall also apply to liability for
damages caused within the jurisdiction of a court or public prosecutor.
Section 350.

(1) A principal shall be subject to joint and several liability with his agent for any damage caused to a
third person by the agent in this capacity. The principal shall be relieved of liability if he is able to prove
that he has not acted delinquently in choosing, instructing, and supervising his agent. This provision shall
not apply to the liability of persons who perf orm activities involving considerable hazard.
(2) In respect of permanent agency, moreover, if th e principal and the agent are economic organizations,
the court shall be entitled to apply the regulations governing the liability for damages caused by employees
in the relationship between the aggrieved person and the principal.
(3) A client shall not be liable for damages caused by his legal representative.
(4) In accordance with the provisions of this Act, an agent shall be liable to the principal for any damage
he causes, as shall a representative not employed by a client to that client. A principal or client shall, also in
accordance with this Act, be entitled to demand reim bursement from an agent or representative for
compensation paid by the agent or representative to a third person.
(5) The provisions of the Labor Code and the provisions of separate legal regulations shall be applied to
such claims between employees and employers and between coop eratives and their members.
Liability of Animal Keepers
Section 351.
(1) Persons who keep animals shall be liable, in accordance with general provisions, for damages caused
by their animals to other persons. (2) Keepers of animals that are wild by nature shall be subject to liability in the same way as persons
pursuing activities that in volve considerable hazard.
Damages Caused by Objects Falling off Buildings
Section 352.
(1) The owner of a building shall be liable for damage caused to other persons by parts of the building
that have fallen off or any other deficiency in the building, unless the owner is able to prove that the
regulations pertaining to construction and maintenance have not been violated and that, in order to abate
damages, he has, in both construction and maintenance, acted in a manner that can generally be expected. (2) Persons in whose interest objects have been installed on the exterior of a building shall be liable for
damages caused by such objects falling down. (3) These provisions shall not affect the right of responsible parties to demand compensation from the
persons who have caused the damage.
Section 353.
(1) The tenant of a dwelling or the user of the prem ises shall be liable for damages caused by objects that
are thrown out, dropped, or poured out from the dwelling or premises. (2) If the tenant or user identifies the person who ca used the damage, he shall bear liability as a surety.
The tenant or user shall be relieved of liability if he proves that the person who caused the damage was on
the premises unlawfully.
(3) The owner of a building shall be liable for damage caused by an object being thrown out, dropped, or
poured out from any room of the building that is used for common purposes. The owner, if he identifies the
person who caused the damage, shall be liable as a surety.
(4) These provisions shall not affect the right of the responsible party to demand compensation from the
person otherwise responsible for the damage.
Non-Material Damages
Section 354.

Chapter XXXI
Mode of Liability, Extent of Compensation
Section 355.
(1) The person responsible for the damage shall be liabl e for restoring the original state, or, if this is not
possible or if the aggrieved party refuses restoration for a substantiated reason, he shall indemnify the
aggrieved party for material and non-material damages. (2) Damage shall be indemnified in cash, unless compensation in kind is justified by the circumstances.
Compensation in kind may be justified particularly if the object of indemnification is produced by the
person responsible for the damage or is otherwise at his disposal.
(3) An annuity can also be awarded as indemnifica tion. On general principle, an annuity shall be
awarded if indemnification is designed to support or assist in the support of the aggrieved person or those
of his relatives entitled to be supported by him.
(4) On the grounds of indemnification, compensation must be made for any depreciation in value of the
property of the aggrieved person and any pecuniary advantage lost due to the damage as well as the
indemnity or costs necessary for the attenuation or elimination of the material and non-material losses
sustained by the aggrieved person.
Section 356.
(1) A person whose capacity to work has been redu ced as a result of an accident shall be entitled to
demand an annuity only if his earning s (income) after the accident are less than his earnings before the
accident for reasons beyond his control.
(2) In the case of an incapacity or reduced capacity for work proceeding from an accident, the amount of
lost earnings (income) less the social security benefits shall be paid as an annuity. (3) When establishing the amount of annuity, the earnings (income) which are gained by the victim of
the accident through extraordinary performance of work in spite of his considerable physical disability
originating from the accident shall no t be taken into account in favor of the person responsible for the
accident.
Section 357.
(1) The loss in earnings (income) of a person who has suffered an accident shall be generally determined
on the basis of the regular monthly average earnings (income) gained in the year preceding the accident. If
during said period the amount of earnings (income) changed permanently, only the average earnings
(income) after this change can be taken into account.
(2) If a person who has suffered an accident had a re gular and fixed salary at the time of the accident,
this shall be taken into account when determining the loss of earnings. (3) If the loss of earnings (income) cannot be assessed under Subsections (1) and (2), the average
monthly salary of persons performing the same or similar work on the basis of employment (membership)
shall govern the determination of the loss. (4) When determining the loss of earnings (income), any future change the occurrence of which is
anticipated with absolute certainty for a specific date shall also be taken into account.
Section 358.
(1) Dependents of a person who has died in an acci dent shall be entitled to claim an annuity that will
supplement any support and ensure th e satisfaction of their needs in accordance with the standard of living
to which they were accustomed before the accident (by considering their actual or expected earnings
[income]).

(2) An annuity can also be claimed if the person who has died in an accident had in fact failed to
discharge his obligation to provide support or if the person claiming the annuity has not enforced his claim
for support for an excusable reason. (3) When establishing the amount of an annuity, it shall be considered whether the person claiming an
annuity has enforced or is eligible to enforce a claim against the persons whose obligation to support him is
equal to that of the person who died in the accident.
Section 359.
(1) If the extent of damage cannot be precisely calculated, even if only in part, the person responsible for
causing the damage can be compelled by court to pay a general indemnification that would be sufficient for
providing the aggrieved person with full financial compensation.
(2) There is no place for reclaiming a general indemnif ication on the grounds that the extent of actual
damage did not subsequently reach the amount of the ge neral indemnification. If, however, the obligor is
paying an annuity as a general indemnification, he sh all be entitled to demand a reduction in the amount of
the annuity or a change in the annuity payment period in accordance with any changes in the conditions.
Section 360.
(1) Indemnification shall be due immediately upon the occurrence of the damage.
(2) Concerning the status of the persons responsible for damage, the provisions pertaining to obligors
who have defaulted in performance of a contract shall be duly applied. (3) The provisions pertaining to assignment, assumption of debt, securing of claims, performance, and
offsetting shall also be duly applied to damage claims.
(4) The provisions on periods of limitation shall be applied with the exception that the period of
limitation for a claim cannot be less than five years if the damage has been caused willfully or criminally.
However, in respect of damages caused by the commissi on of a crime, the period of limitation for a claim
shall not expire even after five years as long as the criminal offense remains punishable under the statute of
limitations.
Chapter XXXII
Unjust Enrichment
Section 361.
(1) Persons who illicitly acquire a material advantage at the expense of another shall be obliged to return
the advantage.
(2) Persons who have been deprived of gains before they are reclaimed shall not be obliged to return
them, unless
a) the obligation to return the gains was an imminent possibility and the person can be held accountable
for the loss of the gains, or b) the gains had been acquired in bad faith.
(3) If a person to whom any gains are due to be returned has created such gains himself through
unlawful or immoral conduct, the court shall be entitled to award the material gains to the state at the
motion of the public prosecutor.
Section 362.
Grants that are provided and used for subsistence ca nnot be reclaimed, unless legal regulation provides
otherwise or the grant has been criminally obtained.
Section 363.

(1) The provisions on possession without legal grounds (Section 195) shall apply to the return of material
advantages related to financial gains; the person obliged to return such material advantages shall be entitled
to demand compensation for those of his expenses that were necessarily appropriated for the thing. (2) If a material advantage cannot be returned in kind, its value must be compensated.
Section 364.
Concerning other issues, the regulations governing indemnification shall be duly applied to unjust
enrichment.
Title III
EXPRESS CONTRACTS
Chapter XXXIII
Sale and Exchange
1. Sale
Section 365.
(1) By concluding a sale contract the seller shall be obliged to transfer title of ownership and cede
possession of a thing to the buyer, and the buyer shall be obliged to pay the purchase price and take
possession of the thing.
(2) All things that are not withdrawn fr om circulation can be subject to sale.
(3) Real property sale contracts shall only be valid if concluded in writing.
(4) A real property sale contract shall include agricultural implements and livestock only if the parties
have expressly agreed to include them.
Section 366.
(1) If the market price has been sti pulated as the purchase price, the average price prevailing on the date
of performance in the market regarded as the place of performance shall be paid.
(2) Unless otherwise provided by law, a purchase pri ce that has been determined according to weight
shall be calculated on the basis of net weight.
Rights and Obligations of Parties
Section 367.
(1) The seller shall inform the buyer regarding the essential characteristics of and all important
requirements pertaining to the thing, particular ly any potential rights in connection with or any
encumbrances on the thing. The se ller must also convey the documents concerning such circumstances,
rights, or encumbrances to the buyer.
(2) The seller shall bear all of the costs related to the transfer of a real property and the correction of the
status recorded in the real estate register. (3) The buyer shall bear the contract costs, title tran sfer fees, the costs of conveyance, and the costs of
changing ownership registration in the real estate register.
Section 368.

(1) The seller shall be entitled to retain title of ownership only on conclusion of the contract, in writing,
until the purchase price is paid in full. (2) The buyer, during the operative period of title reten tion, shall not alienate and/or encumber the thing.
This provision shall not affect the rights acquired in return for consideration by third persons acting in good
faith. (3) The buyer of a real property, if taking possession before the registration of title in the real estate
register, shall, as of the date of taking possession, collect any proceeds of the thing, and shall, furthermore,
be liable for its encumbrances and for the damages for which no indemnification can be demanded from
anyone.
Guarantee for the Transfer of Title Free and Clear
Section 369.
(1) If a third person has a right to an object of a sale that prevents the buyer from acquiring ownership,
the buyer shall be entitled to rescind the contract and demand punitive damages.
(2) Prior to exercising this right, the buyer shall serv e notice to the seller demanding that the restraints on
his acquisition of ownership be eliminated or adequate security thereto be provided within a reasonable
period.
(3) A buyer, if conveying a thing to a third person or returning it to the seller on account of a third party’s
right thereto, shall be entitled to demand indemnification from the seller. (4) If a seller has acted in good faith, he shall pay only the damages incurred by the conclusion of the
contract. This shall not affect the buyers’ right of rescission.
Section 370.
(1) If a third person has a right to a thing that impedes a buyer’s ownership rights, the buyer shall be
entitled to demand disencumbrance with in a reasonable period and refuse payment of the sum necessary
therefor until the encumbrance has been removed. (2) After the lapse of the aforementioned period without any result, the buyer shall be entitled to
disencumber the thing from the sum thus available or, otherwise, at the expense of the seller. (3) If disencumbrance is not possible or if it would require unreasonable expenses, the buyer shall be
entitled to rescind from the contract and demand indemnification or to have the purchase price
appropriately reduced in exchange for assumption of the encumbrance. The buyer shall be entitled to these
rights even if the deadline set for disencumbrance has elapsed without any result and the buyer does not
wish the disencumbrance of the thing. (4) The buyer shall not be entitled to these rights if it is known at the time the contract is concluded that
unrestricted ownership of the thing cannot be acquired, unless the seller had guaranteed the buyer
acquisition of unrestricted ownership. Sellers shall guaran tee that the thing is unfettered by any lien, even if
the buyer is aware of the lien.
Special Modes of Sale
Section 371.
(1) If a thing has been bought for the purpose of inspect ion or testing, the effect of the contract shall be
conditional upon the buyer’s statement. No explanation shall be required from the buyer regarding such
statements. (2) The seller shall be entitled to set a deadline for filing the statement; the buyer’s failure to meet this
deadline shall render the contract inoperative. (3) If the buyer has received a thing for testing and has not made a statement within the period set by the
seller, the contract shall be operative.
(4) The seller shall not be liable for defects that could be recognized by the buyer.

Section 372.
(1) If purchase is made on the basis of a sample th e seller shall deliver things that correspond to the
sample.
(2) The seller shall be liable under warranty for any latent defect in a thing, even if the defect also existed
in the sample. (3) The buyer, if he fails to present the sample, shall be liable for proving that the thing does not
correspond to the sample.
Section 373.
(1) If an owner grants a right of preemption to a specific thing in a written agreement and wishes to sell
the thing, he shall notify the person who has the right of preemption of the offer he has received before he
concludes the contract. The owner shall not be subject to this obligation if compliance would imply
extraordinary difficulties or a substantial delay on accoun t of the location of the beneficiary’s domicile or
other circumstances. (2) If the person with the right of preemption issues a statement of acceptance to the owner regarding the
conditions of the offer, the contract shall be deemed concluded between them. If the beneficiary fails to
issue a statement within the period generally establis hed for acceptance of a proposal, the owner shall be
entitled to sell the thing according to the offer or under better terms.
(3) If a right of preemption is recorded in the real estate register, it shall affect everybody who acquires
any right to the real property following such registration. (4) Unless otherwise provided by la w, transfer of a right of preemption shall be null and void; however,
economic organizations shall be entitled to designate a person who is authorized to exercise this right. (5) Unless otherwise provided by law, a ri ght of preemption shall not pass to heirs.
(6) The provisions on the right of preemption shall also be applied to rights of preemption based on
legal regulation. Rights of preemption based on le gal regulation shall precede contractual rights of
preemption.
Section 374.
(1) The right to repurchase a thing sold shall be put in writing simultaneously with the sales contract.
Repurchase shall be effected upon the seller’s statement to the buyer.
(2) The right of repurchase can be stipulated for a ma ximum of five years; any agreement to the contrary
shall be null and void. (3) The repurchase price shall be the same as the origin al sale price; the original buyer, however, shall be
entitled to demand, in addition to the repurchase price, his expenditure on the thing up to the date of
repurchase, resulting in actual increase of value, wh ile the repurchaser shall be entitled to deduct any
depreciation of the thing incurred during the same period.
(4) The original buyer shall be responsible for any forfeiture or restraint of the right of repurchase;
however, if the thing is destroyed due to reasons beyond the buyer’s control, the right of repurchase shall be
abrogated.
(5) Concerning other issues, the regulations governing the rights of preemption shall apply to repurchase
rights.
Section 375.
(1) If an owner grants a right of purchase (option) to another person, the beneficiary shall be entitled to
buy the thing with a unilateral statement. Agreements on options to purchase shall be put in writing with
the thing and the purchase price specifically indicated.
(2) An option to purchase stipulated for an indefinite period of time shall expire after six months; any
agreement to the contrary shall be null and void. (3) Unless otherwise provided by law, the court may relieve an owner of his obligation deriving from
the option to purchase if the owner is able to prove that, after granting the option, his circumstances have

altered significantly, as a consequence of which performance of his obligation cannot be reasonably
expected. (4) Concerning other issues, the regulations governing the rights of repurchase shall apply to the rights of
option to purchase.
Section 376.
(1) Parties shall be entitled to agree for the buyer to pay the purchase price in several installments at
specific dates and the thing shall be delivered before the purchase price is fully paid (installment sale). (2) The seller shall be entitled to stipulate in writing the right to cancel a contract or revoke the
advantage of payment by installments if the buyer fails to make an installment payment when due. The
seller shall be entitled to exercise this right the first time an installment payment is defaulted only if the
buyer has been informed thereof in advance and sufficient time has been allowed for performance. (3) If the seller rescinds from the contract, the buyer shall pay a charge for use as well as compensation
for any loss in value that exceeds depreci ation from the proper use of the thing.
(4) Any risk of destruction or depreciation of a thing conveyed to a buyer shall be borne by the buyer
even if the title is retained.
Section 377.
2. Exchange
Section 378.
If the contracting parties undertake reciprocal transfer of the ownership of things, the provisions
pertaining to sale shall be duly applied. In such cases each party shall be deemed as the seller in respect of
his own service and the buyer in respect of the other party’s service.
Chapter XXXIV
Supply and Public Utility Contracts
1. Supply Contracts
Section 379.
(1) Under a supply contract the seller shall be obliged to deliver the thing defined therein to a customer
at a later agreed date or period, and the customer sha ll be obliged to accept delivery of the thing and pay its
price.
(2)
Section 380.
Parties shall be entitled to define the quality of a thing; the manner of the inspection of quality and
quantity; and the order of lodging quality and quantity complaints by on the basis of standards, technical
conditions, other regulations, common practices, and sample rules known to both parties or by providing a
sample or a detailed description.
Section 381.
(1) The customer shall be entitled to cancel a contract at any time, but shall be liable for paying
compensation for damages sustained by the supplier.

(2) If the situation prevailing before the conclusion of a contract cannot be restored, or if it is justified
by the interest of the national economy or by any other appreciable interest, the court, if requested by either
party, shall terminate the contract for future consider ations in the case of cancellation by the customer. The
customer shall indemnify the supplier in this case as well.
Section 382.
(1) Suppliers shall notify customers of the date of performance at least three days in advance.
(2) In the absence of different tr ade customs, suppliers shall deliver things packaged and weighed.
Packaging shall be suitable for protecting the condition of the thing during shipping and storage.
Section 383.
(1) It is sufficient to accept delivery of packaged and weighed things by gross weight and quantity in the
presence of the supplier or the carrier. (2) Quality inspection shall take place on the customer’s premises.
(3) The customer shall immediately commence comple tion of the remaining part of quantity inspection
as well as quality inspection, but within no more than eight days of the date of delivery, and shall carry it
out continuously during the time necessary for inspection. (4) The customer shall immediately notify the supplier of any discrepancies in quality whenever such
discrepancies are noticed, and shall make warranty claims at the same time.
Section 383/A.
(1) In the case of delivery by a carrier, the customer shall, in the supplier’s interest, take the necessary
measures to enforce claims against the carrier and notify the supplier thereof without delay.
(2) In the case of failure to take the measures pres cribed in Subsection (1), the customer shall not be
entitled to demand compensation from the supplier for the damage, and he shall be liable for the damage
that could have been enforced against the carrier.
Section 384.
(1) The customer shall be entitled to forward things within three days of receipt wit hout unpacking and
inspecting them.
(2) If the supplier is to perform a service directly for a third person, the third person must conduct the
quality and quantity inspection. (3) Third persons, up on discovering any discrepancy in quality or quantity at the time of receiving
delivery, shall immediately notify the supplier and the customer thereto.
Section 385.
On the grounds of a contributor’s deficient performance, the supplier shall be entitled to enforce his
rights against the contributor as long as he continue s to be liable to the customer for breach of contract,
provided that the supplier has performed his obligation to conduct a quality inspection.
Section 386.

2. Public Utility Contracts
Section 387.

Under a public utility contract the service provider shall be obliged to provide users with public utility
services (such as gas, electricity, and water) on a safe and regular basis as of a specific date and in a volume
determined according to the user’s needs, and the user shall be obliged to make periodic payments for such
services.
Section 388.
(1) Legal regulation can declare th at a contract comes into force when the services are used.
(2) Service providers shall only be entitled to refuse to conclude contracts in cases prescribed by legal
regulation, and the contents of contracts can only be made contingent upon conditions prescribed by legal
regulation. (3) Service providers shall only be entitled to suspend or limit performance for a user in cases prescribed
by legal regulation. (4) Service providers shall only be entitled to termin ate contracts under the grounds prescribed by legal
regulation.
Chapter XXXV
Professional Services
1. General Rules
Section 389.
Under a contract for professional services the contractor shall be obliged to design, fabricate, process,
convert, install, or repair things or to create some other result by work, and the customer shall be obliged to
accept delivery of such services and pay the contracted fee for them.
Rights and Obligations of Parties
Section 390.
(1) Parties may agree for the contractor to prepare a proposal containing detailed technical and financial
data and the customer will accept th e proposal and pay a fee therefor.
(2) Unless otherwise provided by law or in the absence of an agreement by the parties to the contrary, the
customer shall be free to use the detailed proposals even if no contract is concluded with the contractor on
the basis thereof. (3) Parties may also define services with reference to technical plans and cost breakdown.
Section 391.
(1) The contractor shall perform work at his own expense and shall organize work so as to ensure that it
will be completed efficiently and rapidly.
(2) Contractors shall be entitled to engage subcontractors.
(3) The contractor shall be responsible for the work of any legitimately employed subcontractor as for
his own work; in respect of any illegitimate employment of a subcontractor, the contractor shall be liable
for all damages that would not otherwise have occurred.
Section 392.

(1) The contractor shall proceed in accordance with the customers’ instructions. Instructions cannot be
given for the organization of work and shall not render performance more burdensome. The parties shall be
entitled to deviate from these provisions. (2) The contractor shall immediately notify the cust omer regarding all instances that jeopardize or
impede the success of the undertaking or completion by the due date. The contractor shall be liable for all
damages caused by his failure to communicate such notification.
(3) If a customer provides inadequate material or gives imprudent or unsuitable instructions, the
contractor shall be obliged to warn him thereof. The contractor shall be liable for damages caused by his
failure to provide warning. If, however, the customer should insist on his instructions or fail to provide
adequate material in spite of the contractor’s warning, the contractor shall be entitled to rescind the contract.
If the contractor chooses not to rescind the contract, he shall carry out the work with the material received
or in accordance with the customer’s instructi ons, and it shall be done at the customer’s risk.
(4) The contractor shall not carry out the work with the material provided by the customer or in
accordance with the customer’s instructions if it would lead to the violation of a law or statutory provision
or if it would imperil the safety of life and property.
Section 393.
(1) If work is to be performed at a place designated by the customer, the customer shall render the site
available to the contractor in an appropriate condition. (2) The contractor shall be entitled to refuse to commence work until the customer satisfies this
obligation. If the customer fails to satisfy this obligation within a reasonable period of time set by the
contractor, the contractor shall be entitled to rescind the contract and demand compensation for damages.
(3) If two or more contractors are working on the same project, the cu stomer shall provide the necessary
conditions for doing the work that had been arranged w ith the contractors efficiently and quickly, and the
contractors shall coordinate the performance of work. Any damage caused by the inadequate organization
of work to another person shall be compensated for by the party in default. (4) In respect of work performed by two or more contractors, the customer and the contractors shall be
entitled to conclude contracts with one another in order to specify the manner and conditions of
cooperation. The mode of dividing savings and other benefits that can be achieved by coordinating work
and the extra expenses incurred by each pa rty can be specified in the contract.
Section 394.
(1) The customer shall be entitled and, in those instances defined by law or in the contract, obliged to
inspect the work and check the materials used. The contractor shall not be relieved of liability if a customer
has failed to perform such an inspection or has performed it inadequately. (2) If the contractor builds over (covers) certain parts of the work and subsequently inspection
necessitates repeated completion of a part of the work, the contractor shall duly notify the customer of this
in advance. If the customer fails to perform the inspection in spite of bein g duly notified, at a later date, he
shall only be entitled to inspect the part of the work that has been built over if he pays the contractor for the
costs of any new work that is done. (3) If the customer acquires knowledge of a new concept, method, or technical information through a
contractor’s performance, he shall not be entitled to di sclose such to another person without the consent of
the contractor.
Section 395.
(1) The customer shall be entitled to cancel the contract at any time, but he shall be liable for paying
compensation for any damages suffered by the contractor. (2) If the situation prevailing before the conclusion of the contract cannot be restored or if the interest of
the national economy or any other substantial interest so justifies it, the court shall terminate the contract
with regard to the future if the customer rescinds it (or at the request of any of the parties). The customer
shall indemnify the contractor in this case as well.

(3) If the customer rescinds the contract because it becomes obvious before the contracted date of
completion that the contractor cannot carry out the work without a cons iderable delay on account of which
performance is no longer in the customer’s interest, the customer shall be entitled to demand punitive
damages according to the regulations governing breach of contract.
(4) If, while the work is being done, the circumstances would make it possible to conclude that
performance will be defective, the customer shall be entitled to exercise the rights that proceed from
defective performance after the period for elimina ting the insufficiencies has lapsed without result.
Section 396.
(1) At the time service is delivered, the parties sh all jointly perform the customary tests that are
warranted and necessary for verifying the quality of performance. (2) Unless it is otherwise customary for a particular profession, the customer shall, at contractor’s
expense, provide the necessary conditions for the contractor to conduct the tests.
(3) The contractor shall provide the customer with the necessary information for utilizing and
maintaining the thing delivered.
(4) If the thing cannot be properly used without such information, the customer shall not be obliged to
pay remuneration until the contractor has performed his obligation to supply the above-specified
information.
Section 397.
(1) Unless otherwise provided by law, remunera tion shall be due upon completion of performance.
(2) The contractor have liens for service charges on the property of the customer that comes into their
possession in consequence of the co ntract for professional services.
Section 398.
On the grounds of non-conformity of the subcontractor or contributor, the contractor shall be entitled to
enforce his rights to the extent to which the contractor is liable to the customer for breach of contract,
provided that the contractor has performed his obligation to make a quality inspection.
Section 399.
If performance becomes impossible for a reason that cannot be attributed to either party and
a) the cause of impossibility has occurred within or beyond the control of both parties, the contractor
shall be entitled to a proportionate amount of the remuneration for the work done and for his expenses;
b) the cause of impossibility has occurred within the control of the contractor, he shall not be entitled to
demand remuneration; c) the cause of impossibility has occurred within th e control of the customer; the contractor shall be
entitled to remuneration, but the customer shall be en titled to deduct the amount that the contractor had
saved in expenses because of impossibility and the amount that the contractor had earned or could, without
great difficulty, have earned elsewhere in the time gained.
Section 400.
(1) Risk of loss regarding a work that has been started or completed but not delivered shall be divided
between the customer and the contr actor in accordance with the regulations pertaining to the impossibility
of performance. (2) The contractor shall not be oblig ed to re-create a work that has been destroyed for a reason that
cannot be attributed to anybody, and the customer shall not be obliged to accept delivery of such.
(3) The general regulations must be applied in the matter of damages sustained in material and
equipment that are necessary fo r performance of a contract.

Section 401.
Under a contract for pr ofessional services for implementing a complex economic or technical unit
suitable for performing independent fu nctions, the contractor shall be obliged to provide the necessary
conditions for the efficient and expeditious execution of work in coordination with other contractors
working on the same project and, moreover, to conclude the necessary contracts for determining the terms
and conditions of cooperation with th e other contractors. The contractor’s liability for the fulfillment of the
technical, financial, and other conditions stipulated in such a contract shall obtain even if the contractor has
not himself prepared, in full or in part, the necessary plans for fulfillment (general contracting).
2. Construction Contracts
Section 402.
(1) Under a construction contract the contractor is obligated to perform building and installation work
and the customer is obligated to accept delivery of and pay the contracted fees for such work.
(2)-(3)
Section 403.
(1) If, at the time the contract is concluded, all of the plans required for execution (budget, specifications,
etc.) are not yet available, the various deadlines fo r furnishing the plans and an estimation made on the
basis of a cost estimate for the entire construction and installation project shall be stipulated in the contract. (2) Unless otherwise suggested by the nature of the service, the service shall be indivisible. However, if
the parties agree in the contract on progress delivery in specific phases, the service shall be considered
divisible. (3) Unless otherwise provided by law, the customer shall be responsible for making arrangements for the
official licensing procedures that are required for carrying out the work and, moreover, for obtaining the
official permits. (4) The contractor shall complete work which are included in the plans but not in the cost breakdown
(extra work) as well as technically necessary work w ithout which the structure cannot be properly used.
The settlement of fees for such extra work is governed in specific other legislation.
Section 404.
(1) A site shall be deemed suitable for construction and installation work if the condition of the site does
not impede fulfillment of the contract and if the designated reference points and a list of them have been
furnished. (2) The customer shall be obliged to inspect the progress of work at certain intervals.
(3) The parties shall use the journal kept at the project site to keep each other informed of all important
details, circumstances, and instructions pertaining to the work.
(4) If requested by the contractor, th e customer shall, if necessary, provide an interpretation of plans and
detailed instructions for implementing them.
Section 405.
(1) The customer shall inspect the work during the delivery procedure de signated for the date specified
by the contractor in his notification, and the customer shall also record all deficiencies and defects, the
sums appropriate therefor, and the warranty claims he intends to enforce.
(2) If the customer accepts delivery of certain parts of the work prior to completion on a temporary basis
(preliminary delivery), the risk of loss with regard to these shall be transferred to the customer as of the
date of delivery.

(3) The contractor shall be deemed to have performed before the deadline, if the delivery procedure
commences prior to or on the date of final comple tion, unless the customer has received delivery of the
service.
(4) Delivery cannot be refused on the grounds of insignificant defects or deficiencies in the service that,
in connection with other defects or deficiencies or as a result of work concomitant with the repair or
replacement of such, do not prevent proper use.
(5) The work shall be re-inspected in accordance with the provisions of Subsection (1) within one year of
the delivery procedure (post- inspection procedure). The customer shall make the preparations for the post-
inspection procedure and shall invite the contractor to attend.
Section 406.

3. Installation Contracts
Section 407.
(1) Under an installation contract the contractor shall be obliged to carry out technological installation
work, and the customer shall be obliged to accept deli very of and pay the contracted fees for such work.
(2) Unless otherwise provided by legal regulation, the regulations governing construction contracts shall
be duly applied to installation contracts. (3)
Section 407/A.
(1) Delivery shall take place by trial operation. The period of trial operation shall be thirty days.
(2) Prior to trial operation it shall be made certain whether the equipment is suitable for the trial
operation. The statements in respect thereof, any defects and discrepancie s, and the deadlines set for repairs
and replacement shall be put in a protocol. (3) The contractor shall furnish the necessary professional staff to provide direction throughout the entire
trial operation period if the manufacture of the equipment also falls within his sphere of activities.
(4) The energy; the basic, raw, and auxiliary material s; and any special instruments necessary for the trial
operation shall be provided by the customer. (5) The customer shall not be entitled to refuse delivery if the trial operation reveals any minor defects or
discrepancies that do not prevent the proper permanen t and specified mode of operation and the equipment
is otherwise in conformity with the conditions specified in the contract.
4. Design Contracts
Section 408.
Under a design contract the contractor shall be obliged to provide engineering-commercial design
services, and the customer shall be obliged to accept delivery of and pay the contracted fees for such
services.
Section 409.
(1) The parties shall also be entitled to agree in the contract on progress delivery of the engineering-
commercial design services.
(2) The parties shall be entitled to stipulate the limitation of liability for damages in the contract if the
contractor undertakes preparation of a design containi ng an engineering-commercial solution that is not
known or used in Hungary.

(3) The customer shall be entitled to use the design only for the purpose and under the conditions defined
in the contract, and they shall not disclose it.
Section 410.
(1) If implementation has commenced within three years of delivery of the design, the period of
limitation for the warranty rights that can be enforced due to any defect in the design shall begin on the date
on which the service implemented on the basis of the design is performed. (2) If implementation commences after three years fo llowing the delivery of the design, the parties shall
be entitled to agree that the contractor should review the design to determine whether the design is suitable
for implementation or whether any changes are required, and whether he should revise the design, for
which the customer shall pay remuneration (follow-up revision). Follow-up revisions can be made
mandatory by legal regulation. (3) If the implementation of a follow-up revision co mmences within three years of declaring the design
serviceable or of the date of delivery of the revised design, the initial date for the period of limitation of any
claims under warranty enforceable on the grounds of any defects in the design shall be the date of the
performance of the service implemen ted on the basis of the design.
(4) Contractors shall guarantee th at no third person has any right that can prevent or restrict
implementation. The provisions pertaining to seller’s guarantee for the transfer of ownership shall be
applied to this guarantee.
(5) The regulations governing research contracts shall be duly applied to the intellectual products subject
to legal protection that are furnished in connection with a contract.
Section 411.

5. Research Contracts
Section 412.
(1) Under a research contract the contractor shall be obliged to perform research activities, and the
customer shall be obliged to pay the contracted fees for such activities. The parties shall be entitled to agree
that remuneration is due even if these activities fail to produce any results. (2) Contracts shall be concluded in writing and can be made for an indefinite period of time.
(3) With regard to intellectual products subject to legal protection that are furnished in connection with a
contract, a) if the customer reserves the right of disposal, th e contractor shall be entitled to use these intellectual
products only for his own internal activities; he shall not be entitled to make them public or disclose them
to third persons; in this case, the customer is free to dispose over such intellectual products;
b) if the customer does not reserve the right of disposal, the intellectual products can be used only within
the scope of his own business activities; they cannot be published and they cannot be disclosed to third
persons; in this case, the contractor is fre e to dispose over the intellectual products.
Section 413.
(1) The contractor shall be entitled to employ subcon tractors only with the customer’s consent. No
approval shall be required from the customer if the contractor has promised to achieve a specific result.
(2) The customer shall be entitled to use the services of the contractor only for the purposes defined in
the contract, and he shall not disclose them. (3) The contractor shall guarantee that no third pers on has any right that can prevent or restrict the
utilization of services. The provisions pertaining to the seller’s guarantee for the transfer of ownership shall
be applied to this guarantee. (4) The contractor shall be entitled to stipulate the limitation of his liability for damages in the contract.

Section 414.
Contracts concluded for an indeterminate period can be terminated by the parties with six months’ notice.
Section 414/A.
The general rules and regulations governing contracts for professional services and the regulations
governing agency contracts shall be duly applied to research contracts for all matters not specifically
regulated.
6. Contracts for Travel Services
Section 415.
(1) Under a contract for travel services the travel agency shall be obliged to perform contractually
specified travel-related services, including transportation, accommodations at points of excursion, and all
related services (particularly lodging and meals); and the customer shall be obliged to pay the contracted
fees for such services. (2) If the travel agency is only able to fulfill its contractual obligations in ways other than specified, the
customer shall be entitled to demand a fee reduction and compensation for damages.
Section 416.
The detailed regulations on contracts for travel serv ices, inclusive of contracts for mediating certain
travel-related services, shall be established in specific other legislation.
Chapter XXXVI
Contracts for the Sale of Agricultural Products
Section 417.
(1) Under a contract for the sale of agricultural pr oduct the producer shall be obliged to deliver crops
and/or produce of his own production or livestock that he himself has raised in the quantity specified and at
a predetermined future date into the possession an d ownership (management) of the customer, and the
customer shall be obliged to accept de livery of such crops, produce, or livestock and pay the contracted
purchase prices for them. (2) The object of such contracts can also be the production of a product in a designated area or the
raising of livestock. (3) Economic organizations shall also be entitled to enter into contracts for the sale of agricultural
product for the resale of crops or produce produced by other parties or livestock raised by other parties.
Section 418.
(1) The parties shall be entitled to define quantity by a unit of measurement corresponding to the
characteristics of the agricultural product, the entire pro duction of a certain area, the full yield of a specific
animal, or a fraction thereof. The parties shall be entitled to define the quality, the manner of the inspection
of quality and quantity, and the order of lodging quality and quantity complaints with reference to standards
or other specifications, common practices, and sample rules known to both parties or by providing an
elaborate description. (2) Contracts shall be deemed valid only if concluded in writing. Contracts not concluded in writing shall
also be valid if either of the parties has performed his contractual obligations.

Section 418/A.
(1) In contracts for the sale of agricultural product the contracting parties shall be entitled to oblige the
customer to provide the producer (or vice versa) with services that will promote performance and offer
information with regard to these services, while the other party shall be obliged to use the services in
accordance with the instructions that are given.
(2) Producers shall only be entitled to use the sowing-seed or other propagation material provided by the
customer, when applicable. However, the sowing-seed or propagation material may not be used if the
producer objects on the grounds of de ficient quality and the objection is accepted by the customer, or if the
authorized quality certification body has verified the deficient quality.
Section 419.
(1)
(2) The producer shall not be entitled to refuse repa yment of services performed by the customer on
account or as prepayment on the gr ounds that such repayments cannot be covered by the results of
production.
(3) Any loss in value, owing to the nature of the object of the services, sustained during a delay in
delivery shall be the responsibility of the party causing the delay, unless that party is able to prove that the
other party is responsible for the loss in value.
Section 420.
(1) If the performance of any contractual obligation meets with predictable difficulties, the parties shall
notify one another thereof, unless the other party should have been aware of the difficulties even without
notification.
(2) Any failure to make notification of potential diff iculties shall be taken into account in litigation for
breach of contract.
Section 421.
(1) The producer shall also be entitled to effect pe rformance before the deadline or even before the
beginning of the performance period; however, the customer shall be notified in advance of commencement
of performance, and ample time must be provided to make the necessary preparations. The producer shall
be liable for any damages resulting from the failure to make notification. (2) The producer shall be entitled to perform ten per cent below the quantity stipulated in the contract.
(3) Delivery shall take place on the producer’s premises.
(4) In the case of transportation by a carrier, the cu stomer shall, in the producer’s interest, take the
necessary measures for enforcing claims against the carrier, and he shall notify the producer thereof
without delay. (5) In the case of failure to take the measures stipulated in Subsection (4) the customer shall not be
entitled to demand compensation from the producer for any damage, and he shall be liable for the damages
that could have been enforced against the carrier.
Section 422.
(1)
(2) Contracts for the sale of agricultural product can also be concluded for two or more years; in such
cases, the parties shall not be obliged to agree on a price.
(3) In respect of contracts concluded for two or more years, the parties shall also be entitled to agree
a) to carry on production, processing, or sales by bearing the risks jointly;
b) to share the profit generated by production, processing, or sales in the proportions specified in the
contract. (4) Unless otherwise provided by legal regulation, the regulations on sale and entrepreneurial activity
shall be duly applied to contracts for the sale of agricultural products.

(5)
Chapter XXXVII
Leases
1. Lease of Things
Section 423.
Under a lease contract the lessors shall be obliged to grant the use of things to the lessee for a period of
time, and the lessee shall be obliged to make the appropriate lease payments therefor.
Rights and Obligations of Parties
Section 424.
(1) Unless otherwise provided by legal regulation, the lessor shall guarantee that the thing leased out is
and will be suitable for use as contracted for the entir e duration of the lease period and that it is otherwise
in conformity with the provisions of the contract. Concerning this guarantee, the regulations governing
guarantees for defective performance shall be applied with the exception that the lessee is entitled to
terminate the contract with immediate effect instead of rescission and he shall not be entitled to demand
replacement. (2) The lessor shall guarantee that no third person has any right to the leased thing that can prevent or
restrain the lessee’s use of it. Concerning this guarant ee, the regulations pertaining to sellers’ guarantees for
the transfer of ownership shall be applied with the exception that the lessee is entitled to terminate the
contract with immediate eff ect instead of rescission.
Section 425.
(1) The lessee shall be entitled to use the thing prope rly and in accordance with the contract. The lessee
shall be liable for all damages resulting from improper use or non-contractual use.
(2) The lessor shall be entitled
a) to inspect use without causing any unnecessary disturbance to the lessee;
b) to demand discontinuance of use that is improper or in violation of the contract and indemnification
for damages originating from such use; c) if such use is continued or if a request for di scontinuance fails to bring about success because of the
gravity of the danger threatening the leased thing, the lessor shall be entitled to terminate the lease with
immediate effect and demand indemnification. (3) If the lessee transforms a thing for which the permission of the lessor or an authority would have
been required, the lessee shall be obliged to rest ore the original state at the lessor’s request.
(4) The lessor shall be entitled to exercise these rights even if the lessee has sublet the thing or has
otherwise leased it to a third person either with or without the lessor’s permission.
Section 426.
(1) Unless otherwise provided by legal regulation, real properties or dwellings can be sublet or otherwise
leased to others without the lessor’s permission. Other things shall not be sublet or leased to third persons
by the lessee without the lessor’s permission.
(2) If the lessee has leased a thing to another person with the lessor’s permission, the lessee shall be liable
for the conduct of the user as if it were his own.
(3) If the lessee leases a thing to another person with out the lessor’s permission, the lessee shall be liable
for damages that would not otherwise have occurred.

Section 427.
(1) Minor expenses required for the maintenance of a thing shall be borne by the lessee; other expenses
as well as public duties in connection with the thing shall be borne by the lessor.
(2) The lessee shall notify the lessor if any work for which the lessor is responsible is required, and the
lessee shall permit the lessor to carry out such work an d take appropriate measures for preventing damages.
The lessee shall be liable for damages resulting from any failure to notify the lessor.
(3) The lessee shall be entitled to claim reimbursement for the unavoidable costs he incurs because of the
thing; the lessee shall be entitled to demand reimburse ment for other expenses according to the regulations
on impromptu agency.
Section 428.
(1) The lessee shall be obliged to make lease paymen ts in advance of each period. No lease payments
shall be made for the period when the thing cannot be used for reasons beyond the lessee’s control.
(2) In the instance of failure to make lease payments, the lessor shall be entitled to terminate the lease
with immediate effect, provided that the lessor has issued a written demand for remittance of overdue
payments within a reasonable period of time and notif ied the lessee of the consequences, and the lessee has
failed to remit payment within this period.
Section 429.
(1) The lessor (sub-lessor) of a real property or dwelling shall hold a lien on the lessee’s property found
within the rental property for the value of unpaid rent and any additional costs. (2) The lessor shall be entitled to block the removal of hypothecated property as long as his lien remains
in effect. (3) If the lessee files a written protest against a lien, extent of it, or the lessor’s action to block the
removal of property items other than those already providing full cover for his claim, the lessor shall
enforce his lien by court action within eight days. Failu re to do so shall be construed as forfeiture of the
lien. (4) If the lessee removes the hypo thecated thing without the lessor’s permission and does not provide
other appropriate security, the lessor shall be entitle d to demand the return of the thing at the lessee’s
expense. The lien shall be re-established upon the return of the thing.
Extinction of Lease
Section 430.
(1) A lease contract shall be extingu ished upon the expiration of the contract term or upon the occurrence
of the conditions defined in the contract. (2) A lease contract shall also be ex tinguished if the thing is destroyed.
Section 431.
(1) Lease contracts concluded for an indefinite period of time can be terminated by giving fifteen days’
notice.
(2) A lease contract concluded for a specific term sh all be transformed into a lease for an indefinite
period of time if the lessee continues to use the thing beyond the contracted lease term and if the lessor
does not file a protest thereto within fifteen days. (3) A lessee’s heirs shall be entitled to terminate by notice a lease contracted for a specific term;
however, such heirs shall exercise this right within th irty days of taking possession or receiving delivery of
the estate.
Section 432.

(1) The lessee shall be obliged to permit any potential buyers of a thing to inspect it at an appropriate
time and in an appropriate manner. (2) A lease contracted for a specific term cannot be canceled by th e buyer of the leased thing, unless the
lessee has misled the buyer regarding the existe nce of a lease or material lease conditions.
(3) If there is a change in the person of the lessor, the regulations governing assignment shall be applied
regarding the date on which the claim to lease payments is transferred.
(4) A buyer shall be entitled to demand that lease payments be made for the period for which the lessee
had made such payments in advance to the seller, only if he was not aware of such prepayments at the time
the sales contract was concluded and if he could not have known of them, particularly if the lessee had
misled him regarding said prepayments.
Section 433.
(1) Prior to the termination of the lease term, the lessee shall permit any potential lessees of the thing to
inspect it at an appropriate time and in an appropriate manner.
(2) Upon termination of the lease term, the lessee sha ll return the thing to the lessor; however, the lessee
shall be entitled to withhold the thing without using it until his claims against the lessor originating from
the lease are settled. This provision shall not appl y to the lease of real properties and dwellings.
(3) If the lessee illegitimately withholds a thing, he shall be liable for all damages that would not
otherwise have been incurred. (4) The lessee shall be entitled to remove any and all items that he has added to the thing at his own
expense without causing any damage to the thing.
2. Residential Lease
Creation of Residential Lease
Section 434.
(1) Residential tenancy is established by a contract between the lessor and the lessee.
(2) The provisions pertaining to the creation of resi dential tenancy, the rights and obligations of the
parties, and the extinction of such contr acts are prescribed in a separate law.
(3) Unless otherwise provided by legal regulation, the regulations governing residential leases shall be
duly applied to leases for non-residential premises. (4) Further conditions for the creation, extinction, and continuation of residential leases and for the
alienation of dwellings can also be prescribed within the framework of the law described in Subsection (2).
435-451.
Chapter XXXVIII
Leasehold
Section 452.
(1) Under a leasehold contract the lessee shall be en titled to use and collect the proceeds of a designated
parcel of agricultural land or some other profitable thin g for a specific time, and he shall be obliged to pay
appropriate rent therefor. (2) Leasehold payments shall be paid in cash or in kind, as agreed by the parties.
(3) A written contract is required to lease agricu ltural land; administrative approval may be prescribed
by statutory provision for the validity of such contracts. Unless otherwise prescribed by law, any sublease
of agricultural land shall be null and void.
Rights and Obligations of Parties

Section 453.
(1) The lessee shall be entitled to use and collect th e proceeds of a thing only in accordance with the
rules of proper management.
(2) The lessee of agricultural land shall cultivate the land according to its designated purpose and shall
preserve the fertility of the land in the course of doing so.
Section 454.
(1) The lessee shall bear responsibility for the re novation and repairs that are necessary for the
maintenance of the thing as well as all applicable public duties on the thing. (2) Extraordinary renovations and repairs shall be the responsibility of the lessor.
Section 455.
(1) Leasehold payments shall be paid subseq uent to the period to which it pertains.
(2) For years in which the crop yield remains below two- thirds of the average due to natural disaster or
some other extraordinary event, the lessee shall be en titled to request a reduction or consolidation of lease
payments. The lessee shall be obliged to communicate such a request to the lessor prior to harvesting.
(3) No additional payments can be demanded from the crops of subsequent years for recovering reduced
or consolidated lease payments.
Section 456.
The lessor has a lien on the proceeds of a thing and/or on the lessee’s property found in the leasehold area
up to the extent of overdue lease payments.
Extinction of Leasehold Contracts
Section 457.
(1) Agricultural leasehold contracts concluded for an indefinite period of time can be terminated by the
end of the fiscal year by giving six months’ notice. Concerning the leasehold of other things, the period of
notice shall be one month. (2) The lessor shall be entitled to cancel a leasehol d contract with immediate effect if the lessee
a) despite a warning, willfully damages or se riously endangers the condition of the thing;
b) despite a warning, fails to cultivate the leased land or is generally engaged in conduct that seriously
jeopardizes the overall success of production, the fertility of the land, the livestock, or equipment;
c) fails to remit overdue lease payments or public duties within the period specified, despite being
requested to do so. (3) In the event of the lessee’s failure to respond to a notice of immediate termination within three days,
the lessor shall be entitled to file for court action within another eight days. Any action to the contrary shall
render the termination inoperative.
(4) A notice of termination shall be valid only in writing.
Section 458.
(1) The lessee’s heirs shall be entitled to terminate his agricultural leasehold by the end of the fiscal year,
even if the decedent died within the last six months of the fiscal year.
(2) Heirs shall be entitled to exercise this right within th irty days of the date of the final conclusion of the
probate proceeding.
Section 459.

Section 460.
Upon the extinction of an agricultural leasehold, the land and other leased things shall be returned in a
condition that allows immediate and proper continuance of production.
Miscellaneous Provisions
Section 461.
(1) Unless otherwise provided by legal regulation, the regulations on the lease of things shall be duly
applied to leaseholds. (2) Legal regulations can stipulate provisions on agricultural leaseholds that differ from those stipulated
in this Act.
Chapter XXXIX
Deposit
Section 462.
(1) Under a deposit contract the depositary shall be obliged to safeguard things that are temporarily put
into his care by the depositor.
(2) The depositary shall be entitled to refuse to accept a thing under conditio ns in which he could
demand repossession of a deposited thing [Subsection (2) of Section 466].
Rights and Obligations of Parties
Section 463.
(1) The depositary shall be obliged to safeguard a thing in the manner specified in the contract concluded
therefor. He shall not use the thing or give it to another person to keep unless the depositor has consented
thereto or unless it is necessary in order to protect th e depositor from suffering any losses; if the depositary
violates this prohibition, he shall be liable for all damages that would not otherwise have happened.
(2) The depositary shall be liable for the actions of a legitimately employed third person as if he had
safeguarded the thing himself. However, if employment of a third person is required in order to protect the
depositor from suffering any losses, the depositary shall not be liable for the employed person if he is able
to prove that he has acted in a manner that is generally expected in the particular situation with regard to
choosing, training, and supervising the third person.
Section 464.
(1) The depositary shall be required to render any se rvice if it is expressly stipulated or necessitated by
the nature of the deposited thing; in this case, the regulations on agency shall be applied. (2) The depositary shall be obliged to notify the depositor with regard to all material events concerning
the deposit; he shall be liable for damages originating from his failure to do so.
Section 465.
(1) The depositor shall pay an appr opriate fee, unless the circumstances , particularly the relation of the
parties, suggest that the depositary has assumed cust ody without any consideration. The fee shall be due
subsequently and shall include all costs commonly attached to safeguarding deposits.
(2) The depositary shall be entitled to demand reimbursement for his other necessary expenses.

(3) The depositary shall be entitled to demand reimbursement for necessary expenses, even if the deposit
is otherwise gratuitous. (4) In order to secure his due claims for fees an d expenses, the depositary shall hold a lien on the
depositor’s property that is in his posse ssion as a consequence of the deposit.
Termination of Deposit Contracts
Section 466.
(1) The depositor shall be entitled to reclaim a thing at any time. If the duration of the deposit is not
stipulated in the contract, a depositary shall be entitled to terminate the deposit contract at any time by
giving fifteen day’s notice.
(2) If the duration of a deposit can be inferred from the contract, a depositary shall return the thing when
this period lapses and the depositor shall take it ba ck. Prior to this, the depositary shall be entitled to
demand recovery of a thing only if safeguarding the thing is not part of his profession and circumstances of
which he was unaware at the time the contract was concluded have emerged to render further custody of
the thing considerably difficult for him. (3) If a remunerated deposit is terminated before expiration of the time that can be inferred from the
contract, the depositor shall pay a commensurate proportion of the fee. If deposit has been terminated by
the depositary, the depositor shall be entitled to deduct from the fee his damages originating from the
premature return of the thing. (4) A thing deposited shall be returned at the place of custody. If the depositor refuses to receive the
thing, the regulations governing responsible custody shall be applied.
Special Types of Deposit
Section 467.
(1) Hotels shall be liable for damages suffered by gu ests because of the loss, damage, or destruction of
their things, unless the hotel is able to prove that the damages are the result of an unavoidable cause beyond
the control of the hotel’s employees and guests or that the damages have been caused by the guest himself.
(2) Liability shall apply to damage to things put by guests in places th at are designated or usually used
for this purpose or in their rooms and to things he has handed over to an employee of the hotel whom he
could believe to be authorized to receive his things.
(3) Hotels shall be liable for valuables, securities, and cash – and the liability shall be unlimited – only if
a) the hotel has expressly taken possession of the thing for safekeeping;
b) the hotel has expressly refused to take possession of the thing for safekeeping;
c) damages have occurred due to a cause for which the hotel is liable in accordance with the general rules
and regulations. In such cases, the burden of proof lies with the guest.
Section 468.
(1) A hotel shall not be able to limit or exclude its liability validly.
(2) The extent of indemnification can be limited by legal regulation. Limitation shall not apply to those
cases in which a guest proves that the hotel has not pr oceeded in a manner that can generally be expected in
the particular situation; nor shall there be any li mit on liability for valuables, securities, and cash.
Section 469.
Guests shall report any and all damages immediately. If the report is not filed, the hotel shall be liable for
damage in accordance with the general rules and regulations, but the burden of proof shall rest with the
guest.

Section 470.
Hotels hold liens on the things that guests bring to the hotel for their claims originating from lodging.
The regulations governing lessors’ liens shall be duly applied to this lien.
Section 471.
(1) The regulations governing hotel liability shall be applied to the liability of baths, cafés, restaurants,
theaters, and similar establishments as well as cl oak room operators, with the following exceptions:
a) the liability of the enterprise shall apply only to the things that are usually taken to such
establishments by their patrons or visitors; b) if there is an appropriate place provided for patrons and visitors for the safekeeping of their things, the
enterprise shall be liable only for damages to things deposited in such place. (2) These limitations on liability shall be disregarded if a patron or visitor is able to prove that the
enterprise has not proceeded in a manner that can generally be expected in the particular situation.
Section 472.
If the object of deposit is cash or another repl aceable thing and if according to the agreement the
depositary is required to return a thing of the same kind and quantity, the regulations governing loans shall
be applied with the difference that the regulations governing deposit shall be authoritative regarding the
place and date of returning a thing an d that only counterclaims related to the deposit can be setoff against
the claim of a depositor.
Section 473.
(1) Unless otherwise provided by legal regulation, the provisions of this Chapter shall be applied to bank
deposits, securities deposits, court depos its, and deposits in public collections.
(2) Regulations regarding deposit contracts for warehousing things that differ from the provisions of this
Chapter can be established in favor of depositors.
Chapter XL
Agency. Impromptu Agency
1. Agency
Section 474.
(1) Agency contracts are concluded to oblige an agent to carry out the matters entrusted to him.
(2) An agent must fulfill the principal’s instructions and represent his interests regarding the authority
conferred upon him. (3) If a contract is required for the performance of ag ency, the same formal requisites shall be necessary
for the agency as those stipulated in law for contracts to be concluded on the basis of the agency.
Rights and Obligations of Parties
Section 475.
(1) The agent shall proceed in pers on; he shall, however, be entitled to employ other persons if the
principal has agreed thereto or if it is implied by the nature of the agency. An agent shall be liable for the
persons he employs as if he himself had carried out the matter entrusted to him.

(2) The agent shall also be entitled to employ other persons if it is required in order to protect the
principal from sustaining injury. In such cases, the agent shall not be liable for the persons employed if he
is able to prove that he has acted in a manner that ca n generally be expected in the particular situation in
respect of choosing, instructing, and supervising such persons. (3) If the agent has not been authorized to employ other persons, he shall be liable for damages that
would not have occurred without the employment of such person.
(4) If a person employed by the agent has been se lected by the principal, the agent shall not be
responsible for this person if he is able to prove that he has acted in a manner that can generally be
expected in the particular situation with regard to instructing and supervising the person.
Section 476.
If the principal issues imprudent or incompetent instructions, the agent shall call the principal’s attention
to the matter. If the principal insists on the instructions despite the warning, he shall be liable for the
damages sustained on account of the instructions.
Section 477.
(1) The agent shall inform his principal of his activities and the state of affairs upon request or, if
necessary, even without a request, particularly if employment of another person has become necessary or if
the instructions need to be changed due to the occurrence of new circumstances. (2) The agent shall be entitled to depart from the principal’s instructions only if it is essential for the
principal’s interest and if there is no time to notify the principal in advance. In such a case the principal
shall be notified without delay.
(3) The agent shall notify the principal as soon as he fulfills his agency.
Section 478.
(1) The principal shall pay an appropriate fee, unles s the circumstances, or the relationship between the
parties suggest that the agent has assumed the agency without any consideration. (2) The agent shall be entitled to demand remuneration even if his actions brought no results. The
principal shall be entitled to reduce the remuneration or re fuse to pay it if he is able to prove that success
was not achieved in part or in whole for a reason for which the agent is responsible. (3) If the contract is terminated be fore the agency has been fulfilled, the agent shall be entitled to demand
an appropriate fraction of the fee for his activities.
(4) Fees shall be payable at the time a contract is extinguished.
Section 479.
(1) Costs that arise in connection with the handling of a matter shall be borne by the principal. The agent
shall not be obliged to advance any costs. (2) At the time the contract is ex tinguished, the agent shall be obliged to settle his accounts and give the
principal everything that has been acquired for the purpose of fulfilling his agency or as a result of doing
so, except for what he has lawfully used in the course of his agency.
(3) Upon termination of contract the principal shall exonerate the agen t from obligations assumed against
third persons on the basis of the agency and shall reimburse his necessary and useful expenses.
Section 480.
In order to secure their claims for expenses and remuneration, the agent shall hold a lien on the property
of the principal that comes into his possession in consequence of the agency.
Extinction of Agency

Section 481.
The contract shall be terminated even if the agency has not been fulfilled, if
a) either party cancels the contract by notice;
b) either party dies or, if a legal person, is dissolved, unless the dissolved legal person has a legal
successor; c) the principal becomes partially or fully incompetent or if the agent becomes incompetent;
d) the object of the ag ency becomes obsolete.
Section 482.
(1) If the agency is terminated for a reason that is inherent in the person of the principal, termination
shall take effect on the date on which the agent cred ibly acquires knowledge of the cause of termination.
(2) In the event of cancellation or the principal’s d eath or loss of legal competency, the agent shall take
measures as it is necessary to protect the interests of the principal even after the cancellation of the contract
as long as the principal or its legal successor is unable to tend to the business at hand.
Section 483.
(1) The principal shall be entitled to abrogate the contract with immediate effect at any time; the
principal, however, shall be obliged to uphold the obligations already assumed by the agent.
(2) The agent shall also be entitled to abrogate the contract at any time; however, the period of notice
must be sufficient for allowing the principal to handle the matter. In the event of the principal’s grave
breach of contract, abrogation can have immediate effect.
(3) If the agency is canceled without substan tial grounds, the damages that are caused shall be
indemnified, unless the agency is gratuitous and the period of notice is sufficient for allowing the principal
to handle the matter. (4) Any limitation or exclusion of the right of can cellation shall be null and void; however, the parties
shall be entitled to agree on the limitation of the right of cancellation with regard to continuous agencies.
2. Impromptu Agency
Section 484.
A person proceeding in a matter on behalf of another person without being authorized thereto by agency
or otherwise shall be obliged to handle the matter as required by the interest and probable intent of the
person in whose favor he has intervened.
Section 485.
(1) Intervention in the affair of another person without authority shall be considered fitting and proper if
it is in conformity with the interest and probable inte nt of the other person, especially if the intervention
saves him from loss or injury.
(2) Intervention is fitting and proper in order to aver t life threatening situations even against the will of
the person whose life is endangered, prevent or aver t extensive potential hazards even against the will of
the owner or another duly authorized person, or fulfill the obligation to provide support even against the
will of a person who is obliged to provide support.
Section 486.
(1) An impromptu agent shall immediately inform the person in whose favor he has intervened;
otherwise, he shall be subject to the same obligations as an agent. (2) If intervention by an impromptu agent has been f itting and proper, he shall be entitled to the rights of
an agent, irrespective of whether hi s intervention was successful or not.

(3) If intervention has not been fitting and proper, an impromptu agent shall not be entitled to demand
remuneration; he shall be entitled to demand reimburse ment for his expenses only in accordance with the
regulations governing unjust enrichment, and he sha ll be liable for all damages that would not have
occurred without his intervention.
Section 487.
If a person, knowing he has no right to do so, involves himself in the affairs of another person, it shall be
possible to enforce the rights proceeding from im promptu agency. If these rights are enforced, the
proceeding person shall be entitled to include his e xpenses according to the regulations governing unjust
enrichment.
Chapter XLI
Carriage of Goods
Section 488.
(1) Under a carriage contract the carrier shall be oblig ed to transport the consignment to its destination
and deliver it to the consignee in return for remuneration. (2) The contract shall come into existence when carri age is undertaken. Legal regulation can provide that
the acceptance of a consignment shall be construed as undertaking carriage.
Bill of Lading
Section 489.
(1) If contracting parties make out a bill of ladi ng regarding the carriage of goods it shall prove
conclusion of a carriage contract and/or receipt of th e consignment. The date of receipt, until proven to the
contrary, shall be the day on which the carrier signs (stamps) the bill of lading. (2) Having a bill of lading attached, with the formal and content requirements specified, can be rendered
mandatory by law.
(3) Upon the consignor’s request, a carrier shall sign (stamp) and surrender a duplicate of the bill of
lading or proof of receipt of the consignment to the consignee.
Rights and Obligations of Parties
Section 490.
(1) The consignor shall package the consignment in order to provide sufficient protection for the goods
and prevent it from jeopardizing the physical safety or property of others. (2) If the packaging discernibly fails to meet these requirements the carrier may undertake carriage of the
consignment only if the consignor so requests in writing and the consignment does not jeopardize the
physical safety or property of others.
Section 491.
(1) The consignor shall furnish the carrier with all of the documents required for the carriage of goods
and official inspection in transit. The carrier shall be entitled to refu se to accept the consignment until the
above documents have been furnished.
(2) The carrier shall be obliged to use the furnished documents as appropriate.

Section 492.
(1) The carrier shall be obliged to present the means of transport at the proper place in due time in a
condition suitable for carriage and, unless otherwise provided by legal regulation, to commence carriage
without delay.
(2) Unless otherwise provided by legal regulation, loading and unloading the consignment shall be the
responsibility of the consignor and consignee, respectively.
(3) If the carrier is late in presenting the means of transport before accep ting the consignment, the
consignor shall be entitled to cancel the contract and demand a) compensation for damages for the expenses incurred by the unsuccessful attempt to load the goods
and for any extra fr eight charges paid to another carrier;
b) the value of the consignment if the goods are lost or destroyed (damaged, perished) or compensation
for any loss in value due to the consignment being delivered late. The consignor, however, shall only be
entitled to enforce this right if he has informed the carrier of the nature of the co nsignment or if the carrier
was or should have been aware thereof.
(4) If the consignor is late in loading, the carrier shall be entitled to demand indemnification and even
rescind the contract.
Section 493.
(1) The carrier must strive to achieve economy and safety in the transportation of goods.
(2) The carrier shall be obliged to follow the instru ctions of the consignor. However, the right of
consignors to give instructions can be limited by legal regulations.
(3) In the event of receiving in structions that jeopardize the economical, expeditious, and safe
performance of carriage, the carrier shall immediately apprise the consignor thereof.
(4) If the consignor repeats the instructions in writing, the carrier shall execute them at the risk and
expense of the consignor; however, he shall refuse to comply with such instructions if compliance would
jeopardize the safety or property of others.
Section 494.
(1) If carriage is in any way obstructed, the carrier shall immediately ask the consignor for instructions;
this obligation of carriers can be limited or excluded by legal regulations. (2) The consignor shall be obliged to pay the portion of freightage up to the point at which obstruction
occurred and the carrier’s expenses, if he would profit by not paying them and if the carrier proves that the
obstruction had come about due to a cause arising outside the scope of carriage.
Section 495.
(1) The carrier shall be obliged to notify the consignor immediatel y of all important circumstances
related to carriage. The carrier shall be liable for damages caused by his failure to do so.
(2) The obligation to provide notification shall prevail particularly if the consignment has been damaged,
if a significant delay in the completion of carriage can be expected, if the consignment is exposed to
potential danger or if it cannot be delivered.
(3) The obligation to provide notification can be limited by legal regulations.
Section 496.
(1) The consignor shall be entitled to rescind from th e contract prior to the commencement of carriage;
however, he shall be obliged to indemnify the carrier for damages. (2) The consignor shall be entitled to reserve all rights to the consignment until it is delivered or the
consignee receives it. Such entitlement shall include the consignor’s right to stop the consignment in transit,
have it returned, or designate another consignee or destination. (3) The consignor shall bear responsibility for any extra freightage and expense incurred when
subsequent orders are issued.

Section 497.
(1) The carrier shall be obliged to notify the consig nee immediately of the arrival of the consignment.
After notification has been received, the consignment shall be available to the consignee.
(2) In order to ensure the safety of the consignment and make the ap propriate preparations for receiving
it, the consignee shall be entitled to give instructions to the carrier prior to receiving notification of the
arrival of the consignment. The carrier shall be bound by such instructions only if they do not contradict the
consignor’s instructions. Any expenses that arise b ecause of these instructions shall be borne by the
consignee. The right of consignees to give instructions can be limited by legal regulations. (3) If the consignment cannot be delivered or if the consignee does not settle claims due on delivery, the
carrier shall immediately notify the consignor and sa feguard the consignment according to the regulations
governing responsible custody. (4) The consignee as well as the consignor shall be entitled to enforce claims against the carrier after
receiving notification of the arrival of the consignment. Enforcement by either party shall terminate the
other party’s right.
Section 498.
(1) The carrier shall be entitled to delegate other carriers to forward the consignment.
(2) Carriers participating in carriage shall be subject to joint and several liability; if, however, other
carriers have been appointed by the consignor, eac h carrier shall be subject to individual liability.
(3) If two or more carriers are involved, each carrier shall be entitled to demand due payment for
freightage and expenses. The first carrier, however, sh all be entitled to enforce the claims of subsequent
carriers for freightage and expenses against the consig nor, while the last carrier shall be entitled to do so
with regard to the claims of the pr eceding carriers against the consignee.
Section 499.
(1) The carrier shall be entitled to demand payment of freightage and the requisite and useful expenses
spent on carriage. (2) The carrier shall hold liens for freightage and expenses on things that come into his possession in
connection with carriage. (3) The carrier shall also enforce liens to secure th e claims of other carriers that are known to him;
carriers who fail to do so shall be liabl e to the preceding carriers as a surety.
(4) The carrier shall be entitled to satisfy those of his claims secured by lien by selling the encumbered
property commercially, without legal action, and in precedence of other lienors.
Liability of Carriers and Consignors
Section 500.
(1) The carrier in delay shall be obliged to pay a penalty in proportion to the duration of the delay but no
more than the sum of freightage. The aggrieved party shall be entitled to demand indemnification in excess
of the aforementioned penalty if the carrier, aware of th e interest attached to punctual delivery, has agreed
in writing to meet the deadline and is unable to prove that the delay is the result of an unavoidable cause
beyond his control. (2) Such limitation of liability shall not apply to private carriers.
Section 501.
The carrier shall be liable for damage originating from the total or partial loss, destruction, or breakage
of the consignment during the period between receipt and delivery, unless the damage has occurred on
account of a) an unavoidable cause beyond carrier’s control,

b) an inherent property of the goods in consignment,
c) a packaging deficiency that is undetectable from the outside,
d) loading by the consignor or unloading by the consignee, or
e) the fact that the consignor, the consignee, or an attendant ordered by them did not proceed in a manner
that can generally be expected in the particular situation, inclusive of those cases in which the consignor
did not furnish the required documents or filled them out improperly or did not inform the carrier of the
extraordinary value of the consi gnment, a fact that could not be discerned from the outside.
Section 502.
(1) The carrier shall be liable for proving that damage has been caused by an unavoidable event beyond
his control. The consignee shall be liable for proving that the damages do not derive from an inherent
property of the goods in consignment. (2) The carrier shall be obliged to prove that the damage is a consequence of a packaging defect, while
the consignor and the consig nee shall be obliged to prove that the damage does not result from a packaging
defect.
(3) If loading and unloading have been done by the consignor and consignee, respectively, they shall be
liable for proving that the damage did not occur as a consequence of loading or unloading. (4) The consignor or the consignee shall be liable for proving that he or the attendant ordered by him has
proceeded in a manner that can generally be expected in the particular situation.
Section 503.
(1) In the case of total or partial loss or destruction of the consignment, the carrier shall not be entitled to
demand freightage or an appropriate fraction thereof, and he shall be obliged to pay compensation for the
value of the lost thing. (2) If the consignment has been damaged, the carri er shall be obliged to pay compensation for the
depreciation of value or eliminate the damage, at his discretion. (3) If the carrier willfully causes damage, he shall be liable for all damages therefrom.
Section 504.
(1) If, at the time of receipt the consignment is a pparently incomplete or damaged, claims against the
carrier shall be enforced immediately. Failure to do so shall result in forfeiture of rights. (2) Claims can be filed against the carrier within three days of receipt and only if the defect or damage
was not apparent at the time of taking charge. (3) The period of limitation for claims originating from carriage contracts shall be one year. The initial
date of this period shall be the date on which the consignment is delivered or the date on which it should
have been delivered. (4) If enforcement of a claim originating from a carriage contract is contingent upon a preliminary
proceeding, the writ initiating the pr oceeding shall not interrupt the period of limitation; however, the
duration of the proceeding cannot be included in the period of limitation.
Section 505.
(1) If the consignor has instructed the carrier in writing to accept a co nsignment in spite of defective
packaging, he shall be obliged to indemnify the carrier or other persons for damages caused by the defect,
and he shall also be liable for any damage that app ears in the consignment. Nonetheless, if the carrier
accepts the consignment in spite of packaging that is apparently defective from the outside without written
instructions from the consignor, th e carrier and the consignor shall bear the damages suffered by the carrier
or other persons because of the deficient packaging on a fifty-fifty basis.
(2) The carrier shall be liable vis-a-vis third persons; they shall, however, be entitled to demand
compensation from the consignor in accordance with the general rules and regulations governing liability.

Other Provisions
Section 506.
(1) If the consignment is to be conveyed beyond the nation’s borders, the provisions of this Chapter can
only be applied if an international treaty, convention, or regulation does not provide otherwise. (2) The provisions of this Chapter can only be applied to the carriage contracts of shipping and air freight
companies if an international treaty, conventi on, or regulation does not provide otherwise.
(3) Unless otherwise provided by legal regulation, the regulations governing professional services shall
be duly applied to the carriage of persons.
Chapter XLII
Commission Agency
Section 507.
Under a commission agency contract th e commission agent is obliged to conclude a sales contract in his
own name, in favor of the principal in return for a commission.
Section 508.
(1) If the commission agent concludes a sales contract under better conditions for the principal as
defined in the commission agency contract, the benefit or iginating therefrom shall be due to the principal.
(2) If the commission agent makes a sale for a price below the one specified in the commission agency
contract, he shall reimburse the principal for the differen ce, unless he is able to prove that the sales contract
could not have been concluded at the stipulated price, that by making the sale he saved the principal from
losses, and that he was not able to notify the principal in time. (3) If the commission agent substantially departs from the conditions stipulated in the commission
agency contract, the principal shall be entitled to reject the sales contract, unless the commission agent has
effected purchase at a higher price than stipul ated but agreed to reimburse the difference.
Section 509.
(1) A sales contract concluded under a commissi on agency contract shall entitle and bind the
commission agent against the party contracting with the commission agent.
(2) The commission agent shall be responsible to the principal for performance of all of the obligations
that are undertaken by his cont racting partner in the contract.
(3) Creditors of a commission agent sha ll not effect claims in respect of
a) claims against the party contracting with the commission agent and due to the principal;
b) things bought by the commission agent in the case of consignment purchases;
c) amounts of money received by the commission agent and kept or handled separately, which are
apparently due to the principal.
Section 510.
(1) The commission agent can himself conclude a sales contract with the principal.
(2) The commission agent’s claim for commission shall not be affected if the sales contract with the
principal is concluded by the commission agent himself.
Section 511.

(1) The commission agent shall be entitled to receive a commission only if the sales contract has been
performed. (2) The commission shall include the expenses usually involved with consignment, but it shall not
include expenses related to carriage. (3) The commission agent shall be entitled to demand reimbursement for those of his necessary and
useful expenses that are not included in the commission; however, he shall only be entitled to demand those
of his substantiated expenses otherwise included in the commission only if the sales contract has not been
performed due to reasons within the commission agent’s control.
Section 512.
(1) Prior to the conclusion of a sales contract, the principal shall be entitled to terminate the contract by
notice with immediate effect, and the co mmission agent by fifteen-days’ notice.
(2) Any limitation or exclusion of the right of rescission shall be null and void.
Section 513.
(1) A contract in which a commission agent assumes an obligation to conclude a contract other than a
sales contract shall also be deem ed a commission agency contract.
(2) Unless otherwise provided by this Chapter, the regulations governing agency must be applied to
commission agency.
Chapter XLIII
Forwarding
Section 514.
(1) Under a forwarding contract the forwarding agents shall be obliged to conclude, in his own name and
in favor of the principal, carriage and other contract s necessary for forwarding goods and performing other
tasks related to forwarding the goods; and the principal shall be obliged to pay the forwarding fee
appropriate therefor. (2) The contract shall come into ex istence when the agency is accepted.
Rights and Obligations of Parties
Section 515.
(1) With regard to selecting a carrier or other forwar ding agent, establishing the route of shipment, and
performing his other obligations; forwarding agents must strive to achieve economy and the safety of the
consignment. (2) The forwarding agent shall follow the instructions of the principal. If the forwarding agent receives
any instructions that jeopardize th e economical and safe forwarding of the goods, he shall immediately
apprise the principal thereof. If the principal repeats the instruction in writing, the forwarding agent shall
execute it at the risk and expense of the principal.
(3) The forwarding agent shall be required to insu re the consignment only if so instructed by the
principal.
Section 516.
(1) The forwarding agent shall be entitled to perform carriage himself, and he shall also be entitled to
employ other forwarding agents; the other forwarding ag ents, however, will not have any legal relationship
with the principal.

(2) The forwarding agent shall be directly liable for the activities of the other forwarding agents whom
he has chosen; however, if the other forwarding agents are employed on the instructions of the principal,
these forwarding agents shall be directly liable to the principal.
Section 517.
(1) The forwarding agent shall enfo rce the principal’s claims against the carrier; the forwarding agent
shall be liable for all damages incurred by the principal as a result of his violation of this obligation.
(2) This provision shall not affect the principal’s right to enforce his claims himself.
Section 518.
(1) The forwarding agent shall be entitled to dema nd reimbursement for forwarding fees and for his
necessary and useful expenses incurred in the course of forwarding. (2) The forwarding agent shall be entitled to any freightage discount granted subsequently and to the
referral fees paid by carriers for goods carried with the forwarder’s participation.
Section 519.
(1) The forwarding agent shall hold liens for his fees and expenses on those of the principal’s things that
have come into his possession in connection with a forwarding contract as well as those things that are at
his disposal through the do cuments in his possession.
(2) The forwarding agent shall also enforce liens for the claims of other forwarding agents known to
him; if the forwarding agent fails to do so, he shall be liable to the preceding forwarding agents as a surety.
(3) The forwarding agent shall be entitled to satisfy those of his claims secured by lien, after the carrier
but before the other lienors, by selling the encumbered property commercially, without legal action.
Liability of Forwarding Agents
Section 520.
(1) The forwarding agent shall be liable for damages incurred in the consignment within the scope of his
forwarding activity as carriers and liable, moreover, for other damages in accordance with the general
provisions.
(2) The forwarding agent shall only be liable, as carriers, for damages incurred within the scope of
carriage, if a) he carries the cargo himself, or
b) he has had the consignment forwarded together with the goods of others, on the same means of
transportation and without separating it (collective freig ht), and if the damages occurred in the process
thereof.
(3) The period of limitation for claims originating from forwarding contracts shall be one year. The
initial date of this period is the date on which the co nsignment is conveyed to the carrier, or if it has already
been conveyed, the initial date of the period of limitation for carrier’s liability.
Other Provisions
Section 521.
(1) The regulations governing forwarding shall also be applied if a forwarding agent concludes a contract
required for forwarding goods in his principal’s name and, furthermore, if he is delegated to receive
delivery of the goods; in this case, he shall also be liable for the protection of the consignee’s interests.

(2) If the forwarding agent has concluded a contract required for forwarding goods in his principal’s
name, he shall be entitled to enforce the principal’s claims against the carrier only if he has been expressly
authorized by the principal to do so. (3) Unless otherwise suggested by this Chapter, the regulations governing commission agency shall be
duly applied to the contracts and other legal acts of forwarding agents, and the regulations governing
carriage shall be applied to the handling, protection, and forwarding of goods.
Chapter XLIV
Bank and Credit Relations
1. Credit and Loan Contracts
Section 522.
(1) Under a bank credit contract the financial institution assumes an obligation to maintain a specific line
of credit, for a commission, in favor of the other contr acting party and, if the conditions stipulated in the
contract are satisfied, to conclude loan contracts or effect other credit transactions charged to the line of
credit.
(2) Bank credit contracts shall only be valid if concluded in writing.
Section 523.
(1) Under a loan contract the fina ncial institution or other creditor sh all be obliged to place a certain
amount of money at the disposal of the debtor, and the debtor shall be obliged to repay the loan in
accordance with the contract. (2) Unless otherwise provided by legal regulation, the debtor shall pay interest if the creditor is a
financial institution (bank loan).
Section 524.
(1) The creditor shall be entitled to refuse disbursement of loans if able to prove that, due to any material
changes in their circumstances or th ose of the debtor after conclusion of a contract, performance of the
contract can no longer be expected or if able to prove that termination with immediate effect can be applied
on the grounds of factors that emerge after the conclusion of the contract (Section 525).
(2) The debtor shall not be obliged to accept the loan; in such cases, however, the debtor shall indemnify
the creditor for damages arising from the conclusion of the contract. The creditor, if a financial institution,
shall not be entitled to indemnification; however, the debtor shall be obliged to pay a commission for the
period during which the creditor, either by virtue of a credit contract or without one, keeps the loan amount
available in the debtor’s favor.
Section 525.
(1) The creditor shall be entitled to cancel th e loan account with immediate effect, if
a) it is impossible to use the loan for the purpose specified in the contract;
b) the debtor uses the loan for a purpose ot her than that stipulated in the contract;
c) the collateral provided for the loan has significantly depreciated in value and the debtor has not
supplemented it at the request of the creditor;
d) the deterioration of the debtor’s financial standing or his conduct, if it is aimed at depleting funds
reserved as collateral, jeopardizes repayment of the loan; e) the debtor has committed some other serious breach of contract.
(2) The creditor, if a financial institution, shall be entitled to cancel the loan account with immediate
effect above and beyond the cases described in Subsection (1), if

a) the debtor becomes insolvent;
b) the debtor has deceived the financial institution by stating false facts, concealing data, or acting in
some other way in determining the loan amount, if it has influenced the determination of the loan amount;
c) the debtor, notwithstanding a warning, impedes any investigation concerning collateral, security, or
the realization of the purpose of the loan, including those cases in which the debtor fails to meet the
disclosure obligation assumed in the contract or prescribed by a legal regulation.
Section 526.
(1) The loan contract concluded for an open term can be terminated by fifteen days’ notice.
(2) The creditor’s right of recove ry concerning the loan balance sh all commence in accordance with the
maturity or maturities specified in the contract or, if the contract has been terminated, when the term of
notice lapses.
Section 527.
(1) If the debtor uses the loan amount for a purpose other than that stipulated in the contract in a manner
for which he is accountable, the legal consequences resulting from the breach of contract shall be
applicable as of the date of this use. (2) If the debtor is obliged to pay interest, the interest shall be paid subsequent to each quarter, and/or
when repayment of the loan becomes due.
Section 528.
(1) The regulations governing loans and interests shall also be duly applied if the subject of the loan is
not money but some other fungible.
(2) Unless otherwise prescribed by legal regulation, the regulations governing bank credits and bank
loans shall also be applied to loans that a financial institution extends in a name other than its own or from
funds other than its own. (3) The detailed regulations on bank credit and bank loan contracts are laid down in specific other
legislation.
2. Bank Account and Deposit Contracts
Section 529.
(1) Under a bank account contract the financial institution shall assume an obligation to manage and
keep records of the cash assets of the other contrac ting party (account holder), execute proper payment and
transfer orders from these assets, and furnish statem ents to the account holder regarding any sums debited
or credited to his account as well as the account balance.
(2) The financial institution shall be entitled to use the money that comes into an account.
(3) Depletion of funds shall not constitute termination of a checking account contract.
Section 530.
Under a deposit contract the financial institution shall be obliged to pay interest on the money deposited
by the contracting party and repay the deposited sum as specified in the contract.
3. Current Account Contracts
Section 531.

(1) Under a current account contract the parties shall assume an obligation to settle their mutual
monetary claims originating from a specific legal relationship in a consolidated account. (2) The parties shall not be entitled to dispose of any of their claims in the current account; their right of
disposal applies to the current accoun t balance. Only the current account balance at the date of the writ of
execution can be attached. (3) The period of limitation on claims placed on cu rrent accounts shall commence on the initial date of
the period of limitation on the balance.
Section 532.
(1) The parties shall be entitled to co ntest the balance or the receivables and payables that serve as the
basis for computing the balance, in writing, within fifteen days of notification. (2) If the parties have not contested the balance or if they have agreed on the items contested, or if the
court has ruled on the contested subject matter; the individual claims shall cease to exist and shall be
substituted by the current account balance.
4. Savings Deposit Contracts
Section 533.
(1) Under a savings deposit contract the financial institution shall be obliged to receive money from
depositor, record it in a savings book or some other document, and repay such money as specified in the
contract. (2) The savings deposit account must be registered under the holder’s name. Savings deposits can also
be placed in credit institutions in favor of another beneficiary.
(3) The financial institution shall pay interest on savings deposits for the period of deposit or – in respect
of a prize drawing deposit – on the winnings, consistent with the results of the drawing.
(4) No period of limitation shall apply to claims fo r the repayment of savings deposits or the payment of
interest or prize winnings.
Section 534.
Section 535.
(1) The detailed regulations on savings deposits are laid down in specific other legislation.
(2) The regulations governing savings deposit contracts shall be duly applied to cash instruments
deposited by private persons under bank account contracts. (3) The provisions of Subsection (4) of Section 533 and the regulations governing bank account
contracts shall be applied to the bank account contracts of private persons, inclusive of their unincorporated
business associations, subject to the obligation of contracting pursuant to other legal regulations.
Chapter XLV
Insurance
1. Common Provisions
Section 536.
(1) Under an insurance contract the insurer shall be obliged to pay a certain amount of money or perform
another service upon the occurrence of a specific future event (insurance event), and the insured or the
other contracting party shall be obliged to pay an insurance premium therefor.

(2) Insurance event means, among others:
a) an event of loss defined in the contract;
b) death or attainment of a certain age;
c) an accident causing injury, disability, or death. Section 537.
(1) Insurance contracts shall come into existen ce through a written agreement between the parties.
(2) A contract shall also be created if an insurer does not respond to an offer within fifteen days. In such
a case, the contract shall be created re troactively as of the date on which the offer is conveyed to the insurer
or its representative.
(3) If a contract that is concluded without the explicit statement of the insurer deviates from the
insurance regulations, the insurer shall be entitled to ma ke a written proposal within fifteen days to have the
contract amended in accordance with the regulations. This period shall be calculated as of the day on which
the proposal is conveyed to the in surer’s office that is authorized to issue insurance policies. If the
contracting party does not accept the offer or does not respond to it within fifteen days, he shall be entitled
to terminate the contract in writing w ith thirty-days’ notice within fifteen days of receiving the refusal or the
proposal for amendment.
Section 538.
(1) The written agreement or the insurer’s statement of acceptance shall be replaced by the issuance of an
insurance policy (certificate, insurance stamp). If the conditions of the policy differ from the party’s offer
and if this difference is not contested by the party w ithin fifteen days, the contract shall be created in
accordance with the contents of the policy. This provision can be applie d to significant discrepancies only
if the insurer expressly points out such discrepancie s to the contracting party in writing at the time the
policy is delivered. In the absence of a warning notice, a contract shall be created in accordance with the
contents of the offer. (2) Contracting parties shall be entitled to demand deliv ery of an insurance policy even if the contract
has already come into existence in another manner.
Section 539.
(1) Insurance coverage shall take effect on the day following the date on which the contracting party
makes the first premium payment to the insurer by transf er or in cash, the date on which an agreement is
reached on a premium payment deferment, or the date on which the insurer files for court action regarding
premium payments. (2) If the contracting party has made a premium pa yment to the insurer’s representative, the premium
shall be considered to be received by the insurer on or before the fourth day following the date of payment;
however, the contracting party shall be entitled to prove that the premium had been received earlier.
Section 540.
(1) For the purpose of an insurance contract, the insu red must disclose all of the circumstances of which
he was or must have been aware that are important in terms of providing insurance coverage. The party
shall satisfy his disclosure obligation by truthfully filling out the questionnaire furnished by the insurer.
Leaving the questions unanswered shall not in itself constitute a violation of the disclosure obligation. (2) The parties shall be entitled to agree that th e insured and the contracting party are obliged to
promptly report any changes regarding any of the important conditions specified in the contract to the
insurer in writing. (3) In the event of a breach of the obligation to make disclosure and re port changes, the obligation of the
insurer shall not take effect, unless it is proved that the insurer was aware of the concealed or undisclosed
circumstance at the time the contract was concluded or that such circumstance had no influence on the
occurrence of the insurance event.

Section 541.
(1) If the insurer becomes aware of any circumstance of significance regarding a contract only after the
contract has been concluded and, furthermore, if the insurer is notified of changes in any of the important
circumstances specified in the contract, the insurer shall be entitled to make a written proposal, within
fifteen days, to amend the contract or, if it cannot undertake indemnification according to the regulations,
terminate the contract with thirty days’ notice.
(2) If the insured party does not accept the proposal for amendment or fails to respond to it within fifteen
days, the contract shall be terminated on the thirtieth day following the day on which the proposal for
amendment was communicated. The insured party shall be warned of this consequence when he submits
the proposal for amendment. (3) If an insurer does not exercise these rights, the contract shall remain in force with its original
contents.
Section 542.
(1) The first insurance premium shall be due at the time the contract is concluded, and all subsequent
premiums shall be due on the first day of the period to which they pertain. (2) A one-time premium shall be paid at the time the contract is concluded.
(3) The parties shall be entitled to deviate from these provisions by an agreement.
Section 543.
(1) A contract shall be extinguished on the thirty-first day following the premium payment due date if
the overdue premium is not paid and the insured has not received a deferment, or if the insurer has not filed
for court action regarding the premium payment. (2) Insurers shall be entitled to postpone termination of a contract and the time l

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