1
Act V of 2013
on the Civil Code1
BOOK ONE
INTRODUCTORY PROVISIONS
Section 1:1
[Scope]
This Act governs the property and
personal relations of persons under the
principle of interdependence and the
principle of equality.
Section 1:2
[Interpretative principle]
(1) The provisions of this Act shall be
interpreted in accordance with the
constitutional order of Hungary.
(2) The legislation relating to civil law
shall be interpreted in accordance with
the provisions of this Act.
Section 1:3
[Principle of good faith and fair
dealing]
(1) In exercising rights and in fulfilling
obligations the requirements of good
faith and fair dealing shall be observed.
(2) The requirements of good faith and
fair dealing shall be considered
breached where a party’s exercise of
rights is contradictory to his previous
1
Promulgated on 26 February 2013.
actions which the other party had reason
to rely on.
Section 1:4
[Principle of reasonable conduct.
Attributability]
(1) Unless otherwise provided for by
this Act, in civil law any reference to
what can be expected of or by a person,
or in a particular situation, is a reference
to what can reasonably be expected.
(2) A person may not rely, in support of
his claim, on an unlawful act he has
committed.
(3) A person who himself engaged in
an unlawful act may also rely on the
wrongful act committed by others.
Section 1:5
[Prohibition of abuse of rights]
(1) Abuse of rights is prohibited by law.
(2) Where the abuse of a right is
manifested in the repudiation of a
statement required by law and this
conduct does injury to an overriding
public interest or a private interest in
cases of exceptional circumstances, the
court is entitled to substitute its judgment
for the party’s legal statement, provided
there is no other way of averting the
injury.
Section 1:6
[Judicial process]
Unless otherwise provided for by law,
the rights afforded in this Act may be
enforced by way of judicial process.
BOOK TWO
2
MAN AS A SUBJECT AT LAW
PART ONE
LEGAL CAPACITY
TITLE I
COMMENCEMENT AND
CESSATION OF LEGAL
CAPACITY
Section 2:1
[Legal capacity]
(1) All persons shall have legal
capacity; all persons shall be entitled to
have rights and obligations.
(2) Unilateral statements limiting legal
capacity shall be null and void.
Section 2:2
[Commencement of legal capacity]
(1) Each person, if born alive, shall
have legal capacity from the day of
conception.
(2) The three hundredth day preceding
the date of birth shall be considered the
day of conception, which, however, may
be evidenced to have occurred earlier or
later. The day of birth shall be included
in the aforementioned period.
Section 2:3
[Legal guardian of the fetus]
(1) The guardian authority shall
appoint a guardian for the fetus upon
request or ex officio, where this is
deemed required to protect the interest
of the fetus.
(2) The appointment of a guardian may
be requested by the parent or
grandparent of the fetus, or by the
competent public prosecutor or notary.
Section 2:4
[Cessation of legal capacity]
Legal capacity ceases upon death.
TITLE II
LEGAL PRESUMPTION OF
DEATH
Section 2:5
[Legal presumption of death]
(1) A missing person may be legally
declared dead by the court upon request
five years after the date of his/her
disappearance if there has been no
information of any kind during this period
to indicate that he/she is alive.
(2) A person legally declared dead
shall be considered dead in the absence
of proof to the contrary.
(3) Legal presumption of death may be
requested by the missing person’s close
relatives, the public prosecutor, the
guardian authority, or by any person
who has an interest in the legal
presumption of death of the missing
person.
Section 2:6
[Determining the time of death]
3
(1) The court shall declare the time of
death upon due consideration of the
circumstances.
(2) If weighing the circumstances
proves to be inconclusive, the date of
death shall be the fifteenth day of the
month following the month of
disappearance.
Section 2:7
[Changes in the circumstances
underlying the legal presumption of
death]
(1) If it is conclusively resolved that the
person declared legally dead had
disappeared before or after the date
indicated in the relevant ruling, however,
the conditions for the legal presumption
of death otherwise apply, the court shall
amend its ruling on the legal
presumption of death accordingly. The
legal consequences shall change in
accordance with the revised ruling.
(2) If it has been conclusively resolved
that a person legally presumed dead
had disappeared after the date indicated
in the relevant ruling and, in
consequence, the conditions for the
legal presumption of death are not valid,
the court shall abolish its ruling on the
legal presumption of death, and all
ensuing legal consequences shall be
considered null and void.
(3) The amendment and repeal of the
ruling on the legal presumption of death
may be requested by the same persons
that have the right to request the legal
presumption of death.
(4) If a person who has been legally
presumed dead is found, the ruling on
the legal presumption of death shall be
abolished, and the ensuing legal
consequences shall be considered null
and void.
PART TWO
LEGAL COMPETENCY
TITLE III
GENERAL RULES ON LEGAL
COMPETENCY
Section 2:8
[Legal competency]
(1) Any person whose competency is
not limited or precluded under this Act or
by a court ruling on guardianship is
considered legally competent.
(2) Whosoever is competent is entitled
to conclude contracts and make other
legal statements.
(3) Unilateral statements limiting legal
competency shall be null and void.
Section 2:9
[Incompetency]
(1) A legal statement made by any
person who is not of sound mind and
who is therefore unable to make
decision for himself or herself at that
time shall be considered null and void.
(2) Legal statements, exclusive of
testamentary dispositions, made by
incompetent persons shall not be
considered null and void on the grounds
of incompetence, if the contents and
4
circumstances thereof imply that the
legal statement would also have been
justified had the party been legally
competent.
TITLE IV
LIMITED CAPACITY AND LEGAL
INCOMPETENCY OF MINORS
Section 2:10
[Minority]
(1) Persons who have not yet reached
the age of eighteen years shall be
deemed minors. Married minors are
considered to be of legal age.
(2) If the marriage is annulled by court
order owing to the lack of capacity or in
the absence of the guardian authority’s
consent where it is required due to
minority, adulthood acquired by marriage
shall no longer apply.
(3) The dissolution of this marriage
shall not affect adulthood acquired by
marriage.
Section 2:11
[Minors of limited legal capacity]
A minor shall be of limited capacity if
he or she has reached the age of
fourteen years and is not incompetent.
Section 2:12
[Legal statements of minors of limited
legal capacity]
(1) Unless otherwise provided for by
this Act, the legal statements of a minor
with limited capacity shall not be
deemed valid without the consent of that
minor’s legal representative. If and when
a minor of limited capacity becomes
competent, he shall be entitled to make
his own decisions concerning the validity
of his pending legal statement.
(2) Minors of limited capacity shall,
without the involvement of their legal
representatives, be entitled:
a) to make legal statements of a
personal nature for which they are
authorized by legislation;
b) to conclude contracts of minor
importance aimed at satisfying their
everyday needs;
c) to dispose of the earnings they
acquire by gainful employment and
undertake commitments up to the extent
of their earnings;
d) to conclude contracts that only offer
advantages; and
e) to give away gifts within reasonable
limits.
(3) With the permission of the guardian
authority, the legal representative shall
be entitled to refuse gifts that are
promised or given to a minor of limited
capacity. If the guardian authority
declines to approve the legal
representative’s statement of refusal, the
guardian authority’s such decision shall
replace the legal representative’s
statement of acceptance.
(4) The legal representative shall be
entitled to make statements in the name
and on behalf of the minor 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 concerns the
income the minor of limited capacity has
5
acquired by gainful employment. 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 opinion of the minor of
limited capacity.
Section 2:13
[Incompetent minors]
Minors under the age of fourteen years
are legally incompetent.
Section 2:14
[Legal statements of incompetent
minors]
(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 that have been
concluded and performed directly by
incompetent minors shall not be
considered null and void on the grounds
of incompetence.
(3) As regards any statement made by
the legal representative that effects the
person or property of the minor, the
views of the incompetent minor of sound
mind shall be taken into account in
accordance with the age and maturity of
the child.
Section 2:15
[The guardian authority’s approval for
the legal acts made by the legal
representatives of minors]
(1) The approval of the guardian
authority is required for the legal acts of
the legal representatives of minors, if
they concern:
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 acquisition of any real estate
property by a minor, if such property is
not free an clear, or the transfer or
encumbrance of a minor’s real estate
property;
d) disposition relating to the assets of
a minor controlled by the guardian
authority; or
e) any other property of a minor, the
value of which exceeds the amount limit
prescribed in other legislation.
(2) The consent of the guardian
authority is not required for the
encumbrance of the real estate property
of a minor if it takes place upon
acquiring the property without
consideration, and if the provider is
granted beneficiary right at the same
time.
(3) The consent of the guardian
authority is not required if the legal
statement has already been adjudicated
in court or under notarial proceedings.
Section 2:16
[Uncompensated commitment of
minors]
Any legal act made by the legal
representative of a minor - with effect of
the minor’s assets - for giving gifts,
6
undertaking obligations without
adequate consideration, or for
relinquishing rights without consideration
shall be null and void. This provision
shall apply mutatis mutandis to the legal
representative’s consent to a legal
statement made by a minor of limited
legal capacity.
Section 2:17
[Relative nullity of the legal acts of
minors]
Nullity on the basis of incompetence or
limited capacity of minors may be
invoked in the interest of a person who
is incompetent or of limited capacity.
Section 2:18
[Limiting the competency of minors by
order of conservatorship or
guardianship]
(1) A minor may be placed by court
order under conservatorship or
guardianship after reaching the age of
seventeen years according to the
provisions applicable to adults.
(2) Placement under guardianship or
conservatorship may be requested by
the minor’s legal representative as well.
(3) Where a minor is placed by court
order under guardianship invoking fully
limited legal competency, guardianship
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.
TITLE V
LIMITING THE LEGAL
CAPACITY OF PERSONS OF
LEGAL AGE
Section 2:19
[Conservatorship]
(1) Persons of legal age shall be of
partially limited capacity if a court has
placed them in the custody of a
conservator to that effect.
(2) Persons of legal age whose
necessary discretionary ability for
conducting their affairs is - owing to their
mental disorder - permanently or
persistently diminished shall be placed
by court order under conservatorship
which partially limits their competency in
respect of certain specific matters,
where this is deemed justified due to his
individual circumstances and family and
social ties.
(3) In its ruling invoking partially limited
legal competency the court shall specify
the matters of a personal or financial
nature, in which legal capacity is limited.
(4) Legal capacity may not be limited
to any extent, where protection of the
rights of the person affected can be
ensured by other means without
prejudice to legal capacity.
(5) Persons of partially limited legal
capacity shall be able to make legal
statements in all matters concerning
which the court did not limit their
competency in its ruling invoking partially
limited legal competency.
Section 2:20
7
[Legal acts of persons of partially
limited legal capacity]
(1) Legal statements made by persons
of partially limited legal capacity with
respect to certain types of matters
specified in the court ruling shall be
considered valid upon the conservator’s
consent. If and when a persons of
partially limited legal capacity becomes
competent, he shall be entitled to make
his own decisions concerning the validity
of his pending legal statement.
(2) Any dispute between a person of
partially limited legal capacity and his
conservator shall be decided by the
guardian authority.
(3) Persons of partially limited legal
capacity shall, without the consent of
their conservators relating to certain
types of matters specified in the court
ruling, be entitled:
a) to make legal statements of a
personal nature for which they are
authorized by legislation;
b) to conclude contracts of minor
importance aimed at satisfying their
everyday needs;
c) to dispose of a certain percentage of
their earnings as specified by the court,
and to undertake commitments up to the
extent thereof;
d) to conclude contracts that offer only
advantages; and
e) to give away gifts within reasonable
limits.
(4) Where prompt measures are
deemed necessary for protecting the
interests of a person of partially limited
legal capacity, or for safeguarding him
from suffering losses, the conservator
shall be able to proceed of his own
motion in cases for which his consent is
required, and shall be able to make
statements in the name o the person
affected. The persons of partially limited
legal capacity and the guardian authority
shall be notified thereof without delay.
Section 2:21
[Guardianship]
(1) Persons of legal age whom the
court has placed under guardianship
fully limiting their legal competency are
deemed legally incompetent.
(2) Persons of legal age whose
necessary discretionary ability for
conducting their affairs is - owing to their
mental disorder - completely lacking
shall be placed by court order under
guardianship that fully limits their
competency in all matters of life, where
this is deemed justified due to their
individual circumstances and family and
social ties.
(3) Guardianship with fully limited legal
competency may be ordered by the
court if the protection of the rights of the
person affected cannot be ensured by
other means without prejudice to legal
capacity, nor by partially limited
competency.
Section 2:22
[Legal acts of incompetent adults]
(1) Legal statements made by
incompetent adults shall be null and
void; their guardian shall proceed on
their behalf.
(2) Contracts of minor importance that
are generally concluded in large
numbers and do not require special
8
consideration and that have been
concluded and performed directly by
incompetent adults shall not be
considered null and void on the grounds
of incompetence.
(3) Prior to making a decision the
guardian shall hear the views and
requests of the incompetent adult, if
he/she is of sound mind, and shall abide
by such requests if possible.
Section 2:23
[Requirement of the guardian
authority’s consent]
(1) The consent of the guardian
authority is required for the validity of
legal statements made by a person of
partially limited legal capacity and his
conservator, or by the guardian of an
incompetent adult, if the legal statement
concerns:
a) the maintenance of the person of
partially limited legal capacity or the
incompetent adult;
b) rights or obligations which, by virtue
of inheritance, fall upon the person of
partially limited legal capacity or the
incompetent adult;
c) the acquisition of any real estate
property by the person of partially limited
legal capacity or the incompetent adult,
if such property is not free and clear, or
the transfer or encumbrance of real
estate property;
d) disposition relating to the assets of
the person of partially limited legal
capacity or the incompetent adult
controlled by the guardian authority; or
e) any other property of the person of
partially limited legal capacity or the
incompetent adult, the value of which
exceeds the amount limit prescribed in
the resolution on the appointment of the
guardian or conservator.
(2) On an exceptional and duly
justified basis, the guardian authority
may approve, upon request made jointly
by the person with limited legal capacity
in financial affairs and his guardian, the
following outlays can be made from the
assets of the person affected:
a) for a descendant of the person
affected to establish and uphold his/her
own household or to achieve some other
vital objective as financed from the
assets of the person affected; this
support, however, shall not exceed half
of the legal share - of a status and value
prevailing at the time when the support
is provided - in the succession of the
heir; or
b) for making gifts or to surrender any
of his/her rights without consideration or
donate such for public purposes, if such
transaction does not endanger the
livelihood of the person affected.
(3) On an exceptional and duly justified
basis, the guardian authority may
approve, upon request made by the
guardian of an incompetent adult,
outlays for a descendant to establish
and uphold his/her own household or to
achieve any other vital objective from the
assets of the person affected; this
support, however, shall not exceed half
of the legal share - of a status and value
prevailing at the time when the support
is provided - in the succession of the
heir.
(4) The consent of the guardian
authority is not required for the
9
encumbrance of the real estate holdings
of a person of partially limited legal
capacity or an incompetent adult if it
takes place upon acquiring the property
without consideration, and if the provider
is granted beneficiary right at the same
time.
(5) The consent of the guardian
authority is not required if the legal
statement has already been adjudicated
in court or under notarial proceedings.
Section 2:24
[Relative nullity of the legal acts of
persons of partially limited legal capacity
and incompetent adults]
Nullity on the basis of partially limited
legal capacity or incompetence may be
invoked in the interest of a person
whose legal capacity is partially limited
or who is incompetent.
TITLE VI
MEASURES PRIOR TO
PLACEMENT UNDER
GUARDIANSHIP OR
CONSERVATORSHIP
Section 2:25
[Sequestration and appointment of a
conservator]
If legal action for the placement of a
person under conservatorship or
guardianship appears justified, and the
protection of the assets of this person
demands urgent action, the guardian
authority shall order sequestration of all
or part of such assets, and shall appoint
a sequestrator at the same time. The
aforesaid ruling may not be appealed.
Section 2:26
[Appointment of a temporary
conservator]
(1) In cases demanding immediate
action, the guardian authority may
appoint a temporary conservator to
persons of legal age whose placement
under guardianship affecting legal
capacity appears justified, and if their
person or assets cannot be protected by
other means, by sequestration in
principle. An order of appointment of a
temporary conservator cannot be
appealed.
(2) The guardian authority shall specify
in its order of appointment of a
temporary conservator the particular
matters or groups of matters concerning
which the temporary conservator has
powers to make legal acts.
(3) Moreover, the activities of
temporary conservators shall be
governed by the provisions pertaining to
conservators.
Section 2:27
[Common provisions relating to
sequestration and to the appointment of
a temporary conservator]
(1) The guardian authority shall file for
legal action for placement under
conservatorship within eight days from
the order of sequestration or the
appointment of a temporary conservator.
The court shall ex officio review the
sequestration or the appointment of a
10
temporary conservator within thirty days
following the time of bringing action.
(2) Terminating the effect of
sequestration or the removal of the
receiver or the temporary conservator
shall be provided for at the latest in the
order of appointment of the conservator.
TITLE VII
PLACEMENT UNDER
GUARDIANSHIP OR
CONSERVATORSHIP
Section 2:28
[Requesting placement under
guardianship or conservatorship]
(1) Placement under guardianship or
conservatorship may be requested by:
a) the spouse, domestic partner,
relative in direct line, or sibling living with
the person of legal age;
b) the minor’s legal representative;
c) the guardian authority; and
d) the public prosecutor.
(2) The guardian authority shall initiate
the conservatorship procedure upon
receiving notice that it is necessary to
place a person in the custody of a
conservator, if it is not initiated by either
of the persons referred to in Paragraphs
a) and b) of Subsection (1) within sixty
days of receipt of notification from the
guardian authority concerning the
requirement for legal action.
Section 2:29
[Mandatory review of placement under
guardianship or conservatorship]
(1) The court ruling on restricting,
upholding or modifying the legal
competency of a person shall specify the
date by which to initiate the statutory
review of conservatorship, where this
date:
a) must be fixed within five years from
the date when the ruling becomes
legally operative in the case of
conservatorship;
b) must be fixed within ten years from
the date when the ruling becomes
legally operative in the case of
guardianship.
(2) The review procedure shall be
initiated by the guardian authority of its
own motion. The petition for review may
request the termination of
conservatorship or guardianship, the
extension of conservatorship or
guardianship, the transfer from
conservatorship invoking partially limited
legal competency into guardianship
invoking fully limited legal competency,
the transfer from guardianship invoking
fully limited legal competency into
conservatorship invoking partially limited
legal competency, or the revision of the
sphere of rights that cannot be exercised
by a person under conservatorship of
limited competency.
Section 2:30
[Termination and revision of
conservatorship or guardianship]
(1) The court shall terminate
conservatorship concerning competency
if the grounds on which it was ordered
no longer prevail.
11
(2) Termination of guardianship or
conservatorship may be requested by:
a) the person in custody;
b) the spouse, domestic partner,
relative in direct line, or sibling living with
the person in custody;
c) the conservator;
d) the guardian authority; or
e) the public prosecutor.
(3) The persons listed under
Subsection (2) may also request the
modification of guardianship or
conservatorship. To that end, they may
request the transfer from
conservatorship invoking partially limited
legal competency into guardianship
invoking fully limited legal competency,
the transfer from guardianship invoking
fully limited legal competency into
conservatorship invoking partially limited
legal competency, or the revision of the
sphere of rights that cannot be exercised
by a person under conservatorship of
partially limited competency.
(4) Legal action for the termination or
modification of conservatorship or
guardianship may also be initiated
before the statutory review of
guardianship and conservatorship.
TITLE VIII
APPOINTMENT OF A
CONSERVATOR; RIGHTS AND
OBLIGATIONS OF
CONSERVATORS
Section 2:31
[Appointment of conservator]
(1) The guardian authority shall
appoint a conservator for the person
placed under conservatorship by court
order. Any person with legal
competency, who accepts the office may
be appointed a conservator.
(2) A person shall not be appointed
conservator if:
a) he/she is excluded by the person
under conservatorship from among the
possible candidates by means of a prior
legal statement, or if an objection to
such person is expressly made by the
person under conservatorship; or
b) it conflicts with the interests of the
person under conservatorship.
(3) The person designated by the
person placed under conservatorship in
a prior legal statement, or named in the
appointment procedure by the relevant
person, shall be appointed for the office
of conservator, unless it expressly
conflicts with his/her interest. If this is not
possible, his or her spouse or domestic
partner living in the same household,
shall be appointed for the office of
conservator. In the absence of such
family member, or if the appointment of
his/her spouse or domestic partner
appointed would jeopardize the interest
of the person under conservatorship, the
guardian authority shall appoint a person
for the office of conservator who
appears competent in view of all
applicable circumstances.
(4) Of the persons deemed competent
for the office of conservator, preference
shall be given to the parents or the
person named by the parents in an
authentic instrument or in their will in the
event of their death, or, in the absence
12
of such persons, to any other relatives,
provided they are able and willing to
provide care should it be necessary.
(5) If a conservator cannot be
appointed in accordance with
Subsections (3)-(4), a professional
conservator shall be appointed for the
person under conservatorship. The
person aspiring to be a professional
conservator shall have no criminal
record and shall have the qualifications
prescribed for professional conservators.
A legal person working with persons
suffering in a mental disorder may also
be appointed for the office of
conservator; such legal person shall
designate a natural person who will carry
out the functions of the conservator. The
person so designated shall have the
qualifications prescribed for professional
conservators.
Section 2:32
[Multiple and substitute conservators]
(1) Under exceptional circumstances,
more than one conservator may be
appointed to a person placed under
conservatorship. Multiple conservators
may be appointed if:
a) both parents or two close relatives
of the person under conservatorship
accept the office of conservator; or
b) management of all or a part of the
assets or handling certain other matters
of the person under conservatorship
requires special expertise.
(2) In the case provided for in
Paragraph a) of Subsection (1), upon
request made jointly by the
conservators, the guardian authority
shall specify their functions individually.
In the absence thereof, the functions of
the conservators are identical; they can
act collectively or individually.
(3) In the case provided for in
Paragraph b) of Subsection (1), the
guardian authority shall specify the
functions of each conservator
individually.
(4) In addition to a conservator who is
absent or is unable to carry out his
duties for other reasons, the guardian
authority may also appoint a substitute
conservator for the person under
conservatorship. The substitute
conservator shall have powers to
proceed in matters which require
immediate attention.
Section 2:33
[Cessation of the office of conservator]
(1) The guardian authority shall
dismiss 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 conservator
citing substantial reasons; or
d) if any reason serving as grounds for
exclusion of the conservator’s
appointment arises subsequently.
(2) The guardian authority shall
remove a conservator from office if the
conservator:
a) fails to carry out his obligations;
b) fails to follow the instructions set out
in the prior legal statement; or
c) is engaged in any conduct by which
to cause serious injury to, or endanger
13
the interest of, the person under
conservatorship.
(3) In matters where immediate
attention is required, the guardian
authority shall suspend the conservator
from office before ordering his dismissal.
Section 2:34
[Activities of conservators]
(1) In the case of guardianship or
conservatorship invoking partially limited
legal competency by order of the court,
the conservator shall function as the
legal representative of the person under
guardianship or conservatorship.
(2) The conservator shall be entitled to
manage the assets of the person placed
in his custody if the court has fully limited
the legal competency of the person
affected, or has limited his/her
competency in disposing over his/her
income or financial assets.
(3) If so required by the circumstances
the conservator - if agreed in principle shall
also provide care for the person in
his custody.
(4) If the person whose competency
has been limited by court order has
made a prior legal statement in which
he/she specifies the way the conservator
should proceed in his/her specific
personal and financial affairs, the
conservator shall carry out his functions
in due observation of such instructions.
(5) If the conservator exceeds his
powers, his legal statement shall be
considered effective in dealings with
third parties, however, the conservator
shall compensate the person in his
custody on the grounds of noncontractual
liability.
Section 2:35
[Management of assets by
conservators]
(1) The conservator shall manage the
assets of the person in his custody so as
to best serve the interests of that
person.
(2) In the case of guardianship or
conservatorship invoking partially limited
legal competency in connection with
financial matters, the conservator shall at
the guardian authority’s request surrender
the assets of the person in his
custody to the guardian authority, if they
are not required for covering running
expenses. For any transaction
concerning the assets deposited with the
guardian authority the guardian
authority’s prior consent is required.
Section 2:36
[Supervision of the activities of
conservators]
(1) The guardian authority shall
exercise supervision of the activities of
conservators.
(2) Conservators shall be required to
report to the guardian authority on their
activities and concerning the condition of
the persons in their custody at the time
upon the guardian authority’s request, or
on an annual basis together with the
annual statement of accounts.
(3) The persons placed in the custody
of conservators shall be entitled to have
access to records on the conservators’
14
activities and also on their assets, and to
make copies of such records.
Section 2:37
[Giving account of conservators’
management activities]
(1) Conservators shall give account on
the management of assets annually to
the guardian authority. If the conservator
is a close relative of the person under
conservatorship the guardian authority
may forgo the requirement of reporting,
and may authorize simplified accounting.
(2) With the exception of professional
conservators, no annual account simplified
or normal - is required if the
person in the conservator’s custody has
no assets, and if his/her income is below
the statutory limit.
(3) The guardian authority shall be
entitled to order any conservator to give
account on a case-by-case basis. Such
order may also be issued if requested by
the person under conservatorship to
whom it pertains.
(4) When his office is terminated, the
conservator shall prepare a final
statement of account on the assets
managed, and present it to the guardian
authority within fifteen days. If the
conservator’s office terminates because
the court lifted guardianship or
conservatorship invoking partially limited
legal competency in financial affairs, the
conservator shall present the final
statement of account to the person
having entitlement to dispose over those
same assets in the future.
(5) The claims arising out of or in
connection with the conservator’s
obligation to give account shall expire
within one year from the date of delivery
of the resolution releasing the
conservator from the responsibility of
asset management. If the party affected
becomes aware of the reason underlying
a claim at a later point in time, the
deadline shall be reckoned from that
time if the claim has not yet expired.
TITLE IX
ADVOCATED DECISIONMAKING
WITHOUT PREJUDICE
TO LEGAL CAPACITY
Section 2:38
[Appointment of an advocate]
(1) Where a person of legal age is in
need of assistance due to the partial
loss of his/her discretionary ability in
certain matters, the guardian authority
shall appoint an advocate upon his/her
request with a view to avoiding
conservatorship invoking limited legal
competency.
(2) If in an action for the placement of
a person under conservatorship or
guardianship the court considers that
there is no justification to limit that
person’s legal competency even
partially, yet he/she is in need of
assistance due to the partial loss of
his/her discretionary ability in certain
matters, the court shall dismiss the
action for placement under
conservatorship or guardianship, and
shall deliver its decision to the guardian
authority. The advocate is appointed by
15
the guardian authority based on the
court ruling, in agreement with the
person affected.
(3) The appointment of an advocate
shall not affect the legal competency of
a person of legal age.
TITLE X
PRE-ARRANGED LIMITATION
OF LEGAL COMPETENCY FOR
FUTURE CONSIDERATIONS
Section 2:39
[Prior legal statement]
(1) A person of legal age with legal
capacity shall be entitled to make a prior
legal statement executed in an authentic
instrument or in a private document
countersigned by an attorney, or before
the guardian authority in person, with a
view to partially or fully limiting his/her
legal competency for future
considerations.
(2) In that prior legal statement the
person making the statement:
a) may designate one or more persons
of his/her liking as a conservator;
b) may exclude one or more persons
from the list of potential conservators;
and
c) may instruct the conservator as
regards the way to proceed in his/her
specific personal and financial affairs.
(3) The above-specified prior legal
statement shall be recorded in the
register of prior legal statements. Failure
to enter a prior legal statement into the
register shall not affect the validity of that
prior legal statement.
(4) The provisions on making prior
legal statements shall also apply to the
amendment and withdrawal of such
statements. If withdrawn, the prior legal
statement shall be removed from the
register.
Section 2:40
[Entry into effect of prior legal
statements]
(1) In its decision ordering
conservatorship concerning
competency, to court shall order the
application of a prior legal statement,
except if:
a) compliance with the instructions set
out in the prior legal statement expressly
conflicts with the interests of the person
under conservatorship; or
b) the person designated by the
person of legal age for the office of
conservator refuses to carry out the
instructions set out in the prior legal
statement, or is subject to any statutory
grounds for disqualification.
(2) Should any of the several
dispositions of a prior legal statement be
considered inoperative, it shall not affect
the validity or effect of the other
dispositions.
(3) In the appointment of a conservator
and in determining his functions, the
guardian authority shall take due
account of the instructions set out in the
prior legal statement.
Section 2:41
[Review of prior legal statements]
16
In the event of any changes in the
circumstances of a person who has
made a prior legal statement upon which
compliance with the instructions set out
in the prior legal statement are likely to
conflict with the interests of the person
under conservatorship, the person in
custody, the conservator, the guardian
authority and the public prosecutor may
request the court to abolish such
instructions.
PART THREE
RIGHTS RELATING TO
PERSONALITY
TITLE XI
GENERAL PROVISIONS AND
CERTAIN RIGHTS RELATING
TO PERSONALITY
Section 2:42
[Protection of rights relating to
personality]
(1) Everyone is entitled to freely
practice his personality rights within the
framework of the law and within the
rights of others, and to not be impeded
in exercising such right by others.
(2) Human dignity and the related
personality rights must be respected by
all. Personality rights are protected
under this Act.
(3) Personality rights shall not be
considered violated by any conduct if the
person affected has given prior consent
thereto.
Section 2:43
[Specific personality rights]
The following, in particular, shall be
construed as violation of personality
rights:
a) any violation of life, bodily integrity
or health;
b) any violation of personal liberty or
privacy, including trespassing;
c) discrimination;
d) any breach of integrity, defamation;
e) any violation of the right to
protection of privacy and personal data;
f) any violation of the right to a name;
g) any breach of the right to facial
likeness and recorded voice.
Section 2:44
[Protection of the personality rights of
politically exposed persons]
Exercising the fundamental rights
relating to the free debate of public
affairs may diminish the protection of the
personality rights of politically exposed
persons for overriding public interest, to
the extent necessary and proportionate,
without prejudice to human dignity.
Section 2:45
[Right to integrity and reputation]
(1) The integrity of a person is
considered violated when a false and
malicious oral statement is uttered
publicly to damage that person’s
reputation, and to make people have a
bad opinion of such person.
17
(2) Defamation means when
something bad about someone that is
not true, or a true fact with an untrue
implication is published or disseminated
in an abusive attack on that person’s
good name.
Section 2:46
[Right to privacy]
(1) The right to the protection of
privacy shall, in particular, cover the
confidentiality of correspondence
protection, professional secrecy and
commercial secrecy.
(2) Invasion of privacy shall, in
particular, cover the unauthorized
access to and use of private secrets,
including publication and disclosure to
unauthorized persons.
Section 2:47
[Right to commercial secrecy. Know-
how]
(1) Trade secrets shall include any
fact, information and other data, or a
compilation thereof, connected to
economic activities, which are not
publicly known or which are not easily
accessible to other operators pursuing
the same economic activities, and which,
if obtained and/or used by unauthorized
persons, or if published or disclosed to
others are likely to imperil or jeopardize
the rightful financial, economic or
commercial interest of the owner of such
secrets, provided the lawful owner is not
subject to actionability in terms of
keeping such information confidential.
(2) Commercial secrecy shall also
apply to technical, economic and other
practical knowledge of value held in a
form enabling identification, including
accumulated skills and experience and
any combination thereof (hereinafter
referred to as „know-how”), if acquired,
used, disclosed or published in violation
of the principle of good faith and fair
dealing. This protection shall not apply
where a person obtains the know-how,
or any knowledge which essentially has
the same attributes:
a) by means of development
independent of the proprietor; or
b) by way of testing or analyzing a
lawfully acquired product or lawfully
received service.
(3) Breach of commercial secrecy shall
not be relied on as against a person who
has obtained trade secrets or know-how
from third parties in good faith, in the
course of trade for consideration.
Section 2:48
[Right to facial likeness and recorded
voice]
(1) The consent of the person affected
shall be required for producing or using
his/her likeness or recorded voice.
(2) The consent of the relevant person
is not required for recording his/her
likeness or voice, and for the use of
such recording if made of a crowd or in a
public event.
Section 2:49
[Right to a name]
(1) Literary, artistic or scientific
activities or activities accompanying
public performances may be pursued
under an assumed name, provided that
18
it does not result in any harm to the
relevant lawful interests of other
persons.
(2) If the name of a person engaged in
literary, artistic or scientific activities or in
activities accompanying public
performances can be confused with the
name of another person who has
already been engaged in similar
activities, at the request of the relevant
person such name may be used with a
distinctive addendum or omission while
engaged in such activities.
Section 2:50
[Right in memoriam]
(1) In the case of any violation of the
memory 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 bring court
action.
(2) Any heir shall have the right to lay
claim to any financial advantage
obtained by having violated the memory
of a deceased person. Where there are
several heirs, the deprived financial
advantage shall be distributed among
the heirs according to their respective
shares of the estate.
TITLE XII
SANCTIONS FOR VIOLATIONS
OF RIGHTS RELATING TO
PERSONALITY
Section 2:51
[Sanctions independent of
attributability]
(1) A person whose personality rights
have been violated shall have the right
to demand within the term of limitation based
on the infringement - as
appropriate by reference to the
circumstances of the case:
a) a court ruling establishing that there
has been an infringement of rights;
b) to have the infringement
discontinued and the perpetrator
restrained from further infringement;
c) that the perpetrator make
appropriate restitution and that the
perpetrator make an appropriate public
disclosure for restitution at his own
expense;
d) the termination of the injurious
situation and the restoration of the
previous state, and to have the effects of
the infringement nullified or deprived of
their unlawful nature;
e) that the perpetrator or his successor
surrender the financial advantage
acquired by the infringement according
to the principle of unjust enrichment.
(2) Where any violation of personality
rights is committed by a person in an
official capacity within administrative
authority, the sanctions referred to in
Subsection (1) shall be imposed upon
the legal entity exercising State
authority. If the person exercising State
authority is not a legal entity, the
sanctions shall be imposed upon the
administrative body having legal
personality, on whose behalf the
relevant administrative body operates.
(3) Where any violation of personality
rights is committed by a person in an
19
official capacity within the jurisdiction of
a court or public prosecutor, the
sanctions referred to in Subsection (1)
shall be imposed upon the court or the
Prosecutor General, as appropriate. If
the acting court is not a legal entity, the
claim shall be enforced against the court
having legal personality, that is located
in the area of jurisdiction of the acting
court.
Section 2:52
[Restitution]
(1) Any person whose rights relating to
personality had been violated shall be
entitled to restitution for any non-material
violation suffered.
(2) As regards the conditions for the
obligation of payment of restitution such
as the definition of the person
liable for the restitution payable and the
cases of exemptions - the rules on
liability for damages shall apply, with the
proviso that apart from the fact of the
infringement no other harm has to be
verified for entitlement to restitution.
(3) The court shall determine the
amount of restitution in one sum, taking
into account the gravity of the
infringement, whether it was committed
on one or more occasions, the degree of
responsibility, the impact of the
infringement upon the aggrieved party
and his environment.
Section 2:53
[Liability for damages]
Any person who suffers any damage
from the violation of his personality rights
shall have the right to demand
compensation from the infringer in
accordance with the provisions on
liability for damages resulting from
unlawful actions.
Section 2:54
[Enforcement of rights relating to
personality]
(1) Personality rights must be enforced
in person.
(2) Minors of limited legal capacity and
persons of partially limited legal capacity
shall be able to take action on their own
for the protection of their personality
rights. The personality rights of
incompetent persons shall be protected
by their legal representative.
(3) The personality rights of absent
persons of unknown whereabouts shall
be protected by their family members or
conservators.
(4) If the violation of personality rights
infringes upon the public interest, the
public prosecutor shall be entitled to
bring action upon the victim’s consent,
and to invoke the sanctions independent
of attributability. Pursuant to the public
prosecutor’s action the financial
advantage achieved shall be
relinquished for public purposes. This
Subsection shall apply to the
infringement referred to in Subsection
(5) with the exception that the public
prosecutor shall be entitled to bring
action without the victim’s consent within
the applicable limitation period.
(5) Any member of a community shall
be entitled to enforce his personality
rights in the event of any false and
malicious statement made in public at
20
large for being part of the Hungarian
nation or of a national, ethnic, racial or
religious group, which is recognized as
an essential part of his personality,
manifested in a conduct constituting a
serious violation in an attempt to
damage that community’s reputation, by
bringing action within a thirty-day
preclusive period. All members of the
community shall be entitled to invoke all
sanctions for violations of personality
rights, with the exception of laying claim
to the financial advantage achieved.
PART FOUR
COPYRIGHT AND INDUSTRIAL
PROPERTY RIGHTS
Section 2:55
[Supplementary rule]
This Act shall apply to matters falling
within its scope, which are not governed
by the legislation on copyright and
industrial property rights.
BOOK THREE
LEGAL PERSONS
PART ONE
GENERAL RULES RELATING TO
LEGAL PERSONS
TITLE I
GENERAL PROVISIONS
Section 3:1
[Legal capacity of legal persons]
(1) All legal persons shall have legal
capacity; they shall be entitled to have
rights and obligations.
(2) The legal capacity of legal persons
shall cover all rights and obligations that
do not inherently pertain solely to
individual human beings.
(3) The provisions on the protection of
personality rights shall also apply to the
inherent rights of legal persons, unless
such protection, by virtue of its very
nature, can only be given to private
persons.
(4) Legal persons may be established
in a form defined by law, for the pursuit
of activities and objection which are not
prohibited by law; any instrument of
constitution made in violation of this
provision shall be null and void.
(5) A legal person shall have its own
name and seat, shall have assets
separate from its members and
founders, and shall have a management
and representative body.
Section 3:2
[Liability for the legal person’s debts]
(1) Legal persons shall be liable for
their debts with their own assets;
members and founders of a legal person
shall not be held liable for the legal
person’s debts.
(2) In the event of abuse of limited
liability on the part of any member or
founder of a legal person, on account of
21
which any outstanding creditors’ claims
remain unsatisfied at the time of the
legal person’s dissolution without
succession, the member or founder in
question shall be subject to unlimited
liability for such debts.
Section 3:3
[Application of the general rules
relating to legal persons]
(1) The general rules relating to legal
persons shall apply where this Act does
not provide otherwise in connection with
certain types of legal persons.
(2) The general rules relating to legal
persons shall also apply to legal persons
of the types not governed under this Act.
(3) Where legal personality is
conferred by civil law upon any
organization lacking the legal status of
legal persons, the general rules relating
to legal persons shall also apply to those
entities.
TITLE II
FOUNDATION OF LEGAL
PERSONS
Chapter I
Freedom of Establishment
Section 3:4
[Freedom of establishment of legal
persons]
(1) Persons shall have freedom of
establishment of a legal person by
means of a contract, charter document
or articles of association (hereinafter
referred to collectively as „instrument of
constitution”), and shall themselves
decide on the legal person’s
organizational structure and operational
arrangements.
(2) As regards relations between
members and founders, and between
them and the legal person, and as
regards the organizational structure and
operational arrangements of the legal
person, in the instrument of constitution
the members and founders may
derogate from the provisions of this Act
relating to legal persons, save where
Subsection (3) applies.
(3) Members and founders of a legal
person may not derogate from the
provisions of this Act:
a) if it is precluded by law; or
b) where any derogation clearly
violates the interests of the legal
person’s creditors, employees and
minority members, or it is likely to
prevent the exercise of effective
supervision over legal persons.
(4) Legal persons shall enter into
existence upon registration by the court
based on the instrument of constitution
made out for the type of legal person in
question. The court of registry may
refuse to register a legal person on
grounds specified by the relevant
legislation.
(5) Legal persons are established for a
definite or indefinite period. If the
instrument of constitution does not
provide for the term of the legal person,
the legal person enters into existence for
an indefinite duration.
22
Chapter II
Instrument of Constitution
Section 3:5
[Mandatory layout of the instrument of
constitution]
The instrument of constitution of a
legal person shall expressly indicate the
founders’ intent to set up the legal
person and shall contain:
a) the legal person’s name;
b) the legal person’s registered office;
c) the legal person’s purpose or main
activity;
d) the names of the founders of the
legal person, including their home
address or registered office;
e) the capital contributions prescribed,
the value of such contributions, as well
as how and when such assets are to be
made available; and
f) the legal person’s chief executive
officer.
Section 3:6
[Name of legal persons]
(1) The name of a legal person must
differ from the names of other previously
registered legal persons to an extent
that they should not be confused. Where
the registration of several legal persons
is requested under names which are
identical or may be confused, the name
in question may be used by the
applicant having submitted the first
application.
(2) The name of a legal person may
not convey an unrealistic impression.
The name of the legal person shall
contain a designation relating to the type
or form of the legal person.
(3) The type of legal person, and if the
name contains an indication of the legal
person’s activity as well, the legal
person’s activity shall be fixed in
Hungarian, in conformance with the
rules of Hungarian grammar.
Section 3:7
[Statutory seat of legal persons]
The registered office of a legal person
shall also function as its statutory seat,
where the legal person shall have
facilities for receiving legal
correspondence addressed to the legal
person, and where the legal person is to
provide access to documents specified
by the relevant legislation.
Section 3:8
[Activities of legal persons]
Legal persons may engage in the
pursuit of any activity that is not
expressly prohibited or restricted by law.
Section 3:9
[Obligation of capital contribution]
(1) Founders and members of legal
persons are required to provide capital
contribution to the legal person at the
time of foundation and also in cases
where membership rights are otherwise
acquired. Capital contributions made
available to legal persons are not
recoverable, and equivalent
compensation may not be demanded.
23
(2) If the founders and members of
legal persons are not required to provide
capital contribution, liability for the legal
person’s debts shall fall upon its
members, or in the case of nonmembership
legal persons, upon the
person exercising founders’ rights. If the
guarantee obligation falls upon several
persons, their liability shall be joint and
several.
Section 3:10
[Form and value of capital
contributions]
(1) The capital contribution required
from members and founders may be
provided to the legal person in the form
of cash or in the form of consideration
other than in cash.
(2) The founder or member may
provide asset contribution by transferring
ownership rights of tangible or intangible
assets to the legal person.
(3) If, at the time of transfer, the value
of asset contribution does not reach the
value indicated in the instrument of
constitution, the legal person may
demand payment of the difference from
the person having provided the asset
contribution within five years from the
date of transfer.
Section 3:11
[Prohibition of issue of securities
representing membership rights]
With the exception of limited
companies, securities representing
membership rights may not be issued.
Chapter III
Registration of Legal Persons
Section 3:12
[Submission of applications for
registration]
(1) An application for the registration of
a newly established legal person shall
be submitted by the person appointed to
represent the legal person.
(2) The representative shall be held
liable towards the founders for damages
resulting from his failure to submit the
application in due time, also if the
notification submitted is incomplete or
deficient, in accordance with the
provisions on liability for damages for
loss caused by non-performance of an
obligation.
Section 3:13
[Basic principles for the registration of
legal persons]
(1) All entries made to the register of
rights, facts or data must be evidenced
by a document, court or administrative
decision specified by law.
(2) The register shall be construed as
an official public register; the rights, facts
and data (hereinafter referred to as „data
of record”) it contains shall be presumed
to exist and to be authentic. Under no
circumstances shall the lack of
knowledge of any data of record
constitute an excuse. In respect of
parties acting in good faith, a legal
person may not be excused on the
grounds that certain data it has reported,
and thus registered, was untrue. Unless
proven to the contrary, it shall be
24
presumed that a party acquiring certain
rights for consideration relying upon the
register was acting in good faith.
(3) The general public shall have
unlimited access to the register, and
notes may be made and certified true
copies or extracts may be requested
thereof.
Section 3:14
[Publication of legal statements]
Where any obligation of publication is
prescribed for legal persons in this Act, it
shall be satisfied by way of publication in
the Cégközlöny (Company Gazette),
unless this Act provides otherwise.
Chapter IV
Nullity of the Establishment of
Legal Persons
Section 3:15
[Nullity of the establishment of legal
persons]
(1) The provisions on the nullity of
contracts shall apply to the nullity of the
instruments of constitution of legal
persons insofar as the resolution on the
registration of the legal person becomes
final and enforceable.
(2) After the registration of a legal
person by binding decision, nullity of the
instruments of constitution of the legal
person may not be cited as grounds for
removal from the registry. Where any
provision of the instrument of
constitution is found unlawful, the means
for ensuring lawful operations may be
accessed.
(3) The provisions set out in
Subsections (1) and (2) shall also apply
to any amendment to the instrument of
constitution.
TITLE III
ORGANIZATIONAL STRUCTURE
AND REPRESENTATION OF
LEGAL PERSONS
Chapter V
Decision-making by Members or
Founders of Legal Persons
Section 3:16
[Decision-making bodies]
(1) Members and founders shall
exercise their decision-making powers
under this Act or the instrument of
constitution in a body comprised of
members selected from among all
members or of delegates selected by the
members from among themselves
(hereinafter referred to as „college of
delegates”), or in a body consisting of
persons exercising founder’s rights.
(2) Decision-making bodies shall take
decisions in session or out of session.
Section 3:17
[Convening the meetings of decisionmaking
bodies]
(1) Meetings of the decision-making
bodies shall be convened by the
25
executive officer by sending or
publishing an invitation thereto.
(2) The invitation shall contain:
a) the legal person’s name and
registered address;
a) the date and place of the meeting;
c) the agenda.
(3) The agenda shall be indicated in
the invitation in sufficient detail to enable
the persons entitled to vote to formulate
an opinion on the subjects to be
discussed.
(4) The decision-making body shall
convene at the legal person’s head
office.
(5) If the decision-making body has not
been convened in due form, the meeting
may be held only if all entitled persons
are present, and if they unanimously
agree to open the meeting.
(6) The meeting of the decisionmaking
body shall be able to pass
resolutions on duly notified points that
are included in the agenda, except if
entitled persons are present and they
unanimously agree to discuss a matter
that is not included in the agenda.
Section 3:18
[Quorum]
(1) In the meeting of the decisionmaking
body a quorum shall exist when
more than one half of the members with
voting right are present. Quorum shall be
considered for each decision.
(2) Any member or founder who is not
eligible to vote in a given subject shall
not be included for the purposes of
quorum relating to the decision in
question.
Section 3:19
[Passing resolutions]
(1) At the meetings of decision-making
bodies the members or founders shall
decide the matters at issue by voting.
(2) In the process of adopting a
resolution the following persons may not
vote:
a) any person for whom the resolution
contains an exemption from any
obligation or responsibility, or for whom
any advantage is to be provided by the
legal person;
b) any person with whom an
agreement is to be concluded according
to the resolution;
c) any person against whom legal
proceedings are to be initiated according
to the resolution;
d) any person whose family member
has a vested interest in the decision,
who is not a member or founder of the
legal person;
e) any person who maintains any
relation on the basis of majority control
with an organization that has a vested
interest in the decision; or
f) any person who himself has a
vested interest in the decision.
(3) Members or founders shall adopt
resolutions by a majority of the votes
considered for the purposes of quorum.
Where a simple - or higher - majority of
the votes is prescribed under this Act for
passing a resolution, any clause of the
instrument of constitution providing for a
lower voting ratio shall be null and void.
Where unanimity is prescribed under this
Act for passing a resolution, any clause
26
of the instrument of constitution to the
contrary shall be null and void.
Section 3:20
[Adopting resolutions out of session]
(1) Where the instrument of
constitution allows for adopting
resolutions out of session, management
shall initiate such process by sending
the draft of the resolution to the
members or founders. Members or
founders shall be given at least eight
days from the time of receipt of the draft
to send their vote to management.
(2) In adopting a resolution out of
session, the provisions of this Act on
quorum and voting shall apply with the
exception that the decision-making
process shall be considered effective if
the number of votes sent to
management corresponds to at least the
number of members or founders with
voting right required to attend for a
quorum if the meeting was in fact held in
session.
(3) Where so requested by any
member or founder, management shall
convene the meeting of the supreme
body.
(4) Management shall determine the
outcome of the voting within three days
following the last day of the time limit
prescribed for voting, or, if the votes of
all members or founders are received
previously, within three days from the
day when the last vote is received, and
shall convey the results in writing to the
members or founders within an
additional three days. The date of the
resolution shall be the last day of the
voting deadline, or if the votes of all
members or founders are received
previously, the day when the last vote is
received.
Chapter VI
Management of Legal Persons
Section 3:21
[Definition of management,
appointment of executive officers]
(1) Decisions that are related to the
governance of a legal person, and are
beyond the competence of the members
or founders, shall be adopted by one or
more executive officers or by a body
consisting of executive officers.
(2) Executive officers shall perform
their management functions
representing the legal person’s interests.
(3) The first executive officers of a
legal person shall be delegated in the
legal person’s instrument of constitution.
After the legal person is established,
executive officers are selected,
appointed and dismissed by the
members of the legal person, or by the
founders in the case of non-membership
legal persons. The appointment of an
executive officer shall take effect when
accepted by the person delegated,
elected or appointed.
Section 3:22
[Requirements for executive officers,
grounds for exclusion]
(1) The executive officer must be of
legal age and must have full legal
27
capacity in the scope required for
discharging his functions.
(2) If the executive officer is a legal
person, that legal person shall designate
a natural person to discharge the
functions of the executive officer in its
name and on its behalf. The rules
pertaining to executive officers shall
apply to the designated person as well.
(3) The executive officer shall perform
management functions in person.
(4) Any person who has been
sentenced to imprisonment by final
verdict for the commission of a crime
may not be an executive officer until
exonerated from the detrimental
consequences of having a criminal
record.
(5) A person may not be an executive
officer if he has been prohibited from
practicing that profession. Any person
who has been prohibited by final court
order from practicing a profession may
not serve as an executive officer of a
legal person that is engaged in the
activity indicated in the verdict.
(6) Any person who has been
prohibited from holding an executive
office may not serve as an executive
officer within the time limit specified in
the prohibition order.
Section 3:23
[Confidentiality and obligation of
information]
(1) The executive officer is required to
keep the members of the legal person,
or the founders in the case of nonmembership
legal persons, informed
concerning the legal person, and to
provide access for them to the legal
person’s documents, records and
registers. The executive officer shall be
entitled to request a written declaration
of confidentiality before the provision of
information or access.
(2) The executive officer may refuse to
give information and to provide access
to documents if this would infringe upon
the legal person’s trade secrets, if the
requesting party exercises his right in a
manner which is abusive, or if he refuses
to make a declaration of confidentiality
despite having been asked to do so. If
the requesting party considers the
refusal of information unjustified, he may
request the court of registry to order the
legal person to provide access to the
information.
Section 3:24
[Liability of executive officers]
The executive officer shall be held
liable for damages caused to the legal
person resulting from his management
activities in accordance with the
provisions on liability for damages for
loss caused by non-performance of an
obligation.
Section 3:25
[Termination of executive officers]
(1) The mandate of an executive
officer shall terminate:
a) upon expiry of the designated term
of office;
b) if the mandate is rendered subject
to some condition for termination, when
the condition is met;
c) by dismissal;
28
d) upon resignation;
e) upon death or dissolution of the
executive officer without succession;
f) if executive officer’s legal capacity is
limited in the scope required for
discharging his functions;
g) upon the occurrence of any grounds
for exclusion or any reason giving cause
to conflict of interest.
(2) Members of the legal person, or the
founders in the case of non-membership
legal persons, shall be entitled to
dismiss the executive officer at any time,
without giving any reason.
(3) The executive officer may resign at
any time by means of notice addressed
to the legal person and delivered to the
legal person’s other executive officer or
decision-making body.
(4) If so required by any vital interest
of the legal person, the resignation shall
only take effect upon the delegation or
election of a new executive officer, or
failing this on the sixtieth day after the
announcement thereof.
Chapter VII
[Supervision of legal persons on
behalf of the owners]
Section 3:26
[Establishment and membership of the
supervisory board]
(1) Members or founders may provide
in the instrument of constitution for the
establishment of a supervisory board
comprised of three persons, tasked to
supervise management in order to
protect the interests of the legal person.
(2) Members of the supervisory board
must be of legal age and must have full
legal capacity in the scope required for
discharging their functions. A person
who is subject to any grounds for
exclusion applicable to executive officers
may not hold a seat on the supervisory
board, nor any person who himself or
whose family member holds an
executive office in the legal person.
(3) Supervisory board members shall
partake in the work of the supervisory
board in person. Supervisory board
members shall be independent of the
management of the legal person, and
shall not be bound by any instructions in
performing their duties.
(4) The members of the first
supervisory board shall be designated in
the instrument of constitution, after
which such members are appointed by
the decision-making body. Membership
in the supervisory board shall take effect
when accepted by the person appointed.
(5) The provisions on the termination
of the mandate of executive officers
shall also apply to the termination of
membership of supervisory board
members, with the proviso that
supervisory board members shall send
their resignation to the legal person’s
executive officer.
Section 3:27
[Supervisory board operating
procedures]
(1) The supervisory board shall assess
all motions brought before the decision-
29
making body of members or founders,
and to present its opinion thereof at the
meeting of the decision-making body.
(2) The supervisory board shall have
access to the documents, accounting
records and books of the legal person,
and shall be entitled to request
information from the legal person’s
executive officers and employees, and
to inspect the legal person’s payment
account, cash desk, securities portfolio,
inventories and contracts, or to have
them inspected by an expert.
(3) The supervisory board shall adopt
its decisions by a simple majority of the
votes of the members present. Any
clause of the instrument of constitution
providing for a lower voting ratio shall be
null and void.
Section 3:28
[Liability of supervisory board
members]
Members of the supervisory board
shall be held liable for damages caused
to the legal person resulting from their
omission of supervisory responsibilities
in accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation.
Chapter VIII
Representation of Legal Persons
Section 3:29
[Legal representation of legal persons]
(1) The responsibility for providing
legal representation of legal persons lies
with the executive officer.
(2) The executive officer shall exercise
his power of representation
independently.
(3) The executive officer shall notify
the legal person’s particulars prescribed
by law to the court of registry.
Section 3:30
[Mode of representation]
(1) If the legal person’s instrument of
constitution or its internal policy relating
to the organization and functioning of the
legal person provides for an office
vested with power of representation, the
person holding that office shall also be
vested with individual power of
representation.
(2) The head of any department
lacking the legal status of a legal person
shall also be vested with individual
power of representation in matters
considered necessary for the regular
functioning of the department.
(3) In specific cases management may
delegate powers of representation upon
the employees of the legal person in
writing; employees shall be able to
exercise such power of representation
together with another person vested with
power of representation by management
in a written statement.
Section 3:31
[Limited power of representation]
Any restriction of the power of
representation vested upon the legal
person’s authorized representative
30
shown in the registry of legal persons, or
rendering such representative’s actions
conditional or subject to approval shall
not be effective as against third parties,
except if the third party knew, or should
have known about the restriction or
about the condition or approval
requirement, and the lack thereof.
Chapter IX
Legal Status of Any Department of
a Legal Person
Section 3:32
[Legal status of any department of a
legal person]
(1) Where so permitted by this Act, the
instrument of constitution may contain
provisions for conferring legal
personality upon certain departments of
the legal person, provided that the
department has its own organization and
assets separate from the founders and
from the legal person.
(2) The general rules relating to legal
persons shall also apply to the
departments with legal personality, with
the exception that liability for any claims
of creditors that cannot be satisfied from
the own assets of the department with
legal personality shall fall upon the legal
person both during the period of the
department’s legal personality and
subsequently.
Section 3:33
[Provisions relating to the termination
of the department’s legal personality]
(1) If the department’s legal
personality is terminated, the
department’s rights and obligations shall
pass to the legal person.
(2) If the legal person decided to
terminate the department’s legal
personality, such decision shall be made
public. If a creditor’s claim arises before
the announcement of the decision, the
creditor may demand adequate
safeguards from the legal person within
a thirty-day preclusive period if
termination of the department’s legal
personality jeopardizes the satisfaction
of its claim. The department may be
stricken if the legal person provides
adequate guarantees in compliance with
the creditor’s request.
(3) If the legal person’s dissolution is
ordered, the legal personality of the legal
person’s department shall cease to exist.
TITLE IV
SAFEGUARDS FOR THE
LAWFUL OPERATION OF
LEGAL PERSONS
Chapter X
Judicial Oversight of Legal
Persons
Section 3:34
[Judicial oversight of legal persons]
(1) Judicial oversight of legal persons
shall in general be carried out by the
competent court of registry. Judicial
31
oversight shall not apply to cases that
are normally subject to other court or
administrative proceedings. The scope
of judicial oversight shall not cover the
business decisions of legal persons in
terms of economic feasibility and
efficiency.
(2) If the measures taken to restore the
legality of operations prove ineffective,
the competent court of registry shall
declare the legal person terminated.
Chapter XI
Judicial Review of the Resolutions
of Legal Persons
Section 3:35
[Reasons for review, persons entitled
to initiate reviews]
Members of the legal person, or the
founders in the case of non-membership
legal persons, the executive officers of
legal persons and members of the
supervisory board shall be entitled to
bring court action seeking annulment of
resolutions adopted by the members or
founders, or by the bodies of the legal
person, if the resolution is alleged to be
unlawful or to violate the instrument of
constitution.
Section 3:36
[Action for the annulment of
resolutions]
(1) An action may be brought against
the legal person for the annulment of a
resolution within thirty days from the time
when the applicant has become, or
could be expected to have become,
aware of the resolution. No action may
be brought after a preclusive period of
one year from the date of the resolution.
(2) Persons who contributed to the
adoption of the resolution with their
votes, except for cases of mistake,
misrepresentation or duress, shall not be
entitled to bring action.
(3) If a resolution is challenged by the
executive officer of the legal person, and
the legal person remains without an
executive officer who can represent the
legal person, a member of the
supervisory board appointed by the
supervisory board shall represent the
legal person in the proceedings. If the
legal person does not have a
supervisory board, or all members of the
supervisory board are involved in the
proceedings as plaintiffs, the court shall
order a curator ad litem to represent the
legal person.
(4) Bringing action for the annulment of
a resolution shall have no suspensory
effect on the enforcement of the
resolution. The court shall be entitled to
suspend execution on reasonable
grounds, upon the applicant’s request.
The decision ordering suspension may
not be appealed. Court injunctions may
not be issued in such actions.
Section 3:37
[Annulment of resolutions]
(1) If a resolution is found unlawful or
to violate the instrument of constitution,
the court shall annul the resolution and
shall order the passing of a new
resolution if necessary.
32
(2) The court decision on the
annulment of a resolution shall also
apply to any other persons who are not
involved in the proceedings and are
entitled to bring action for the review of
the resolution.
(3) If the violation of the law or the
instrument of constitution is not
considered significant, and does not
jeopardize the legal person’s lawful
operation, the court shall establish the
fact of infringement.
Chapter XII
Statutory Auditor
Section 3:38
[Statutory auditor]
(1) If the legal person enlists the
services of a statutory auditor to audit
the legal person’s books, the statutory
auditor shall have access to the
documents, accounting records and
books of the legal person, and shall be
entitled to request information from
executive officers, from the members of
the supervisory board and from the legal
person’s employees, and to inspect the
legal person’s payment account, cash
accounts, securities portfolio, inventories
and contracts.
(2) Should the statutory auditor detect
any changes in the legal person’s assets
that are likely to jeopardize its ability to
satisfy any claims filed against the legal
person, or learn of any circumstance
which entails the liability of the executive
officers or supervisory board members
with respect to their activities performed
in that capacity, he shall forthwith
request management to take immediate
action to the extent required for enabling
the members - or the persons exercising
founder’s rights in the case of nonmembership
legal persons - to take the
necessary decisions. In the event of
non-compliance with his request, the
auditor shall inform the court of registry
exercising judicial oversight over the
legal person concerning the situation at
hand.
TITLE V
TRANSFORMATION, MERGER,
DIVISION AND DISSOLUTION
OF LEGAL PERSONS WITHOUT
SUCCESSION
Chapter XIII
Transformation, Merger, Division
Section 3:39
[Transformation]
(1) In the case of transformation of a
legal person to another type of legal
person, the legal person undergoing
transformation will be dissolved, and its
rights and responsibilities shall be
transferred to the legal person
established by way of the
transformation, as the general legal
successor.
33
(2) In the case of transformation, the
provisions on the establishment of legal
persons shall apply.
Section 3:40
[Restrictions]
A legal person may not be transformed
if:
a) undergoing dissolution without
succession or bankruptcy proceedings;
b) indicted in criminal proceedings
carrying possible criminal sanctions, or if
subject to any criminal sanctions in
connection with the criminal liability of
legal persons; or
c) the members or founders fail to
provide the capital contribution
prescribed in the instrument of
constitution.
Section 3:41
[Decision on going into transformation]
(1) The decision on going into
transformation, including the mode of
transformation and the successor legal
person, lies with the members or
founders of the legal person.
(2) Following the decision referred to in
Subsection (1) the legal person’s
management shall draw up the draft
terms of transformation, including a draft
statement of assets and liabilities, and
shall make these available to the
members or founders.
Section 3:42
[Members refusing to take part in the
transformation]
(1) The members of a legal person
shall have thirty days from the time of
disclosure of the draft terms of
transformation to declare that they do
not intend to retain their membership in
the legal person to be established by the
transformation.
(2) The membership of those members
referred to in Subsection (1) shall
terminate at the time of transformation,
and they shall be entitled to an equal
share from the assets of the legal
person undergoing transformation that
they would have the right to claim in the
event of the legal person’s dissolution
without succession.
(3) The draft terms of transformation
shall be amended according the
members’ statements made under
Subsection (1).
Section 3:43
[Conclusion of transformation]
(1) Members or founders shall take a
decision on transformation by adopting
the draft terms of transformation; the
decision-making body shall pass this
resolution by at least a three-quarters
majority.
(2) The adopted draft terms of
transformation shall be made public
together with the decision on
transformation. If a creditor’s claim
originates from before the decision was
published, the creditor may demand
adequate safeguards from the legal
person to be converted within a thirtyday
preclusive period if transformation
jeopardizes the satisfaction of its claim.
34
(3) At the time of registration of the
legal person established by
transformation, the legal person
terminated by transformation shall be
removed from the registry. Until the time
of registration of the successor legal
person, the predecessor legal person
shall continue to operate in the form
registered.
(4) If the court of registry refuses to
register the transformation, the legal
person shall continue to operate in its
previous form.
Section 3:44
[Merger]
(1) A legal person may combine with
other legal persons as one legal entity
by way of merger or acquisition. In the
case of merger, the merging legal
persons are terminated and a new legal
person is established by way of
universal succession. In the case of
merger by acquisition, the acquired legal
person is terminated and all its assets
and liabilities are transferred to the
acquiring legal person by way of
universal succession.
(2) Where all of the merging legal
persons decide to initiate the merger,
their management shall prepare the draft
terms of merger in accordance with the
draft terms of transformation, containing
the draft statements of assets and
liabilities of all participating legal persons
as well as the opening draft statements
of assets and liabilities of the legal
person established by the merger.
(3) The merging legal persons shall
individually decide on adopting the draft
terms of merger. The draft terms of
merger shall be considered adopted, if it
has been approved by all legal persons
participating in the merger.
Section 3:45
[Demerger]
(1) Demerger means when a legal
person is split into two or more legal
persons by way of division or separation.
Division means the operation whereby,
after being terminated, a legal person
transfers all its assets to more than one
legal person. In the case of separation
the legal person shall continue to
operate in its previous form and part of
its assets are transferred to the
successor legal person established by
the separation.
(2) Furthermore, demerger may take
place by way of separation or division
where:
a) a member joins another legal
person with a part of the predecessor
legal person’s assets (separation by
acquisition);
b) members join various existing legal
persons and transfer their share of the
predecessor legal person’s assets to
such successor legal persons (division
by acquisition).
(3) In the case of separation by
acquisition and division by acquisition,
the decision taken by the decisionmaking
body on the demerger is subject
to the consent of the acquiring legal
persons which the acquired members
wish to join.
Section 3:46
35
[Rights and obligations of the legal
person being divided]
(1) The successors of the legal person
being divided - including the one that
remains after separation - shall be held
liable in accordance with the draft terms
of division for the obligations of the legal
person being divided originating from
before demerger. If the successor
named in the draft terms of division fails
to fulfill a given obligation, all successors
shall be jointly and severally liable for
such obligation.
(2) If the draft terms of division does
not provide for a given obligation, the
successors shall be jointly and severally
liable for such obligation.
(3) The rights of the legal person being
divided obtained prior to the distribution
of assets may be enforced after the
division by the successor upon which
the draft terms of division has conferred
the right in question. If the draft terms of
division does not provide for a specific
right, the successors shall be entitled to
such right in the proportion in which the
assets were distributed.
Section 3:47
[Application of the rules of
transformation]
In connection with the merger and
demerger of legal persons the provisions
on transformation shall apply mutatis
mutandis.
Chapter XIV
Dissolution of Legal Persons
Without Succession
Section 3:48
[Dissolution of legal persons without
succession]
(1) A legal person shall terminate
without succession if:
a) it was established for a fixed
duration, and such period of time
expires;
b) it was subject to termination upon a
certain condition, when this condition is
met;
c) declared terminated by its members
or founders; or
d) terminated by a body so authorized;
provided in all cases that the legal
person is cancelled from the registry
following completion of the appropriate
procedure for the settlement of the legal
person’s financial affairs.
(2) Following dissolution of the legal
person without succession, its assets
remaining after settlement of all debts
shall be allocated to the legal person’s
members, or to the person exercising
founders’ rights in the case of nonmembership
legal persons in the same
percentage as the capital contribution
they or their predecessors provided to
the legal person.
(3) The members and founders of a
legal person dissolved without
succession shall be held liable up to
their respective shares for the debts of
the dissolved legal person outstanding.
TITLE VI
36
GROUPS OF CORPORATIONS
Section 3:49
[Definition of recognized groups of
corporations]
(1) Recognized group of corporations
means a form of cooperation featuring a
common business strategy between at
least one dominant member that is
required to draw up consolidated annual
accounts and at least three members
controlled by the dominant member
under a control contract.
(2) A group of corporations may
consist of limited companies, private
limited-liability companies, groupings
and cooperative societies.
(3) If a group of corporations is led
jointly by several legal persons, they
shall enter into an agreement to
determine the one enabled to exercise
the rights of the dominant member in
accordance with the control contract.
Section 3:50
[Control contracts]
(1) The control contract lays down the
common business strategy for a
corporate group.
(2) The control contract shall inter alia
contain the following:
a) the corporate names and registered
offices of the dominant member and the
controlled members;
b) the mode of cooperation within the
group, including the key aspects of such
cooperation;
c) an indication as to whether the
corporate group is established for a
limited period of time or for an indefinite
duration.
(3) The autonomy of the controlled
companies of the group may be
restricted in the manner and to the
extent specified in the control contract
with a view to achieving the common
business objective. The control contract
shall provide for the protection of the
rights of the controlled members, and for
the protection of creditors’ interests.
(4) The general provisions pertaining
to contracts shall also apply to control
contracts.
Section 3:51
[Preparing the formation of a group of
corporations]
(1) The draft terms of the control
contract shall be prepared by the
managements of the dominant member
and the controlled members by
delegation of the supreme bodies of the
participants. Workers’ representative
bodies of the participating members
shall be duly informed about the
preparations for the formation of a
corporate group.
(2) The supreme bodies of the
members participating in the group shall
decide on adopting the control contract
by at least a three-quarters majority.
(3) The dominant member shall make
a public announcement on the formation
of the group of corporations within eight
days after gaining knowledge of the last
decision on the approval of the control
contract on two occasions, at least thirty
days apart.
37
(4) The above-specified public
announcement shall contain:
a) the control contract; and
b) a notice addressed to the creditors
and shareholders of the controlled
members.
(5) The management of the dominant
member shall submit an application to
the court of registry for registration of the
group of corporations within sixty days
after gaining knowledge of the last
approval.
Section 3:52
[Rights and entitlements of members
and creditors of controlled companies]
(1) The members of a controlled
company that participates in a group of
corporations may request within a thirtyday
preclusive period following the
second publication of the notice on the
formation of the group that their shares
be purchased by the dominant member
at the market value prevailing at the time
of publication of the announcement.
(2) If a creditor has any claim from a
controlled member participating in the
group of corporations at the time of first
publication of the announcement, the
creditor may demand adequate
safeguards from said controlled member
within a thirty-day preclusive period
following the second publication of the
announcement. Any creditor whose
claim is already guaranteed - pursuant
to statutory provision or contract - shall
not be entitled to demand such
safeguards, including if it is not justified
in light of the controlled member’s
financial standing or of the contents of
the control contract.
(3) A group of corporations may be
registered if all rightful claims of the
members and creditors of the controlled
legal persons have been satisfied, or if
the court has dismissed the request of
members and creditors in a legal action
brought to that effect.
Section 3:53
[Effects of registration of a group of
corporations]
Following registration the provisions
relating to members with a qualifying
holding shall not apply to the group of
corporations and its members.
Section 3:54
[Single-member company in a group of
corporations]
If only the dominant member holds any
share in the controlled member of a
group of corporations, no control
contract is required. Instead, the
mandatory layout of the control contract
shall be provided for in the instrument of
constitution of the dominant member
and the controlled member.
Section 3:55
[Relations between the management
of the dominant member and the
controlled member]
(1) The management of the dominant
member shall have the right to give
instructions to the management of the
controlled member as specified in the
control contract, and to issue binding
38
resolutions relating to the controlled
member’s operations. If the dominant
member’s actions are in compliance with
the control contract, the provisions of
this Act pertaining to the supreme body’s
exclusive jurisdiction and to
management autonomy shall not apply
to the controlled member.
(2) If the control contract provide
facilities to delegate competence upon
the dominant member for the election
and recall of the controlled member’s
executive officers and supervisory board
members, and for determining their
remuneration, an employee of the
dominant member may be appointed as
director of the controlled company.
(3) The executive officers and
supervisory board members of the
dominant member may also serve at the
controlled member as executive officers
and supervisory board members.
(4) The executive officer of a
controlled member shall manage the
controlled member in accordance with
the control contract, under the
governance of the dominant member,
based on the primacy of the business
policy of the group of corporations as a
whole. The executive officer shall be
exempt from liability to members if his
conduct is found to be in compliance
with the provisions set out in the relevant
legislation and in the control contract.
Section 3:56
[Reporting obligation]
(1) The managements of both the
dominant member and the controlled
member shall report to their supreme
body at the intervals fixed in the control
contract, but at least once a year on the
fulfillment of the objectives set out in the
control contract. Any provision of the
control contract providing for a less
frequent reporting obligation shall be null
and void.
(2) Any creditor of the controlled
member whose claim reaches ten per
cent of the controlled member’s
subscribed capital may request the
management of the dominant member to
provide information on the
implementation of the control contract,
and on the controlled member’s financial
standing. If the management of the
dominant member fails to comply with
the request, or if the information
supplied is insufficient, the creditor may
request the court of registry to
adjudicate that the dominant member is
in breach of the control contract.
Section 3:57
[Safeguards for the protection of
minority stakeholders]
A group of members controlling at
least five per cent of the voting rights in
the controlled company and the
executive officers of the controlled
company may request that the supreme
body of the dominant member be
convened if they notice any substantive
or repeated breach of the control
contract. If the management of the
dominant member fails to comply with
such request within fifteen days of the
date of receipt, and fails to convene the
meeting of the supreme body within
thirty days, the court of registry shall
39
convene the meeting of the supreme
body at the request of the members
making the proposal, or shall empower
the requesting members to convene the
meeting within the prescribed deadline.
The costs of the meeting shall be
advanced by the dominant member,
however, if the request is found
unsubstantiated, the costs shall be
borne by the requesting parties.
Section 3:58
[Employee participation]
(1) If employee participation in the
supervisory board is mandatory in at
least three controlled members of a
registered group of corporations, the
supreme body of the dominant member
may permit, if so requested by the works
councils concerned, that the
representatives of employees participate
in the supervisory board of the dominant
member instead of the supervisory
bodies of the controlled members. In
that case the instrument of constitution
of the dominant member shall provide
for the setting up of a supervisory board,
if the given member did not have one.
The mode of delegation of the
representatives of employees in that
case shall be regulated by way of an
agreement between the management of
the dominant member and the works
councils of the controlled members
affected.
(2) The general provisions for
contracts shall also apply to the
agreements concluded under
Subsection (1).
Section 3:59
[Liability of the dominant member]
If any controlled member of the group
is undergoing liquidation, the dominant
member shall be held liable for any debt
the member may have outstanding. The
dominant member shall be relieved of
liability if able to verify that the controlled
member’s insolvency did not arise as a
consequence of the group’s common
business strategy.
Section 3:60
[Measures of the court of registry]
In the event of any major or repeated
breach of the control contract, the court
of registry shall, upon request by either
of the parties with legal interest:
a) call on the dominant member to
abide by the control contract;
b) introduce supervisory measures; or
c) dissolve the group of corporations.
Section 3:61
[Termination of the group of
corporations]
(1) A group of corporations shall
terminate if:
a) the duration fixed in the control
contract has expired, or the condition of
termination has occurred;
b) the supreme body of the dominant
member so decides by a three-quarters
majority of all members;
c) if the dominant member is no longer
required to prepare a consolidated
annual account; or
d) the court of registry decides to
dissolve the group of corporations.
40
(2) In the cases provided for in
Paragraphs a)-c) of Subsection (1), the
court of registry shall delete from the
registry all entries pertaining to the
group of corporations upon receipt of
notice from the dominant member. The
notice shall be made within thirty days
from the date of publication of the
relevant circumstance.
(3) The dominant member shall remain
liable to honor the commitments
undertaken during the life of the
recognized group of corporations also
after the group ceases to exist.
Section 3:62
[De facto groups of corporations]
(1) If the conditions for the control
contract prevail for at least three
consecutive years, at the request of
either of the parties with legal interest
the court may order the de facto
dominant member and the controlled
companies to conclude the control
contract and to apply to the court of
registry for the registration of the group
of corporations.
(2) If a group of corporations de facto
operates for at least three consecutive
years, the court - at the request of either
of the parties with legal interest - shall
have authority to apply the regulations
governing the relations between the
managements of the dominant member
and the controlled member even in the
absence of a control contract and
without being registered as a group of
corporations.
PART TWO
ASSOCIATIONS
TITLE VII
DEFINITION, FOUNDATION AND
MEMBERSHIP OF
ASSOCIATIONS
Section 3:63
[Definition of associations]
(1) Associations are legal persons with
registered members, created for the
purposes defined in their statutes in
order to achieve their common
objectives on a continuous basis.
(2) Associations may not be formed
with the objective of performing
economic activities.
(3) Associations are authorized to
perform economic activities only if they
are directly related to the achievement of
the association’s goals.
(4) Associations shall use their assets
in accordance with their objective, they
shall not be allowed to distribute their
assets among their members, and may
not pay dividends to their members.
Section 3:64
[Establishment]
An association shall be considered
established upon the adoption of its
statutes, for which the unanimous
declaration of intent of at least ten
person is required.
Section 3:65
[Legal status of association members]
41
(1) The members of an association
shall be entitled to partake in the
association’s activities.
(2) Association members shall have
equal rights and obligations, except
where the statutes provide for
membership of special legal status.
(3) Members shall exercise their
membership rights in person. Members
may exercise their membership rights by
way of proxy if so permitted by the
statutes. Membership rights are nontradable,
and can not be inherited.
Section 3:66
[Obligations of members]
(1) Members of the association shall
fulfill the obligations prescribed for
members in the statutes.
(2) Members of the association shall
not jeopardize the objectives of the
association and the activities of the
association.
Section 3:67
[Commencement of membership]
(1) Membership in the association
shall commence at the time of
foundation upon the registration of the
association, after the application for
admission are accepted by the general
meeting.
(2) The personal data of members are
not considered public information.
Section 3:68
[Termination of membership]
(1) Membership shall terminate:
a) upon the member’s withdrawal;
b) if membership is cancelled by the
association;
c) upon the member’s exclusion;
d) upon death or dissolution of the
member without succession.
(2) Members shall be able to terminate
their membership at any time, by means
of written notice addressed to the
association’s representative, without
giving any reason.
Section 3:69
[Cancellation of membership]
(1) If membership is rendered subject
to certain conditions set out in the
statutes, and the member fails to meet
such conditions, the association shall
have the right to cancel the membership
in writing subject to a thirty-day notice
period.
(2) Cancellation of membership shall
be decided by the association’s general
meeting.
Section 3:70
[Exclusion of members]
(1) If a member has seriously or
repeatedly infringed the law, the statutes
of the association or any resolution of
the general meeting, the general
meeting shall - when so requested by
any member or body of the association have
authority to open procedures for
the member’s exclusion, inasmuch as
the statutes provides guarantees for the
conduct of a fair hearing.
(2) The resolution for the exclusion of
the member shall be fixed in writing, and
the statement of reasons shall indicate
the facts and evidence underlying the
42
exclusion decision, as well as
information on access to review
procedures. The resolution of exclusion
shall be delivered to the member
concerned.
(3) The statutes may provide for
access to appeal against the resolution
of exclusion, in which case the statutes
shall also provide for the appeal
procedure and shall specify the
association body to hear the appeal.
TITLE VIII
STATUTES AND BODIES OF
THE ASSOCIATION
Section 3:71
[Layout of the statutes, interpretation]
(1) In addition to the standard contents
of the mandatory layout of the
instrument of constitution of a legal
person, the statutes of an association
shall specify:
a) the rights and obligations of its
members;
b) the bodies of the association and
their competence, and the grounds for
exclusion of members, executive officers
and supervisory board members, and
any reason giving cause to conflict of
interest;
c) the sanctions to be invoked in the
event of any infringement of the law, the
statutes or any resolution of the
association, and any conduct in gross
violation of the association’s objectives,
including the rules of procedure and the
cases where such sanctions and rules
do not apply;
d) the rules for convening and
conducting the general meeting, for
setting the venue of the general
meeting, the rules governing the
contents of the invitation and the
agenda, the rules for the appointment of
the officers and the chairperson
presiding over the general meeting, the
rules for the election of vote counters,
the rules on quorum and voting, keeping
the minutes, and the delivery of
resolutions; and
e) the conditions for exercising voting
rights.
(2) The statutes shall be interpreted
taking into account the association’s
goals.
Section 3:72
[General meeting, college of
delegates]
(1) The association’s decision-making
body is the general meeting.
(2) Members shall be entitled to attend
the general meeting and exercise their
voting rights. Moreover, they shall be
entitled to speak and ask questions
according to the rules of the general
meeting, to make recommendations and
to submit its comments.
(3) If the statutes provide for a college
of delegates, it shall also specify the
procedure for the election of delegates.
The provisions on general meetings
shall apply to the college of delegates
mutatis mutandis.
Section 3:73
43
[Sessions of the general meeting]
(1) The general meeting shall convene
at least once a year. Any clause of the
instrument of constitution providing for
less frequent meetings shall be null and
void.
(2) The general meeting shall not be
open to the public; it may be attended apart
from the members and
management - by persons duly invited
by the person entitled to convene the
general meeting, and by the persons
attending in an advisory capacity under
the statutes or upon the decision of the
general meeting.
Section 3:74
[Competence of the general meeting]
The following shall fall within the
competence of the general meeting:
a) amendment of the statutes;
b) decision on the termination, merger
or division of the association;
c) appointment and dismissal of the
executive officer and establishing his
remuneration;
d) adopting the annual budget;
e) adopting the annual account,
covering also the report of the
management body on the association’s
financial position;
f) exercising employer’s rights over the
executive officer, if the executive officer
has a contract of employment with the
association;
g) approval to conclude contracts
between the association and one of its
members, its executive officer,
supervisory board member or their close
relatives;
h) decision on the enforcement of
claims for compensation from present or
previous members, executive officers
and supervisory board members, or from
the members of any other bodies of the
association;
i) election and dismissal of supervisory
board members and establishing their
remuneration;
j) election and dismissal of the auditor
and establishing his remuneration;
k) appointment of a receiver.
Section 3:75[Additions to the agenda]
(1) Within the time limit provided for in
the statutes, calculated from the delivery
or public disclosure of the invitation to
the general meeting, members and the
bodies of the association may request
additions to the agenda from the body or
person convening the general meeting,
with the reasons indicated.
(2) The decision for additions to the
agenda lies with the body or person
convening the general meeting. If the
body or person convening the general
meeting has decided to make additions
to the agenda, or refused the request
therefor, the general meeting shall
decide before adopting a resolution on
the agenda whether or not to make any
additions to the agenda.
Section 3:76
[Passing resolutions]
(1) A resolution passed by a threequarters
majority of the votes of the
members present shall be required for
the amendment of the statutes of the
association.
44
(2) A resolution passed by a threequarters
majority of the members with
voting rights shall be required for the
amendment of the objectives of the
association and for a decision on the
dissolution of the association.
Section 3:77
[Management]
Associations are managed by the
managing director or by the presidency.
The association’s executive officers are
the managing director or members of the
presidency.
Section 3:78
[Presidency]
(1) The presidency is comprised of
three members. The presidency shall
elect its chairman from among its
members.
(2) Members of the presidency are
required to attend the general meeting,
answer questions in the general meeting
related to the association, and give
account of the activities and financial
position of the association.
(3) The presidency shall adopt its
resolutions by a simple majority of the
votes of the members present. Any
clause of the statutes providing for a
lower voting ratio shall be null and void.
Section 3:79
[Mandate of executive officers]
(1) If the members do not provide for
the term of an executive officer in the
statutes upon his election, the executive
officers shall be considered elected for
two years.
(2) If the mandate of an executive
officer is set for more than five years, the
part exceeding the five-year period shall
be null and void.
(3) Executive officers shall be elected
from among the members of the
association, by authorization of the
statutes not more than one-third of the
executive officers may be elected from
among non-members.
Section 3:80
[Management functions]
The responsibilities of management
shall include:
a) performing daily administrative
tasks, taking decisions within the
competence of management;
b) preparing reports and accounts and
submitting them to the general meeting;
c) preparing the annual budget and
submitting it to the general meeting;
d) managing the association’s assets,
and taking decisions relating to the
allocation and investment of assets, for
which the general meeting has no
responsibility, and the implementation of
such decisions;
e) making preparations for setting up
bodies provided for by law and by the
association’s statutes, and for the
election of officers for these bodies;
f) convening the general meeting,
notifying members and the bodies of the
association;
g) setting the agenda for the general
meeting convened by the managing
body;
45
h) attending the general meeting and
providing answers to questions
concerning the association;
i) keeping records on members;
j) keeping record of the association’s
resolutions, organizational documents
and other books;
k) safeguarding documents pertaining
to the association’s operations;
l) monitoring the existence of any other
cause for winding up the association,
and taking measures as provided for in
this Act if such cause has occurred; and
m) taking decision under the statutes
concerning the admission of new
members.
Section 3:81
[Convocation of the general meeting]
(1) The managing body shall call the
general meeting in order to provide for
the necessary measures if:
a) the association’s assets are
insufficient to cover its outstanding
debts;
b) it is presumed that the association
will not be able to meet its liabilities
when due; or
c) achieving the association’s goals no
longer appears feasible.
(2) If the general meeting is convened
as under Subsection (1) the members
are required to take measures for
eliminating the cause on account of
which the meeting was called, or shall
decide on the dissolution of the
association.
Section 3:82
[Cases where a supervisory board
must be established]
(1) A supervisory board must be
established if more than half of all
members are not natural persons, or if
there are more than one hundred
members.
(2) The supervisory board is
responsible for supervising the
association’s bodies, upholding the law
and monitoring the implementation of
the statutes and the resolutions of the
association.
TITLE IX
DISSOLUTION OF
ASSOCIATIONS
Section 3:83
[Termination with succession]
An association may merge only with
another association or may be divided
into associations only.
Section 3:84
[Reasons for dissolution without
succession]
Apart from the general cases of
dissolution of a legal person without
succession, an association shall be
dissolved without succession if:
a) the association has fulfilled its
purpose, or if achieving the association’s
objective is no longer possible, and a
new objective has not been determined;
or
46
b) the number of members of the
association remains below ten for six
consecutive months.
Section 3:85
[Distribution of the remaining assets]
(1) In the event of the association’s
dissolution without succession, assets
remaining after settlement of all debts
shall be transferred to a public-benefit
organization established for a purpose
that is identical or similar to the
association’s objective laid down in the
statutes, or failing this, designated by
the court of registry.
(2) The court of registry shall provide
for the distribution of the association’s
remaining assets in its decision on
dissolution, and - if necessary - shall
appoint a guardian ad litem for
overseeing the transfer of assets. The
right of disposition over the assets shall
pass to the new beneficiary upon the deregistration
of the association.
Section 3:86
[Liability of executive officers in the
event of dissolution without succession]
(1) Following dissolution of the
association without succession, claims
for damages may be brought against the
executive officers within a period of one
year following the time of de-registration
of the association by the court of
registry, for losses resulting from their
activities performed in that capacity by
the members with membership at the
time of de-registration, or any person to
whom the association’s assets
remaining at the time of dissolution had
to be transferred, or should have been
transferred had there been any assets
remaining.
(2) During a period of two years
preceding the dissolution of the
association, the executive officers shall
be jointly and severally liable for a period
of two years after the dissolution of the
association to the association’s creditors
for all debts which were not covered by
the association’s assets, or by the legal
person’s guarantee obligation existing
under the general rules with respect to
members who did not provide any
capital contribution.
Section 3:87
[Arbitration]
In accordance with the statutes of the
association or under an agreement
between the parties concerned, any
dispute arising out of or in connection
with membership or from the relations of
the bodies and members of the
association shall be settled by way of
permanent or ad hoc arbitration.
PART THREE
BUSINESS ASSOCIATIONS
TITLE X
COMMON PROVISIONS
RELATING TO BUSINESS
ASSOCIATIONS
Chapter XV
47
General Provisions
Section 3:88
[Definition of business association]
(1) Business associations are legal
persons established for the pursuit of
business operations with financial
contribution provided by its members,
where each member has a right to a
share of the profit and an obligation to
participate in covering the losses.
(2) The business association’s profits
and losses shall be distributed among
the members in proportion to their
capital contributions. The business
association shall be allowed to pay
dividends or a share from the net profit
for the year or from the retained
earnings available. Any clause of the
instrument of constitution for the
exclusion of any member from the profits
or from the bearing of losses shall be
null and void.
(3) Each member shall be required to
cooperate with other members and the
company’s organs, and may not engage
in any conduct which seriously
endangers the achievement of the
company’s objectives.
Section 3:89
[Company form]
(1) A business association may
operate in the form of a general
partnership, limited partnership, private
limited-liability company or limited
company.
(2) The corporate name of a business
association shall contain the designation
of the corporate form or the abbreviation
thereof as specified in this Act.
Section 3:90
[Members of the company]
(1) A natural person may be a member
with unlimited liability in only one
business association at any given point
in time. A minor may not be a member
with unlimited liability in a business
association.
(2) A general partnership, limited
partnership or sole proprietorship may
not be a member with unlimited liability
in a business association.
(3) Any person who has been
prohibited from practicing a profession
may not be a member in a business
association, other than a public limited
company.
(4) In respect of limited companies, the
members are the shareholders.
Section 3:91
[Means and time of legal statements]
(1) Legal statements pertaining to the
company must be made in writing. This
provision shall also apply to the
company’s decisions, and to the delivery
of legal statements and decisions to the
recipient.
(2) A legal statement relating to the
company may be made or delivered by
means of electronic communications if
so permitted by the company’s
instrument of constitution, which shall
provide for the relevant conditions and
the means thereof.
(3) Where a legal statement relating to
the business association is mandatory,
48
or where certain action is required, it
shall be made or carried out without
delay.
(4) Where a legal statement made in
writing has been sent by way of post, it
shall be considered received - if sent to
a resident recipient - at the point in time
indicated on the notice of receipt, and in
the case of registered mail on the fifth
working day following dispatch, in the
absence of proof to the contrary.
Section 3:92
[Arbitration procedure]
(1) In accordance with the instrument
of constitution or under an agreement
between the parties concerned, any
dispute in the area of company law shall
be settled by way of binding arbitration.
(2) Corporate dispute shall mean:
a) any dispute arising out of or in
connection with the corporate
relationship between the business
association and its members, including
former members, covering also the
judicial review of decisions of company
bodies;
b) any dispute between members in
connection with their corporate
relationship; and
c) any dispute between the business
association and its executive officers or
supervisory board members, arising out
or in connection with their office.
Section 3:93
[Application of the common provisions
relating to business associations]
The common provisions relating to
business associations shall apply where
this Act does not provide otherwise in
connection with certain types of
business associations.
Chapter XVI
Foundation of Business
Associations
Section 3:94
[Instrument of constitution of business
associations]
The memorandum of association of a
company shall also function as its
instrument of constitution, with the
exception of limited companies and
single-member private limited-liability
companies. The articles of association of
a limited company and the charter
document of a single-member private
limited-liability companies shall serve as
its instrument of constitution.
Section 3:95
[Formal requirements of instruments of
constitution]
(1) The instrument of constitution shall
be signed by all founder members. The
memorandum of association may be
signed on behalf of a member by his
representative holding an authorization
fixed in an authentic instrument or in a
private document representing
conclusive evidence.
(2) The instrument of constitution shall
be drawn up in a notarial document, or
in a private document countersigned by
a lawyer or the legal counsel of a
founder.
49
Section 3:96
[Place of operation]
(1) If a company’s registered office
and head office of central administration
are not the same, the office of central
administration shall be indicated in the
instrument of constitution as well.
(2) The company’s place of business
and branch shall be indicated in the
instrument of constitution, if the
company requests the registration
thereof.
Section 3:97
[Provisions relating to the scope of
activities of the company]
(1) Where authorization by the
competent authority is prescribed
mandatory by law to engage in a certain
economic activity, the company may
take up the pursuit of such activity in
possession of such authorization.
(2) A business association may
engage in the pursuit of an activity that
is rendered conditional upon specific
qualifications by law, if the company’s
member bound by personal involvement,
or at least one person employed by the
company under contract of employment
or any other form of civil employment
relationship is able to satisfy such
qualification requirements.
Section 3:98
[Non-compliance with the obligation of
capital contribution]
(1) If a member fails to provide his
contribution as undertaken in the
instrument of constitution by the
prescribed time limit, management shall
call upon such member, with the
applicable consequences indicated, to
provide the contribution within thirty
days.
(2) In the event of non-compliance
within the thirty-day time limit, the
membership of the member who failed to
provide the capital contribution shall be
terminated on the day following the
expiration of such time limit.
Management shall notify the former
member of the termination of his
membership. The former member shall
be held liable for damages caused to the
business association by virtue of his
failure to provide the contribution in
accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation.
(3) Any provision of the instrument of
constitution which provides more lenient
sanctions than what is prescribed in this
Act upon members for failure to provide
the capital contribution shall be null and
void.
Section 3:99
[Asset contribution]
(1) Non-cash contribution may also be
provided in the form of receivables,
provided that it is acknowledged by the
debtor or if it is based on a final court
ruling. Commitments of members for
performing work or for any other
personal involvement or service shall not
be accepted as a form of capital
contribution.
(2) Members who were knowledgeable
about, and consented to, a non-
50
monetary contribution that a member
has provided at a value higher than what
it was worth at the time when provided
shall, together with the person providing
it, be subject to joint and several liability
toward the company in accordance with
the provisions on liability for damages for
loss caused by non-performance of an
obligation.
(3) Any provision of the instrument of
constitution contrary to the rules
contained in Subsections (1) and (2)
shall be null and void.
Section 3:100
[Notification to the court of the
formation of a company]
(1) The formation of a business
association shall be notified to the court
of registry within thirty days from the
date when the instrument of constitution
is executed in a notarized document or
countersigned by a lawyer or legal
counsel.
(2) If the establishment of a business
association is subject to approval by the
authorities, notification to the court of
registry shall be made within fifteen days
upon receipt of the final authorization.
Section 3:101
[Pre-company]
(1) As of the date when the instrument
of constitution is executed in a notarized
document or countersigned by a lawyer
or legal counsel, the business
association may operate as the precompany
of the business association. A
pre-company may take up the pursuit of
business operations only after having
submitted the application for the
registration of the business association.
The disposition of the pre-company shall
be indicated on the company’s
documents and legal statements; in the
absence thereof, any legal statement
taken by the pre-company shall be
treated as a legal statement taken by the
founders collectively if the court of
registry refuses to register the company.
(2) The regulations applicable for the
business association to be established
shall also apply to the pre-company with
the following exceptions:
a) changes in the persons of the
members of the pre-company are
allowed only if expressly permitted by
law;
b) the instrument of constitution may
not be altered, other than for the
purpose of compliance with any request
made by the court of registry or the
competent body of authorization;
c) the pre-company may not establish
a business association, nor may it join
one as a member;
d) legal proceedings for the exclusion
of a member may not be initiated; and
e) no decision for dissolution without
succession, transformation, merger or
division may be adopted.
(3) Upon registration by final decision
of the court of registry the business
association shall cease to function as a
pre-company, and all transactions
concluded in that capacity will be treated
as if they were concluded by the
business association.
(4) If registration of the business
association is refused by final decision,
the pre-company must terminate all
51
operations effective immediately upon
gaining knowledge thereof. The
executive officers of the pre-company
shall be held liable for damages caused
by non-compliance in accordance with
the provisions on liability for damages
resulting from any breach of that
obligation.
(5) If the pre-company ceases to exist
as under Subsection (4), the obligations
undertaken until that time shall be
satisfied from the assets made available
to the business association to be
established. The founders shall be
subject to joint and several liability vis-àvis
third persons for the liabilities that
cannot be covered from such assets. If
the liability of the members of the
business association to be established
for the obligations of the business
association is limited, and any
outstanding claims remain despite the
members honoring their respective
liability, the executive officers of the
business association to be established
shall bear unlimited, joint and several
liability vis-à-vis third parties.
(6) The provisions contained in
Subsections (4)-(5) shall also apply if the
company withdraws its application for
registration.
Chapter XVII
Amendment of the Instrument of
Constitution
Section 3:102
[Amending the instrument of
constitution]
(1) Any amendment to the instrument
of constitution, if done by means other
by contract, shall be decided by the
supreme body of the company by at
least a three-quarters majority.
(2) The supreme body may change the
business association’s corporate name,
registered office, places of business and
branches, and the activities of the
business association other than its
principle activity, by simple majority.
(3) Any amendment that would harm
the rights of some members or make
their status more onerous shall be
decided by all members unanimously. In
voting for such issue members without
the right to vote may also participate.
(4) Moreover, the provisions on the
formation of business associations shall
also apply to the amendment of the
instrument of constitution, however, the
document on the amendment need not
be signed by the members, and it may
be countersigned by the legal counsel of
the business association as well.
Chapter XVIII
Protection of Minority Stakeholders
Section 3:103
[Requesting convocation of the
supreme body]
(1) Those members of the business
association together controlling at least
five per cent of the voting rights may, at
any time, request that the business
52
association’s supreme body be
convened, indicating the reason and the
purpose thereof, or the passing of a
decision without a meeting. If
management fails to comply with such
request within eight days of the date of
receipt, and fails to convene the meeting
of the supreme body at the earliest
possible date, and fails to provide for the
passing of a decision out of session, the
court of registry shall convene the
meeting of the supreme body at the
request of the members making the
proposal, or shall empower the
requesting members to convene the
meeting, or to carry out the procedure
for the passing of a decision out of
session.
(2) The expected costs shall be
covered by the requesting members.
The business association’s supreme
body shall decide in a meeting convened
at the request of minority stakeholders or
by way of a decision adopted without a
meeting whether the costs incurred be
borne by the business association or the
persons convening such meeting.
Section 3:104
[Requesting special audits]
(1) If the business association’s
supreme body has refused - or did not
present for decision - a proposal that the
last financial report, or any economic
event which has occurred in connection
with the activities of management during
the last two years, or any commitment
be examined by an auditor to be
engaged specifically for this purpose,
such examination shall be ordered, and
the auditor shall be appointed, at the
company’s expense by the court of
registry upon a request by any one
member or members controlling at least
five per cent of the votes submitted
within a thirty-day preclusive period
calculated from the meeting of the
supreme body.
(2) The court of registry shall refuse
the request in the event of abuse of
minority rights by the members
presenting the request.
(3) The company’s auditor may not be
appointed to carry out such special
audits.
(4) The costs of the audit shall be
advanced and borne by the company.
The company shall be able to charge the
costs upon the member affected if
requesting the audit was manifestly
unfounded.
Section 3:105
[Initiating the enforcement of claims]
If the supreme body of a business
association has refused - or did not
present for decision - a request to
enforce a claim against the members,
executive officers, supervisory board
members or against the auditor of the
business association, any one member
or members controlling at least five per
cent of the votes may move within a
thirty-day preclusive period calculated
from the meeting of the supreme body to
enforce such claim themselves on behalf
and for the benefit of the company.
Section 3:106
[Prohibition of derogations]
53
Any provision of the instrument of
constitution which derogates from the
provisions of this Chapter to the
detriment of minorities shall be null and
void.
Chapter XIX
Exclusion of Members
Section 3:107
[Grounds for exclusion, legal effects of
exclusion]
(1) A member of a business
association may be excluded from the
business association by court ruling
based on a claim launched by the
business association against such
member, if the continued membership of
the person in question would seriously
jeopardize the business association’s
objective.
(2) Action for exclusion may not be
brought in two-member companies. A
shareholder of a public limited company
and any member holding three-quarters
or more of the votes in the meetings of
the supreme body may not be excluded.
(3) Membership shall terminate upon
the member’s exclusion.
Section 3:108
[Exclusion procedure]
(1) A procedure for the exclusion of a
member may be opened upon a
resolution adopted by the supreme body
of the company by at least a threequarters
majority of all members,
indicating the reasons for exclusion as
well. The member affected may not vote
on that issue.
(2) The action based on the resolution
referred to in Subsection (2) shall be
brought within a fifteen-day preclusive
period from the date of the supreme
body’s resolution.
(3) The court may suspend the
membership rights of the member
affected upon request, before the final
court ruling, if continued exercise of such
membership rights would seriously harm
the company’s interests. Such
suspension shall not affect the member’s
right to a share of the profit.
(4) As regards relations between
members, a commitment undertaken
during the period of suspension shall not
apply to the member whose right has
been suspended, even if such member
is liable for the company’s debts owed to
third parties.
(5) During the period of suspension of
membership rights, the instrument of
constitution may not be amended, an
action for the exclusion of another
member may not be opened, and a
decision may not be taken to resolve the
transformation, merger or division of the
business association, or its dissolution
without succession.
Chapter XX
Organizational Structure of
Business Associations
1. Supreme body of business
associations
54
Section 3:109
[Powers and responsibilities of the
supreme body]
(1) The supreme body functions as the
decision-making organ of the members
of the business association.
(2) The principal duty of the supreme
body of a business association is to
adopt decisions on fundamental
business and personnel issues. The
responsibilities of the supreme body
shall include the approval of the annual
account, as prescribed in the Accounting
Act (hereinafter referred to as „financial
report”), and decisions on the
distribution of profits.
(3) The decision for the enforcement of
claims for damages against the
company’s members, executive officers,
supervisory board members and against
the auditor lies with the business
association’s supreme body.
(4) In single-member companies the
founder or the sole member shall
function as the supreme body. In matters
falling within the supreme body’s
competence the founder or the sole
member shall take decisions in writing,
and such decisions shall take effect
when communicated to management.
Section 3:110
[Participating in the supreme body’s
decision-making process]
(1) All members of the business
association shall have the right to
partake in the activities of the supreme
body in person or by way of a
representative. Unless this Act contains
provisions to the contrary, a member
may delegate one representative,
however, a representative shall be
allowed to represent more than one
members. The power of attorney for
representation shall be fixed in an
authentic instrument or in a private
document with full probative force.
(2) The voting right of a member in the
supreme body of the company is
consistent with the members’ capital
contribution.
Section 3:111
[Meetings of the supreme body]
(1) Sessions of the supreme body
shall not be public. The company’s
executive officers and supervisory board
members may attend sessions of the
supreme body in an advisory capacity.
(2) Members may exercise their rights
in meetings of the supreme body by
means of electronic communications
instead of attending in person, if the
instrument of constitution defines such
electronic communications equipment
and the condition for their use to contain
facilities for the identification of members
and for mutual and unrestricted
communication between the members.
(3) Any resolution adopted at a
meeting which was unduly convened
and held, and is therefore considered
invalid, shall become valid with
retroactive effect from the date when the
resolution was adopted, if declared valid
by the unanimous decision of all
members within thirty days of the day on
which the meeting was held.
55
2. Management and
representation
Section 3:112
[Autonomy of executive officers]
(1) The executive officer shall manage
the operations of the business
association under a personal service
contract or under a contract of
employment, as agreed with the
company.
(2) The executive officer shall manage
the operations of the business
association independently, based on the
primacy of the business association’s
interests. In this capacity, the executive
officer shall discharge his duties in due
compliance with the relevant legislation,
the instrument of constitution and the
resolutions of the company’s supreme
body. The executive officer may not be
instructed by the members of the
business association and his
competence may not be negated by the
supreme body.
(3) As regards single-member
business associations, the sole member
may instruct the management, which the
executive officer is required to carry out.
Section 3:113
[Managers]
(1) The company’s supreme body may
decide to appoint one or more managers
to assist the executive officers in their
work. Managers shall carry out their
functions under contract of employment.
Managers are employees who direct the
continuous operation of the company on
the basis of the executive officer’s
instructions.
(2) The grounds for exclusion of
executive officers, and the reasons
giving cause to conflict of interest shall
also apply to company managers.
(3) In addition to managers with
general competence, the supreme body
of the business association or, upon the
authorization of the supreme body, the
management may appoint managers
with restricted competence to the place
of business and branches of the
company.
Section 3:114
[Term of mandate of executive
officers]
Executive officers are elected for a
term of five years, or - if the business
association is established for a shorter
period - for that period.
Section 3:115
[Conflict of interest]
(1) Executive officers may not acquire
any share in the capital of a business
association - except for the shares of
public limited companies - which is
engaged in the pursuit of the same
economic activity, as its main activity, as
the business association in which they
hold an executive office. In the event of
accepting a new executive office, within
fifteen days of accepting such office the
executive officer shall notify any other
company in which he already serves as
an executive officer or a supervisory
board member.
56
(2) With the exception of everyday
dealings, an executive officer and his
close relatives may not conclude any
transactions falling within the scope of
the main activities of the business
association in his own name and on his
own behalf.
Section 3:116
[Representation of the company.
Power of representation]
(1) Business associations are
represented by their executive officers
and other duly authorized employees in
writing.
(2) Management may confer general
power of representation upon managers.
(3) Managers and other employees
entitled to representation may not validly
assign their right of representation to
others.
Section 3:117
[Liability of executive officers to the
business association for damages]
(1) If the company’s supreme body
provides a hold-harmless warrant to an
executive officer at the time of approval
of the financial report, thus
acknowledging the executive officer’s
management activities during the
previous financial year, the company
may bring action against the executive
officer on the grounds of breaching
management obligations in a claim for
damages if the facts and information
underlying the hold-harmless warrant
proved to be false or incomplete.
(2) If an executive officer is removed
from office in between two meetings
debating the financial report, the
executive officer may request the
supreme body’s decision for the issue of
a hold-harmless warrant in the next
session.
(3) Following termination of the
business association without
succession, claims for damages may be
brought against the executive officers by
the members with membership at the
time of the company’ removal from the
registry, within a preclusive period of one
year following the time of removal.
Members may enforce any claim for
compensation up to their rightful share
from the assets distributed upon
termination of the business association.
Section 3:118
[Liability of executive officers in
respect of third parties]
In the event of a business
association’s dissolution without
succession, creditors may bring action
for damages up to their claims
outstanding against the company’s
executive officers on the grounds of noncontractual
liability, should the executive
officer affected fail to take the creditors’
interests into account in the event of an
imminent threat to the business
association’s solvency. This provision is
not applicable in the case where the
company is wound up without going into
liquidation.
3. Supervisory Board
Section 3:119
57
[Cases where a supervisory board
must be established]
A supervisory board must be
established if the annual average
number of full-time employees employed
by the business association exceeds two
hundred, and the works council did not
relinquish employee participation in the
supervisory board.
Section 3:120
[Powers of the supervisory board]
(1) If the supervisory board wishes to
engage the services of experts in the
course of its supervisory activities,
management shall fulfill the supervisory
board’s such request.
(2) If the company has a supervisory
board, the supreme body of the
company may adopt a decision
concerning the financial report in
possession of the written report of the
supervisory board.
(3) If, in the judgment of the
supervisory board, the activity of the
management is contrary to the law, to
the instrument of constitution or to the
resolutions of the business association’s
supreme body, or otherwise infringes
upon the interests of the business
association, the supervisory board shall
have the right to convene the meeting of
the business association’s supreme
body to discuss that issue and to take
the necessary decisions.
(4) Any provision of the instrument of
constitution which derogates from the
provisions of Subsections (1)-(3) shall be
null and void.
Section 3:121
[Membership of the supervisory board]
(1) The supervisory board shall consist
of three members. If the business
association is required to have a
supervisory board, or it has a
peremptory supervisory board, any
provision of the instrument of
constitution according to which the
supervisory board may consist of less
than three members shall be null and
void. The supervisory board shall
function as a body, and may entrust any
of its members to fulfill certain
supervisory tasks, or may divide
supervisory duties among its members.
(2) Supervisory board members are
elected for a term of five years, or - if the
business association is established for a
shorter period - for that period.
(3) The regulations governing personal
service contracts shall also apply to
supervisory board members.
(4) Employees of the business
association may not hold a seat on the
supervisory board, except where
membership is based on employee
participation.
Section 3:122
[Supervisory board operating
procedures]
(1) The supervisory board shall elect a
chairman from among its members.
(2) The supervisory board shall have a
quorum if at least two-thirds of its
members, or at least three persons are
present.
58
(3) The supervisory board shall
establish its own rules of procedure,
subject to approval by the business
association’s supreme body.
(4) If the number of supervisory board
members falls below the number set
forth in the instrument of constitution, the
management of the business
association shall convene the business
association’s supreme body, or shall
take measures for adopting a resolution
out of session, in the interest of restoring
proper operation of the supervisory
board.
Section 3:123
[Peremptory supervisory body]
(1) If under the instrument of
constitution the supervisory board is
given responsibility under the instrument
of constitution for the taking or approval
of decisions which otherwise fall within
the competence of the supreme body or
management, the members of the
supervisory board shall be held liable for
damages caused to the business
association while acting in that capacity
in accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation.
(2) If the instrument of constitution
renders certain decisions of
management subject to prior approval
by the supervisory board, and the
supervisory board refuses to approve
the proposal of management for a
decision, however, management stands
by its proposal nonetheless,
management shall be entitled to turn to
the company’s supreme body for a
decision. If the supervisory board
approves the proposal of management
for a decision, the executive officers and
supervisory board members having
voted for the proposal shall be jointly
and severally liable for damages caused
to the business association in
accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation.
(3) In connection with their decisionmaking
functions, members of the
supervisory board shall be subject to the
provisions pertaining to those vested
with decision-making authority under this
Act with respect to the issue at hand.
Section 3:124
[Conditions for employee participation]
(1) If the annual average number of
full-time employees employed by the
business association exceeds two
hundred, one-third of the supervisory
board shall be made up of employee
representatives.
(2) Where employee representatives
are entitled to sit on the supervisory
board, the instrument of constitution may
preclude employee participation in the
supervisory board for a maximum period
of five years, subject to the prior consent
of the works council. Any clause of the
instrument of constitution to the contrary
shall be null and void.
(3) Employee representatives shall be
elected for the first time when the
company’s supreme body debates the
annual account for the financial year
when the annual average number of
employees reached two hundred.
59
(4) In a company established by way
of succession, employee participation in
the supervisory board shall be provided
for from the time of registration, if the
number of employees employed by the
business association exceeds two
hundred, and if the conditions for
employee participation existed at the
predecessor company, or at one of the
predecessor companies, if there was
more than one.
Section 3:125
[Election and removal of employee
representatives]
(1) Employee representatives are
delegated by the works council from
among the employees following
consultation with the trade unions
operating at the business association. In
the event of the termination of
employment of an employee
representative, this shall also bring
about the termination of his membership
in the supervisory board.
(2) Persons delegated by the works
council shall be given a seat on the
supervisory board by the business
association’s supreme body at its first
meeting following such delegation,
unless statutory grounds for
disqualification exist in respect of the
persons delegated. Failure to delegate
such person shall have no effect on the
supervisory board’s operation, provided
that all other statutory requirements are
satisfied. In that case the seats of
employee representatives may not be
occupied, however, the supreme body is
to elect at least three members for the
supervisory board nonetheless.
(3) The company’s supreme body shall
recall an employee representative upon
recommendation by the works council.
(4) If at the time of adopting the
company’s annual account it is
determined that the number of
employees dropped below two hundred
during the previous financial year, the
right of employee representatives to sit
on the supervisory board shall cease.
Section 3:126
[Rights and obligations of employee
representatives]
(1) Employee representatives shall
have the same rights and same
obligations as all other members of the
supervisory board. If the opinion of the
employee representatives unanimously
differs from the majority standpoint of the
supervisory board, the minority opinion
of the employees shall be stated at the
next meeting of the business
association’s supreme body.
(2) Employee representatives shall
inform the company’s employees
concerning the activities of the
supervisory board.
Section 3:127
[Prohibition of derogations]
Any provision of the instrument of
constitution which provides stricter
measures then what is prescribed in this
Act for employee participation shall be
null and void.
Section 3:128
60
[Non-mandatory employee
participation]
Where employee participation in the
supervisory board is prescribed by the
instrument of constitution, this shall be
subject to the provisions of this Act on
employee participation.
4. Statutory Auditor
Section 3:129
[Responsibilities of the statutory
auditor]
(1) The statutory auditor appointed by
the supreme body shall be responsible
for carrying out the audits of accounting
documents according to the relevant
regulations, and to provide an
independent audit report to determine as
to whether the annual account of the
business association is in conformity
with legal requirements, and whether it
provides a true and fair view of the
company’s assets and liabilities,
financial position and profit or loss.
(2) The statutory auditor may be an
individual auditor or an audit firm shown
in the register of auditors. Where
auditing services are provided by an
audit firm, this audit firm shall be
required to designate the person who
will be personally responsible for
carrying out the audits.
(3) A member, executive officer or
supervisory board member of the
business association, and the family
members of these persons may not
serve as the statutory auditor. An
employee of the business association
may not serve as the statutory auditor
during the period of employment and for
a period of three years thereafter.
Section 3:130
[Commencement and term of
assignment of the statutory auditor]
(1) The first statutory auditor shall be
designated in the instrument of
constitution, after which such auditors
are appointed by the company’s
supreme body. Management shall enter
into a contract with the auditor within
ninety days following the date of
delegation or appointment, under the
terms and conditions and subject to the
remuneration specified by the supreme
body. If the contract is not concluded
within the time limit specified above, the
supreme body shall select a new
auditor.
(2) The statutory auditor is appointed
for a fixed term of maximum five years.
The term of the statutory auditor’s
mandate may not be less than the
period beginning when the auditor is
appointed by the supreme body and
ending at the time of the meeting
convened to approve next year’s annual
account.
(3) Any provision of the instrument of
constitution which derogates from
Subsection (2) hereof shall be null and
void.
Section 3:131
[Carrying out the duties of the statutory
auditor]
(1) The statutory auditor may not
provide any service to a business
association, and may not collaborate
61
with management in a way that may
imperil his ability to carry out his auditing
duties objectively and independently.
(2) The statutory auditor shall be
invited to the sessions of the company’s
supreme body when discussing the
company’s financial report. The auditor
must attend these meetings, however, if
absent, the meeting will be held
nonetheless.
(3) If the business association has a
supervisory board, the auditor may
attend the meetings of the supervisory
board in an advisory capacity, or must
attend such meetings when so
requested by the supervisory board. The
supervisory board shall put the items
recommended by the auditor on the
agenda.
5. Other Company Bodies
Section 3:132
[Other company bodies]
If the instrument of constitution or, by
authorization thereof, the company’s
supreme body provides for the setting
up of other organs in addition to the
bodies and officers defined in this Act, it
shall be without prejudice to the powers
and responsibilities of the bodies and
officers defined in this Act.
Chapter XXI
Transformation and Merger of
Business Associations
Section 3:133
[Cases of and conditions for
transformation]
(1) A business association may be
converted into a business association,
grouping or cooperative society of
another corporate form.
(2) If a business association’s equity is
not sufficient to cover the subscribed
capital prescribed for its specific
corporate form over two consecutive
financial years, and the members fail to
provide for the necessary equity within a
period of three months after approval of
the annual account for the second year,
the business association shall be
required to adopt a decision within sixty
days of this deadline for its
transformation. Instead of transformation
the business association may opt
dissolution without succession or for
merger.
Section 3:134
[Conclusion of transformation]
(1) Prior to the execution of
transformation, the share of each
member of the successor business
association from the planned subscribed
capital shall be determined, as shall the
share of assets due to members who do
not wish to transfer to the successor
business association, and the procedure
for settlement therefor.
(2) The share of assets due to
members not wishing to take part in the
successor business association shall be
disbursed within a period of sixty days
after the registration of the successor,
unless an agreement concluded by the
62
successor with the persons concerned
provides otherwise.
Section 3:135
[Liability rules relating to
transformation]
(1) The members who have decided to
withdraw from the company upon
transformation, if dissolved without
succession, shall be liable for any debt
of the predecessor which is not covered
by the legal person established by
transformation.
(2) Any member with unlimited liability
who becomes a member with limited
liability upon transformation shall be
liable for any debt of the predecessor
jointly and severally with other members
of the legal person established by
transformation with unlimited liability, for
a preclusive period of five years
following the time of registration of the
successor.
Section 3:136
[Merger of business associations]
A business association may merge
with another business association, and
also with a cooperative society or a
grouping.
Chapter XXII
Dissolution of a Business
Association Without Succession
Section 3:137
[Liability of members in the event of
dissolution without succession]
(1) In the event of dissolution of a
business association without
succession, claims that remain
outstanding on the basis of the
obligations of the business association
that will cease to exist may be enforced
within a five-year preclusive period
against the former members of the
business association.
(2) If the liability of a member for the
obligations of the business association
was unlimited during the company’s
existence, his guarantee obligation shall
also be unlimited and joint and several
with other members for the liabilities of
the terminated business association.
Any debt arising between members shall
be covered by and shared among the
members consistent with their share in
the distributed assets of the business
association.
TITLE XI
GENERAL PARTNERSHIPS
Section 3:138
[Definition of general partnerships]
By virtue of the memorandum of
association for the establishment of a
general partnership (közkereseti
társaság or kkt.), the members of the
partnership agree to make available to
the partnership the capital contribution
necessary for its activities, and to
undertake joint and several liability for
63
the partnership’s obligations not covered
by the assets of the partnership.
Section 3:139
[Members’ liability for the obligations of
the partnership]
(1) Members of the general
partnership shall undertake joint and
several liability for the partnership’s
obligations not covered by the assets of
the partnership.
(2) In legal proceedings judgment may
be passed and enforcement may be
carried against members of the
partnership based on their liability
provided for in Subsection (1) hereof.
(3) Members may also be sued
together with the partnership. The court
may order enforcement of the judgment
against members if efforts for recovering
the claim from the partnership failed.
(4) The liability of a new member for
the obligations originating prior to his
admission to the partnership shall be
identical to that of all other members.
Any agreement of the members to the
contrary shall be null and void with
respect to third parties.
Section 3:140
[Right of withdrawal of the creditors of
members]
Creditors of members may not
demand to recover their claims from the
partnership’s assets. Creditors’ claims
against members shall be covered to the
extent of the partner’s share from the
partnership’s assets, which is due upon
the termination of his membership. If a
creditor files to have this share attached,
he shall be entitled to exercise the
member’s right of withdrawal and, as a
result, shall be entitled to demand
compensation from that member’s
share.
Section 3:141
[Acquisition of partnership share under
marital community of property]
The amendment of the memorandum
of association is required for the spouse
of a member to gain admission into the
partnership on the grounds of marital
community of property or the division of
marital property.
Section 3:142
[Competence of the meeting of
members]
(1) The supreme body of a general
partnership is the meeting of members.
(2) Members may tender the decision
of any matter under the competence of
the meeting of members by at least a
three-quarters majority.
(3) In the matters conferred under the
competence of the meeting of members,
members may adopt a decision without
having to hold a meeting.
Section 3:143
[Rules of adopting resolutions in the
meeting of members]
(1) In the process of adopting
resolutions, each member shall have an
equal vote. Any clause of the
memorandum of association to deprive a
member of his voting right shall be null
and void.
64
(2) The meeting of members shall
adopt its resolutions by a simple majority
of the votes calculated relative to the
number of all eligible votes. Any
provision of the memorandum of
association to the contrary shall be null
and void.
(3) Resolutions are passed by the
simple-majority voting procedure.
(4) A resolution adopted by at least
three-quarters majority is required for the
removal of executive officers. A
resolution adopted by the unanimous
vote of all members shall be required for
any amendment of the memorandum of
association, and for the transformation,
merger, division or termination without
succession of the partnership.
(5) The amendment of the
memorandum of association shall be
signed by all members.
Section 3:144
[Management and representation]
(1) The management of general
partnerships shall be conducted by one
or more managing directors, delegated
or elected from among the members. If
no managing director has been
delegated or elected, all members shall
function as such.
(2) Any clause of the memorandum of
association to appoint a non-member to
serve as a managing director, or
provides for the appointment of such
person shall be null and void.
Section 3:145
[Functions of managing directors]
(1) Each managing director may act
independently. Managing directors may
raise an objection against the planned or
executed actions of another managing
director. In such cases, the meeting of
members shall have powers to override
the action in question. With the
exception of urgent measures, the
planned measure may not be taken until
a resolution is adopted by the meeting of
members.
(2) Where according to the
memorandum of association several
managing directors are to act together,
and there is no consensus among them,
any one of the managing directors shall
be entitled to request a decision on the
issue by the meeting of members.
Urgent measures may be taken
independently by the managing
directors. All other managing directors
shall be informed of such measures
without delay.
Section 3:146
[Cases of termination of membership]
In addition to the common provisions
relating to business associations,
membership shall cease to exist:
a) upon mutual agreement of the
members;
b) upon withdrawal of the member;
c) upon transfer of partnership share;
d) upon death or dissolution of the
member;
e) upon the occurrence of any grounds
for exclusion or any reason giving cause
to conflict of interest.
Section 3:147
65
[Cancellation of membership]
(1) Membership may be terminated by
giving at least three months’ notice in
writing. Any exclusion or restriction of
this right in a partnership established for
an indefinite duration shall be null and
void.
(2) Members may terminate their
membership in writing, indicating the
reason, if any other member of the
partnership is engaged in a serious
breach of the memorandum of
association or in any conduct which
seriously endangers cooperation with
such member or the achievement of the
purpose of the partnership.
(3) The partnership may bring action
for the annulment of the termination of
membership within a preclusive period of
fifteen days from the effective date of the
notice.
Section 3:148
[Transfer of partnership share]
Any member of a partnership may
assign his share (rights and obligations)
in the partnership, or a part thereof,
either to another member or to a third
party. The contract of transfer shall be
executed in writing. The contract of
transfer shall take effect upon the
amendment of the memorandum of
association in accordance with the
transfer.
Section 3:149
[Death or dissolution of a member]
Based on an agreement with other
members of the partnership, the heir of a
member who has died, or the successor
of a member that has ceased to exist,
may join the partnership as a member.
The heir or successor shall not be
required to provide capital contribution
upon gaining membership.
Section 3:150
[Settlement upon the termination of
membership]
(1) If membership is terminated, the
partnership must settle accounts with the
former member, or with the member’s
heir or successor, except if the
partnership share is transferred, or if the
member’s heir or successor joined the
partnership.
(2) In the settlement process the
market value of the partnership’s assets
at the time of termination of membership
has to be determined, and the part
corresponding to the member’s capital
contribution shall be paid to the former
member, or to the member’s heir or
successor, in cash within three months
from the time of termination of
membership.
(3) Any provision of the instrument of
constitution which excludes or restricts
the obligation of settlement, or alters the
rules thereof to the detriment of the
member relative to the provisions of this
Act shall be null and void.
Section 3:151
[Liability for the debts of the
partnership upon the termination of
membership]
(1) A former member of the
partnership - including the successor of
a dissolved member, who did not join
66
the partnership - shall remain to be liable
for the partnership’s liabilities arising
prior to the termination of his
membership within a preclusive period of
five years, in the same way as before
the termination of his membership.
(2) The heir of a deceased member
who did not join the partnership, shall
remain to be liable for the partnership’s
liabilities arising prior to the time of his
death within a preclusive period of five
years, in accordance with the provisions
on inheritance debts.
Section 3:152
[Dissolution of a partnership without
succession]
(1) Apart from the general cases of
dissolution of a legal person without
succession, a general partnership shall
be dissolved without succession if only
one partner remains, and the
partnership does not apply for the
registration of a new member at the
court of registry within a preclusive
period of six months from that time.
(2) Until the new member is registered,
or failing this until the time of dissolution
without succession or until a liquidator is
appointed the sole remaining member is
entitled to decide matters falling within
the competence of the meeting of
members, and shall be regarded as the
partnership’s executive officer, provided
that he is able to meet the requirements
pertaining to executive officers. If no
such member remains in the
partnership, the court of registry shall
appoint a supervising commissioner for
the partnership.
Section 3:153
[Conversion between general
partnerships and limited partnerships]
(1) The conversion of any general
partnership into a limited partnership or
any limited partnership into a general
partnership is subject to the amendment
of the memorandum of association,
irrespective of the provisions on the
transformation of business associations.
(2) If, in connection with the
conversion of a general partnership into
a limited partnership, the liability of a
member who becomes the limited
partner shall remain to have unlimited
liability for the partnership’s debts arising
before the conversion within a preclusive
period of five years.
(3) Financial settlement with the
members who do not wish to participate
in the partnership in its new form shall
be governed by the provisions
applicable to the termination of
membership.
TITLE XII
LIMITED PARTNERSHIPS
Section 3:154
[Definition of limited partnerships]
By virtue of the memorandum of
association for the establishment of a
limited partnership (betéti társaság or
bt.), the members of the partnership
agree to make available to the
partnership the capital contribution
necessary for its activities, and at least
one of the partners (hereinafter referred
67
to as „general partner”) undertake joint
and several liability together with the
other general partners for the
partnership’s obligations not covered by
the assets of the partnership, while at
least one other partner (hereinafter
referred to as „limited partner”) is not
liable for the obligations of the
partnership, unless this Act provides
otherwise.
Section 3:155
[Rules applicable to limited
partnerships]
The provisions on general
partnerships shall also apply to limited
partnerships subject to the exceptions
set out under this Title.
Section 3:156
[Management]
A limited partner may not serve as the
partnership’s executive officer.
Section 3:157
[Changes in member’s liability]
If the partnership’s general partner
becomes a limited partner, he shall
remain liable in accordance with the
provisions applicable to the general
partner within a preclusive period of five
years from the date of becoming a
limited partner for the partnership’s
debts arising before the change.
Section 3:158
[Dissolution of a partnership without
succession]
(1) Apart from the general cases of
dissolution of a legal person without
succession, a limited partnership shall
be dissolved without succession if the
membership of all general partners and
all limited partners ceases to exist, and
the partnership does not notify the court
of registry within a preclusive period of
six months from the time when its
memorandum of association was
amended so as to reinstate the
conditions for functioning as a limited
partnership, or that the limited
partnership has been converted into a
general partnership.
(2) If the partnership is left without an
executive officer for the lack of any
general partner or limited partner, or due
to the number of members being
reduced to one, until the partnership’s
memorandum of association is
amended, or failing this until the time of
dissolution without succession or until a
liquidator is appointed, the member who
meets the statutory requirements
prescribed for executive officers shall be
regarded as the partnership’s executive
officer. In that case, the limited partner
may also serve as the partnership’s
executive officer. If no such member
remains in the partnership, the court of
registry shall appoint a supervising
commissioner for the partnership.
TITLE XIII
PRIVATE LIMITED-LIABILITY
COMPANIES
Section 3:159
68
[Definition of private limited-liability
companies]
Private limited-liability companies
(korlátolt felelősségű társaság or kft.) are
business associations founded with an
initial capital consisting of capital
contributions of a predetermined
amount, in the case of which the liability
of members to the company extends
only to the provision of their initial
contributions, and to other contributions
set out in the memorandum of
association. Unless otherwise provided
for in this Act, members shall not bear
liability for the company’s obligations.
Chapter XXIII
Foundation of the Company
Section 3:160
[Prohibition of public invitation]
Members may not be solicited by
public invitation.
Section 3:161
[Definition and amount of initial capital
and core deposit]
(1) The capital contribution of
members is provided in the form of core
deposits. The capital contributions of
members may differ in terms of value,
however, the amount of each
contribution may not be less than one
hundred thousand forints.
(2) Each member shall have one core
deposit.
(3) Where several persons have
agreed to provide a core deposit
collectively, their liability for providing
such core deposit shall be joint and
several.
(4) The core deposits together
comprise the initial capital, which may
not be less than three million forints.
Section 3:162
[Provision of capital contribution in
cash]
(1) Where according to the
memorandum of association a member
is required to provide less than half of
their respective cash contribution before
the application for registration is
submitted, or if the memorandum of
association provides for a time limit of
over one year from the time of
registration of the company for making
available the part of the cash
contribution that was not paid before the
application for registration is submitted,
the company shall not be allowed to pay
any dividend insofar as the unpaid profit
calculated relative to the members’ core
deposits according to the provisions on
the payment of dividends reaches the
initial capital together with the cash
contributions which the members have
already paid up.
(2) In the case provided for in
Subsection (1), members shall bear
liability for the company’s debts up to the
unpaid part of their cash contribution.
Section 3:163
[Asset contribution]
(1) If the value of asset contributions at
the time of foundation reaches or
exceeds half of the initial capital, it shall
69
be made available to the company in its
entirety before the time of submission of
the application for registration.
(2) If the asset contribution was not
made available to the company in its
entirety at the time of foundation, the
remaining asset contribution shall be
provided by the time specified in the
memorandum of association. Where the
memorandum of association provides for
a time limit of more than three years
from the time of registration, the part
exceeding the three-year period shall be
null and void.
Chapter XXIV
Business Share
Section 3:164
[Definition of business shares]
(1) Business share means the whole
of rights and obligations arising in
connection with the core deposit.
Business shares shall come to existence
upon the company’s registration.
(2) The business shares of members
shall be consistent with their respective
capital contributions. Identical
membership rights shall be attached to
equivalent business shares.
Section 3:165
[Jointly owned business shares]
(1) One business share may be owned
by more than one person. These
persons shall be treated as a single
member from the standpoint of the
company; their rights may be exercised
only by their appointed representative,
and they shall bear joint and several
liability for the member’s obligations. The
joint holders of a business share shall
appoint their representative from among
themselves by way of exercising voting
rights in the percentage of their
respective ownership share.
(2) The appointed representative shall
notify the company of all changes in the
person or ownership ratio of co-owners
of a business share. A change in the
person of the appointed representative
shall be reported to the company by the
new representative.
Section 3:166
[Transfer of business share among
members]
(1) Business shares may be freely
transferred among the members of the
company.
(2) Where the members are afforded
the right in the memorandum of
association to acquire a business share
offered for sale in exchange for money
in priority before third party buyers, such
transaction shall be governed by the
provisions on the right of preemption.
This right shall accrue to members as
commensurate with the percentage of
their business shares.
Section 3:167
[Transfer of business shares to third
persons]
(1) Business shares may be
transferred to third persons only if the
member concerned has paid up his
capital contribution in full, with the
70
exception where such transfer is
effected in consequence of the
termination of membership due to the
member’s failure to provide the capital
contribution or supplementary payment,
or due to exclusion.
(2) Where the right to acquire a
business share offered for sale in
exchange for money is accrued to other
members, the company, or a person
designated by the company, they may,
in this order, exercise that right
according to the provisions on the right
of preemption. Any transfer of that right
shall be considered null and void. The
right to acquire a business share in
priority before third party buyers shall
accrue to members as commensurate
with the percentage of their business
shares.
(3) As regard the exercise of the right
to acquire a business share in priority
before third party buyers by the
company, the appointment of a third
party for exercising such right shall be
decided by the members’ meeting.
(4) An action for declaring a contract
null and void that was concluded in
violation of the right to acquire a
business share in priority before third
party buyers may only be brought within
a preclusive period of one year following
the date of the contract.
(5) If the member concerned, or the
company or a person appointed by the
company fails to make his position
known, respectively, within fifteen or
thirty days after the offer is
communicated, he shall be considered
to have forfeited such right.
(6) Where the company’s consent is
required under the memorandum of
association for the transfer of a business
share to a third party buyer, the granting
of such consent shall be decided by the
members’ meeting. If the company fails
to respond within a period of thirty days
after receipt of notice for the proposed
transfer, consent shall be considered to
have been granted. Any clause of the
memorandum of association to provide a
longer time limit shall be null and void.
(7) The transfer of business shares to
third party buyers in exchange for money
cannot be validly excluded in the
memorandum of association.
(8) The provisions contained in
Subsections (2)-(6) shall also apply to
the transfer of business shares within
the framework of enforcement.
Section 3:168
[Common provisions relating to the
transfer of business shares]
(1) Transfer of business shares shall
be executed in writing. The
memorandum of association need not
be amended as a result of any transfer
of business shares.
(2) In order for the change of
ownership and date thereof to be
entered in the register of members, the
party acquiring the business share shall
notify the company within eight days.
The notice shall be executed in an
authentic instrument or a private deed
representing conclusive evidence, and
the business share transfer contract
shall be attached. The notice, in addition
to the fact of acquiring the business
71
share, shall also contain a statement
that the party acquiring the business
share acknowledges the provisions of
the memorandum of association as
binding.
Section 3:169
[Effects of the transfer of business
shares]
(1) In the event of the transfer of
business shares, the rights and
obligations of the transferor attached to
his membership shall pass to the party
acquiring the business shares.
(2) A change in the person of a
member stemming from the transfer of a
business share shall take effect in
respect of the company from the date
when notified; the rights and obligations
arising out of or in connection with
membership shall accrue to the new
holder of the business share from the
date of notification, irrespective of
registration.
Section 3:170
[Inheritance and transfer of business
shares to the successor]
(1) In the event of a member’s death,
the heir, or if the member is a legal
person, upon the transfer, merger or
division of such legal person, or in the
event of succession in respect of its
business share on the basis of law, the
successor may request the managing
director to be entered in the register of
members upon providing proof of
inheritance or succession.
(2) The managing director may refuse
to register the heir or the successor if the
persons authorized under the
memorandum of association provide a
statement on the acquisition of the
business share according to the
conditions laid down in the
memorandum of association within a
preclusive period of thirty days from the
date of the heir’s or successor’s
application for registration taking effect,
and if they pay the market value of the
business share to the heir or successor.
Any clause of the memorandum of
association to provide a time limit longer
than thirty days shall be null and void.
Section 3:171
[Effect of the dissolution of a legal
person member without succession on
the business share]
Where a legal person member is
dissolved without succession and its
business share did not get transferred
either before its removal from the
registry or upon property distribution
proceedings covering the business
share as well, the company shall either
withdraw the business shares in
question or shall distribute them among
the members in the percentage of their
capital contribution.
Section 3:172
[Business shares held in community
property]
(1) Where a member has acquired
his/her business share funded from
community property, in a matrimonial
property action the court may award a
business share or part of a business
share to the non-member spouse - upon
72
request - according to the provisions of
this Act and the memorandum of
association on the transfer of business
shares, in which case the right to acquire
a business share in priority before third
party buyers and the requirement to
provide the core deposit in full shall not
apply.
(2) The provisions contained in
Subsection (1) shall also apply if the
spouses can agree on the distribution of
marital property with respect to the
business share.
Section 3:173
[Division of business shares]
(1) Business shares may be divided:
a) in the case of transfer;
b) in the event of succession upon the
division of a legal person member, in
respect of its business share;
c) in the case of inheritance;
d) upon the distribution of marital
property;
e) upon dissolution without succession
in the absence of a new holder.
(2) The division of business shares
shall be subject to the consent of the
members’ meeting.
(3) Any provision of the memorandum
of association contrary to the rules
contained in Subsections (1) and (2)
shall be null and void.
Section 3:174
[Conditions for the acquisition of own
business shares]
(1) Private limited-liability companies
may acquire their own business shares
by way of transfer by decision of the
members’ meeting.
(2) The company may purchase its
own business shares from its assets in
excess of the initial capital. The
company may not acquire its own
business shares if it is not authorized to
pay out any sums in dividends. The
annual report and the interim balance
sheet may be taken into consideration
for allocating funds for covering the
consideration for the acquisition of own
business shares within the six-month
period following the balance sheet date.
(3) The company may acquire
business shares for which the capital
contribution has been provided in full.
(4) The amount of capital contributions
underlying the company’s own business
shares may not exceed fifty per cent of
the initial capital.
Section 3:175
[Rights attached to own business
shares]
(1) A company may not exercise
membership rights in connection with its
own business shares; such business
shares shall be disregarded for the
purposes of quorum requirements.
(2) The company shall not be entitled
to dividends on its own business shares.
Any dividend that is payable on the
company’s own business shares shall be
distributed among the members entitled
to draw dividends in the percentage of
their capital contribution.
(3) Within a period of one year
following the purchase thereof, the
company shall alienate the business
73
shares acquired for consideration or
shall convey them to the members in the
percentage of their capital contributions,
without compensation, or shall withdraw
such business shares pursuant to the
rules of capital reduction.
Section 3:176
[Withdrawal of business shares]
(1) The decision for the withdrawal of
business shares lies with the supreme
body, in consequence of which the rights
and obligations arising out of or in
connection with the business shares,
and the membership of the holder of
such business shares shall be
terminated.
(2) Upon the withdrawal of business
shares, the initial capital shall be
reduced by the amount of the core
deposit underlying the business shares
in question.
Section 3:177
[Sale of business shares]
(1) If a member is excluded from the
company by order of the court, or if
membership is terminated due to the
member’s failure to provide the capital
contribution or supplementary payment,
the business share of such member
must be disposed of.
(2) The former member and the
company shall agree within fifteen days
from the date of termination of
membership on the conditions and on
the mode of sale. The agreement shall
fix the time limit within which the
business share must be disposed of which
may not exceed three months -,
and the minimum selling price, which
may not be less than the total of the
capital contribution and supplementary
payment that the former member failed
to provide. If no agreement is reached
within the prescribed time limit, or if the
business share is not disposed of within
the time limit fixed in the agreement, the
company shall dispose of the share in
question by way of public auction within
forty-five days following the deadline
prescribed for the agreement or for the
sale.
(3) In the interest of carrying out the
sales procedure the company shall be
entitled to introduce measures and make
statements as deemed necessary.
Section 3:178
[Auction notice]
(1) If the business share is sold by way
of auction, the company shall publish an
auction notice at least eight days before
the scheduled date of the auction.
(2) The auction notice shall contain:
a) the company’s name and registered
office;
b) the place and time of the auction;
c) important particulars of the business
share offered;
d) the reserve price; and
e) terms and conditions of payment of
the purchase price.
(3) The reserve price may not be lower
than the sum the former member owes
to the company due to his failure to
provide the capital contribution and
supplementary payment.
Section 3:179
74
[Implementation of the auction]
(1) Auctions shall be held in the
presence of a notary public. The notary
shall execute the auction report in an
authentic instrument.
(2) Apart from the former member any
person may bid for purchasing the
business share. The price offered may
not be lower than the reserve price. The
binding period of the highest bidder shall
cover the time until acceptance could
normally have been expected, taking
also into account any right of preemption
that may exist for the business share in
question.
(3) Based on the highest bid, a
member of the company, the company
itself and a third person designated by
the company may exercise the right to
acquire the business share in priority
before others in accordance with the
provisions on the transfer of business
shares to third persons. If the entitled
persons did not exercise such right, the
highest bid made in the auction shall be
accepted.
(4) In the event where the business
share is sold by auction, the buyer shall
pay the purchase price to the company,
following which the company shall settle
with the former member.
Section 3:180
[Allocation of the purchase price
received]
(1) From the purchase price the
company is entitled to lay claim to the
capital contribution and supplementary
payment that the former member failed
to provide. If the purchase price exceeds
that amount, the company is entitled to
cover its costs of the sales procedure
and the remaining sum shall be due to
the former member.
(2) If the purchase price received is
insufficient to cover the costs of sale in
accordance with Subsection (1), the
former member shall reimburse the
company for the sum that the company
was unable to recover from the purchase
price.
Section 3:181
[Unsuccessful auction]
(1) If no bid is received in the auction
covering at least the reserve price, the
auction shall be considered
unsuccessful.
(2) Within a period of six months from
the date of exclusion of a member or
from the termination of his membership,
the business share may be offered for
sale by public auction anytime and
without any limitation.
(3) If either of the auctions fail, the
company shall be entitled to withdraw
the business share within thirty days.
(4) If the business share of a former
member is not sold within a period of six
months from the date of exclusion of the
member or from the termination of his
membership, the company shall
withdraw the business share. If the
business share is withdrawn, the former
member shall be entitled to lay claim his
portion of the company’s capital
according to the provisions on the
allocation of the purchase price received
from the sale of the business share.
75
Chapter XXV
Auxiliary Services and
Supplementary Payment
Section 3:182
[Auxiliary services]
(1) If a member is personally involved
in the company’s activities in the
absence of a special contract to that
effect, compensation may be requested
for such involvement in accordance with
the relevant provisions of the
memorandum of association. The
company may demand compensation
from a member for the omission of
personal involvement if this is permitted
by the memorandum of association.
(2) The transfer of a business share
shall terminate the obligation to perform
auxiliary services, unless the party
acquiring the business share assumes
such obligation with the consent of the
company.
Section 3:183
[Supplementary payments]
(1) If the memorandum of association
contains provisions to authorize the
members’ meeting to order an obligation
upon the members to provide
supplementary capital contributions in
order to cover losses, the maximum
amount payable by members on that
basis, as well as the frequency of
performing supplementary capital
contributions shall be specified,
(2) The method as well as the
timetable and deadlines for performing
supplementary capital contributions shall
be specified in the resolution of the
members’ meeting on ordering
supplementary payments. The amount
of supplementary capital contributions
shall not be deemed to increase the
members’ core deposits. Supplementary
payments may also be provided in the
form of non-monetary contribution in due
compliance with the regulations
pertaining to asset contributions.
(3) The obligation of supplementary
capital contributions shall be established
and performed consistent with the
percentage of core deposits.
(4) The provisions on non-performance
of a member’s capital contribution shall
apply to any failure to provide
supplementary capital contributions in
due time.
(5) Supplementary capital
contributions which are not required to
cover losses shall be repaid to the
members listed in the register of
members. Such repayment may take
place after full payment of all capital
contributions. Supplementary capital
contribution applicable to a member’s
own business share shall not be repaid.
Chapter XXVI
Distributions Made by the
Company
Section 3:184
[Payment to the benefit of members]
(1) The company may effect any
distribution from its own funds to a
76
member, on account of his membership,
during the company’s existence solely in
the cases defined in this Act, with the
exception of the reduction of the initial
capital, from the taxed profit for the
current year, or from the taxed profit
supplemented with available profit
reserves from the current year. No
distribution shall be made if the
company’s adjusted equity is below its
initial capital or it would be reduced to
drop below the initial capital if the
distribution was made, of if the
distribution would jeopardize the
company’s solvency.
(2) Any payment made in cash or
otherwise shall be construed as
distribution.
(3) Any distribution made in
contradiction of Subsection (1) shall be
repaid to the company.
(4) The provisions contained in
Subsections (1)-(3) shall also apply if the
member receives any payment for
reasons other than his membership.
Section 3:185
[Dividend]
(1) Members shall be entitled to
receive a share from the company’s own
funds that is available for distribution to
the benefit of members, and has been
ordered for distribution by the members’
meeting, in the percentage consistent
with their capital contribution (hereinafter
referred to as „dividend”). Dividends
shall be paid to the members entitled to
exercise membership rights with respect
to the company at the time of decision
for the payment of dividends. Members
shall be entitled to receive dividends in
the proportion of the capital contributions
they have already paid up.
(2) The members’ meeting shall decide
on the payment of dividends
simultaneously with the approval of the
financial report.
Section 3:186
[Interim dividend]
(1) The members’ meeting may adopt
a decision for the payment of interim
dividends between the approval of two
consecutive financial reports if:
a) according to the interim balance
sheet, the company has funds sufficient
to cover such interim dividends;
b) the amount distributed does not
exceed the amount of profits earned
after the closing of the books of the
financial year to which the last financial
report pertains, and/or the amount
supplemented with the available profit
reserves; and
c) the payment of such interim
dividends may not result in the
company’s adjusted equity to drop below
its initial capital.
(2) Interim dividends are paid by
recommendation of the managing
director. If the company has a
supervisory board, the prior consent of
the supervisory board is required for the
recommendation of the managing
director.
(3) If according to the annual account
prepared after the distribution of interim
dividends, there was no justification for
the payment of dividends, such
77
distribution must be returned by the
members.
Section 3:187
[Prohibition of derogations]
Any clause of the memorandum of
association to provide conditions which
are more favorable for the members
relative to what is contained in this
Chapter relating to distributions made by
the company shall be null and void.
Chapter XXVII
Organizational Structure of
Companies
Section 3:188
[Members’ meeting]
(1) The supreme body of a private
limited-liability company is the members’
meeting.
(2) The members’ meeting shall have
exclusive competence for the approval
to conclude contracts which take place
between the company and one of its
members, its managing director,
supervisory board member, auditor, or
their close relatives.
Section 3:189
[Mandatory convocation of the
members’ meeting]
(1) The managing director shall
without delay convene the members’
meeting, or initiate its decision-making
process without having to hold a
meeting in order to provide for the
necessary measures whenever it comes
to his attention that:
a) the company’s equity dropped to
half of the initial capital due to losses;
b) the company’s equity dropped
below the amount limit defined by law;
c) the company is on the brink of
insolvency or has stopped making
payments; or
d) the company’s assets do not cover
its debts.
(2) In the cases provided for in
Subsection (1), members are required to
adopt decisions, in particular,
concerning the subscription of
supplementary capital contributions or
on securing the initial capital in other
ways, on any reduction of the initial
capital, or in the absence of all these, on
the company’s transformation, merger,
division or dissolution without
succession. The related resolutions of
the members’ meeting shall be carried
out within three months.
(3) If the reason referred to in
Paragraph a) of Subsection (1), on
account of which the members’ meeting
was called, is not eliminated within three
months following the conclusion of the
members’ meeting, the company’s
equity must be reduced.
Section 3:190
[Agenda]
(1) The invitation of members to the
members’ meeting shall contain the
agenda of the meeting. The invitation
shall be sent at least fifteen days in
advance. The memorandum of
78
association shall not specify a time limit
of less than three days.
(2) Where a member proposes certain
additions to the agenda in accordance
with the provisions on setting the items
of the agenda, the matter proposed shall
be construed to have been placed on
the agenda if such proposal is delivered
to the members and the managing
director at least three days in advance.
Section 3:191
[Reconvened members’ meeting]
(1) If the members’ meeting fails to
have a quorum, the reconvened
members’ meeting shall have a quorum
for the issues of the original agenda
irrespective of the voting rights
represented by those present, if called
for a date following the original time by
not less than three and not more than
fifteen days. Any provision of the
memorandum of association providing
for a convocation time limit of less than
three days shall be null and void.
(2) Members’ meetings reconvened
due to the lack of a quorum may also be
convened subject to the same conditions
as indicated in the invitation to the
original members’ meeting.
Section 3:192
[Use of electronic means of
communication in members’ meetings]
The discussions of members’
meetings held by way of electronic
means of communication and the
resolutions adopted shall be recorded so
that they can be retrieved at any time in
the future. Where a resolution adopted
by the members’ meeting has to be
submitted to the court of registry,
minutes shall be drawn up and it shall be
signed by the managing director.
Section 3:193
[Minutes of the members’ meeting]
(1) The responsibility for having
minutes taken at the members’ meetings
lies with the managing director, except if
the members’ meeting is held by way of
electronic means of communication. The
minutes shall contain the place and time
of the members’ meeting, the persons
present and the percentage of voting
rights represented by such persons,
significant events, statements and
resolutions taking place during the
members’ meeting, the number of votes
for and against resolutions, and the
persons abstaining from or not taking
part in the vote.
(2) The minutes shall be signed by the
managing director and a member
present at the meeting and elected to
witness the minutes.
Section 3:194
[Book of resolutions]
The managing director shall enter all
resolutions adopted by the members in
the book of resolutions. The resolutions
adopted by the members shall be
recorded in the book of resolutions
without delay.
Section 3:195
[Members’ right of access to the
documents]
79
(1) All members shall have access to
the minutes of members’ meetings and
the recordings made on members’
meetings held by way of electronic
means of communication, as well as the
book of resolutions, and may request
copies of the contents thereof. Any
provision of the memorandum of
association to the contrary shall be null
and void.
(2) Copies provided in writing shall be
signed by the managing director.
Section 3:196
[Management]
(1) The management of a company
shall be provided for by one or more
managing directors.
(2) If a company has more than one
managing directors, they shall be
entitled to handle management issues
independently, with the proviso that they
are entitled to raise an objection against
the planned or executed actions of any
other managing director. In that case the
objection shall be decided by the
members’ meeting, and the planned
measure cannot be carried out pending
such decision.
(3) If the memorandum of association
provides that all members are entitled to
exercise management and
representation, the members able to
comply with the general provisions
pertaining to executive officers shall be
considered managing directors.
(4) Where a company is left without a
managing director the members’
meeting may be convened and the
decision-making process without having
to hold a meeting may be initiated by
any member. If the members’ meeting is
not convened within thirty days following
the change, the members’ meeting shall
be convened at the request of any
member or creditor by the court of
registry, or the court shall delegate
powers to convene the members’
meeting or to initiate the decisionmaking
process without having to hold a
meeting upon such member.
Section 3:197
[Register of members]
(1) Managing directors shall maintain a
register on the members of the
company.
(2) The following shall be indicated in
the register of members:
a) the name, home address or
registered office, and the capital
contribution of each member;
b) in connection with jointly owned
business shares, the name and home
address or registered office of the
owners and their joint representative,
and the amount of their capital
contribution;
c) the amount of initial capital;
d) the provisions of the memorandum
of association on any supplementary
capital contributions and auxiliary
services, as well as on the restriction or
prohibition of the transfer of business
shares.
(3) The managing director shall enter
all changes in the data registered, and
shall submit the updated register of
members to the court of registry as well.
80
Chapter XXVIII
Increase and Reduction of Initial
Capital
Section 3:198
[Decision for the increase of initial
capital through additional financial
contributions]
(1) If each member has provided his
respective share of capital contribution
in full, the members may decide by a
resolution adopted by at least a threequarters
majority to increase the initial
capital through the provision of
additional capital contributions.
(2) The resolution shall contain:
a) the amount of increase;
b) an indication of the type and value
of the capital contribution required for
the increase of the initial capital;
c) in the case of asset contribution, a
description and the value of the asset to
be provided, indicating also the persons
entitled thereto;
d) an indication of the persons entitled
to provide cash contributions for the
eventuality where the holders of
preferential rights did not undertake to
provide the full amount of cash
contributions, including the share of
such designated persons in the capital
increase; and
e) date of payment of the capital
contributions.
(3) In the process of increasing the
initial capital through the provision of
additional capital contributions, the
regulations on the provision of capital
contributions, on the applicable
deadlines and consequences in the
event of delay, and on the liability for the
value of asset contributions shall be duly
applied.
Section 3:199
[Provision of capital contributions and
exercising preferential rights]
(1) Where the initial capital is
increased by financial contribution, the
members shall have preferential rights
within fifteen days following the date of
decision for the capital increase.
(2) If any member fails to exercise his
preferential rights within the prescribed
time limit, it may be exercised in his
stead by the other members within an
additional fifteen days. If all members
failed to exercise their preferential rights,
the members’ meeting shall designate
other persons upon whom to confer the
right to provide the financial contribution.
(3) Members shall be entitled to
exercise preferential rights in the
percentage of their capital contribution.
Section 3:200
[Amendment of the memorandum of
association upon the increase of capital]
(1) If the entitled parties have made
commitments in the resolution on the
capital increase for the provision of
capital contributions in a specific form
and in a specific amount, the company is
required to amend its memorandum of
association so as to reflect the increase
of capital. Without prejudice to the
preferential rights of members, a
decision for the increase of the initial
81
capital and for the amendment of the
memorandum of association may be
adopted in a single members’ meeting.
(2) The new members participating in
the capital increase shall supply a
statement executed in an authentic
instrument or in a private deed
representing conclusive evidence for
acknowledging the provisions of the
memorandum of association as binding.
Section 3:201
[Capital increase from assets in
excess of the initial capital]
(1) A decision may be adopted by at
least a three-quarters majority of the
members’ meeting to increase the
company’s capital from its assets
available in excess of the initial capital, if
the company’s increased initial capital
will not exceed the company’s equity,
and, according to the balance sheet of
the annual account prepared for the
previous financial year, or according to
the interim balance sheet of the current
year, there are sufficient funds available
for the capital increase. Cover for the
increase of capital shall be verified by
the company’s financial report or interim
balance sheet made out within six
months to date.
(2) Any increase of the initial capital
from assets in excess of the initial capital
shall increase the capital contributions of
members consistent with the percentage
of their previous contributions.
Section 3:202
[Decision for the reduction of initial
capital]
(1) Members may tender the decision
by at least a three-quarters majority for
the reduction of capital for the purpose
of withdrawal of equity, consolidating
losses or for increasing other capital
components. Where the reduction of
initial capital is subject to statutory
requirement on the grounds specified in
this Act, the members’ meeting shall
adopt a decision within thirty days after
learning of the reason therefor.
(2) The resolution shall specify:
a) the amount of reduction;
b) the core deposit of each member
after the capital reduction; and
c) the reason for the reduction.
(3) The capital contributions of
members shall be decreased by the
amount of reduction in the percentage of
their existing core deposits.
(4) The company may decide to
reduce its capital below the minimum
amount defined in this Act, if the capital
increase decided simultaneously with
the reduction of capital is implemented,
and hence the initial capital reaches at
least the minimum level prescribed in
this Act.
Section 3:203
[Disclosure of the decision for the
reduction of initial capital]
(1) The managing director shall notify
the court of registry of the reduction of
capital within thirty days thereof, and
shall take measures for the disclosure of
the capital reduction by way of public
notice at least on two occasions. The
two disclosures shall be made at least
thirty days apart.
82
(2) The public notice shall contain the
essence of the decision on the capital
reduction, and - if the company’s
creditors are likely to request safeguards
- a call to the company’s creditors to
make their request for safeguards
known.
(3) The company shall send a copy of
the public notice to the company’s
known creditors directly at the time of
publication of the first public notice.
Section 3:204
[Safeguards to creditors]
(1) The holders of any claim against
the company arising before the first
disclosure of a public notice on the
capital reduction may demand adequate
safeguards from the company with the
exception if:
a) the creditor’s claim is already
secured consistent with the risk related
to the reduction of the capital;
b) it is not justified in light of the
company’s assets and liabilities and
financial position after the capital
reduction;
c) capital reduction is carried out for
the purpose of re-allocation to a reserve
account of funds tied up over and above
the company’s initial capital, and the
company did not carry out capital
reduction inside the previous five-year
period for reasons of provisioning; or
d) capital reduction is mandatory.
(2) The reserve set aside from the
initial capital under Paragraph c) of
Subsection (1) may not exceed ten per
cent of the company’s initial capital. The
appropriated reserve created in this
fashion may be used to cover the
company’s losses or to increase the
company’s initial capital subsequently;
no payments to members are permitted
from this reserve.
(3) The company’s creditors shall file
any request for adequate safeguards in
connection with the reduction of the
company’s initial capital within a thirtyday
preclusive period following the
second publication of the notice.
(4) The company shall provide
adequate safeguards within eight days
following the deadline for filing the proof
of claim or, if a claim is refused, shall
deliver the resolution concerning the
refusal and the reasons therefor to the
creditor in question. The creditor
affected may file for the review of any
decision of rejection, or if the safeguards
provided are insufficient, to the court of
registry within a preclusive period of
eight days following receipt of the
resolution.
(5) Reduction of the initial capital may
not be registered until the creditor
entitled thereto is provided adequate
safeguards, or until the court ruling on
the refusal of the creditor’s request
becomes operative.
Section 3:205
[Failure of reduction of the capital]
(1) The reduction of capital shall be
considered to have failed if the company
fails to provide adequate safeguards
within the prescribed time limit to the
creditors entitled thereto. Failure of
reduction of the capital shall be notified
to the court of registry.
83
(2) If the statutory reduction of capital
has failed and the company fails to
eliminate the reasons for statutory
reduction within thirty days from the time
of failure, the company shall adopt a
decision for its transformation, merger,
division or dissolution without
succession.
Section 3:206
[Amendment of the memorandum of
association and registration of the
reduction of capital]
(1) The company may decide to
amend its memorandum of association
in accordance with the reduced capital if
no creditor’s claims have been notified
within the prescribed time limit, or if the
company has satisfied the creditors’
request for adequate safeguards. The
memorandum of association may be
amended by the resolution on the
reduction of capital if the company
satisfies the request of eligible creditors
for adequate safeguards.
The reduction of capital may be
registered if the company is able to
evidence the notification of creditors,
and that the eligible creditors received
adequate safeguards.
(3) Payments can be made to
members as a result of capital reduction
after the registration of the capital
reduction.
Chapter XXIX
Dissolution of a Company Without
Succession
Section 3:207
[Distribution of assets]
(1) In the event of dissolution of a
company without succession, from the
assets remaining after the satisfaction of
creditors, the supplementary capital
contributions shall be repaid first, and
then the remaining assets shall be
distributed among the members of the
company consistent with the percentage
of their core deposits contributed.
(2) If the company that will cease to
exist held its own business shares, the
commensurate part of assets shall be
distributed among the other members in
the percentage of their core deposits.
(3) If, upon commencement of
dissolution or upon an order of
liquidation, the initial capital of the
company has not yet been paid up in
full, the receiver in charge of the
dissolution proceedings or the liquidator
shall have the right to make outstanding
payments due with immediate effect,
and to order the performance thereof by
the members, if this is necessary in
order to satisfy the debts of the
company.
Chapter XXX
Single-member Companies
Section 3:208
[Establishment of single-member
companies]
(1) Where a private limited-liability
company is established by a single
person, the founder shall put the asset
84
contribution at the company’s disposal in
its entirety before the application for
registration is submitted. Any provision
of the charter document to the contrary
shall be null and void.
(2) Where all shares of a multimember
company are acquired by a
single person, this too shall become a
single-member company. As of that time
the company shall continue to operate
as a single-member company, however,
a charter document shall be prepared
instead of a memorandum of association
if no new member is registered within
one year from the time of being
converted into a single-member
company.
(3) As regards the liability of the single
member of a private limited-liability
company the provisions on qualified
majority control shall apply mutatis
mutandis.
Section 3:209
[Operating procedures of singlemember
companies]
(1) The contract between a singlemember
company and its sole member
shall be executed in an authentic
instrument or in a private deed
representing conclusive evidence.
(2) A single-member company may not
acquire its own business shares.
(3) If, due to the division of business
shares or the increase of initial capital
new members are admitted into a singlemember
company and in this way it
becomes a company with multiple
members, the members shall convert the
charter document into a memorandum of
association.
TITLE XIV
LIMITED COMPANIES
Chapter XXXI
General Provisions
Section 3:210
[Definition of limited companies]
Limited companies (részvénytársaság)
are business associations founded with
a share capital consisting of shares of a
pre-determined number and nominal
value, where the obligation of
shareholders to the limited company
extends to the provision of funds
covering the nominal value or the
accounting par value of shares. Unless
otherwise provided for in this Act,
shareholders shall not be held liable for
the limited company’s obligations.
Section 3:211
[Types of limited companies]
(1) Any limited company whose shares
are listed on a stock exchange shall be
recognized as a public limited company
(nyrt.).
(2) Any limited company whose shares
are not listed on any stock exchange
shall be recognized as a private limited
company (zrt.).
(3) A decision adopted by at least a
three-quarters majority of the general
85
meeting is required to change the
corporate form of a limited company;
such decision shall enter into effect in
the case of conversion of a private
limited company into a public limited
company upon the admission of the
company’s shares for trading on a stock
exchange, and vice versa, upon the
delisting of the company’s shares in the
case of conversion of a public limited
company into a private limited company.
Section 3:212
[Share capital]
(1) The sum total of the nominal value
of all shares shall comprise the share
capital of a limited company.
(2) The share capital of a private
limited company may not be less than
five million forints. The share capital of a
public limited company may not be less
than twenty million forints.
(3) The amount of cash contributions
at the time of foundation may not be less
than thirty per cent of the share capital.
(4) Any issue of shares below the
nominal value is null and void. Liability
as regards third parties for damages
resulting from the issue of shares below
the nominal value shall fall upon the
founders if it takes place before the
company is registered, on the grounds
of non-contractual liability, or it shall fall
upon the company if such shares are
issued after the company is registered. If
there is more than one founder, their
liability shall be joint and several.
(5) The nominal value of shares may
be determined as a percentage of the
prevailing share capital of the company
(capital stock). In that case only the
percentage the share represents in the
company capital shall be indicated on
the share, whereas the amount of the
share capital need not be shown.
Chapter XXXII
Shares
1. General rules, types of shares
Section 3:213
[Shares]
(1) Shares are equity securities
representing membership rights in the
issuing limited company, they are
registered, have a nominal value, and
are tradable.
(2) One share may have several
owners, who shall be treated as a single
shareholder in respect of the limited
company; their rights may only be
exercised by their joint representative
and they shall bear joint and several
liability for the obligations of
shareholders.
Section 3:214
[Types of shares]
(1) The shares of private limited
companies may be either printed on
paper or may be registered as
dematerialized shares; printed share
certificates may be converted and
recorded as dematerialized shares, and
vice versa, dematerialized shares may
be converted into printed securities.
86
(2) The shares of public limited
companies may be issued in the form of
dematerialized shares.
Section 3:215
[Definition of printed shares and
dematerialized shares]
(1) Printed shares are certificates
produced in a duly authorized printshop,
which shall inter alia contain:
a) the corporate name and registered
office of the issuing limited company;
b) the serial number, series and
nominal value of the share;
c) the name of the first holder;
d) the date of the articles of
association, or the amendment thereof,
on which the issue is based;
e) the amount of the share capital, or
the percentage the share represents in
the capital, and the number of shares
issued;
f) signatures of the authorized
signatories of the issuing limited
company; and
g) the securities codes.
(2) If so required, printed share
certificates shall contain:
a) the rights attached to the type of
shares, class of shares or series of
shares in question, as set out in the
articles of association;
b) any restriction of voting rights;
c) in the case of restriction on the
transfer of the share, or making the
same subject to the consent of the
limited company, the content of such
restriction or the company’s right of
consent.
(3) Dematerialized shares are
dematerialized securities embodying the
content elements of printed share
certificates with the following exceptions:
a) the shareholder’s name and other
data required for identification are
contained in the securities account
maintained by a securities account
manager on behalf of the shareholder;
b) it does not have a serial number;
and
c) it does not have the signatures of
the authorized signatories of the issuing
limited company.
(4) In the event of any changes in the
particulars fixed in the share, the
company shall replace or overstamp the
printed share certificates affected by the
change in due compliance with the
provisions applicable to the increase of
capital, or shall modify the
dematerialized shares where
appropriate.
Section 3:216
[Conditions for the issue or crediting of
shares]
(1) Shareholders may demand the
disbursement of printed share
certificates due to them, or the crediting
of the dematerialized shares to their
securities account following registration
of the limited company, and the full
payment of the share capital or, if the
nominal value and the issue price of the
shares differ, the issue price of the
shares.
(2) Within a period of thirty days upon
fulfillment of the conditions contained in
Subsection (1), a limited company shall
87
take measures to produce the shares
without delay, even if such action has
not been demanded by shareholders.
(3) Any shares issued prior to
registration of the limited company,
and/or prior to full payment of the share
capital or the accounting par value of the
shares shall be null and void.
Section 3:217
[Global notes]
(1) Where printed securities are
produced in a single note embodying
several shares of the same series, as
provided by the articles of association or
if so requested by the shareholder, the
rights attaching to the shares contained
in the global note shall accrue to each
share individually.
(2) Upon the request of shareholders,
global notes may be divided into several
global notes of a smaller denomination
at a later point in time, or into shares of
the nominal value specified in the
articles of association for the series of
shares in question, provided that the
costs of such conversion are covered by
the shareholders in question.
Section 3:218
[Offering of shares]
(1) Shares may be offered publicly or
privately.
(2) The shares of private limited
companies may not be offered publicly.
Section 3:219
[Limiting the transfer of shares]
(1) Where a limited company restricts
the transfer of shares in its articles of
association, or if renders the transfer of
shares subject to the company’s
approval, these restrictions shall apply in
dealings with third parties if the
restriction, including the details, is clearly
discernable relying on the particulars of
the share, or of the securities account in
the case of dematerialized shares.
(2) Where preemption rights,
redemption rights or purchase options
are attached to shares under contract,
this shall be considered valid in respect
of the limited company or third parties if
this is clearly discernable relying on the
particulars of the share, or of the
securities account in the case of
dematerialized shares.
Section 3:220
[Transfer of shares upon the
company’s consent]
(1) Where the transfer of shares is
rendered conditional upon the
company’s approval under the articles of
association, it shall specify the reasons
under which such approval may be
refused. The decision on approval falls
within the competence of the
management board.
(2) If the management board fails to
respond within a period of thirty days
after the date of notification of the
intention to transfer the shares, consent
shall be considered to have been
granted.
Section 3:221
88
[Determining the rightful holder of a
share]
(1) In connection with the assignment
of ownership of printed share certificates
by means other than transfer, the
management board shall record the
transfer of title on the reverse side or
allonge of the certificates in question at
the new owner’s request, and if
supported by documentary evidence,
with reference to said documentary
evidence. Registering the change of
ownership by the management board
comprises part of the endorsement
chain.
(2) Where dematerialized shares are
acquired by means other than transfer,
the securities account manager shall
debit the previous shareholder’s
securities account and credit the shares
transferred to the securities account of
the new shareholder at the request of
the new shareholder based on the
document in proof of the acquisition.
2. Own shares
Section 3:222
[Own shares]
(1) Limited companies shall be entitled
to acquire their own shares up to twentyfive
per cent of the share capital. In
determining the holding of own shares,
the shares held by legal persons
controlled by the limited company
directly or indirectly shall also be
included as appertaining to the limited
company, in the ratio representing the
percentage of control. Furthermore,
shares acquired or held by their owner
for the benefit of the limited company
shall also be considered as appertaining
to the limited company.
(2) Limited companies shall not be
entitled to subscribe for shares of their
own issue in the process of foundation
or when increasing the share capital.
(3) The shares whose nominal value or
accounting par value is not paid up or
made available in full may not be
acquired as own shares.
(4) A limited company may acquire its
own shares for consideration if the
conditions for the payment of dividends
are satisfied. The company shall be
allowed to pay for its own shares from
the assets available for payment as
dividends.
Section 3:223
[Decision on the acquisition of own
shares]
(1) Own shares may be acquired by
means of a contract for pecuniary
interest upon the general meeting
authorizing the management board in
advance to acquire them, expressly
specifying the type and class of shares
that can be acquired, their quantity and
nominal value, and the minimum and
maximum amounts of consideration
payable. Authorization may be granted
for a period of eighteen months.
(2) The prior authorization of the
general meeting is not required if the
acquisition of shares is necessary to
prevent an imminent serious threat to
which the limited company is exposed.
This provision shall not apply to take-
89
over bids launched for the acquisition of
a public limited company.
(3) No prior authorization of the
general meeting is required for the
acquisition of the limited company’s own
shares if acquired by way of court
proceedings for the settlement of any
legitimate claim of the company, or in
the process of transformation.
(4) The management board shall
present at the next general meeting the
reasons for which the own shares had to
be acquired, the quantity and aggregate
nominal value of the shares, the
percentage they represent in the
company’s share capital, and also the
price paid for the shares.
Section 3:224
[Unlawful acquisition of own shares]
Where a limited company has
acquired its own shares unlawfully, the
shares thus acquired or, if their quantity
cannot be determined, all of its own
shares must be withdrawn by way of
reducing the share capital within one
year of the date on which they were
acquired.
Section 3:225
[Exercising shareholder rights with
own shares]
(1) Own shares shall not entitle the
limited company to exercise shareholder
rights.
(2) Own shares shall not count for the
purposes of quorum of the general
meeting, or in connection with exercising
preferential subscription (takeover)
rights.
(3) Any dividend that is payable on the
company’s own shares shall be taken
into account at nominal value as
pertaining to shareholders with respect
to the dividends payable on their shares.
Section 3:226
[Prohibition of derogations]
Any provision of the articles of
association which provides more lenient
requirements for the company relative to
the provisions of this Act for the
acquisition of own shares or as regards
the rights that may be exercised with
own shares shall be null and void.
3. Financial assistance for the
acquisition of shares
Section 3:227
[Financial aid restrictions]
Public limited companies shall be
allowed to provide financial assistance
to third parties for the acquisition of
shares issued by the public limited
company only under market conditions,
form the assets available for the
payment of dividends, provided that the
general meeting approved such decision
by at least a three-quarters majority
upon recommendation by the
management board.
4. Types of shares, classes of
shares, series of shares
Section 3:228
[Types of shares, classes of shares,
series of shares]
90
(1) Limited companies may issue the
following types of shares:
a) ordinary shares;
b) preference shares;
c) employee shares;
d) interest-bearing shares;
e) redeemable shares.
(2) Within the category of preference
shares, shares may belong to different
classes of shares according to the
shareholder rights to which the
preference pertains, and within the same
class of shares, shares of different
content or shares representing different
membership rights may be issued.
(3) Within one category or class of
shares, several series of shares may be
issued.
Section 3:229
[Ordinary shares]
(1) Ordinary shares mean shares other
than preferential, employee, interestbearing
or redeemable shares, or any
other types of shares specified in the
articles of association.
(2) The total nominal value of all
ordinary shares issued by limited
companies shall at all times be higher
than half of the limited company’s share
capital.
Section 3:230
[Preference shares]
(1) The articles of association of a
limited company may, in defining the
relevant conditions, provide for the issue
of shares which grant certain
preferences to their holders over other
types of shares.
(2) For preference shares, the articles
of association may define classes of
shares to afford the following:
a) dividend preference;
b) upon dissolution of the limited
company without succession, priority for
a share from the assets to be distributed;
c) preference related to voting rights;
d) priority for the appointment of
executive officers or supervisory board
members;
e) the right of preemption; and
f) any combination of the preferential
rights referred to in Paragraphs a)-e).
(3) The articles of association may
contain provisions - and shall specify the
conditions - for the issue of a series
within a class of preference shares,
where the shares will have to be
exchanged - at the request of the
shareholder - in accordance with the
articles of association, for shares within
another class of preference shares or for
ordinary shares, or where the shares
may be exchanged for shares within
another class of preference shares or for
ordinary shares by decision of the limited
company.
Section 3:231
[Dividend preference shares]
(1) From after-tax profits to be
distributed among shareholders, shares
carrying dividend preference shall entitle
their holders to dividends to a
preferential degree over shares
belonging to other categories and
classes of shares.
(2) Where the voting rights attached to
dividend preference shares are limited or
91
precluded under the articles of
association, and the limited company
does not pay dividends to holders of
dividend preference shares in any
financial year, or the dividend paid is
less than what should have been paid
based on the dividend preference
shares, voting rights attached to
dividend preference shares may be
freely exercised until the annual account
for the following financial year is
adopted.
Section 3:232
[Shares conferring prior voting right]
(1) Holders of shares conferring prior
voting right may exercise multiple voting
rights to the extent defined in the articles
of association. In respect of public
limited companies the voting rights
attached to one share may not exceed
the voting rights corresponding to the
nominal value of the share by a factor of
ten; any provision of the articles of
association to the contrary shall be null
and void.
(2) Certain resolutions of the general
meeting may be adopted solely upon the
simple majority vote of the holders of
shares present conferring prior voting
right with veto rights, or if there is only
one share conferring prior voting right in
issue, such resolutions may be adopted
if supported by the holder of this share.
Section 3:233
[Priority shares for the appointment of
executive officers or supervisory board
members]
(1) Holders of preference shares
carrying the right to appoint executive
officers are entitled - in the manner and
under the procedure specified in the
articles of association - to appoint one or
more members of the management
board, who will become members of the
management board upon formally
accepting the appointment.
(2) If the holders of preference shares
fail to appoint an executive officer under
the procedure and within the time limit
specified in the articles of association,
entitlement to appoint the executive
officer passes according to the general
provisions to the company body of
original entitlement.
(3) The holders of preference shares
shall also be entitled to remove the
management board members they have
appointed. Under the conditions laid
down in the articles of association, the
holders of preference shares shall be
liable to remove the management board
members they have appointed. If the
holders of preference shares fail to
comply with such obligation within the
time limit set out in the articles of
association, entitlement to remove the
executive officer passes to the company
body of original entitlement for the
removal of executive officers. Even in
such circumstances the holders of
preference shares shall be entitled to
appoint a replacement executive officer.
(4) Preference shares carrying
entitlement for the appointment of
executive officers may not be issued if
the powers of the management board
are exercised by a general director at
the limited company.
92
(5) The provisions of Subsections (1)(3)
shall also apply to the appointment
and removal of supervisory board
members pursuant to preference shares
carrying such entitlement.
(6) Public limited companies may not
issue any shares attaching privileges for
the appointment of executive officers or
supervisory board members.
Section 3:234
[Shares conferring right of preemption]
(1) The articles of association of
private limited companies may provide
for the introduction of a class of shares
which confer the right of preemption to
the holders of such shares with respect
to the shares of the issuer private limited
company when offered for sale in
exchange for money.
(2) If the shareholder fails to make his
position known within fifteen days after
the conditions for the sales offer,
including the price, are communicated,
he shall be considered to have forfeited
his preemption right.
Section 3:235
[Preference shares of public limited
companies]
Where a private limited company has
decided to convert into a public limited
company, the company’s preference
shares attaching privileges for the
appointment of executive officers or
supervisory board members, and its
preference shares with the right of
preemption, as well as any preference
shares collectively embodying
preferential rights other than dividend
preference with preferential right to any
liquidation surplus, shall be converted
into preference shares or ordinary
shares that can be issued by public
limited companies as well, before the
time of being listed on the stock
exchange.
Section 3:236
[Issue of employee shares]
(1) Limited companies may issue
employee shares and provide them to
full-time and part-time employees free of
charge or at a reduced price, below the
share’s nominal value.
(2) If dividend preference is conferred
to employee shares under the articles of
association, this right may be exercised
after the holders of shares of a class
with dividend preference attached.
(3) Employee shares may be issued
simultaneously with the increase of the
limited company’s share capital, not to
exceed fifteen per cent of the increased
share capital.
Section 3:237
[Transfer and inheritance of employee
shares]
(1) Employee shares may effectively
be transferred only to other employees
of the limited company, or to persons to
whom this right is afforded under the
articles of association on account of their
previous employment at the company.
(2) If the employment of an employee
is terminated, losing also his entitlement
to acquire employee shares, the
employee may transfer his employee
shares before the first general meeting
93
held after a period of six months
following the date of termination.
(3) In the event of death of the holder
of employee shares, the heir of the
employee may transfer such employee
shares before the first general meeting
held after a period of six months:
a) following the date of death of the
testator, if no probate proceeding is
held;
b) following the operative date of the
grant of probate adopted in probate
proceedings with full effect;
c) following the date when the
judgment of the court becomes final, in
the event of inheritance proceedings.
(4) If the former employee, or the heir,
failed to dispose of the employee share,
respectively, as provided for in
Subsection (2) or within the time limit
prescribed, the limited company may
adopt a decision during the general
meeting on the closure of the time limit
for the withdrawal of the employee
shares in question, or to sell the
employee shares converted into another
type of share. In that case, former
employees or their heirs shall be entitled
to the nominal value of their shares,
payable within thirty days from the date
of withdrawal or transfer of the shares in
question.
Section 3:238
[Interest-bearing shares]
(1) The articles of association may
provide for the issue of shares entitling
their holders to a pre-determined rate of
interest up to ten per cent of the share
capital.
(2) From the taxed profit of the current
year supplemented with available profit
reserves, holders of interest-bearing
shares shall be entitled - in addition to
other rights attached to the shares - to
interest calculated according to the
method shown on the shares after the
nominal value thereof. No interest may
be paid to shareholders if, in
consequence, the equity capital of the
company would drop below the share
capital of the limited company.
Section 3:239
[Redeemable shares]
(1) The articles of association may
provide for the issue of shares in a value
not exceeding twenty per cent of the
share capital that gives:
a) the limited company the right to
purchase;
b) the shareholders the right to sell; or
c) the right to purchase for the limited
company and the right to sell for the
shareholder.
(2) The limited company shall be able
to exercise its right to purchase or to
carry out its obligation arising in
connection with the shareholder’s right
to sell shares for which the shareholder
has paid the nominal value or the
accounting par value in full, and if the
shareholder in question has made
available his asset contribution to the
limited company.
(3) The limited company may not
exercise its rights arising from the right
to purchase and may not carry out its
obligations arising from the right to sell if
the limited company could not decide
94
the payment of dividends. The financial
report and the interim balance sheet
may be taken into consideration for
allocating funds necessary for exercising
the right to purchase or the right to sell
within the six-month period following the
balance sheet date.
(4) The company shall withdraw the
shares redeemed in accordance with the
rules on the reduction of share capital.
Section 3:240
[Other types of shares]
A limited company may resolve to
issue different types or classes of
shares, other than those provided for in
this Act, if it specifies in the articles of
association the contents and the extent
of membership rights attached to the
shares to be issued.
Equity Bonds2
Section 3:240/A3
(1) A limited company may issue
registered bonds in a value of up to half
of its share capital, which shall be
converted into shares upon the
subsequent occurrence of certain
objective requirements (equity bonds).
(2) The general meeting of the limited
company may authorize the
management board to the issue
automatically or conditionally converted
equity bonds.
2
Enters into force as under Section 39 of Act
CXXXV of 2013.
3
Enters into force as under Section 39 of Act
CXXXV of 2013.
5. Share certificates and interim
shares
Section 3:241
[Share certificate]
Before the time of registration of the
foundation of the limited company or the
increase of its capital, upon request
made by a person who provided capital
contribution, the company shall make
out a certificate which contains that
person’s name and the amount of capital
contribution provided, and - unless there
is evidence to the contrary - verifies the
rights and obligations of the person
indicated therein accrued in respect of
the limited company.
Section 3:242
[Definition of interim shares]
(1) Following the registration of a
limited company, or the registration of its
increase of the share capital by the court
of registry, interim shares shall be made
out for the amount of contribution
provided on shares subscribed or
undertaken to be received by
shareholders, for the period up to the full
payment of the share capital (increased
share capital) or the accounting par
value of the shares. Interim shares
issued prior to registration of the limited
company or in a value exceeding the
amount of financial contributions which
were actually provided shall be null and
void.
(2) Interim shares are treated as
securities, to which the regulations on
shares shall be applied, with the
95
exception that the transfer of interim
shares shall become valid in dealing
with the company only upon the
registration of the holder of such shares
in the register of shareholders.
Section 3:243
[Form and contents of interim shares]
(1) Interim shares may be either
printed on paper or may be registered as
dematerialized shares, as provided for
by the articles of association, regardless
of the type of the share in question.
(2) Where interim shares are issued in
a dematerialized form, such interim
shares may be credited to shareholder’s
securities account at the time when their
financial contribution, or the first
installment, is provided according to the
articles of association.
(3) The amount the shareholder has
paid up before the interim share is
issued shall be indicated on printed
interim shares, or in the securities
account in connection with
dematerialized interim shares. Any
additional financial contribution the
shareholder has provided after the issue
of interim shares shall be indicated - at
the shareholder’s request - on the
interim shares, or new interim shares
have to be issued in place of and upon
the cancellation of the previous interim
shares.
Section 3:244
[Rights attached to interim shares]
(1) Interim shares shall entitle their
holders to exercise shareholders’ rights
in proportion to the contribution which
they have already provided. The holders
of preference shares shall not be entitled
to any preferential rights until their
financial contribution has been paid in
full. In these cases the holders of
preference shares shall be entitled to
exercise shareholder rights afforded to
holders of ordinary shares.
(2) If a shareholder transfers his
interim shares to third parties, such
shareholder shall be liable toward the
limited company for the debts arising
from the contributions to be provided on
the shares subscribed or undertaken to
be received by him under surety
facilities. Where interim shares are
transferred several times, all former
shareholders shall be subject to surety
liability jointly and severally.
(3) When the shares are produced, the
management board shall request the
shareholders to surrender their printed
interim shares within the prescribed
deadline, and to collect their printed
share certificates. Where interim shares
are not surrendered in due time, the
company shall declare them ineffective
by means of a resolution adopted by the
management board. Printed share
certificates may be collected and
dematerialized shares are credited to
the shareholder’s securities account
after interim shares are surrendered and
rendered ineffective.
(4) Where interim shares are issued in
a dematerialized form, management
shall take action for having the interim
shares deleted from the central
securities account and from the
securities accounts alike.
96
6. Register of shareholders
Section 3:245
[Definition of register of shareholders]
(1) Limited companies shall keep a
register of shareholders, including
holders of interim shares, in which to
record the name and the home address
or registered office of shareholders, or
their proxy in the case of jointly owned
shares, the name and home address or
registered office of the joint
representative, the number of shares or
interim shares, and the percentage of
control of shareholders for each series of
shares.
(2) In the event of any change in the
particulars of an issued share, which is
also contained in the register of
shareholders, the management shall
update the register of shareholders
accordingly.
(3) The register of shareholders shall
be maintained by the management
board of the limited company. The
management board shall be entitled to
subcontract the keeping of the register
of shareholders; in the case of public
limited companies, it shall be published
along with the personal data of the
subcontractor.
Section 3:246
[Entries of the register of shareholders,
deletions, and the related legal effects]
(1) Shareholders may exercise
shareholder rights in dealings with the
limited company only upon being
registered in the register of
shareholders. The omission of
admission into the register of
shareholders shall not affect the
shareholder’s right of ownership of his
shares.
(2) Any shareholder who has been
formally identified must be registered in
the register of shareholders upon
request made to the keeper of the
register. A registered shareholder shall
be deleted from the register of
shareholders at his request.
(3) The keeper of the register of
shareholders may refuse to comply with
the request of a formally identified
person, if such person has acquired his
shares in violation of the regulations on
the transfer of shares set out by law or
the articles of association.
(4) Any data that is deleted from the
register of shareholders must remain
identifiable.
(5) The resolutions adopted in
connection with the register of
shareholders shall be construed as
corporate decisions.
Section 3:247
[Access to data recorded in the
register of shareholders]
(1) The general public shall have
unlimited access to registers of
shareholders. The limited company or
the appointed keeper of the register of
shareholders shall provide access at its
head office during working hours
continuously.
(2) The subject of any data, current or
deleted, contained in the register of
shareholders may request a copy of the
97
section which pertains to him from the
keeper of the register of shareholders.
Such copies shall be supplied free of
charge and made available to the data
subject within five days.
Section 3:248
[Recording identification procedures in
the register of shareholders]
Where the identification procedure is
requested by the public limited
company, the keeper of the register of
shareholders shall delete all data
contained in the register of shareholders
at the time of the identification
procedure, and shall simultaneously
enter the data obtained upon the
identification procedure into the register
of shareholders.
Chapter XXXIII
Foundation of Limited Companies
Section 3:249
[Private foundation]
Shareholders and capital may not be
solicited for the foundation of a limited
company by way of public invitation.
Section 3:250
[Contents of the articles of association]
(1) The articles of association shall, in
addition to the generally binding content
elements, contain:
a) the declaration of the founders
concerning their commitment to
subscribe for all shares, and on the
division of the shares among
themselves;
b) the number and nominal value or
accounting par value of the shares to be
issued upon foundation, and the type of
shares (printed or dematerialized);
c) the procedure for calling general
meetings, as well as the conditions and
method of exercising voting rights; and
d) the name of the first auditor.
(2) The founders may effectively
provide in the articles of association for:
a) the object and value of asset
contributions, the date when it is to be
provided, the number and nominal value
of shares to be provided in exchange,
the name and home address or
registered office of the parties providing
the contribution and the name and home
address or registered office of the
auditor responsible for the preliminary
valuation of the asset contribution as
indicated in the articles of association;
b) the rights attached to the individual
types, classes, and series of shares, and
any restriction of certain rights attached
to shares, the rules on conversion of
shares into shares belonging to other
types or classes, or series of shares, as
well as the number and nominal value or
accounting par value of shares
belonging to certain types or classes of
shares, separately for each series of
shares;
c)4
the series, quantity and nominal
value of convertible bonds, bonds with
subscription rights or equity bonds, and
the rules pertaining to such bonds;
4
Enters into force as under Section 40 of Act
CXXXV of 2013.
98
d) any restriction on the transfer of
shares, or making transfer subject to the
consent of the limited company;
e) the provisions relating to the
mandatory withdrawal of shares;
f) authorization conferred upon the
management board to approve the
interim balance sheet in connection with
the exercise of rights attaching to
redeemable shares, with the acquisition
of own shares, the payment of interim
dividends, and with the increase of the
share capital financed from assets not
comprising a part of the share capital.
Section 3:251
[Asset contribution]
(1) In connection with asset
contributions, the auditor’s report or that
of another expert qualified for the asset
in question shall be attached to the
articles of association which shall
contain a valuation of such asset
contribution. In the said report the
auditor or expert shall provide a
statement indicating as to whether the
value of such contribution - as previously
determined by the founders - complies
with the quantity and nominal value of
the shares to be provided in exchange.
(2) No auditor or expert report is
required if the shareholder that has
provided the asset contribution has an
audited financial report prepared within
three months to date in relation to the
date when the contribution was
provided, if it contains the value of the
contribution, or if the contribution is
comprised of assets whose price is listed
on the stock exchange.
Section 3:252
[Conditions of registration]
(1) A limited company may be
registered only if, prior to the submission
of the application for registration:
a) the founders who agreed to provide
contributions in cash have paid at least
twenty-five per cent of the nominal value
or accounting par value of the shares
which they have committed to subscribe
for in the articles of association;
b) asset contributions have been made
available to the company, with the
exception if the value of such asset
contributions is less than twenty-five per
cent of the share capital.
(2) Shareholders shall pay up the
nominal value or accounting par value of
the shares to the limited company in full
within one year from the date when the
limited company is registered, and shall
place asset contributions at the limited
company’s disposal in whole within three
years from the date of registration.
(3) Any provision of the articles of
association which provides for a later
date then what is prescribed in this
Section in connection with capital
contributions shall be null and void.
Chapter XXXIV
Rights and Obligations of
Shareholders
Section 3:253
[Equality of shareholders]
Shareholders holding shares that
belong to the same series shall not be
99
discriminated in any way in connection
with the exercise of their shareholder
rights.
Section 3:254
[Proof of qualification as a
shareholder]
(1) Shareholders shall be entitled to
exercise shareholder rights in dealing
with the company in possession of the
shares, or the certificate of deposit or
certificate of ownership, following their
entry into the register of shareholders.
(2) In connection with printed share
certificates placed in securities
depositories the operator of the
depository shall make out a depository
receipt at the shareholder’s request
concerning the shares placed in his
custody.
(3) In connection with dematerialized
shares, the operator of the securities
account shall issue an ownership
certificate at the shareholder’s request
concerning the shares held on the
account.
(4) The depository receipt and the
ownership certificate shall indicate the
name of the limited company, the type
and quantity of shares, the name and
authorized signature of the operator of
the securities depository of the securities
account, and the name and home
address or registered office of the
shareholder. The depository receipt and
the ownership certificate issued to permit
its holder to attend the company’s
general meeting shall remain valid until
the date of the general meeting,
including the second meeting if
reconvened.
(5) After the issue of an ownership
certificate the operator of the securities
account shall register any changes
pertaining to the shares in the securities
account only upon the withdrawal of the
ownership certificate. The securities
depository shall be required to withdraw
the depository receipt if the shares to
which it pertains are released to the
shareholder or his authorized
representative.
(6) In the case of public limited
companies, the ownership certificate is
not required for exercising shareholder
rights where entitlement is verified by
way of the identification procedure.
Section 3:255
[Representation of shareholders]
(1) Shareholders may exercise
shareholder rights through
representatives. Executive officers,
supervisory board members and the
auditor may not function as a
representative of a shareholder.
(2) Where a shareholder is
represented by more than one agents,
and if these agents are contradicted in
their votes or statements, all such votes
and statements shall be considered null
and void.
Section 3:256
[Shareholder’s representative]
A shareholder may appoint a proxy after
being registered in the register of
shareholders - to exercise some or all
rights of that shareholder before the
100
limited company in his own name and for
the benefit of the shareholder.
Section 3:257
[Right of attending the general
meeting]
Shareholders shall have the right to
participate, to request information and to
make remarks and proposals at the
general meeting. Shareholders are
entitled, if holding shares with voting
rights, to vote.
Section 3:258
[Right to information]
(1) The management board shall
provide information at the latest three
days before the date fixed for the
general meeting to all shareholders
which may be deemed necessary for
discussions held in connection with the
items placed on the agenda of the
general meeting upon written request
submitted at least eight days before the
date fixed for the general meeting.
(2) The management board shall
disclose the key data of the financial
report and key data of the report of the
management board and the supervisory
board to the shareholders at least fifteen
days before the general meeting.
(3) Any provision of the articles of
association which excludes or restricts
the right of shareholders to information
shall be null and void.
Section 3:259
[Right to make additions to the
agenda]
(1) Where a group of shareholders
together controlling at least five per cent
of the votes in a private limited company
propose certain additions to the agenda
in accordance with the provisions on
setting the items of the agenda, the
matter proposed shall be construed to
have been placed on the agenda if such
proposal is delivered to the members
and the management board within eight
days of receipt of the invitation to the
general meeting.
(2) Where a group of shareholders
together controlling at least one per cent
of the votes in a public limited company
propose certain additions to the agenda
in accordance with the provisions on
setting the items of the agenda, the
matter proposed shall be construed to
have been placed on the agenda if such
proposal is delivered to the management
board within eight days following the
time of publication of notice for the
convocation of the general meeting, and
the management board publishes a
notice on the amended agenda upon
receipt of the proposal. The matter
published in the notice shall be
construed to have been placed on the
agenda.
(3) Any provision of the articles of
association which provides for a larger
percentage of votes as a precondition
for putting additional items on the
agenda, or which provides for a shorter
time limit for exercising such right
relative to what is contained in this Act
shall be null and void.
Section 3:260
101
[Right to vote]
(1) Voting rights attached to shares
are determined by the nominal value of
such shares. Any provision of the
articles of association which confers
greater voting rights to certain specific
shares outside the cases provided for in
this Act shall be null and void.
(2) Shareholders in any arrears in their
capital contribution shall not be able to
exercise their voting rights.
Section 3:261
[Conditions for any distribution to
shareholders]
(1) The limited company may effect
any distribution from its own funds to a
shareholder, on account of his
membership, during the company’s
existence solely in the cases defined in
this Act, with the exception of the
reduction of the share capital, from the
taxed profit for the current year, or from
the taxed profit from the current year
supplemented with available profit
reserves. No distribution can be made if
the limited company’s equity capital is
below its share capital or it would be
reduced to drop below the share capital
if the distribution was made, of if the
distribution would jeopardize the limited
company’s solvency.
(2) Within the meaning of Subsection
(1), any payment made in cash or
otherwise shall be construed as a
distribution, with the exception of
employee shares provided without
compensation or at a discounted price,
as well as shares provided without
compensation from the share capital
increased by the conversion of assets
which do not form part of the share
capital into share capital.
(3) With the exception of interestbearing
shares, limited companies shall
not pay any interest on their shares.
(4) A group of shareholders together
controlling at least five per cent of the
voting rights in a private limited
company, a group of shareholders
together controlling at least one per cent
of the votes in a public limited company,
and any creditor of the limited company
who has a claim that is not yet due at
the time of distribution and reaches ten
per cent of the share capital may
request the court of registry to appoint
an independent auditor to examine the
legality of such distribution within a
preclusive period of one year from the
time of the decision on the distribution,
with the costs advanced.
(5) Any distribution made in
contradiction of Subsection (1) shall be
repaid to the company when so
requested by the limited company.
(6) The provisions of this Section shall
also apply to distributions made to
shareholders for reasons other than
membership, which are otherwise
incompatible with the principle of
prudent management.
Section 3:262
[Dividends]
(1) Shareholders shall be entitled to
receive a share from the limited
company’s taxed profit that is available
and has been ordered for distribution by
the general meeting in the percentage
102
consistent with the nominal value of their
shares. Dividends shall be paid to the
shareholders listed in the register of
shareholders at the time when the
general meeting adopting the decision
for the payment of dividends was held.
Dividends may be paid by means other
than cash if so permitted by the articles
of association. Shareholders shall be
entitled to receive dividends based on
the capital contributions they have
already paid up.
(2) In connection with the application
of Subsection (1), the articles of
association may stipulate specific rights
or restrictions separately for each class
of shares.
Section 3:263
[Interim dividend]
(1) The general meeting or, by
authorization of the articles of
association, the management board may
adopt a decision for the payment of
interim dividends between the approval
of two consecutive financial reports if:
a) according to the interim balance
sheet, the company has funds sufficient
to cover such interim dividends;
b) the amount distributed does not
exceed the amount of profits earned
after the closing of the books of the
financial year to which the last financial
report pertains, and/or the amount
supplemented with the available profit
reserves; and
c) the payment of such interim
dividends may not result in the
company’s adjusted equity capital to
drop below its share capital.
(2) Interim dividends are paid by
recommendation of the management
board. If the company has a supervisory
board, the prior consent of the
supervisory board is required for the
recommendation of the management
board.
(3) If according to the annual account
prepared after the distribution of interim
dividends there was no justification for
the payment of dividends, such
distribution must be returned by the
shareholder when so requested by the
company.
Section 3:264
[Conditions for the acquisition of
assets]
(1) The prior consent of the general
meeting of the limited company shall be
required for any contract on the transfer
of property to be concluded within two
years from the company’s registration
between the company and its
shareholders, where the value of the
compensation to be provided by the
company reaches one-tenth of its share
capital. To this end, the provisions on
asset contributions shall apply, with the
proviso that the auditor or expert report
shall be published.
(2) The prior consent of the general
meeting is required also in the case
where the contract above-specified is
concluded between the company and a
shareholder or his close relative, or any
person in which the shareholder has
majority control.
(3) The prior consent of the general
meeting is not required where property is
103
transferred under a contract of ordinary
magnitude within the scope of the
company’s activities, by virtue of official
resolution or by official auction, nor in
connection with stock exchange
transactions.
(4) In the application of this Section,
the term shareholder shall cover persons
holding shares in a company at the time
when the decision to convert it into a
public limited company is adopted, and
following registration of the public limited
company any shareholder who controls
at least ten per cent of the voting rights.
Section 3:265
[Prohibition of derogations]
Any clause of the articles of
association to provide conditions which
are more favorable for the shareholder
relative to what is contained in this
Chapter shall be null and void.
Section 3:266
[Exercising minority rights]
A group of shareholders together
controlling at least one per cent of the
votes in a public limited company shall
have entitlement to exercise minority
rights.
Section 3:267
[Obligations of shareholders]
(1) Shareholders shall be required to
pay up and make available to the limited
company the cash and asset
contributions covering the nominal value
or accounting par value of the shares
they have received or subscribed. With
the exception of a reduction of share
capital, shareholders may not be
exempted from this obligation.
(2) Within the time limit set out in the
articles of association, shareholders are
required to pay the nominal value or
accounting par value of their shares
when so notified by the management
board according to the conditions laid
down in the articles of association.
Shareholders may satisfy their payment
obligation prior to receiving the said
notice.
(3) Where a shareholder’s relationship
is terminated due to his failure to provide
in due time the capital contribution
undertaken, and the obligation to
provide the contribution on the shares
subscribed or undertaken to be
subscribed by the shareholder is not
assumed by another person, the share
capital must be reduced consistent with
the contribution committed by such
shareholder in default.
(4) The value of the contribution
provided by shareholders in default shall
be due to such shareholders following
the reduction of the share capital, or
when the replacement shareholder
performs his contribution towards the
company.
Chapter XXXV
Organizational Structure of Limited
Companies
1. The general meeting
Section 3:268
104
[General meeting]
(1) The supreme body of a limited
company is the general meeting.
(2) In public limited companies the
general meeting shall have exclusive
jurisdiction to lay down the guidelines
and framework for a long-term salary
and incentive scheme for executive
officers, supervisory board members and
executive employees.
(3) In public limited companies issues
delegated under the competence of the
general meeting may not be resolved
without having to hold a meeting.
Section 3:269
[General Provisions Relating to the
convocation of general meetings]
The invitation for the general meeting
shall, in addition to the generally binding
content elements, contain:
a) the procedure for holding the
general meeting;
b) the conditions for exercising voting
rights, as laid down in the articles of
association;
c) the place and time of the
reconvened general meeting in the
event of failure to meet quorum
requirements.
Section 3:270
[Mandatory convocation of the general
meeting]
(1) The management board shall, with
simultaneous notice to the supervisory
board, call a general meeting within a
period of eight days in order to provide
for the necessary measures, or initiate a
decision-making process without having
to hold a meeting, whenever it comes to
the notice of any member that:
a) the limited company’s equity has
dropped to two-thirds of the share
capital due to losses;
b) the limited company’s equity
dropped below the amount limit defined
by law;
c) the limited company is on the brink
of insolvency or has stopped making
payments; or
d) the limited company’s assets do not
cover its debts.
(2) In the cases provided for in
Subsection (1), shareholders are
required to adopt decisions within or
without a general meeting to determine
the ways to eliminate the causes
referred to in Subsection (1), or shall
adopt decisions on the company’s
transformation, merger or division, or in
the absence of these, on its dissolution.
The related resolutions of the general
meeting shall be carried out within three
months.
(3) If the reason referred to in
Paragraph a) of Subsection (1), on
account of which the general meeting
was called is not eliminated within three
months following the conclusion of the
general meeting, the company’s share
capital must be reduced.
Section 3:271
[Special rules for convening the
general meeting of private limited
companies]
(1) In the case of private limited
companies, the general meeting shall be
called by means of an invitation sent to
105
the shareholders at least fifteen days
prior to the first day of the general
meeting.
(2) The invitation to the general
meeting may be sent by way of
electronic means to the shareholders
who specifically requested it.
Section 3:272
[Special rules for convening the
general meeting of public limited
companies]
(1) In the case of public limited
companies, the invitation for the general
meeting shall be posted on the
company’s website at least thirty days
prior to the first day of the general
meeting.
(2) If an extraordinary general meeting
is called in consequence of the
shareholders’ opinion relating to a public
takeover offer for the shares of a public
limited company or at the request of the
person having obtained a qualifying
holding upon the successful conclusion
of the public takeover offer, the general
meeting shall be convened at least
fifteen days in advance.
(3) Public limited companies shall
publish the proposals relating to the
items on the agenda and the related
reports of the management board,
together with the draft resolutions on
their website, at least twenty-one days
before the general meeting. Public
general meeting materials may be sent
by way of electronic means to the
shareholders who specifically requested
it at the time of publication of such
general meeting materials.
Section 3:273
[Access to the general meeting]
(1) The names of shareholders and
proxies wishing to participate in the
general meeting of the private limited
company shall be entered into the
register of shareholders before the
beginning of the general meeting. If the
articles of association contains
provisions to specify the time by which
the above entry has to be made, it may
not be earlier than the second working
day before the general meeting; any
provision of the articles of association to
the contrary shall be null and void.
(2) The names of shareholders and
proxies wishing to participate in the
general meeting of the public limited
company shall be entered into the
register of shareholders at the latest by
the second working day preceding the
beginning of the general meeting. Any
provision of the articles of association to
the contrary shall be null and void.
(3) In the general meeting
shareholders rights may be exercised
only by the persons whose names are
contained in the register of shareholders
at the time it was closed. The transfer of
shares before the opening day of the
general meeting shall not affect the right
of a person whose name is contained in
the register of shareholders from
attending the general meeting and from
exercising his shareholder’s rights.
Section 3:274
[Attendance list]
106
(1) The shareholders present at the
general meeting shall be entered into an
attendance list, which shall contain the
name and home address or registered
office of the shareholder or his
representative, the quantity of his shares
and the number of votes he has, and
any changes during the general meeting
in the persons of those present.
(2) Attendance lists shall be signed by
the chairman of the general meeting and
the keeper of the minutes.
Section 3:275
[Quorum]
(1) If the general meeting fails to have
a quorum, the reconvened general
meeting shall have a quorum for the
issues of the original agenda
irrespective of the voting rights
represented by those present, if called
for a date following the original time by
not less than three days in the case of
private limited companies and by not
less than ten days and not more than
twenty-one days in the case of public
limited companies. Any provision of the
articles of association providing for a
convocation time limit of less than three
or ten days, and more than twenty-one
days shall be null and void.
(2) The general meeting may adjourn
its session once by not more than thirty
days.
(3) The adjourned meeting shall
reconvene subject to the same quorum
requirement as the original general
meeting. In respect of public limited
companies any provision of the articles
of association to the contrary shall be
null and void.
(4) When the adjourned meeting
reconvenes, the provisions on calling the
general meeting and on the election of
the officers of the general meeting shall
not apply.
Section 3:276
[Majority required for resolutions]
(1) The general meeting shall decide
by at least a three-quarters majority on
the amendment of the articles of
association, on changing the company
form, on the transformation, merger or
division of the company, on its
dissolution without succession, and on
the reduction of its share capital.
(2) Where an amendment to the
articles of association is adopted in
connection with the implementation of a
general meeting resolution to increase
or reduce the share capital (i.e. to
determine the size of the share capital),
the approval of the general meeting for
the amendment of the articles of
association shall be considered granted
when the resolution to increase or
reduce the share capital is adopted.
(3) In connection with public limited
companies the provisions on the
requirement of unanimous decision for
the amendment of the instrument of
constitution shall not apply.
Section 3:277
[Consent to general meeting
resolutions]
(1) Any resolution of the general
meeting that discriminates against the
107
rights attached to a certain series of
shares may only be passed if, according
to the procedure set out in the articles of
association, the shareholders of the
share series in question grant their
explicit consent. In the course thereof,
the provisions on the restriction or
exclusion of the voting rights attached to
such shares may not be applied, not
including the prohibition of exercising
voting rights attached to own shares.
(2) Any provision of the articles of
association of a public limited company
contrary to Subsection (1) hereof shall
be null and void.
Section 3:278
[Minutes]
(1) The events of general meetings
shall be recorded in minutes, containing
the following:
a) the corporate name and registered
office of the limited company;
b) the place and time and the
procedure for holding the general
meeting;
c) the names of the chairman of the
general meeting, the keeper of the
minutes, the person appointed to
witness the minutes and the official vote
counters;
d) key events and proposals made
during the general meeting;
e) draft resolutions, the number of
votes cast for and against draft
resolutions, and the number of
abstentions from the vote.
(2) The minutes shall be signed by the
keeper of the minutes and the chairman
of the general meeting, and shall be
witnessed by an elected shareholder
present.
(3) The management board of the
limited company shall archive and
safeguard the minutes of the general
meeting and the attendance list among
its own documents.
(4) The management board of a public
limited company shall submit the
minutes of the general meeting and the
attendance list to the court of registry
within a period of thirty days after the
close of the general meeting.
(5) Any shareholder may request a
copy of the minutes of general meetings
or an abstract of a part of the minutes
from the management board.
Section 3:279
[Public disclosure of resolutions]
Public limited companies shall make
their general meeting resolutions
available to the public.
Section 3:280
[Conditions for holding general
meeting by conferencing]
(1) If according to the articles of
association shareholders are allowed to
participate in the general meeting by
way of electronic communications
equipment instead of appearing in
person, shareholders may freely decide
the way in which they wish to participate.
The shareholders who wish to attend the
general meeting in person shall so notify
the limited company at least five days in
advance. Any shareholders who fail to
notify the limited company concerning
their intention to participate in due time
108
shall be treated as participating in the
general meeting through electronic
communications equipment.
(2) All costs arising in connection with
the use of electronic communications
equipment on the part of the limited
company shall be borne by the limited
company, and they may not be charged
to the shareholders.
(3) A general meeting may not be held
by conferencing if objected to in writing
by a group of shareholders controlling at
least five per cent of the total number of
votes - indicating the reason - within five
days after the date of receipt of the
invitation or from the date of publication
of the public notice, and if they request
that the general meeting be held the
conventional way.
Section 3:281
[Implementation of the general
meeting by conferencing]
(1) Before the opening of a general
meeting that is held by conferencing, the
entitlement of shareholders wishing to
participate in person shall be checked
on the basis of the data contained in the
register of shareholders. The articles of
association, or a general meeting
resolution adopted by authorization of
the articles of association, shall define
the procedure for checking the
identification of shareholders
participating through a
telecommunications connection, along
with the voting procedure and the
authentic conclusion of the results,
furthermore, define the procedure for the
election of general meeting officers, and
the requirements for shareholders to
make their opinions known and to make
proposals.
(2) The discussions of a general
meeting held by conferencing and the
resolutions adopted shall be recorded
using a reliable medium so that it can be
retrieved at any time in the future. Where
the discussions of the meeting have
been recorded, minutes shall be drawn
up based on the said recording and it
shall be signed by a member of the
management board.
2. Management
Section 3:282
[Composition and procedures of the
management board]
(1) Limited companies shall be
managed by the management board.
The management board is comprised of
three natural persons. Any provision of
the articles of association which provides
for a management board of less than
three members shall be null and void.
(2) The management board shall elect
its chairman from among its members.
(3) The management board shall
exercise its rights and perform its duties
as an independent body.
(4) The management board shall adopt
its decisions by a simple majority of the
votes of the members present. Any
clause of the articles of association
providing for a lower voting ratio shall be
null and void.
Section 3:283
109
[General director exercising the rights
of the management board]
Where so provided for by the articles
of association of private limited
companies, the general director shall
function as the chief executive officer in
exercising the powers of the
management board.
Section 3:284
[Reporting]
(1) The management board shall
prepare a report on the management,
the financial situation and the business
policy of the company at least once
every year for the general meeting, and
at least once every three months for the
supervisory board, if the limited
company has one.
(2) Any provision of the articles of
association which excludes or restricts
the management board’s obligation of
reporting shall be null and void.
Section 3:285
[Public limited companies in the onetier
system]
(1) Where the articles of association of
a public limited company so provides, it
shall be controlled by the board of
directors under the one-tier system
instead of the management board and
the supervisory board. The board of
directors shall discharge the duties of
the management board and the
supervisory board conferred upon them
by law.
(2) The provisions of this Act on
management boards shall also apply to
boards of directors.
Section 3:286
[Composition of the board of directors]
(1) The board of directors is comprised
of five natural persons. The board of
directors shall elect its chairman from
among its members. Any provision of the
articles of association which provides for
a board of directors of less than five
members shall be null and void.
(2) The majority of the board of
directors - with the exception set out in
Subsection (3) - shall be made up of
independent persons. Any provision of
the articles of association which provides
for a lower ratio of independent
members shall be null and void.
(3) The requirement for the majority of
the board of directors to be made up of
independent persons shall not apply if
the limited company is a controlled
company belonging to a recognized
group.
Section 3:287
[Independence of the member of the
board of directors]
(1) A board member shall be
considered independent if apart from his
seat on the board of directors and apart
from any transaction conducted within
the company’s usual activities, aiming to
satisfy the board member’s personal
needs he is not holding any other office.
(2) A member of the board of directors
shall not be considered independent if
he:
a) is an employee of the limited
company or a former employee for five
110
years following the termination of such
employment;
b) provides services to the limited
company or its executive officers for
consideration as an expert or other
similar services under personal service
contract;
c) is a shareholder of the limited
company controlling at least thirty per
cent of the votes, whether directly or
indirectly, or is a close relative or
domestic partner of such person;
d) is a close relative or domestic
partner of any - non-independent executive
officer or executive employee
of the limited company;
e) is entitled to receive financial
benefits based on his board membership
if the limited company operates
profitably, or receives any other form of
remuneration from the company apart
from the salary for his board
membership, or from a company that is
affiliated to the limited company;
f) is engaged in a partnership with a
non-independent member of the board
of directors in another business
association on the strength of which the
non-independent member attains
control;
g) is an auditor of the limited company,
or an employee or partner of the audit
firm, for three years following the
termination of such relationship;
h) is an executive officer or executive
employee of a business association,
whose independent board member also
holds an executive office in the public
limited company.
(3) Any provision of the articles of
association which provides more lenient
requirements concerning independence
relative to what is contained in
Subsections (1)-(2) shall be null and
void.
Section 3:288
[Employee participation in the board of
directors]
(1) If the public limited company has a
board of directors, the procedures for
exercising the rights stemming from
employee participation shall be laid
down in an agreement between the
board of directors and the works council.
(2) The general provisions for
contracts shall also apply to the
agreements concluded under
Subsection (1).
Section 3:289
[Company governance and
management report]
(1) The management board of a public
limited company shall present to the
annual general meeting the company
governance and management report
prepared according to the rules
applicable to the actors of the given
stock exchange.
(2) The report shall be approved by
decision of the general meeting. The
general meeting’s resolution and the
approved report shall be posted on the
website of the limited company.
(3) Any provision of the articles of
association which derogates from this
Section shall be null and void.
3. Supervisory Board, Audit
Committee, Auditor
111
Section 3:290
[Supervisory board of limited
companies]
(1) In addition to the cases provided
for by the common provisions relating to
business associations, public limited
companies shall install a supervisory
board even if the company does not use
the one-tier system. In that case the
provisions pertaining to the ratio of
independent members of the board of
directors and to their independence shall
apply to the supervisory board.
(2) Public limited companies may not
have a peremptory supervisory body.
(3) In the case of private limited
companies, if so requested by a group of
shareholders together controlling at least
five per cent of the voting rights, a
supervisory board shall be installed.
(4) Any provision of the articles of
association to the contrary of this
Section shall be null and void.
Section 3:291
[Audit committee]
(1) Public limited companies are
required to set up audit committees,
which shall provide assistance to the
supervisory board or the board of
directors in supervising the financial
report regime in selecting an auditor,
and in working with the auditor.
(2) The general meeting shall elect the
audit committee from among the
independent members of the
supervisory board or the board of
directors. At least one member of the
audit committee shall have competence
in accounting or auditing.
(3) Any provision of the articles of
association contrary to the rules
contained in Subsections (1) and (2)
shall be null and void.
(4) The audit committee is comprised
of three members. Any provision of the
articles of association which provides for
a audit committee of less than three
members shall be null and void.
Section 3:292
[Auditor]
All limited companies shall employ an
auditor; any provision of the articles of
association of a public limited company
to the contrary shall be null and void.
Chapter XXXVI
Increase of Share Capital
1. Common provisions relating to
the increase of share capital
Section 3:293
[Decision for the increase of share
capital]
(1) The decision for the increase of a
limited company’s share capital lies with
the general meeting. Different methods
of increasing the share capital may be
decided and implemented at the same
time.
(2) The general meeting’s resolution
on the increase of share capital shall be
considered effective if the holders of the
types or classes of shares which are
112
considered affected under the articles of
association grant their explicit consent to
the increase of the share capital by way
of the means specified in the articles of
association. In the course thereof, the
provisions on the restriction or exclusion
of the voting rights attached to such
shares may not be applied, not including
the prohibition of exercising voting rights
attached to own shares.
(3) Any provision of the articles of
association of a public limited company
contrary to Subsection (2) hereof shall
be null and void.
Section 3:294
[Empowerment of management board
to increase the share capital]
(1) The general meeting of the limited
company may authorize the
management board to increase the
share capital. The amount limit by which
the management board is allowed to
increase the limited company’s share
capital and a period of up to five years
during which the increase of capital is to
be executed shall be specified in the
authorization.
(2) The authorization granted to the
management board for the increase of
share capital also constitutes an
entitlement for the management board to
adopt decisions relating to the increase
of share capital, which otherwise fall
within the competence of the general
meeting by law or according to the
articles of association.
2. Share capital increase through
the issue of new shares
Section 3:295
[Preconditions for increasing the share
capital]
Limited companies may increase their
share capital through the issue of new
shares only if the nominal value or the
accounting par value of all previously
issued shares are paid up in full, and all
asset contributions are made available
to the company.
Section 3:296
[General meeting resolutions]
(1) The resolution of the general
meeting adopted for increasing the
share capital through the issue of new
shares shall specify the following:
a) the method of increasing the share
capital;
b) the amount of increase of the share
capital, the planned lowest increase;
c) the draft of the amendment of the
articles of association in connection with
the increase of share capital, including
the quantity and the series of the new
shares to be issued, the rights attached
to the types of shares, classes or series
of shares belonging to such series, the
method of production, the nominal value
or accounting par value of the shares, as
well as the terms of payment of the
nominal value or accounting par value of
the shares;
d) a description and value of asset
contributions, the quantity and other
characteristics of shares to be provided
in exchange, the name (corporate
name), home address or registered
office of the person providing such
113
contribution, and the name, registered
office (home address) of the auditor
conducting preliminary assessment, and
the date when they are made available;
e) the time limit for making a statement
undertaking the obligation to subscribe
shares or the subscription deadline.
(2) The resolution containing the
general meeting’s decision for
increasing the share capital through the
private offering of new shares shall
indicate the persons the general meeting
has authorized to subscribe for the
shares, provided that the persons
otherwise eligible do not intend to
exercise their pre-emptive subscription
rights concerning the shares in question.
The same general meeting resolution
shall also specify the quantity of shares
that may be subscribed by any one
person.
(3) Subscription right to the shares
may be granted if the person designated
made a preliminary statement of
commitment to subscribe for the shares
and to provide the appropriate
consideration. The limited company shall
abide by the statement of commitment
above-specified.
(4) The regulations on the provision of
capital contributions, on the applicable
deadlines and consequences in the
event of delay, on the valuation of asset
contributions and on the liability for the
value thereof shall be duly applied.
(5) In the case of public limited
companies, the auditor or expert report
on the valuation of asset contributions
shall be published.
Section 3:2975
[Exercise of preferential rights]
(1) The general meeting shall be
empowered according to the conditions
laid down in the articles of association to
decide on the issue of bonds with
subscription rights, where such bonds
feature preference to their holder for the
subscription of shares in the event of
increasing the share capital through the
issue of new shares.
(2) Where the share capital is
increased by way of a cash infusion, the
shareholders and holders of convertible
bonds and bonds with subscription rights
for the subscription of shares shall have
preferential rights for the subscription of
shares. The ranking of persons entitled
to exercise preferential rights and the
time limit for exercising preferential
rights shall be specified in the articles of
association.
(3) The limited company shall allow at
least fifteen days for the exercise of
preferential rights.
(4) The limited company shall inform
the shareholders, by way of the
procedure laid down in the articles of
association, and the holders of
convertible bonds and bonds with
subscription rights concerning the
nominal value or accounting par value of
shares which may be acquired, and the
first and last days of the period during
which such right can be exercised.
(5) An equity bond may be converted
into a share on the basis of pre-
5
Enters into force as under Section 41 of Act
CXXXV of 2013.
114
determined objective requirements,
consequently, it carries no preferential
rights.
Section 3:298
[Amendment of the articles of
association]
(1) The general meeting adopting a
decision for the increase of share capital
may amend the articles of association in
connection with the share capital
increase - depending on the outcome of
commitments made for the subscription
of shares, or on the outcome of the
actual subscription of shares - as of the
last day of the time limit prescribed for
the statement, or for the closure of
subscription. Another general meeting is
not required in connection with the
increase of share capital.
(2) If a conditional amendment of the
articles of association has not been
implemented or if in connection with the
increase of share capital the general
meeting is to adopt a decision
concerning an issue which the
conditional amendment of the articles of
association has failed to provide for
properly, the general meeting shall
adopt a decision for the amendment of
the articles of association within sixty
days following the time limit available for
making the statement of commitment or
after the successful conclusion of the
subscription of shares.
(3) Dividends may be paid for the first
time on new shares issued with a view to
increasing the share capital in
connection with the financial year during
which the increase of share capital was
registered.
Section 3:299
[Failure of increasing the capital]
(1) The share capital increase shall be
considered to have failed if the persons
eligible refuse to undertake the
commitment for the subscription of
shares in the nominal value or
accounting par value sufficient to cover
the planned or lowest increase of share
capital, or if the shares have not been
subscribed.
(2) Failure of the share capital
increase shall be reported to the court of
registry within a period of thirty days
after the expiration of the time limit
prescribed for making the commitments
for the subscription of shares
(hereinafter referred to as „subscription
deadline”).
3. Share capital increase from the
assets not forming part of the
share capital
Section 3:300
[Preconditions for increasing the share
capital]
A limited company may transfer all or
part of its assets other than the share
capital to increase the share capital, if,
according to the balance sheet of the
annual account for the previous financial
year or the interim balance sheet of the
current year there are sufficient
additional funds available for the capital
increase, and if the company’s share
115
capital will not exceed its adjusted equity
capital. The annual report or the interim
balance sheet may be taken into
consideration for determining the size of
funds in excess of the share capital
within the six-month period following the
balance sheet date.
Section 3:301
[Implementation of the increase of
share capital]
(1) The resolution of the general
meeting adopted for increasing the
share capital shall provide for the
amendment of the articles of association
and shall specify if the increase of share
capital is carried out by way of the issue
of new shares, overstamping, or
exchange.
(2) The shares embodying the
increased share capital shall be
conveyed to the company’s
shareholders free of charge, in
proportion to the nominal value of their
shares.
4. Share capital increase through
the issue of employee shares
Section 3:302
[Issue of employee shares]
(1) In the event of an issue of
employee shares, the consideration to
be covered by the limited company shall
be covered from the limited company’s
assets not forming part of the share
capital.
(2) If the capital is increased by way of
the issue of employee shares, the
provisions on the private offering of new
shares, and/or on the increase of share
capital by funds transferred from the
assets of the company other than the
share capital shall apply.
5. Share capital increase through
the conversion of convertible
bonds, or equity bonds into
shares6
Section 3:303
[Conditional increase of the share
capital]
(1)7
The limited company may adopt a
decision for the conditional increase of
share capital through the issue of
convertible or equity bonds.
(2)8
The total of the nominal value of
the convertible or equity bonds issued
may not exceed half of the limited
company’s share capital.
(3)9
At the bond holder’s request,
convertible bonds shall be exchanged
for shares under the conditions set out in
the articles of association.
(4)10
Equity bonds shall be converted
into shares upon the subsequent
6
Enters into force as under Section 42 of Act
CXXXV of 2013.
7
Enters into force as under Section 42 of Act
CXXXV of 2013.
8
Enters into force as under Section 42 of Act
CXXXV of 2013.
9
Enters into force as under Section 42 of Act
CXXXV of 2013.
10
Enters into force as under Section 42 of Act
CXXXV of 2013.
116
occurrence of certain objective
requirements.
(5)11
In the resolution of the general
meeting on the conditional share capital
increase, the following shall be defined:
a) an indication of whether the bonds
are offered privately or publicly;
b) the quantity and nominal value or
accounting par value of the bonds to be
issued, the series of the bonds, and the
place and time of subscription;
c) the conditions and the time for
converting the bonds into shares;
d) the maturity of the bonds and the
conditions for paying interest or other
yield on such bonds;
e) if the bonds are issued privately, the
persons entitled to receive them and the
quantity, nominal value, accounting par
value and series of the bonds they are
entitled to subscribe for.
(4) In the resolution of the general
meeting on the conditional share capital
increase, the following shall be defined:
a) an indication of whether the bonds
are offered privately or publicly;
b) the quantity and nominal value or
accounting par value of the bonds to be
issued, the series of the bonds (bond
attributes), and the place and time of
subscription;
c) the conditions and the time for
converting the bonds into shares;
d) the maturity of the bonds and the
conditions for paying interest or other
yield on such bonds;
11
Enters into force as under Section 42 of Act
CXXXV of 2013.
e) if the bonds are issued privately, the
persons entitled to receive them and the
quantity, nominal value, accounting par
value and series of the bonds they are
entitled to subscribe for.
Section 3:304
[Consequences of bond issue]
(1) If the bond issue is successful, the
general meeting shall amend the articles
of association within sixty days following
the time limit prescribed for the
subscription of bonds.
(2) If the subscription of bonds fails,
the management board shall notify the
court of registry thereof within thirty days
following the closure of the subscription
process.
Section 3:30512
[Requesting shares in place of
convertible bonds and conversion of
equity bonds]
(1) Within the maturity time of the
convertible bonds, bond holders may
demand in writing shares in exchange
for their bonds within a period of time set
forth by the general meeting, upon the
submission of such bonds - in the case
of printed bonds - to the management
board. If the bonds were issued at an
amount below the nominal value or
accounting par value of the shares, bond
holders shall pay, simultaneously with
their declaration, the difference between
the nominal value of the bond and the
12
Enters into force as under Section 43 of Act
CXXXV of 2013.
117
nominal value or accounting par value of
the share to the limited company. Upon
the provision of such statement the bond
holder shall be entitled to receive share
certificates.
(2) An equity bond may be converted
into a share upon the subsequent
occurrence of certain objective
requirements set out in the general
meeting resolution on the increase of
capital by way of the issue of equity
bonds. Within the time of occurrence of
certain objective requirements, equity
bond holders may demand in writing
shares in exchange for their bonds
within a period of time set forth by the
general meeting, through the submission
of such bonds to the management
board. Upon the occurrence of certain
objective requirements the bond holder
shall be entitled to receive share
certificates. The conversion of bonds
shall be implemented on the strength of
law.
(3) According to the general meeting
resolution adopted for the issue of
bonds, a decision for the increase of
share capital shall be adopted during the
first general meeting held following the
last day of the time limit prescribed for
the filing of the notice referred to in
Subsections (1) and (2) or upon the
occurrence of certain objective
requirements, or at a time specified by
the general meeting, and the company’s
articles of association shall be amended
accordingly.
6. Issue of shares of the type
consistent with the increased
share capital
Section 3:306
[Share capital increase with printed
shares]
(1) In respect of printed share
certificates, within a period of sixty days
after registration of the increase of share
capital, the management board shall
inform the shareholders by means of a
written notice made out in accordance
with the articles of association, of the
place and the opening and closing date
of the acceptance of shares to be
exchanged, and the provision of new,
exchanged or overstamped share
certificates, depending on the mode of
capital increase.
(2) A period of at least thirty days shall
be allowed for the delivery of shares to
the limited company. The management
board shall retire all shares deposited in
exchange according to the regulations
on securities, following the expiry of the
prescribed deadline.
(3) Where any shareholder fails to
surrender the shares to be overstamped
or exchanged to the management board
within the time limit specified in the
notice, the management board shall
declare these shares invalid. The
resolution for declaring such shares
invalid shall be made public.
Shareholders’ rights may not be
exercised with shares that have been
declared invalid as of the operative date
of the resolution therefor.
118
(4) In lieu of the shares declared
invalid, the limited company shall issue
new shares which are to be given to the
holders of shares which have been
declared invalid.
(5) In connection with the
implementation of capital increase, the
shares held by the limited company shall
not be treated as own shares, and the
limited company may not exercise
shareholders’ rights with such shares.
(6) No period of limitation applies to
any claim of shareholders for new,
exchanged or overstamped share
certificates under this Section.
Section 3:307
[Share capital increase with
dematerialized shares]
In connection with dematerialized
shares, the management board shall
notify the central depository and the
operator of the shareholder’s securities
account following registration of the
increase of share capital within fifteen
days concerning the changes in the
securities holdings of the shareholder in
question in consequence of the increase
of share capital.
Chapter XXXVII
Reduction of Share Capital
Section 3:308
[Cases and restrictions of capital
reduction]
(1) Limited companies may reduce
their share capital at their discretion,
however, in the cases defined in this Act
reduction of the share capital is
mandatory.
(2) With the exception set out in
Subsection (3), the company’s share
capital may not be reduced below the
amount limit defined by law.
(3) The company may decide to
reduce its capital below the minimum
amount defined in this Act, if the capital
increase having been decided
simultaneously with the reduction of
capital is implemented, and hence the
share capital reaches at least the
minimum level prescribed in this Act.
Section 3:309
[General meeting resolution]
(1) The decision for the reduction of
share capital lies with the general
meeting. A resolution of the general
meeting is not required for the reduction
of share capital if the limited company’s
articles of association prescribed the
mandatory withdrawal of shares and the
reduction of share capital in the event
that certain specific conditions occur
before the shares of the series in
question are issued.
(2) The invitation to a general meeting
convened to adopt a decision for the
reduction of share capital shall contain,
in addition to the generally binding
content elements, information
concerning the amount of reduction of
share capital, the reason and the
procedure of implementation, and the
conditional reduction of share capital
where applicable.
119
(3) The resolution of the general
meeting on the reduction of share capital
shall inter alia contain:
a) as to whether the share capital is
reduced for the purpose of withdrawal of
equity, consolidating losses or for
increasing other capital components;
b) the amount by which the share
capital is being reduced, and the shares
affected by the capital reduction; and
c) the procedure for the
implementation of the reduction of share
capital.
(4) The resolution on the reduction of
share capital shall also provide for the
amendment of the articles of association
required on account of the capital
reduction. Such resolution of the general
meeting shall be effective upon
compliance with the conditions for
capital reduction. If a general meeting
resolution is not required for the
reduction of share capital, the
amendment of the articles of association
required on account of the capital
reduction falls within the competence of
the management board.
(5) The general meeting’s resolution
on the reduction of share capital shall be
considered effective if the holders of the
types or classes of shares which are
considered affected under the articles of
association grant their explicit consent to
the reduction of the share capital by way
of the means specified in the articles of
association. In the course thereof, the
provisions on the restriction or exclusion
of the voting rights attached to such
shares may not be applied, not including
the prohibition of exercising voting rights
attached to own shares.
(6) Where the share capital is reduced
by way of disinvestment, the amount
due to the shareholders shall be
determined taking into account - in
proportion to the share capital - the
assets in excess of the share capital. If
the company’s own funds are below the
share capital, for the reduction of share
capital by way of disinvestment a
decision is first required for the reduction
of the share capital to cover losses.
Section 3:310
[Implementation of the reduction of
share capital]
(1) In the event of share capital
reduction, own shares held by the
limited company shall be withdrawn first.
(2) Reduction of share capital shall be
implemented by reducing the quantity or
the nominal value of share, or by using
these two methods in tandem.
Section 3:311
[Mandatory reduction of share capital]
(1) Where reduction of the share
capital is prescribed mandatory in this
Act, the company’s general meeting
shall adopt a decision for reduction of
share capital within sixty days following
the event giving rise to the obligation.
(2) If the share capital is to be reduced
below the threshold specified by law,
and if the shareholders fail to
supplement the share capital within
three months following the event giving
rise to the obligation, the general
meeting of the limited company shall
adopt a decision for the company’s
transformation, merger with another
120
company, division or dissolution without
succession.
Section 3:312
[Public disclosure of the reduction of
share capital]
(1) The management board shall take
measures within thirty days following the
date of the resolution on capital
reduction for the disclosure of such
resolution by way of public notice at
least on two occasions. The two
disclosures shall be made at least thirty
days apart.
(2) The public notice shall contain the
essence of the decision on the capital
reduction, and - if the company’s
creditors are likely to request safeguards
- a call to the company’s creditors to
make their request for safeguards
known.
(3) The company shall send notice to
the company’s known creditors directly
at the time of publication of the first
public notice.
Section 3:313
[Safeguards to creditors]
(1) The holders of claims against the
company arising before the first
publication of a public notice on the
capital reduction may demand adequate
safeguards from the company with the
exception if:
a) the creditor’s claim is already
secured consistent with the risk related
to the reduction of the capital;
b) it is not justified in light of the limited
company’s assets and liabilities and
financial position after the capital
reduction;
c) capital reduction is carried out for
the purpose of re-allocation to a reserve
account of funds tied up over and above
the limited company’s share capital, and
the company did not carry out capital
reduction within the previous five-year
period for reasons of provisioning; or
d) capital reduction is mandatory.
(2) The reserve set aside from the
share capital under Paragraph c) of
Subsection (1) may not exceed ten per
cent of the limited company’s share
capital. The appropriated reserve
created in this fashion may be used to
cover the company’s losses or to
increase the limited company’s share
capital subsequently; no payments to
shareholders are permitted from this
reserve.
(3) The company’s creditors may file a
request for adequate safeguards in
connection with the reduction of the
limited company’s share capital within a
thirty-day preclusive period following the
second publication of the notice.
(4) The company shall provide
adequate safeguards within eight days
following the deadline for filing the proof
of claim or, if a claim is refused, shall
deliver the resolution concerning the
refusal and the reasons therefor to the
creditor in question. The creditor
affected may file for the review of any
decision of rejection, or if the safeguards
provided are insufficient, to the court of
registry within a preclusive period of
eight days following receipt of the
resolution.
121
(5) Reduction of the share capital may
not be registered until the creditor is
provided adequate safeguards, or until
the court ruling on the refusal of the
creditor’s request becomes operative.
Section 3:314
[Failure of the reduction of share
capital]
(1) The management board shall notify
the court of registry concerning the
failure of reduction of the share capital
within thirty days.
(2) If the statutory reduction of the
share capital has failed and the limited
company fails to eliminate the reasons
for statutory reduction within ninety days
from the time of failure, the limited
company shall adopt a decision for its
transformation, merger with another
company, division or dissolution without
succession.
Section 3:315
[Reduction of share capital involving
printed shares]
(1) In respect of printed share
certificates the amount of shares may be
reduced by way of withdrawal of shares,
whereas the nominal value may be
reduced through the exchange of shares
for new issues with lower nominal value,
or by changing the nominal value of
existing shares by way of overstamping.
(2) Within a period of sixty days after
registration of the reduction of share
capital, the management board shall
inform the shareholders by means of a
notice made out in accordance with the
articles of association, of the place and
the opening and closing date of the
acceptance of shares to be withdrawn,
overstamped or exchanged, and of the
place and time for the delivery of new
share certificates produced for the
purpose of exchange, or overstamped
share certificates. A period of at least
thirty days shall be allowed for the
delivery of share certificates. The
management board shall retire all shares
deposited for the purpose of withdrawal
or in exchange according to the
regulations on securities, following the
expiry of the prescribed deadline.
(3) Should a shareholder fail to
surrender the shares to be withdrawn,
overstamped or exchanged to the
management board within the time limit
specified in the notice, the management
board shall declare these shares invalid.
The resolution for declaring such shares
invalid shall be made public.
Shareholders’ rights may not be
exercised with shares that have been
declared invalid as of the operative date
of the resolution therefor.
(4) In lieu of the shares declared
invalid - excluding withdrawn shares -,
the company shall issue new shares to
be given to the holders of shares which
have been declared invalid.
(5) In connection with the
implementation of capital increase, the
shares held by the limited company shall
not be treated as own shares, and the
limited company may not exercise
shareholders’ rights with such shares.
(6) No period of limitation applies to
any claim of shareholders for new,
exchanged or overstamped share
certificates under this Section.
122
Section 3:316
[Reduction of share capital involving
dematerialized shares]
In connection with dematerialized
shares, the management board shall
notify the central depository and the
operator of the shareholder’s securities
account following registration of the
reduction of share capital within fifteen
days concerning the changes in the
securities holdings of the shareholder in
question in consequence of the
reduction of share capital.
Section 3:317
[Distributions to shareholders]
Payments may be made to
shareholders following the time of
registration of the reduction of share
capital, and unpaid cash contributions
related to shares and asset contributions
not yet provided may be cancelled after
that time.
Chapter XXXVIII
Special Regulations Concerning
the Transformation, Merger and
Division of Limited Companies
Section 3:318
[Transformation]
(1) If a limited company is converted,
the shares shall become invalid upon
the registration of the legal person
established by transformation.
(2) The executive officers of the
successor business association shall
take measures within thirty days after
receipt of the resolution on registration
for having the printed share certificates
which have become invalid transferred
to the successor, or for having such
dematerialized shares deleted from the
central securities account, and from the
relevant securities accounts. The printed
share certificates surrendered shall be
destroyed by the successor. These
measures shall be governed by the
provisions applicable to the
implementation of the reduction of share
capital.
Section 3:319
[Merger]
(1) In the event of the merger of limited
companies, the following shall be
defined in the merger agreement:
a) the share exchange ratio of the
merging companies and the amount of
cash supplement payable to the
shareholders from the assets other than
the share capital of the company being
acquired, which amount may not exceed
ten per cent of the nominal value of the
shares that were allocated to the
shareholders on the basis of their
respective holdings;
b) the detailed rules for the transfer of
the shares of the acquiring company in
connection with the execution of the
merger;
c) the point in time, following which the
shares are entitled to a portion of aftertax
profits;
d) the rights conferred by the acquiring
company on the holders of shares to
which special rights are attached and
123
the holders of securities other than
shares, or the measures proposed
concerning them;
e) the potential benefits provided by
the merging limited companies to
members of the management board,
executive employees and members of
the supervisory board.
(2) Simultaneously upon preparation of
the merger agreement, the executive
officers of the merging limited
companies shall prepare a written report
in which to demonstrate the justification
of the merger and the share exchange
ratio in line with legal and financial
considerations. Upon the request of
shareholders and at the cost of the
limited company, full or summary copies
of the documents accessible to
shareholders shall be prepared.
(3) The auditor overseeing the draft
statement of assets and liabilities shall
demonstrate the methods the limited
company used for establishing the
exchange ratio specified in Paragraph a)
of Subsection (1) as well as the value
each of these methods resulted in, and
shall declare as to whether the
exchange ratio is correct in his opinion. If
the assessment met with particular
difficulties, this shall also be indicated.
(4) The auditor acting in accordance
with the provisions of Subsection (3)
shall make a statement in a report
regarding the soundness of the contents
of the draft merger agreement, and the
written report of the executive officers.
Such statement shall also contain an
opinion on whether the planned merger
endangers the satisfaction of creditors’
claims outstanding against the limited
companies.
(5)13
In respect of convertible or equity
bonds the limited company being
established through the merger shall
provide such entitlements to bond
holders, which are at least equivalent to
the entitlements they possessed in the
predecessor business association,
unless each of the bond holders gives
his consent to the change of entitlement.
Holders may also claim the redemption
of convertible or equity bonds, or bonds
with subscription rights issued by the
merging companies from the successor
limited company. The provisions of this
Subsection need not be applied if, upon
the issue of the security, the position of
bond holders has been defined in
advance in case a merger should take
place subsequently.
Section 3:320
[Merger meetings]
(1) Thirty days prior to the date of the
general meeting adopting a decision for
the approval of the merger agreement,
the draft merger agreement, the written
report prepared by the executive officers
of the merging limited companies, and
the report of the auditor containing his
opinion on the draft merger agreement
and on the written report shall be
submitted by the limited companies
involved in the merger to the competent
court of registry keeping the register of
merging limited companies.
13
Enters into force as under Section 44 of Act
CXXXV of 2013.
124
(2) For a period of thirty days prior to
the second general meeting resolution
on the merger, all shareholders of the
limited companies involved in the merger
shall have the right to inspect the annual
accounts of the merging companies
prepared for the previous three years, in
addition to the documents prepared for
the resolution of the general meeting.
(3) If there are several types or classes
of shares, the provisions on the approval
of the general meeting resolution shall
be applied in the process of adopting a
resolution on the merger.
(4) Upon due application of the
provisions on capital reduction, creditors
of limited companies involved in the
merger may demand adequate
safeguards if they are able to verify that
the merger endangers the basis of
satisfaction of their claims, provided that
the limited companies involved in the
merger have not granted adequate
safeguards to such creditors previously.
(5) Limited companies shall be exempt
from the publication requirement laid
down in Subsection (1) if they provide
public access to the relevant documents
at their own websites for a continuous
period beginning at least thirty days
before the day fixed for the general
meeting which is to decide on the draft
terms of merger and ending not earlier
than the conclusion of that meeting for
the general public, or if they make the
documents available to the general
public.
Section 3:321
[Division of limited companies]
(1) Public limited companies may not
be divided.
(2) In the division of private limited
companies the division agreement shall
specify:
a) the share exchange ratio of the
companies being divided and the
amount of cash supplement payable to
the shareholders from the assets other
than the share capital, which amount
may not exceed ten per cent of the
nominal value of the shares that were
allocated to the shareholders on the
basis of their respective holdings;
b) the potential benefits provided by
the limited companies to be divided
among executive officers and members
of the supervisory board.
(3) In the event of the division of a
limited company, the management
board shall inform the general meeting
of any substantial change in the
company’s assets that takes place
between the time the division agreement
is drafted and the time it is approved by
the general meeting.
Chapter XXXIX
Dissolution of a Limited Company
Without Succession
Section 3:322
[Consequences of dissolution]
(1) If the limited company has issued
preference shares with respect to any
liquidation surplus, the privileges
granted by such preference shares shall
be taken into account when distributing
125
the assets of the company remaining
after the settlement of debts.
(2) If, before the opening of dissolution
procedures, or before the order of
liquidation, the share capital of the
limited company has not yet been paid
up in full, the receiver in charge of
dissolution proceedings or the liquidator
shall have the right to make outstanding
cash contributions and asset
contributions due with immediate effect,
and to order the performance thereof by
the shareholder, if this is necessary in
order to satisfy the debts of the limited
company.
Chapter XL
Single-member Limited
Companies
Section 3:323
[Different rules applicable to singlemember
limited companies]
(1) Where a limited company is
established by a single person
undertaking the commitment to acquire
all shares of the company, the founder
shall put the asset contribution at the
company’s disposal in full before the
application for registration is submitted.
Any provision of the articles of
association to the contrary shall be null
and void.
(2) Where all shares of a multimember
limited company are acquired
by a single person, this too shall become
a single-member company.
(3) A single-member limited company
may not acquire its own shares.
(4) The contract between a singlemember
limited company and its sole
member shall be executed in writing.
(5) As regards the liability of the single
member of a limited company the
provisions on qualified majority control
shall apply mutatis mutandis.
TITLE XV
ACQUISITION OF A
QUALIFYING HOLDING
Section 3:324
[Extra commitments of members with
a qualifying holding]
(1) Where a member of a private
limited-liability company or a shareholder
of a private limited company - directly or
indirectly - controls at least threequarters
of the votes, the court of
registry shall be notified thereof within
fifteen days from the time of acquisition
of such qualifying holding for the
purpose of registration and publication.
(2) Within a sixty-day preclusive period
reckoned from the date of notification of
the acquisition of a qualifying holding,
any member (shareholder) of the
company may request that his shares be
purchased by the owner of the qualifying
holding. The owner of a qualifying
holding must purchase such shares at
the market value prevailing at the time
when the request was submitted, which
value may not be lower than the value
126
the shares represent in the company’s
own capital.
(3) If the company is dissolved without
succession, at the request of the
creditors the owner of the qualifying
holding shall cover any claim for which
no satisfaction had been provided,
provided that dissolution without
succession was brought about in
consequence of the poor business
decisions of the owner of the qualifying
holding. This provision is not applicable
in the case where the company is wound
up without going into liquidation.
PART FOUR
COOPERATIVE SOCIETIES
TITLE XVI
GENERAL PROVISIONS
Section 3:325
[Definition and principal activities of
cooperative societies]
(1) A cooperative society (szövetkezet)
is a legal person established with a
capital made up of the members’
contributions; it operates under the
principle of open membership and
variable capital with the objective of
lending assistance to its members so as
to satisfy their economic and societal
needs, where the obligation of its
members toward the cooperative society
covers the provision of capital
contribution and their personal
involvement as provided for in its
statutes. Members shall not bear liability
for the cooperative society’s obligations.
(2) The activities of cooperative
societies may include sales, purchases,
production and services.
Section 3:326
[General provisions relating to
members of cooperative societies]
(1) The number of members that are
not natural persons in a cooperative
society may not exceed twenty per cent
of the total number of members; the
legal person members of a cooperative
society set up as a cooperative society
shall be ignored when calculating the
number of members that are not natural
persons.
(2) The number of members of the
cooperative society refusing personal
involvement in operations may not
exceed one-quarter of all members.
(3) The capital contribution provided by
any one member in a cooperative
society may not exceed fifteen per cent
of the capital; the capital contribution
provided by members that are not
natural persons may not exceed onethird
per cent of the capital.
(4) Members may not be solicited by
public invitation.
Section 3:327
[General provisions relating to
operations of cooperative societies]
(1) Where authorization by the
competent authority is prescribed
mandatory by law to engage in a certain
activity, the cooperative society may only
start up and pursue the activity in
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question when in possession of such
authorization.
(2) Activities subject to qualification
may be pursued by cooperative
societies only if there is at least one
person among its participating members,
employees, or among the persons
working to the benefit of the cooperative
society under a long-term civil
relationship concluded with the
cooperative society, who satisfies the
qualification requirements set out in the
relevant legislation.
Section 3:328
[Making legal statements]
(1) Legal acts pertaining to the
cooperative society must be made in
writing. This provision shall also apply to
the cooperative society’s decisions, and
to the delivery of legal statements and
decisions to the recipient.
(2) Where a legal act relating to the
cooperative society is mandatory, or
where certain action is mandatory, it
shall be made or carried out without
delay.
(3) Where a legal statement made in
writing has been sent by way of post, it
shall be considered received - if sent to
a resident recipient - at the point in time
indicated on the notice of receipt or, in
the case of registered mail, on the fifth
working day following dispatch, in the
absence of proof to the contrary.
(4) A legal statement relating to the
cooperative society can be made or can
be delivered by means of electronic
communication if so permitted by the
statutes, and if it provides for the
relevant conditions for and the means
thereof.
Section 3:329
[Registration of cooperative societies]
(1) The formation of a cooperative
society shall be notified to the court of
registry within thirty days from the date
when the statutes is executed in a
notarized document or countersigned by
a lawyer or legal counsel. If the
establishment of a cooperative society is
subject to approval by the authorities,
notification to the court of registry shall
be made within fifteen days upon receipt
of the final authorization.
(2) The provisions on pre-companies
shall apply to cooperative societies after
having submitted the application for
registration, until the time of registration
by final ruling.
(3) Any cooperative society whose
application for registration has been
refused by a final decision shall be
required to terminate all activities. The
members shall be held liable for
commitments accepted in the name of
the cooperative society in accordance
with the regulations pertaining to the
dissolution of legal persons without
succession.
Section 3:330
[Arbitration procedure]
(1) In accordance with the statutes or
under agreement between the parties
concerned, any dispute in the area of
company law shall be settled by way of
binding arbitration.
(2) Cooperative dispute shall mean:
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a) any dispute arising out of or in
connection with the cooperative
membership between the cooperative
society and its members, including
former members, covering also the
judicial review of decisions of
cooperative bodies;
b) legal disputes among the members
in connection with the statutes, or as
pertaining to the operation of the
cooperative society; and
c) any dispute between the
cooperative society and its executive
officers or supervisory board members,
arising out or in connection with their
office.
Section 3:331
[Instrument of constitution of
cooperative societies]
(1) The statutes of a cooperative
society shall also function as its
instrument of constitution. The statutes
shall be adopted upon the unanimous
declaration of intent of at least seven
persons.
(2) When adopted, the statutes shall
be signed by all founding members. The
statutes may be signed on behalf of a
member by his representative holding an
authorization fixed in an authentic
instrument or in a private deed
representing conclusive evidence.
(3) The statutes shall be drawn up in a
notarial document, or in a private
document countersigned by a lawyer or
the legal counsel of a founder. This
provision shall also apply to
amendments of the statutes and when
the amendment is recorded in the
minutes, with the proviso that it may be
countersigned by the legal counsel of
the member or by the legal counsel of
the cooperative society.
(4) In addition to the standard contents
of the mandatory layout of the
instrument of constitution of a legal
person, the statutes of a cooperative
society shall specify:
a) the amount of capital contribution
that is to be subscribed by each
member;
b) potential ways of personal
involvement of members;
c) description of economic cooperation
between the cooperative society and its
members;
d) the regulations relating to the
fellowship fund;
e) the types and forms of benefits to
be provided to natural person members
and their families, as well as the
conditions and procedures for awarding
them;
f) the bodies of cooperative societies
and their powers;
g) the grounds for exclusion of
executive officers and members, and the
reasons giving cause to conflict of
interest; and
h) the procedure for calling general
meetings, as well as the conditions and
method of exercising voting rights.
(5) Of the standard contents of the
mandatory layout of the instrument of
constitution of a legal person, the
amount of capital contribution to be
provided by each member for the
cooperative society shall be specified in
the statutes at the time of foundation.
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Section 3:332
[Capital contribution of members]
(1) Capital contribution may also be
provided in the form of receivables, if it is
acknowledged by the debtor or based on
a final court ruling. Commitments of
members for performing work or for any
other personal involvement or service
shall not be accepted as a form of nonmonetary
capital contribution.
(2) Each member is required to make
available at least thirty per cent of his
cash contribution before the application
for registration is submitted, together
with all of his asset contributions. The
members of the cooperative society
refusing personal involvement in
operations shall make available their
cash contribution in full before the
application for registration is submitted.
(3) Any member who did not pay up
his cash contribution before the time of
submission of the application for
registration in full shall provide the
remaining portion within one year from
the date of registration.
Section 3:333
[Non-compliance with the obligation of
capital contribution]
(1) If a member fails to provide his
capital contribution committed in the
statutes or in the application for
admission by the time prescribed,
management shall call upon such
member, with the applicable
consequences indicated, to provide the
contribution within thirty days.
(2) In the event of non-compliance
within the thirty-day time limit, the
membership of the member who failed to
provide the capital contribution shall be
terminated on the day following the
expiration of such time limit.
Management shall notify the member
concerning the termination of his
membership. The former member shall
be held liable for damages caused to the
cooperative society by virtue of his
failure to provide the capital contribution
in accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation.
(3) Any provision of the statutes which
provides more lenient sanctions then
what is prescribed in this Act upon
members for failure to provide the capital
contribution shall be null and void.
Section 3:334
[Fellowship fund]
(1) The assets placed in the fellowship
fund by decision of the general meeting
from which to provide benefits to
members and their family members may
not be distributed among the members.
(2) If the cooperative society is
transferred into a business association
or dissolved without succession, the
fellowship fund shall be transferred following
settlement with all creditors - to
an organization specified by the
statutes.
(3) Benefits provided from the
fellowship fund shall not be taken into
consideration in connection with shares
from the profit, nor in connection with the
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settlement of accounts upon the
termination of membership.
TITLE XVII
ORGANIZATIONAL STRUCTURE
OF COOPERATIVE SOCIETIES
Chapter XLI
General Meeting
Section 3:335
[Competence of the general meeting]
(1) The supreme body of a cooperative
society is the general meeting, which
consists of all members.
(2) The following shall fall within the
competence of the general meeting:
a) amendment of the statutes;
b) election and removal of executive
officers and supervisory board members,
establishing their remuneration;
c) election and removal of the auditor
and establishing his remuneration;
d) transferring a certain part of the
cooperative’s assets into the fellowship
fund, and decisions on the general
principles for the appropriation of the
fellowship fund;
e) approval of the financial report,
decision regarding the appropriation of
taxed profits;
f) decision concerning the merger or
division of the cooperative society,
transformation into a business
association or dissolution without
succession;
g) decision for launching a petition for
the opening of bankruptcy proceedings,
and on the approval of a composition
agreement;
h) decision for winding up the
cooperative society going into
liquidation, and on the approval of a
composition agreement reached during
the liquidation proceedings;
i) decision for ordering supplementary
payment.
Section 3:336
[Convocation and agenda of the
general meeting]
(1) The general meeting shall convene
at least once a year. Any clause of the
statutes providing for less frequent
meetings shall be null and void.
(2) The invitation for the general
meeting shall, in addition to the
generally binding content elements,
contain:
a) an indication if the college of
delegates or a section meetings is
convened; and
b) the place and time of the
reconvened general meeting in the
event of failure to meet quorum
requirements, and a warning to different
quorum regulations.
(3) In connection with the issues
proposed for the agenda of the general
meeting the administrative body shall
provide information to all members.
(4) Upon written request, any matter
supported by at least ten per cent of all
members shall be included in the
agenda. The request shall be submitted
at least eight days prior to the scheduled
131
date of the general meeting to the
administrative body. The amended
agenda shall be conveyed to the
members at least three days prior to the
scheduled date of the general meeting.
(5) Any resolution adopted at a general
meeting which was unduly convened
and held and is therefore considered
invalid, shall become valid with
retroactive effect from the date when the
resolution was adopted if declared valid
by the unanimous decision of all
members within thirty days of the day on
which the general meeting was held.
Section 3:337
[Rights of members at the general
meeting]
(1) Members shall be entitled to make
recommendations relating items of the
agenda and to exercise their voting
rights. At the general meeting each
member shall have one vote irrespective
of their capital contribution.
(2) Members in any arrears in their
capital contribution prescribed in the
statutes shall not be allowed to exercise
their voting rights.
(3) Members may exercise their
membership rights through
representatives. The chairman and
members of the administrative body and
the supervisory board, and the auditor
may not serve as representatives. The
authorization shall be executed in an
authentic instrument or in a private deed
representing conclusive evidence. One
representative may represent several
members at the general meeting,
however, the maximum number of
members one representative may
represent shall not exceed ten per cent
of all members of the cooperative
society.
Section 3:338
[Quorum, decisions]
(1) If the general meeting fails to have
a quorum, the reconvened general
meeting shall have a quorum for the
issues of the original agenda
irrespective of the number of those
present, if called for a date following the
original time by not less than three and
not more than fifteen days. Any
provision of the statutes providing for a
convocation time limit of less than three
days shall be null and void.
(2) The affirmative votes of two-thirds
of the members attending and one-half
of all members are required for the
amendment of the statutes.
(3) The decision concerning the
merger or division of a cooperative
society, for its transformation into a
business association or dissolution
without succession the affirmative votes
of at least two-thirds of all members are
required.
(4) The general meeting shall adopt its
resolutions by open voting; the decisions
for the election and recall of executive
officers and members of the supervisory
board shall be adopted by voting by
secret ballot.
Section 3:339
[Reconvened, adjourned general
meetings]
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(1) The reconvened general meeting
may pass resolutions on any issue on
the original agenda.
(2) If so indicated in the invitation, the
general meeting may resolve to adjourn
the general meeting with respect to
certain items on the agenda, and
continue at a later time. This general
meeting, however, may not address any
other issues.
Section 3:340
[Minutes]
(1) The responsibility for having
minutes drawn up at general meetings
lies with the management. The minutes
shall contain the place and time of the
general meeting, the persons present,
significant events, statements and
resolutions taking place during the
general meeting, the number of votes for
and against resolutions, and the persons
abstaining from or not taking part in the
vote.
(2) The attendance list and the
documents for authorizations for
representation shall be annexed to the
minutes.
(3) The minutes shall be signed by the
presiding chairman, the keeper of the
minutes and the two cooperative
members appointed to witness the
minutes.
(4) The minutes shall be made
available to any member for inspection
and excerpts or copies of the minutes
may be requested from the
administrative body at the requesting
member’s expense.
Section 3:341
[Section meeting]
(1) If the statutes provide for section
meetings in the stead of a general
meeting, the sectors of section meetings
and the venues of section meetings shall
be provided for in the statutes.
(2) Section meetings shall be held with
the same agenda; the decisions of the
general meeting shall be announced by
the administrative body after adding up
all the votes cast on the section
meetings.
(3) The resolutions adopted by section
meetings shall be delivered to the
members within fifteen days of the count
of votes.
(4) Other aspects of section meetings
shall be governed by the provisions
governing general meetings.
Section 3:342
[College of delegates]
(1) Where the statutes provide for a
college of delegates, the number of
delegates required according to the
number of members, the procedure for
their election and their term shall be
specified in the statutes.
(2) Where section meetings are held
on a regular basis, delegates for the
college of delegates shall be elected
separately for each section meeting.
(3) Any non-delegate member of the
cooperative society may attend the
college of delegates in an advisory
capacity.
(4) Furthermore, the provisions
governing general meetings shall also
133
apply to the powers and the procedures
of colleges of delegates with the
exception that at least two-thirds of all
delegates shall constitute a quorum for
the college of delegates and for the
reconvened college of delegates.
Chapter XLII
Management of Cooperative
Societies
Section 3:343
[Administrative body]
(1) Cooperative societies shall be
managed by the administrative body
consisting of at least three members.
Any provision of the statutes which
provides for a administrative body of less
than three members shall be null and
void.
(2) The general meeting shall elect the
chairman and members of the
administrative body for a term of five
years, or - if the cooperative society is
established for a shorter period - for that
period.
Section 3:344
[Administrative body operating
procedures]
(1) The administrative body shall
exercise its rights and perform its duties
as an independent body.
(2) The administrative body shall have
a quorum if at least two-thirds of its
members are present. The
administrative body shall adopt its
resolutions by simple majority of the
members present. Any clause of the
statutes providing for a lower voting ratio
shall be null and void. The session of the
administrative body shall be called by
the chairman or a member of the
administrative body he has appointed.
The administrative body shall determine
its own rules of procedure.
(3) The administrative body is vested
with powers to decide all matters which
are not conferred under the competence
of the general meeting or the
supervisory body by law or the statutes.
(4) The responsibility to convene the
general meeting, including the
preparation and execution of its
decisions lies with the administrative
body.
(5) The administrative body shall give
account concerning its activities, the
financial situation and the business
policy of the cooperative society at least
once every year for the general meeting,
and at least once every three months for
the supervisory board. Any clause of the
statutes providing for less frequent
reporting shall be null and void.
Section 3:345
[Director of operations]
If the cooperative society has less than
fifteen members, the statutes may
provide for the office of director of
operations in lieu of the administrative
body, vested with the same powers as
the administrative body.
Section 3:346
[Executive officers of cooperative
societies, grounds for exclusion and the
134
reasons giving cause to conflict of
interest]
(1) Executive officers of cooperative
societies are the chairman and members
of the administrative body or the director
of operations.
(2) Executive officers of cooperative
societies may hold membership in that
cooperative society. The member of the
cooperative society with legal personality
shall appoint a natural person to
exercise management on its behalf.
(3) Apart from the grounds for
exclusion applicable to the executive
officers of legal persons, the close
relative or domestic partner of any
executive officer or supervisory body
member of the cooperative society may
not function as the executive officer of
that cooperative society.
(4) Executive officers of cooperative
societies may not acquire any share not
including the shares of public limited
companies - and may not hold an
executive office in a cooperative society
or business association that is engaged
in the pursuit of the same economic
activity as its main activity, as the
cooperative society in which they hold
an executive office. In the event of
accepting a new executive office, within
fifteen days of accepting such office the
executive officer shall notify any other
cooperative society and business
association in which he already serves
as an executive officer or a supervisory
board member.
(5) With the exception of everyday
dealings, an executive officer and his
close relatives may not conclude any
transactions falling within the scope of
the main activities of the cooperative
society in his own name or on his own
behalf.
(6) Claims for damages caused by an
executive officer to the cooperative
society by any infringement of the
regulations on conflicts of interest may
be enforced for a period of one year
from the occurrence of such damage.
Section 3:347
[Actions of executive officers]
(1) The executive officer shall manage
the cooperative society independently,
based on the primacy of the cooperative
society’s interest. The executive officer
shall discharge his duties bond to the
relevant legislation, the statutes and the
resolutions of the general meeting. The
executive officer may not be instructed
by the members of the cooperative
society and his competence may not be
negated by the general meeting.
(2) Following termination of the
cooperative society without succession,
claims for damages caused by executive
officers to the cooperative society in that
capacity may be brought by the
members with membership at the time of
the cooperative society’ removal from
the registry, within a preclusive period of
one year following the time of removal.
Members may enforce any claim for
compensation up to their rightful share
from the assets distributed upon
termination of the cooperative society.
Section 3:348
[Termination of executive officers]
135
In addition to the grounds for the
termination of the mandate of executive
officers set out under the common
provisions applicable to legal persons,
the mandate of the executive officer of a
cooperative society shall cease to exist
upon the termination of membership.
Chapter XLIII
Supervisory Body
Section 3:349
[Supervisory body]
(1) The supervisory body of a
cooperative society is comprised of three
members. Any provision of the statutes
which provides for a supervisory body of
less than three members shall be null
and void.
(2) Members of the supervisory body
are elected for a term of five years, or - if
the cooperative society is established for
a shorter period - for that period.
(3) The regulations governing personal
service contracts shall also apply to
members of the supervisory body.
Section 3:350
[Supervisory body operating
procedures]
(1) The supervisory body shall have a
quorum if at least two-thirds of its
members are present.
(2) Meetings of the supervisory body
are called by the chairman.
(3) The supervisory body shall
establish its own rules of procedure.
(4) The supervisory body shall give
account of its activities to the general
meeting at least once a year. Any
provision of the statutes providing for a
less frequent reporting obligation shall
be null and void.
Chapter XLIV
Auditor
Section 3:351
[Responsibilities of the auditor]
(1) The auditor shall be responsible for
carrying out the audits of accounting
documents according to the relevant
regulations, and to provide an
independent audit report to determine as
to whether the annual account of the
cooperative society is in conformity with
legal requirements, and whether it
provides a true and fair view of the
cooperative society’s assets and
liabilities, financial position, and profit or
loss.
(2) The auditor of a cooperative
society may be an individual auditor or
an audit firm shown in the register of
auditors. Where auditing services are
provided by an organization, this
organization shall be required to
designate the person who will be
personally responsible for carrying out
the audits.
(3) A member, executive officer or
supervisory board member of the
cooperative society and the family
members of these persons may not
serve as the auditor of that cooperative
136
society. An employee of the cooperative
society may not serve as the auditor
during the period of employment and for
a period of three years thereafter.
Section 3:352
[Commencement and term of
assignment of the auditor]
(1) The first auditor of the cooperative
society shall be designated in the
statutes, after which the auditors are
appointed by the general meeting.
Management shall enter into a contract
with the auditor within ninety days
following the date of delegation or
appointment, under the terms and
conditions and subject to the
remuneration specified by the general
meeting. If the contract is not concluded
within said time limit, the general
meeting shall select a new auditor.
(2) The auditor is elected for a term of
five years, or - if the cooperative society
is established for a shorter period - for
that period. The term of the auditor’s
mandate may not be less than the
period beginning when the auditor is
appointed by the general meeting and
ending at the time of the general
meeting convened to approve next
year’s annual account; any provision of
the statutes to the contrary shall be null
and void.
Section 3:353
[Carrying out the duties of the auditor]
(1) The auditor may not provide any
service to a cooperative society, and
may not collaborate with management in
a way that may imperil his ability to carry
out his auditing duties objectively and
independently.
(2) The auditor shall treat all secrets of
the cooperative society strictly
confidential.
(3) The auditor shall be invited to the
general meeting when discussing the
cooperative society’s financial report.
The auditor must attend these meetings,
however, if absent, the meeting will be
held nonetheless. The general meeting
may not adopt a decision concerning the
financial report without hearing the
auditor’s opinion.
(4) The auditor may attend the
meetings of management and - if the
cooperative society has a supervisory
body - the meetings of the supervisory
body in an advisory capacity, or must
attend such meetings when so
requested by the supervisory body. The
supervisory body shall put the items
recommended by the auditor on the
agenda.
TITLE XVIII
COOPERATIVE MEMBERSHIP
Section 3:354
[Commencement of membership]
(1) Membership in a cooperative
society shall commence upon the
foundation of the cooperative, or by way
of application submitted upon admission.
(2) In the application for admission the
applicant shall declare to abide by the
provisions of the statutes of the
cooperative society and shall indicate
137
the capital contribution agreed upon. If
the application for admission specified a
commitment for personal involvement,
the specifics of such involvement shall
be explained in detail.
(3) The provision of capital
contributions shall be governed by the
rules applicable to the foundation of
cooperative societies, where submission
of the application for registration and
registration shall be understood as the
date of admission.
(4) Prospective members seeking
admission to the cooperative society are
not required to provide any capital
contribution insofar as a member who
wishes to depart from the cooperative
society does not claim his share from the
cooperative society’s assets due on
account of terminating membership
based on an agreement with the
prospective new member. In that case,
the person seeking admission to the
cooperative society takes the place of
the departing member as regards the
economic rights and obligations
stemming from membership. This
provision shall also apply if an existing
member reaches an agreement with the
person seeking admission to the
cooperative society to transfer all
economic rights and obligations
attached to his capital contribution or a
part thereof, above and beyond the
minimum capital contribution required for
membership, to the person seeking
admission, if accepted.
Section 3:355
[Register of members]
Cooperative societies shall keep a
register of their members, containing the
member’s name and home address, or
registered office of members that are not
natural persons, the amount of the
member’s capital contribution, and the
date of commencement and termination
of membership. The register shall be
accessible to the general public subject
to proof of concern.
Section 3:356
[Members fundamental rights]
(1) Members shall have equal rights in
the governance and control of the
cooperative society, irrespective of their
capital contributions.
(2) The profits of a cooperative society
may be distributed among its members.
Half of the cooperative society’s profits
shall be distributed among the members
in proportion to their personal
involvement; any provision of the
statutes which provides for a distribution
ratio in connection with personal
involvement in less than half of the
profits shall be null and void.
Section 3:357
[Supplementary payments]
(1) If the statutes contains provisions
to authorize the general meeting to order
an obligation upon the members to
provide supplementary capital
contributions in order to cover the
cooperative society’s losses, members
may be obligated to provide additional
contributions once in a year, in
proportion to their capital contribution,
and such payment may not exceed thirty
138
per cent of the member’s capital
contribution.
(2) Supplementary capital
contributions which are not required to
cover losses shall be repaid to the
members. Such repayment, however,
may only take place after full payment of
the agreed capital contribution.
(3) The provisions on non-performance
of capital contribution shall apply to any
failure to provide supplementary capital
contributions.
Section 3:358
[Termination of membership]
Membership shall terminate:
a) upon the member’s withdrawal from
the cooperative society;
b) if the member did not provide his
capital contribution (supplementary
payments) within the time limit specified
by the statutes or in the general meeting
resolution;
c) upon the member’s death
(dissolution);
d) upon the member being excluded
by court order;
e) upon the cooperative being
terminated by way of transformation,
merger or division, or if dissolved without
succession.
Section 3:359
[Withdrawal of members]
Any member wishing to withdraw from
the cooperative society shall notify the
administrative body in writing.
Membership may be terminated after
three months from the date of the notice
of withdrawal; any provision of the
statutes providing for a time limit of over
three months shall be null and void in
respect of the part exceeding the three
month period.
Section 3:360
[Exclusion of members]
(1) A member of a cooperative society
can be excluded from the cooperative
society by court ruling based on a claim
launched by the cooperative society
against such member, if the continued
membership of the person in question
would seriously jeopardize the
cooperative society’s objective.
Membership shall terminate upon the
member’s exclusion.
(2) A procedure for the exclusion of a
member may be opened upon a
resolution adopted by the general
meeting by at least a three-quarters
majority of all members. The member
affected may not vote on that issue.
(3) The action showing the grounds for
exclusion shall be brought within a
fifteen-day preclusive period from the
date of the general meeting’s resolution.
(4) The court may suspend the
membership rights of the member
affected upon request, before the final
court ruling, if continued exercise of such
membership rights would seriously harm
the cooperative society’s interests. Such
suspension shall not affect the member’s
right to a share of the profit.
(5) During the period of suspension of
membership rights, the statutes may not
be amended, an action for the exclusion
of another member may not opened,
and a decision may not be taken to
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resolve the transformation, merger or
division of the cooperative society, or its
dissolution without succession.
Section 3:361
[Settlement upon the termination of
membership]
(1) If membership is terminated, the
member or his successor shall be
entitled to a share of the cooperative
society’s assets, for which he would be
entitled in the event of the cooperative
society’s dissolution without succession.
The above-specified share shall be
disbursed within three months from the
termination of membership; any
provision of the statutes providing for a
time limit of over three months shall be
null and void in respect of the part
exceeding the three month period.
(2) Upon the termination of
membership, at the member’s request
any asset he has provided to the
cooperative for common use, other than
cash contributions, shall be returned to
the member or to his successor if not
seeking admission to join the
cooperative society, provided that the
asset in question is still in the
cooperative’s possession. Said
disbursement shall take place in
conjunction with the settlement referred
to in Subsection (1). If the asset
provided for common use is no longer in
the cooperative’s possession as a result
of normal wear and tear, the cooperative
society shall not be held liable to pay
any compensation. If the abovespecified
asset is used following the
termination of membership, a fee shall
be paid to the former member or to his
successor if not seeking admission to
join the cooperative, for the period until
such asset is returned.
TITLE XIX
PROTECTION OF MINORITY
STAKEHOLDERS
Section 3:362
[Convocation of the general meeting]
(1) Members of the cooperative
society together controlling at least five
per cent of the voting rights may, at any
time, request that the general meeting
be convened, indicating the reason and
the purpose thereof, or the passing of a
decision out of session. If management
fails to comply with such request within
eight days of the date of receipt, and
fails to convene the general meeting at
the earliest possible date, or fails to
provide for the passing of a decision
without a meeting, the court of registry
shall convene the general meeting at the
request of the members making the
proposal, or shall empower the
requesting members to convene the
general meeting within the prescribed
deadline, or to carry out the procedure
for the passing of a decision out of
session.
(2) The expected costs shall be
covered by the requesting members.
The general meeting shall decide in a
session convened at the request of
minority stakeholders or by way of a
decision adopted without a meeting
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whether the costs incurred be borne by
the cooperative society or the persons
convening such meeting.
Section 3:363
[Requesting special audits]
(1) If the general meeting has refused
- or did not present for decision - a
proposal that the last financial report, or
any economic event which has occurred
in connection with the activities of
management during the last two years,
or any commitment be examined by an
auditor to be engaged specifically for
this purpose, such examination shall be
ordered at the expense of the
cooperative society, and the auditor
shall be appointed, by the court of
registry upon a request by any one
member or members controlling at least
five per cent of the votes submitted
within a thirty-day preclusive period
calculated from the date when the
general meeting was held.
(2) The court of registry shall refuse
the request in the event of abuse of
minority rights by the members
presenting the request.
(3) The cooperative society’s auditor
may not be appointed to carry out such
special audits.
(4) The costs of the audit shall be
advanced and borne by the cooperative
society. The cooperative society may
charge the costs upon the member
concerned if requesting the audit was
manifestly unfounded.
Section 3:364
[Initiating the enforcement of claims]
If the general meeting has refused - or
did not present for decision - a request
to enforce a claim against the members,
executive officers, supervisory board
members or against the auditor of the
cooperative society, any one member or
members controlling at least five per
cent of the votes may move within a
thirty-day preclusive period calculated
from the date of the general meeting to
enforce such claim themselves on behalf
and for the benefit of the cooperative
society.
Section 3:365
[Prohibition of derogations]
Any provision of the statutes which
derogates from the provisions of this
Title to the detriment of minorities shall
be null and void.
TITLE XX
TRANSFORMATION, MERGER
AND DIVISION OF
COOPERATIVE SOCIETIES
Section 3:366
[Transformation, merger and division
of cooperative societies]
(1) Transformation, merger or division
may be initiated by at least ten per cent
of the members or by the administrative
body.
(2) The members who decided to
withdraw from the cooperative society
upon transformation, merger or division
shall be liable for a period of five years
following the time of their withdrawal for
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any liability of the cooperative society
arising before the termination of his
membership, which have not been
covered by the successor, up to the
amount of the emolument to which they
are entitled upon termination of their
membership.
(3) A cooperative society may be
converted into a private limited-liability
company or a limited company.
(4) A limited company established
upon the transformation of a cooperative
society may only be established
privately.
TITLE XXI
TERMINATION OF
COOPERATIVE SOCIETIES
Section 3:367
[Termination of cooperative societies]
Apart from the general cases of
dissolution of a legal person without
succession, a cooperative society shall
be dissolved without succession if the
number of its members drops below
seven, and the cooperative society does
not apply for the registration of an
adequate number of new members at
the court of registry within a preclusive
period of six months from that time.
PART FIVE
GROUPINGS
Section 3:368
[Definition of groupings]
(1) A grouping (egyesülés) is a
cooperative association with legal
personality, founded by its members in
order to improve the efficiency of their
financial management, to coordinate
their economic activities, and to
represent their professional interests.
The purpose of a grouping is not to
make profits for itself; its members shall
bear unlimited, joint and several liability
for debts exceeding the grouping’s
assets.
(2) A grouping may also pursue other
service and joint economic activities
(economic auxiliary activities) in support
of its coordination duties.
(3) The common provisions relating to
business associations shall apply to
groupings subject to the exceptions set
out in this Part.
Section 3:369
[Memorandum of association of
groupings]
(1) In addition to the standard contents
of the mandatory layout of the
instrument of constitution, the
memorandum of association of a
grouping shall specify:
a) the responsibilities for facilitating
and coordinating the business activities
of members, and the related interest
representation activities;
b) the division of operating costs
among members, the amount and
method of settlement of the payments of
individual members;
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c) in the event of the withdrawal of a
member, the conditions for disbursing
the share of assets due to that member;
d) the order of distributing assets that
remain following the dissolution of the
grouping.
(2) If so required, the memorandum of
association shall inter alia define:
a) the economic auxiliary activities;
b) the amount of assets of the
grouping necessary for conducting
economic auxiliary activities;
c) within the framework of economic
auxiliary activities, the extent of voting
rights of individual members, and the
method of exercising such rights;
d) the rules for keeping separate
records on the income from, and the
costs and expenses of economic
auxiliary activities, and appropriating
after-tax profits from economic auxiliary
activities as determined based on these
records;
e) the conditions relating to other
services of value (hereinafter referred to
as „ancillary services”) due from
members.
Section 3:370
[Financial issues between the
company and its members]
(1) Members are entitled to use the
services provided by the grouping
without compensation; they are entitled
to a share of after-tax profits from
economic activities provided to third
parties.
(2) Members may be entitled to
remuneration for such ancillary services.
(3) After-tax profits arising from
economic activities shall be distributed
among members in proportion to their
contributions. Otherwise, profits shall be
distributed among members in equal
proportions.
Section 3:371
[Members’ meeting]
(1) The supreme body of a grouping is
the members’ meeting. Members may
not be represented at the members’
meeting by the director, the supervisory
board members or the auditor.
(2) The members’ meeting shall
convene at least once every year, or as
necessary. Any clause of the statutes
providing for less frequent meetings
shall be null and void.
(3) The members’ meeting has a
quorum if members representing at least
three-quarters or more of the votes are
present.
Section 3:372
[Powers of the members’ meeting,
decision-making]
(1) The following shall fall within the
exclusive competence of the members’
meeting:
a) drawing up the rules pertaining to
the management and control of the
grouping’s internal organization;
b) laying down the strategy for
coordination and interest representation
activities, and for economic auxiliary
activities;
c) approval of the grouping’s financial
report;
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d) decision on the appropriation of
after-tax profits from economic auxiliary
activities;
e) adopting resolutions to define the
tasks to be implemented in the business
administration of members;
f) decision on dissolution without
succession, transformation, merger or
division of the grouping;
g) approval of admission to the
grouping, and approval of the restriction
of liability of new members;
h) election and removal of the director,
as well as the exercise of employer’s
rights related to the director;
i) election of the supervisory board,
where applicable, the removal of its
members, and establishing their
remuneration;
j) if the grouping employs an auditor,
appointment and removal of the auditor,
and establishing his remuneration;
k) amendments to the memorandum of
association;
l) initiating the exclusion of a member;
m) decisions to conclude or amend
contracts the values of which exceeds
the value limit specified in the
memorandum of association, or which
are concluded between the grouping
and one of its members outside the
scope of its ordinary activity;
n) decisions on all issues which are
conferred under the competence of the
members’ meeting by this Act or the
memorandum of association.
(2) In connection with issues of
coordination and interest representation
all members shall have one vote. The
memorandum of association may,
however, grant multiple voting rights to
certain members, with the restriction that
no single member may acquire more
than fifty per cent of the votes.
(3) Within the scope of economic
auxiliary activities, as well as on the
issues listed under Paragraphs f)-g) and
l)-m) of Subsection (1) hereof, voting
rights shall be established in proportion
to the capital contributions provided, or
failing this, equivalent votes shall be
granted.
(4) An unanimous decision by the
members shall be required:
a) for changing the activity of the
grouping;
b) for changing the number of votes of
the individual members;
c) altering the conditions for passing
resolutions.
(5) A majority of at least three-quarters
of the votes shall be required to resolve
the dissolution of the grouping without
succession, transformation, merger or
division, to grant approval for the
admission of new members and to
initiate the exclusion of members, as
well as to amend the memorandum of
association for any other reason, if such
amendment does not fall within the
scope of Subsection (3).
(6) A majority of at least three-quarters
of the votes shall be required in order to
adopt a resolution aiming to establish
obligations to be implemented within the
business administration of members.
Such resolution may be adopted with the
consent of the member concerned.
Section 3:373
144
[Management and representation of
groupings]
(1) Management and representation of
a grouping shall be carried out by the
director within the framework of the
resolutions of the members’ meeting.
(2) The memorandum of association
may contain provisions to confer
management upon a management
board consisting of three members. In
that case, the members of the
management board shall be treated as
directors. The decision for the election of
members of the management board,
their term in office, remuneration and
dismissal, and on the approval of the
management board’s rules of procedure
lies with the members’ meeting.
Section 3:374
[Accession]
(1) According to the conditions
contained in the memorandum of
association, any person may join a
grouping.
(2) Decisions for admission lie with the
members’ meeting, including the date of
admission, the related obligations, and
the extent of the voting rights of the new
member within the scope of the
economic auxiliary activities.
(3) New members shall be liable for
the obligations of the grouping arising
prior to their admission, unless the
resolution approving admission exempts
new members from such liability
previously.
(4) The fact and date of the admission,
as well as the exemption from liability
shall be entered in the register.
Exemptions shall be considered
effective in dealings with third parties as
of the date of such entry.
Section 3:375
[Termination of membership]
(1) Membership shall terminate:
a) if the member failed to provide his
capital contribution defined in the
memorandum of association within the
prescribed deadline of not less than
fifteen days, despite having been asked
to do so;
b) upon withdrawal of the member;
c) upon the member’s exclusion;
d) upon death or dissolution of the
member without succession;
e) if the existence of such is
considered unlawful;
f) upon the transfer of membership
rights.
(2) The transfer of membership rights
shall be governed by the regulations on
admission.
(3) Members may withdraw from the
grouping at the end of the year. Notice
of intention to withdraw shall be
submitted at least three months before
the end of the year.
Section 3:376
[Rules of accounting with departing
members]
(1) Accounts shall be settled with
departing members according to the
status existing at the time of withdrawal.
The members’ meeting shall decide
when and in what installments the share
of assets due to the departing member
is to be disbursed. The date set for
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disbursement shall not jeopardize the
continued operation of the grouping, and
disbursement shall be completed within
a period of one year.
(2) If disbursement does not take place
upon the member’s withdrawal, a
proportionate share of after-tax profits
shall be due to the departing member
commensurate with his assets yet to be
disbursed.
(3) In the event of the member’s death
or dissolution, the provisions of
Subsections (1)-(2) shall apply to
rendering accounts with the member’s
legal successor or heir. If, however, the
successor or heir intends to continue the
activity of the member, he may join the
grouping upon the consent of the
members’ meeting. In that case, liability
for obligations arising prior to the
termination of the membership of the
predecessor shall be borne by the new
member assuming the membership
rights.
Section 3:377
[Distribution of assets upon
termination of the grouping]
In the event of dissolution of a
grouping without succession, the assets
remaining after settlement of all debts
shall be distributed among the members
in equal proportions, or, if capital
contributions were provided by the
members, it shall be distributed in
proportion to the capital contributions of
such members.
PART SIX
FOUNDATIONS
TITLE XXII
DEFINITION OF FOUNDATIONS,
SETTING UP FOUNDATIONS,
ASSETS OF FOUNDATIONS
Section 3:378
[Definition of foundations]
Foundations (alapítvány) are legal
persons set up to pursue the long-term
objective defined in the charter
document. The founder shall define in
the charter document the funds made
available to the foundation and the
organizational structure of the
foundation.
Section 3:379
[Limitations on the activities of
foundations]
(1) A foundation may not be formed
with the objective of performing
economic activities.
(2) Foundations are authorized to
perform economic activities only if they
are directly connected to the
achievement of the foundation’s goals.
(3) A foundation may not be a partner
with unlimited liability in another legal
entity, may not set up another
foundation, and may not join another
foundation.
(4) Unless otherwise provided for in
this Act, a foundation may not be
established in the interest of its founder,
any member current or future, any officer
146
of the foundation, any member of a
foundation organ, or the family members
of these persons. This provision shall be
without prejudice to the contractual
remuneration of the foundation’s
officers.
Section 3:380
[Setting up a foundation by more than
one founders]
(1) A foundation may be set up by
several persons jointly.
(2) Where a foundation is established
by several persons, founder’s rights shall
be exercised by these persons jointly.
Section 3:381
[Withdrawal of legal statement for
setting up a foundation]
Before the time of registration the
founder shall be entitled to withdraw his
legal statement for setting up a
foundation.
Section 3:382
[Provision of funds]
(1) The founder shall provide the funds
required for the foundation’s purpose as
provided for in the charter document.
(2) The founder shall place at the
foundation’s disposal funds to cover at
least the expenses for taking up
operations at the latest by the time of
submission of the application for
registration.
(3) The founder shall place at the
foundation’s disposal the whole of the
committed assets within one year after
the time of registration of the foundation.
(4) If the founder fails to place the
whole of the committed assets at the
foundation’s disposal by the deadline
specified in the charter document, the
board of trustees shall call upon the
founder to comply within the prescribed
time limit. In the event of noncompliance
within the prescribed time
limit, the court of registry - acting upon
notice received from the board of
trustees - shall suspend the exercise of
founder’s rights. During the period of
suspension the court of registry shall
exercise founder’s rights.
(5) The suspension of founder’s rights
shall not relieve the founder of his
obligation undertaken in the charter
document.
Section 3:383
[Joining a foundation]
(1) A foundation may accept new
members upon the contribution of funds,
subject to the conditions set out in the
charter document.
(2) If the new member is granted
entitlement to exercise founder’s rights
under the charter document, such rights
may be exercised after the accession in
conjunction with other persons having
the same entitlement.
Section 3:384
[Management and protection of the
foundation’s assets]
(1) Foundations shall manage and use
their assets in accordance with their
purpose, as provided for in the charter
document.
147
(2) The founder and new members
may not appropriate the foundation’s
assets for other purposes and may not
demand to recover such assets; any
provision of the charter document to the
contrary shall be null and void. This
provision shall also apply to the
founder’s and any new member’s
successor as well.
Section 3:385
[Beneficiaries]
Financial benefits may be provided
from the foundation’s assets, consistent
with the foundation’s objectives, to
persons designated as beneficiaries in
the charter document, or in the absence
of such instruction, by the appropriate
foundation organ.
Section 3:386
[Founder and his family member
named as beneficiary]
(1) The founder and any new member
can be named as beneficiary if the
foundation is established for the purpose
of caring for the founder’s scientific,
literary and artistic works.
(2) The family members of the founder
and any new member can be named as
beneficiary if the foundation is
established for the purpose of caring for
the family member’s scientific, literary
and artistic works, or the caring, nursing
or maintenance of the family member,
covering the family member’s medical
expenses, and supporting his education
by way of scholarship or otherwise.
Section 3:387
[Claims which may be lodged by the
beneficiary against the foundation]
The designated beneficiary may not
make any claims against the foundation,
except if:
a) the charter document properly
specifies the person of the beneficiary,
the benefits due to such person, and the
date when the benefits are due; or
b) the board of trustees has adopted a
decision for providing benefits to the
beneficiary and delivered this decision to
the beneficiary, and the beneficiary
accepted the applicable conditions.
TITLE XXIII
SETTING UP A FOUNDATION
BY WAY OF TESTAMENTARY
DISPOSITION
Section 3:388
[Setting up a foundation by way of
testamentary disposition]
(1) A foundation may be set up by
means of a holographic will or an
agreement as to succession. In these
cases the testamentary disposition is to
contain the content elements of the
charter document.
(2) In the case of a foundation set up
by means of a holographic will or an
agreement as to succession, the
application for the foundation’s
registration shall be handled by a person
designated to sit on the board of
trustees. If neither of the persons
designated to sit on the board of
trustees provides for the registration of
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the foundation, it will be handled by the
guardian ad litem appointed by the court
of registry.
(3) A foundation set up by means of a
holographic will or an agreement as to
succession shall enter into existence
with retroactive effect from the date of
registration.
(4) The person dealing with the
registration of the foundation shall be
entitled to take action in connection with
the foundation’s assets and shall provide
for the protection of such assets.
Section 3:389
[Setting up a foundation by way of
enjoinder]
(1) Setting up a foundation may be
ordered by the testator by means of
enjoinder. The enjoinder shall specify
the purpose of the foundation to be
established and the funds of the
foundation, as well as a person vested
with the right to demand that the
foundation be established.
(2) If the person who is the subject of
the enjoinder fails to comply, the person
entitled to demand the starting of the
foundation may bring court action to
demand to have the foundation’s charter
document drafted by court verdict and to
order the heir or the legatee to provide
funds for starting the foundation. The
person entitled to demand the starting of
the foundation may request the court of
registry to register the foundation based
on the said court ruling.
Section 3:390
[Failure to start a foundation by way of
testamentary disposition]
(1) If the foundation is not started in
the public interest as provided for in a
will or an agreement as to succession,
the testator’s grant shall be treated as a
public interest enjoinder, and the assets
designated for the foundation shall be
handled in the interest of implementing
the purpose of the foundation.
(2) If the private foundation provided
for in a will or an agreement as to
succession is not started, the assets
thus affected shall form part of the
estate.
TITLE XXIV
CHARTER DOCUMENT
Section 3:391
[Mandatory layout of the charter
document]
(1) In addition to the standard contents
of the mandatory layout of the
instrument of constitution of a legal
person, the charter document of a
foundation shall specify:
a) if it was established for a fixed or
unfixed duration, and the fixed-term of
the foundation if applicable;
b) the rules for the management and
appropriation of the foundation’s assets;
c) the rules for the commencement
and termination of membership in the
board of trustees, if such mandate is
awarded for a fixed or unfixed duration,
the fixed-term of membership in the
board of trustees if applicable, and the
149
grounds for exclusion of members of the
board of trustees, and the reasons
giving cause to conflict of interest;
d) the rules for determining the
remuneration of members of the board
of trustees.
(2) The charter document shall - if
necessary - provide for:
a) the rules for delegating founder’s
rights upon a specific foundation organ;
b) the rules for the transfer of founder’s
rights;
c) granting permission for joining the
foundation in exchange for the
contribution of funds, the conditions
thereof, and the founder’s and other
rights of the new member;
d) the pursuit of economic activities,
and the framework thereof;
e) the powers of foundation organs,
including their rules of procedure;
f) the convocation of founders’
meetings, including the operational
arrangements for such meetings;
g) the formation of foundation organs
not provided for in this Act, laying down
their rules of procedure, and for the
appointment, recall and remuneration of
members of such organs;
h) the detailed rules for representing
the foundation, including the designation
of a party entitled to exercise employer’s
rights in connection with the foundation’s
employees;
i) the range of beneficiaries, or naming
specific persons as beneficiaries, and for
the services and rights which are due to
the beneficiaries;
j) naming the person to whom the
foundation’s remaining assets will be
transferred in the event of the
foundation’s dissolution without
succession.
Section 3:392
[Interpretation of the charter
document]
The charter document shall be
interpreted in accordance with the entire
understanding of the founder, with a
view to achieving the foundation’s
objective.
Section 3:393
[Amendment of the charter document]
(1) Any amendment of the charter
document aiming to alter the
foundation’s purpose shall be
considered annulled, except if the
foundation has fulfilled its purpose, or if
achieving the foundation’s objective is
no longer possible and the foundation
has enough funds for its new objective.
(2) Any amendment of the charter
document aiming to diminish the
foundation’s assets, or to change the
person designated as the beneficiary for
the eventuality of dissolution without
succession - if a new member joined the
foundation - shall be considered null and
void.
TITLE XXV
THE EXERCISING OF
FOUNDER’S RIGHTS
Section 3:394
150
[Exercising founder’s rights in the
founder’s absence]
(1) In the event of the founder’s death
or dissolution without succession, or if
permanently unable to exercise
founder’s rights, founder’s rights shall be
exercised by a person or foundation
organ designated in the charter
document, or failing this, by the board of
trustees.
(2) If founder’s rights are exercised by
a person other than the founder, the
provisions of this Act pertaining to the
founder shall apply to the person or
organ effectively exercising founder’s
rights.
(3) Where a specific foundation organ
has authority to exercise founder’s
rights, such foundation organ shall not
be able to exercise founder’s rights in
dealings with its own members and
director, including other persons with
authority to supervise the organ in
question.
(4) If the right to exercise founder’s
rights has not been delegated upon any
person or organ as provided for in
Subsections (1)-(3), founder’s rights
shall be exercised by the court of
registry.
Section 3:395
[Founders’ meetings]
(1) If a foundation is started by several
persons, where founder’s rights are
exercised collectively in the form of a
body, in matters not regulated by the
charter document the provisions on the
general meeting of associations shall
apply to the founders’ meeting.
(2) In exercising founder’s rights by
way of the founders meeting, any
founder who cannot be located and who
fails to exercise his founder’s rights
despite of being so advised by means of
public notice shall be disregarded.
(3) The provisions contained in
Subsection (2) shall also apply if a
designated organ of the foundation
exercises founder’s rights in the form of
a body.
Section 3:396
[Assignment of the rights and
obligations of founders]
The founder shall be entitled to assign
founder’s rights and obligations upon
having provided the capital contribution
in accordance with the charter
document.
TITLE XXVI
FOUNDATION ORGANS
Section 3:397
[Board of trustees]
(1) The board of trustees functions as
the foundation’s managing body.
Members of the board of trustees are the
executive officers of the foundation.
(2) The board is comprised of three
natural persons, at least two of which
shall be residents of Hungary.
(3) No beneficiary of the foundation or
his close relative may hold a seat on the
board. Any provision of the charter
document to the contrary shall be null
and void.
151
(4) The founder and his close relatives
may not have majority in the board of
trustees. Any provision of the charter
document to the contrary shall be null
and void.
(5) The founder may appoint a trustee
to function as a single-member
managing body of the foundation. The
provisions pertaining to the board of
trustees shall also apply to the trustee.
Section 3:398
[Provisions relating to membership in
the board of trustees]
(1) Members of the board are elected
for a specified or unspecified duration.
(2) The person exercising founders’
rights shall have authority to recall any
member of the board of trustees before
the expiry of his mandate, if he
considers that the foundation’s purpose
is in imminent jeopardy.
Section 3:399
[Board of trustees operating
procedures]
(1) If the founder did not reserve the
right to delegate the chairman of the
board of trustees and did not transfer
this right to another officer of the
foundation or to another foundation
organ, members of the board of trustees
shall elect a chairman from among
themselves.
(2) The board of trustees shall
convene at least once a year, called by
the chairman. Any clause of the charter
document providing for less frequent
meetings shall be null and void.
(3) The board of trustees shall be
convened at the request of either of its
members, with the purpose and the
reason indicated. If so requested, the
chairman of the board of trustees shall
take measures within eight days from
the date of receipt of the request for
calling the meeting. If the chairman of
the board of trustees fails to comply with
the request, the requesting member
shall have authority to convene the
meeting.
Section 3:400
[Supervisory body]
(1) If the foundation has a supervisory
body, it shall carry out its activities on
the founder’s behalf, and shall once a
year give account of its activities to the
person exercising founder’s rights.
(2) The grounds for exclusion of
members of the board of trustees, and
the reasons giving cause to any conflict
of interest shall also apply to members
of the supervisory body.
Section 3:401
[Other foundation organs]
Other foundation organs should not
undermine the rights of the board of
trustees, the supervisory body or the
auditor.
TITLE XXVII
TRANSFORMATION AND
DISSOLUTION OF
FOUNDATIONS
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Section 3:402
[Transformation of foundations]
(1) A foundation may merge only with
another foundation or may be divided
into foundations only.
(2) The founder may decide to merge
the foundation with another foundation,
or to divide the foundation, upon having
provided the capital contribution
specified in the charter document.
(3) Merger or division must not be
allowed to impair the foundation’s
assets, and may not jeopardize the
foundation’s purpose.
Section 3:403
[Dissolution of foundations]
(1) A foundation shall cease to exist if:
a) the foundation has fulfilled its
purpose, and a new objective has not
been determined;
b) fulfillment of the foundation’s
purpose is no longer possible, and
revisiting the objective or merging with
another foundation cannot be done; or
c) the foundation is not pursuing any
activity with a view to fulfilling its goal for
a period of three years.
(2) The founder shall not have the right
to dissolve the foundation.
(3) Upon the occurrence of any reason
for termination, the board shall notify the
person or organ exercising founder’s
rights to take the necessary measures
and shall relate said reason for
termination to the supervisory body and
the auditor as well.
(4) If the person or organ exercising
founder’s rights fails to take proper
action based on the reason for
termination within thirty days, the board
shall then report the reason for
termination to the court of registry.
Members of the board of trustees shall
bear joint and several liability towards
third parties for damages arising from
non-compliance with the obligation of
notification in due time.
(5) In the event of the foundation’s
dissolution without succession, the
assets of the foundation remaining after
all creditors’ claims are satisfied shall be
provided for in the certificate of
dissolution.
Section 3:404
[Assets of the foundation after
dissolution without succession]
(1) In the event of the foundation’s
dissolution without succession, the
assets of the foundation remaining after
all creditors’ claims are satisfied shall be
given to the person so designated in the
charter document, with the proviso that
the assets due to the founder, any new
member, other benefactor, or their family
members may not exceed the funds that
the founder, new member, other
benefactor, or their family members
have provided to the foundation.
(2) Upon the foundation’s dissolution
without succession, the founder may
dispose of the assets he has provided
for the benefit of another foundation or
an association having the same or
similar objective, if the charter document
fails to provide for the appropriation of
the assets in such cases, or if such
provision cannot be executed.
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(3) The assets shall be assigned to the
foundation designated by the court of
registry, if the founder does not dispose
of the assets of the dissolved
foundation, or if the person the founder
has designated refuses to accept it, or
cannot acquire it.
(4) The court of registry shall assign
the assets - taking into account the
views of the board of trustees and the
supervisory body - to a foundation
having the same objective or, failing this,
a similar objective. The foundation is to
decide whether or not to accept the
assets.
PART SEVEN
STATE INVOLVEMENT IN CIVIL
RELATIONS
Section 3:405
[The State as a subject at law]
(1) The State shall participate in civil
relations as a legal person.
(2) The minister vested with powers to
oversee State property shall represent
the State in civil relations.
Section 3:406
[Liability for the obligations of the
State]
The State and legal persons being part
of general government shall remain
liable for their obligations arising out of
or in connection with civil relations even
in the absence of budgetary
appropriations.
BOOK FOUR
FAMILY LAW
PART ONE
PRINCIPLES
Section 4:1
[Protection of the institution of
marriage and the family]
(1) The institution of marriage and
family life is protected by law.
(2) The provisions of this Act shall be
applied with a view to reconciling family
life and individual interests.
Section 4:2
[Protection of the interests of children]
(1) In family law the interests and
rights of children merit enhanced
protection.
(2) All children have the right to grow
up in their own family.
(3) If raising a child in his own family is
not an option, all possibilities should be
explored to find ways for the child to
grow up in a family environment and to
maintain prior family ties.
(4) The right of children to grow up in
their own families, or alternatively in a
family setting, and to maintaining prior
family ties may be limited in cases
defined by law, under exceptional
circumstances and in the best interests
of the child.
Section 4:3
154
[Principle of equality of spouses]
In family life and in family affairs
spouses shall be considered equals;
they shall have equal rights and
obligations.
Section 4:4
[Principle of fairness and protection of
the weaker party]
Family relations should be resolved
under the principle of fairness and in due
consideration of the protection of the
party who is considered weaker in
standing up for his/her interests.
PART TWO
THE INSTITUTION OF
MARRIAGE
TITLE I
THE ACT OF MARRIAGE
Section 4:5
[Contracting marriage]
(1) Marriage shall be considered
contracted if a man and a woman
together appears before the registrar in
person and declare their intention to
marry. Such declaration cannot be made
subject to a condition or time limit.
(2) After the exchange of wedding
vows, the registrar shall declare the
parties united in marriage, and shall
record the fact of marriage in the
marriage registry.
(3) Marriage shall not be contracted in
the absence of the conditions set out in
Subsection (1). A non-existent marriage
shall be treated as if it has never been
contracted.
Section 4:6
[Establishing the existence or nonexistence
of marriage]
(1) If the existence or non-existence of
a marriage cannot be clarified in
administrative proceedings, an action for
determining the existence or nonexistence
of a marriage may be brought
by either of the spouses, the public
prosecutor, or by any person who has a
legal interest therein.
(2) The action shall be brought by a
spouse against the other spouse, or by
the public prosecutor or a third party
authorized to bring action against both
spouses. If the party against whom the
action is to be brought is no longer alive,
the guardian ad litem appointed by the
court shall be named as the defendant in
the action.
(3) The judgment on the existence or
non-existence of the marriage applies to
all parties involved.
Section 4:7
[Actions prior to marriage]
(1) Before marriage both parties to the
marriage shall declare in front of the
registrar that no legal impediment exists
as to their marriage, and they shall verify
that the legal requirements for their
marriage are satisfied.
(2) The registrar shall schedule the
marriage for a date thirty days after the
155
time of receipt of the notification of intent
to marry. In justified cases, the notary
may grant exemption from that time limit.
(3) Where either of the parties to the
marriage suffers in a terminal illness, the
statement of the parties shall suffice in
place of verifying all legal requirements
of marriage, and marriage may be
contracted immediately upon
notification.
Section 4:8
[Formalities of marriage]
(1) Marriage shall take place publicly,
in an office of the local authority before
two witnesses.
(2) At the request of the parties the
marriage may take place privately, or subject
to authorization by the notary - in
a place other than the office of the local
authority, if deemed appropriate.
TITLE II
ANNULMENT OF MARRIAGE
Chapter I
Causes of Annulment of Marriage
Section 4:9
[Legal age for marriage]
(1) The marriage of a minor shall be
considered void if entered into without
the prior consent of the guardian
authority.
(2) In cases provided for by law, the
guardian authority may authorize the
marriage of a minor of limited legal
capacity over the age of sixteen years.
(3) The guardian authority shall
interview the parent or guardian before
deciding on the granting or refusal of the
authorization. If the parent has no
authority to exercise parental custody in
major issues relating to the child’s
affairs, or if his whereabouts are
unknown or if any insurmountable
obstacles exist, the aforesaid interview is
not required.
(4) A marriage entered into without the
guardian authority’s permission or before
the age of sixteen years shall become
valid after six months following the date
of the spouse reaching legal age with
retroactive effect to the date of marriage,
if the spouse affected does not
challenge the existing marriage within
such preclusive period, or if the court
dismisses - at his request - any action
previously brought on the same grounds
by another person.
Section 4:10
[Marriage of an incompetent person
placed under guardianship]
(1) The marriage of any person under
guardianship invoking fully limited legal
competency at the time of marriage shall
be invalid.
(2) The marriage of a person under
guardianship shall become valid after six
months following the date of termination
of guardianship with retroactive effect to
the date of marriage, if the spouse who
is the reason for invalidity does not
challenge the existing marriage within
such preclusive period, or if the court
156
dismisses - at his request - any action
previously brought on the same grounds
by another person.
Section 4:11
[Marriage of an incompetent person]
(1) The marriage of any person who
was legally incompetent at the time of
marriage shall be invalid.
(2) The marriage shall become valid
after six months following the date of the
spouse regaining legal competency with
retroactive effect to the date of marriage,
if the spouse who is the reason for
invalidity does not challenge the existing
marriage inside such preclusive period.
Section 4:12
[Family ties, relations]
(1) Marriage shall be invalid if it takes
place:
a) between relatives in direct line;
b) between siblings;
c) between a person and the biological
descendant of his/her sibling; and
d) between the adoptive parent and
the adopted person during the existence
of the adoption.
(2) The marriage between a person
and the biological descendant of his/her
sibling shall not be considered invalid if
the notary grants an exemption from the
impediment to marriage before or after
the marriage takes place. An exemption
may be granted if the matrimonial union
of the spouses does not jeopardize the
health of their children to be born as a
result of such relation.
Section 4:13
[Existing marriage]
(1) Marriage shall be declared invalid if
one of the parties to the marriage is
already married.
(2) The latter marriage shall become
valid from the date of dissolution of the
previous marriage. If the court declared
the previous marriage annulled, the
latter marriage shall become valid
retroactively from the date when it took
place.
Chapter II
Annulment of Marriages
Section 4:14
[Annulment of a marriage]
(1) A marriage shall be considered
annulled upon the act of a court in
voiding the marriage in an action
brought for such reason (hereinafter
referred to as „action for annulment”).
(2) The judgment for annulment of the
marriage applies to all parties involved.
(3) An annulled marriage shall be
subject to the legal effects set out in this
Act.
Section 4:15
[Right to bring an action for annulment]
(1) Actions for annulment may be
brought during the existence or after the
dissolution of the marriage.
(2) Unless otherwise provided for in
this Act, an action for annulment may be
brought by either of the spouses, the
public prosecutor, or by any person who
157
has a legal interest in the nullity of the
marriage.
(3) In the event of death of the person
who brought the action, any person with
a vested interest may take his/her place
in the action.
Section 4:16
[Limitation of the right to bring an
action]
(1) If a marriage was declared invalid
due to the absence of permission to
marry for reason of minority or for
reason of guardianship the spouse who
was the reason for invalidity may bring
action for annulment after reaching legal
age, or after the termination of
guardianship. The action for annulment
may be brought within six months from
the time of reaching legal age, or from
the time of termination of guardianship.
(2) An action for annulment may be
brought on the grounds of incompetency
at the time of marriage by the spouse
who was legally incompetent at the time
of marriage. The action for annulment
may be brought within six months from
the time of regaining legal competency,
as from the day when legal competency
was in fact re-established. In the event
of the spouse’s death before regaining
legal competency, the public prosecutor
may bring action for annulment of the
marriage within six months from the date
of the spouse’s death.
(3) The deadlines specified in
Subsections (1)-(2) shall apply with
prejudice.
(4) If the spouse having exclusive right
to bring action under Subsections (1)-(2)
dies, any person who has the right to
bring an action for annulment may join
the action in his/her place.
Section 4:17
[Exercising the right to bring action]
(1) An action for annulment shall be
brought by the entitled party in person.
(2) Any spouse whose capacity in legal
actions has been partially limited may
bring action without the consent of
his/her legal representative.
(3) If the entitled party is incompetent,
the action may be brought in his/her
name by the legal representative upon
the guardian authority’s consent.
Section 4:18
[Respondents in actions for
annulment]
The action for annulment shall be
brought by a spouse against the other
spouse, or by the public prosecutor or a
third party authorized to bring action
against both spouses. If the party
against whom the action is to be brought
is no longer alive, the guardian ad litem
appointed by the court shall be named
as the defendant in the action.
Section 4:19
[Validity of marriages]
The provisions pertaining to actions for
the annulment of marriages shall apply
mutatis mutandis to actions for the
validity of marriages.
TITLE III
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TERMINATION OF MARRIAGES
Section 4:20
[Cases of termination of a marriage]
(1) Marriage shall cease to exist:
a) in the event of the death of one of
the spouses;
b) if dissolved by court order.
(2) The marriage shall be considered
terminated if the other spouse re-married
- if the registry entry on the spouse’s
death or the court ruling declaring the
person in question dead or on the legal
presumption of death is abolished upon
the latter marriage - provided that neither
of the parties to the marriage had been
aware that the death did not occur.
(3) In the cases provided for in
Paragraph a) of Subsection (1) and in
Subsection (2) hereof, the date of
dissolution of the marriage shall be the
day shown as the date of death on the
death certificate or in the relevant court
decision. In the case of Paragraph b) of
Subsection (1) the marriage shall be
considered terminated on the effective
date of the final judgment granting
divorce.
Section 4:21
[Dissolution of marriage]
(1) The court shall dissolve the
marriage at the request of either of the
spouses, in the event of breakdown of
the marriage due to irreconcilable
differences. The marriage shall be
considered to have broken down if the
relationship of the spouses has been
destroyed and there is no reasonable
expectation of reconciliation judging
from the events that led to destruction of
their life as a couple, or based on the
length of their separation.
(2) The court shall dissolve the
marriage irrespective of what is
contained in Subsection (1), if so
requested by the spouses based on their
mutual agreement reached without
undue influence reflecting their final
intent.
(3) Dissolution of the marriage under
Subsection (2) should be possible if the
spouses agreed upon parental custody
in connection with their common child,
including visitation rights between the
separated parent and the child, the
maintenance of the child, use of the
spouses common home, and also on
spousal support where applicable, and if
the court sustained their settlement
agreement.
(4) If the spouses agreed to exercise
parental supervision jointly, no
agreement is required in terms of
visitation rights, however, the child’s
home must be specified.
(5) The dissolution of marriage shall be
carried out in consideration of the best
interest of the common child.
(6) In exercising parental supervision,
in the relationship between parent and
child and in making arrangements for
the maintenance of the child, the best
interest of the child must be given
priority.
Section 4:22
[Mediation]
159
Before filing for divorce, or during the
divorce action the spouses shall have
access to mediation - of their own
accord or by recommendation of the
court - attempting to reconcile their
differences or to settle any disputes they
may have in connection with the divorce
by way of an agreement. The agreement
reached in conclusion of the mediation
process may be fixed in a court
settlement.
Section 4:23
[Bringing action for the dissolution of
marriage; effect of divorce]
(1) An action for the dissolution of
marriage shall be filed by a spouse
against the other spouse, in person.
(2) Any spouse whose capacity in legal
actions has been partially limited may
also bring action without the consent of
his/her legal representative.
(3) If the spouse is incompetent, the
action may be brought in his/her name
by the legal representative upon the
guardian authority’s consent.
(4) The decree of divorce applies to all
parties involved.
TITLE IV
PERSONAL RELATIONS OF
SPOUSES
Chapter III
General Provisions
Section 4:24
[Obligation of cooperation and support]
(1) Spouses must be loyal and faithful
to each other; they shall cooperate in
their common goals and shall support
one another.
(2) In cases defined by law, the
obligation of support shall remain in
force after the dissolution of the
marriage.
Section 4:25
[Collective and individual power of
decision]
In family life and in family affairs
spouses shall make decisions
collectively, in their personal affairs the
spouses shall decide themselves, in the
best interest of the family, taking also
into account the interest of their children
and their own.
Section 4:26
[Choosing a home]
Spouses shall choose their home
jointly, in agreement with each other.
Chapter IV
Married Names
Section 4:27
[Provisions on surnames in marriage]
(1) Upon marriage, the wife shall have
the option:
a) to keep her birth name, or her name
immediately before the time of marriage;
b) to bear her husband’s full name with
an indication of marital status, possibly
160
with her name immediately before the
time of marriage attached;
c) to bear her husband’s surname with
an indication of marital status and with
her name immediately before the time of
marriage attached; or
d) to bear her husband’s surname with
her own forename.
(2) Upon marriage, the husband shall
have the option:
a) to keep his birth name, or his name
immediately before the time of marriage;
or
d) to bear his wife’s surname with his
own forename.
(3) Upon marriage, the husband and
the wife may choose to use both of their
surnames merged together as their
married name, with their own forename
attached. The surname part of a merged
married name may consist of two
segments at most.
(4) In the cases provided for in
Paragraphs b)-d) of Subsection (1),
Paragraph b) of Subsection (2) and in
Subsection (3) hereof the spouses shall
use a common married name.
(5) Subject to the exception set out in
Subsection (3), only one of the parties to
the marriage may use the other’s
surname as a married name.
(6) The parties to the marriage may
agree as to the use of name under
Subsections (1)-(3). In the absence of
an agreement, the spouses shall
continue to use their name from before
the marriage, except if the wife uses the
married name in Paragraph b) or c) of
Subsection (1).
Section 4:28
[Provisions on surnames after
termination of marriage by dissolution or
annulment]
(1) Following the dissolution or
annulment of marriage, the former
spouses shall continue to use the name
used during their marriage. If either of
them wishes to do otherwise, he/she
may so notify the registrar following the
dissolution or annulment of marriage.
Even in this case the ex wife shall not be
able to use her ex husband’s name with
an indication of marital status, if she did
not use that name during the marriage.
(2) The court may - at the former
husband’s request - ban the former wife
from using a surname with an indication
of marital status, if the wife is sentenced
to imprisonment by final verdict for an
intentional criminal offense.
(3) If re-married, the wife and the
husband shall be entitled to retain the
married name from his or her previous
marriage, with the exception that the
wife shall not use her ex husband’s
name with an indication of marital status,
and this right shall not be reinstated after
the termination of latter marriage either.
TITLE V
SPOUSAL SUPPORT
Section 4:29
[Entitlement for maintenance]
(1) Following the termination of
matrimonial relationship, either spouse
shall be entitled to demand maintenance
from his/her spouse, or ex spouse in the
161
case of divorce, if unable to support
him/herself for reasons beyond his/her
control.
(2) If the spouse or former spouse
develops the need for support after a
period of five years following the
termination of matrimonial relationship,
maintenance may be demanded in
cases of exceptional circumstances.
(3) If the matrimonial relationship of
the spouses lasts for less than one year,
and their marriage did not produce a
child, the former spouse shall be entitled
to maintenance - if in need - for a
duration corresponding with the length of
their marriage. In cases of exceptional
circumstances, the court may order
maintenance payments for a longer
period of time.
Section 4:30
[Undeserving maintenance]
(1) A spouse or former spouse shall be
considered unworthy of maintenance:
a) if the irretrievable breakdown of
their marriage is attributable to his/her
gross misconduct or reprehensible
lifestyle; or
b) if he/she engaged after the
termination of matrimonial relationship in
any conduct intended to do harm to
his/her spouse, former spouse or their
any resident family member.
(2) In determining unworthiness, the
actions of the spouse or former spouse
invoking it shall be taken into
consideration.
Section 4:31
[Ability to provide maintenance]
A person shall not be obligated to
support his/her spouse if this would
seriously jeopardize his/her ability to
provide for him/herself or for his/her
child.
Section 4:32
[Agreement to provide lump-sum
maintenance]
By agreement of the spouses
executed in an authentic instrument or in
a private document countersigned by an
attorney, the spouse subject to
maintenance obligation shall meet this
obligation by providing assets of kind
value or in a lump-sum payment. In that
case the spouse to whom maintenance
is provided shall not make any
maintenance claim in the future, even if
otherwise made eligible by this Act.
Section 4:33
[Maintenance of relatives]
The amount of maintenance, the
means of providing and the duration
such maintenance, including any
changes thereof, the enforcement of any
maintenance claim retroactively, the
cessation of right to maintenance and
the termination of maintenance shall be
governed by the common provisions on
the maintenance of relatives, with the
proviso that the right to spousal support
shall cease if the entitled party remarries
or enters into a domestic
partnership.
TITLE VI
162
RIGHTS IN PROPERTY ARISING
OUT OF A MATRIMONIAL
RELATIONSHIP
Chapter V
General Provisions
Section 4:34
[Property relationships of spouses]
(1) Parties to the marriage and
spouses may arrange their relationship
in terms of property by means of a
marital agreement for the duration of
their matrimonial relationship.
(2) Unless otherwise provided by the
marital agreement, marital community of
property (matrimonial property regime)
shall exist between the spouses for the
duration of the matrimonial relationship.
Section 4:35
[Temporal scope of provisions relating
to property rights]
(1) The statutory matrimonial property
regime shall enter into effect from the
beginning of life partnership, even if the
spouses lived together as domestic
partners before the marriage. Upon
entering into marriage the existence of
life partnership shall be presumed.
(2) Any temporary disruption in life
partnership shall not affect the continuity
of the matrimonial property regime,
statutory or contractual, except if the
assets in question are distributed among
the parties.
Section 4:36
[Property consequences of invalid
marriages]
(1) If both spouses acted in good faith
when entering into an invalid marriage,
the same property consequences shall
apply - including the use of the common
home - as if the marriage was valid. In
that case, if the marriage is declared
invalid, both spouses shall be entitled to
make property claims as if the court had
dissolved the marriage at the time
invalidity was established, or - if
invalidity was established after the death
of one of the spouses - as if the
marriage had been terminated upon the
spouse’s death.
(2) If only one of the spouses acted in
good faith when entering into an invalid
marriage, the provisions set out in
Subsection (1) may be applied upon the
request of the bona fide spouse.
(3) The property claims of the bona
fide spouse referred to in Subsection (1)
may be enforced by his/her heir as well.
(4) The invalidity of the marriage shall
be without prejudice to any contract
concluded by the spouses together, or
by either one of them with a bona fide
third party.
Chapter VI
Marital Community of Property
1. Community property and
separate property
Section 4:37
[Community property]
163
(1) Marital community of property
means property acquired by the spouses
during the community of property,
irrespective of whether such property is
acquired together or separately.
(2) Community property of the spouses
shall include the burdens of their
common assets and - unless this Act
provides otherwise - they shall
collectively shoulder the debts arising
out of or in connection with obligations
undertaken by either of the spouses
during community of property.
(3) The spouses shall be entitled to an
undivided and equal share of the marital
property.
(4) Community property shall not
include those assets, burdens and debts
which are treated as separate property
of either spouse.
Section 4:38
[Separate property]
(1) Separate property of a spouse
shall include:
a) any property acquired before marital
community of property;
b) any property acquired by gift,
bequest, devise, or inheritance, and any
received without compensation during
marital community of property;
c) any right of the spouse as the
proprietor of intellectual property, except
for the royalties due during community of
property;
d) any compensation received for
personal injury;
e) personal effects and articles of
personal use of customary value; and
f) assets acquired in exchange for the
spouse’s separate property and anything
of value acquired for such property.
(2) The proceeds on separate property
that remain during matrimonial
relationship after handling and
maintenance charges and other burdens
are deducted shall be considered
community property.
(3) The assets comprising a part of
separate property of either spouse,
which replace any furnishing and
household item normally used in
everyday life during matrimonial
relationship shall become community
property after five years of marriage.
Section 4:39
[Burdens and liabilities on separate
property]
(1) Apart from statutory maintenance
obligations, any debt arising out of or in
connection with an act that took place
before the onset of matrimonial
relationship shall be charged to the
separate property.
(2) Separate property shall include the
burdens on assets comprising part of
separate property and the interest on
any debt treated as separate liability.
(3) Separate property shall include any
debt incurred during matrimonial
relationship:
a) that is incidental to the acquisition or
maintenance of the separate property,
excluding the expenses related to the
acquisition of the proceeds of such
separate property and to the
maintenance of assets which are used
or utilized by the spouses collectively;
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b) that is based on any obligation
stemming from the spouse’s disposition
relating to his/her separate property;
c) that was undertaken without any
consideration by the spouse upon
community property, without the consent
of the other spouse;
d) resulting from any unlawful and
intentional conduct, or gross negligence
of the spouse, if the debt is in excess of
the other spouse’s enrichment.
(4) The separate property status of the
debt shall not affect the other spouse’s
liability in dealing with third parties.
Section 4:40
[Presumption of community property
status]
(1) Unless otherwise provided for in
this Act, the assets of the spouses shall
be presumed to comprise a part of
community property during the existence
of community of property.
(2) During the existence of community
of property, the fulfillment of any
obligation relating to community property
or to the separate property of either
spouse shall be presumed to have been
executed from the community property
of the spouses.
Section 4:41
[Contracts between spouses]
(1) Any exchange or sales contract,
contract of gift and loan agreement
between spouses during matrimonial
relationship, including any
acknowledgement of debt between
spouses shall be considered effective if
executed in an authentic instrument or in
a private document countersigned by a
lawyer. This provision shall not apply to
giving away movable property as gift of
common value, if the gift has in fact
been delivered.
(2) Where an agreement of the
spouses concerns the community
property or separate property status of
an asset, burden or liability, or it alters
the ratio of these properties, such
agreement shall be considered effective
in dealing with third parties if the third
party was aware, or should have been
aware that the asset in question
belonged to community property or
separate property under the agreement.
2. Using and handling assets
considered community property
Section 4:42
[Use and handling of assets
considered community property]
(1) The assets of community property
may be used by either of the spouses for
their intended purpose. Neither of the
spouses should exercise this right with
prejudice to the rights and lawful interest
of the other spouse.
(2) The asset of community property
should be managed by the spouses
collectively. Either of the spouses may
request the other spouse’s consent for
taking measures which are deemed
necessary for the protection and
maintenance of assets comprising part
of community property. Urgent measures
for the protection of assets may be
implemented by either spouse without
the consent of the other spouse,
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however, the spouse should be notified
thereof without delay.
(3) During the time between the
termination of life partnership and the
division of community property, the use
and handling of asset of community
property shall be governed by the
provisions on common property, unless
otherwise provided for in this Act.
Section 4:43
[Use and administration of assets
required for the pursuit of profession or
for business purposes]
(1) The right of use and administration
of assets comprising part of community
property, which are required for the
pursuit of profession or private
entrepreneurial activities shall accrue to
the spouse who is engaged in the
pursuit of that profession or business
activity, provided that the other spouse
consented to the exclusive exercise of
such rights. Consent shall be considered
granted if the other spouse was aware,
or should have been aware of the
pursuit of that profession or business
activity, and did not object.
(2) If the spouse is a member or
shareholder of a sole proprietorship, a
cooperative society or a business
association, he/she shall be able to
exercise membership or shareholder
rights of his/her own accord, even if
capital contribution was provided from
the marital community property. The
spouse shall be informed on a regular
basis concerning the outcome of
operations of the sole proprietorship,
cooperative society or business
association.
(3) In exercising the right of use or
administration under Subsections (1)-(2),
and also in exercising membership or
shareholder rights the spouse shall take
due account of the other spouse’s
interest. The spouse shall be held liable
for damages caused by any breach of
such obligations in accordance with the
general provisions on non-contractual
liability.
Section 4:44
[Costs and expenses]
(1) The costs of maintenance and
administration of the assets of
community property, the costs of
maintaining the common household and
the expenses of supporting and raising
the common child of the spouses shall
primarily be covered from the community
property.
(2) If the community property is
insufficient to cover the costs and
expenses defined in Subsection (1), they
shall be covered from the spouses’
separate property as commensurate. If
only one of the spouses has any
separate property, the funds required to
cover said outstanding expenses shall
be made available by that spouse.
3. Disposition over community
property
Section 4:45
[Disposition over common property
during community of property]
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(1) During community of property the
spouses shall be able to make any
disposition relating to their community
property collectively, or subject to the
other spouse’s consent.
(2) As regards an agreement
concluded by one of the spouses during
the community of property, no formal
requirements apply to the other spouse’s
consent.
Section 4:46
[Presumption of spousal consent]
(1) Any contract for pecuniary interest
concluded by a spouse during the
community of property shall be
presumed - unless otherwise provided
for in this Act - to have been concluded
with the other spouse’s consent if the
contracting third party was aware, or
should have been aware that the other
spouse had not given his/her prior
consent for the contract.
(2) If the spouse concluded the
contract aimed at satisfying his/her
everyday needs or within the framework
of the pursuit of his/her profession or
business activity, the other spouse may
invoke the lack of his/her consent if
having specifically expressed to the
contracting third party his/her objection
before the contract was concluded.
Section 4:47
[Disposition over community property
during the time period between the
termination of marital community of
property and the division of community
property]
(1) During the time period between the
termination of marital community of
property and the division of community
property, as regards disposition over
community property the provisions on
disposition over community property
during marital community of property
shall apply with the exception that either
spouse, in due observation of prudential
management requirements, may, without
the other spouse’s consent:
a) exercise control of the assets used
within the framework of the pursuit of
his/her profession or business activity, or
reserved for such purposes;
b) exercise control of those movable
property, which had been transferred to
his/her exclusive possession following
the termination of marital community of
property by agreement of the spouses;
c) undertake commitments aimed at
the protection, maintenance, restoration
and preservation of community property;
and
d) satisfy debts owed on community
property, in a manner where the debt
may not become more onerous for the
community property.
(2) The provision contained in
Subsection (1) shall not affect the
obligation of reimbursement prevailing at
the time of division of the community
property.
Section 4:48
[Special rules applicable to common
home and contribution to company
capital]
Neither of the spouses shall be entitled
to dispose over the real estate property
167
containing the jointly owned family home
of the spouses during community of
property, or during the time period
between the termination of marriage and
the division of community property
without the other spouse’s consent, and
may not use community property as
capital contribution for a sole
proprietorship. business association or
cooperative society. In that case the
other spouse’s consent shall not be
presumed.
4. Responsibility stemming from
exercising the right of disposition
Section 4:49
[Liability of spouses in respect of
contracts in dealings with third parties]
(1) Where a spouse enters into a
contract involving community property,
he/she shall cover any debts arising out
of or in connection with such contract
from his/her separate property and from
his/her share of the community property.
(2) Where a spouse did not take part in
concluding a contract that the other
spouse entered into with his/her
consent, the liability of the nonparticipating
spouse in dealings with
third parties shall be covered from the
community property up to his/her share
at the time when the debt falls due.
Section 4:50
[Legal effects of contracts concluded
without spousal consent]
Where a spouse did not consent to a
contract concluded by the other spouse
regarding community property, and no
consent can be presumed or the
presumption has been rebutted, the
spouse shall not be held liable for any
obligation arising out of or in connection
with that contract. A contract concluded
without the spouse’s consent shall have
no legal force in respect of such spouse
if the acquiring party acted in bad faith or
had a gratuitous advantage originating
from the contract. If the other spouse
concluded the contract with his/her
relative, bad faith and gratuitous nature
shall be presumed.
Section 4:51
[Liability toward third parties in the
case of unjust enrichment]
Where a spouse made any gain in
consequence of a contract or any other
form of legal obligation entered into by
the other spouse, he/she shall be held
liable in dealings with third parties on the
grounds of unjust enrichment even if
otherwise exempt from liability.
Section 4:52
[Responsibility of the spouse who
negotiated the contract towards the
other spouse]
Where a spouse enters into a contract
which carries any liability for the other
spouse, without the consent of that
spouse, he/she shall be liable to
compensate the other spouse for
damages arising in connection with that
contract on the grounds of noncontractual
liability, unless he/she is able
to verify that the contract was made in
light of the other spouse’s interest and
168
presumed intent, specifically, if the
contract was made with a view to
safeguarding the community property.
5. Termination of community of
property
Section 4:53
[Termination of community of property]
Community of property shall terminate
if:
a) the spouses precluded community
of property for future considerations by
means of a marital agreement;
b) excluded by court order during
matrimonial relationship; or
c) the matrimonial relationship is
terminated.
Section 4:54
[Termination of community of property
by court order]
(1) In justified cases the court shall,
during the matrimonial relationship,
dissolve community of property at the
request of either of the spouses. This
shall, in particular, include if:
a) the other spouse accumulated debts
by way of entering into any contract
without the consent of the requesting
spouse or by means of non-contractual
liability of a measure that jeopardizes
his/her share of the community property;
b) an enforcement procedure is
opened against the other spouse
engaged in private entrepreneurial
activities, or an enforcement procedure
or liquidation proceeding is opened
against the sole proprietorship,
cooperative society or business
association in which the other spouse
has unlimited liability, and such
proceedings jeopardize his/her share of
the marital community property; or
c) the other spouse is placed under
guardianship invoking fully limited legal
competency or under conservatorship
invoking partially limited legal
competency in respect of his/her
financial affairs, and the appointed
conservator is a person other than the
spouse.
(2) Unless otherwise instructed by the
court, community of property terminates
on the last day of the month following
the date on which the resolution on
termination becomes final.
Section 4:55
[Legal effects of the termination of
community of property by court order]
If the court terminates the community
of property, the property relations of the
spouses shall henceforth be governed
by the provisions on the separation of
property during their life partnership.
Section 4:56
[Reestablishment of community of
property by court order]
If the reason under which the court
ordered the termination of community of
property no longer exist, upon the
spouses’ mutual request, the court shall
reinstate community of property during
marital relationship for future
considerations.
169
6. Distribution of community
property of the spouses
Section 4:57
[Distribution of community property]
(1) If community of property is
terminated either spouse may request
the division of community property. If
marriage is terminated upon the
spouse’s death, this right shall accrue
upon the heir.
(2) If community property is divided by
way of an agreement between the
spouses, the agreement shall be
considered valid if executed in an
authentic instrument or in a private
document countersigned by an attorney.
This provision shall not apply to the
division of movable community property,
if division has already been carried out.
(3) If the spouses failed to reach an
agreement regarding the division of
community property, or it does not cover
all claims arising out of the community of
property, an action may be brought
before the court for the division of
community property and for the
settlement of open claims, if any.
Section 4:58
[Settlement of claims relating to
community property]
Claims arising out of or in connection
with marital community of property shall
be settled uniformly.
Section 4:59
[Claims for compensation between
community property and separate
property]
(1) In the process of division of
community property, claims can be
made for compensation for any
expenses made from community
property on separate property, from
separate property on community
property and from the separate property
of one spouse on the separate property
of the other spouse, including the
settlement of debts from the property of
the other spouse. Compensation claims
shall be settled in accordance with the
provisions on determining the value of
the spouses’ share.
(2) Compensation for any expenditures
made from separate property for
covering common expenses may be
claimed under exceptional
circumstances.
(3) There shall be no right of
compensation if it has been waived by
the spouse. There are no formal
requirements for the waiver, however,
the burden of proof lies with the spouse
who relies on the waiver.
(4) Where an expenditure results in
considerable increase in the value of
real estate property, the spouse entitled
to compensation may also lay claim to
an ownership share consistent with the
increase in the property’s value.
(5) There shall be no right of
compensation for any missing
community property or separate property
if there is no community property at the
time when community of property is
terminated, and the spouse liable to
170
provide compensation has no separate
property either.
Section 4:60
[Value and disbursement of
community property share]
(1) The share of a spouse from
community property shall be established
based on the status and value prevailing
at the time of termination of community
of property. Any change in value
between the time of termination of
community of property and the division
of community property shall be taken
into consideration, except if it is
attributable to any conduct of either
spouse.
(2) The division of specific items of
community property shall be governed
by the provisions on the termination of
joint ownership, with the proviso that
division in kind is not allowed even if
objected to by either of the spouses on
reasonable grounds.
(3) The provisions of Subsection (2)
shall also apply to the division of rights
and claims comprising part of community
property.
Section 4:61
[Distribution of assets and liabilities]
(1) In determining the distribution of
assets among the spouses in terms of
ownership of certain items, the court
shall first and foremost take into account
the spouses’ uniform statement.
(2) The assets which are required for
the pursuit of profession or private
entrepreneurial activities by either
spouse shall in principle accrue to the
spouse who is engaged in the pursuit of
that profession or business activity.
(3) If one of the spouses is a member
or shareholder of a business association
where the capital contribution of that
spouse was provided from the
community property, the court may
assign a share of ownership in the
business association to the other spouse
- at this/her request - under the
provisions on the transfer of corporate
membership rights, if his/her share from
the community property cannot be
allocated otherwise in accordance with
the provisions on the disbursement of a
share from the community property
subject to the provisions set out in
Subsection (1).
(4) If the asset carries any debt, in the
property relationships of spouses it shall
be covered by the spouse who gained
ownership of the asset following
distribution. The distribution of debts
shall apply in respect of the creditor
according to the rules on the assumption
of debts.
Section 4:62
[Disbursement of separate property]
Separate property existing at the time
of termination of community of property
shall be allocated in kind, except when
this is not possible on account of the
mixing of assets or if division is likely to
considerably diminish the value of
community property or separate
property.
Chapter VII
171
Marriage Contracts
1. General provisions
Section 4:63
[Mandatory layout of marriage
contracts]
(1) The function of the marriage
contract is to permit the parties to the
marriage or the spouses to define a
property regime - in lieu of marital
community of property - with a view to
governing their property relationships
during the marriage from the time
specified in the agreement.
(2) In the marriage contract the parties
may define several different property
regimes relating to certain specific
assets, and they may even deviate from
the rules on statutory and optional
property regimes, if such deviation is not
precluded by this Act.
Section 4:64
[Conditions for the conclusion of
marriage contracts]
(1) The marriage contract shall be
concluded in person by the parties to the
marriage or the spouses.
(2) The approval of the guardian
authority is required for the validity of
marriage contracts, if the spouse is
under the age of eighteen years or
his/her capacity in respect of making
legal statement relating to property has
been partially limited.
Section 4:65
[Formal requirements for and keeping
records of marriage contracts]
(1) A marriage contract shall be
considered valid if executed in an
authentic instrument or in a private
document countersigned by an attorney.
(2) A marriage contract shall be
considered effective in dealing with third
parties if the contract is recorded in the
national register of marriage contracts,
or if the spouses are able to prove that
the third party was aware, or should
have been aware that such contract
existed, including its contents.
Section 4:66
[Amendment to and termination of
marriage contracts]
(1) The spouses shall be able to
amend or terminate the marriage
contract during their matrimonial
relationship.
(2) Any amendment to and the
termination of marriage contracts shall
be governed by the provisions on the
scope and validity of contracts.
Section 4:67
[Protection of third parties]
(1) A marriage contract shall not
contain any clause having retroactive
effect for changing, to the detriment of a
third party, any obligation a spouse may
have in dealing with third parties arising
before the marriage contract was
concluded.
(2) Where an agreement of the
spouses alters the community property
or separate property status of an asset
in derogation from the relevant
172
provisions of the marriage contract. such
agreement shall be considered effective
in dealing with third parties if the third
party was aware, or should have been
aware that the asset in question
belonged to community property or
separate property under the agreement.
Section 4:68
[Testamentary disposition]
If the marriage contract contains
provisions for the disposition over the
spouses’ assets in the event of their
death, the rules pertaining to joint wills
shall apply to such dispositions.
2. Marital property acquisition
regime
Section 4:69
[Marital property acquisition regime]
(1) If the parties to the marriage or the
spouses agree to install a marital
property acquisition regime in the
marriage contract, they shall be
considered independent in their property
acquisitions during their matrimonial
relationship, therefore the rules on
separation of property shall apply
between them. After the termination of
marriage, either of the spouse may
demand a share of the growth in assets
which is considered to have been
acquired jointly.
(2) Jointly acquired property means
the net value, at the time of termination
of marriage, of the spouse’s property
remaining after his/her debt share and
separate property are deducted.
(3) As regards marital property, the
property existing at the time of
termination of matrimonial relationship
shall be presumed to have been
acquired jointly.
(4) Specific assets, burdens and debts
to be taken into account as separate
property shall be determined relying on
the provisions of the matrimonial
property regime on separate property. In
addition to existing separate property,
the value of any separate property which
the spouses spent during their
matrimonial relationship on jointly
acquired property or on the separate
property of the other spouse shall also
be considered to comprise a part of
separate property, Compensation for
any shortage in separate property shall
be permitted only if expressly specified.
Section 4:70
[Protection of a spouse’s share from
jointly acquired property]
(1) A spouse may request, during
marriage, to have the value of his/her
share from the jointly acquired property
established, as well as adequate
safeguards up to such value or the
termination of the marriage contract if
the other spouse accumulated debts by
way of entering into any contract without
his/her knowledge in a value that
exceeds his/her share of the assets
treated as jointly acquired property.
(2) Guaranteeing jointly acquired
property as under Subsection (1) shall
be without prejudice to any right of a
third party holding a previous claim
against the other spouse.
173
(3) If the other spouse refuses to
cooperate in establishing the value of
jointly acquired property and in providing
adequate safeguards despite of having
been asked to do so, or prevents such
efforts, the spouse may bring action in
the court.
(4) The court shall have powers to
terminate the contract at the request of
either spouse on the grounds referred to
in Subsection (1), and may order the
separation of property between the
spouses for future considerations.
Section 4:71
[Sharing of jointly acquired property]
(1) The sharing of jointly acquired
property from the property existing at the
time of termination of the matrimonial
relationship may be requested in
accordance with the provisions of the
matrimonial property regime on the
division of community property. The
spouse shall not lay any claim to assets
which are required for the pursuit of
profession or private entrepreneurial
activities of the other spouse, nor shall
he/she do so in respect of any share of
the other spouse in the capital of a
business association, even if he/she
contributed to the funding thereof.
(2) Either spouse shall be entitled to
half of all jointly acquired properties.
3. Separation-of-property system
Section 4:72
[Separation-of-property system]
If the spouses excluded marital
community of property fully in the
marriage contract for future purposes, or
limited it for certain specific acquisitions,
assets, burdens and debts, the excluded
segments of the property shall be
governed between the spouses under
the system of separation of property.
Section 4:73
[Use and handling of assets; covering
debts, costs and expenses]
(1) If, based on court order or a
contract between the parties to the
marriage or the spouses separation of
property is instituted, said parties or
spouses shall have access to and use
their own assets independently during
matrimonial relationship, and they shall
autonomously control such assets and
be liable for their own debts.
(2) The costs of maintaining the
common household and the expenses of
supporting and raising the common child
of the spouses, as well as the child of
one of the spouses living in their
household with the other spouse’s
consent shall be covered by the spouses
together even if they live under the
separation-of-property system. Any
clause allowing complete or near
complete exemption for either spouse
from such costs and expenses shall be
null and void. Work done in the
household and in raising a child shall be
construed as a contribution to costs.
4. Termination of the marriage
contract
Section 4:74
174
[Cases of termination of a marriage
contract]
(1) A marriage contract may be
terminated by the parties before the
beginning of their marital relationship, or
either of them may withdraw from the
contract. During their matrimonial
relationship, the parties may extinguish
the contract for future purposes.
(2) Furthermore, a marriage contract
shall be terminated:
a) by order of the court in the cases
defined in this Act; or
b) if matrimonial relationship is
terminated, except if it takes place upon
the death of either of the spouses, in
which case the contract may take effect
as the spouse’s joint will.
(3) If the contract terminates upon the
parties’ mutual consent or by way of the
right of either spouse to terminate it as
afforded in the contract, the property
relations of the spouses shall be
governed by the provisions on marital
community of property during their
matrimonial relationship from the time of
termination.
(4) The termination of the contract
shall be considered effective in dealing
with third parties from the time when the
contract is removed from the register or
when the third party gains knowledge of
the termination of the contract.
Section 4:75
[Settlement, distribution of assets]
If the marriage contract is terminated
either spouse may request settlement
and the distribution of community
property according to the property
regime fixed in the contract.
Chapter VIII
Use of the Common Home of the
Spouses
Section 4:76
[Common home of the spouses]
(1) Common home of the spouses
means a dwelling in which the spouses
live together and which is owned by
either or both them, or in which either or
both spouses have tenancy or lease
rights.
(2) Minor children of the spouses shall
be given the right of tenancy in the
common home of the spouses.
(3) In the application of this Chapter,
the minor child of a spouse holding
exclusive legal title for the home shall
also have the right of tenancy.
Section 4:77
[Restriction of the right of disposition
over the common home]
(1) During marriage and also after its
termination until the right of tenancy is
settled the use of a home occupied on
the basis of the spouses’ common legal
title shall be controlled by either spouse
together with the other spouse, or with
the other spouse’s consent. Consent
may not be presumed.
(2) The dissolution of the marriage or
the termination of matrimonial
relationship shall not in itself terminate
the right of tenancy of the spouse who
175
resides in the home under the other
spouse’s legal title.
(3) During marriage, and also after the
termination of marriage until the right of
tenancy is settled a spouse shall not be
allowed to make any decision
concerning the home used under his/her
exclusive legal title without the consent
of the other spouse, where such
decision would put the other spouse or
the child living in the home at a
disadvantage.
Section 4:78
[Contractual arrangement of the right
of tenancy]
(1) The parties to the marriage or the
spouses may make prior arrangements
for the use of the common home of the
spouses for the dissolution of the
marriage or the termination of
matrimonial relationship. The agreement
shall be considered valid if executed in
an authentic instrument or in a private
document countersigned by an attorney.
(2) The agreement shall apply to a
common home that replaces the home
existing at the time of its entry into effect,
if the agreement so provides.
(3) The parties shall also have the
option to make arrangements for the use
of the common home in the marriage
contract.
Section 4:79
[Applicability of the right of tenancy of
children]
(1) If in the agreement for the prior
arrangement of the right of tenancy the
parties agree on providing continued
housing for their children with the right of
tenancy following the dissolution of the
marriage or the termination of
matrimonial relationship, the agreement
shall also apply to their child born after
the agreement was concluded.
(2) If the agreement does not contain
the provision defined in Subsection (1),
or the provision seriously harm the right
of the minor child with the right of
tenancy for adequate housing, the court
may override such provision regarding
the use of the common home of the
spouses following the dissolution of the
marriage or the termination of the
matrimonial relationship in the interest of
the child.
Section 4:80
[Right of tenancy after the termination
of matrimonial relationship]
(1) Following the termination of
matrimonial relationship the spouses
may agree to continue using the
common home. There are no formal
requirements for such an agreement.
(2) In the absence of an agreement for
the prior arrangement of the right of
tenancy, or any other agreement
concluded after the termination of
matrimonial relationship, further use of
the common home following the
dissolution of the marriage or the
termination of matrimonial relationship
shall be decided by the court at the
request of either of the spouses.
(3) If either spouse requests in a
divorce action or in an action for the
distribution of community property the
termination of joint ownership of the
176
common home, the court shall provide
for the use of the spouses’ home
together with the termination of joint
ownership.
(4) The right of tenancy of a child shall
be ensured in the former common home
to best accommodate his/her living
conditions, except if adequate housing is
available elsewhere.
Section 4:81
[Sharing the use of a home occupied
under common legal title; omission of
sharing]
(1) If the spouses have a common
legal title for using their home, the court
shall order the shared use of the home,
if this is possible based on the attributes
of the home. Shared use of a home is
permitted also if the home can be fitted
for shared use by minor alterations,
provided that one or both spouses verify
their entitlement of making such
alterations and the technical
requirements thereof, and if they agree
to advance the costs of such works. In
the event of dispute, the court shall
decide on bearing the costs of such
works.
(2) In the case of shared use of the
home, the spouses shall have exclusive
use of certain specific rooms and areas
of the home, and shared use of other
areas. Shared use of the home shall not
affect the rights and obligations of the
spouses in dealings with third parties.
(3) The court may refrain from ordering
the shared use of a home with due
regard to the parties’ relevant
circumstances if:
a) the spouses or one the spouses
have a vacant home in the same
community, or such home can be made
vacant by means of a unilateral
statement; or
b) one of the spouses moved out from
home on his/her own volition, without the
intent to return, and - if he/she exercises
parental supervision - he/she has
properly provided the right of tenancy for
the minor child.
(4) A home, that is otherwise suitable,
shall not be shared if one of the spouses
is engaged in actionable conduct on
account of which shared use is likely to
cause serious harm to the interest of the
other spouse or the minor child.
Section 4:82
[Termination of the right of tenancy of
one of the spouses]
(1) If use of a home used under
common legal title of the spouses is not
shared, the court shall abolish the right
of tenancy of one of the spouses and
shall order such spouse to vacate the
home, unless one of the spouses moves
out from home on his/her own volition,
without intent to return.
(2) Moreover, the court shall abolish
the right of tenancy of one of the
spouses and shall order such spouse to
vacate the home also if, even though the
home is considered suitable for shared
use, the other spouse offers an
adequate replacement home for the
spouse in question, and if such
arrangement of tenancy does not harm
the interest of a minor child with the right
of tenancy.
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Section 4:83
[Use of a home occupied under the
exclusive legal title of one of the
spouses]
(1) If the common home of the
spouses is used under the exclusive
legal title of one of the spouses,
following the dissolution of the marriage
or the termination of the matrimonial
relationship the court shall authorize that
spouse to continue using the home.
(2) The court shall order the shared
use of a home that is considered
suitable, if having granted parental
authority for the other spouse over at
least one of the minor children with right
of tenancy, or if moving out of the home
by the other spouse would be gravely
unjust, taking into account the length of
the marriage and the circumstances of
that spouse.
(3) On an exceptional and duly justified
basis, the court may grant entitlement to
a spouse for the exclusive use of a
home owned exclusively by the other
spouse, or in which the other spouse
has beneficial rights, if that parent has
parental authority over a minor child with
the right of tenancy and the housing for
the minor child cannot be provided
otherwise. In that case, the spouse shall
have tenant status, with the proviso that
his/her right of tenancy may be
terminated by offering an adequate
replacement subject to notice.
(4) The court may order shared use of
a home or exclusive right of tenancy as
provided for under Subsections (2)-(3)
for a fixed period of time, or subject to
some condition.
Section 4:84
[Compensation for the value of the
right of tenancy]
(1) The spouse required to vacate the
home under contract or by court order
shall be entitled to lay claim for
compensation in the monetary value of
his/her right of use.
(2) No compensation may be claimed:
a) if the spouse agreed under contract
to vacate the home and waived any
claim for housing or compensation; or
b) if the court deprived the spouse of
the right of tenancy for a specific period
of time, or subject to some condition.
(3) In determining the amount of
compensation the value of the right of
tenancy of a child shall be taken into
consideration for the benefit of the
spouse who henceforward provides
housing for the child under his/her
parental authority.
(4) Compensation shall be due
immediately at the time of moving out of
the home, except if:
a) the court has ordered the spouse to
vacate the home on account of his/her
wrongful conduct, and simultaneous
performance would seriously harm the
interest of the remaining spouse and the
minor child; or
b) use of the home is provided for in
the action for the division of community
property, and the court shall apply the
value of the right of use in the process of
distributing the assets.
(5) Instead of compensation, the
spouse remaining in the home may offer
an adequate replacement home for the
spouse moving out.
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Section 4:85
[Rearranging the right of tenancy]
(1) If the court has ordered the shared
use of a home, or ordered the spouse
who is the owner or holder of beneficial
interest to vacate the home, either
spouse may request rearrangement of
the right of tenancy on the pretext that
his/her relevant lawful interests or the
interest of the common child of minor
age are in jeopardy under the current
arrangement due to changes in the
circumstances underlying the
arrangement in question.
(2) The provisions in Subsection (1)
shall not affect the spouse’s right to
request termination of his/her former
spouse’s co-tenancy following the order
of shared use, under the relevant
provisions of this Act pertaining to co-
tenancy.
PART THREE
LEGAL ASPECTS OF CIVIL
PARTNERSHIPS UNDER FAMILY
LAW
TITLE VII
MAINTENANCE OBLIGATIONS
IN CIVIL PARTNERSHIPS
Section 4:86
[Entitlement for maintenance]
(1) Following the termination of civil
partnership, either partner shall be
entitled to demand maintenance from
his/her partner if unable to support
him/herself for reasons beyond his/her
control, if their civil partnership existed
for at least one year and it produced a
child.
(2) If the former partner develops the
need for support after a period of one
year following the termination of civil
partnership, maintenance may be
demanded in cases of exceptional
circumstances.
Section 4:87
[Undeserving maintenance]
(1) A former partner shall be
considered unworthy of maintenance:
a) if the breakdown of their relationship
is attributable to his/her gross
misconduct or reprehensible lifestyle; or
b) if engaged after the termination of
civil partnership in any conduct intended
to do harm to his/her former partner or
the partner’s resident family member.
(2) In determining unworthiness, the
actions of the former partner invoking it
shall also be taken into consideration.
Section 4:88
[Ability to provide maintenance]
A person shall not be obligated to
support his/her former partner if this
would seriously jeopardize his/her ability
to provide for him/herself or for his/her
child.
Section 4:89
[Agreement to provide lump-sum
maintenance]
179
By agreement of the partners
executed in an authentic instrument or in
a private document countersigned by an
attorney, the partner subject to
maintenance obligation shall meet this
obligation by providing assets of kind
value or in a lump-sum payment. In that
case the partner to whom maintenance
is provided shall not make any
maintenance claim in the future, even if
otherwise would be eligible under this
Act.
Section 4:90
[Order in which maintenance is
provided between spouses and
domestic partners]
Former partners shall be entitled to
maintenance in line with a separated or
former spouse.
Section 4:91
[Maintenance of relatives]
The amount of maintenance, the
means of providing and the duration
such maintenance, including any
changes thereof, the enforcement of any
maintenance claim retroactively, the
cessation of right to maintenance and
the termination of maintenance shall be
governed by the common provisions on
the maintenance of relatives, with the
proviso that the right to maintenance in
civil partnership shall cease if the
entitled party enters into another civil
partnership or into marriage.
TITLE VIII
RIGHT OF TENANCY IN CIVIL
PARTNERSHIPS
Section 4:92
[Settlement of the right of tenancy in
court]
In the absence of an agreement for the
prior arrangement of the right of tenancy
relating to the common home, or any
other agreement concluded after the
termination of civil partnership, further
use of the common home following the
termination of partnership shall be
decided by the court at the request of
either of the partners.
Section 4:93
[Use of a home occupied under the
common legal title of the partners]
(1) Further use of the common home
used under the common legal title of the
partners shall be decided by the court in
accordance with the provisions
governing the use of a home used under
common legal title of spouses.
(2) In its decision for the further use of
the home used under the common legal
title of the partners following the
termination of their partnership, the court
shall take due account of the right of a
common child of minor age with the right
of tenancy for adequate housing.
Section 4:94
[Entitlement of either partner for use of
a home occupied under the exclusive
legal title of the other partner]
(1) Following the termination of civil
partnership, the court may award the
180
right to a former partner - at his/her
request - to continue using the common
home occupied under the exclusive legal
title of the other partner, if their civil
partnership existed for at least one year
and if this is justified in the interest of
providing adequate housing under the
right of tenancy of a minor child born
during their relationship.
(2) In the cases provided for in
Subsection (1), the court shall primarily
order the shared use of a home that is
considered suitable.
(3) On an exceptional and duly justified
basis, the court may grant entitlement to
a former partner for the exclusive use of
a home owned exclusively by the other
partner, or in which the other partner has
beneficial rights, if that partner has
parental authority over at least one of
the common minor children with the right
of tenancy and the housing for the minor
child cannot be provided otherwise.
(4) The court may order shared use of
a home or exclusive right of tenancy as
provided for under Subsections (2)-(3)
for a fixed period of time, or subject to
some condition.
(5) The former partner granted
exclusive right of tenancy shall have
tenant status, with the proviso that
his/her right of tenancy may be
terminated by offering an adequate
replacement subject to notice.
(6) Shared use of a home used under
the former partner’s exclusive legal title
may not be demanded by the other
partner if he/she has a vacant home
elsewhere, or a home that can be made
vacant by means of a unilateral
statement.
Section 4:95
[Rearranging the right of tenancy]
(1) If the court has ordered the shared
use of a home, or ordered the partner
who is the owner or holder of beneficial
interest to vacate the home, either of the
former partners may request
rearrangement of the right of tenancy on
the pretext that his/her relevant lawful
interests or the interest of the common
child of minor age are in jeopardy under
the current arrangement due to changes
in the circumstances underlying the
arrangement in question.
(2) The provisions in Subsection (1)
shall not affect the former partner’s right
to request termination of his/her former
partner’s co-tenancy following the order
of shared use, under the relevant
provisions of this Act pertaining to co-
tenancy.
PART FOUR
KINSHIP
TITLE IX
FAMILY RELATIONSHIP
Section 4:96
[Family relationship]
(1) Lineal descent refers to a blood
relative in the direct line of descent.
(2) Collateral descent refers to
relatives not in direct line of descent,
having at least one common ancestor.
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Section 4:97
[Basis of family relationships]
(1) Family relationship in direct line
between parent and child is established
by descent or by way of adoption.
(2) A child shall be related to all his/her
parent’s relatives upon descent or
adoption.
TITLE X
RELATIONSHIP BY DESCENT
Chapter IX
Establishment of Paternity
Section 4:98
[Facts establishing paternity]
Paternity is established:
a) by way of wedlock;
b) by way special procedures for the
purpose of human reproduction in the
case of civil partnerships (hereinafter
referred to as „reproduction procedure”);
c) by way of acknowledgement of
paternity; or
d) by way of court decision.
Section 4:99
[Presumption based on wedlock]
(1) Unless otherwise provided for in
this Act, the man with whom the mother
lived in wedlock from the time of
conception of the child until the birth of
the child, or at least during a part of this
period, shall be considered the father of
that child. The invalidity of the marriage
shall not affect the presumption of
paternity.
(2) The presumed time of conception
means the time period between the one
hundred and eighty second day and the
three hundredth day elapsed since the
date of the child’s birth, including both
deadlines. If the child is claimed to have
been born before or after the presumed
time of conception, it may be verified by
evidence.
(3) If the woman remarried after the
termination of her previous marriage, the
latter husband shall be considered the
father of a child born during the latter
marriage, even if three hundred days did
not lapse between the date her previous
marriage was terminated and the date
on the child was born. If this
presumption is rebutted, the former
husband shall be considered the father
of the child.
Section 4:100
[Presumption based on reproduction
procedure]
(1) If paternity cannot be established
relying on a presumption based on the
mother’s marriage, the man who was
involved in a reproduction procedure
with the mother during their partnership
shall be considered the father of the
child if descent is the result of such
reproduction procedure.
(2) If following a successful
reproduction procedure, before the birth
of the child the mother enters into
marriage with another man, it shall not
invoke the presumption of paternity in
respect of the husband.
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(3) The mother’s partner shall be
considered the father of the child in
accordance with Subsection (1) also if
the presumed time of conception did not
lapse between the time when the
mother’s previous marriage was
terminated and the date when the child
was born.
Section 4:101
[Presumption based on
acknowledgement of paternity]
(1) If the mother was not married
between the beginning of the time of
conception and the date when the child
was born, and did not participate in a
reproduction procedure invoking the
presumption of paternity, or if the
presumption of paternity was rebutted,
the man who admitted in a fully
enforceable acknowledgement of
paternity that he is the father of the child
shall be considered the father of that
child.
(2) The man who makes an
acknowledgement of paternity must be
at least sixteen years older than the
child.
(3) An acknowledgement of paternity
can be made from the beginning of the
time of conception of the child. If the
acknowledgement of paternity is made
before the birth of the child, the
declaration shall become fully
enforceable when the child is born.
(4) The acknowledgement of paternity
shall be made in person. An
acknowledgement of paternity made by
a minor of limited legal capacity and any
person whose capacity in respect of
making legal statements relating to
descent has been partially limited shall
be considered effective with the consent
of his/her legal representative. If the
legal representative is unavailable for
any extended period of time to give
consent, or if refuses to consent, the
guardian authority may do so in his
stead.
(5) An acknowledgement of paternity
shall be construed fully enforceable with
the consent of the mother and the child’s
legal representative, and with the
consent of the child if over the age of
fourteen years. If the mother is the
child’s legal representative, consent may
be granted in that capacity as well,
except if there exists a conflict of interest
between mother and child. In this event,
the guardian authority shall appoint a
caretaker officer to represent the minor.
If the mother or the child is not alive, or if
unable for any extended period of time
to make a statement, the consent shall
be granted by the guardian authority.
(6) If at the time the acknowledgement
of paternity is made a paternity suit is in
progress for establishing paternity with
respect to another man, the
acknowledgement of paternity shall
become fully enforceable - even if the
statements of consent referred to in
Subsection (5) are available - if the
paternity suit failed to conclusively
establish paternity.
(7) If a fully enforceable
acknowledgement of paternity is made
with respect to a child of legal age, the
child shall have the option to decide to
take up the name of his/her biological
father or to keep his/her existing
183
surname. If the child fails to exercise this
option, the presumption of paternity shall
not affect his/her name.
Section 4:102
[Formal requirements and scope of a
fully enforceable acknowledgement]
(1) Acknowledgement and consent
shall be executed in a statement made
before the registrar, the court, the
guardian authority or a career consulate
officer, or shall be executed in a notarial
document. Consent may also be granted
before an honorary consul with authority
to issue consular certificates. Once the
statement or the document is signed, the
acknowledgement of paternity may not
be withdrawn.
(2) The fully enforceable
acknowledgement of paternity applies to
all parties affected.
Section 4:103
[Presumption based on court decision]
(1) If a child’s father cannot be
identified based on the mother’s
marriage, reproduction procedure or fully
enforceable acknowledgement of
paternity, paternity may be established
by way of judicial process.
(2) The court shall establish a man as
the child’s father if that man is alleged to
have engaged in sexual intercourse with
the mother at the time of conception,
and upon careful consideration of all the
circumstances there are reasonable
grounds to consider that the child was
conceived upon such sexual contact.
(3) If paternity is established by way of
judicial process with respect to a child of
legal age, the child shall have the option
to decide to take up the name of his/her
biological father or to keep his/her
existing surname. If the child fails to
exercise this option, the presumption of
paternity shall not affect his/her name.
(4) The judgment establishing paternity
applies to all parties involved.
(5) If descent results from a
reproduction procedure, paternity may
not be established by way of judicial
process with respect to a man who
made a donation of gamete or embryo
for the procedure.
Section 4:104
[Persons entitled to bring paternity
suit]
(1) An action for establishing paternity
by way of judicial process may be
brought by the mother, the child - or by
the child’s descendant after his/her
death -, or by the father.
(2) The minor child may join the action
on his/her mother’s side with the
guardian authority’s consent.
(3) If descent results from a
reproduction procedure, no action may
be brought by a man who made a
donation of gamete or embryo for the
procedure.
Section 4:105
[Exercising the right to bring action]
(1) An action for the establishment of
paternity shall be brought by the entitled
party in person.
(2) As regards an acknowledgement of
paternity made by a minor of limited
legal capacity or by any person whose
184
capacity in respect of making legal
statements relating to descent has been
partially limited, such an action may be
brought with the consent of the legal
representative. If the legal
representative is unavailable for any
extended period of time to give consent,
or if refuses to consent, the guardian
authority may do so in his stead.
(3) If the entitled party is incompetent,
the action may be brought in his/her
name by the legal representative with
the guardian authority’s consent.
(4) The mother may proceed in the
action as her child’s legal representative.
Section 4:106
[Respondents in paternity suits]
(1) Actions for the establishment of
paternity shall be filed against the father,
whereas the father shall bring such
action against the child.
(2) If the child did not join his/her
mother in an action brought by the
mother, the mother shall bring action
against the child as well. In this event,
the guardian authority shall appoint a
caretaker officer to represent the child.
(3) If the party against whom the action
is to be brought is no longer alive or
cannot be located, the guardian ad litem
appointed by the court shall be named
as the defendant in the action.
Chapter X
Contested Presumption of
Paternity
Section 4:107
[Grounds for challenging the
presumption of paternity]
(1) The presumption of paternity may
be challenged alleging that the man
presumed to be the father did not have
sexual contact with the mother of the
child at the time of conception, or that he
could not have fathered the child based
on the relevant circumstances.
(2) If the presumption of paternity is
based on a fully enforceable
acknowledgement of paternity, it may be
challenged alleging that:
a) the statement is not fully
enforceable in the absence of the
relevant legal requirements;
b) the acknowledgement of paternity
was made in error, or under
misrepresentation or duress; or
c) the acknowledgement of paternity
was made for the purpose of
circumventing the law.
(3) If descent results from a
reproduction procedure, presumption of
paternity may be contested if the
mother’s husband or partner has not
given his prior consent for the
procedure.
Section 4:108
[Exclusion of challenging the
presumption of paternity]
The presumption of paternity may not
be contested if:
a) descent results from a reproduction
procedure, except if the mother’s
husband or partner has not given his
prior consent for the procedure; or
b) paternity was established by way of
judicial process.
185
Section 4:109
[Persons entitled to challenge the
presumption of paternity]
(1) The presumption of paternity may
be challenged by the presumed father,
the mother, the child, or by the child’s
descendant after his/her death.
(2) Alleging that the acknowledgement
of paternity was made in error, or under
misrepresentation or duress, the
presumption of paternity may be
challenged by the father only.
(3) The mother may bring action with
the guardian authority’s consent, jointly
with her minor child.
(4) The mother’s former husband shall
be entitled to challenge the presumption
of paternity if, based on the
presumption, the mother’s new husband
is considered the father, however, if that
presumption is rebutted, the former
husband would have to be considered
the father.
(5) Alleging that the acknowledgement
of paternity was made for the purpose of
circumventing the law, the public
prosecutor and the guardian authority
shall have the right to challenge the
acknowledgement of paternity.
Section 4:110
[Exercising the right to bring action]
(1) An action shall be brought by the
entitled party in person.
(2) A minor of limited legal capacity or
any person whose capacity in respect of
making legal statements relating to
descent has been partially limited shall
be entitled to bring action with the
consent of his/her legal representative. If
the legal representative is unavailable
for any extended period of time to give
consent, or if refuses to consent, the
guardian authority may do so in his
stead.
(3) If the entitled party is incompetent,
the action may be brought in his/her
name by the legal representative with
the guardian authority’s consent.
(4) The mother may proceed in the
action as her child’s legal representative.
Section 4:111
[Time limits for bringing action]
(1) An action for challenging the
presumption of paternity may be brought
by the minor child and the mother
subject to the guardian authority’s
consent, before the child reaches the
age of three years. Other entitled parties
may challenge the presumption of
paternity within a period of one year from
the date when presumption of paternity
is established.
(2) If the presumed father made the
fully enforceable acknowledgement of
paternity in error, or under
misrepresentation or duress, he may
bring action for challenging the
presumption within one year from the
date on which he detected such error or
misrepresentation, or from the date of
cessation of duress.
(3) If no action had been brought
under Subsections (1)-(2) before the
child reached the age of majority, during
the following one-year period the child
shall have the right to bring action on
his/her own accord.
186
(4) Where an entitled party gained
knowledge of any fact giving rise to
challenge is based, he/she may
challenge the presumption of paternity
within a period of one year from the date
after learning of such reason.
Section 4:112
[Respondents in actions challenging
the presumption of paternity; effect of
judgment]
(1) An action to rebut the presumption
of paternity shall be brought jointly by
the child and the mother against the
father, by the father against the child, or
against both the child and the father if
brought by others. The mother shall be
named as a defendant in such actions
as well - unless brought by the child -,
except when this is not possible due to
her death.
(2) If the child was born during the
mother’s new marriage, within three
hundred days reckoned from the date of
dissolution of the mother’s previous
marriage, the mother’s former husband
shall also be named in the action as a
defendant.
(3) If the party against whom the action
is to be brought is no longer alive or
cannot be located, the guardian ad litem
appointed by the court shall be named
as the defendant in the action.
(4) The judgment to rebut the
presumption of paternity applies to all
parties involved.
Section 4:113
[Provisions on surnames and visitation
rights after the rebuttal of the
presumption of paternity]
(1) If the court’s decision is in favor of
the claim for the rebuttal of the
presumption of paternity, the court may,
in justified cases:
a) authorize the child to retain his/her
surname; and
b) award visitation rights to the man
who raised the child in his family as his
own over a long period of time.
(2) The child shall be entitled to retain
the surname referred to in Paragraph a)
of Subsection (1) also if paternity status
has been conveyed to another man.
Section 4:114
[Challenging the presumption of
paternity in non-contentious
proceedings]
(1) No action for the rebuttal of the
presumption of paternity is necessary if it
exists based on the mother’s marriage,
matrimonial relationship was terminated
at least three hundred days previously,
and the natural father of the child wishes
to make a fully enforceable
acknowledgement of paternity to declare
that he is the father of the child.
(2) In the case provided for in
Subsection (1), upon the joint request of
the presumed father, the mother and the
man who wishes to make a fully
enforceable acknowledgement of
paternity to declare that he is the father
of the child, the court shall establish in
non-contentious proceedings that the
child’s father is not the mother’s
husband or former husband. In the same
187
action paternity shall be established by
means of fully enforceable
acknowledgement of paternity.
(3) The time limits for bringing action
for challenging the presumption of
paternity shall not apply to the opening
of the proceedings referred to in
Subsection (2).
Chapter XI
Maternity
Section 4:115
[Legal status of mothers]
(1) The woman giving birth to the child
shall be considered the mother of that
child.
(2) If the mother’s person cannot be
established, the child may bring action
requesting the court to award mother’s
status to the person he/she designates.
In the event of the child’s death, this
right shall accrue upon his/her
descendants.
(3) An action for establishing maternity
by way of judicial process may also be
brought by a person who claims to be
the mother of the child.
(4) If descent results from a
reproduction procedure, no action may
be brought by a woman who made a
donation of gamete or embryo for the
procedure.
Section 4:116
[Action for a negative declaration]
The child, or his/her descendant after
the child’s death, or the natural mother
may bring action requesting the court to
establish that the person shown in the
registry of births as the mother is not the
woman who gave birth to the child,
provided that the wrong entry of
maternity cannot be remedied by way of
an administrative procedure.
Section 4:117
[Exercising the right to bring action]
(1) A maternity suit shall be brought by
the entitled party in person.
(2) A minor of limited legal capacity or
any person whose capacity in respect of
making legal statements relating to
descent has been partially limited shall
be entitled to bring action with the
consent of his/her legal representative. If
the legal representative is unavailable
for any extended period of time to give
consent, or if refuses to consent, the
guardian authority may do so in his
stead.
(3) If the entitled party is incompetent,
the action may be brought in his/her
name by the legal representative with
the guardian authority’s consent.
Section 4:118
[Respondents in maternity suits, legal
effects of any change in maternity]
(1) The action shall be brought by the
child or his/her descendant against the
mother or the person shown in the
registry of births as the mother, or by the
mother against the child or the person
shown in the registry of births as the
mother.
(2) If descent results from a
reproduction procedure, maternity may
188
not be established by way of judicial
process with respect to a woman who
made a donation of gamete or embryo
for the procedure.
(3) If in an action for establishing
maternity by way of judicial process any
change in maternity status stemming
from the woman’s marriage has an effect
on the presumption of paternity, the
husband who is to be considered the
father of the child by way of presumption
based on wedlock shall also be named
as defendant in the action.
(4) If the party against whom the action
is to be brought is no longer alive, the
guardian ad litem appointed by the court
shall be named as the defendant in the
action.
(5) In the event of any change in
maternity, the child shall have the option
to decide to take up the name of his/her
biological mother or to keep his/her
existing surname. In justified cases the
court may authorize the child to retain
his/her surname.
(6) The judgment delivered in a
maternity suit applies to all parties
involved.
TITLE XI
ADOPTION
Chapter XII
Purpose and Conditions of
Adoption
Section 4:119
[Purpose of adoption]
(1) Adoption shall be considered to
establish a family relationship between
the adoptive parent, his/her relatives and
the adopted child in the interest of
allowing the child to grow up in a family.
(2) Only minor children can be
adopted.
Section 4:120
[General conditions of adoption]
(1) For the adoption an identical
petition shall be submitted by the person
wishing to assume the parenting of a
child and by that child’s legal
representative, together with the consent
of the child’s parents and the spouse of
the adoptive parent.
(2) As to his/her adoption, a minor of
limited legal capacity over the age of
fourteen years may be adopted with
his/her consent. A minor of sound mind
under the age of fourteen shall be heard
and his/her opinion shall be taken into
consideration where deemed
appropriate.
(3) In the adoption process efforts
should be made to ensure a degree of
continuity in the child’s upbringing, with
particular regard to his/her family ties,
nationality, religion, mother tongue and
cultural background.
(4) Adoption shall be authorized by the
guardian authority.
(5) Moreover, after the requirements
set out in this Act are satisfied, the
guardian authority shall authorize the
adoption if it is deemed to be in the
child’s best interest. In the interest of the
minor child, in its adoption decision the
189
guardian authority shall give preference
to adoptive parents living in wedlock.
Section 4:121
[The adoptive parent]
(1) The adoptive parent must be at
least twenty-five years of age with legal
capacity, must be at least sixteen years
and at most forty-five years of the child’s
senior, and who is considered suitable to
adopt the child based on his/her
personality and other circumstances. In
the case of adoption by a relative or
spouse, the requirement of age
difference shall not apply.
(2) In the case of adoption as a
common child, the age and age
difference requirement set out in
Subsection (1) shall be satisfied by
either of the adoptive parents. If the
adoptees are siblings, the age of the
older child shall be taken into
consideration.
(3) Any person whose parental
supervision has been terminated by
court order, or who has been excluded
from public affairs, and whose child is
under temporary or permanent foster
care may not adopt a child.
Section 4:122
[Establishing suitability for adoption]
(1) Suitability for adoption shall be
determined by the guardian authority
following the preliminary procedure and
preparation carried out in accordance
with the relevant legislation.
(2) The suitability of relatives and the
parent’s spouse, including a person who
has been raising the child with the
parent’s consent in his/her own
household for a period of not less than
one year and, in the case of international
adoption, of the person wishing to
assume the parenting of a child shall be
determined by the guardian authority in
the procedure for the authorization of
adoption. This provision shall also apply
for determining the suitability of any
person who raises a child in his/her own
household against compensation by
decision of the guardian authority
(hereinafter referred to as „child
protection foster parent”).
Section 4:123
[Children for adoption]
(1) Apart from the adoption of the
minor child of the spouse, a child may be
adopted if his/her parents are not alive,
or if his/her parents are unable to raise
him/her properly.
(2) An adopted child may, during the
term of adoption, be adopted by the
spouse of the adoptive parent, or by
others after the adoptive parent’s death.
If an adopted child is adopted after the
adoptive parent’s death, the previous
adoption shall cease.
Section 4:124
[Eligibility for adoption]
(1) The guardian authority shall
declare a child placed under temporary
foster care eligible for adoption for a
period of not more than two years if the
parent:
a) has failed - for reasons within
his/her control - to keep regular contact
with his/her child for a period of one
190
year, or no contact of any kind for a
period of half a year, and fails to make
any changes in his/her life style and/or
other circumstances, on account of
which temporary foster care cannot be
eliminated; or
b) changes - for reasons within his/her
control - his/her permanent or habitual
residence without leaving the address of
the new permanent or habitual
residence, and efforts for obtaining such
address proved ineffective within a
period of six months.
(2) In justified cases, the time limit
referred to in Subsection (1) may be
extended by not more than two years.
(3) In the case provided for in
Paragraph a) of Subsection (1), the
parent shall be advised in the resolution
ordering temporary foster care
concerning the legal effects of eligibility
for adoption.
(4) The guardian authority shall, upon
declaring the child eligible for adoption,
suspend the parent’s right of access in
the interest of the child’s adoption.
(5) If the adoption of a minor fails to
materialize, and the guardian authority
subsequently terminates temporary
foster care, the resolution declaring the
child eligible for adoption shall be
abolished.
Section 4:125
[Parental consent for open adoption]
(1) Open adoption means when the
biological parent approves the adoption
to an adoptive parent known to him/her.
(2) The parent may withdraw his/her
statement of consent within a period of
six weeks following the birth of the child
for the benefit of caring for and bringing
up the child by the parent or another
relative of the child. The parent shall be
informed of the possibility of withdrawal.
(3) Upon giving consent for adoption,
the parent’s right of custody terminates
when the child reaches the age of six
weeks. Termination of the parent’s right
of custody shall be declared by the
guardian authority.
(4) With the exception if the child is
adopted by a relative or by the parent’s
spouse, an open adoption process shall
be carried out with the involvement of
the regional child protection social
services or an organization specializing
in adoptions.
Section 4:126
[Parental consent for confidential
adoption]
(1) Confidential adoption means when
the biological parent agrees to the
adoption of his/her child in a manner
maintaining the person and the
identifying information of the adoptive
parents as secret, or where the parent’s
consent is not required in accordance
with this Act. The statement of consent
can be made before the birth of the child
as well.
(2) The parent may withdraw his/her
statement of consent within a period of
six weeks following the birth of the child
for the benefit of caring for and bringing
up the child by the parent or another
relative of the child. The parent shall be
informed of the possibility of withdrawal.
191
(3) If the child is over the age of six
years or suffers in any mental disorder,
the approval of the guardian is required
for the validity of the statement of
consent.
(4) Within the meaning of Subsection
(2), the parent’s rights of custody
terminates when the child reaches the
age of six weeks. Termination of the
parent’s right of custody shall be
declared by the guardian authority.
(5) In the process of confidential
adoption the parent is not notified of the
adoption and my not seek remedy
against the decision on adoption.
(6) In the process of confidential
adoption the natural identification data of
the biological parent and the adoptive
parent shall not be disclosed between
them.
Section 4:127
[Adoption without parental consent]
(1) No consent is required for adoption
from a parent:
a) whose parental supervision was
terminated by final court order;
b) whose child had been placed in
temporary foster care, and the guardian
authority declared such child eligible for
adoption;
c) who is incompetent for reasons
other than minority;
d) who cannot be identified or cannot
be located, and the measures
introduced to identify or locate such
person failed; or
e) who abandoned his/her child - with
a view to passing on the responsibility of
raising the child - at a place designated
by a medical institution, without
revealing his/her identity, and did not
come forward within six weeks to reclaim
the child.
(2) No consent is required for adoption
from the adoptive parent’s spouse if:
a) the spouse is incompetent or cannot
be located; or
b) the matrimonial relationship of the
spouses was terminated.
Section 4:128
[Care before adoption]
(1) Following the submission of a
petition for adoption and after the
consent of the parties concerned, the
person wishing to assume the parenting
of a child shall provide care for that child
in his/her home for a period of at least
one month. Adoption may be authorized
if the above specified period of caring for
the child proves to be successful.
(2) Adoption may be authorized
without the period of caring referred to in
Subsection (1) if:
a) the adoptive parent and the
biological parent are married;
b) the adoptive parent has been caring
for the child in his/her own home for at
least one year with the biological
parent’s consent; or
c) the child being cared for is adopted
by his/her child protection foster parent,
who has been providing for the child’s
care and upbringing for a period of at
least one year.
Section 4:129
[International adoption]
192
(1) International adoption means when
the child moves permanently to another
country in consequence of the adoption,
irrespective of the adoptive parent’s
nationality and irrespective of whether or
not the child’s citizenship is changed.
(2) Save where the child is adopted by
a relative or by the parent’s spouse, a
child may be adopted internationally if
declared eligible for adoption, or if
placed under temporary or long term
foster care, provided that the child, after
having been placed under long term
foster care or declared eligible for
adoption, was not adopted in Hungary
because the measures taken for the
child’s adoption had failed.
Section 4:130
[Prohibition of financial gain]
Adoption shall not be authorized if it is
likely to result in any financial advantage
for the parties, other persons or
organizations involved in the adoption
process, in excess of their justified
expenses.
Section 4:131
[Effect of adoption, follow-up
procedures]
(1) Adoption enters into effect on the
date on which the resolution on adoption
becomes legally binding. If the adoptive
parent dies during the adoption process,
the legal effects of the adoption, if
authorized, shall take effect upon the
death of the adoptive parent.
(2) After the adoption the organization
delegated by law or the regional child
protection social services shall monitor
and promote the child’s well-being and
his/her development for a period of up to
five years following the operative date of
the resolution on adoption.
Chapter XIII
Legal Effects of Adoption
Section 4:132
[Child’s status in the adoptive parent’s
family; adoption as a common child]
(1) As regards the adoptive parent and
his/her relatives, the adoptee receives
the legal status as the adoptive parent’s
child.
(2) The person adopted by both
spouses together or separately, shall be
construed as the common child of the
spouses. Furthermore, if either spouse
adopts the child of the other spouse, that
child shall also be considered as a
common child.
(3) Adoption will have effect on the
descendants of the adopted person.
Section 4:133
[Legal effects on the rights and
obligations deriving from descent]
(1) The act of adoption eliminates the
rights and obligations accrued upon
relationship by descent in connection
with parental supervision and the
maintenance of relatives, except when
one of the spouses adopted the child of
the other spouse.
(2) Where one of the spouses adopts
the child of the other spouse, and the
marriage during which the child was
193
born terminated upon the death of either
spouse, the adoption shall not affect the
rights of access of the relatives of the
deceased spouse.
(3) Where a relative of either spouse
adopts the child upon the death of both
spouses, the adoption shall not affect
the rights of access of the relatives of
the other spouse.
(4) On an exceptional and duly justified
basis, in the case of open adoption the
guardian authority may grant rights of
access for the biological parent who has
given consent for the adoption of his/her
child by the spouse of the other parent.
Section 4:134
[Name of the adoptee]
(1) The adopted child shall use the
surname of the adoptive parent accrued
by birth or through marriage, with the
exception if the adoptive parent uses the
full name or surname of her spouse with
an indication of marital status. If the
adoptive parent uses as her married
name her spouse’s or former spouse’s
name without an indication of marital
status, or their surnames merged
together as their married name, the
adoptee’s new surname may be - by
decision of the adoptive parent - the
spouse’s or former spouse’s surname,
the merged married name or the
adoptive parent’s birth name. Where a
parent has adopted more than one child,
they may all use the same surname.
(2) Where a child is adopted as a
common child, the adoptive parents
shall specify in the petition for adoption
their choice of the surname of one of the
adoptive parents the adopted child
should use. By agreement of the
adoptive parents, the adopted child may
use the surnames of the adoptive
parents merged together also if the
adoptive parents have not merged their
surnames. If the spouses did not adopt
the child together, in the absence of their
agreement the child shall use the
surname of the de facto adoptive parent.
(3) The guardian authority may
exceptionally permit the adoptee to
retain his/her surname.
(4) On an exceptional and duly justified
basis, the guardian authority may
authorize the adoptee to change his/her
forename. The forename shall be
decided by the adoptive parents.
(5) The surname and forename of the
adopted person shall be established at
the time when the authorization for
adoption is granted.
Section 4:135
[Right of adoptees to access
information about biological relations]
(1) The adoptee shall have the right to
request information from the guardian
authority as to whether he/she was
adopted, about his/her biological parent,
about whether he/she has any siblings,
and - over the age of fourteen years shall
have access to the natural
identification data of his/her biological
parent and sibling. A child over the age
of fourteen years may submit such
request without the permission of his/her
legal representative. The parties to the
adoption process shall be informed
thereof.
194
(2) Before the disclosure of such
information the biological parent and the
sibling shall be interviewed. If the
adopted person is a minor, the adoptive
parent or other legal representative shall
also be interviewed. If the sibling is a
minor, the prior consent of his/her legal
representative is required for the
interview. If the biological parent or the
sibling is incompetent, their legal
representative shall be interviewed as
well.
(3) If the biological parent, the sibling,
the adoptive parent or other legal
representative cannot be located, or if
any insurmountable obstacles exist, the
aforesaid interview is not required.
(4) The natural identification data of
the biological parent or sibling shall not
be released to the adoptee if:
a) it was not possible to interview the
biological parent, the sibling, the
adoptive parent or other legal
representative for they could not be
located or any insurmountable obstacles
existed;
b) the biological parent and the sibling
did not permit the disclosure of their
natural identification data; or
c) it is not in the minor child’s best
interest, in particular if the court deprived
the biological parent of his/her rights of
custody on account of his/her wrongful
conduct causing serious injury to, or
endangering the interest of, his/her child,
including the child’s physical integrity
mental or moral development.
(5) If the biological parent is not alive
at the time the request referred to in
Subsection (1) is submitted, his/her
natural identification data may be
disclosed to the adopted child, except if
he/she already blocked the disclosure of
his/her personal data previously.
Section 4:136
[Disclosure of the biological parent’s
medical information]
The guardian authority shall, at the
request of:
a) the legal representative of the
adopted child under the age of fourteen
years;
b) the legal representative or the
adopted child over the age of fourteen
years;
c) the adoptee of legal age;
disclose information on the biological
parent’s medical data, excluding natural
identification data, which are construed
important from the point of view of the
adopted person’s health. The data
requested by an adopted child over the
age of fourteen years shall be
communicated to the legal
representative as well.
Chapter XIV
Nullity and Dissolution of Adoption
Section 4:137
[Nullity of adoption]
(1) Adoption shall be abolished if the
adoptive parent provides a fully
enforceable acknowledgement of
paternity so as to confirm that he is the
father of the adoptee, or if the adoptive
parent is declared by binding court
195
decision to be the father or the mother of
the adopted child.
(2) If adoption is abolished, it shall be
construed as if the adoption had not
taken place.
Section 4:138
[Dissolution of adoption upon mutual
request]
(1) The guardian authority shall have
powers to dissolve the adoption upon
the parties mutual request.
(2) If the adopted child is a minor,
adoption may be dissolved only if it is in
the child’s best interest. During the
procedure the guardian authority may
interview the adopted child’s biological
parents as well, except when any
insurmountable obstacles exist.
(3) Adoption shall cease at the time
the guardian authority’s resolution
becomes legally binding. If either party
should die during the process, the legal
effects of adoption, if dissolution is
authorized, shall be considered
terminated with retroactive effect to the
date when the petition was submitted.
(4) Dissolution will have effect on the
adoptive parent, the adoptive parent’s
relatives, the adopted person and on the
descendants of the adopted person.
Section 4:139
[Dissolution of adoption upon unilateral
request]
(1) Adoption shall be dissolved by the
court if either the adoptive parent or the
adopted person engaged in conduct
such that made life under adoption
unbearable for the other party. If the
adopted child is a minor, adoption may
be dissolved on an exceptional and duly
justified basis upon the adoptive parent’s
request.
(2) Upon the death of the adoptive
parent, the adoption may be dissolved in
the interest of allowing the adoptee to
regain his/her family status on the basis
of descent.
(3) Dissolution of adoption by judicial
process may be requested by either of
the parties. If the adopted child is a
minor, the guardian authority may bring
action for the dissolution of adoption. If
the party against whom the action is to
be brought is no longer alive, the
guardian ad litem appointed by the court
shall be named as the defendant in the
action. If the adoptive parent dies during
the procedure, the guardian ad litem
appointed by the court shall be named
as the defendant in the action.
(4) If there are more than one adoptive
parent, and one of them is alive at the
time the action is brought, dissolution of
adoption may be requested by the living
adoptive parent on behalf of the
deceased adoptive parent as well. Such
action may be based on the conduct
shown with respect to either of the
adoptive parents.
(5) If the adopted child is a minor, the
court shall hear the biological parents as
well, except if any insurmountable
obstacles exist.
Section 4:140
[Effect of judgment for the dissolution
of adoption]
196
(1) Adoption shall be abolished on the
date on which the decree of dissolution
becomes legally binding. If either party
should die during the process, the legal
effects of adoption, if dissolution
authorized, shall be considered
terminated with retroactive effect to the
date when the petition was submitted.
(2) The decree of dissolution of
adoption will have effect on the adoptive
parent, the adoptive parent’s relatives,
the adopted person and on the
descendants of the adopted person.
(3) The decree of dissolution of
adoption applies to all parties involved.
Section 4:141
[Effect of decree for the dissolution of
adoption relating to the adoptive parents
separately]
If adoption was dissolved with effect to
only one of the adoptive parents,
adoption shall be abolished with respect
to this parent and his/her relatives,
unless the guardian authority or the
court provides otherwise.
Section 4:142
[Provisions relating to surnames upon
dissolution of adoption]
Following dissolution of adoption the
adoptee and his/her descendant may
not retain the surname accrued through
the adoption. In justified cases the
guardian authority or the court may
authorize, upon request, the persons
concerned to retain the surname
accrued through adoption.
Section 4:143
[Protection of rights accrued through
the deceased adoptive parent]
The dissolution of adoption shall not
affect the rights accrued before the
opening of the guardian authority’s
proceedings or the legal action with
respect to the deceased adoptive
parent. In that case, the estate already
devolved cannot be reclaimed.
Section 4:144
[Legal effects of dissolution of
adoption on relationships by descent]
Following the dissolution of adoption,
rights and obligations accrued upon
relationship by descent shall resume, if
they were lost upon the adoption, with
the exception of rights and obligations
stemming from parental custody.
Chapter XV
Legal Statements Relating to
Adoption
Section 4:145
[Legal statements relating to adoption]
(1) Subject to the exceptions set out in
Subsections (2)-(3), legal statements
relating to adoption shall be made in
person. Minors of limited legal capacity
shall also be allowed to make legal
statements in person, without the
consent of their legal representative.
(2) As regards the legal acts, under
family law, of a minor of limited legal
capacity the consent of his/her legal
representative is required in respect of
197
making legal statements relating to
adoption.
(3) Legal statements relating to
adoption may be made by the legal
representative of an incompetent person
in his stead. A minor of sound mind
under the age of fourteen years shall be
heard by the guardian authority.
(4) The adoptive parent may not act as
the legal representative of the adoptee
in connection with the dissolution of
adoption. In that case, the guardian
authority shall appoint a caretaker officer
to represent the minor adoptee.
TITLE XII
PARENTAL CUSTODY
Chapter XVI
General Provisions Relating to
Parental Custody
Section 4:146
[Legal status of minors; rights and
obligations stemming from parental
custody]
(1) Minor children are under parental
custody or guardianship.
(2) Parental custody covers the right to
select the minor child’s name, to provide
care, to determine the child’s place of
residence, to handle his/her financial
affairs, including the right and obligation
of representing the child in legal forums,
and the right to exclude guardianship
and other forms of social care.
Section 4:147
[Principles of exercising parental
supervision]
(1) Parental supervision shall be
exercised by the parents in collaboration
with one another in the interest of the
child’s physical, intellectual and moral
development.
(2) In exercising parental supervision
jointly the rights and obligations of the
parents shall be equal.
Section 4:148
[Involving children in the decisionmaking
process]
The parents shall inform their child
concerning the decisions that pertain to
the child as well, and they shall permit
the child of sound mind to express
his/her views before the decision is
made, and to partake in making the
decision itself together with his/her
parents in cases defined by law. The
parents shall take the child’s opinion into
account, giving due weight consistent
with the child’s age and degree of
maturity.
Section 4:149
[Limiting parental supervision in
exceptional cases]
The court or other competent authority
may restrict or withdraw the parent’s
rights of custody in exceptional and
justified cases specified by law, where
this is deemed necessary for the
protection of the child’s best interest.
Chapter XVII
198
Scope of Parental Custody
1. Naming the child
Section 4:150
[Selecting the child’s name]
(1) The child shall be given - by
agreement of the parents - the birth
name or the married surname of his/her
mother or father. If the parents are not
married the child may not use the
mother’s married name from a previous
marriage, if the mother uses that name
with an indication of marital status. The
child may use the parents’ merged
surname as his/her surname, even if the
parents did not merge their surnames
after the marriage, or if the parents did
not marry. The surname of the child may
consist of two segments at most.
(2) If the parents are married all
common children born during their
marriage shall have the same surname,
except if the parents modified their
surname during the marriage. If the
parents use a common married name,
their child may use the parents’ common
married name. If one of the parents uses
their merged surname as a married
name, the child shall be given - by
agreement of the parents - the other
parent’s name without an indication of
marital status or the parents’ merged
surname.
(3) If there is no person who should be
considered the child’s father, the child
shall use his/her mother’s surname
accrued by birth or through marriage,
with the exception if the mother uses the
full name or surname of her husband
with an indication of marital status.
(4) The mother may request the
guardian authority to enter an imagined
person in the registry of births as the
father of her minor child. In entering an
imagined person as the father, the
mother shall have the option to decide
for the child to use the name of such
imagined father. In the event of failing to
supply a statement to that effect, the
child shall retain use of the mother’s
name.
(5) If there is no person who should be
considered the child’s father, upon
reaching the age of majority the child
may request to enter an imagined
person in the registry of births as his/her
father - if it was not previously done and
may also request to have the name
of the father shown in the registry
removed. In that case, the child shall
also have the option to decide whether
or not he/she wishes to use the surname
of the imagined father in the future.
(6) The forename of the child is
determined by the parents.
Section 4:151
[Name given by the guardian authority]
(1) The guardian authority shall
determine the child’s name if:
a) the parents exercising parental
supervision jointly fail to notify the
guardian authority concerning their
agreement on the child’s surname and
forename within thirty days of being
asked to do so; or
b) both parents are unknown.
199
(2) The guardian authority shall
determine the child’s forename if the
parent having the right of custody fails to
decide on the child’s forename despite
being asked to do so by the registrar or
the guardian authority, within thirty days
of such request.
2. Care, training and instruction of
children
Section 4:152
[Taking care of the child, selecting
his/her home and residence]
(1) It is the parents’ right and
obligation to care for the child, and to
provide the necessary conditions for the
child’s continuous maintenance and
development.
(2) Parents shall provide a home for
their child in their own household.
Unless otherwise provided for by the
court or the guardian authority, the
child’s place of residence shall be the
parents’ home even if the child
temporarily resides elsewhere.
(3) The parent or the guardian
authority shall have the right to demand
the child be released by any person who
unlawfully holds the child in custody.
(4) A child over the age of sixteen
years shall be allowed to leave the
parents’ home or any other place of
residence designated by the parents,
with the guardian authority’s
authorization, without the parents’
consent, if that is not contrary to his/her
interest. Leaving the parents’ home or
any other place of residence designated
by the parents shall not in itself affect
parental custody, with the exception of
personal care and upbringing.
(5) The agreement of both parents is
required for the child’s residence abroad
for any extended period of time for the
purpose of studies or work, or other
similar reason, either by him/herself or
together with one of the parents.
(6) Parental authorization is required
for the child’s moving to another country.
Section 4:153
[Raising and development of children,
career guidance]
(1) The parents shall have the right to
choose the path for the child’s
upbringing and development.
(2) Taking into account the child’s
abilities, the parents and the child shall
jointly decide the possible path for the
child’s career.
(3) Any dispute arising between parent
and child in connection with setting the
career path and, in that context, with the
child’s education and schooling shall be
decided by the guardian authority.
Section 4:154
[Involvement in caring for and raising
the child by a person in direct contact
with the child within the family]
Where a child is raised in a home of a
person other than the parents, or in a
home maintained by such person and
the parents together, this person may be
involved - by agreement of the parent
having the right of custody - in exercising
certain rights and obligations relating to
caring for and raising the child.
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3. Management of the assets of
the child
Section 4:155
[Executors of the child’s property]
(1) It is the right and obligation of the
parents having rights of custody to
manage all of the child’s property which
are not removed from their
administration under this Act.
(2) If the child was given any property
under the condition that his/her parents
should be deprived of access to such
property, the guardian authority shall
appoint a trustee - taking into
consideration the recommendation of
the settlor - for the administration of such
property (hereinafter referred to as
„trustee”). If the third person granting the
property excluded one of the parents
from managing the property, the other
parent otherwise entitled to manage the
property shall manage the property.
Section 4:156
[Parent’s right as the exclusive
executor of the property of the child]
(1) Where custody is exercised by the
parents jointly, the parents may give a
power of attorney collectively or
separately authorizing the other parent
to administer the child’s property in the
other parent’s stead. The power of
attorney shall be considered valid if
executed in an authentic instrument or in
a private document countersigned by an
attorney.
(2) In connection with contracts of
minor importance, the parent acting on
the child’s behalf may be considered by
bona fide third parties as acting in the
name of the other parent as well.
(3) Where custody is exercised by the
parents jointly, the guardian authority
shall have powers to delegate a parent
to administer the child’s property if
deemed necessary for the child’s best
interest.
Section 4:157
[Appropriation of the child’s property
and income]
(1) The parents shall use the child’s
assets remaining after covering the
incremental costs applicable to the
assets for financing the child’s justified
needs.
(2) The parents shall be allowed to
allocate the child’s assets for covering
the costs of maintenance in accordance
with the provisions of this Act on the
maintenance of the child.
(3) If the child is raised in the parent’s
home and he/she has an income, the
parent shall be entitled to ask for
appropriate contribution to household
expenses.
Section 4:158
[Fiduciary responsibility of the parents]
(1) The parents shall administer their
child’s property without having to provide
security and without the obligation to
give account.
(2) In managing their child’s property,
the parents shall follow the same rules of
prudential management as applicable to
their own affairs. In the event of any
breach of this obligation committed
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intentionally or through serious
negligence, the parents shall provide
compensation for damages on the
grounds of non-contractual liability.
Section 4:159
[Limitation of the parent’s right to
manage the child’s assets]
In the event of any breach of the
obligation of parents having rights of
custody in managing their child’s assets,
thus causing serious injury to the child’s
interest, the guardian authority may, in
justified cases:
a) order that the child’s money and
other valuables be transferred to the
guardian authority, if such assets are not
immediately required for ongoing
expenses according to the principle of
prudential management;
b) order the parents to provide
collateral security;
c) place the management of assets
under its supervision;
d) order the parents to give account of
management practices as a trustee;
and/or
e) impose restrictions on or withdraw
the right of management from the
parents, or their right of representation in
certain financial matters or specific
groups of matters.
Section 4:160
[Disbursement of the child’s assets]
If the parents’ asset management right
is terminated, they shall release the
assets to the child of legal age, or to the
person to whom management of the
assets has been entrusted.
4. Legal representation of the child
Section 4:161
[Legal representation of the child]
(1) It is the right and obligation of the
parents having rights of custody to
represent their child in matters of a
personal and financial nature.
(2) The parent having no asset
management right may not act as a legal
representative of the child’s in matters of
a financial nature.
Section 4:162
[Exclusion of parental representation
in making legal acts]
The parent’s power of representation
shall not cover the child’s legal
statement which must be made in
person under the relevant legislation.
Section 4:163
[Exclusion of parental representation
on the grounds of conflict of interest]
(1) Unless otherwise provided for in
this Act, the parent may not represent
his/her child in matters in which the
parent him/herself, his/her spouse,
domestic partner, relative in direct line or
any other person under the parent’s
legal representation is the opposing
party.
(2) If, owing to a conflicting interest or
physical obstacle, a parent acting as the
legal representative is not able to
proceed pursuant to the law or a
guardian authority’s order, the guardian
authority shall appoint a caretaker officer
to represent the child.
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(3) The appointment of a caretaker
officer may be requested by either of the
parties affected or by any authority, and
one may be appointed ex officio. The
parent shall notify the guardian authority
without delay with a view to having a
caretaker officer appointed, if unable to
proceed for the reasons defined in
Subsection (2).
(4) The caretaker officer shall act with
the same authority as a guardian.
Chapter XVIII
Exercising Parental Supervision
1. Agreement of parents on
exercising parental custody
Section 4:164
[Joint exercise of parental custody]
(1) Unless otherwise provided for in an
agreement between the parents, or by
the guardian authority or the court,
parental custody shall be exercised by
the parents jointly, even if they are
separated.
(2) If the parents are separated, in
exercising parental supervision they
shall ensure that the child’s life is well
balanced.
(3) In matters where immediate
attention is required, in the case of joint
custody either parent shall have the right
to decide on his/her own in the child’s
interest, of which the other parent must
be notified immediately.
Section 4:165
[Agreement between separated
parents on the division of rights of
custody and on joint parental
supervision]
(1) If the parents are living separate
and apart, the rights and obligations
relating to parental supervision may be
shared among them, and they may
agree to delegate the right of custody to
one of them. Such agreement of the
parents shall be implied if the child has
been living with one of the parents
undisturbed over a long period.
(2) In a matrimonial suit or in an action
brought in connection with the exercise
of certain rights of custody, at the
parents’ mutual request the court shall upon
weighing the child’s best interest sustain
the parents’ agreement relating
to custody, and in that context, to the
child’s residence or to the arrangement
made under Subsection (1) concerning
parental supervision, or shall pass
judgment thereof.
Section 4:166
[Decision on disputes arising out of or
in connection with joint custody]
If, in the case of joint custody, the
parents fail to agree on certain issues,
the guardian authority shall decide such
issues, with the exception of issues
connected to the right of freedom of
conscience and religion.
2. Settlement of parental custody
by way of judicial process
Section 4:167
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[Settlement of parental custody by way
of judicial process]
(1) In the absence of an agreement
between the parents living separate and
apart the court shall decide - upon
request or ex officio if deemed
necessary for the protection of the
child’s best interest - which parent shall
have the right of custody.
(2) The court shall make the above
decision with a view to finding the best
way to ensure the child’s physical,
intellectual and moral development.
Section 4:168
[Delegation of separated parent for
exercising certain rights of custody]
(1) If the court award the right of
custody to one of the parents, the parent
living separate and apart from the child
shall not be able to exercise parental
authority, with the exception of major
issues relating to the child’s well-being.
(2) The court may delegate certain
rights upon the parent living separate
and apart from the child in connection
with caring for and the upbringing of the
child, and - exceptionally - for exercising
full or partial powers in financial
management and in handling the child’s
financial affairs. Where deemed
necessary for the protection of the
child’s best interest, the court may
restrict or withdraw the right of decision
in terms of major issues relating to the
child’s well-being.
Section 4:169
[Placement of a child with a third party]
(1) If the court considers that the
exercise of custody by the parents
jeopardizes the child’s best interest, it
may place the child under the care of a
third party, provided that such third party
requests the placement him/herself. In
that case, that person shall be appointed
as the guardian, while the parent’s rights
of custody are suspended.
(2) In the case provided for in
Subsection (1), the court shall first and
foremost place the child with a person
who has a history in caring for and
raising the child in accordance with the
child’s best interest.
Section 4:170
[Changes in exercising certain rights of
custody and in the placement of a child]
(1) Changes in exercising certain
rights of custody and in the placement of
a child with a third party may be
requested in court in the event of
considerable changes taking place
subsequently in the circumstances
underlying the parents’ agreement or the
court’s decision, and in consequence
changes are in the child’s best interest.
In consequence of changes in the
relevant circumstances, the child’s
interest shall not be invoked by the
parent if the change is attributable to
his/her wrongful conduct, especially if
the parent has abducted or holds off the
child unlawfully.
(2) If, in the case of joint custody, the
parents are no longer able to cooperate,
the court shall abolish joint custody at
the request of either parent.
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Section 4:171
[Action brought in disputes in
connection with the exercise of certain
rights of custody and with the third-party
placement of a child]
(1) An action may be brought in
disputes in connection with changes in
exercising certain rights of custody and
with the third-party placement of a child,
or for the modification of placement by
the parent and by the guardian authority.
(2) With the exception set out in
Subsection (3), the action shall be
brought by either parent against the
other parent, or by the guardian
authority against both parents.
(3) An action for the modification of
placement with a third party shall be
brought against the person with whom
the child has been placed.
(4) During the action the court shall
hear both parents, except if any
insurmountable obstacles exist. In
justified cases, or if requested by the
child him/herself, the court shall hear the
child as well either personally or through
an expert. If the child is over the age of
fourteen years, the decision relating to
custody and his/her placement can be
made upon the child’s agreement,
except when the child’s choice is
considered to jeopardize his/her
development.
Section 4:172
[Mediation in actions brought in
disputes in connection with the exercise
of certain rights of custody]
In justified cases, the court may order
the parents to submit to mediation in the
interest of properly exercising parental
supervision and to ensure their
cooperation to that end, including the
right to maintain direct contact between
the parent living separate and apart and
the child.
3. Rights and obligations of a
parent living separate and apart
from his/her child
Section 4:173
[Cooperation obligations of parents]
The parent having the right of custody
and the parent living separate and apart
from his/her child shall cooperate in the
interest of the child’s balanced
development, with due respect for and
without any disturbance of the family life
of each other.
Section 4:174
[Obligation of the parent living with the
child to provide information]
The parent having custody shall inform
the parent living separate and apart
concerning the child’s development,
health and studies at prearranged
intervals, and shall provide all
information requested by the parent
living separate and apart relating to the
child.
Section 4:175
[Joint rights in custody]
(1) The parents living separate and
apart shall exercise their rights jointly
205
having regard to major issues relating to
the child’s well-being, also if custody has
been awarded to one of the parents by
agreement of the parents or by court
decision, with the exception if the court
has restricted or withdrawn the right of
supervision of the parent living separate
and apart from his/her child.
(2) Major issues relating to the child’s
well-being shall cover the naming of a
minor child and changing the child’s
name, relocation of the child’s residence
to a place other than one where his/her
parent lives, or to abroad for long term
residence or for the purpose of
settlement, changing the child’s
citizenship and decisions relating to the
schooling or career path of the child.
(3) If the parents living separate and
apart are unable to reach an agreement
in connection with any of the jointly
exercised parental rights referred to in
Subsection (2), the guardian authority
shall decide on the matters in question.
Section 4:176
[Obligation of the parent living
separate and apart to provide
information]
If, in connection with caring for and
upbringing the child as well as with
exercising powers in financial
management and in handling the child’s
financial affairs, the court delegates
certain rights upon the parent living
separate and apart from the child, and
parental authority shall, in that respect,
be exercised by the parent living
separate and apart. The parent living
separate and apart shall inform the
parent having the right of custody of
such activities.
Section 4:177
[Mediation in proceedings of the
guardian authority]
The guardian authority may - upon
request or ex officio if deemed
necessary for the protection of the
child’s best interest - order the parent
having the right of custody and the
parent living separate and apart to
submit to mediation in the interests of
ensuring the cooperation and to
safeguarding the rights of the parent
living separate and apart, including
communication between the parent
living separate and apart and the child.
4. Visitation rights
Section 4:178
[Right to maintain contact]
(1) The child shall have the right to
maintain on a regular basis a personal
relationship and direct contact with
his/her parent living separate and apart.
The parent or other person raising the
child shall ensure that the right to
maintain personal relationship can be
exercised undisturbed.
(2) Unless otherwise provided for by
the court or the guardian authority, the
parent living separate and apart from
his/her child has the right and obligation
to maintain contact with his/her child.
(3) The parent shall have the right to
maintain contact with his/her child even
if his/her right of parental supervision is
suspended, with the exception if an
206
injunction is in effect for an offense
committed against the child or any family
member living with the child in the same
household.
(4) On an exceptional and duly justified
basis, in the interest of the child the
parent may be authorized to maintain
contact with his/her child:
a) even if his/her right of parental
supervision has been withdrawn by the
court;
b) even if the parent has given consent
for the adoption of his/her child by the
spouse of the other parent; or
c) where the parent’s right of parental
supervision has been suspended on
account of giving consent for the
adoption of his/her child by an unknown
person, or because the parent
abandoned his/her child - with a view to
passing on the responsibility of raising
the child - at a place designated by a
medical institution, without revealing
his/her identity, and did not come
forward within six weeks to reclaim the
child, and the child has not been
adopted.
(5) In the case provided for in
Subsection (4), authorization may be
granted to the parent to maintain contact
with his/her child by the court that has
withdrawn the right of parental
supervision, or - if the child was placed
under long term foster care - by the
guardian authority.
Section 4:179
[Other family members with visitation
rights]
(1) Rights of access shall also be
allotted to the grandparents, siblings and
- if the parent or grandparent is not alive
or is unable to maintain contact for
reasons within his/her control for any
extended period of time - to the sibling
and spouse of the child’s parent.
(2) If the marriage during which the
child was born terminated upon the
death of either of the child’s parents, and
the spouse adopted the child of the
other spouse from his/her previous
marriage, this shall not affect the rights
of access of the persons referred to in
Subsection (1).
(3) Upon the child’s request, visitation
rights may be granted to the former
stepparent, foster parent or guardian,
and any person whose presumption of
paternity for the child was rebutted by
the court, if the child was raised in their
home for a longer period of time.
Section 4:180
[Contents of visitation rights]
(1) Visitation rights shall cover the right
of access for maintaining personal
contact with the child, the removal of the
child from his/her home or place of
residence on a regular basis, for a
prearranged period of time, spending
longer time with the child at specific
times, such as school breaks and
lengthy holidays, as well as maintaining
contact by ways other than personally.
(2) Unless otherwise provided for by
the court or the guardian authority in the
child’s interest, the right of visitation
applies also to traveling with the child to
foreign destinations for prearranged
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durations within the framework specified
in Subsection (1).
(3) Unless otherwise provided for by
the court or the guardian authority, the
costs of transport relating to the removal
of the child shall be covered by the
person exercising visitation rights.
Section 4:181
[Agreement on visitation rights]
(1) In a matrimonial suit or in an action
brought in connection with the exercise
of certain rights of custody the parents
may reach an agreement relating to
visitation rights; in the absence thereof
the court shall decide - upon request or
ex officio if deemed necessary for the
protection of the child’s interest - about
visitation rights. If there is no matrimonial
suit or action in connection with the
exercise of certain rights of custody in
progress, in the absence of the parents
agreement on visitation rights the
decision lies with the guardian authority.
The parties concerned and the child of
sound mind shall be heard before such
decision is made.
(2) The court or the guardian authority
shall adopt a decision relating to
visitation rights taking into account the
child’s age, health and living conditions,
the parents’ personal circumstances, as
well as the opinion of the child of sound
mind.
(3) The resolution of visitation rights
shall provide for the time intervals of
visits, the duration of such visits,
whether visits are made systematically
or periodically, any supervision that
might be required during the visits, as
well as the place where the child is
collected and returned, the time and
method of exchange, the notification
obligation when the visit is cancelled and
for rescheduling cancelled visits.
(4) If the right of visitation has been
decided in court, subsequent changes
may be requested from the court within
two years after the operative date of the
resolution.
Section 4:182
[Obligation to provide information;
rescheduled visitation]
(1) The parties shall communicate to
the other party without delay any
obstacle that may arise in relation to
visitation.
(2) If visitation is cancelled due to
reasons beyond the beneficiary’s
control, it shall be rescheduled at the
earliest available time, within six months
at the latest.
Section 4:183
[Responsibility for preventing the
exercise and violation of visitation rights]
(1) If the party having the right of
visitation or the party who is to abide by
such right obstructs the visits or violates
the right of access without due cause,
shall be liable to compensate the other
party for damages.
(2) Upon request the guardian
authority shall order the party who
obstructs the visits or violates the right of
access without due cause to cover the
verifiable costs and expenses incurred in
consequence of his/her actions to
208
obstruct the visits or violating the right of
access.
Section 4:184
[Restriction and withdrawal of rights of
access]
The guardian authority or - in a
matrimonial suit or action in connection
with the exercise of certain rights of
custody - the court may, in the interest of
the child, restrict or withdraw the
visitation rights of the parent or other
person having the right of access, if
engaged in any wrongful conduct.
Section 4:185
[Implementation of resolutions relating
to visitation rights]
The responsibility for the
implementation of resolutions relating to
visitation rights lies with the guardian
authority.
Chapter XIX
Suspension and Termination of
Parental Custody Rights
1. Suspension of parental custody
rights
Section 4:186
[Suspension of parental custody rights]
(1) Parental custody rights shall be
suspended if:
a) the parent is incompetent;
b) the parent is a minor and of limited
legal capacity, excluding the right and
obligation of the minor parent over the
age of sixteen years of caring for and
upbringing the child;
c) the parent’s capacity in respect of
exercising rights of custody has been
partially limited;
d) the parent cannot be located or
effectively prevented in carrying out
his/her parental responsibilities;
e) the guardian authority approved the
child’s placement with a family;
f) the parent has given consent for
adoption of his/her child below the age
of six weeks;
g) the guardian authority took the child
under temporary foster care;
h) the court ordered the placement of
the child with a third party; or
i) the parent is under the force of an
injunction for an offense committed
against the child or any family member
living with the child in the same
household.
(2) During life partnership parental
custody rights shall be suspended in
respect of the parent who lives together
with the other parent who has been
deprived of custody rights.
(3) Until the binding conclusion of an
action for the termination of parental
custody or an action brought in
connection with the exercise of certain
rights of custody, custody rights of a
parent shall be suspended if the
guardian authority temporarily placed
his/her child with the other parent living
separate and apart, with another person
or an institution.
2. Temporary family placement
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Section 4:187
[Temporary family placement]
(1) When requested by the parents
exercising joint custody or by the parent
having the right of custody, the guardian
authority - upon hearing the other parent
living separate and apart - may approve
to temporarily place the child under the
care of a family named by the requesting
parent for health reasons, justified
absence or other family reasons,
provided that such temporary placement
is in the child’s best interest.
(2) The guardian authority shall
approve temporary family placement if,
based on his/her personality and other
circumstances, the parent in the
receiving family is considered suitable
for caring for the child, for providing for
his/her upbringing and for handling
guardianship duties, and agrees to do so
him/herself.
(3) The guardian authority shall confer
guardianship duties upon the parent or
parents of the receiving family.
Section 4:188
[Parent’s rights and obligations in the
case of temporary family placement]
(1) During the term of temporary family
placement the parent’s rights of custody
shall be suspended.
(2) The parent shall have the right to
maintain contact, as well as joint
decision rights in major issues relating to
the child’s well-being.
(3) In particularly justified cases the
guardian authority may delegate upon
the parent the right of legal
representation in financial management
and in handling the child’s financial
affairs.
(4) Temporary family placement shall
not affect the parent’s maintenance
obligation.
Section 4:189
[Review of temporary family
placement]
(1) The guardian authority shall review
annually the conditions underlying
temporary family placement.
(2) The guardian authority shall
terminate temporary family placement
when so requested by the parent of the
child or by the parent of the receiving
family, or if maintaining it would be
harmful to the child’s development.
3. Cessation, termination and
restoration of the parent’s right of
custody
Section 4:190
[Cessation of the parent’s right of
custody]
(1) Parental custody rights shall cease:
a) when the child reaches the age of
majority;
b) upon the adoption of the child,
except when the child is adopted by the
parent’s spouse;
c) if the parent has given consent for
the adoption of the child, or if the parent
has given consent for the adoption of
his/her child below the age of six weeks,
at the time the child reaches the age of
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six weeks, except if the parent has
withdrawn the statement of consent; or
d) if the parent has abandoned the
child - with a view to passing on the
responsibility of raising the child - at a
place designated by a medical
institution, without revealing his/her
identity, and did not come forward within
six weeks to reclaim the child.
(2) If the parents have joint custody, in
the event of death of either parent
custody shall pass on to the surviving
parent.
(3) In the event of death of the parent
who had exclusive parental custody or
exclusive right to exercise certain rights
of custody, custody shall pass on to the
surviving parent, provided that his/her
right of custody was not terminated by
court ruling.
(4) If custody passed on to the
surviving parent in accordance with
Subsection (3), the guardian authority
shall call upon that parent to exercise
parental custody rights. The surviving
parent may not be called upon to
exercise parental custody rights if his/her
rights of custody are suspended on
account of his/her incompetency or
limited capacity due to his/her minority, if
the parent’s capacity in respect of
exercising rights of custody has been
partially limited, or because the parent
cannot be located or effectively
prevented in carrying out his/her
parental responsibilities, or if this is
manifestly contrary to the child’s best
interest.
Section 4:191
[Termination of the parent’s right of
custody by judicial process]
(1) The court shall terminate parental
custody if:
a) the parent has engaged in any
wrongful conduct causing serious injury
to, or endangering the interest of, his/her
child, including the child’s physical
integrity mental or moral development;
or
b) the child was placed with another
person or under temporary foster care,
and the parent failed - for reasons within
his/her control - to make any changes in
his/her life style and/or other
circumstances, on account of which
placement or temporary foster care was
ordered.
(2) If the parent was sentenced to
imprisonment by court verdict for an
intentional criminal offense committed
against either of his/her children, the
court shall have powers to deprive the
parent of custody of all of his/her
children. The above-specified court
decision may also apply to any child yet
to be born.
(3) A parent who has been deprived of
custody rights by final court decision
shall not be allowed to adopt a child or
to accept the office of guardianship, to
accept the placement of a child and unless
otherwise provided by the court
or the guardian authority - shall not have
the right to maintain contact with his/her
child.
Section 4:192
[Reinstatement of the parent’s right of
custody by judicial process]
211
If the reason under which the court
ordered the termination of the parent’s
right of custody no longer exist, the court
shall reinstate parent’s right of custody,
provided that there is no other reason for
the termination thereof.
Section 4:193
[Persons entitled to bring action for the
termination and reinstatement of
parent’s right of custody, respondents in
actions]
(1) An action for the termination or
reinstatement of parental custody may
be brought, respectively, by the other
parent for by both parents. In both cases
the child, the guardian authority and the
public prosecutor shall also be entitled to
bring action.
(2) A minor of limited legal capacity
and any parent whose capacity in
respect of exercising rights of custody
has been partially limited may bring
action for the termination or
reinstatement of parental custody in
person, with the consent of his/her legal
representative. If the parent or the child
is incompetent, the action may be
brought in his/her name by the legal
representative with the guardian
authority’s consent.
(3) The action for the termination of
parental custody shall be filed against
the parent who is to be deprived of
custody. The action for having parental
custody restored shall be brought
against the person at whose claim the
court decided to terminate parental
custody; if that person requests the
reinstatement of parental custody, the
action shall be brought against the other
parent. If the party against whom the
action is to be brought is no longer alive,
the guardian ad litem appointed by the
court shall be named as the defendant in
the action.
(4) The judgment delivered in an
action for the termination or
reinstatement of parental custody shall
apply to all parties involved.
TITLE XIII
MAINTENANCE OF RELATIVES
Chapter XX
Common Provisions Relating to
the Maintenance of Relatives
Section 4:194
[Entitlement for maintenance]
(1) Any person who is unable to
support him/herself through no fault of
his/her own, and who has no spouse or
former spouse who owes maintenance
may claim maintenance from his/her
relatives.
(2) A person of legal age shall be
considered unworthy of maintenance if
engaged in gross misconduct against
the person owing maintenance or any
resident family member, or pursues a
lifestyle because of which maintenance
cannot reasonably be expected from the
person owing maintenance taking into
account their relationship and the
conduct of the person owing
maintenance.
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(3) If the parent fulfilled his/her
obligation to maintain and care for the
child and to provide for his/her
upbringing, the child may allege
unworthiness in the event of the parent’s
flagrant misconduct against him/her.
Section 4:195
[Ability to provide maintenance]
Unless otherwise provided for in this
Act, a person shall not be obligated to
support another person if this would
seriously jeopardize his/her ability to
provide for him/herself or for a person
ranked higher in the chain of entitlement
for maintenance.
Section 4:196
[Persons owing maintenance, chain of
maintenance obligation]
(1) Unless otherwise provided for by
this Act, maintenance obligation shall be
conferred upon relatives in direct line
with respect to each other.
(2) Maintenance obligation shall
primarily prevail in the relation of the
parent and his/her child and vice versa.
(3) If a child to whom maintenance is
owed has no parent from whom to claim
maintenance, his/her distant relatives in
the ascending line shall be required to
provide maintenance.
(4) If the person to whom maintenance
is owed has no children, his/her distant
relatives in the ascending line shall be
required to provide maintenance.
(5) The maintenance obligation of any
relative who is closer in the line of
descent to the person to whom
maintenance is owed shall precede that
of the more distant relative.
(6) The dependant to be supported
may not claim maintenance from his/her
relative alleging his/her inability to
enforce maintenance claim from a
person ranked higher in the chain of
entitlement for maintenance due to
his/her unworthiness.
Section 4:197
[Maintenance of siblings]
Any minor who has no relative in direct
line from whom to claim maintenance
shall be supported by his/her sibling of
legal age, provided that such sibling is
capable of doing so without jeopardizing
his/her own maintenance and the
maintenance of his/her spouse,
domestic partner and any dependant
relative in direct line.
Section 4:198
[Maintenance of stepchildren]
(1) The spouse shall provide support
in his/her home to his/her spouse’s
dependant minor child (hereinafter
referred to as „stepchild”) who was
brought by his/her spouse to their
common home with his/her consent.
(2) The stepparent’s maintenance
obligation shall not affect the biological
parent’s obligation to pay maintenance.
Section 4:199
[Maintenance of stepparents and
foster parents]
(1) A stepchild shall be required to
support his/her dependant stepparent if
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the stepparent had provided for his/her
maintenance for a long time previously.
(2) A foster child shall be required to
support under the conditions set out in
Subsection (1) a person who had
provided for his/her maintenance in
his/her own home for a long time
previously without receiving anything in
exchange, and if such person is other
than his/her biological, adoptive or
stepparent (hereinafter referred to as
„foster parent”).
Section 4:200
[Chain of entitlement for maintenance
among blood relatives and in family
relationships]
Entitlement for maintenance shall
accrue:
a) to blood children, stepchildren and
foster children, in the same line; and
b) to the biological parent and - if other
legal requirements are satisfied stepparent
and foster parent, in the
same line.
Section 4:201
[Division of maintenance obligations]
(1) Maintenance obligation shall be
shared among several persons owing
maintenance in the same line in
proportion to their income and financial
standing.
(2) If a person owing maintenance is
exempted from maintenance obligation,
his/her share of maintenance shall pass
on to others in the same line, or failing
this to persons owing maintenance
ranked after them.
(3) Where a person owing
maintenance provides care personally to
the person to whom maintenance is
owed, the related activities and other
burdens shall be taken into
consideration in determining the
maintenance obligation.
Section 4:202
[Chain of entitlement for maintenance]
Where a person owes maintenance to
more than one person, and he/she is
unable to support all of them, in the
chain of entitlement priority shall be
given:
a) to a minor child versus a child of
legal age;
b) to a child versus the spouse, former
spouse and former domestic partner;
c) to the spouse in line with the former
spouse and former domestic partner
versus the parent;
d) to the parents in the same line
versus other relatives; and
e) of the other relatives, to the
descendant versus relatives in the
ascending line and to closer relatives
versus distant ones.
Section 4:203
[Derogation from the chain of order]
Upon request the court may, where
justified, derogate from the chain of
entitlement for maintenance and from
the chain of maintenance obligation.
Section 4:204
[Determining the amount and the
means of maintenance]
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The amount and the means of
maintenance shall primarily be governed
by the agreement between the person
entitled to and the person owing
maintenance. In the absence of an
agreement, the entitled person may
bring action to request the court to
establish maintenance.
Section 4:205
[Amount of maintenance]
(1) The court shall determine the
amount of maintenance upon due
consideration of the entitled person’s
justified needs and on the financial
ability of the person owing maintenance.
(2) Justified needs shall cover the
justified expenses and the costs of living
of the person entitled to maintenance.
(3) The maintenance of a descendant
and a minor sibling shall inter alia cover
the costs of development and education.
(4) The obligation of maintenance of a
relative in need of care due to his/her old
age, health, disability or other reason
shall cover the costs of nursing and
care, as well as other related services
which are deemed necessary.
(5) If the need of the person entitled to
maintenance is limited, a supplemental
support shall be provided. If the need of
the person entitled to maintenance is
absolute, but his/her relatives whose
principle responsibility it is to provide
maintenance are unable to provide
support commensurate for his/her
justified needs, a supplemental support
may be requested from the relatives next
in line.
(6) The maximum amount the person
owing maintenance is required to
provide shall not exceed half of his/her
income.
Section 4:206
[Means of maintenance]
(1) Unless otherwise provided for in
this Act, maintenance shall primarily be
provided in money (hereinafter referred
to as „alimony”).
(2) At the request of either of the
parties, the court may order another
form of maintenance if deemed justified
based on the parties’ circumstances,
and if the other party does not object.
(3) Alimony shall be paid in advance
for each time period.
Section 4:207
[Establishing the amount of alimony]
Alimony payments shall be established
in a fixed amount. The court may order
in its judgment that alimony payments
should be adjusted each year
automatically, from the first of January of
the following year, based on the annual
consumer price index published by the
Központi Statisztikai Hivatal (Central
Statistics Office).
Section 4:208
[Maintenance actions]
(1) An action for maintenance due to
minors may be brought on the minor’s
behalf by the guardian authority,
whereas an action for maintenance due
to a parent may be brought on the
215
parent’s behalf - with his/her consent by
the district office as well.
(2) A relative owing maintenance, who
him/herself provides maintenance and
care, may bring action against the others
who owe maintenance in his/her own
right.
(3) A maintenance claim may be
enforced in court with retroactive effect
to a period more than six months
previously if the entitled person was
delayed with reasonable cause in
enforcing the claim. No maintenance
claim shall be enforced in court with
retroactive effect to more than three
years.
Section 4:209
[Duration of maintenance]
(1) Court-ordered maintenance
payments are established for an
indefinite duration.
(2) Maintenance payments may be
ordered for a definite duration or
pending certain condition, if there is
reason to believe that the need of the
person entitled to maintenance will
cease after a certain period of time or
under certain conditions.
Section 4:210
[Modification of the amount or the
means of maintenance]
(1) In the event of any change in the
circumstances underlying maintenance
based on the agreement of the parties or
court-ordered maintenance, where the
provision of maintenance under the
existing arrangement infringes upon the
relevant lawful interest of either party,
modification of the amount or the means
of maintenance may be requested.
Modification of agreement-based
maintenance may not be requested by
the party if he/she should have had
calculated with the possibility of changes
in the circumstances, or if the changes
are attributable to his/her conduct.
(2) The organ or person responsible
for making payments on behalf of the
person owing maintenance shall be
required to inform the entitled person - at
his/her request - of the amount of wages
and other benefits of the person owing
maintenance.
Section 4:211
[Termination of the maintenance
obligation]
(1) The person to whom the
maintenance payments are in fact
delivered is required to notify the court and
the person owing maintenance - if
the entitled person is no longer in need
of maintenance. The said person shall
be held liable in accordance with the
general provisions of civil law for
damages caused by any breach of such
obligations. Upon receipt of notice, the
court shall order the termination of
maintenance obligation without litigation.
(2) The person owing maintenance
may request the termination of the
maintenance obligation if the underlying
conditions no longer apply due to
changes in the relevant circumstances,
or if the person entitled to maintenance
failed comply with the notification
requirement under Subsection (1).
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Section 4:212
[Cessation of right to maintenance and
the obligation to provide maintenance]
(1) The right to maintenance shall
cease upon the death of the person
entitled to maintenance, at the end of
the fixed term or when the condition is
met.
(2) The maintenance obligation shall
terminate upon the death of the person
owing maintenance. Any outstanding
maintenance unpaid by the time of death
of the person owing maintenance shall
pass on the heir in accordance with the
rules on liability for the debts under the
succession.
Chapter XXI
Maintenance of Minor Children
Section 4:213
[Application of the provisions relating
to maintenance of relatives]
The common provisions on the
maintenance of relatives shall also apply
to the obligation of parents to support
their minor children subject to the
exceptions set out in this Chapter.
Section 4:214
[Presumption of need]
The need of minor children for support
shall be presumed. This presumption
hall remain to apply until the child
reaches the age of majority, not
exceeding the age of twenty years, if the
child is pursuing studies in a secondary
school.
Section 4:215
[Obligation of parents to provide child
support]
(1) Providing support for minor
children shall precede the parent’s own
maintenance. This provision shall not
apply if the justified necessities of the
child are covered by his/her income
acquired by gainful employment or by
his/her earnings on assets, or if the child
has any other relative in direct line from
whom to claim maintenance.
(2) If the child’s maintenance cannot
be ensured as under Subsection (1), the
guardian authority may authorize the
parents to access the child’s property
and allocate funds to the extent required
to cover the costs of his/her
maintenance.
Section 4:216
[Means of child support]
(1) The parent caring for the child shall
provide maintenance in kind, whereas
the parent living separate and apart shall
provide maintenance primarily in the
form of money (hereinafter referred to as
„child support”).
(2) The parent may be ordered to pay
child support also if the child lives in
his/her home, however, he/she does not
provide for the child’s maintenance.
Section 4:217
[Agreement of parents on child
support]
217
(1) As regards the amount of child
support and the means of payment shall
in principle be governed by the
agreement of the parents.
(2) By agreement of the parents, the
parent living separate and apart from
his/her child shall meet his/her
maintenance obligation by providing
assets of kind value or in a lump-sum
payment. Such agreement shall be
considered valid if it specifies the time
period for which the child support is
provided, and if it is approved by the
guardian authority, or by the court in the
case of court settlement.
(3) The court may award child support
irrespective of the agreement referred to
in Subsection (2) if deemed necessary in
the child’s best interest or to prevent any
serious harm to the interest of either of
the parties due to unforeseeable and
considerable changes in the relevant
circumstances.
Section 4:218
[Court-ordered child support]
(1) In the absence of an agreement
between the parents, the court shall
adjudicate child support.
(2) In determining the amount of child
support the following shall be taken into
consideration:
a) the child’s justified needs;
b) the income and financial situation of
both parents;
c) other children - own, step or foster
children - living in the parents’ home,
and the children whom are to be
supported by the parents;
d) the child’s own income; and
e) any child and family welfare
benefits, and any allowances provided
under the social security and similar
system to the child and the parents on
the child’s behalf.
(3) The child’s justified needs shall
inter alia include the regular
expenditures covering necessities of life,
and the costs of his/her health care,
education and development. In the event
of any extraordinary expense arising in
the child’s interest, which cannot be
covered from the child support even
under due foresight, the person owing
maintenance shall be required to cover a
proportionate part of such expense as
well.
(4) The amount of child support
awarded shall generally be between
fifteen and twenty-five per cent of the
parent’s average income for each child.
The average income shall usually be
calculated based on the total income of
the parent acquired over a period of one
year before the action was brought.
Chapter XXII
Maintenance of an Adult Child
Pursuing Further Studies
Section 4:219
[Application of the provisions relating
to maintenance of relatives and minor
children]
The common provisions on the
maintenance of relatives and the
obligation of parents to support their
minor children shall apply to the
218
maintenance of adult children subject to
the exceptions set out in this Chapter.
Section 4:220
[Entitlement of an adult student child
for maintenance]
(1) Irrespective of presumption of
need, adult children of working age
pursuing further studies shall be entitled
to maintenance, if considered justified
for the pursuit of studies within a
reasonable timeframe. The child shall
inform his/her parent of his/her intention
to pursue further studies without delay.
(2) The studies referred to in
Subsection (1) shall cover continued
training and education providing skills
and qualifications for the planned career
path, basic and masters training for
acquiring a university or college degree,
as well as post-secondary vocational
education. Any interruption of studies
beyond the child’s control shall not affect
the continuity of studies.
(3) The parent shall not be obligated to
support his/her adult child pursuing
further studies if:
a) the child is unworthy of support;
b) if the child fails to fulfill the
obligation of studies and to take
examinations on a regular basis, for
reasons within his/her control; or
c) this would seriously jeopardize the
parent’s ability to provide for him/herself
or for his/her minor child.
(4) A child of legal age shall be
considered unworthy of maintenance if
fails to maintain contact with the person
owing maintenance without due cause.
(5) The parent may be obligated to
provide maintenance for his/her child
pursuing further studies over the age of
twenty-five years under exceptional
circumstances.
Section 4:221
[Amount of maintenance]
In determining the amount of
maintenance the justified needs of the
child pursuing further studies, the child’s
own income and financial situation and
the grants and other benefits received
for his/her studies as provided for by the
relevant legislation, as well as the
financial standing of the parents shall be
taken into consideration.
Section 4:222
[Obligation of notification on the
pursuit of studies]
The institution providing training and
education for the child pursuing further
studies shall inform the parent - upon
request - required to provide
maintenance concerning the child’s
progress in studies, or if studies are
terminated.
PART FIVE
GUARDIANSHIP
TITLE XIV
APPOINTMENT OF A
GUARDIAN
219
Section 4:223
[Minor child placed under
guardianship]
A minor who is not under parental
supervision shall be placed under
guardianship.
Section 4:224
[Responsibilities of the guardian]
Unless otherwise provided for by this
Act, the guardian shall provide for the
care and upbringing of the child, shall
manage the child’s property and shall
function as the child’s legal
representative.
Section 4:225
[Reporting the need for the
appointment of a guardian]
(1) The close relative of a minor child
and the person who provides for the
child shall forthwith notify the guardian
authority if a guardian has to be
appointed for the minor. The court and
other authorities shall also notify the
guardian authority if they accrue positive
knowledge in the course of official
proceedings that a guardian has to be
appointed for a minor. Where there is a
need for the appointment of a guardian,
it may be notified by any person.
(2) The guardian authority shall
appoint a guardian ex officio.
Section 4:226
[Designated guardian]
(1) The office of guardianship shall
primarily accrue to a person designated
by the parent having the right of custody
in an authentic instrument or
testamentary disposition as the
guardian. Where both parents have the
right of custody, and they named
different guardians, the guardian
authority shall appoint one of them in
due consideration of the child’s best
interest.
(2) A designated guardian may be
overlooked if:
a) he refused the office of
guardianship;
b) he is excluded from the office of
guardianship by this Act;
c) he is unable to accept the office of
guardianship; or
d) his appointment is likely to harm the
minor’s interest.
Section 4:227
[Appointed guardian]
(1) If no guardian has been
designated, the guardian authority shall
primarily appoint a close relative as
guardian, if such relative is considered
suitable. If there is no such relative, the
guardian authority shall appoint another
family member as guardian, or a person
deemed competent, preferably from
among the persons who were previously
involved in the child’s upbringing.
(2) With the exception of protective
guardianship, the guardian authority
shall appoint a separate guardian for
each minor. For siblings living in the
same home the same person shall be
appointed as guardian, provided that this
is not contrary to the minors’ best
interest.
220
Section 4:228
[Taking into account the opinion of a
child of sound mind]
In the process of appointment of a
guardian, the opinion of a minor child of
sound mind shall be taken into account,
giving due weight consistent with the
child’s age and degree of maturity. A
person whom the child over the age of
fourteen years specifically and justifiably
objected may not be appointed as
guardian for that child.
Section 4:229
[Mandatory appointment of a guardian]
A person shall be appointed as
guardian:
a) if the guardian authority temporarily
placed the child in his care;
b) if the child was placed in his care by
court order; or
c) if he has accepted the child within
the framework of family placement
approved by the guardian authority.
Section 4:230
[Protective guardianship]
A child shall, in particular, be placed
under protective guardianship:
a) if he/she has been taken under
temporary or permanent custody;
b) if he/she was temporarily placed
under the care of child protection foster
parents, in a children’s home or other
residential care institution, and an action
for the termination of parental custody
has been brought against his/her parent;
or
c) if his/her parent has given consent
for the confidential adoption of his/her
child.
Section 4:231
[Multiple guardianship]
(1) Under exceptional circumstances,
more than one guardian may be
appointed for a child. Multiple
guardianship may be ordered if:
a) the parents raising the child in their
own home mutually agreed to accept
guardianship;
b) two close relatives of the minor
under guardianship agreed to accept
guardianship collectively;
c) management of the assets or
handling certain other matters of the
child requires special expertise; or
d) it is in the best interest of the child
under protective guardianship.
(2) In the case provided for in
Paragraph c) of Subsection (1), the
guardian authority shall define
specifically the sharing of duties among
the guardians.
(3) If the guardian exceeds his powers,
his legal statement shall be considered
effective in dealings with third parties,
however, the guardian shall compensate
the person in his custody on the grounds
of non-contractual liability.
Section 4:232
[Conditions for entering the office of
guardianship]
(1) Any person of legal age may be
appointed as guardian, who is not
subject to the disqualifying factors
defined in this Act, and who is
221
considered suitable based on his
personality and other circumstances.
(2) With the exception of protective
guardianship, a person who accepts the
office may be appointed as a guardian.
Section 4:233
[Exclusion from the office of
guardianship]
(1) The following may not be
appointed to serve as a guardian:
a) any person who is under
guardianship or conservatorship;
b) any person whose parental custody
rights were terminated or who has been
excluded from public affairs by court
order;
c) any person whose parental custody
rights have been suspended upon
placing the child under temporary foster
care by the guardian authority;
d) any person whose child was placed
in long term foster care;
e) any person whose child had been
declared eligible for adoption; or
f) any person whom the parent having
the right of custody excluded by means
of an authentic instrument or will.
(2) If the parent having the right of
custody excluded from guardianship the
person whom the other parent
designated for the office of guardian, the
guardian authority shall decide on the
appointment in due consideration of the
minor child’s best interest.
TITLE XV
EXERCISE OF GUARDIANSHIP
Section 4:234
[Exercise of guardianship]
(1) The guardian shall carry out his
responsibilities in the child’s best
interest. The guardian shall permit the
child of sound mind to participate in the
preparation of decisions pertaining to
him/her and to express his/her views
before such decisions are made.
(2) Unless otherwise provided for in
this Act, the provisions on the rights and
obligations of the parent having the right
of custody shall also apply to the rights
and obligation of the guardian.
Section 4:235
[Limits of the guardian’s
responsibilities]
(1) The guardian shall not be entitled
to determine or change the child’s name,
and may not issue a statement of
consent for the adoption of the child.
(2) The approval of the guardian
authority is required for the validity of
statements made by the guardian, if the
legal statements concerns the child’s
family status and bringing action in that
context.
Section 4:236
[Rights and obligations of the guardian
relating to financial affairs]
The guardian shall deliver to the
guardian authority the child’s money and
other valuables, if such assets are not
immediately required for ongoing
expenses according to the principle of
prudential management.
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Section 4:237
[Supervision of the guardian by the
guardian authority]
(1) The guardian shall carry out his/her
functions under the regular supervision or
guidance in the case of protective
guardianship - of the guardian authority.
The guardian shall give information
concerning his/her activity to the
guardian authority at any time.
(2) The guardian authority may limit
the guardian’s authority in the child’s
interest, and may override his measures
ex officio or at the request of the child
under his custody or of the child’s close
relative. In this respect, the parent shall
be treated as a close relative even if
his/her right of parental custody has
been suspended.
(3) The guardian authority shall consult
with the guardian before making any
decision pertaining to major issues of
the child under guardianship, and shall
hear the child of sound mind and - in
justified cases - the child’s close
relatives as well.
Section 4:238
[Covering the costs and expenses of
the guardian]
(1) Unless otherwise provided for in
this Act, the benefits serving the child’s
life necessities shall be paid to the
guardian.
(2) The guardian shall use the child’s
income for the child’s maintenance only.
If the child has no parent from whom to
claim maintenance, the guardian
authority may authorize the guardian to
access the child’s property and allocate
funds to the extent required to cover the
costs of his/her maintenance.
(3) The guardian may request
compensation from the child’s income
for his justified costs and expenses
incurred in connection with the child’s
maintenance. In the absence of
sufficient income, the guardian authority
shall provide compensation for said
costs and expenses.
(4) Subsections (2)-(3) shall not apply
in connection with protective
guardianship.
Section 4:239
[Obligation of the guardian to give
account]
(1) Unless otherwise provided for by
this Act, the guardian shall give account
of his financial management activities to
the guardian authority once a year.
(2) If the income of the child under
guardianship does not exceed the limit
specified by the relevant legislation, the
guardian authority may authorize the
guardian to give account by the
simplified procedure, with the exception
of protective guardianship. If the office of
guardianship is held by a close relative,
the guardian may be exempted even
from the obligation to give account by
the simplified procedure.
(3) In justified cases other than the
ones provided for in Subsections (1)-(2),
the guardian authority shall be entitled to
order the guardian - ex officio or if so
requested by the child of limited legal
capacity under guardianship, or by
223
his/her family member - to give ad hoc
accounts.
TITLE XVI
TERMINATION OF
GUARDIANSHIP AND THE
OFFICE OF GUARDIAN
Section 4:240
[Termination of guardianship and the
office of guardian]
(1) Guardianship shall terminate if the
child under guardianship dies, placed
under parental supervision or reaches
the age of majority.
(2) The office of the guardian shall
cease to exist:
a) if guardianship is terminated;
b) upon the guardian’s death;
c) upon the guardian’s dismissal; or
d) upon the guardian’s removal.
Section 4:241
[Dismissal of the guardian]
(1) The guardian authority shall
dismiss a guardian from office:
a) if so requested by the guardian
citing substantial reasons;
b) the guardian proves incompetent for
the office of guardianship; or
c) the guardian authority gains
knowledge, after the appointment, of any
circumstance, or any subsequent
hindrance on account of which the
guardian is to be disqualified from
holding the office of guardianship.
(2) The guardian authority may, under
exceptional circumstances, relieve the
guardian from office if another appears
better suited to be appointed as
guardian.
Section 4:242
[Removal of the guardian]
(1) The guardian authority shall
remove the guardian from office, if the
guardian abuses his functions, fails to
fulfill his obligations or if he engages in
conduct by which to cause serious injury
to or endanger the interest of the child
under guardianship, or on account of
which the guardian is deemed unworthy
of office.
(2) If there are reasonable grounds to
believe that the guardian should be
removed, and any delay is likely to entail
a risk, the guardian authority shall
suspend the guardian from office.
Section 4:243
[Obligations of the guardian upon the
termination of guardianship]
(1) When his office is terminated, the
guardian shall prepare a report on his
activities and a final statement of
account on the assets managed, and
present it to the guardian authority.
(2) The claims arising out of or in
connection with the guardian’s obligation
to give account shall lapse within one
year from the date of delivery of the
resolution releasing the guardian from
the responsibility of asset management.
If the party affected becomes aware of
the reason underlying a claim at a later
point in time, the deadline shall be
reckoned from that time, provided that
224
the claim has not yet lapsed under the
statute of limitations.
Section 4:244
[Guardian’s liability for damages]
The guardian shall be held liable for
damages caused to the child under
custody by his asset management
actions in accordance with the general
provisions on non-contractual liability.
BOOK FIVE
RIGHTS IN REM
PART ONE
POSSESSION
TITLE I
POSSESSION AND
PROTECTION OF POSSESSION
Chapter I
Possession Acquisition and Loss
of Possession
Section 5:1
[Possessor]
(1) Possessor is the person in
possession of a thing as his own, or who
keeps possession of a thing under
temporary right.
(2) Where there is a person who
maintains actual possession of a thing
under temporary right (secondary
possessor), the person from whom the
possession actually originates shall also
be considered a possessor (principal
possessor).
(3) The person from whom a thing is
temporarily conveyed without legal basis
to the actual control of another person is
also deemed a possessor.
Section 5:2
[Acquisition of possession]
The person who actually controls a
thing is considered to have acquired
possession of that thing.
Section 5:3
[Transfer of possession]
(1) The transfer of possession shall
materialize upon the conveyance of
physical control of the thing on the basis
of an agreement therefor. Transfers of
possession shall be governed by the
provisions on contracting and on the
validity of contracts.
(2) Transfer of possession shall be
considered done by means of an
agreement between the possessor and
the acquirer of possession if:
a) the party acquiring possession
already has physical possession of the
thing as a secondary possessor; or
b) the transferor maintains physical
possession of the thing as a secondary
possessor.
(3) Transfer of possession shall be
considered completed upon the
possessor relinquishing physical
possession of the thing, if so agreed by
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the possessor and the acquirer of
possession.
(4) If the thing is held by a third party,
transfer of possession shall be
considered completed upon conveying
the claim for the thing to the party
acquiring possession, if so agreed by
the possessor and the acquirer of
possession.
Section 5:4
[Loss of possession]
(1) The possessor shall lose
possession if definitively abandoning
physical possession of the thing, or if
possession of the thing is acquired by
others.
(2) Possession shall not cease if the
possessor is unable to maintain physical
possession of the thing temporarily.
(3) Upon the possessor’s death or
dissolution with succession, possession
of the thing shall pass to the heir or
successor after the succession has been
opened, or upon succession. The
possessory status of the heir or
successor shall be determined by the
possessory title of the testator or other
predecessor.
Chapter II
Protection of Possession
Section 5:5
[Possessor’s right to protection]
(1) If the possessor is deprived of his
possession without legal basis or is
restrained in maintaining such
possession (hereinafter referred to as
„unlawful arbitrary conduct”), he shall be
entitled to protection of his possession.
(2) The possessor is entitled to
protection of his possession against
anybody, with the exception of the
person from whom he has acquired the
possession by unlawful arbitrary action.
(3) The secondary possessor shall be
entitled to protection in dealings with the
principal possessor according to his title.
(4) In the case of joint possession,
protection of possession shall accrue to
each possessor individually, and each
possessor shall be entitled to demand
the thing to be rendered available for
joint possession.
(5) Joint possessors are also entitled
to protection of possession against each
other according to their title.
Section 5:6
[Arbitrary action]
(1) A possessor shall be entitled to act
arbitrarily to avert any unlawful arbitrary
action to the extent necessary for the
protection of his possession.
(2) A person shall be allowed to act
arbitrarily 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 5:7
[Possessory action]
(1) In the event of unlawful arbitrary
action, the possessor shall be entitled to
bring action requesting the court to
restore the original state of possession
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or to order the discontinuance of
restraint.
(2) The court shall decide on the basis
of eligibility for holding possession.
Entitlement of the party disturbed in
peaceful possession shall be presumed.
Section 5:8
[Protection of possession on the basis
of actual possessory status]
(1) The possessor shall be entitled to
file a request within one year with the
notary for having the original state of
possession reestablished or for the
discontinuance of restraint.
(2) The notary shall order the
reestablishment of the original state of
possession and prohibit the trespasser
from continuing in this conduct, unless it
is evident that the person who has
requested protection is not entitled to
possession or has been obliged to
tolerate such restraint. Upon request,
the notary may also resolve the issues of
profits, damages, and costs.
(3) This resolution of the notary may
not be appealed by way of an
administrative procedure. The party who
finds the resolution of the notary
adopted in relation to protection of
possession prejudicial may bring action
against the other party within fifteen
days of receipt of the decision
requesting the court to have the
resolution overturned.
(4) The resolution of the notary
adopted in relation to protection of
possession shall be carried out within
three days of the date of the resolution.
The action shall not stay the execution
of the resolution adopted by the notary,
unless the notary’s decision inter alia
covers the issues of profits, damages
and costs, and the party concerned
brought action in this respect, or in
connection with possession.
(5) The court may order the
suspension of the execution of the
resolution adopted by the notary in
relation to possession, if the resolution is
likely to be overturned in light of the
information available.
TITLE II
WRONGFUL POSSESSION
Section 5:9
[Status of wrongful possessor,
obligation to surrender possession]
(1) Any person who wrongfully holds a
thing in his possession shall be required
to surrender the thing to its rightful
possessor.
(2) The wrongful possessor may
refuse to surrender the thing until his
demands claimed in connection with
possession are satisfied. The possessor
who has acquired the thing by
committing a criminal offense or in
another violent or treacherous way may
not refuse to surrender the thing.
(3) Unless otherwise provided for in
this Act, the principles of negotiorum
gestio shall apply to the legal status of
the wrongful possessor.
Section 5:10
227
[Claim of the wrongful possessor for
compensation, right of removal]
(1) The wrongful possessor shall be
entitled to demand compensation
regarding the necessary expenses
related to the thing, with the exception of
minor expenses normally required for
the maintenance of the thing, and shall
be entitled to remove the equipment and
accessories he has created.
(2) The wrongful possessor, if acting in
good faith, may also demand
compensation for his useful expenses
that are not covered by proceeds, or - if
acting in bad faith - may demand
compensation according to the
principles of unjust enrichment.
(3) The wrongful possessor shall
exercise the right of removal without
damaging the thing.
Section 5:11
[Surrendering the proceeds of a thing,
liability of wrongful possessor]
(1) The wrongful possessor shall be
required to surrender 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) The bona fide wrongful possessor
shall not be responsible to provide
compensation for proceeds he has
consumed or failed to collect for the
duration until possession is reclaimed
from him before the notary or the court,
and shall not be liable for damages
caused to the thing. The bona fide
wrongful possessor shall not be
responsible to provide compensation for
proceeds he has consumed or failed to
collect, any attempt made for the
recovery of the thing notwithstanding,
which he has or should have collected
under his presumed right until the time of
the recovery action, and shall not be
liable for damages caused to the thing
while exercising his presumed right.
(3) The mala fide wrongful possessor
shall reimburse the value of the
proceeds he has consumed or failed to
collect, and shall be liable for all
damages according to the principles of
non-contractual liability that would not
have occurred in the thing had it been in
the possession of the entitled party.
Section 5:12
[The wrongful possessor’s right to sell
and use the thing]
(1) If the entitled party fails to remove
the 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
wrongful possessor shall be allowed to
sell or use the thing.
(2) Perishable things and things where
any delay is likely to induce substantial
loss of value shall be sold or utilized, if
possible.
(3) The sum received from the sale or
consideration of a used thing shall
accrue to the entitled party.
(4) In respect of other issues, the
provisions on unjust enrichment shall
apply to the status of wrongful
possessor.
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PART TWO
OWNERSHIP RIGHTS
TITLE III
GENERAL RULES OF
OWNERSHIP
Chapter III
Ownership in General
Section 5:13
[Ownership]
(1) Ownership means the rights of an
owner to lawfully exercise the full and
exclusive right to control property within
the framework of law and without
prejudice to the rights of others.
(2) The owner shall have the right of
possession, right of use, right of
beneficial enjoyment and the right to
dispose over property.
(3) The owner shall have the right to
avert all forms of unlawful intrusions.
Chapter IV
Objects of Ownership
Section 5:14
[The thing]
(1) There may be ownership of all
things of a tangible nature which are
capable of appropriation.
(2) The provisions pertaining to things
shall also apply to money and securities,
including natural resources that can be
utilized as capital goods.
(3) The provisions pertaining to things
shall apply to animals in accordance with
the statutory provisions laying down
derogations consistent with their natural
characteristics.
Section 5:15
[Components]
Ownership extends to everything that
is permanently enjoined 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.
Section 5:16
[Accessories]
When in 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.
Section 5:17
[Scope of ownership of real estate
property]
(1) The ownership of real estate
property covers the airspace above the
land and the land mass underneath to
the extent of potential use of the
property.
(2) The ownership of real estate
property shall not extend to the
treasures of the earth, nor does it extend
to natural resources.
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Section 5:18
[Ownership of land and buildings]
(1) Ownership of a building shall
accrue to the owner of the land, unless
there is an agreement between the
owner of the building and the owner of
the land to contrary.
(2) At the discretion of the real estate
property’s owner, the building and the
land on which it stands may be entered
in the real estate register as separate
properties.
Section 5:19
[Regulating land use between the
owner of the land and the owner of the
building by way of contract]
(1) If the land owner and the owner of
the building entered into a contract to
regulate their rights and obligations
relating to the construction of the
building and the use of the land, that
contract shall be considered effective in
dealings with third parties if it was
recorded in the real estate register.
(2) The land owner and the owner of
the building may enter into an
agreement to stipulate that the owner of
the building shall be permitted to sell or
encumber the building only with the land
owner’s consent. The owner of the
building may demand the land owner to
give consent if the sale or encumbrance
does not jeopardize the fulfillment of the
building owner’s obligations or the
purpose for which the building was
constructed as fixed in the contract.
Section 5:20
[Right of preemption in the event of
separation of ownership of a building
and the land]
In the cases where the ownership of a
building and that of the land on which it
stands are separated, 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.
TITLE IV
CONTENT AND PROTECTION
OF OWNERSHIP RIGHTS
Chapter V
Right of Possession
Section 5:21
[Right of possession]
The owner has the right of possession
and is entitled to protect his possession.
Chapter VI
Right of Use and Right of
Beneficial Enjoyment
1. General provisions
Section 5:22
[Use, beneficial title, bearing of costs
and liability for damages]
The owner is entitled to use and enjoy
the benefits of a thing, and shall bear the
expenses on the thing as well as the
230
liability for damages for which no
compensation can be demanded from
any one.
Section 5:23
[General limitation of use under private
law]
When using a thing, the owner shall
refrain from engaging in any conduct
that would needlessly disturb others,
especially his neighbors, or that would
jeopardize the exercise of their rights.
2. Neighborhood rights
Section 5:24
[Right to earth-support]
The owner may not deprive the
neighboring building from its necessary
earth-support without providing another
appropriate means of stabilizing it.
Section 5:25
[Right of access to the neighboring
land]
(1) The owner shall permit access to
his land 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) The owner shall have access to the
neighboring land for compensation if it is
necessary for the construction,
demolition, reconstruction or
maintenance of a building located on his
land.
3. Specific cases of use
Section 5:26
[Emergency]
(1) In the event of danger constituting
a direct threat to the life, safety or
property of another person that cannot
be prevented in any other way, the
owner shall tolerate his property to be
accessed and used, or damaged to the
extent necessary for abolishing
emergency. This obligation shall be
binding on the owner in the case of an
emergency endangering another
person’s property only if the imminent
damage is estimated to substantially
exceed the damage likely to be caused
to the owner as a consequence of the
intervention.
(2) Owners shall be entitled to demand
compensation according to the
principles of non-contractual liability from
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 life,
physical integrity or property of several
persons is prevented by sacrificing some
endangered articles, the damage
originating 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 5:27
231
[Use for public purposes]
(1) The owner of a real estate property
is obliged to tolerate persons authorized
by other legislation to use his property
for a period of time, obtain the right of
use or restrain ownership rights in other
ways to the extent that is necessary for
the performance of their duties. In such
cases, the owner of the real estate
property shall be entitled to
compensation according to the extent of
the hindrance.
(2) If the restraint terminates or
considerably impedes the proper use of
the real estate property, the owner may
request that the real estate property be
purchased or expropriated.
4. Encroachment
Section 5:28
[Bona fide encroachment]
(1) If the owner had a house built
beyond the boundary line of his land in
good faith, the neighbor shall be entitled
to demand the builder:
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 encroachment has rendered the
remaining part of the land unusable; or
b) the exercise of a right or profession
related to the land has become
impossible or considerably more
expensive due to the encroachment.
(3) The court shall have powers to
invoke either of the sanctions defined in
Subsection (1) instead of the one
selected by the neighbor. The court shall
not invoke a sanction that is protested
by both parties.
Section 5:29
[Mala fide encroachment]
(1) If the builder has acted in bad faith
or the neighbor protested against the
encroachment at a time when restoration
of the original state would not have
caused unreasonable harm to the
builder, the neighbor shall be entitled to
demand the builder to:
a) demolish the building; or
b) transfer ownership of his land and
the building in return for proper
compensation for the land and the
building.
(2) In addition to what is contained in
Subsection (1), the neighbor shall - at
his discretion - have the rights laid down
in the provisions on bone fide
encroachment.
(3) The costs of demolition and of the
restoration of the original state shall be
borne by the builder. The builder shall
have possession of the material
recovered.
Chapter VII
Right of Disposition
232
1. General provisions relating to
the right of disposition
Section 5:30
[Scope of the right of disposition]
(1) The owner has the right to
surrender the possession, use or
beneficial enjoyment of a thing to
another person, to pledge it as collateral
or encumber it in another way, and,
furthermore, to transfer or abandon
ownership.
(2) The ownership of real estate
property may not be abandoned.
2. Restraint on alienation and
encumbrance
Section 5:31
[Constitution of restraint on alienation
and encumbrance]
(1) With a view to safeguarding the
right of ownership of a thing, the owner
may impose a restraint on alienation and
encumbrance or a restraint on alienation
in dealings with third parties. With regard
to real estate property, the right secured
by the restraint shall also be indicated in
the real estate register.
(2) The restraint on alienation and
encumbrance and the restraint on
alienation shall cease to have effect
when the right to which pertains
terminates.
Section 5:32
[Effects of restraint on alienation and
encumbrance]
(1) The entitled party’s consent is
required for any disposition contrary to
the restraint on alienation and
encumbrance. A disposition contrary to
the restraint on alienation and
encumbrance shall be ineffective with
respect to the person whose right it is
intended to protect. A disposition
contrary to the restraint on alienation
and encumbrance becomes effective
upon the statement of consent that is
made by the person whose right is to be
protected by the restraint to the person
who made the disposition.
(2) The restraint on alienation and
encumbrance shall not apply to any
acquisition of right for consideration by
persons acting in good faith.
(3) The provisions on restraint on
alienation and encumbrance shall also
apply if the restraint is limited to
alienation, or if the right of disposition is
not limited in any other way.
Section 5:33
[Constitution of restraint on alienation
and encumbrance on the strength of
legislation or by court ruling]
Where the restraint on alienation and
encumbrance is invoked on the strength
of legislation or by court ruling for the
benefit of specific persons, the
provisions on contractual restraint on
alienation and encumbrance shall apply.
Section 5:34
[Registration of transactions in breach
of restraint on alienation and
encumbrance]
233
In the case of any restraint on
alienation and encumbrance registered
on a real estate property, or one that
applies to a real estate property invoked
on the strength of legislation or by court
ruling in the absence of registration, the
change of ownership or any
encumbrance of the property may be
entered into the real estate register if the
person whose right the restraint on
alienation and encumbrance is intended
to protect provides a statement of
consent.
Chapter VIII
Protection of Ownership Rights
Section 5:35
[Exclusion of prescription of ownership
claims]
Ownership claims shall not lapse.
Section 5:36
[Protection of ownership rights]
(1) The owner may demand the
termination of illegal intrusions or
influences and to demand from the
wrongful possessor to surrender the
thing.
(2) If the secondary possessor
unlawfully conveyed possession of the
thing to a third party, the owner shall be
entitled to demand, in the name of the
secondary possessor, from the third
party to return the thing to the secondary
possessor. If the secondary possessor
refuses to collect the thing, the owner
shall be entitled to demand surrender of
the thing on his own behalf.
(3) As regards the owner’s request for
having the thing surrendered, where the
owner acquired ownership without
effective transfer, by way of assignment
of a claim for the thing, the possessor of
the thing shall be entitled to refer to all
objections to which he would have been
entitled as against the claim of the
owner for having the thing surrendered.
(4) Pursuant to the regulations on the
protection of possession, the owner may
arbitrarily restrain or prevent any and all
illegal intrusion or influence that
impedes, restricts, or obliterates the
exercise of his ownership rights.
Section 5:37
[Requests for registration in the real
estate register]
The owner of a real estate property, if
he has acquired ownership title from an
owner other than the holder of record,
may request to have his ownership
registered in the real estate register.
TITLE V
ACQUISITION OF OWNERSHIP
Chapter IX
Acquisition by Transfer
Section 5:38
[The transfer]
234
(1) For the acquisition of ownership of
movable property by way of transfer, a
contract for transfer or other legal title is
required and, in that context, possession
of the thing shall be conveyed.
(2) For the acquisition of title to real
estate property by way of transfer, a
contract for transfer or other legal title is
required and, in that context, the change
of owners shall be registered in the real
estate register.
Section 5:39
[Acquisition of ownership from a
person other than the owner]
(1) Ownership by transfer may be
acquired only from the owner of the
thing.
(2) Where ownership is acquired in
good faith, in the course of trade for
consideration, the transferee shall
acquire ownership by way of transfer
even if the transferor was not the owner.
(3) Acquisition in the course of trade
for consideration shall also include when
the buyer makes a purchase from a
seller who enters into a sales contract in
his own name, within the framework of
legitimate business activities.
(4) Upon the acquisition of ownership
as under Subsection (2) the rights of the
third party on the thing arising before the
time of transfer shall cease, in
connection with which the party
acquiring ownership acted in good faith.
Section 5:40
[Acquisition of money and securities]
Any person acquiring money or
securities by way of transfer shall
become the owner even if the transferor
was not the owner.
Chapter X
Acquisition of Ownership by
Means of Administrative Decision
and Official Auction
Section 5:41
[Acquisition of ownership by means of
administrative decision or official
auction]
(1) Any person who has acquired a
thing in good faith by means of official
resolution or official auction shall gain
ownership irrespective of who the
previous owner was.
(2) Ownership by way of administrative
decision shall be considered acquired
when possession is transferred in the
case of movable property, or when the
acquisition of title is registered in the real
estate register in the case of real estate
property, unless the administrative
decision provides otherwise.
(3) In the case of official auction the
auction buyer shall acquire ownership
when possession of the movable
property is transferred by the auctioneer,
or when the acquisition of title is
registered in the real estate register in
the case of real estate property.
(4) Upon the acquisition of ownership
of the thing by means of official
resolution or official auction, the rights of
the third party on the thing shall cease,
except when the party acquiring
ownership by means of official resolution
235
or official auction did not act in good
faith in respect of those rights.
Section 5:42
[Acquisition of ownership by the State
without indemnification by means of
administrative decision]
(1) The State, if it acquires ownership
by operation of law or pursuant to a
court decision or other official resolution
without indemnification, shall be liable,
to a bona fide person, for the ex-owner’s
obligations existing at the time of
acquisition of ownership on the basis of
legislation, court decision, or other
administrative decision, or a contract for
pecuniary interest to the extent of the
value of the property. However, the
State shall be liable only if the creditor
filed for enforcement on the ex-owner’s
assets and the enforcement procedure
has been unsuccessful.
(2) 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.
Chapter XI
Expropriation
Section 5:43
[Expropriation]
(1) Ownership of real estate property
may be acquired under exceptional
circumstances for public use against
immediate, full and unconditional
compensation.
(2) Compensation shall be provided by
the persons who acquire ownership by
condemnation.
Chapter XII
Adverse Possession
Section 5:44
[Conditions for and legal effects of
adverse possession]
(1) A person who has had notorious
possession of a real estate property for
fifteen years, or any movable property
for ten years as his/her own, shall
acquire ownership through adverse
possession.
(2) Upon the acquisition of ownership
of movable property by way of adverse
possession the rights of a third party on
the thing shall cease if such had arisen
before the adverse user acquired
possession, and if in connection with
which the duration of adverse
possession has expired, except when
the adverse user did not act in good faith
in respect of those rights.
(3) The existence of restraint on
alienation and encumbrance does not
preclude the acquisition of title by way of
adverse possession, if other conditions
for adverse possession are met.
(4) An ownership share of a thing may
also be acquired under the general
provisions on adverse possession.
Section 5:45
[Adverse possession by deed]
236
Title shall be considered acquired by
way of adverse possession after five
years if the possessor acquired
possession of the real estate property
from the owner by means of a written
contract, which gives him the right to
demand registration of his title in the real
estate register if the contract meets the
prescribed formal requirements and if
the possessor has paid the amount of
consideration.
Section 5:46
[Succession in adverse possession]
A new possessor shall be entitled to
add to the period of his own adverse
possession the time that qualified as
duration of adverse possession during
the possession of his predecessor.
Section 5:47
[Exclusion of adverse possession]
(1) Any 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.
(2) Ownership of real estate property
shall not be acquired through adverse
possession, if the conditions for adverse
possession are met only for a section of
the land and that parcel of land is
indivisible.
Section 5:48
[Suspension of the duration of adverse
possession]
If an owner is not in the position to
exercise his ownership rights for an
excusable reason, adverse possession
shall not take place for one year from
the termination of the impediment, even
if the duration of adverse possession
has elapsed or there is less than one
year left.
Section 5:49
[Discontinuance of adverse
possession]
(1) Adverse possession is considered
discontinued if:
a) the owner brings action to enforce
his claim for having the thing
surrendered;
b) the owner exercises his ownership
rights in connection with the thing; or
c) the possessor loses the property
against his will and fails to reacquire it
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 duration 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.
Chapter XIII
Acquisition of Ownership of
Products, Produce, and Progeny
Section 5:50
[Acquisition of ownership of products,
produce, and progeny]
237
(1) Any 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 person
may demand - in the absence of an
agreement to the contrary - that the
owner or the new holder provide
compensation up to the value of the
products, produce, or accession under
the principle of unjust enrichment, and 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 notary.
Chapter XIV
Accretions
Section 5:51
[Acquisition of accretions]
The owner of a parcel of land shall
acquire ownership of everything that has
become part of the land subsequently,
except if it belongs to another under any
title.
Chapter XV
Acquisition of Derelict Property
Section 5:52
[Acquisition of derelict property]
(1) Ownership of a derelict movable
property shall be considered acquired by
any person who takes possession of the
thing to acquire ownership.
(2) A movable property shall be
considered derelict if it was never
previously owned by any person or that
was abandoned by its owner with intent
to relinquish ownership.
Chapter XVI
Acquisition of Ownership of Game
and Fish
Section 5:53
[Acquisition of game and fish]
(1) Game, the fish living in rivers and
natural lakes, and other useful aquatic
animals comprise the property of the
State.
(2) Game that was killed or captured or
that has fallen on hunting grounds shall
be owned by a party authorized to hunt,
and who owns the hunting ground where
the animal was killed or captured, or
where it has fallen, provided that his
hunting right applies to that game. In the
238
absence of such hunting right the game
shall become the property of another
authorized hunter, if the land from where
the game migrated is owned by that
person, and if he has hunting rights for
the game that was killed or captured or
that has fallen.
(3) The ownership of fish and other
useful aquatic animals shall be acquired
by the person authorized to exercise
fishing rights.
Chapter XVII
Found Property
Section 5:54
[Acquisition of found property]
(1) A person who finds a thing that is
presumably owned by somebody else
and takes possession thereof, shall be
considered to have acquired that thing if
he claims ownership thereof, provided
that:
a) he has done everything within his
power in order to return the thing to its
rightful owner, and
b) the owner or any other person
authorized to collect it has not come
forward to take possession of the thing
within one year, or within three months
in the case of live animals, of the day on
which it was found.
(2) If the thing is found by several
persons collectively, the rights and
obligations of the finder shall accrue to
the co-finders equally and collectively.
Co-finder shall also mean the person
who had been the first to discover the
thing and had endeavored to take
possession thereof, however, another
person managed to take possession
before him.
Section 5:55
[Finder’s obligations]
(1) The finder shall deliver the thing he
has found to the person who lost it, to its
owner or any other person authorized to
collect it, or to the notary of jurisdiction
by reference to the place where it was
found, within eight days from the date of
the find.
(2) If delivered to the competent
notary, the finder shall declare whether
he wishes to lay claim for ownership of
the thing. The notary shall make out a
certificate on the finder’s claim.
Section 5:56
[Notary’s actions]
(1) If the person having entitlement to
collect the thing can be identified, the
notary shall give the thing to its rightful
holder without delay.
(2) If the person having entitlement to
collect the thing cannot be identified, the
notary shall retain possession of the
thing for a period of three months from
the date of receipt. If the rightful owner
fails to come forward during that time,
the thing shall be released to the finder,
if he filed a claim for it at the time of
delivery.
Section 5:57
[Limitations of finder’s rights and
resolution of any rights on the thing]
239
(1) The finder shall be entitled to use
the thing without causing any physical
harm to the thing, however, he shall not
be entitled to alienate it or encumber it,
and may not allow others to use it.
(2) Upon the acquisition of ownership
by the entitled party the rights of any
third party on the thing shall cease.
Section 5:58
[Sale of thing that has been found]
(1) If the rightful holder did not come
forward within three months from the
date of delivery, and the finder did not
file a claim for it at the time of delivery,
the notary shall sell the thing that had
been found.
(2) The provisions on the sale of
assets seized during administrative
enforcement shall also apply to the sale
of found things.
Section 5:59
[Things found in publicly accessible
places]
(1) The finder shall relinquish
possession of things found in publicly
accessible buildings and areas or on the
vehicles of a public transportation
company to an employee of the operator
of such buildings or means of
transportation without delay. The finder
may not lay claim to such things.
(2) If the person having entitlement to
collect the thing can be identified, the
operator shall notify such person and
shall give the thing to its rightful holder
without delay if he comes forward.
(3) If the person having entitlement to
collect the thing cannot be identified, the
operator shall retain possession of the
thing for a period of three months from
the date of receipt, or, if lacking facilities
for safeguarding, deliver it to the notary
within eight days from the date of
receipt.
(4) If the rightful holder did not come
forward within three months to claim the
thing, the operator or the notary shall
sell the thing in question.
Section 5:60
[Procedures applicable to perishable
things and things that cannot be
safeguarded]
If the thing that has been found is
perishable or cannot be safeguarded,
the notary, the office or the company
shall provide for its sale without delay.
Section 5:61
[Owner’s rights]
If the rightful owner comes forward
before the time of sale, the things shall
be released to him, or if comes forward
after the sale, the sum received shall be
paid to him. The rightful owner shall
forfeit his/her right to the thing, or to the
sum received upon sale if he fails to
come forward within one year from the
date when the thing was found.
Section 5:62
[Finder’s fee]
(1) 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
240
within his power to have the thing
returned to its owner. Co-finders shall be
entitled to an equal share of the finder’s
fee.
(2) The finder may refuse to give up
the thing that has been found until his
claim for cost reimbursement and for the
finder’s fee is satisfied.
(3) The finder shall have those rights
also if he has released the found thing to
the authorities. The authority shall be
allowed to deliver the thing to the person
entitled to collect it and to pay him the
purchase price received with the finder’s
consent, except the person entitled to
collect the thing has deposited the value
of the thing with the authorities. The sum
deposited replaces the thing found.
Section 5:63
[Ownership and allocation of the
purchase price received if the rightful
owner does not come forward]
If the owner of a thing that has been
found, the person who lost it or any
other person authorized to collect it does
not come forward within a period of one
year, or three months in the case of live
animals, and the finder does not acquire
ownership thereof, ownership or the
purchase price received for the sale of
the thing shall accrue to the State.
Section 5:64
[Treasure finds]
(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 become 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 classified as protected
cultural goods, its ownership may be
claimed by the State.
Chapter XVIII
Processing, Conversion, Merger,
Mixing, Annexation, Remodeling,
In-building, Building on the Land of
Another
Section 5:65
[Processing and conversion]
(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 significantly
exceeds the value of the processed or
converted thing, the owner of the thing
may demand compensation 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
accrue to the owner of the material.
(4) If the owner of the material opts to
acquire ownership of the new thing, he
241
shall pay compensation only up to the
extent of his actual gains.
(5) If ownership of the new thing is
acquired by the person performing the
processing operation, the rights of any
third party on the thing shall cease. If
title to the new thing belongs to the
owner of the material, any right on the
material shall apply to the new things as
well.
Section 5:66
[Composites and compounds]
(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 final product shall be
claimed jointly by the persons affected in
proportion to the value of the objects in
existence at the time when merged or
combined.
(2) If, based on its value, quality,
economic function or for any other
reason, either of the merged or mixed
things should be considered as a main
component of the new thing created by
merging or mixing, the owner of such
thing shall have the option to either
retain ownership of the thing created by
merging or mixing and compensate the
other owners, or to surrender it to them
in return for compensation.
(3) The right to choose may not be
claimed by the person who himself
caused the merger or mixing in bad faith.
In that case the mala fide former owner
may demand compensation only up to
the extent of actual gains.
(4) If the thing created by merging or
mixing is given to joint ownership in
accordance with the relevant provisions
of this Act, the rights of third parties on
the things affected by the merger or
mixing shall accrue to the ownership
shares replacing those things. If there is
a right on one of the things, and the
thing created by merging or mixing
becomes the property of the person who
owns the other thing, the right on the
thing shall cease, unless otherwise
provided for in this Act. Any right on the
thing shall pass to the thing created by
merging or mixing, if it becomes the
property of the same person who owned
the thing on which the right existed.
Section 5:67
[Sale of a converted, processed,
merged or compounded thing]
(1) If ownership of a converted,
processed, merged or compounded
thing is claimed by neither of the parties,
it shall be sold, and the received price
shall be divided among the entitled
parties in accordance with their
ownership share.
(2) In that 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 that part of the
received price which remains after the
satisfaction of those entitled to full
indemnification.
Section 5:68
[Annexation]
242
(1) If any person who, using his own
material, in good faith builds an annex
attached to the building of another, and
thereby considerably increases the
value of that building, ownership of the
final product of such building shall be
claimed jointly by the builder and the
owner of the building, unless there is an
agreement to the contrary (hereinafter
referred to as „annexation”). The
ownership shares shall be determined
based on the value of the whole property
and the attached building section, in the
percentage the attached section
represents in the whole building at the
time when the annexation is finished.
(2) Consideration for construction
works which are not treated as
annexation may be demanded according
to the principle of unjust enrichment.
(3) The provisions on mala fide
builders shall also apply to mala fide
annexation.
Section 5:69
[In-building]
(1) If a person uses another person’s
material for building on land, upon which
the materials used shall become
permanently attached to the land, such
material shall become the property of the
land owner, unless there is an
agreement to the contrary between the
owner of the material and the owner of
the land.
(2) If a person uses another person’s
material for construction, upon which the
materials used shall irretrievably become
part of the building, such material shall
become the property of the owner of the
building, unless there is an agreement to
the contrary between the owner of the
material and the owner of the building.
Section 5:70
[Building on the land of another]
(1) If a person builds a structure in
good faith on another person’s land
without entitlement, ownership of the
structure shall be acquired by the owner
of the land, however, he shall reimburse
the 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 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 land owner, the court may resolve
that the builder has acquired ownership
of the building alone; in such a case, the
builder shall have right of use on the
land.
Section 5:71
[Builder mala fide]
(1) If the builder has acted in bad faith
or if the owner of the land protested
against the construction at a time when
the restoration of the original state would
not have caused unreasonably great
damage to the builder, the provisions on
encroachment shall be applied.
(2) A builder shall be considered to
have acted in bad faith if before the
beginning of construction works he knew
or should have known under the
243
circumstances that such building
infringes upon the owner’s ownership
rights.
Section 5:72
[Provisions on joint ownership]
The provisions of this Chapter shall
apply also if the co-owner processes or
converts a jointly owned thing, or
expands or remodels a jointly owned
building, or builds an annex to such
building, or if the co-owner develops a
jointly owned land.
TITLE VI
JOINT OWNERSHIP AND
CONDOMINIUMS
Chapter XIX
Joint Ownership
Section 5:73
[Definition of joint ownership]
(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
shares of the joint owners shall be
equal.
Section 5:74
[Co-owner’s rights of possession and
use]
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 relevant
lawful interests of the others in
connection with the thing.
Section 5:75
[Beneficial title in joint property,
bearing of costs and liability for
damages]
Proceeds from a thing shall be claimed
by the co-owners in proportion to their
ownership shares; costs and expenses
related to the thing, as well as
obligations originating from coownership,
and any damage to the thing
shall be borne by the co-owners in the
same proportion.
Section 5:76
[Protection of joint property]
Any of the co-owners is entitled to
carry out works that are essential for the
preservation and maintenance of the
thing, and each co-owner shall be
obliged to bear his share of such costs.
If possible, the co-owners shall be
notified before such expenses are
incurred.
Section 5:77
[Rights on the materials of joint
property created from multiple
components]
If joint property is created from multiple
components, the rights of third parties
on the things arising before the
commencement of joint ownership shall
accrue to the ownership shares
replacing those things.
244
Section 5:78
[Passing resolutions]
(1) Unless there is an agreement to
the contrary, the co-owners shall adopt
decisions on issues of relevance to the
joint property by simple majority. Each
owner shall have voting rights in
accordance with his ownership share.
(2) A unanimous decision by the coowners
shall be required for:
a) expenses exceeding the scope of
standard operating procedures;
b) transferring ownership of the entire
thing, encumbering the entire thing, or
making any commitment relating to the
entire thing.
Section 5:79
[Challenging a resolution adopted by
simple majority before a court]
(1) If a decision infringes reasonable
management or results in a significant
injury to the lawful interests of the
opposing persons, such minority shall be
entitled to contest the decision in court.
The action shall not stay the execution
of the decision, although the court may
suspend execution of the decision where
deemed necessary.
(2) This provision shall also apply if
there is disagreement among the coowners
as to whether the proposed work
is absolutely necessary for the
preservation and maintenance of the
condition of the thing.
(3) In the absence of a decision, the
court may rule on matters relating to
possession, use, or utilization at the
request of either of the co-owners in
accordance with the ownership shares,
the rights and lawful interests of coowners
on the thing, and according to
the requirements of prudential
management.
Section 5:80
[Right of disposition over one’s own
share of the property]
Each of the co-owners may freely
dispose of his share of the property.
Section 5:81
[Right of preemption, right of first
refusal for lease or tenancy]
(1) In relation to the property share of
a co-owner the other co-owners shall
have the right of preemption or the right
of first refusal for lease or tenancy
before third persons.
(2) If the seller is certain that any
person other than the ones shown in the
real estate register also owns a share in
the real estate property, his obligation to
disclose the offer shall also apply with
respect to such a person according to
the general provisions. In the case of
non-registered property owners, the
legal effects arising from noncompliance
with the disclosure
obligation shall not apply to acquisitions
of right by persons acting in good faith.
(3) The co-owners may exercise their
right of preemption or the right of first
refusal for lease or tenancy with respect
to the ownership share offered in
proportion to their ownership shares. If
the co-owners fail to reach an
agreement but, if either of the co-owners
- by himself or jointly with another co-
245
owner - endorses the offer for the
ownership share in question, the right of
preemption or the right of first refusal for
lease or tenancy shall accrue exclusively
to him, or them. If there is more than one
such co-owner acting on his own, the
owner shall have the right to select one,
whereupon the right of preemption or the
right of first refusal for lease or tenancy
shall accrue to the co-owner selected.
(4) The statutory right of preemption
shall precede the preemption rights of
co-owners afforded under this Act.
(5) Co-owners shall be able to
exercise their right of preemption also in
auctions conducted in enforcement
procedures.
Section 5:82
[Protection of joint property]
Any of the co-owners may act
independently to protect joint property.
Section 5:83
[Request for termination of co-
ownership]
(1) Any of the co-owners may demand
termination of co-ownership; any waiver
of this right shall be null and void.
(2) Termination of co-ownership may
not be ordered by the court if the
termination of co-ownership falls on an
inopportune day.
Section 5:84
[Termination of co-ownership]
(1) Objects of co-ownership shall be
divided primarily in kind. 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 appropriate consideration
if it is justified with regard to the
circumstances of the co-owners. This
requires the agreement of the co-owner
acquiring ownership, unless ownership
of part of a real estate property is
transferred by court order to the coowner
residing in such property and
such action does not violate the
reasonable interests of the tenant.
(2) If co-ownership cannot otherwise
be terminated, or division in kind would
cause a significant decrease in value or
prevent proper use, the objects of coownership
shall be sold and the price
received shall be appropriately divided
among the co-owners. Co-owners shall
also have the right of preemption in
respect of selling before third persons.
(3) If any co-owner acquires ownership
of the object of co-ownership, adequate
consideration, or the minimum purchase
price, if sold by auction, shall be
determined by court ruling. The
minimum purchase price established by
court ruling may not be altered in the
process of enforcement neither by the
bailiff nor by the court.
(4) Where co-ownership of a real
estate property that is occupied by one
of the co-owners has to be terminated,
the court shall order such person to
vacate the property, or - if the order to
vacate the property infringes the tenant’s
equitable interest - shall award use
rights for him in proportion of his
ownership share. The depreciating effect
of such right of use shall be borne by the
co-owner who maintains tenancy in the
246
real estate property when the amount of
compensation payable upon acquisition
or the division of the auction purchase
price is determined. In the event of
considerably overstepping the right of
use awarded by court order or as
afforded by law, the court shall terminate
such right of use upon the owner’s
request.
(5) Joint ownership of a real estate
property may also be terminated by way
condominium conversion, provided that
the conditions for condominium
conversion are satisfied. If joint
ownership is terminated by court
decision by way of condominium
conversion, the bylaws of the
condominium shall be substituted by the
court ruling.
(6) The court shall not resort to any
mode of termination of co-ownership
such that is objected to by all of the co-
owners.
Chapter XX
Condominiums
Section 5:85
[Condominiums]
(1) A condominium is established
when in a building at least two
independent units for residential or nonresidential
purposes or at least one
independent unit for residential and one
for non-residential purposes defined in
the bylaws and technically separated
pass into the private ownership of
condominium owners, whereas the
building sections, building equipment,
areas and dwelling units, which are not
owned individually, shall pass into the
joint ownership of condominium owners.
(2) If the land on which the building
stands is not commonly owned, the
condominium owners shall have land
use rights.
(3) Common elements of joint
ownership shall comprise an
independent property together with the
individually owned residential and other
non-residential units.
(4) The ownership share of the
individual unit owners in the common
elements and the ownership rights in
condominium units and other nonresidential
units may not be transferred
separately from one another and may
not be encumbered.
(5) The provisions pertaining to joint
ownership shall also apply to
condominium properties.
PART THREE
LIMITED RIGHTS IN REM
TITLE VII
LIENS, MORTGAGES AND
OTHER PLEDGES
Chapter XXI
Effect of a Lien
Section 5:86
247
[Lien]
(1) Upon the failure of the obligor of
the secured claim (hereinafter referred to
as „designated lienor”) to perform, a lien
holder shall be entitled to seek
satisfaction prior to other claims against
the property pledged as security for his
claim (hereinafter referred to as „pledged
property”).
(2) The right to satisfaction shall not be
affected by any rights acquired after
pledging, unless this Act provides
otherwise.
Section 5:87
[Effect of a lien]
A lien shall take effect:
a) when the lien holder and the lienor
enter into an agreement to that effect;
and
b) the lienor has the right of disposition
over the pledged property.
Section 5:88
[Establishment of a lien]
A lien shall be considered established
upon entering into a pledge agreement
and in that context it is necessary:
a) to have the lien registered in the
relevant register (mortgage); or
b) to transfer possession of the
pledged property to the lien holder
(possessory lien).
Section 5:89
[Pledge agreement]
(1) The pledge agreement contains an
arrangement between the lienor and the
lien holder on pledging a specific item to
secure a specific claim.
(2) Under the pledge agreement the
lienor undertakes the obligation to:
a) transfer possession of, or control
over, the pledged property to the creditor
in the case of possessory lien;
b) grant approval for the registration of
a mortgage; and
c) either inform the obligor of a
hypothecated claim in writing on having
the lien established, or to make out a
statement thereof and deliver it to the
lien holder, whichever method is chosen
by the lien holder.
(3) The pledge agreement shall be
considered effective if the pledged
property and the secured claim are
defined properly.
(4) The pledged property may be
described by type and quantity, or by
elaborate description by which it may be
identified. The description may also
pertain to certain assets which do not
yet exist, or over which the lienor has no
right of disposition.
(5) A claim secured by a pledge shall
be determined in a way by which it may
be identified, with an indication of the one
or more - underlying relationship
and showing the amount, or in any other
way suitable for the identification of the
secured claim. The description may also
pertain to certain claims which do not yet
exist.
(6) Pledge agreements shall be
executed in writing. As regards the
possessory lien, the pledge agreement
may be replaced by a security issued by
the creditor, authorizing the holder of
such document to collect the pledged
248
property in exchange for the sum shown
in the security, within the time limit
specified in the security.
Section 5:90
[Consumer pledge agreement]
If the lienor is a natural person and the
pledged property is primarily used for a
purpose which is not required for the
pursuit of profession, private
entrepreneurial activities or business
operations of the lienor, furthermore, the
claim secured by a pledge is not a result
of the lienor’s profession, private
entrepreneurial activities or business
operations, the provisions of pledge
agreements shall apply subject to the
following exceptions:
a) the property pledged may be an
individually determined asset that is
owned by the lienor, or an asset which
the lienor will acquire by means of a loan
or respite of payment the lien holder has
provided;
b) the definition of the secured claim
shall include the sum as well.
Section 5:91
[Effect of the pledge agreement
between the parties]
The rights and obligations established
under this Act with respect to the lien
holder and the lienor shall also apply to
the parties to a pledge agreement with
respect to each other even if the lien has
not been formally established.
Section 5:92
[Statutory lien]
The pledge agreement shall be
replaced by the statutory provision under
which the holder of a claim is afforded
lien rights.
Section 5:93
[Registration of mortgages]
(1) Mortgages are to be registered:
a) in the real estate register in the case
of real estate properties;
b) in the collateral register in the case
of movable properties, rights and
receivables.
(2) Where ownership of a movable
property or right is recorded in a public
register (hereinafter referred to as
„registry”), mortgage shall be considered
established if registered in the relevant
registry.
(3) Registration in the real estate
register or in the registry shall be
effected based on the pledge agreement
or upon the lienor’s consent for
registration if:
a) the pledge agreement or the
consent for registration uniquely
identifies the pledged property; and
b) the lienor is shown as the owner or
beneficial user of the thing or right in the
real estate register or registry.
(4) A pledged property shall be
registered in the collateral register only if
uniquely identified or if a detailed
description is provided. Registration
shall not be prevented even if the
pledged property to be registered does
not exist, or the lienor has no right of
disposition at the time of registration.
Section 5:94
249
[Transfer of possession in the case of
possessory lien]
(1) Transfer of possession may also
be satisfied if possession is maintained
jointly by the lien holder and the lienor,
or if the asset concerned is safeguarded
on their behalf by a third party pledgee.
(2) If the thing is held by a third party,
and the transfer of possession is
considered completed upon conveying
the claim for the thing to the party
acquiring possession, possessory lien
shall be considered established upon
the owner having notified the secondary
possessor concerning the pledge.
(3) No possessory lien shall be
established if the transfer of possession
is carried out by means of an agreement
between the owner and the creditor to
that effect, where the owner retains
possession as a secondary possessor.
Section 5:95
[Arrangement of collateral security]
(1) Collateral security may be
arranged:
a) on money and securities in the form
of possessory lien;
b) on dematerialized securities in the
form of possessory lien or by way of the
means specified in Subsection (2);
c) on payment account balances by
way of the means specified in
Subsection (2);
d) on other assets defined by law by
way of the means specified in
Subsection (4).
(2) On dematerialized securities and
payment account balances collateral
security may be arranged:
a) by way of an agreement between
the account holder, the payment service
provider and the lien holder, under which
the payment service provider shall
execute the account holder’s orders with
the lien holder’s consent, and shall
execute the lien holder’s orders without
the account holder’s consent; or
b) to the benefit of the payment service
provider by way of a pledge agreement
between the account holder and the
payment service provider in itself.
(3) The payment service provider shall
indicate the lien established as provided
for in Subsection (2) on all account
statements and other similar documents.
(4) If collateral security is provided in
the form of assets defined by law, the
collateral security shall be considered
arranged if the collateralized asset is
transferred from the possession of the
collateral provider to the possession or
control of the collateral taker, or
otherwise removed from the unrestricted
control by the collateral provider.
Section 5:96
[Lien holder’s agent]
(1) Any one or more lien holders shall
have the right to designate a lien
holder’s agent in the pledge agreement
or any other written document. The
appointment shall be executed in writing.
(2) The appointment of lien holder’s
agent shall be considered effective in
dealings with third parties as of the time
when the agent is registered in the real
estate register, registry or collateral
register, in his capacity as a lien holder’s
agent.
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(3) The lien holder’s agent may
request to be shown in the real estate
register, registry or collateral register as
lien holder. The withdrawal of the
appointment of a lien holder’s agent
shall be considered effective in dealings
with third parties as of the time when the
lien holder is registered in the real estate
register, registry or collateral register.
(4) If the lien holder’s agent is
registered, the real estate register, the
registry and the collateral register shall
not contain the names of the lien holders
in whose name and on whose behalf the
lien holder’s agent is acting.
(5) The lien holder’s agent registered
in the real estate register, registry or
collateral register shall be subject to the
rights and obligations of the lien holder,
in that context the lien holder’s agent
shall act in his name and on the lien
holder’s behalf.
(6) While the lien holder’s agent is
registered the lien holder shall not
exercise the rights stemming from the
lien, however, he shall bear full liability
for the actions of the agent as if he had
acted himself.
(7) The transfer of a claim secured by
a pledge shall not affect the rights and
obligations of the lien holder’s agent.
(8) The lien holder’s agent shall handle
and keep records of all assets and funds
he has received or acquired upon the
enforcement of a pledge or by other
means in connection with the pledge,
separately from one another and from
his own assets. Creditors of a lien
holder’s agent shall not lay claims in
respect of:
a) claims against the lienor and claims
due to the lien holder;
b) sums of money received by the lien
holder’s agent and kept or handled
separately, which are apparently due to
the lien holder.
Chapter XXII
Claims Secured by Pledge
Section 5:97
[Secured claims]
(1) Lien may be established on one or
more existing or future, conditional or
unconditional pecuniary claims of a
specific amount or the amount of which
can be determined.
(2) If the lien is not arranged for a
pecuniary claim, the lien shall guarantee
the claim for damages resulting from the
failure to satisfy a claim, or shall
guarantee other receivables.
(3) No lien shall be established on
claims that cannot be enforced in court.
Section 5:98
[Scope of liability assumed through
pledged property]
(1) The scope of liability assumed
through pledged property shall be
adjusted to the size of the claim for the
guaranty of which the property was
pledged.
(2) The liability guaranteed by a
pledged property shall include the
interests on the claim, the costs of
enforcing the claim and the lien as well
251
as to the reasonable costs spent on the
pledged property.
(3) If the parties set a limit up to which
the lien holder may seek satisfaction
from the pledged property, the lien shall
guarantee the claim and the associated
costs up to that limit.
Section 5:99
[Transfer of secured claims]
(1) Upon the assignment or transfer by
other means of the secured claim, the
lien shall be transferred to the new
holder of the claim. The transferor of the
claim shall surrender, to the new holder,
the pledged property, or shall provide
the permit for registration of the transfer
of the lien.
(2) If only a part of the secured claim is
transferred, the previous and the new
lien holder shall receive the same rank
for the lien in proportion to their
respective claim.
(3) The lien shall be transferred
together with the claim secured by a
pledge.
Section 5:100
[Seceded lien]
(1) The lien holder shall be allowed to
transfer the lien - under contract, to
guarantee his debt - without having to
transfer the secured claim (hereinafter
referred to as „seceded lien”) to the
holder of his debt. Based on the
seceded lien, the rights of the lien holder
shall pass on to the party acquiring the
lien (hereinafter referred to as „seceded
lien holder”).
(2) The contract on the transfer of the
lien shall specify the claim to which the
seceded lien pertains. Said contract
shall be executed in writing.
(3) The transfer of the lien shall be
considered effective in dealings with
third parties as of the time when the
seceded lien holder is registered in the
real estate register, registry or collateral
register, or when the third party receives
notice on the assignment of the lien in
accordance with the provisions on
assignment.
(4) The seceded lien holder shall
exercise his rights stemming from the
lien without jeopardizing the recovery of
the original secured claim.
(5) Upon the termination of the claim
secured by a seceded lien, the seceded
lien shall revert to the original lien
holder. The seceded lien holder shall be
entitled to re-assign the lien to the
original lien holder before the
termination of the secured claim. The
seceded lien must be transferred
together with the claim secured by the
seceded lien.
Chapter XXIII
Pledged Property
Section 5:101
[Pledged goods]
(1) Any asset of value can be pledged
as security.
(2) Only movable property shall be the
subject matter of possessory lien.
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(3) With the exception of the
ownership share in a joint property, or
the share of the lienor on a thing that is
owned by more than one person, or a
specific part of a divisible claim, a
fraction or part of a thing or a right may
not be pledged as security.
(4) If the pledged property is a right or
claim, the ownership right to the pledged
property shall be understood as the right
or the claim and the owner of the
pledged property shall be understood as
the holder of the right or claim, unless
otherwise provided for in this Act and
unless otherwise suggested by the
nature of the pledged property.
(5) The provisions on liens established
on claims shall apply if the pledged
property is a right.
Section 5:102
[Pledged property identified by
detailed description]
If the pledged property registered in
the collateral register has been identified
by detailed description, the lien shall at
all times pertain to those things, rights
and claims identified by said detailed
description, over which the lienor has
the right of disposition. Lien shall remain
in effect even after the right of
disposition ceases, if the pledged
property has been sold outside the
course of trade or to a mala fide buyer
making the acquisition for consideration.
Section 5:103
[Components, accessories and profits
of pledged property]
(1) The lien shall be effective on a
thing together with all its components.
When in doubt, the lien shall also extend
to all accessories of the thing.
(2) The lien shall also extend to the
products, produce, and progeny of the
thing and other benefits of the pledged
property.
(3) The lien shall not cover the
components and accessories detached
from the real estate property before the
effective date of the right to satisfaction
according to prudential management
requirements, if ownership thereof had
been transferred and they have been
removed from the property.
Section 5:104
[Things and other valuables as
pledged property substitutes]
(1) A security deposit, reimbursement,
or other value, provided as alternative
security for the destruction or
depreciation of the pledged property, or
any claim thereof, shall replace the
pledged property or supplement the
pledged collateral.
(2) Any compensation received for the
expropriation of the pledged property, or
the claim thereof shall replace the
pledged property.
(3) If the lien holder sells the pledged
property to avoid damages, the sale
price received shall replace the pledged
property.
(4) If the pledged property registered in
the collateral register has been sold by
the lienor within the framework of
prudential management, the proceeds
253
from the sale shall replace the property
originally pledged.
(5) If the lienor processes, converts, or
blends or mixes the pledged property
with other assets, the new thing created
by the processing, conversion, merger or
mixing operation shall replace the
property originally pledged.
(6) If the lienor or the designated lienor
made available a new property in the
originally pledged property’s stead, or a
supplemental property in the event of
any depreciation of the pledged
property, the new pledged property shall
replace, or shall be added to, the
property originally pledged.
(7) The funds or assets received on
the basis of a lien provided to satisfy a
hypothecated claim or a lien provided to
guarantee a hypothecated claim, or any
surety or other form of guarantee shall
replace the property originally pledged.
(8) Possessory lien shall be
established on any funds or assets
received by the seceded lien holder
upon calling the seceded lien in security
for a claim underlying the transfer of the
lien.
Section 5:105
[Multiple pledge]
(1) If a lien is established on more than
one pledged property to secure the
same claim, the relevant register shall
indicate that the lien is universal. No
indication of universality is required if all
properties are pledged by the same
lienor, and the lien is registered in the
collateral register.
(2) If the lien is universal, all of the
pledged properties shall serve as
security for the entire claim. The lien
holder shall have the right to determine
the order of enforcement of the pledge,
however, the right to satisfaction covers
only as many pledged properties as
necessary to provide satisfaction.
Chapter XXIV
Rights and Obligations of the
Parties Before the Effective Date
of the Right to Satisfaction
Section 5:106
[Possession, use and utilization of the
property pledged in the form of
possessory lien]
(1) The holder of the property
subjected to possessory lien shall keep
the pledged property in his possession
and shall keep it in good condition.
(2) The parties’ rights and obligations
relating to the possession, and the use
and utilization of the pledged property
shall be governed by the provisions on
deposits for pecuniary interest, with the
proviso that the lienor shall not be
entitled to recover the pledged property
during the term of the possessory lien.
Section 5:107
[Protection of guarantee by
possessory lien]
(1) The debtor or the designated lienor
shall be entitled to monitor the condition
and use of the pledged property.
254
(2) If any loss in value of the pledged
property jeopardizes satisfaction of the
claim, and the debtor fails to restore the
condition of the pledged property in spite
of so requested by the creditor within the
prescribed time limit, or fails to provide
adequate replacement or additional
guarantee to cover the loss of value, the
creditor shall have the right to sell the
pledged property - acting in the place of
the debtor and on his behalf - with a
view to preventing further depreciation.
The creditor shall be entitled to sell the
pledged property without issuing a
warning and without setting a time limit,
if any insurmountable obstacles exist or
if any further delay in waiting for the
debtor’s action is likely to result in further
depreciation.
(3) If the debtor or the designated
lienor offers adequate other assets in
replacement and this does not
jeopardize the right to satisfaction, the
creditor shall return the pledged
property.
(4) In connection with a divisible
pledged property whose value can be
clearly determined relying on the
collateral security and other publicly
accessible information or in the case of
any changes in the value of the secured
claim the debtor is required to provide
additional security, and the creditor is
required to release any excess collateral
to the debtor.
(5) The debtor shall be entitled to use
any insurance settlement, compensation
or other value received in exchange for
the pledged property to restore the
pledged property, provided that this
does not jeopardize the satisfaction of
the secured claim.
Section 5:108
[Possession, use and utilization of the
mortgaged property]
(1) The mortgagor is entitled to keep
the mortgaged property in his
possession, use it and utilize it for its
intended purpose, and shall keep the
mortgaged property in good condition.
(2) The mortgagor registered in the
collateral register shall be entitled to
process, convert, merge or mix the
mortgaged property identified by
detailed description within the framework
of prudential management.
Section 5:109
[Protection of the mortgaged property]
(1) The mortgage holder shall be
entitled to check the condition and use
of the mortgaged property.
(2) In the event the mortgagor or a
third person is endangering the condition
of the mortgaged property, the mortgage
holder shall be entitled to exercise the
rights of the exposed party in order to
eliminate the danger.
(3) If any loss in value of the
mortgaged property jeopardizes
satisfaction of the claim, and the
mortgagor fails to restore the condition
of the mortgaged property in spite of so
requested by the mortgage holder within
the prescribed time limit, or fails to
provide adequate replacement or
additional guarantee to cover the loss of
value, the mortgage holder shall have
the right to sell the mortgaged property
255
with a view to preventing further
depreciation.
(4) The mortgagor shall be entitled to
use any insurance settlement,
compensation or other value received in
exchange for the mortgaged property to
restore the mortgaged property,
provided that this does not jeopardize
satisfaction of the secured claim.
Section 5:110
[Protection of a hypothecated claim as
lien guarantee]
After the debtor of a hypothecated
claim is notified in writing concerning the
establishment of a lien, containing an
indication of the hypothecated claim and
the lien holder, the amendment to the
contract between the lienor and the
debtor of the hypothecated claim shall
cease to apply to the lien holder. The
debtor shall be entitled to enforce,
against the lien holder, the objections
and to offset the counterclaims that arise
with regard to the lienor on the legal
grounds prevailing at the time of
notification.
Section 5:111
[Rights and obligations of the debtor of
a hypothecated claim]
(1) The debtor of a hypothecated claim
shall be liable to perform to the lienor
insofar as an instruction is given that
indicates the name and registered office
of the lien holder, or home address or
habitual residence or account number
for a natural person. After that the debtor
may effect performance as instructed.
(2) The performance instruction shall
invoke the legal effect referred to in
Subsection (1), if the instruction is
incorporated into the notice of
hypothecation, otherwise it originates
from the lienor, or if the lien holder is
able to verify that the claim has in fact
been hypothecated by way of a pledge
agreement or other reliable means. If the
notice of hypothecation indicated the lien
holder, but it did not contain any
performance instruction, a performance
instruction may be given only by the lien
holder.
(3) The lien holder may send a
performance instruction after the
effective date of the right to satisfaction.
(4) By way of derogation from
Subsection (1), the performance
instruction shall not affect the rights and
obligations the payment service provider
has under the account or deposit
contract in terms of the account holder.
(5) At the lien holder’s request, the
lienor shall produce the documents
necessary for enforcing the
hypothecated claim. If the maturity of a
hypothecated claim depends on the
legal statement of the lien holder or on a
condition to be met by him, the lien
holder shall be entitled to make the legal
statement or satisfy the condition
required for maturity.
Chapter XXV
Collateral Register
Section 5:112
256
[Basic principles of the collateral
register]
(1) The collateral register contains the
mortgages established on nonregistered
movable properties, rights
and claims separately for each lienor, as
well as other security rights provided for
in this Act.
(2) The collateral register is made
available to the general public,
accessible on the internet free of charge,
without personal identification.
Section 5:113
[Statements constituting the basis for
the collateral register]
(1) Making entries into the collateral
register, the modification and deletion of
entries shall take place by means of a
standard electronic form described in the
relevant legislation, made out by the lien
holder and/or the lienor, based on a
written statement made on the internet
website of the collateral register, without
there being any need to examine the
contents of the statements.
(2) The statement made by the lien
holder shall be notified to the lienor, and
the statement made by the lienor shall
be notified to the lien holder immediately
after the statement is made, by way of
electronic means.
(3) Statements can be made by
persons registered in the collateral
register as users.
(4) In the process of making a
statement, natural persons may proceed
in the name of legal persons and other
organizations registered as users if
designated by the relevant organization
at the time of registration, or
subsequently, as representatives
authorized to act in their name and on
their behalf.
(5) Statements can be made following
the electronic identification of the person
acting in his own name or in the name of
others.
Section 5:114
[Registration of a lien]
(1) A statement for the registration of a
lien can be made by the lien holder or
the lienor.
(2) If the statement for the registration
of a lien is made by the lien holder, the
lien shall be registered on the strength of
that statement if the lienor authorized
the registration by making a statement
by way of electronic means on the
internet website of the collateral register.
(3) If the statement for the registration
of a lien is made by the lienor, the lien
shall be registered on the strength of
that statement.
Section 5:115
[Contents of the statement for the
registration of a lien]
(1) The statements made for the
registration of lien shall inter alia contain:
a) the lienor’s name and other
particulars provided for in specific other
legislation;
b) the lien holder’s name and other
particulars provided for in specific other
legislation;
c) the name of the natural person
acting in the name of a legal person or
257
other organization, and other particulars
provided for in specific other legislation;
d) a unique identification or detailed
description of the pledged property.
(2) The statement for the registration
of a lien may also contain the amount
limit available for the lien holder to seek
satisfaction from the pledged property.
Section 5:116
[Contents of the collateral register]
The collateral register shall contain the
following information for each registered
lien:
a) the contents of the statement for the
registration of a lien;
b) the time of registration of the lien;
and
c) the entry number.
Section 5:117
[Cancellation of liens]
(1) Statements for the cancellation of a
lien can be made by the lien holder and
by the lienor both.
(2) If the statement for the cancellation
of a lien is made by the lien holder, the
lien shall be cancelled on the strength of
that statement.
(3) If the statement for the cancellation
of a lien is made by the lienor, the lien
shall be cancelled on the basis of that
statement if the lien holder:
a) gave consent for the cancellation of
the lien; or
b) did not make a statement for
maintaining the entry within a period of
thirty days from the date of the lienor’s
statement for the cancellation of a lien.
(4) The lien holder must consent to the
cancellation of the lien, or shall not be
entitled to make a statement for
maintaining the entry if his secured claim
no longer exists or has no legal
relationship which may result in a
secured claim in the future.
Chapter XXVI
Ranking of Liens
Section 5:118
[Ranking based on the establishment
of the lien]
If the same pledged property is
encumbered by more than one lien, the
lien holders shall be satisfied in the
order in which the liens were
established.
Section 5:119
[Ranking of lien on an asset provided
in place of a pledged property or to
supplement the pledged collateral]
A lien on an asset provided in place of
a pledged property or to supplement the
pledged collateral shall have the same
rank as on the property originally
pledged, unless the property in question
is pledged for other liens as well.
Section 5:120
[Changes in the pledged properties
registered in the collateral register]
If a lien registered in the collateral
register is secured by more than one
asset identified by detailed description,
258
changes in such things, rights and
claims shall not affect the rank of the
lien.
Section 5:121
[Lien established by the previous
holder of the right of disposition]
A lien established by the previous
holder of the right of disposition over the
property pledged to secure a lien
registered in the collateral register shall
precede the lien that was established
prior to the said lien, however, it came
into existence subsequently due to the
lack of right of disposition.
Section 5:122
[Priority of lien carrying entitlement to
acquire the pledged property]
A lien established to guarantee the
creditor’s claim for the purchase price of
a pledged movable property or for the
repayment of a loan granted for the
acquisition of the pledged movable
property shall precede the liens
established by the buyer or the debtor
previously, if, before the pledged
property is transferred:
a) the lien is registered in the collateral
register; and
b) the lien holder notifies of the
establishment of lien in writing those
previous lien holders, whose lien covers
the new pledged property, if acquired by
the lienor.
Section 5:123
[Rank between collateral security and
mortgage]
If the same property is pledged to
guarantee a collateral security and a
mortgage, the holder of the collateral
security shall have priority for
satisfaction over the mortgage holder.
Section 5:124
[Ranking agreement]
(1) The ranking of liens may be
modified with the consent of all parties
concerned. Any change in ranking shall
be considered effective upon registration
or recording of the new ranking.
(2) Disposition over the rankings of
entries may not cause any injury to third
party rights registered at the time of
modification of the ranking.
(3) A lien moved to a higher ranking
shall retain its new ranking so acquired
also if the lien moved backward is
terminated.
Section 5:125
[Prior ranking arrangement for the lien]
(1) The owner shall be entitled to have
his intention to pledge any asset
recorded or registered in the appropriate
register to the benefit of a specific
person or without indicating the
beneficiary.
(2) The amount limit of the lien the
owner wishes to establish shall be
specified in the application for recording
or in the registration.
(3) A lien registered under prior
ranking arrangement shall be ranked
consistent with the ranking of the
recording or registration.
Chapter XXVII
259
Enforcement of Liens
1. General provisions on
exercising the right to satisfaction
Section 5:126
[Right to satisfaction]
(1) The lien holder’s right to
satisfaction shall open in the case of
default, when the claim secured by a
pledge falls due.
(2) In connection with seceded liens
the maturity of a claim secured through
the transfer of a lien and the failure of
related performance shall not result in
the opening of the right to satisfaction. If,
however, the right to satisfaction
stemming from a seceded lien has
opened in respect of the secured claim,
the lien may be enforced irrespective of
the fact that the claim secured by the
transfer of a lien is not yet due. If the
right to satisfaction stemming from a
seceded lien has opened, the seceded
lien holder shall exercise his right to
satisfaction, or he shall transfer the lien
back to the original lien holder.
(3) The lien holder shall have the
option to exercise his right to satisfaction
either by way of judicial enforcement or
by means other than by judicial
enforcement.
(4) A lien on payment account
balances may be enforced by way of
judicial enforcement.
2. Common provisions on the
enforcement of liens by ways other
than by judicial enforcement
Section 5:127
[Modes of exercising the right to
satisfaction other than by judicial
enforcement]
(1) The right to satisfaction by means
other than by judicial enforcement shall
be exercised, at the lien holder’s
discretion:
a) through the sale of the pledged
property by the lien holder;
b) through the acquisition of the
pledged property by the lien holder; or
c) through the enforcement of a
hypothecated right or claim.
(2) The lien holder shall be entitled to
switch to a different mode of
enforcement of the right to satisfaction.
Section 5:128
[Exercising the right to satisfaction in
connection with consumer pledge
agreements]
In connection with a consumer pledge
agreement, the lien holder:
a) shall be allowed to sell the pledged
property only publicly, unless the parties
agreed on an alternative sales method
after the effective date of the right to
satisfaction; and
b) shall not acquire ownership of the
pledged property as a mode of
satisfaction, with the exception of
collateral security.
Section 5:129
[Assignment of the right of
enforcement of a lien]
(1) Following the opening of the
enforcement of a pledge, the lien holder
260
shall be allowed to assign the right to
enforce the pledge to another lien holder
of higher rank by way of a written
statement, if compensation is provided
for the related costs and expenses of the
lien holder who has opened the
enforcement of the pledge.
(2) The lien holder who has opened
the enforcement of the pledge shall,
upon receipt of a statement of
acceptance, provide adequate
information to the lien holder of higher
rank concerning the actions taken and
the costs incurred up to that point.
Section 5:130
[Suspension or limitation of the right to
satisfaction]
If, when exercising his right to
satisfaction, the lien holder infringes his
obligations laid down in this Act, the
lienor, the designated lienor or any other
person who has a legal interest therein
may bring action requesting the court to
suspend the exercise of the right to
satisfaction, or to order the lien holder to
exercise his right to satisfaction in
accordance with the conditions
stipulated by the court.
3. Sale of pledged property by the
lien holder
Section 5:131
[Prior notification]
(1) The lien holder shall send notice in
writing concerning his intention to sell
the pledged property:
a) to the lienor, the designated lienor
and the persons having guaranteed the
designated lienor’s performance;
b) to the beneficiaries of other liens
secured by the same property;
c) to all persons holding some right
registered on the pledged property, if the
pledged property has been registered;
and
d) to the persons who sent notice in
writing claiming to hold some right on the
pledged property, with proof attached,
more than ten days before the date of
the lien holder’s notice.
(2) The prior notification shall be sent
at least ten days, in the case of
consumer pledge agreement, at least
thirty days before the sale.
(3) The prior notification shall specify:
a) the lien holder and the lienor;
b) the pledged property to be sold;
c) the amount of the claim enforced
and the associated costs;
d) the reason for and the date of the
opening of the right to satisfaction;
e) the planned mode of sale;
f) the place and date of the public sale,
or if sold by other means, the date after
which the sale will take place.
(4) The lien holder shall be entitled to
sell the pledged property without prior
notification if the pledged property:
a) is perishable, or if its value is likely
to diminish considerably upon any delay;
or
b) is a thing or a right traded on the
stock exchange.
Section 5:132
261
[Right of possession of the pledged
property]
(1) Following the effective date of the
right to satisfaction, the lien holder shall
have the right to take possession of the
pledged property for the purpose of sale,
and, to this end, to call the lienor to
release the pledged property into his
possession by the time limit specified.
(2) For compliance with the request of
possession a time limit justified by the
circumstances shall be given, of at least
ten days in the case of movable
properties and at least twenty days for
real estate properties. A residential
property shall be surrendered fully
vacated within a time limit of at least
three months.
(3) Following the effective date of the
right to satisfaction, upon the lien
holder’s request the lienor shall release
the pledged property in his possession
to the lien holder within the prescribed
time limit for the purpose of sale, to
permit the lien holder to take possession
of the pledged property, and shall refrain
from any conduct aimed at preventing
the lien holder from carrying out the sale.
(4) Failure to take possession shall
have no bearing on carrying out the sale
of the pledged property.
Section 5:133
[Principle of reasonable commercial
practices]
(1) When selling the pledged property
the lien holder shall act in accordance
with the principle of reasonable
commercial practices, and in due
observation of the lienor’s and/or the
designated lienor’s interest.
(2) Unless proven to the contrary, it
shall be presumed that the sale of the
pledged property is conducted under the
principle of reasonable commercial
practices if:
a) the sale is completed in the stock
exchange, at a price in effect at the time
of sale; or
b) the sale takes place under normal
market terms usually employed in the
commercial sale of pledged properties.
Section 5:134
[Sale]
(1) The lien holder shall be entitled to
transfer the ownership of the pledged
property instead and on behalf of the
owner of such property.
(2) The pledged property may be sold:
a) as is, or after commercially justified
processing or conversion;
b) privately or publicly.
(3) If a lien is established on more than
one pledged property to secure the
same claim, they may be sold together
or separately.
(4) The lien holder may acquire
ownership of the pledged property he is
selling in the case of public sale, or if the
pledged property is traded on the stock
exchange.
Section 5:135
[Settlement, distribution of sales
proceeds]
(1) After the pledged property is sold,
the lien holder shall forthwith prepare a
financial statement in writing, indicating:
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a) the pledged property sold;
b) the purchase price received;
c) the proceeds the lien holder has
collected on pledged goods;
d) the costs arising out of or in
connection with the safeguarding,
maintenance, processing, conversion
and sale of the pledged property; and
e) if available, the ranking of the liens
on the pledged property and the
amounts of the claims secured by such
liens.
(2) The lien holder shall send the
financial statement to the lienor and to
all persons to whom prior notification is
to be sent.
(3) The lien holder shall, without delay,
distribute the purchase price received
plus the proceeds collected, minus the
costs arising out of or in connection with
the safeguarding, maintenance,
processing, conversion and sale of the
pledged property, taking into
consideration the ranking of the liens
and the amounts of the claims secured
by such liens, among the holders of the
liens on the pledged property, and to
pay the remaining amount to the lienor.
4. Acquisition of ownership of the
pledged property by the lien holder
Section 5:136
[Prohibition of acquisition of the
pledged property by the lien holder]
Any agreement concluded for
transferring ownership of the pledged
property to the lien holder at the time of
opening of the right to satisfaction shall
be null and void.
Section 5:137
[Acquisition of the pledged property by
the lien holder following the effective
date of the right to satisfaction]
(1) Following the effective date of his
right to satisfaction, the lien holder may
offer to the lienor to accept ownership of
the pledged property in satisfaction of
the secured claim in whole or in part.
(2) The offer shall specify:
a) the lien holder and the lienor;
b) the pledged property to which the
offer pertains;
c) the amount of the claim secured by
the lien;
d) the reason for and the date of the
opening of the right to satisfaction; and
e) the percentage of the claim the
acquired ownership of the pledged
property covers, or the amount that the
lien holder is willing to pay - in exchange
for acquiring ownership, in addition to
the settlement of the secured claim - to
the lienor.
(3) Apart from the lienor, the lien
holder shall also send notice concerning
the offer, with a copy attached:
a) to the designated lienor and the
persons having guaranteed the
designated lienor’s performance;
b) to the beneficiaries of other liens
secured by the same property;
c) to all persons holding some right
registered on the pledged property, if the
pledged property has been registered;
and
d) to the persons who sent notice in
writing claiming to hold some right on the
pledged property, with proof attached,
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more than ten days before the date of
the lien holder’s notice.
(4) The persons to be notified may
object to the lien holder’s offer if it is
considered to jeopardize satisfaction of
their secured claim.
(5) If the lienor accepts in writing the
lien holder’s offer within twenty days
from the date of receipt thereof, and the
persons referred to in Subsection (3) do
not object in writing to the lien holder’s
offer within twenty days from the date of
receipt thereof, the lien holder and the
lienor shall enter into a sales contract,
on the basis of which the lienor is
required to transfer possession of the
pledged property, or to make out an
authorization for the registration of
ownership. Upon the transfer of
ownership, the claim secured by a
pledge shall cease to exist in part or in
whole, according to the contents of the
offer.
Section 5:138
[Right to direct satisfaction]
(1) In the case of collateral security, if
provided in connection with money,
payment account balances, or securities
traded on the stock exchange or any
other securities whose market price is
listed publicly, the lien holder shall be
entitled to acquire ownership - by way of
unilateral statement addressed to the
lienor - of the pledged property up to the
amount of the secured claim at the
effective date of his right to satisfaction,
or, if it was acquired previously, may
terminate his obligation to transfer
assets of the same type and amount as
the collateral security received to the
lienor.
(2) The lien holder shall settle
accounts in writing with the lienor
immediately after exercising direct right
to satisfaction and to pay the amount
remaining after the secured claim is
satisfied to the lienor. To that end,
money and payment account balances
shall be taken into account at their
nominal value, whereas securities shall
be taken into account at market value.
(3) These rules shall also apply if the
object of the lien are securities that
represent property rights, and the object
of ownership are things that are traded
on the stock exchange or any other
things whose market price is listed
publicly.
5. Enforcement of a hypothecated
right or claim
Section 5:139
[Enforcement of a hypothecated right
or claim]
If the object of a mortgage is a claim,
the mortgage holder may give
performance instructions to the
mortgagor, and shall be allowed, after
the date of maturity of the claim, to
enforce the claim in place of the original
mortgage holder against the mortgagor.
This provision shall apply even if the
mortgage pertains to a right.
Section 5:140
[Subordinated lien]
264
If the claim subjected to a lien is
secured by a lien or surety, the lien
holder may also exercise the rights of
the holder of the claim arising out of or in
connection with the lien or surety. If the
claim is secured by possessory lien, the
holder of the claim shall transfer
possession of the pledged property to
the lien holder upon his request.
Section 5:141
[Debt instruments]
The provisions on subordinated
mortgages shall also apply to the
enforcement of a hypothecated right or
claim, even if the object of the lien are
debt instruments.
Chapter XXVIII
Termination of a Lien
Section 5:142
[Termination of a lien]
(1) The lien shall terminate if:
a) the lien holder waives his lien and
returns the pledged property to the lienor
or if the mortgage is cancelled from the
relevant register;
b) the property pledged in security of
the lien is destroyed, the right pledged in
security of the lien ceases without any
replacement in either case;
c) the holder of the possessory lien
loses possession of the pledged
property, except when the holder brings
an action in rem or a possessory action
without delay;
d) the secured claim no longer exists
or any legal relationship which may
result in a secured claim in the future is
terminated;
e) the claim secured by a pledge
lapses;
f) the lien holder sells the pledged
property when exercising his right to
satisfaction, or acquires ownership of the
pledged property.
(2) If the claim secured by a pledge
ceases to exist the lien shall remain in
force nonetheless for guaranteeing the
recovery claim accruing to the
designated lienor who satisfied the
claim, to the lienor or to a third party.
(3) The lien shall remain in force to
guarantee the claim secured by a
pledge, if the same person becomes the
lienor and the lien holder.
(4) In the cases provided for in the
previous Subsections the lien shall
terminate also if it was transferred
previously.
Section 5:143
[Unencumbered acquisition]
(1) Where ownership is acquired in
good faith, in the course of trade for
consideration, the transferee shall
acquire unencumbered ownership, right
or claim registered in the collateral
register.
(2) If the pledged property is sold in
order to protect the pledged collateral,
the buyer shall acquire unencumbered
ownership, right or claim.
Section 5:144
265
[Obligations of lien holders when the
lien is terminated]
(1) If the secured claim no longer
exists or if it has lapsed, and no other
legal relationship exists which may result
in a secured claim in the future, the lien
holder shall forthwith:
a) return the pledged property to the
lienor;
b) consent to having the lien cancelled;
and
c) notify in writing the lienor’s payment
service provider or any third party who,
as the pledge holder, has possession of
the pledged property or on whose
account the pledged property was
credited to the benefit of the lien holder
concerning the termination of the lien.
(2) The third party who, as the pledge
holder, has possession of the pledged
property or on whose account the
pledged property was credited to the
benefit of the lien holder shall return the
pledged property to the lienor or shall
transfer the pledged property that was
credited on his account to the account of
the lienor without delay upon receipt of
written notice on the termination of the
lien.
(3) The seceded lien holder shall settle
accounts with the original lien holder
when the lien is terminated and when it
passes back to the original lien holder.
TITLE VIII
RIGHTS OF USE
Chapter XXIX
Land Use
Section 5:145
[Land use rights if ownership of a
building and the land are separated]
(1) If the ownership of a building and
the land on which it stands belongs to
different persons, the owner of the
building shall have right of use on the
land to the extent required for normal
use of the building.
(2) The owner of a building is entitled
to use the land and to enjoy its benefits,
and he shall be liable for the
maintenance costs of the land as
commensurate with the use of the
building by virtue of his right of use of
the land.
Chapter XXX
Beneficial Interest
Section 5:146
[Establishment of beneficial interest
under contract]
(1) Beneficial ownership shall enter
into effect when the relevant contract or
other title is executed and possession of
the thing is transferred; in the case of
beneficial interest on real estate property
or any right registered in the real estate
register, beneficial interest shall be
registered in the real estate register.
(2) Where beneficial interest is granted
on real estate property or any right
registered in the real estate register on
the strength of law, it shall be registered
in the real estate register; in the absence
266
thereof, beneficial interest shall be
enforceable only against a mala fide
acquirer of the property or an acquirer
who has not given any consideration for
the property.
(3) Beneficial interest shall not cover
the increment in the object of beneficial
interest, which is gained after the
commencement of beneficial use, unless
the increment results from the use of the
object of beneficial interest within the
framework of prudential management.
Section 5:147
[Contents of beneficial ownership]
(1) A person may possess, use,
exploit, and collect the proceeds of a
property owned by another person by
virtue of beneficial ownership.
(2) If beneficial interest is held by more
than one beneficial user at the same
time, the provisions pertaining to joint
ownership shall apply to the right of
possession, use, and collection of
proceeds.
(3) Beneficial interest shall remain in
force even if ownership of the property is
transferred.
(4) Beneficial interest shall be granted
to a natural person for a limited period of
time, not to exceed the lifetime of the
holder of beneficial interest.
(5) Beneficial interest shall be granted
to a legal person for a limited period of
time, not to exceed fifty years. Where
beneficial interest is granted for an
unspecified period, it shall remain in
force for fifty years.
Section 5:148
[Assignment of the right to exercise
beneficial interest]
(1) The beneficial user may not
transfer his right to such interest;
however, he may assign right of
possession, use, and collection of
proceeds.
(2) The beneficial user may assign the
right to exercise beneficial interest for a
consideration only if the owner
surrenders the right of use, exploitation
and collection of proceeds under the
same conditions.
Section 5:149
[Rights and obligations of the
beneficial user during the life of
beneficial interest]
(1) The beneficial user shall act in
accordance with the rules of normal
management when exercising his right
thereto.
(2) The beneficial user shall be entitled
to change the economic function of the
object of beneficial enjoyment without
the owner’s consent, or may convert or
considerably alter the same insofar as
maintaining the economic function or
leaving the object of beneficial
enjoyment unaltered is in contradiction
to the requirements of prudent
management.
(3) The beneficial user shall cover the
costs of maintenance of the thing, with
the exception of extraordinary repairs
and renovations. The beneficial user
shall be subject to the obligations
stemming from the use of the thing.
(4) The beneficial user shall notify the
owner of any imminent danger to the
267
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.
Section 5:150
[Costs]
(1) The beneficial user shall be entitled
to have extraordinary repairs or
renovations made upon the owner’s
failure, despite the request of the
beneficial user, to do so.
(2) When beneficial interest is
terminated, the beneficial user shall be
entitled to demand from the owner
compensation under the principle of
unjust enrichment for any increment in
the value of the thing achieved by the
extraordinary repairs or renovations
carried out at his own expense.
Section 5:151
[Irregular beneficial interest]
(1) The beneficial user may dispose of
the inherently expendable objects,
business equipment, livestock, stocks of
goods and money 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.
(2) If the claim of the former owner of a
thing that was sold or consumed in the
course of beneficial use for replacement
of reimbursement is considered to be at
risk, he may demand adequate
guarantees.
Section 5:152
[Owner’s rights during the life of
beneficial interest]
(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 alters its function by unauthorized
means, or otherwise jeopardizes the
return of the property after the
termination of the beneficial interest, the
owner shall have the right to demand
adequate guarantees if he has protested
to no avail.
(3) If the holder of beneficial interest
fails to provide adequate guarantee, the
court shall be entitled, upon the owner’s
request, to order the suspension of the
exercise of beneficial rights until such
guarantee 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. In that case, and if no
guarantee is provided, the court shall
prohibit the third party from exercising
the rights assigned to him by the
beneficial user.
(5) For the duration of beneficial
interest, the owner may exercise the
right of possession, use, and collection
of proceeds only if the holder of
beneficial interest does not exercise his
rights thereto.
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Section 5:153
[Destruction of the object of beneficial
interest]
(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 interest 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 or receivables, the
owner and the beneficial user may
demand that sum be spent on the
restoration or replacement of the thing, if
this is within the framework of the
principle of prudent management.
(4) The owner may carry out the
restoration or replacement himself, or
may convey the sum of compensation to
the beneficial user for that purpose.
Section 5:154
[Termination of beneficial interest]
(1) Beneficial interest shall terminate
upon the expiry of the fixed term, upon
the holder’s death or dissolution without
succession, and also if the beneficial
user acquires ownership of the thing.
(2) Beneficial interest may be
terminated by way of a legal act upon
the beneficial user’s waiver; in the case
of beneficial interest on real estate
property or any right registered in the
real estate register or other public
register the beneficial interest shall be
removed from the register.
(3) In the case of beneficial interest on
a thing, the waiver shall be sent to the
owner, or if beneficial interest pertains to
a right, it shall be sent to the proprietor
of such right or the person who
established the right.
(4) In the case of beneficial interest on
real estate property or any right
registered in the real estate register or
other public register the waiver shall be
made out in writing.
Section 5:155
[Beneficial user’s obligations upon
termination of beneficial interest]
(1) The holder of beneficial interest
shall return the property upon the
termination of his beneficial right. The
beneficial user shall be held liable for
damages to the thing according to the
principles of non-contractual liability. The
holder of beneficial interest shall not be
liable for reimbursing any regular
depreciation resulting from the use of
the property.
(2) The provisions relating to the
protection of ownership rights shall apply
to claims arising out of any infringement
of beneficial rights.
Chapter XXXI
Special Provisions Relating to
Beneficial Interest in Rights and
Receivables
269
Section 5:156
[Beneficial interest in rights]
(1) Concerning the beneficial
ownership of profit-yielding rights and
receivables, the provisions pertaining to
the beneficial ownership of things shall
apply.
(2) A right or receivable encumbered
by beneficial interest may be canceled
or amended to the disadvantage of the
holder of beneficial interest through a
contract with effect to the beneficial right,
for which the consent of the holder of
beneficial interest is required.
Section 5:157
[Legal status of the beneficial user of a
right]
If beneficial interest is given in a right
for demanding the performance of a
service, the relationship between the
holder of beneficial interest and the
provider of the service shall be governed
by the rules pertaining to the party
acquiring the right, if transferred, and the
provider of the service.
Section 5:158
[Beneficial interest in receivables]
(1) The holder of beneficial interest in
receivables shall be entitled to enforce
the receivables and, if the creditor’s
waiver is required for maturity, to
exercise the creditor’s right to terminate.
If the receivables are collected by the
beneficial user, he shall be held liable for
the enforcement of the receivables in
respect of the creditor according to the
principles of non-contractual liability.
Other acts of the holder of beneficial
interest relating to the receivables shall
be null and void.
(2) Upon the debtor’s performance the
holder of the receivables shall acquire
the object of the service, with the proviso
that the holder of beneficial interest is
given beneficial rights at the time of
performance.
Chapter XXXII
Use Rights
Section 5:159
[Use rights]
(1) Persons entitled to beneficial use
may use a thing and collect its proceeds
up to an extent not exceeding his own
needs and those of his relatives living in
the same household. Legal persons
shall be entitled to use the thing arising
from their right of use, and to enjoy its
benefits in accordance with its purpose
and activities set out in the instrument of
constitution. The exercise of the right of
beneficial use may not be assigned to
others.
(2) In respect of other issues, the
provisions on beneficial ownership shall
be applied regarding the right of use.
TITLE IX
RIGHTS OF ACCESS AND USE
FOR PUBLIC PURPOSES
Chapter XXXIII
270
Easement
Section 5:160
[Definition of easement]
(1) Easement may be granted to and
held by the possessor of a real estate
property on another person’s real estate
property to use such property to a
specific extent for right-of-way, or for the
installation of water lines or water
conduits, basement, poles for aerial
lines, building abutment, or for other
similar purposes to the benefit of the
dominant tenement, or to demand the
holder of the servient tenement to refrain
from otherwise rightful conduct
proceeding from his entitlement.
(2) If a piece of land is not connected
to a suitable public road, neighbors shall
tolerate the holder of dominant tenement
to pass through their land.
Section 5:161
[Express easement and easement by
prescription]
(1) The provisions on the
establishment of beneficial ownership of
real estate property shall apply to an
easement created by agreement.
(2) Easement may also be created by
the owner of a real estate property to his
own benefit by a unilateral statement.
(3) The holder of a real estate property
shall obtain easement by prescription if
the holder of the other real estate
property has not protested against its
use for fifteen years. The exercise of a
right allowed as a favor or for a specific
time period shall not lead to prescription.
(4) Easement per se shall not be
subject to transfer.
Section 5:162
[Exercise of easement]
(1) Exercising easement shall not
result in unnecessary harm to the rights
of others, particularly the servient
tenement.
(2) If the grant of easement also
involves the use of any equipment or
instruments, the costs of maintenance
shall, unless otherwise agreed, be borne
by the dominant and the servient
tenement in the proportion to their
respective use of the equipment or
instruments.
Section 5:163
[Extinguishment of easement]
(1) The court shall be entitled to
terminate, restrict or suspend easement
if it is no longer required for the proper
use of the real property of the holder of
dominant tenement.
(2) Easement shall be terminated if the
holder of dominant tenement, despite his
ability to do so, has not exercised the
easement for a period of fifteen years or
if he has endured being prevented from
exercising it for the same period of time.
(3) Easement may be terminated by
way of a legal act upon the waiver of the
holder of dominant tenement addressed
to the holder of servient tenement in
writing, when the easement is removed
from the real estate register.
Chapter XXXIV
271
Use for Public Purposes
Section 5:164
[Right of use for public purposes]
(1) Public easement or other rights of
access may be imposed upon a real
estate property by decision of the
relevant authority in the public interest,
to the benefit of agencies authorized
under specific other legislation. For said
rights of use compensation shall be
provided as commensurate with the
degree of constraint.
(2) Damages resulting from public
easement shall be compensated
according to the provisions on
indemnification for prescription.
PART FOUR
REAL ESTATE REGISTER
TITLE X
THE REAL ESTATE REGISTER
AND THE PRINCIPLES OF
REGISTRATION
Section 5:165
[Real estate register]
The real estate register is an authentic
public register containing rights in real
estate properties and facts of
significance for legal purposes. The real
estate register contains the particulars of
real estate properties and the data
provided for in specific other legislation
of persons registered in the real estate
register.
Section 5:166
[Public access to the real estate
register]
(1) The real estate register is open to
the public.
(2) The general public shall have
unlimited access to title deeds and maps
on file in the real estate register - with
the exception of personal data under
special protection -, they may be
inspected, notes may be made and
certified copies and certificates may be
requested.
(3) The documents on file in proof of
entries and records made in the real
estate register, as well as applications
pending registration may be accessed within
the limits of approval and
sufficient proof of necessity - if the
requesting person is able to verify the
consent of the parties in respect of
whom the document contains any rights
or obligations, or that it is necessary for
the purpose of enforcing his legitimate
right or for discharging an obligation
conferred by law or administrative
decision.
(4) The section(s) of a document
based on which rights, facts and
updates are registered pertaining to a
portion of the real estate property which
is defined in kind may be reviewed
without restriction, also if the entry on
the title deed contains no reference to
the document in question alleging to
contain a definition of said part of real
estate.
272
Section 5:167
[Principle of documentation]
Rights and legally significant facts may
be registered and recorded, and data
may be updated in the real estate
register solely on the basis of documents
prescribed by law or binding resolutions
of authorities and court decisions.
Section 5:168
[Principle of registration]
(1) The creation, amendment and
termination of rights and entitlements
defined by law shall be considered
effective when recorded on the title deed
in the real estate register. Rights may be
registered in the real estate register if
their registration is permitted by the
relevant legislation.
(2) If an entry is recorded on the basis
of a deed of subrogation it shall signify
ownership based on transfer, and if an
entry is recorded on the basis of a deed
on creating rights it shall signify asset
management right, land use right,
beneficial ownership and the right of
use, easement and mortgage based on
contract.
(3) Failure of registration of legally
significant facts defined by law, and
rights contrived by operation of law shall
have no impact on the legal effect of
such rights.
(4) In the event of failure to register
rights and entitlements and legally
significant facts defined by law, the rightholder
of record may not enforce them
against a bona fide third party.
(5) The registration of rights and
entitlements and legally significant facts
defined by law shall restrain or render
conditional any future acquisition of
rights.
Section 5:169
[Principle of ranking]
The sequence of rights registered in
the real estate register for real estate
properties (hereinafter referred to as
„ranking”) shall be determined based on
the effective dates of such entries.
Section 5:170
[Authenticity of the real estate register]
Real estate registration records shall
be construed as authentic proof of
registered rights and recorded facts.
TITLE XI
AUTHENTICITY OF THE REAL
ESTATE REGISTER
Section 5:171
[Extent of authenticity of the real
estate register]
(1) If a right or a fact has been
registered or recorded in the real estate
register, lack of knowledge of such shall
not constitute an excuse under any
circumstances.
(2) The provisions of Subsection (1)
shall also apply in respect of
applications provisionally registered in
the real estate register to the fact and
subject of such pending procedures.
273
Section 5:172
[Bona fide person acquiring a right
relying on the real estate register]
(1) In determining the good faith of a
bona fide person, the existence of good
faith shall be examined at the time when
the application for registration of the
acquisition of a right in the real estate
register is submitted. If an agreement of
subrogation is concluded after the
effective date of registration, good faith
shall be determined relying on the date
of conclusion of the agreement.
(2) Any person acquiring some right, or
a person engaged in any conduct falling
under the presumption of good faith
shall not be considered to have acted in
good faith, if at the time of acquisition or
when the act was carried out he knew or
should have known that the relevant
data in the real estate register was
incorrect, or that the rights of the person
shown in the real estate register as the
holder of some right were restricted.
(3) A person acquiring some right shall
not be allowed to allege his good faith in
respect of a person who claims to have
acquired title based on a right or fact to
be registered or recorded, where the
registration or recording of such right or
fact in the real estate register is pending
and this is shown in the real estate
register as provisionally registered at the
time applicable for the purpose of
determining good faith, if registration or
recording is in fact carried out based on
the application for registration or
recording.
Section 5:173
[Completeness of the real estate
register]
(1) On the basis of rights registered
and facts recorded in the real estate
register, it is to be presumed that such
registered rights and recorded facts
pertain, until proven otherwise, to the
rightholder thereof.
(2) Unless proven to the contrary,
rights or facts deleted from the real
estate register shall be presumed not to
exist.
Section 5:174
[Protection of ownership acquired in
good faith and for consideration]
(1) Rights registered in the real estate
register to the benefit of a party acting in
good faith and for consideration shall be
deemed as true even if it deviates from
the actual substantive legal status. On
that basis, the acquiring party shall enjoy
protection afforded under this Act.
(2) A bona fide person may not rely on
the protection referred to in Subsection
(1) with regard to any person who has
brought action against him for having an
entry deleted from the real estate
register or for the annulment of a
transaction underlying an application
shown in the real estate register as
provisionally registered or for declaring
the prescription of such request. The
same applies if the action for
cancellation or for correction had been
recorded in the real estate register
before the application was submitted.
Section 5:175
274
[Legal status of persons acquiring nonregistered
rights]
(1) A person acquiring some right that
is not entered in the real estate register
or the beneficiary of a fact that can be
recorded in the real estate register may
not enforce such right or fact against a
party acting in good faith who is
registered in the real estate register or
who enjoys priority with respect to the
application for registration before such
person.
(2) A right that is not registered and a
fact that is not recorded in the real
estate register may not be enforced
against a party who acquired such right
in good faith and for consideration, or
against a bona fide person who enjoys
priority with respect to the application for
registration. Protection afforded to a
bona fide person shall not cover the
case where pending legal status is
recorded in the real estate register.
Section 5:176
[Extension of the scope of entries
made in the real estate register]
The provisions on the scope of entries
made in the real estate register, and on
the protection of persons acting in good
faith and for consideration shall also
apply where a service is provided under
a right registered in the real estate
register to the holder of such right.
Section 5:177
[Applicability of real estate register
data]
(1) In regulatory proceedings related to
real estate properties, the data shown in
the real estate register and the
boundaries indicated in the realty map
shall be construed as authoritative.
(2) If a party claims that data in the
real estate register are incorrect or
untrue, the burden of proof lies with that
party.
(3) If the size of a real estate property
indicated in the real estate register
differs from the size to be determined in
accordance with the relevant legislation
on the basis of the boundaries marked in
the realty map, the latter shall be
applied.
TITLE XII
REGISTRATION, RECORDING.
HIERARCHY AND RANKING
Section 5:178
[Registration]
(1) Upon registration of the acquisition
of a right or any change therein and the
termination thereof, as well as the
enforceability of the right shall take
effect directly, if other conditions of
subrogation are satisfied.
(2) Registration in the real estate
register may be carried out if the
grounds for subrogation are verified, and
the registered holder of the right
subrogated consented. A right may be
deleted with the holder’s consent. The
provisions pertaining to the conclusion
and validity of contracts shall also apply
to the consented registration and
deletion of rights.
275
(3) Registration may be made also on
the basis of a court ruling or
administrative decision.
(4) Registration shall take effect
retroactively to the date of submission of
the application for registration.
(5) If the acquisition of ownership of a
real estate property, or the acquisition,
transfer or encumbrance of a right to a
real estate property is subject to
registration in the real estate register,
subrogation shall take effect upon
registration in the real estate register,
according to the contents of registration.
(6) If the termination of ownership of or
a right to a real estate property is subject
to registration in the real estate register,
the right shall cease upon the
registration of its deletion in the real
estate register, according to the contents
of registration.
(7) If, following registration, the rights
to and ownership of a real estate
property are held by the same person,
the rights to the real estate property
shall remain in effect with respect to
other rightholders ranked lower.
Section 5:179
[Recording]
(1) Recording means the indication in
the real estate register of facts
pertaining to rights registered in the real
estate register.
(2) Only facts defined by law may be
recorded in the real estate register.
(3) Recording shall take effect
retroactively to the date of submission of
the application on the basis of which
recording was ordered.
Section 5:180
[Hierarchy and ranking]
(1) A ranking may be established
solely on the basis of an application for
which a document serving as grounds
for the registration has been attached.
(2) Rights registered and entering into
effect at the same time shall have the
same ranking.
(3) The sequence of ranking of
applications received at the same time,
and the order in which registered entries
and records are scheduled to take effect
shall be determined by the dates of the
documents underlying registration, or on
the date when the document was drawn
up, or when countersigned if
countersigning is required for registration
relying on that document.
(4) The ranking of applications may be
modified with the consent of all parties
concerned. Any change in ranking shall
be considered effective upon registration
or recording of the new ranking in the
real estate register.
(5) Disposition over the rankings of
entries of record may not cause any
injury to the rights of a third party which
are registered at the time of modification
of such ranking.
(6) A right moved to a higher ranking
shall retain its ranking so acquired even
if the right moved backward is
terminated, or if the claim secured by
mortgage expires.
Section 5:181
[Changes in the scope of a right]
276
The provisions on the acquisition and
termination of rights in real estate
properties shall also apply to changes
made in the contents of rights in real
estate properties.
TITLE XIII
CORRECTION OF ENTRIES IN
THE REAL ESTATE REGISTER;
ACTION FOR CANCELLATION
AND FOR CORRECTION;
LEGAL PROTECTION
Section 5:182
[Correction of entries in the real estate
register]
(1) If an entry in the real estate register
does not coincide with what is contained
in the document on the basis of which it
was registered or recorded, that entry
shall be corrected.
(2) Correction shall be carried out
either by deleting the incorrect entry or
record, or by revising the incorrect entry
or record in the real estate register.
Section 5:183
[Deletion of an entry]
An entry or record in the real estate
register shall be deleted if the
transaction on which the entry or record
is based has been abolished or if the
entry or record subsequently becomes
inappropriate.
Section 5:184
[Cancellation and correction requests]
(1) The rightholder’s entitlement to
request cancellation and correction shall
not lapse in respect of any person
acquiring ownership of the real estate
property or a right related to the real
estate property.
(2) An action for the cancellation of an
invalid entry may be brought against a
person who has gained some right or
was released from some liability in direct
consequence of such entry within the
period during which the invalidity of the
legal statement substantiating said entry
may be established.
Section 5:185
[Obligation of registration]
If an entry in the real estate register
may be corrected on condition that the
right of another person be registered
previously, the rightholder may demand
from that person to have his right
registered in the real estate register.
Section 5:186
[Correction of an entry]
(1) The authority maintaining the real
estate register shall make corrections
within its own initiative concerning any
errors in names, numbers or
calculations, any other typing errors and
erroneous descriptions in entries or
records. The authority maintaining the
real estate register shall supplement its
resolution if it failed to provide for any
part of the application for registration or
recording or of the underlying document,
and also if the entry or recording is
incomplete as compared to the
277
information furnished in the document or
in the application.
(2) If there is information in the real
estate register to conclude that a bona
fide third party has obtained some right
for consideration during the proceedings
concerning the real estate property, and
that a correction or revision would
infringe the right of such third party, a
correction or revision concerning a right
or fact may only be executed with the
consent of the third party concerned.
Section 5:187
[Protective effect of the real estate
register]
A person holding some right under
substantive law, or who is expected to
obtain some right upon the cancellation
of an entry may bring action for
cancellation against a third party who
acquired some right in good faith for
consideration based on an unlawful
entry or an entry that became incorrect
subsequently, relying on the
completeness and the probity of such
entry, within six months from the date of
delivery of the resolution on the
originally invalid entry in the case of the
person holding some right under
substantive law, or, in the case of the
person becoming entitled as a result of
deletion, within six months from the date
of delivery of the resolution on the
registration of acquisition made on the
basis of an entry that became incorrect
subsequently, if the resolution was
delivered to him. If delivery did not take
place, the action for cancellation may be
brought within a period of three years
from the effective date of the entry.
These time limits shall apply with
prejudice.
BOOK SIX
LAW OF OBLIGATIONS
PART ONE
COMMON PROVISIONS
RELATING TO OBLIGATIONS
TITLE I
GENERAL PROVISIONS
Chapter I
Obligation
Section 6:1
[Obligation]
(1) An obligation means a commitment
to perform a service and an entitlement
to demand performance of a service.
(2) An obligation may pertain to the
provision of some thing, an activity,
abstaining from an activity, or some
other conduct.
(3) The parties may depart from the
common provisions relating to the right
and obligations of the parties upon
mutual consent, provided it is not
prohibited by this Act.
Section 6:2
278
[Facts establishing obligations]
(1) Obligations may originate from
contracts, torts, any infringement of
personality rights, rights in rem and other
rights, from unilateral acts, securities,
unjust enrichment, negotiorum gestio
and from implicit conduct.
(2) Obligations shall be considered to
arise from unilateral acts in cases
provided for by law. The common
provisions on obligations and the
general provisions on contracts shall
apply to such obligations.
(3) Obligations may be constituted by
virtue of statutory provision, court ruling
or administrative decision, if so ordered
by such statutory provision, court ruling
or administrative decision, and if the
obligor, the obligee, and the service are
accurately specified. The common
provisions on obligations and the
general provisions on contracts shall
apply to such obligations.
Section 6:3
[Termination of obligations]
An obligation shall terminate:
a) upon performance of the service;
b) if the same person becomes the
obligor and the obligee, unless this Act
provides otherwise;
c) upon death or dissolution of the
obligor without succession, if it concerns
a service that can be performed
personally;
d) upon death or dissolution of the
obligee without succession, if the service
is to be performed specifically for the
obligee by virtue of its very nature;
e) upon the parties’ agreement for the
termination of the obligation;
f) on other grounds provided for by
law, court ruling or administrative
decision.
Chapter II
Legal Statements
Section 6:4
[Legal statements]
(1) A legal statement is a unilateral act
intended to have legal effect.
(2) A legal statement can be made
orally, in writing or by implicit conduct.
(3) If a party makes a legal statement
by way of implicit conduct, the legal
statement shall be considered made
when the implicit conduct is performed.
(4) Silence or inactivity shall be
construed as a legal statement where
expressly provided for by the parties.
Section 6:5
[Effect of legal statements]
(1) Any legal statement made between
persons who are present shall come into
existence immediately. A legal statement
shall be considered made between
persons who are present if the
addressee becomes aware of the
contents of the legal statement at the
time when made.
(2) A distance legal statement shall
come into existence when delivered to
the addressee.
279
(3) A legal statement made by implicit
conduct shall come into existence when
communicated to the addressee.
(4) A non-assigned legal statement
shall come into existence when made.
Section 6:6
[Formality requirements for legal
statements]
(1) If a legal statement has to be made
in a specific form determined by law or
by agreement of the parties, the legal
statement shall be considered valid only
if made in that form.
(2) If a legal statement is considered
valid only if made in a specific form, it
shall be amended, confirmed, withdrawn
and challenged, and the amendment
and termination of any legal relationship
entered into under such legal statement
shall be made in that form as well.
Section 6:7
[Legal statements executed in writing]
(1) If a legal statement is to be made
in writing, it shall be considered valid if at
least the key points thereof are executed
in writing.
(2) Unless otherwise provided for in
this Act, a legal statement shall be
construed to have been made in writing
if the person making the statement has
signed the legal statement.
(3) A legal statement shall be
construed to have been made in writing
if executed in a form with facilities for
retrieving the information contained in
the legal statement unaltered, and for
identifying the person making the legal
statement and the time when it was
made.
(4) A written legal statement made by
a person who is illiterate or incapable of
writing shall be considered valid if
executed in an authentic instrument or
private deed representing conclusive
evidence, where the signature or initial
of that person is verified by a court or
notary public, or countersigned by a
lawyer or witnessed by two witnesses to
verify that the person making the
statement signed or initialed the
document that was drafted by another
person before them, or acknowledged
the signature or initial on the documents
as his own. If the issuer of a document
containing his statement cannot read, or
he does not understand the language in
which the document is made out, the
written legal statement shall be
considered valid only if the document
contains any evidence to suggest that
the issuer was educated as to its
contents by either of the witnesses or
the counter-signatory.
Section 6:8
[Interpretation of legal statements]
(1) In the event of a dispute, the
parties shall, in light of the presumed
intent of the person issuing the legal
statement and the circumstances of the
case, construe statements in
accordance with the generally accepted
meaning of the words.
(2) In the event of a dispute, the
parties shall, in light of the presumed
intent of the person issuing the nonassigned
legal statement and the
280
circumstances of the case, construe
statements in accordance with the
generally accepted meaning of the
words.
(3) Any waiver of a right in part or in
full shall be considered valid if made by
express legal statement. Should a
person waive his rights in part or in full,
such a legal statement shall not be
broadly construed.
Section 6:9
[Application of the provisions
pertaining to contracts]
Unless otherwise provided for in this
Act, the general provisions on contracts
shall also apply to the effect, nullity and
invalidity of legal statements.
Section 6:10
[Application of the provisions
pertaining to legal statements]
Unless otherwise provided for in this
Act, the provisions on legal statements
shall also apply to legal statements not
pertaining to obligations.
Chapter III
Representation
1. General provisions on
representation
Section 6:11
[Representation]
(1) Unless otherwise provided for in
this Act, a legal statement can be made
through another person as well. A legal
statement made by a representative
shall entitle and bind the person
represented.
(2) Right of representation may be
granted pursuant to a statutory
provision, court ruling or administrative
decision, or on the basis of an
instrument of constitution or a power of
attorney.
Section 6:12
[Limited power of representation]
Limiting the rights of an authorized
representative shall be null and void in
dealing with third parties, unless this Act
contains provisions to the contrary.
Section 6:13
[Conflict of interest]
(1) If there exists any conflict of
interest between the representative and
his principal, the principal shall have the
right to challenge a legal statement
made by the representative.
(2) Conflict of interest shall be
presumed if the representative is the
opposing party, or represents the
opposing party.
(3) The principal shall not be allowed
to challenge the legal statement if he
was aware of the conflict of interest
when the right of representation was
granted.
Section 6:14
[Misrepresentation]
(1) When a person makes a legal
statement in the name of another
281
without authorization or by overstepping
his authorization, the statement shall
invoke any legal effect upon the
principal’s consent.
(2) If the principal refuses to approve
the legal statement made in his name, a
bona fide false representative shall be
liable for damages caused to third
parties through making the statement,
whereas a mala fide false representative
shall be liable for the losses of third
parties in full.
2. Ad hoc representation
Section 6:15
[Power of attorney]
(1) A power of attorney is a unilateral
act granting the right of representation.
The power of attorney shall be
addressed to the agent, the competent
authority or court, or any person to
whom the agent is authorized to make a
legal statement.
(2) A power of attorney shall be
subject to formal requirements as
prescribed by law for making legal
statements on the basis of a power of
attorney.
(3) The power of attorney shall remain
valid until further notice.
(4) Any waiver of the right to limit or
withdraw the power of attorney shall be
null and void. Restriction or withdrawal
of the power of attorney in terms of a
third person shall be effective only if he
was aware or should have been aware
thereof.
(5) A power of attorney may be
granted to a person of limited legal
capacity or a person of partially limited
legal capacity to represent a competent
person.
Section 6:16
[General power of attorney]
A power of attorney granted for
unspecified cases shall be considered
valid if executed in a private deed
representing conclusive evidence or in
an authentic instrument. A general
power of attorney granted for an
indefinite period or for a period of more
than five years shall be abolished after
five years.
Section 6:17
[Scope of representation]
The power of representation shall
extend to all acts and legal statements
which are deemed required to achieve
the goal for which the mandate was
granted.
3. Specific cases of representation
Section 6:18
[Presumed and appearance-based
representation]
(1) In commercial establishments and
in publicly accessible places any person
who is presumed under reasonable
grounds to be authorized to make
pertinent legal statements shall be
construed as a representative.
Restrictions on the scope of authority of
a representative shall be inoperative
towards third persons, unless the third
282
person has been aware of such
restrictions.
(2) Any person who - relying on his
conduct and on the acts of the principal is
presumed under reasonable grounds
to be authorized to make legal
statements on behalf of the principal
shall be construed as a representative.
Section 6:19
[Representation of persons who are
unable to conduct their affairs]
(1) Upon request, the guardian
authority shall appoint a conservator for
a person who is unable to conduct his
affairs. The appointment of a
conservator may be requested by either
of the parties affected or by any
authority, and one may be appointed ex
officio.
(2) The appointment of a conservator
shall not affect the legal competency of
the person in the custody of a
conservator.
(3) The conservator shall manage the
assets of the person in his custody.
Furthermore, the conservator of an
absentee may take any measure, with
the prior consent of the guardian
authority, in order to protect the person
in his custody from losses. No approval
by the guardian authority shall be
required for imminently urgent
measures, however, the guardian
authority shall be notified thereof as
soon as possible.
Section 6:20
[Ad hoc conservatorship and ad hoc
guardianship]
(1) The guardian authority shall
appoint an ad hoc conservator if, owing
to a conflicting interest or physical
obstacle, the conservator is not able to
proceed pursuant to the relevant
legislation or the guardian authority’s
orders.
(2) An ad hoc conservator shall also
be appointed if:
a) measures are urgently required and
the person who is incompetent or a
person of legal age with partially limited
legal capacity has no legal
representative, or if the identity of the
legal 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) The ad hoc conservator shall act
with the same authority as the
conservator.
(4) The authority of a conservator shall
not apply to the affairs for which an ad
hoc conservator has been appointed.
(5) The guardian authority shall
appoint a caretaker officer in the cases
provided for in Subsections (1) and (2)
when representation for minor has to be
provided for. The provisions on ad hoc
conservators shall also apply to
caretaker officers.
Chapter IV
Statute of Limitations
Section 6:21
283
[Legal effects of the passage of time]
A statutory time limit for the exercise of
a right or for the enforcement of a claim
shall be considered forfeited upon the
expire of said time limit if so ordered by
the relevant legislation expressly. If the
time limit is not preclusive, the provisions
on statute of limitations shall apply.
Section 6:22
[Statute of limitations]
(1) Unless otherwise provided for in
this Act, claims shall lapse after five
years.
(2) The period of limitation commences
upon the due date of the claim.
(3) An agreement for changing the
limitation period shall be executed in
writing.
(4) Any agreement excluding
prescription shall be null and void.
Section 6:23
[Legal effects of prescription]
(1) Unless otherwise provided for in
this Act, expired claims may not be
enforced in court.
(2) Prescription shall be without
prejudice to the obligor’s obligation to
perform the service; a service provided
on the basis of an expired claim may not
be recovered on the grounds that the
claim had already expired.
(3) If the principal claim lapses, all of
the collateral claims pending shall also
lapse. The principal claim shall not be
affected when collateral claims lapse.
(4) Prescription may not be taken into
consideration ex officio in court or
administrative proceedings.
Section 6:24
[Suspension of prescription]
(1) If the obligee is unable to enforce a
claim for an excusable reason,
prescription shall be suspended.
(2) If prescription is suspended, 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.
(3) During the period mentioned in
Subsection (2) prescription may not be
suspended, and the provisions on the
interruption of the prescription period
may be applied with the proviso that the
period of limitation of one year or less, or
three months if the period of limitation is
less than one year, shall restart after the
interruption.
Section 6:25
[Interrupting the prescription period]
(1) The prescription period shall be
interrupted:
a) if the debt is acknowledged by the
obligor;
b) if the obligation is modified by
agreement, and also upon composition;
c) if an action was brought against the
obligor to enforce the claim, and the
court has adopted a final and binding
decision in conclusion of the
proceedings; or
d) if the claim was notified in
bankruptcy proceedings.
284
(2) The prescription period shall
recommence after interruption or
following the final conclusion of the
proceedings on interruption.
(3) If a writ of enforcement is issued in
the course of proceedings on the
interruption of the prescription period,
the prescription period shall be
interrupted upon the modification of the
obligation by agreement and by the acts
of enforcement.
Chapter V
Acknowledgment of Debt.
Composition
Section 6:26
[Acknowledgment of debt]
The obligor’s acknowledgment of his
debt shall not change the legal title of a
debt, however, the burden of proof lies
with the person making the
acknowledgment to demonstrate that he
had no debt at the time of the statement
of acknowledgment, or the debt was for
a lower amount, or that it was based on
a claim that cannot be judicially
enforced, or on an invalid contract.
Section 6:27
[Composition]
(1) The parties may settle any
disputed or indeterminate issues arising
from an obligation by reaching an
agreement for making mutual
concessions, or if either party makes a
concession.
(2) The composition shall not be
affected by any misapprehension of the
parties regarding a circumstance that
was disputed or deemed indeterminate.
TITLE II
MULTI-PARTY OBLIGATIONS
Chapter VI
Multiple Liability in an Obligation
Section 6:28
[Shared liability]
(1) Unless otherwise provided for in
this Act, if a divisible service is to be
supplied by more than one obligor, the
obligee may demand from each obligor
to perform his share of the obligation.
Where there is any doubt, the obligors
are required to perform the service in
equal proportions.
(2) A service shall be construed
divisible, if it can be broken up into
independent sections, unless such
division is likely to harm the relevant
lawful interests of the obligee.
Section 6:29
[Joint and several liability]
(1) If an indivisible service is to be
supplied by more than one obligor,
performance can be demanded from
either of the obligors. Liability shall be
joint and several also if a divisible
service is to be supplied by more than
one obligor, where the obligee is entitled
285
to demand performance from either of
the obligors.
(2) In the case of joint and several
liability, each obligor owes the entire
service; however, should any of them
perform the obligation, the obligation of
the other obligors towards the obligee
shall also cease to exist up to the extent
of performance. The obligors shall also
be liable for each other’s breach of
contract.
(3) The obligor may challenge the
obligee’s claim, alleging the complaint of
the other obligors relating to the
satisfaction of the obligee; however, he
shall not be entitled to offset the other
obligor’s claims.
(4) Default of an obligee towards one
of the obligors shall stand in respect to
all obligors.
(5) The prescription of the claim in
respect of either obligor shall have no
effect on the other obligors.
Section 6:30
[Relationship of persons under joint
and several liability]
(1) Persons under joint and several
liability shall bear obligations in equal
shares, unless their relationship implies
otherwise. If the obligor has performed a
service for the obligee that exceeds his
obligation, he shall have the right to
demand compensation for the excess
service he has provided from the other
obligors up to the value of their share of
the obligation.
(2) The obligor may not refer to an
advantage against the other obligors
that he has received from the obligee.
(3) The obligor against whom the claim
of the obligee lapsed, may refer to such
prescription with respect to the other
obligors as well.
Chapter VII
Joint Obligees in an Obligation
Section 6:31
[Joint obligees of a divisible service]
If more than one person lays claim to a
divisible service, each obligee shall be
entitled to claim his share. Where there
is any doubt, the obligees are entitled to
demand the service in equal proportions.
Section 6:32
[Collectivity of obligees]
If several persons are entitled to
demand an indivisible service, it shall be
performed into the hands of all of them.
Section 6:33
[Joint and several obligees]
(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, 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 either obligee, or by a legal
statement that is a condition of
enforcement of a claim or performance
of a service.
(3) A claim shall not lapse in respect of
any of the obligees insofar as the
286
conditions for prescription have
materialized in respect of all of them.
(4) If any of the obligees brings action
regarding performance, the obligor may
refuse performance to the other
obligees, without being exempted
thereby from the legal consequences of
default, until the final conclusion of the
action.
(5) Obligees shall be entitled to equal
shares of a claim, unless their
relationship suggests otherwise.
TITLE III
SETTLEMENT OF AN
OBLIGATION
Chapter VIII
General Provisions
Section 6:34
[General rules of performance]
A service shall be performed
according to the contents of the
obligation.
Section 6:35
[Time of performance]
(1) The time of performance may be
determined by setting a delivery date or
delivery period. If the delivery date is set,
the service shall be performed on that
date. In the case of a delivery period, the
service may be performed any time
during that period, except if the
circumstances of the case suggest that
the obligee is allowed to choose the
delivery date.
(2) If the delivery date can be
determined based on the intended
purpose of the service, the service shall
be performed on that date.
(3) If the delivery date cannot be
determined as under Subsections (1)(2),
the obligor shall effect performance
after the preparation time necessary for
performance.
Section 6:36
[Early settlement]
(1) The obligee shall accept
performance offered before the delivery
date, if that does not harm his relevant
lawful interests, and if the obligor covers
the extra costs which it entails.
(2) If performance is accepted before
the delivery date, that shall not affect the
other party’s services in terms of delivery
times.
Section 6:37
[Place of performance]
(1) Unless otherwise provided for in
this Act, the place of performance of the
service shall be the obligor’s place of
business at the time when the obligation
was constituted, or, failing this the
obligor’s registered office or the home
address or, failing this, habitual
residence in the case of natural persons.
(2) If the obligor has more than one
place of business, the one that has the
closest relationship to the obligation
shall be construed as the place of
performance.
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(3) If the place of performance
changes after the constitution of the
obligation, and the obligor notifies the
obligee thereof, the place of
performance shall be the new place of
business or registered office, or the new
home address or habitual residence in
the case of natural persons. The extra
expenses incurred in connection with
changing the place of performance shall
be advanced and borne by the obligor.
Section 6:38
[Acknowledgement of performance]
(1) The obligee shall be required to
provide a written acknowledgement of
performance at the obligor’s request, or
to return the promissory note.
(2) A person presenting the statement
of acknowledgement of the obligee shall
be construed as a person authorized to
accept performance, unless the relevant
circumstances suggest that such person
has no entitlement to accept
performance.
Section 6:39
[Costs of performance]
The costs arising out of or in
connection with performance shall be
borne by the obligor.
Section 6:40
[Distribution of specific services]
(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.
Section 6:41
[Settlement in the case of several
debts]
(1) If an obligor owes several
analogous services to an obligee and
the performance he has offered does not
cover all of his debts, the obligor shall be
entitled to designate, at the time of
performance, the debt to which he
wishes to apply such performance.
(2) If the obligor did not provide for the
settlement of debts, and his intentions
are not clearly discernible, the other
party shall be entitled to decide which
one of the overdue and uncontested
debts the performance shall be applied
to. The obligee shall inform the obligor of
his choice in due time.
(3) If neither party has issued any
instructions, or the obligee has not
informed the obligor of his choice, the
performance shall be applied to the debt
that expired earlier, or in the case of
debts of the same maturity, to the one
that has less security attached, or if the
debts are secured equally, to the one
that is more burdensome for the obligor.
(4) If performance cannot be settled as
under Subsection (3), it shall be applied
to all debts as commensurate.
Chapter IX
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Settlement of Monetary Debts
Section 6:42
[Payment]
(1) A monetary debt may be settled by
way of transferring ownership of money
to the creditor or by way of deposit or
credit transfer to the creditor’s payment
account.
(2) A monetary debt shall be
considered settled at the time of taking
delivery if paid in cash, or at the time
when the creditor’s payment service
provider credited, or should have
credited, the funds to the creditor’s
payment account.
(3) These provisions shall also apply to
the performance of any other obligation
that involves the delivery of money.
Section 6:43
[Early settlement of a monetary debt]
The creditor shall accept early
settlement of the debt before the due
date.
Section 6:44
[Place of settlement of monetary
debts]
(1) The place of settlement of a
monetary debt shall be the creditor’s
place of business at the time when the
obligation was constituted, or, failing this
the creditor’s registered office or the
home address or, failing this, habitual
residence in the case of natural persons.
If the debtor settles the monetary debt
by means other than cash payment, the
place of settlement of the monetary debt
shall be the place of business of the
creditor’s payment service provider at
the time when the obligation was
constituted, or, failing this, the bank’s
registered address. If at the time when
the obligation was constituted the
creditor had more than one payment
account, the debtor shall have the right
to choose the place of settlement.
(2) If the creditor has more than one
place of business, the one that has the
closest relationship to the obligation
shall be construed as the place of
settlement.
(3) If the place of settlement has
changed after the constitution of the
cash debt, and the creditor notifies the
debtor thereof, the place of settlement
shall be the new place of business or
registered office, or the new home
address or habitual residence in the
case of natural persons.
(4) The extra expenses incurred in
connection with changing the place of
settlement shall be advanced and borne
by the creditor.
Section 6:45
[Terms of payment of monetary debts]
(1) A monetary debt shall be settled in
the legal tender at the place and time of
settlement.
(2) If the monetary debt is recorded in
another currency, it shall be converted at
the exchange rate specified by the
central bank of the place of settlement in
effect at the time of settlement, or failing
this, based on the money market rate. If
a monetary debt is to be repaid in a
foreign currency, and at the time of
289
settlement the debt cannot be repaid in
that foreign currency, the monetary debt
shall be settled as under Subsection (1).
Section 6:46
[Settlement in the case of several
debts]
If the sum paid in settlement for a
monetary debt is insufficient to cover the
entire debt, the sum shall be used for
paying the costs first, then the interest,
and, finally, the principal debt, if the
creditor did not provide otherwise, and
his intentions are not clearly discernible.
Section 6:47
[Interest]
(1) Unless otherwise provided for in
this Act, monetary debts shall draw
interest.
(2) The interest rate shall be the same
as the central bank base rate.
(3) If the monetary debt is to be repaid
in a foreign currency, the interest rate
shall be the same as the base rate of the
issuing central bank, or failing this the
money market rate.
(4) For the purposes of calculating the
interest, the interest rate in effect on the
first day of the calendar half-year
affected shall apply to the entire period
of the given calendar half-year.
Section 6:48
[Interest on late payments]
(1) In respect of a monetary debt, the
debtor shall pay interest on late payment
from the time of default calculated by the
central bank base rate in effect on the
first day of the calendar half-year to
which it pertains, or - if the monetary
debt is to be satisfied in a foreign
currency, by the base rate of the issuing
central bank, or failing this, by the
money market rate -, even if the debt is
otherwise free of interest.
(2) If interest up to the date of default
is due to the creditor, the debtor shall
pay interest on late payment in addition
to the interest due, as of the date of
default at a rate of one-third of the
central bank base rate in effect on the
first day of the calendar half-year to
which it pertains, or - if the monetary
debt is to be satisfied in a foreign
currency, by one-third of the base rate of
the issuing central bank, or failing this,
one-third of the money market rate -, but
not less than the default interest
specified in Subsection (1) on the
aggregate.
(3) For the purposes of calculating the
interest, the central bank base rate in
effect on the first day of the calendar
half-year affected shall apply to the
entire period of the given calendar half-
year.
(4) The obligation to pay interest shall
be effective even if the obligor justifies
his default.
Chapter X
Set-off
Section 6:49
[Setting off pecuniary claims]
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(1) The debtor shall be entitled to
settle his debt also by way of setting off
his overdue pecuniary claim against his
monetary debt by means of a legal
statement made out to the creditor.
(2) Obligations shall cease to exist up
to the value of set-offs.
Section 6:50
[Limitations on setting of pecuniary
claims]
(1) Time barred pecuniary claims may
be also be offset if the pecuniary claim
to be offset had not yet expired at the
time when the monetary debt became
due.
(2) The same type of monetary debt
may be offset against a pecuniary claim
provided for by an enforcement order or
composition, of if executed in an
authentic instrument.
(3) Only monetary debts originating
from the same legal basis can be offset
against pecuniary claims which are
exempt from judicial enforcement.
Section 6:51
[Exclusion of set-offs]
(1) No set-off is permitted:
a) against claims for maintenance
payments and benefits, with the
exception of overpayments; and
b) against pecuniary claim for
compensation for willfully caused
damages.
(2) Any pecuniary claim that cannot be
enforced in court may not be offset.
Section 6:52
[Application of the provisions relating
to set-offs in connection with nonpecuniary
claims]
The provisions on set-offs shall apply
also if the debtor intends to offset, by
means of a legal statement made out to
the creditor, his analogous and overdue
pecuniary claim against his monetary
debt owed to the creditor.
Chapter XI
Specific Cases of Performance
1. Court deposit and notary escrow
Section 6:53
[Settlement by way of court deposit]
(1) The debtor may settle his
obligation to pay cash or deliver
securities or other documents by way of
court deposit if:
a) the identity of the creditor is
uncertain, and the debtor is unable to
ascertain the creditor’s identity through
no fault of his own;
b) the creditor cannot be found at the
place of settlement;
c) the creditor refuses to accept
performance offered by the debtor
proper; or
d) in the case of collectivity of
obligees, the creditors did not permit the
debtor to provide settlement into the
hands of all of them.
(2) The provisions on deposit contracts
shall also apply to the obligations of the
depositary.
Section 6:54
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[Recovery and statute of limitations]
(1) The debtor shall be entitled to
withdraw his deposit until the creditor is
notified by the court thereof.
(2) The creditor may demand delivery
of the deposit within a period of five
years from the date of receipt of notice
on the deposit.
(3) If the creditor’s right to access the
deposit expired, the debtor may demand
to have the deposit returned.
Section 6:55
[Delivery of the deposit]
(1) The court may release the deposit
to the creditor only.
(2) If the deposit was made claiming
that the identity of the creditor was
uncertain, the deposit may be released
on the basis of a binding decision
verifying the identity of the creditor.
(3) In the case of collectivity of
obligees, the court shall release the
deposit at the request of all creditors, or
on the basis of a binding decision
verifying the identity of the creditor.
(4) When making the deposit, the
debtor shall be entitled to stipulate that
the deposit can only be surrendered to
the creditor upon the acknowledgement
of his performance.
Section 6:56
[Notary escrow]
(1) If the conditions for settlement by
way of court deposit are satisfied, the
debtor may settle his debt also through a
notary escrow.
(2) The provision on court deposit shall
also apply to notary escrows.
2. Settlement by third parties
Section 6:57
[Settlement by third parties]
(1) The creditor shall also accept
settlement offered by a third party if the
debtor has given consent thereto and
the service is not bound to a specific
person, and if that does not require any
expertise or skill that is not possessed
by the third party. The debtor’s consent
shall not be required if the third party
has a relevant lawful interests in
settlement and the debtor failed to effect
settlement, or it is evident that the debtor
is unable to effect settlement in due
time.
(2) Unless otherwise suggested by the
nature of the relationship between the
debtor and the third party, the third party
shall have the right to demand
compensation from the debtor.
(3) If, as a result of the settlement of
the debt, a third party claim is generated
against the debtor, the guarantees of the
terminated claim shall remain in effect,
and shall be transferred to that new
claim. This provision shall also apply if
the claim is satisfied on the basis of a
lien or based on the guarantor’s liability.
PART TWO
GENERAL PROVISIONS ON
CONTRACTS
TITLE IV
292
CONTRACTS. FUNDAMENTAL
PRINCIPLES OF CONTRACTS
Section 6:58
[Contracts]
A contract is concluded upon the
mutual and congruent expression of the
parties’ agreement intended to give rise
to obligations to perform services and to
entitlements to demand services.
Section 6:59
[Freedom of contract]
(1) The parties are free to conclude a
contract and to choose the other party.
(2) The parties are free to determine
the contents of the contract. The parties
may depart from the provisions relating
to their rights and obligations with
mutual consent, unless prohibited by this
Act.
Section 6:60
[Contents subject to mandatory rules
of the relevant law]
(1) If certain content items of the
contract are prescribed mandatory by
law, the contract shall enter into effect
with such mandatory items included.
(2) If the contents of an existing
contract are to be amended pursuant to
a newly adopted legislation, and the
amended content of the contract is
against the relevant lawful interests of
any of the parties, the party so affected
shall be entitled to request the court to
amend the contract, or shall be entitled
to withdraw from the contract.
Section 6:61
[Presumption of reciprocity]
Unless the contract or the applicable
circumstances expressly indicate
otherwise, a consideration is due for
services set forth in the contract.
Section 6:62
[Duty to cooperate and communicate
information]
(1) The parties shall be required to
cooperate during preliminary
negotiations, at the time of the
conclusion and termination, and during
the life of the contract, and shall be duty
bound to communicate information to
each other on circumstances relevant to
the contract.
(2) The party may not allege the
infringement of the duty to provide
information with respect to rights, facts
and circumstances of which he was
aware, or should have known from a
public register or any other source.
(3) If the contract is concluded, the
party who breaches the obligations
referred to in Subsection (1) shall be
subject to liability for damages for loss
caused by non-performance of an
obligation to the other party.
(4) If conclusion of the contract fails,
the parties shall not be liable for
payment of compensation.
(5) If the contract is not concluded, the
party who breaches the obligation
referred to in Subsection (1) during
preliminary negotiations shall be subject
to liability for damages in accordance
293
with the general provisions of noncontractual
liability.
TITLE V
CONCLUSION AND
INTERPRETATION OF
CONTRACTS
Chapter XII
Entering into a Contract
Section 6:63
[Conclusion and contents of contracts]
(1) Contracts are concluded upon the
mutual and congruent expression of the
parties’ intent.
(2) It is fundamental to the validity of a
contract that an agreement is reached
by the parties concerning all essential
issues as well as those deemed relevant
by either of the parties. An agreement in
the issues which are deemed relevant
shall be required for the conclusion of
the contract if either party expressly
indicates that an agreement on such
issues is a precondition for the
conclusion of the contract.
(3) If the contract is concluded, but the
parties have not clearly defined the
amount of consideration, or if the market
price has been stipulated as the price,
the average price prevailing on the date
of performance in the market regarded
as the place of performance shall be
paid.
(4) The parties need not agree on
issues that are regulated by statutory
provisions.
(5) Under the contract the parties shall
be bound by any usage which they have
agreed on in prior business dealings and
by any practice they have established
between themselves. Furthermore, the
parties shall be bound by a usage which
would be considered generally
applicable and widely known in the given
sector by parties to similar contracts,
unless such usages and practices are
likely to conflict with contract terms
which have been previously negotiated
between the parties.
Section 6:64
[Binding period]
(1) Any person who makes a legal
statement clearly indicating his intention
to enter into a contract, showing also the
relevant issues, shall be bound by his
statement. The offeror may specify the
period for his offer to remain binding.
(2) The binding period shall commence
when the offer takes effect.
Section 6:65
[Termination of the binding period]
(1) If the offeror fails to specify the
period during which he is bound to keep
open his offer, the binding period shall
terminate:
a) when the offer is made between
persons present, if the other party fails to
accept the offer immediately;
b) in the case of distance contracts,
upon the expiry of the period of time
within which the person who made the
294
offer can normally 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;
c) if the offer is refused by the other
party.
(2) The binding period shall cease if
the offeror revokes the offer by means of
a legal statement addressed to the other
party, and the revocation reaches the
other party before the other party sends
an acceptance.
(3) An offer made in writing may be
revoked in writing.
(4) An offer may not be revoked after it
has entered into effect, if the offer
indicates that it is irrevocable or if the
offer states a fixed time period for its
acceptance.
Section 6:66
[Acceptance of an offer]
Any form of statement by the offeree is
an acceptance if it indicates assent to
the offer.
Section 6:67
[New offer, modified acceptance]
(1) The acceptance of a proposal with
contents that deviate from the vital
points of the offer shall be deemed a
new offer.
(2) The legal statement expressing
assent shall be considered acceptance
even if it contains additional or differing
conditions which do not afflict any
material issues. Said additional or
different terms shall become part of the
contract, unless:
a) the offer expressly limits acceptance
to the terms of the offer; or
b) the offeror objects to the additional
or different terms without undue delay.
(3) If the contract is concluded by
means other than in writing, and either
party executes the contract, without
delay, in writing after the conclusion of
the contract, with additional or different
contract terms which do not materially
alter the terms of the offer, and sends
this contract to the other party, these
terms shall become part of the contract if
the other party fails to object without
undue delay.
Section 6:68
[Late acceptance]
(1) If the statement of acceptance is
made with a delay, the contract shall not
enter into effect.
(2) Where a statement of acceptance
is made with a delay the contract is
considered concluded nonetheless if the
offeror forthwith notifies the offeree
thereof.
(3) Where a statement of acceptance
is sent in due time, but it reaches the
offeror late, the contract shall be
considered concluded if it shows that the
statement of acceptance has been sent
in such circumstances that if its
transmission had been normal it would
have reached the offeror in due time,
unless, without undue delay, the offeror
informs the offeree that the statement of
acceptance arrived late, and as such it is
not considered valid. In that case, the
contract is considered concluded when
the statement of acceptance would have
295
reached the offeror had it been sent
under normal circumstances.
Section 6:69
[Time and place of conclusion of the
contract]
(1) The contract is concluded when the
statement of acceptance becomes
effective.
(2) Where an offer is accepted at the
place where it was made, the place of
conclusion of the contract is the place
where the legal statements are made. In
other cases, the place of conclusion of
the contract is the offeror’s registered
office, or home address or, failing this,
habitual residence in the case of natural
persons.
Section 6:70
[Contracts executed in writing]
(1) If a contract is to be executed in
writing, the offer and the statement of
acceptance shall be made in writing as
well.
(2) A contract shall be construed to
have been made in writing even if not
executed in a single document that
contains the legal statements of all
parties, but the contracting parties’
mutual and congruent expression of
their intention is contained in separate
documents.
(3) A contract shall be construed to
have been made in writing also if it is
made out in several counterparts and
each party signs the one to be given to
the other party.
Chapter XIII
Obligation to Contract
Section 6:71
[Statutory obligation to contract]
(1) Where an obligation to contract is
prescribed by law, and the parties do not
conclude the contract, the court shall
have powers to establish the contract
and to define its terms.
(2) By disclosing the necessary details
and sending the necessary documents,
the obligee may request the person who
is subject to contracting obligation to
make an offer. The obligor shall present
his offer within thirty days following the
effective date of the request.
(3) If the request for an offer does not
contain the necessary details or
documents, the obligor shall request
these details and/or documents within
fifteen days following the effective date
of the request. In that case, the deadline
for presenting the offer shall commence
upon the provision of the missing details
and/or documents.
(4) Conclusion of the contract may be
refused if the obligor provides proof that
he is incapable of performing the
contract or there exists the right to
withdraw from or to terminate the
contract.
Section 6:72
[Breach of obligation to contract by
abusing a dominant position]
Where a party unjustifiably refuses to
conclude or maintain a contract by
abusing his dominant position, the other
party shall have the right to bring action
296
and request the court to establish the
contract between them under the
principle of statutory obligation to
contract.
Section 6:73
[Preliminary contract]
(1) If the parties agree to enter into a
contract at a later date, and they define
the material terms of that contract, the
court shall have powers to establish the
contract under such terms and
conditions at the request of either party.
(2) The preliminary contract shall be
concluded in the form stipulated for the
contract. The provisions pertaining to a
contract to be concluded on the basis of
an agreement in principle shall apply to
the preliminary contract.
(3) Either party shall be entitled to
refuse to conclude a contract if able to
evidence:
a) that performing the contract under
the same terms is likely to harm his
relevant lawful interests in consequence
of a circumstance that has occurred
since the conclusion of the preliminary
contract;
b) that the possibility of change in
circumstances could not have been
foreseen at the time of conclusion of the
preliminary contract;
c) that he did not cause the change of
circumstances; and
d) the change in circumstances cannot
be regarded as normal business risks.
Chapter XIV
Conclusion of Contract in a
Competitive Selection Process
Section 6:74
[Invitation to tender in competitive
selection process]
(1) Where a party publishes a contract
notice inviting several persons to submit
a proposal, where the contract is
awarded following a selection process
conducted under the criteria set out in
the notice to the offeror who made the
best offer, the party having published the
notice shall be subject to contracting
obligation.
(2) The party having published the
notice may refuse to conclude the
contract with the person making the best
offer under the conditions set out in the
notice if this right was expressly
stipulated in the notice.
(3) The party having published the
notice shall have the right to revoke the
notice before the deadline indicated
therein.
Section 6:75
[Binding period in competitive
selection process]
(1) The binding period shall
commence when the deadline indicated
in the notice expires. Offerors may
revise or withdraw their offers prior to the
expiration of that time limit.
(2) The offeror shall remain bound by
his offer for a period of thirty days
following the time indicated in the notice
for the contract award procedure.
297
(3) If the offeror provided any
guarantee with his offer, such guarantee
shall be considered forfeited in the event
that the offeror withdraws his offer within
the binding period; otherwise the
guarantee shall be refunded following
conclusion of the selection process.
Section 6:76
[Competitive selection process based
on price]
(1) If the competitive selection process
concerns the price only, and the offerors
make their proposals in full knowledge of
the price offered by others, the contract
shall be awarded to the successful
offeror and concluded at that price.
(2) The offer shall be considered
ineffective if another offeror offers a
better price, or if the competitive
selection process is concluded without
award.
Chapter XV
Conclusion of Contracts with
Standard Terms and Conditions
Section 6:77
[Standard contract terms]
(1) Standard contract terms means
contract terms which have been
unilaterally drafted in advance by one of
the parties for several transactions
involving different parties, and which
have not been individually negotiated by
the parties.
(2) Where either party claims that a
standard contract term has been
individually negotiated, the burden of
proof in this respect shall be incumbent
on the party applying the standard
contract term.
Section 6:78
[Standard contract terms becoming
part of the contract]
(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 other party for perusal before the
conclusion of the contract, and if the
other party has accepted those terms.
(2) The other party shall be explicitly
informed of any standard contract terms
that differs substantially from the
relevant legislation and from usual
contractual practice, except if they are in
line with any practice the parties have
established between themselves. The
other party shall be explicitly informed of
any standard contract terms that differs
substantially from any stipulations
previously applied by the same parties.
(3) The terms defined in Subsection
(2) shall form part of the contract only if
the other party has expressly accepted
them after being informed about them.
Section 6:79
[Terms allowing extra claims from
consumers to become part of the
contract]
Any term granting the right to the
business party to demand extra
payments in addition to the
consideration due for the fulfillment of
the primary commitment shall form part
298
of the contract only if the consumer has
expressly accepted it after having been
informed thereof.
Section 6:80
[Conflicting contract terms and
conditions]
If a standard contract term and
another condition of the contract differ
from one another, the latter shall be
integrated into the contract.
Section 6:81
[Conflicting standard contract terms]
(1) Where an offer made by reference
to standard contract terms is accepted
by the other party under his own
standard contract terms, and the
standard contract terms in question are
not conflicting, the standard contract
terms of both parties shall become part
of the contract.
(2) If the standard contract terms differ
from one another in issues of minor
importance, the contract is nonetheless
concluded, and the non-conflicting
standard contract terms shall become
part of the contract.
(3) If there is any difference among the
standard contract terms in the vital
points of the contract, the contract shall
not be concluded.
Chapter XVI
Special Provisions Relating to
Contracts Concluded by Electronic
Means
Section 6:82
[Information relating to contracts
concluded by electronic means]
(1) In connection with contracts
concluded by electronic means, the
party providing the electronic means for
concluding the contract shall, before
making a legal statement pertaining to
the contract, inform the other party of the
following matters:
a) technical steps to be taken in order
to conclude the contract;
b) whether or not the concluded
contract is considered made in writing,
whether or not it will be filed by the party
providing the electronic means and
whether it will be accessible;
c) the technical means for identifying
and correcting input errors made in the
course of electronic processing before
the other party makes the legal contract
statement;
d) the language offered for the
conclusion of the contract; and
e) if available, a code of conduct
relating to the service activity by which
the party providing the electronic means
has undertaken to be bound, and the
electronic address where it is accessible.
(2) The party providing the electronic
means shall make available his standard
contract terms in a way that allows the
other party to store and reproduce them.
Section 6:83
[Correcting input errors]
The party providing the electronic
means shall provide sufficient technical
means allowing the other party to
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identify and correct input errors made in
the course of electronic processing
before making his contract statement. In
the event of failure by the party providing
the electronic means to fulfill that
obligation, the other party shall have the
right to challenge the said contract
statement.
Section 6:84
[Electronic contract statements and
confirmation of such statements]
(1) A contract statement made by way
of electronic means shall be effective
when made accessible for the other
party.
(2) The party providing the electronic
means shall send confirmation of receipt
of the other party’s contract statement by
way of electronic means without delay.
The party shall be relieved from any
contractual commitment and may not be
required to perform the contract if
confirmation is not delivered to the other
party immediately.
Section 6:85
[Scope and cogency of provisions on
the conclusion of electronic contracts]
(1) The provisions of this Chapter shall
not apply to contracts concluded by
exchange of electronic mail or by
equivalent individual communications,
with the exception of the provisions on
the effect of contract statements made
by way of electronic means.
(2) In connection with a contract that
involves a consumer and a business
party any agreement derogating from
the provisions of this Chapter shall be
null and void.
Chapter XVII
Interpretation of Contracts
Section 6:86
[Interpretation of contracts]
(1) Contract terms and statements are
to be interpreted in accordance with the
contract as a whole.
(2) If the meaning of a standard
contract term or the contents of the
contract term which has not been
individually negotiated cannot be clearly
established by the application of the
provisions set out in Subsection (1) for
the interpretation of the legal statement,
the interpretation that is more favorable
to the party entering into a contract with
the person imposing such contract term
shall prevail. In connection with a
contract that involves a consumer and a
business party, this provision shall also
apply to the interpretation of any
contract term.
(3) Subsection (2) shall not apply to
actions brought in the public interest.
Section 6:87
[Merger clauses]
(1) Where a contract in writing
includes a term stating that the
document contains all contract terms
agreed upon by the parties, any prior
agreements which are not contained in
the document do not form part of the
contract.
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(2) Prior statements of the parties may
be used for the interpretation of the
contract.
TITLE VI
INVALIDITY
Chapter XVIII
Nullity and Avoidance
Section 6:88
[Nullity]
(1) Annulled contracts shall be
considered null and void as from their
conclusion. No special procedure is
required for the establishment of
invalidity; the court observes the nullity
of the contract of its own motion.
(2) If an annulled contract is in
conformity with the validity requirements
of another contract, this latter contract
shall be valid, unless that is in
contradiction with the presumed
intention of the parties.
(3) Unless otherwise provided for in
this Act, only a person who has a legal
interest therein or who is so authorized
by law may rely on the nullity of the
contract and may bring action in
connection with the nullity of the
contract.
(4) In the interest of having a violation
of public interest eliminated and with
regard to usurious contracts, the public
prosecutor may bring action for the
annulment of the contract or for invoking
the legal effects of nullity.
Section 6:89
[Avoidance]
(1) A contract which may be avoided
shall, in consequence of being avoided,
become invalid as of the date on which it
was concluded.
(2) The aggrieved party and persons
with a lawful interest in the avoidance of
a contract shall be entitled to do so.
(3) Avoidance may be effected by
notice to the other party given within a
period of one year from the date on
which it was concluded, or by legal
action brought in court. Avoidance may
be effected in court within a period of
one year by the party who sent notice to
the other party for the purpose of
avoidance, and if said avoidance has
been declined.
(4) 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.
(5) The right of avoidance shall be
suppressed if the party entitled to avoid
the contract confirms the contract or
otherwise waives his right to do so in full
knowledge of the grounds for avoidance,
after the expiration of the time limit for
avoidance.
1. Defects in consent
Section 6:90
[Mistake]
(1) A person acting under a
misapprehension regarding any material
circumstance at the time a contract is
301
concluded shall be entitled to contest his
contract statement if his mistake had
been caused or could have been
recognized by the other party. The
mistake shall be considered to impact a
material circumstance if the party, but for
the mistake, would not have concluded
the contract or would have done so only
on fundamentally different contract
terms.
(2) If the parties had the same
mistaken assumption regarding any
material circumstance at the time the
contract was concluded, either of them
may avoid the contract.
(3) The contract may not be avoided
by a party who knew or could be
expected to have known the mistake, or
if he assumed the risk of the mistake.
Section 6:91
[Misrepresentation and threat]
(1) A person who has been persuaded
to conclude a contract by
misrepresentation or fraud by the other
party shall be entitled to contest the
contract statement made as a
consequence of such misrepresentation.
(2) A person who has been persuaded
to conclude a contract by the other
party’s use of threat shall be entitled to
contest the contract statement.
(3) The provisions under Subsections
(1) and (2) shall also apply if
misrepresentation or threat was
committed by a third person and the
other party had or should have had
knowledge of such conduct.
Section 6:92
[Disguised stipulations, sham
contracts]
(1) Disguised stipulations and
concealed motives shall be immaterial
with regard to the validity of the contract.
(2) A sham contract shall be null and
void, and if such contract is intended to
disguise another contract, the rights and
obligations of the parties are to be
adjudged on the basis of the disguised
contract.
Section 6:93
[Defect in consent in connection with
gratuitous contracts]
A gratuitous contract may be
contested on the grounds of mistake,
mistaken assumption, or threat or
misrepresentation by a third person
even if these circumstances could not
have been recognized by the other
party.
2. Errors in contract statements
Section 6:94
[Remedying formal discrepancies]
(1) If a contract is annulled for any
breach of formal requirements, it shall
become valid by acceptance of
performance, up to the extent
performed. If the contract is to be
executed by law in an authentic
instrument or private deed representing
conclusive evidence, or if the contract
pertains to the transfer of a real estate
property, performance shall have no
bearing on the annulment invoked on
the grounds of infringement of statutory
formalities.
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(2) Any amendment to and termination
or cancellation of a contract made in the
absence of statutory formalities shall be
deemed valid, if the actual state
conforming thereto has been established
with the parties’ mutual consent. If the
contract is to be executed by law in an
authentic instrument or private deed
representing conclusive evidence, or if
the contract pertains to the transfer of a
real estate property, any amendment to
and termination or cancellation of a
contract made in the absence of
statutory formalities shall be null and
void, even if the actual state conforming
thereto has been established with the
parties’ mutual consent.
3. Defect in the intended legal
effects
Section 6:95
[Illegal contracts]
Any contract which is incompatible
with the law or that was concluded by
circumventing the law shall be null and
void, unless the relevant legislation
stipulates another legal consequence. If
the relevant legislation stipulates
another legal consequence in
connection with a contract, it shall be
null and void nonetheless where this is
specifically declared by law, or if the
purpose of the law is to prohibit the legal
effect pursued by the contract.
Section 6:96
[Immoral contracts]
A contract shall be null and void if it is
manifestly in contradiction to good
morals.
Section 6:97
[Usurious contracts]
If, by exploiting the other party’s
situation, a contracting party gains
excessive benefit or unfair advantage
when the contract is concluded, the
contract shall be considered null and
void.
Section 6:98
[Gross disparity in value]
(1) 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 making a gratuitous grant - is
grossly unfair, the injured party shall be
allowed to avoid the contract. The
contract shall not be avoided by the
party who knew or could be expected to
have known the gross disparity in value,
or if he assumed the risk thereof.
(2) The parties may exclude the right
of avoidance provided for in Subsection
(1), with the exception of contracts that
involve a consumer and a business
party.
Section 6:99
[Nullity of fiduciary collateral
arrangements]
Any clause on the transfer of
ownership, other right or claim for the
purpose of security of a pecuniary claim,
or on the right to purchase, with the
303
exception of the collateral arrangements
provided for in the directive on financial
collateral arrangements, shall be null
and void.
Section 6:100
[Unfair clause in consumer contracts]
Any clause of a contract that involves
a consumer and a business party that
derogates from the provisions of this Act
on consumer rights to the detriment of
the consumer shall be null and void.
Section 6:101
[Consumer disclaimers]
In a contract that involves a consumer
and a business party, any disclaimer by
a consumer of a statutory right shall be
considered null and void.
Section 6:102
[Unfair standard contract terms]
(1) A standard contract term shall be
considered unfair if, contrary to the
requirement of good faith and fair
dealing, it causes a significant and
unjustified imbalance in contractual
rights and obligations, to the detriment of
the party entering into a contract with the
person imposing such contract term.
(2) The unfair nature of a standard
contract term 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 leading to the conclusion
of the contract and to all the other terms
of the contract or of another contract on
which it is dependent.
(3) The provisions relating to unfair
standard contract terms shall not apply
to the definition of the main subject
matter specified in the contract 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.
(4) The standard contract terms
defined by legislation, or established in
accordance with the provisions of the
relevant legislation shall not be deemed
unfair.
(5) Any unfair contract term that has
been incorporated into the contract as a
standard contract term may be
contested by the injured party.
Section 6:103
[Unfair contract terms in consumer
contracts]
(1) As regards contracts which involve
a consumer and a business party, the
provisions relating to standard contract
terms shall also apply - subject to the
exceptions set out in this Section - to the
contract terms which have been drafted
in advance by the business party and
which have not been individually
negotiated. The burden of proof to verify
that a contract term has been
individually negotiated lies with the
business party.
(2) As regards contracts which involve
a consumer and a business party, where
a standard contract term or any contract
term which has been drafted in advance
304
by the business party and which has not
been individually negotiated shall be
regarded as unfair if they are not drafted
in plain and clearly understandable
language, solely on that basis.
(3) Any unfair contract term that has
been incorporated into a contract that
involves a consumer and a business
party shall be null and void. Nullity may
be invoked in favor of the consumer.
Section 6:104
[Other unfair terms in consumer
contracts]
(1) In contracts which involve a
consumer and a business party a
contract term shall, in particular, be
considered unfair if its object or effect is
to:
a) give the business party the
exclusive right to interpret any contract
term;
b) give the business party the
exclusive right to determine whether
performance is in conformity with the
contract;
c) provide that the consumer is bound
by the contract when the business party
is not;
d) entitle the business party to
withdraw from or terminate the contract
on a discretionary basis without giving
the same right to the consumer;
e) exclude the consumer’s right to
recover at the time the contract is
terminated the services already
performed without compensation, except
where the contract is terminated on the
grounds of non-performance;
f) exclude or limit the right to offset
claims that the consumer may have
against the business party against what
the consumer may owe to the business
party;
g) allow the business party to transfer
its debts to a third party without the
consumer’s consent;
h) limit the business party’s obligation
to be bound by commitments
undertaken by its authorized agents;
i) exclude or hinder the consumer’s
right to take legal action or exercise any
other legal remedy, particularly by
requiring the consumer to take disputes
exclusively to an arbitration system not
foreseen generally in legal provisions,
restrict the evidence available to the
consumer or impose on the consumer a
burden of proof which should legally lie
with the other party;
j) alter the burden of proof to the
detriment of the consumer.
(2) In contracts which involve a
consumer and a business party the
contract term shall, in particular, be
considered unfair, until proven
otherwise, if its object or effect is to:
a) declare a specific conduct of the
consumer as making a contract
statement, or the failure to make one, if
the time limit available for performing
that conduct is unreasonably short;
b) subject the consumer in making
statements to particular formalities that
are unreasonable;
c) extend a contract of fixed duration
unless the consumer indicates
otherwise, in cases where contract terms
provide for an unreasonably early
deadline for making such statement;
305
d) enable a business party to alter
contract terms unilaterally without a valid
reason which is specified in the contract,
in particular to increase the monetary
consideration fixed in the contract, or to
allow the business party to alter
unilaterally the terms of a contract where
there are serious grounds laid down in
the contract for doing so, provided that
in such cases the consumer is not free
to withdraw from or to terminate the
contract;
e) enable a trader to alter unilaterally
without a valid reason any
characteristics of the services to be
provided as contracted;
f) allow a business party to be bound
by commitments subject to compliance
with a particular condition the fulfillment
of which depends exclusively on the
business party, except if the consumer is
free to withdraw from or to terminate the
contract;
g) allow a period of over forty-five days
for the business party to satisfy its debt
or to provide an inappropriately
determined deadline for the performance
of its service, and for the acceptance of
the consumer’s contract statement;
h) exclude or limit the remedies
available to the consumer against the
business party in the case of non-
performance;
i) exclude the consumer’s right to
recover any payment made under
contract in case of the consumer’s nonperformance
or if his performance is not
in conformity with the contract, if the
business party is not bound by similar
obligations;
j) order the consumer to pay a
disproportionately high amount if he fails
to perform obligations or fails to perform
as stipulated by the contract.
Section 6:105
[Public-interest proceedings in
connection with unfair standard contract
terms]
(1) As regards contracts which involve
a consumer and a business party, an
action may be brought for the annulment
of an unfair contract term that has been
incorporated into a contract by:
a) the public prosecutor;
b) the minister, autonomous
administrative agencies, government
agencies, the director of the head office;
c) the heads of the Budapest and
county government agencies;
d) economic and trade organizations
or interest-representation bodies; and
e) associations for the protection of
consumers’ interests within the scope of
consumer interests they protect, and
organizations set up for the protection of
consumers’ interests under the laws of
any Member State of the European
Economic Area.
(2) In public-interest proceedings, the
court shall establish the annulment of an
unfair contract term in favor of all of the
parties with which the party imposing the
condition has a contractual relationship,
and shall order the party who applied the
contract term in question to take
measures for having a public notice on
declaring the contract term unfair
published at his own cost. The wording
of such public notice and the mode of
306
publication shall be decided by the court.
The public notice shall contain the
precise description of the contract term
in question, an indication that it was
found unfair, including the reasons and
the arguments in support of such finding.
Having the term declared null and void
by the court shall not affect the contracts
that had already been performed prior to
the date on which the action was filed.
(3) Moreover, an action may be
brought in the public interest to 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 the term or
condition in question had in fact been
applied or not. If the court finds the
contested standard contract term unfair,
the court ruling may also contain a
clause banning the party who made it
available to the public from the further
use of such.
(4) Furthermore, the lawsuit referred to
in Subsection (3) may be brought
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 standard contract term unfair,
shall declare it null and void for future
purposes and shall ban any further
recommendation for use.
(5) The provisions contained in
Subsection (2) shall also apply to any
unfair standard contract term that has
not been used in a contract previously.
Publication shall be provided for by the
party who made the standard contract
term in question available to the general
public or who recommended the use of
such term.
Section 6:106
[Public-interest proceedings in
connection with unfair standard contract
terms between business parties]
(1) An action may be brought by an
organization representing the interests
of business entities for the annulment of
a contract term that has been
incorporated into a contract between
business parties as a standard contract
term relating to the amount or due date
of interest on late payment, or to the
costs of recovery of the claim, that is
deemed contrary to good faith and fair
dealing and as such regarded as
unilaterally and unjustifiably unfair to the
creditor business association. If an
action in the public interest is found
substantiated, the court may declare the
contract term in question annulled in
favor of all of the parties with which the
party applying the term has a contractual
relationship. Having the term declared
annulled shall not affect the contracts
that have already been performed.
(2) The organization representing the
interests of business entities may
request to have a standard contract term
referred to in Subsection (1) declared
annulled, that has been defined for
contracts and made available to the
general public, regardless of whether or
not the term in question had in fact been
applied. If the contested contract term is
annulled, the court ruling may also
307
contain a clause banning the party who
made it available to the public from the
further use of such.
(3) In the proceedings referred to in
Subsections (1) and (2), the court, upon
the claimant’s request, may order the
party who applied or published the
contract term in question, or who
suggested the use of such, to take
measures for having a public notice on
declaring the contract term annulled
published at its own cost. The wording of
such public notice and the mode of
publication shall be decided by the court.
The public notice shall contain the
precise description of the contract term
in question, an indication that it was
annulled, including the reasons and the
arguments in support of such finding.
(4) In the application of this Section, a
contract term that excludes the
obligations for covering the costs
incurred in connection with interests on
late payments and with the recovery of
claims in contracts between business
parties shall be regarded as unilaterally
and unjustifiably unfair to the creditor
and contrary to good faith and fair
dealing.
Section 6:107
[Impossible performance.
Incomprehensible and inconsistent
terms]
(1) Contracts aimed at impossible
services shall be null and void. A service
shall not be deemed impossible solely
on the grounds that the obligor does not
have the object of the service in his
possession at the time the contract is
concluded.
(2) Incomprehensible and
irreconcilable terms shall be null and
void.
Chapter XIX
Legal Consequences of Invalidity
Section 6:108
[Applying the legal consequences of
invalidity]
(1) No right may be established and
performance may not be demanded on
the basis of an invalid contract. Other
legal effects of invalidity shall be invoked
by the court at the party’s request to that
effect, within the framework of
prescription and adverse possession.
(2) The party may bring action asking
the court to declare a contract invalid
without requesting the application of the
legal consequences of invalidity.
(3) The court decision may resolve the
consequences of invalidity in a manner
that differs from the party’s request;
however, such a decision may not
prescribe a solution that is protested by
all parties.
Section 6:109
[Passing of risk]
Upon the provision of a service under
an invalid contract the risk shall pass to
the other party.
Section 6:110
308
[Declaring a contract valid by court
ruling with retroactive effect]
(1) The court may declare an invalid
contract valid with retroactive effect to
the date of conclusion of the contract if:
a) the harm resulting from invalidity
can be eliminated by the amendment of
the contract to that effect; or
b) the reason for invalidity no longer
applies.
(2) If an invalid contract is declared
valid, the contracting parties shall be
liable to mutually effect performance as
contracted, and shall be liable for any
subsequent breach of contract as if the
contract had been valid from the very
beginning.
Section 6:111
[Validity of a contract by actions of the
parties]
(1) A contract shall become valid with
retroactive effect to the date of
conclusion if the parties subsequently
eliminate the grounds for invalidity, or if
such grounds cease for other reasons
and they reconfirm their contractual
intent.
(2) If an invalid contract becomes
valid, the contracting parties shall be
liable to mutually effect performance as
contracted, and shall be liable for any
subsequent breach of contract as if the
contract had been valid from the very
beginning.
(3) If the parties subsequently
eliminate the grounds for invalidity, and
agree to validate the contract for future
considerations, the performance that
has been provided up to that point shall
be resolved subject to the legal effects
of invalidity.
Section 6:112
[Restitution]
(1) In connection with an invalid
contract each party has the right to
reclaim the service he has provided from
the other party in kind, if that party also
returns the service he has received in
kind. The obligation to return what was
received applies to the party requesting
restitution irrespective of whether the
time of prescription or the duration of
adverse possession has lapsed.
(2) In the process of restitution the
original value-service ratio must be
maintained.
Section 6:113
[Payment for monetary value for unjust
enrichment]
(1) If a contract cannot be declared
valid, and if the state of affairs having
existed prior to the conclusion of the
contract cannot be restored, the court
shall order payment for monetary value
of the services yet uncompensated. The
court may invoke that sanction also in
the case if restitution is likely to harm the
relevant lawful interests of either of the
parties.
(2) The party shall not be required to
provide payment for monetary value of
the services yet uncompensated if able
to prove that the reason for his inability
to return the service he has received is
attributable to the other party. If the party
paid compensation for the service, he
may request to have it returned even if
309
he is unable to return the service he has
received, and provides proof that the
reason for his inability to return the
service he has received is attributable to
the other party.
(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
himself 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.
Section 6:114
[Partial invalidity]
(1) If the grounds for invalidity
concerns specific parts of the contract,
the legal effects of invalidity shall apply
to those parts of the contract. In the
event of limited invalidity of a contract,
the entire contract shall fail if there is
reason to believe that the parties would
not have concluded it without the invalid
part.
(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.
Section 6:115
[Claims arising in connection with an
invalid contract]
(1) The parties shall provide
compensation for proceeds and interests
not restituted according to the principle
of wrongful possession. The party who
did not perform his service, or received
the service without compensation, shall
provide compensation for proceeds and
interests according to the principle of
unjust enrichment.
(2) For any loss caused to the other
party by way of the conclusion of an
invalid contract compensation shall be
provided in accordance with the general
provisions of non-contractual liability. If
the party responsible for the invalidity of
the contract is able to justify his conduct,
he shall be liable for any loss caused to
the other party by way of the conclusion
of the contract.
(3) A person who has, in good faith,
believed in the existence of an invalid
contract may demand compensation for
damages resulting from the contract
from the party responsible for the
invalidity of the contract. The parties
shall be equally liable to provide
compensation if they are equally
responsible for the invalidity of the
contract.
(4) The contracting party whose
conduct was actionable in dealings with
a bona fide third party shall be liable for
full compensation for damages
regardless of who is responsible for the
invalidity of the contract.
TITLE VII
SCOPE OF CONTRACTS.
INEFFECTIVENESS
Section 6:116
[Conditions and terms]
310
(1) If the parties have made the
effective date of a contract contingent
upon an unpredictable future event, the
contract shall become effective when
such condition is met.
(2) If the parties have made the
termination of a contract contingent
upon an unpredictable future event, the
contract shall expire when such
condition is met.
(3) The provisions pertaining to
conditions shall also apply in the event
the parties have attached the validity or
termination of a contract to a certain
date.
Section 6:117
[Conditions pending]
(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
satisfaction or failure of the condition.
This provision shall not affect the rights
acquired in return for consideration by
third persons acting in good faith.
(2) Persons who have actionably
caused the satisfaction or failure of a
condition shall not be entitled to
establish any right thereupon.
Section 6:118
[Contracts subject to consent or
approval]
(1) If the consent of a third party or
official approval is required by law for the
validity of a contract, the contract shall
become effective upon such consents or
approval with retroactive effect to the
date of conclusion of the contract.
(2) Until the statement of consent or
approval is granted, and within the
deadline for making statements, the
rights and obligations of the parties shall
be adjudged according to the condition
pending.
(3) The contract shall not come into
existence if the third party fails to give
consent or the authority fails to grant
approval, or if they fail to make a
statement thereof within the deadline
communicated by one party to the other.
Section 6:119
[Legal effects of an inoperative
contract]
(1) If the contract did not come into
existence, or if the contract became
inoperative, including if a third party’s
consent or the authority’s approval is
lacking or it was refused, performance of
the contract may not be demanded.
(2) With respect to any performance
made under an inoperative contract, the
legal effects on invalid contracts shall
apply mutatis mutandis.
Section 6:120
[Fraudulent contracts]
(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 acquiring party acted
in bad faith or had a gratuitous
advantage originating from the contract.
(2) If a person concludes such a
fraudulent contract with a relative or with
a legal person with whom this person is
associated by way of majority control, or
311
concludes such a contract with a
member or executive employee of the
legal person or one of their relatives,
bad faith and gratuitous promise shall be
presumed. Bad faith and 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) At the third party’s request, the
acquiring party is obliged to tolerate
satisfaction from the acquired property
and enforcement against such property.
(4) If the acquiring party alienated the
property acquired through a fraudulent
contract in bad faith, or lost the property
in bad faith, he shall be held liable for up
to the value of the acquired property in
respect of the third party.
(5) The provisions on fraudulent
contracts shall apply also if the
advantage is accrued by a person other
than the person who made the contract
statement.
TITLE VIII
CLAIMS THAT CANNOT BE
ENFORCED BY JUDICIAL
PROCESS
Section 6:121
[Claims that cannot be enforced by
judicial process]
(1) The following claims may not be
enforced before court:
a) claims originating from gambling or
betting, except if the gambling or betting
operation has been authorized by the
relevant authority;
b) claims originating from a loan
promised or granted explicitly for the
purposes of gambling or betting;
c) claims that may not be enforced by
judicial process, as expressly excluded
by law;
d) claims arising from contracts or
terms guaranteeing or confirming the
claims referred to in Paragraphs a)-c).
(2) Where a claim cannot be enforced
by judicial process for the reasons listed
in Subsection (1), it must be recognized
ex officio.
(3) If a claim that cannot be enforced
by judicial process is satisfied
voluntarily, it may not be reclaimed.
TITLE IX
CONTRACT PERFORMANCE
Chapter XX
General Provisions
Section 6:122
[Passing of risk]
Unless otherwise provided for in this
Act, risk shall pass on the other party
upon performance.
Section 6:123
[Quality of service]
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(1) Performance shall be in conformity
with the contract, that is to say, services,
at the time when supplied:
a) shall be suitable for any particular
purpose for which the obligee requires
them and which the obligee made
known to the obligor at the time the
contract was concluded;
b) shall be suitable for their intended
purpose and in conformity with other
services of the like;
c) shall be of a quality and
performance that are normal in services
of the same type and that the obligee
can reasonably expect, given the nature
of the services and taking into account
any public statements on the specific
characteristics of the services made
about them by the obligor or - if
produced by a person other than the
obligor - the producer and their
representative;
d) shall comply with the description
given by the obligor and possess the
qualities of the services the obligor
presented to the obligee as a sample or
model; and
e) shall be in conformity with the
quality requirements defined by law.
(2) The obligor shall not be bound by
the public statements referred to in
Paragraph c) of Subsection (2) if he
demonstrates that:
a) he was not and could not
reasonably have been aware of the
statement in question;
b) the statement had been adequately
corrected by the time the contract was
concluded; or
c) the obligee’s decision to enter into
the contract could not have been
influenced by the statement.
(3) Within the meaning of Paragraph c)
of Subsection (1), the manufacturer, the
importer and distributor of the service,
and any person who places his name,
trademark or other distinctive sign on the
thing shall be regarded as the producer
of the service.
(4) For the purposes of compliance of
the service with the intended purpose
quality requirements shall be taken into
account as well.
(5) If the parties have not stipulated
the quality of the object defined by type
and quantity, performance shall be
made in conformity with commercially
available goods of standard good
quality.
Section 6:124
[Delivery of documentation]
The obligor shall deliver to the obligee
all information material and other
documents pertaining to the service
provided.
Section 6:125
[Additional services]
If the obligor offers to supply services
additional to those contracted, the
obligee shall be entitled to refuse such
additional services. If the obligee
accepts the additional services,
additional compensation shall also be
provided in proportion to the additional
services received according to the
provisions on the payment of the
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contract price in terms of due dates and
payment methods.
Section 6:126
[Communication of impediments]
(1) Where any impediments are likely
to occur in the performance of any
contractual obligation, the parties shall
notify one another thereof, unless the
other party should have been aware of
the impediment even without notification.
(2) In the event of failure to
communicate an impediment, the
negligent party shall be held liable for
damages in accordance with the
provisions on liability for nonperformance
of an obligation.
Section 6:127
[Obligation to verify performance]
(1) The obligee shall, within the
shortest possible time, verify whether
performance is as contracted in terms of
quality and quantity.
(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
commercial guarantee.
(3) The costs of verifying performance
in terms of quality and quantity shall be
borne by the obligee.
Section 6:128
[Simultaneous performance]
On the delivery date either party may
demand from the other party the
performance of services which are due if
he offers to perform his own service
simultaneously.
Section 6:129
[Subcontractors and agents]
(1) The parties may employ others for
fulfilling their obligations or exercising
their rights.
(2) If the obligor is required to effect
performance in person due to the nature
of the service, or pursuant to statutory
provision or the parties’ agreement, he
may delegate certain functions upon
others where this is necessary in order
to protect the obligee from suffering any
losses.
Section 6:130
[Place of settlement of monetary
debts]
(1) If the parties did not fix in the
contract the time of payment of a
monetary claim, it shall be satisfied
within thirty days of receipt of the
creditor’s request for payment or that of
the invoice.
(2) A monetary claim shall be satisfied
within thirty days after the creditor’s
contractual performance:
a) if the creditor’s request for payment
or invoice was received before the
creditor’s contractual performance;
b) where the date of receipt of the
creditor’s invoice or request for payment
cannot be clearly determined; or
c) where the debtor is required to
make payment before the time of receipt
of the creditor’s invoice or request for
payment.
314
(3) In contracts between business
parties, any contract term that is deemed
contrary to good faith and fair dealing
and as such regarded as unilaterally and
unjustifiably unfair to the creditor
economic operator in derogation from
this Section shall be null and void.
Section 6:131
[Early settlement of a monetary debt in
the case of consumer contracts]
In contracts that involve a consumer
and a business party any term excluding
the early settlement of a monetary debt,
and any term imposing extra charges on
the consumer apart from the costs
directly related to early settlement shall
be null and void.
Section 6:132
[Reduction of interest]
An excessive interest may be reduced
by the court at the obligor’s request.
Section 6:133
[Costs]
Consideration shall cover the costs
which are generally incurred in
connection with the performance of the
contract.
Chapter XXI
Specific Cases of Performance
Section 6:134
[Performance of alternative services]
(1) If the obligation can be fulfilled
through any obligation from among
several ones, the obligor will be entitled
to select the one for performance.
(2) If the obligee has the right to
choose, but he is late in making it, this
right shall pass to the obligor.
Section 6:135
[Performance of divisible services]
If a service is divisible, the obligee
shall accept partial performance.
Section 6:136
[Performance of contracts concluded
in favor of a third party]
(1) If the parties have concluded a
contract for services to be performed for
a third party, the third party shall have
the right to require directly performance
of the service if:
a) this right has been expressly
provided for by the parties; or
b) it follows unambiguously from the
purpose of the contract or from the
circumstances of the case.
(2) The third party shall be entitled to
require performance of the service
stipulated in his favor as of the date on
which he receives notice of the contract
from either party. If the right to require
performance of the service is declined
by the third party, the service may be
claimed by the party who concluded the
contract in his favor.
(3) The obligor shall be entitled to
enforce his objections to the contract in
respect of the third person as well.
TITLE X
315
NON-PERFORMANCE
Chapter XXII
General Provisions Relating to
Non-performance
Section 6:137
[Non-performance]
Non-performance of an obligation is
any failure to perform that obligation.
Section 6:138
[Right of requiring performance]
In the event of non-performance, the
aggrieved party shall be entitled to
require performance of the obligation.
Section 6:139
[Right to withhold performance]
(1) In the event of non-performance,
the obligee shall be entitled to withhold
his own performance as commensurate
until the obligor has tendered
performance or has provided adequate
guarantees.
(2) The party having the right to
withhold performance may withdraw
from the contract, or if restitution cannot
be provided he shall be entitled to
terminate the contract if the other failed
to remedy his non-performance within
the reasonable time limit provided, or
failed to provide adequate guarantee for
performance.
(3) As to other issues pertaining to the
rights and obligations of the party that is
entitled to withhold performance, the
principles of negotiorum gestio shall
apply.
Section 6:140
[Withdrawal, termination]
(1) If in consequence of nonperformance
the obligee’s interest in
contractual performance has ceased, he
may withdraw from the contract, or if
restitution cannot be provided in kind, he
may terminate the contract, unless this
Act contains provisions to the contrary.
(2) The obligee’s statement shall be
considered valid if the reason for
withdrawal or termination is properly
indicated, if that right exists for a number
of reasons. The obligee shall be entitled
to switch from the reason indicated for
withdrawal or termination to another.
(3) The obligor shall not be entitled to
demand payment for monetary value of
the services yet uncompensated if the
obligee is able to prove that the reason
for his inability to return the service he
has received is attributable to the
obligor. If the obligee paid compensation
for the service, he may request to have it
returned even if he is unable to return
the service he has received, and
provides proof that the reason for his
inability to return the service he has
received is attributable to the obligor.
Section 6:141
[Contingency contract]
The obligee - if he withdrew from or
terminated the contract - shall be entitled
to conclude a contingency contract to
achieve the objective of the original
contract, and may demand from the
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obligor to cover the difference between
the contract price and the price quoted
in the contingency contract, and the
costs arising in connection with the
conclusion of the contingency contract,
under the principle of compensation of
damages.
Section 6:142
[Liability for any loss caused by non-
performance]
The person who causes damage to
the other party by breaching the contract
shall be liable for such damage. The
said party shall be relieved of liability if
able to prove that the damage occurred
in consequence of unforeseen
circumstances beyond his control, and
there had been no reasonable cause to
take action for preventing or mitigating
the damage.
Section 6:143
[Extent of compensation for loss]
(1) Compensation shall be provided in
the form of damages for the loss caused
to the subject matter of the service.
(2) The amount of damages for the
loss caused by non-performance in the
obligee’s property, including lost income,
is such sum as the obligee is able to
verify that the loss, as the potential
consequence of non-performance, was
foreseeable at the time of the conclusion
of the contract.
(3) If non-performance was intentional,
the obligee shall be compensated for all
losses and damages.
Section 6:144
[Complementary application of the
principle of non-contractual liability]
(1) The aggrieved party’s obligation
relating to damage control and to the
prevention and mitigation of damages,
and the division of liability among parties
bearing joint liability for damages shall
be governed by the principle of noncontractual
liability.
(2) As regards the definition of damage
and the mode of compensation, in
matters not regulated in this Chapter the
principle of non-contractual liability shall
apply, with the exception that
compensation may not be reduced for
reasons of equitable considerations.
Section 6:145
[Exclusion of parallel compensation
claims]
The obligee shall enforce his claim for
compensation against the obligor in
accordance with the provisions on
liability for damages for loss caused by
non-performance of an obligation even if
the obligor’s non-contractual liability also
exists.
Section 6:146
[Liability for damages caused during
performance]
The obligee may demand
compensation for damages caused to
his assets in the course of performance
of the contract in accordance with the
provisions on liability for damages for
loss caused by non-performance of an
obligation.
Section 6:147
317
[Liability for damages in connection
with gratuitous contracts]
(1) In the case of gratuitous
performance of a contract, liability for
damages in the subject matter of the
service shall apply if the obligee is able
to prove the obligor’s actionable conduct
in non-performance, or that the obligor
failed to provide information concerning
any material characteristics of the
service, of which the obligee was
unaware.
(2) In the case of gratuitous
performance of a contract, the obligor
shall be liable to provide compensation
for any damage caused to the obligee’s
property by performance. The obligor
shall be relieved of liability if able to
prove that his conduct was not
actionable.
Section 6:148
[Liability for subcontractors and
agents]
(1) Any person who employs another
person to perform his obligations or
exercise his rights shall be liable for the
conduct of that person as if he himself
had carried out the obligation or
exercised the right.
(2) If the obligor has not been
authorized to employ other persons, he
shall be liable even for damages that
would not have occurred without the
employment of such person.
(3) The obligor shall be entitled to
enforce his rights against subcontractors
and agents - for reasons of nonperformance
- as long as his liability
toward the obligee exists.
Section 6:149
[Limited non-performance]
In the case of non-performance of an
obligation concerning a part of a divisible
service, the consequences of nonperformance
shall stand only in respect
of that part, unless limited use of legal
effects is likely to harm the relevant
lawful interests of the obligee.
Section 6:150
[Interim non-performance]
(1) Non-performance shall also apply if
the party fails to take measures or make
the required statements for enabling the
other party to perform his obligations
stemming from the contract.
(2) If either party fails to take
measures or make the statements as
required, this shall preclude any breach
of obligations on the part of the other
party resulting from the other party’s
failure to take measures or make the
statements as required.
Section 6:151
[Premature non-performance]
(1) If it becomes obvious before the
contracted date of delivery that the
obligor will not be able to effect
performance as due, on account of
which performance is no longer in the
obligee’s interest, the obligee shall be
entitled to enforce his rights stemming
from late performance.
(2) If it becomes obvious before the
contracted date of delivery that
performance cannot be effected as
contracted, the obligee shall be entitled
318
to enforce his rights stemming from lack
of conformity following non-compliance
with the deadline for repair or
replacement.
Section 6:152
[Limitation or exclusion of the
consequences of non-performance]
Any contract term limiting or excluding
liability for premeditated nonperformance
of an obligation resulting in
loss of life, or harm to physical integrity
or health shall be null and void.
Chapter XXIII
Delay in Performance
1. Obligor’s delay
Section 6:153
[Obligor’s delay]
An obligor shall be in delay if he does
not perform his obligation when due.
Section 6:154
[Legal consequences of delay by
obligors]
(1) In the event of the obligor’s delay,
the obligee shall be entitled to require
performance or, if performance no
longer serves his interest, he shall be
entitled to withdraw from the contract.
(2) It shall not be necessary to prove
the cessation of an interest in
performance for the obligee’s withdrawal
if:
a) 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
b) the obligee has stipulated a
reasonable deadline for subsequent
performance and this period too elapsed
without result.
(3) The obligor shall reimburse the
obligee for damages caused by his
delay, if it is in excess of the interest on
late payment in the case of a monetary
claim, unless the delay is excused.
Section 6:155
[Delay in payments in contracts
between business parties]
(1) In connection with contracts
between business parties, interest on
late payment shall be calculated as the
sum of the central bank base rate in
effect on the first day of the calendar
half-year affected by the default - if the
monetary claim is to be satisfied in a
foreign currency, the base rate of the
issuing central bank, or failing this the
money market rate - plus eight
percentage points. For the purposes of
calculating the interest, the central bank
base rate in effect on the first day of the
calendar half-year affected shall apply
for the entire period of the given
calendar half-year.
(2) In the event of the obligor’s delay,
in contracts between business parties
the obligor shall be required to pay the
sum specified in the Directive on
combating late payment in commercial
transactions to the obligee. Fulfilling the
above-specified obligation shall not bring
immunity from other legal consequences
319
of late payment. Any contract term
excluding these provisions shall be
treated as a contract term that is
deemed contrary to good faith and fair
dealing and as such regarded as
unilaterally and unjustifiably unfair to the
obligee.
(3) In contracts between business
parties, any contract term that is deemed
contrary to good faith and fair dealing
and as such regarded as unilaterally and
unjustifiably unfair to the obligee in
derogation from this Section shall be null
and void.
(4) In contracts between business
parties, any contract term which
excludes interest on late payment shall
be considered null and void, except if
the debtor is liable to pay contractual
penalty when in delay.
2. Late acceptance by the obligee
Section 6:156
[Late acceptance]
(1) The obligee is in delay when
refusing the accept the performance
offered.
(2) Delay by the obligee excludes any
simultaneous delay of the obligor.
(3) In the event of late acceptance the
obligor shall, under the principles of
negotiorum gestio, be required to
safeguard the thing, whereas risk shall
pass on the obligee.
(4) If a service has been specified by
type and quantity, the provisions of
Subsection (3) shall apply if the parties
have marked the things designated for
performance or have separated them
from similar things for the obligee.
Chapter XXIV
Lack of Conformity
1. General provisions on lack of
conformity
Section 6:157
[Lack of conformity]
(1) Lack of conformity means when the
obligor’s performance at the delivery
date is not in compliance with the quality
requirements laid down in the contract or
stipulated by law. The obligor is not
liable for any lack of conformity if, at the
time of the conclusion of the contract,
the obligee knew or should have known
the lack of conformity.
(2) Any clause of a contract that
involves a consumer and a business
party that derogates from the provisions
of this Chapter on warranties and
commercial guarantees to the detriment
of the consumer shall be null and void.
Section 6:158
[Presumption of lack of conformity]
In connection with contracts that
involve a consumer and a business
party, in the absence of proof to the
contrary, any lack of conformity detected
by the consumer within six months of the
date of performance shall be presumed
to have existed at the time of delivery,
unless this presumption is incompatible
320
with the nature of the thing or the nature
of the lack of conformity.
2. Warranty
Section 6:159
[Warranty rights]
(1) On the basis of a contract in which
the parties owe mutual services to one
another, the obligor shall be liable to
provide warranty for lack of conformity.
(2) On the basis of warranty rights, the
obligee shall have the option:
a) to choose either repair or
replacement, unless compliance with the
chosen warranty right 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 service would
have had there been no lack of
conformity, the significance of the nonperformance,
and the harm caused to
the obligee upon compliance with the
warranty right; or
b) to ask for a commensurate
reduction in the consideration, repair the
defect himself or have it repaired at the
obligor’s expense, or to withdraw from
the contract if the obligor refuses to
provide repair or replacement or is
unable to fulfill that obligation under the
conditions described in Subsection (4),
or if repair or replacement no longer
serves the obligee’s interest.
(3) The obligee is not entitled to
withdraw from the contract if the lack of
conformity is minor.
(4) Any repair or replacement shall be
completed within a reasonable time and
without any significant inconvenience to
the obligee, taking account of the nature
of the goods and the purpose for which
the obligee required the thing.
Section 6:160
[Switching to other warranty rights]
The obligee shall be entitled to switch
from the warranty right he has selected
to another. The cost of switch-over shall
be covered by the obligee, unless it was
made necessary by the obligor’s
conduct or for other reasons.
Section 6:161
[Derogation from the warranty right
indicated by the obligee]
The court is not bound by the obligee’s
request, however, the court shall not
order such warranty right that is
protested by all parties.
Section 6:162
[Notification of lack of conformity]
(1) The obligee shall be required to
inform the obligor of any lack of
conformity without delay.
(2) In the case of contracts that involve
a consumer and a business party, if
notification of the lack of conformity is
made within two months of the time it is
detected, it shall be deemed to have
been made in good time.
(3) The obligee shall be liable for any
damage that results from late
notification.
Section 6:163
[Expiry of a right to warranty]
321
(1) The obligee’s right to warranty shall
lapse after one year from the delivery
date.
(2) In connection with contracts that
involve a consumer and a business
party, the obligee’s right to warranty
shall lapse after two years from the
delivery date. If the things supplied
under a contract that involve a consumer
and a business party are second-hand,
the parties may agree on a shorter
limitation period, however, the limitation
period may not be less than one year in
this case either.
(3) If the thing provided under contract
is a real estate property, the right to
warranty shall lapse after five years from
the delivery date.
(4) The limitation period shall be
suspended for the time during which the
thing is being repaired and the
consumer cannot use it.
(5) As regards any part of the thing
that has been repaired or replaced, the
limitation period for the right to warranty
shall recommence. This provision shall
apply also when another defect emerges
in consequence of the repair.
Section 6:164
[Enforcement of warranty rights as an
excuse]
The obligee entitled to warranty rights
shall be entitled to enforce this right by
challenging a claim originating from the
same contract, even if the right to
warranty has already expired.
Section 6:165
[Scope of enforced guarantee claims]
(1) Any guarantee claim that is made
for a specific defect shall be deemed
satisfied in due time for all other
associated defects.
(2) If the obligee files a guarantee
claim only for a specific (in terms of the
given defect) part of the thing, the
guarantee claim shall not be deemed as
having been made for the thing’s other
parts.
Section 6:166
[Costs]
(1) The costs incurred in connection
with the fulfillment of guarantee
obligations shall be borne by the obligor.
(2) If defect is attributable in part to the
obligee’s failure to fulfill maintenance
obligations, the costs incurred in
connection with the fulfillment of
guarantee obligations shall be covered
by the obligee to the extent
commensurate to his involvement, if he
had sufficient information relating to
maintenance, or if the obligor has
provided the information required to that
effect.
Section 6:167
[Obligor’s claim of enrichment]
(1) Where the replacement of a thing
is effected after the majority of the
warranty period is consumed on account
of suspension of the period of limitation,
and this results in considerable increase
in value for the benefit of the obligee, the
obligor shall have the right to demand
compensation for such enrichment. This
provision shall not apply in contracts that
322
involve a consumer and a business
party.
(2) In the event of replacement or
withdrawal, the obligee shall not be
liable to compensate for the loss in value
if it has occurred in consequence of
proper use.
3. Product guarantee
Section 6:168
[Product liability claims]
(1) In case of lack of conformity of any
movable property sold by a business
party to a consumer (hereinafter referred
to as „product”) the consumer shall have
the right to demand from the
manufacturer to have the product
repaired or - if repair is not possible
within a reasonable period of time and
without harming the consumer’s interest
- to provide a replacement. A product
shall be deemed defective if it does not
meet the requirements related to
conformity in effect at the time of placing
on the market, or it does not meet the
specifications provided by the
manufacturer.
(2) For the purposes of this subtitle,
manufacturer shall mean anyone who
manufactures and places the product on
the market.
(3) The manufacturer shall be relieved
of product guarantee obligation if able to
prove that:
a) he manufactured or placed the
product on the market in the course of
operations other than in the course of its
business activity or for purposes relating
to his profession;
b) the state of scientific and technical
knowledge at the time when he put the
product into circulation was not such as
to enable the existence of a defect to be
discovered; or
c) the defect in the product was
caused by the application of a regulation
or a regulatory provision prescribed by
the authorities.
(4) The warranty obligation relating to
a replacement product in the case of
replacement, or to the part repaired shall
be assumed by the manufacturer.
Section 6:169
[Notification and claim deadlines]
(1) The consumer shall be required to
inform the manufacturer of any lack of
conformity without delay. 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. The consumer shall be liable
for any damage that results from late
notification.
(2) The manufacturer shall remain
subject to product liability for a period of
two years effective from the date of
placing the given product on the market.
This deadline shall apply with prejudice.
Section 6:170
[Product liability in the case of change
of ownership]
If the product’s ownership is
transferred, product liability may be
enforced by the new owner against the
manufacturer.
4. Commercial guarantee
323
Section 6:171
[Commercial guarantee]
(1) Any person who guarantees
performance of a contract or is required
by law to provide guarantee shall
assume liability for lack of conformity
during the guarantee period under the
conditions set out in the guarantee
statement or in the relevant legislation.
The guarantor shall be released from
liability if he is able to prove that the
cause of the defect occurred after
performance.
(2) This guarantee shall not affect the
obligee’s legal rights.
Section 6:172
[Guarantee rights in the case of
change of ownership]
If the thing’s ownership is transferred,
commercial guarantee may be enforced
by the new owner against the guarantor.
Section 6:173
[Enforcement of guarantee rights]
(1) A commercial guarantee may be
enforced during the guarantee period. If
the guarantor fails to fulfill his obligations
in good time when so requested by the
obligee, the guarantee claim may be
enforced before the court within three
months after the deadline set out in the
request even if the guarantee period has
already expired. This deadline shall
apply with prejudice.
(2) The legal provisions on exercising
warranty rights shall be duly applied
concerning the enforcement of
commercial guarantee rights.
5. Damages
Section 6:174
[Right to damages]
(1) The obligee is entitled to damages
for loss caused by lack of conformity for
which the obligor is liable, unless the
lack of conformity is excused.
(2) The obligee shall be entitled to ask
for compensation for damages in the
subject matter of the service if repair or
replacement is not possible, or the
obligor refuses to provide repair or
replacement or is unable to fulfill that
obligation, or if repair or replacement no
longer serves the obligee’s interest.
Such claim for compensation shall lapse
within the deadline prescribed for the
enforcement of warranty rights. The
obligee shall be entitled to enforce his
right to claim compensation by
challenging a claim originating from the
same contract, even if the right to claim
compensation has already expired.
6. Warranty of title
Section 6:175
[Warranty of title due to any
impediment of a right]
(1) In connection with an obligation for
the transfer of ownership, a right or claim
for valuable consideration, if the
acquisition of ownership, other right or
claim is hindered by a right of a third
party, the obligee shall request the
obligor to eliminate such hindrance
within the prescribed time limit, or to
provide adequate guarantees. In the
324
event of non-compliance within said time
limit the obligee shall be entitled to
withdraw from the contract and to claim
damages.
(2) If the obligor has acted in good
faith, he shall cover only the damages
incurred by the conclusion of the
contract.
Section 6:176
[Warranty of title due to any limitation
of a right]
(1) In connection with an obligation for
the transfer of ownership, a right or claim
for valuable consideration, if the
acquisition of ownership, the exercise of
the right or acquisition of the claim is
hindered by a right of a third party, or the
value thereof is reduced by such
hindrance, the obligee may request
disencumbrance within the prescribed
time limit.
(2) In the event of non-compliance
within the deadline prescribed, the
obligee may carry out the
disencumbrance at the obligor’s
expense.
(3) If disencumbrance is not possible
or if it would require unreasonable
expenses, the obligee shall be entitled to
withdraw from the contract and require
compensation or to have the
consideration reduced as commensurate
in exchange for assumption of the
encumbrance. The obligee shall be
entitled to these rights even if the
deadline set for disencumbrance has
elapsed without any result and the
obligee does not wish the
disencumbrance of the thing.
(4) If the obligor has acted in good
faith, he shall cover only the damages
incurred by the conclusion of the
contract.
(5) The obligee shall not be entitled to
these rights if he knew or should have
known at the time the contract was
concluded that unrestricted ownership,
right or claim could not be acquired,
unless the obligor had guaranteed the
acquisition of unrestricted ownership,
right or claim.
7. Special provisions on lack of
conformity
Section 6:177
[Lack of conformity in result-oriented
contracts]
(1) If the contract pertains to the
obligor’s commitment to create a thing or
to achieve another result by work, the
provisions pertaining to lack of
conformity shall apply, with the proviso
that:
a) replacement shall be understood as
the result by work recreated in part or in
full; and
b) repeated performance of repair or
service in part or in full may be
implemented by ways other than the
originally undertaken result by work,
taking into consideration the obligee’s
interest in contractual performance,
where the extra costs ensuing shall be
borne by the obligor.
(2) The obligor shall be excused of
liability if lack of conformity has its origin:
a) in any defect in the materials
supplied by the obligee;
325
b) in any discrepancy or error in the
data supplied by the obligee; or
c) in any impracticable or
unreasonable instruction given by the
obligee;
provided that the obligee has been
informed of these circumstances.
Section 6:178
[Lack of conformity in use and
exploitation contracts]
(1) If the obligee is entitled to use or
exploit temporarily the thing of another
person or an article protected under the
property right of another person, the
obligor shall guarantee in due
compliance with the principle of warranty
rights for the full term of the contract,
that the thing or the protected article is fit
for use or exploitation as contracted.
(2) If the obligee is entitled to use or
exploit temporarily the thing of another
person or an article protected under the
property right of another person, the
obligor shall guarantee in due
compliance with the principle of warranty
of title for the full term of the contract,
that the use or exploitation of the thing
or the protected article is not hindered or
limited by the right of a third party.
Chapter XXV
Other Cases of Non-performance
1. Impossibility of performance
Section 6:179
[Impossibility of performance]
(1) If performance has become
impossible, the contract shall be
terminated.
(2) The party gaining knowledge of the
impossibility of performance shall
immediately notify the other party
thereof. The party failing to give
notification shall be liable for damages
originating therefrom.
Section 6:180
[Responsibility for impossibility]
(1) If performance has become
impossible for a reason that cannot be
attributed to either of the parties, the
monetary value of the services provided
before the time when the contract was
terminated shall be compensated. If the
other party did not compensate the
monetary consideration provided for
services already performed, the money
shall be refunded.
(2) If performance has become
impossible for a reason attributable to
one of the parties, the other party shall
be relieved from the obligation of
contractual performance, and may
demand damages for loss caused by
non-performance of an obligation.
(3) If performance has become
impossible for a reason attributable to
both parties, the contract shall be
terminated and the parties may demand
damages from one another in the
proportion to their responsibility.
Section 6:181
[Impossibility of alternative services]
(1) If performance of any of the
alternative services becomes
326
impossible, the contract shall be limited
to the other services.
(2) If performance of the service has
become impossible for a reason
attributable to the party who has no right
to choose, the other party may choose
either the possible service or the
consequences of subsequent
impossibility.
Section 6:182
[Remnants of the object of a service
that has become impossible]
If the remnants of the object of a
service that has become impossible
have remains in the possession of the
obligor in full or in part, or if the obligor
has received or has the right to demand
compensation 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 commensurate
part of the consideration.
2. Withholding performance
Section 6:183
[Withholding performance]
If either party withholds performance
without legitimate reason, the other party
shall be entitled to apply the
consequences of either delay, or
subsequent impossibility.
3. Failure to make legal statement
Section 6:184
[Legal statement drafted by court
verdict]
If the party is required under the
contract to make a legal statement, and
fails to do so, the statement shall be
drafted by court verdict.
TITLE XI
CONFIRMATION AND
AMENDMENT OF CONTRACTS
Chapter XXVI
Confirmation of Contract
1. Earnest money
Section 6:185
[Earnest money]
(1) A sum of cash deposited with the
other party shall be construed as
earnest money if provided to evidence
commitment and if this intention is
expressly indicated in the contract.
(2) If the contract is performed the
earnest money shall be credited to the
amount payable. If the contract falls
through for reasons attributable to
neither or both of the parties, the earnest
money shall be returned.
(3) The person responsible for the
failure of performance shall forfeit the
earnest money that he has given, or he
shall refund twice the amount of the
earnest money he has received.
(4) Forfeiture of the earnest money or
the double repayment shall not
constitute an exemption from the
consequences of non-performance. The
amount of the earnest money shall be
327
credited to the contractual penalty and
compensation.
(5) An excessive deposit of earnest
money may be reduced by court at the
obligor’s request.
2. Contractual penalty
Section 6:186
[Contractual penalty]
(1) The obligor may pledge to pay a
certain sum of money in case he fails to
perform the contract for reasons
attributable to him. The obligor shall be
relieved from the obligation of payment
of contractual penalty, if his nonperformance
is excused.
(2) The contractual penalty shall be
fixed in writing.
(3) The obligee shall be entitled to lay
claim for contractual penalty irrespective
of any loss from the obligor’s non-
performance.
(4) The provisions relating to interest
on late payment shall apply to
contractual penalties for late payment of
monetary debts.
Section 6:187
[Contractual penalty and other claims
in cases of non-performance]
(1) Enforcement of contractual
penalties stipulated for non-performance
precludes any demand for performance.
Payment of contractual penalty
stipulated for late performance shall not
constitute an exemption from
performance.
(2) In addition to contractual penalty
for lack of conformity, the obligee shall
not be entitled to make any guarantee
claim.
(3) In addition to contractual penalty,
the obligee shall be entitled to demand
payment for damages not covered by
the contractual penalty.
(4) The obligee shall be entitled to
demand compensation for damages
caused through non-performance even if
he has not enforced his claim for
contractual penalty.
Section 6:188
[Reduction of contractual penalty]
Excessive contractual penalty can be
reduced by the court at the obligor’s
request.
Section 6:189
[Interest on contractual penalty]
Any interest attached to contractual
penalty shall be null and void. The
obligor shall be charged interest on late
payment of contractual penalty.
3. Forfeiture clause
Section 6:190
[Forfeiture clause]
(1) Parties shall be entitled to agree in
writing that the party responsible for any
non-performance shall forfeit a right 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
at the obligor’s request.
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Chapter XXVII
Contract Amendment
Section 6:191
[Amendment of contract by the parties]
(1) 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 the amendment 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.
(3) The provisions pertaining to the
conclusion of contracts shall also apply
to the amendment of contracts.
(4) The contents of a contract may be
amended unilaterally by either of the
parties if the parties so stipulated in the
contract or if the party is so authorized
by statutory provision.
Section 6:192
[Amendment of contract by the court]
(1) Either of the parties shall be
entitled to request to have the contract
amended by court order if in the longterm
contractual relationship of the
parties performing the contract under the
same terms is likely to harm his relevant
lawful interests in consequence of a
circumstance that has occurred after the
conclusion of the contract, and:
a) the possibility of that change of
circumstances could not have been
foreseen at the time of conclusion of the
contract;
b) he did not cause that change of
circumstances; and
c) such change in circumstances
cannot be regarded as normal business
risks.
(2) The court shall have powers to
amend the contract as of the date it has
determined, at the earliest from the date
of enforcement of the right to amend the
contract before the court, in a manner to
ensure that neither of the parties should
suffer any harm in their relevant lawful
interests in consequence of any change
in the circumstances.
TITLE XII
ASSIGNMENT, SUBROGATION,
ASSUMPTION OF DEBT,
TRANSFER OF CONTRACT
Chapter XXVIII
Assignment
Section 6:193
[Assignment]
(1) The obligee shall be allowed to
transfer his claim from the obligor to a
third party.
(2) For the acquisition of a claim by
way of assignment a contract for transfer
or other legal title is required and, in that
context, the claim shall be assigned.
Assignment is an agreement between
the assignor and the assignee, upon
329
which the assignee takes the place of
the assignor.
(3) Through the assignment the rights
proceeding from the lien and suretyship
are conveyed to the assignee, including
interest claims.
Section 6:194
[Assignable claims]
(1) A claim can be assigned if the
relationship from which the claim
originates already exists at the time of
assignment.
(2) The assigned claim shall be
identified by indicating the obligor, the
legal title, the sum and maturity, or by
other means facilitating identification of
the assigned claim at the time of
assignment, or at the latest at the time
when the claim is created in the case of
future claims.
(3) The assignment of any claim that is
bound to the person of the obligor shall
be null and void.
Section 6:195
[Disallowing assignment]
(1) Any term excluding the assignment
of a claim shall be null and void in
respect of third parties.
(2) The provision contained in
Subsection (1) shall not affect the
assignor’s liability for any breach of the
term excluding assignment. Any contract
term that allows the right to terminate or
stipulates the payment of a contractual
penalty for non-performance shall be
null and void.
Section 6:196
[Information and communication of
documents]
The assignor shall make available to
the assignee all information that may be
deemed necessary to enforce the claim,
and shall hand over to the assignee
documents in his possession evidencing
existence of the claim.
Section 6:197
[Notification of assignment]
(1) The assignor shall - if so requested
by the assignee - notify the obligor in
writing concerning the assignment,
indicating the fact of assignment and
identifying the claim, or to deliver the
deed of assignment to the assignee,
showing the name of the assignee.
(2) After the obligor is notified, any
amendment of the contract between the
obligor and the assignor shall be
inoperative towards the assignee. The
obligor shall be entitled to enforce the
objections and offset the counterclaims
against the assignee that arise with
regard to the assignor on the legal
grounds prevailing at the time of
notification.
(3) The notice of assignment shall
invoke the legal effect referred to in
Subsection (2), if it originates from the
assignor, or if the assignee is able to
verify that the assignment has in fact
been effected by way of the deed of
assignment or other reliable means.
Section 6:198
[Performance instruction]
(1) The obligor shall be liable to
perform to the assignor insofar as a
330
performance instruction is conveyed
indicating the name of the assignee and
the place of business or, failing this, the
registered office of the assignee, home
address or, failing this, habitual
residence or account number if a natural
person. After that the obligor may effect
performance as instructed.
(2) The performance instruction shall
invoke the legal effect referred to in
Subsection (1), if it originates from the
assignor, or if the assignee is able to
verify that the claim has in fact been
assigned to him by way of the deed of
assignment or other reliable means. If
the notice indicated the assignee but it
did not contain the performance
instruction, a performance instruction
may be given only by the assignee.
(3) If, following delivery of the notice of
assignment, the obligor effects
performance to the assignor for lack of
performance instruction, the assignor
shall keep the assets received in
performance of the service separate
from his own assets, and shall deliver
them to the assignee without delay. The
assignor’s creditors shall not be entitled
to lay claim to such assets.
Section 6:199
[Multiple and subsequent assignment]
(1) If the assignor assigns the same
claim more than once, the obligor shall
be released upon effecting performance
as provided for in the performance
instruction first received.
(2) If the assignor reassigns a claim,
the obligor shall be released upon
effecting performance as provided for in
the performance instruction last
received.
Section 6:200
[Covering the expenses of the obligor]
The expenses of the obligor arising
from the assignment shall be covered by
the assignor and the assignee
collectively.
Section 6:201
[Statutory remise of a claim]
If a claim is transferred to another
person on the basis of a statutory
provisions, the provisions on assignment
shall be duly applied. In that case, the
liability of the assignor shall be
maintained only if so prescribed by a
specific provision.
Chapter XXIX
Subrogation
Section 6:202
[Subrogation]
(1) The subrogor may transfer his right
to another person, provided that the right
is declared non-transferable by law, or
unless non-transferability follows
unambiguously from the nature of the
right.
(2) Unless otherwise provided for in
this Act, for the acquisition of a right by
way of subrogation a contract for
transfer or other legal title is required
and, in that context, the right shall be
subrogated. Subrogation is an
331
agreement between the subrogor and
the subrogee, upon which the subrogee
takes the place of the subrogor.
(3) The provisions on assignment shall
apply to subrogation mutatis mutandis.
(4) If the right is verified by a public
register, subrogation shall be considered
effective - in addition to assignment - if
the subrogee is registered in that
register.
Chapter XXX
Assumption of Debt
Section 6:203
[Assumption of debt]
(1) If the obligor and the obligee reach
an agreement with a third party (for the
purposes of this Chapter hereinafter
referred to as „transferee”) to assume
the obligor’s debt owed to the obligee,
the obligee shall be able to demand
satisfaction from the transferee only.
(2) The transferee shall be entitled to
all rights to which the obligor was
entitled in respect of the obligee under
contract.
(3) The guarantees of the claim shall
cease to exist upon the assumption of
debt. The guarantees shall remain in
place if the obligor thereof consents to
the assumption of debt.
Section 6:204
[Prior consent to the assumption of
debt]
(1) If the obligee makes a statement
required for the assumption of debt in
advance, the assumption of debt shall
enter into effect after the notification of
the obligee.
(2) The obligee may install a clause in
the statement reserving the right to
withdraw the statement.
Section 6:205
[Assumption of performance]
If a third party agrees with the obligor
to assume the obligor’s debt, that third
party shall be liable to satisfy the
obligor’s debt or to enable the obligor to
satisfy his debt when it falls due. The
obligee may not demand satisfaction of
the debt from the third party.
Section 6:206
[Undertaking a debt]
If the parties send notice to the obligee
concerning the assumption of
performance, joint and several liability
shall evolve. Following the undertaking
of a debt, the joint and several obligors
shall be entitled to all rights to which the
obligor was entitled in respect of the
obligee under contract. The person
undertaking the debt shall not be entitled
to offset the obligor’s other existing
claims against the obligee.
Section 6:207
[Statutory remise of a debt]
If a debt passes to another person on
the basis of statutory provisions, the
provisions on the assumption of a debt
shall apply mutatis mutandis.
Chapter XXXI
332
Transfer of Contract
Section 6:208
[Legal effects of transfers of contracts]
(1) The party withdrawing from, the
party remaining in and the party entering
into the contract may reach an
agreement for transferring the rights and
obligations of the withdrawing party to
the party entering into the contract.
(2) All rights and obligations of the
party withdrawing from the contract
conferred under the contract in respect
of the party remaining in the contract
shall accrue to the party entering into the
contract. The party entering into the
contract shall not be entitled to offset
other existing claims of the party
withdrawing from the contract from the
party remaining in the contract. The
party remaining in the contract shall not
be entitled to offset his other existing
claims due from the party withdrawing
from the contract.
(3) The guarantees of the contract
shall cease to exist upon the transfer of
the contract. With the lienor’s consent
the new lien shall be established at the
place of ranking of the original lien.
Section 6:209
[Prior consent to the transfer of a
contract]
(1) If the party remaining in the
contract makes a statement required for
the transfer of contract in advance, the
transfer of contract shall enter into effect
after the notification of the party
remaining in the contract.
(2) The party remaining in the contract
may install a clause in the statement
reserving the right to withdraw the
statement.
Section 6:210
[Application of the provisions relating
to assignment and assumption of debt]
Otherwise, the provisions on
assignments shall apply to transfers of
contracts in terms of claims and rights,
and the provisions on the assumption of
debt shall apply mutatis mutandis in
terms of obligations.
Section 6:211
[Transfer of contract on the basis of
statutory provisions]
If all rights of a person arising from a
contract passes to another person on
the basis of statutory provisions, the
provisions on the transfer of contract
shall apply mutatis mutandis.
TITLE XIII
TERMINATION OF A CONTRACT
BY MUTUAL CONSENT OR
UNILATERALLY
Section 6:212
[Termination of a contract by
agreement of the parties]
(1) The parties may terminate a
contract by mutual consent for future
purposes, or may cancel the contract
with retroactive effect to the date when it
was concluded.
333
(2) In the case of termination of a
contract, the parties shall not owe further
services and they shall settle accounts
with respect to services performed
before the time of termination.
(3) In the case of cancellation of a
contract, the services already performed
shall be returned. If no restitution in kind
is possible, the contract may not be
cancelled.
Section 6:213
[Termination of a contract by unilateral
act]
(1) Any person who has the right of
withdrawal or avoidance on the strength
of law or on the basis of a contract may
terminate the contract by making a
statement to the other party. If the
contract is cancelled the provisions
relating to termination, whereas in the
case of avoidance the provisions relating
to dissolution shall apply, with the
exception that the party may avoid the
contract if he offers to return the services
received.
(2) If the parties stipulated the right of
avoidance for payment of a specific sum
(retention money), the court - at the
obligor’s request - shall be entitled to
reduce the sum of the retention, if it is
considered unreasonably high.
(3) Unless otherwise provided for in
this Act, a contract entered into for an
unfixed duration, setting up a long-term
relationship may be terminated by either
party giving a reasonable period of
notice. Any exclusion of the right to
terminate shall be null and void.
Section 6:214
[Termination by court order]
These provisions shall apply mutatis
mutandis if the contract is terminated by
court order.
PART THREE
EXPRESS CONTRACTS
TITLE XIV
TITLE-TRANSFER CONTRACTS
Chapter XXXII
General Provisions Relating to
Sales Contracts
Section 6:215
[Sales contracts]
(1) Sales contract means any contract
under which the seller undertakes to
transfer the ownership of a thing to the
buyer, and the buyer undertakes to pay
the price thereof, and to take possession
of the thing.
(2) If the object of the sales contract is
a real estate property, in addition to
transferring ownership the seller shall
also transfer possession of the thing. If
the object of the sales contract is a real
estate property, it shall be executed in
writing.
(3) The provisions relating to the sale
of things shall also apply to contracts for
commitments for the transfer for
334
valuable consideration of a right or
claim.
Section 6:216
[Retention of title]
(1) The seller shall be entitled to retain
title of ownership until the purchase
price is paid in full.
(2) The agreement on the retention of
title shall be executed in writing.
(3) In the case of retention of title
relating to real estate property, the seller
shall have it recorded in the real estate
register in the form of an entry showing
the fact of retention of title and the name
of the buyer.
(4) In the case of retention of title
relating to movable property, the seller
shall have it registered in the collateral
register showing the fact of retention of
title and the name of the buyer, or in the
relevant registry if ownership of the
movable property is recorded in a public
register and if hypothecation of the thing
is to be registered in the proper registry
by law. In the absence of registration:
a) where ownership of a movable
property is acquired from the buyer for
consideration in good faith, the
transferee shall acquire ownership by
way of transfer; and
b) the lien established by the buyer on
the movable property for a third party
shall come into existence even if the
buyer has no right of disposition.
Section 6:217
[Beneficial title, bearing of costs and
liability for damages in connection with
the sale of real estate property]
If the seller transfers possession of the
real estate property which is the subject
of the sale to the buyer before the
registration of ownership in the real
estate register, the buyer shall, as of the
date of taking possession, collect the
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.
Section 6:218
[Costs]
(1) The seller shall bear all of the costs
related to the transfer of possession and
the correction of the status recorded in
the real estate register.
(2) The costs of taking possession of
the thing and the costs of registering the
change in ownership in the real estate
register shall be covered by the buyer.
Section 6:219
[Passing of risk in consumer sales
contracts]
If the seller is a business party and the
buyer is a consumer, and the seller
undertakes to dispatch the thing to the
buyer, risks shall pass to the buyer when
he or a third party named by the buyer
has acquired the physical possession of
the thing. At the time of handing over the
thing to the carrier, risks shall pass to
the buyer if the carrier was hired by the
buyer, provided that the carrier was not
recommended by the seller.
Section 6:220
335
[Legal consequences upon the seller’s
late performance in consumer sales
contracts]
(1) If the seller is a business party and
the buyer is a consumer, unless
otherwise agreed by the parties the
seller shall place the thing at the buyer’s
disposal without delay upon the
conclusion of the contract, at the latest
within thirty days.
(2) In the event of late performance by
the seller, the buyer shall have the right
to set an additional time for
performance. If the seller fails to perform
within such additional period, the buyer
shall be entitled to withdraw from the
contract.
(3) The buyer shall be entitled to
withdraw from the contract without
setting an additional time for
performance if:
a) the seller refused the perform the
contract; or
b) 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.
Chapter XXXIII
Special Modes of Sale
Section 6:221
[Right of preemption]
(1) If an owner grants a right of
preemption to a specific thing in an
agreement and wishes to sell the thing
by accepting the offer of a third party,
the person who has the right of
preemption shall be entitled to buy the
thing under the conditions fixed in the
offer, preceding the third party.
(2) If the owner grants consecutive
rights of preemption to more than one
person for the same thing, these
persons shall be able to exercise their
rights in the sequence in which their
rights of preemption were established.
Section 6:222
[Notification of purchase offer to the
holder of preemption right]
(1) If the owner receives a purchase
offer from a third party, and he wishes to
accept the offer, before accepting the
offer he shall communicate the offer in
full to the holder of preemption right. The
owner shall not be subject to this
obligation if compliance would imply
extraordinary difficulties or a substantial
delay on account of the location of the
beneficiary’s domicile or other
circumstances.
(2) Notification of the offer shall be
construed as a sales offer made by the
owner. As regards the binding period,
the provisions on distance contracts
shall apply, with the proviso that the
owner may not stipulate a binding period
shorter than the period defined in the
general provisions on contracts.
(3) If the holder of preemption right
fails to issue a statement of acceptance
during the binding period, the owner
shall be entitled to sell the thing
according to the offer received from the
third party or under terms which are
more favorable for the seller.
336
(4) If the holder of preemption right
issues a statement of acceptance to the
owner regarding the offer, the contract
shall be deemed concluded between
them.
(5) If more than one person has the
right of preemption regarding the same
thing in the same ranking, and if a
statement of acceptance is made by
several of them, the owner shall so
inform the persons holding such rights
without undue delay, upon which the
persons holding such rights shall be
entitled to withdraw their statement of
acceptance within eight days from the
effective date of the notice. When this
deadline expires, the sales contract shall
be concluded with the right-holders who
made the statement of acceptance. The
holders of preemption right who made a
statement of acceptance shall acquire
ownership in proportion to their interest
among each other. If the share of the
interest of the holders of preemption
right who made a statement of
acceptance cannot be determined, they
shall acquire ownership in the thing
equally.
Section 6:223
[Nullity of a contract concluded by the
infringement of preemption right]
(1) If the owner enters into a contract
in breach of his obligations stemming
from a right of preemption, such contract
shall be inoperative in respect of the
holder of the right of preemption.
(2) The holder of the right of
preemption shall be able to enforce his
claims arising from such nullity within
thirty days after gaining knowledge
thereof, on condition that he makes a
statement of acceptance at the same
time, and verifies his ability to perform.
The holder of the right of preemption
shall not be able to enforce his claims
arising from nullity after three years
following the date of conclusion of the
contract.
Section 6:224
[Repurchase right]
(1) If at the time of conclusion of the
sales contract the buyer grants the
option for the seller to repurchase the
thing sold by agreement of the parties,
the seller may purchase the thing by way
of a statement made to the buyer.
(2) The parties shall fix the repurchase
price in the agreement on granting the
repurchase option. Failing this, the
holder of the option shall be able to
repurchase the thing at the market value
prevailing at the time of exercising the
option to repurchase.
Section 6:225
[Purchase option and right to sell]
(1) If the owner establishes the right to
purchase a specific thing under contract,
the holder of such option shall be
entitled to buy the thing with a unilateral
statement, at the price fixed in the
contract.
(2) If the owner acquires the right to
sell a specific thing under contract, he
shall be entitled to sell the thing with a
unilateral statement to the obligor of the
option to sell, at the price fixed in the
contract.
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Section 6:226
[Common provisions relating to
preemption rights, repurchase rights,
purchase options and rights to sell]
(1) Contracts relating to preemption
rights, repurchase rights, purchase
options and sell options shall be
executed in writing.
(2) If a right of preemption, repurchase
right, purchase option or sell option
established on a real estate property
under contract is recorded in the real
estate register, and a right of
preemption, repurchase right, purchase
option or sell option established on a
movable property shown in a public
register is registered in the public
register, it shall affect everybody who
acquires any right on such a thing
following such registration.
(3) The provisions on the right of
preemption, repurchase right, purchase
option or sell option shall also apply to
statutory rights of preemption,
repurchase rights, purchase options or
sell options. Statutory rights of
preemption, repurchase rights, purchase
options or sell options shall precede
contractual rights of preemption,
repurchase rights, purchase options or
sell options.
(4) The obligor of repurchase right,
right to purchase or right to sell shall
refrain from all such conducts as to
hinder or prevent the exercise of the
repurchase right, right to purchase or
right to sell.
(5) The repurchase right, right to
purchase or right to sell shall cease if the
thing is destroyed due to reasons
beyond the obligor’s control.
Section 6:227
[Hire purchase]
(1) Based on the parties’ agreement,
the buyer shall be entitled to pay the
purchase price in several installments at
specific dates, where possession of the
thing is transferred to the buyer before
the purchase price is paid in full, the
seller shall have the option to either
withdraw from the contract or to
terminate the payment facilities granted
in the event of the buyer’s failure to
make the installment payments 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.
(2) If the seller withdraws from the
contract, the buyer shall pay a charge
for use of the thing transferred to his
possession under the contract, and shall
be liable to pay compensation for any
loss in value that exceeds depreciation
implied by the proper use of the thing.
Section 6:228
[Purchase upon delivery subject to
inspection]
(1) If the consumer is not able to
inspect the subject matter of the contract
before concluding the contract, and the
buyer has the right by agreement of the
parties to declare his intention whether
or not to conclude the contract after
visual inspection of the thing, the seller
338
shall provide for the inspection of the
thing. In that case, 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) If the seller allowed the inspection
of the thing, he may set an appropriate
deadline for the buyer to declare his
intention. If the buyer fails to meet the
deadline fixed in the contract or
stipulated by the seller for making the
statement, the contract shall not enter
into effect.
(3) The seller is not liable for any lack
of conformity if able to verify that the
buyer has detected, or should have
detected, the defect upon the inspection.
Section 6:229
[Purchase upon delivery subject to
testing]
(1) If the sales contract contains a
clause allowing the buyer to test the
subject matter of the contract before
concluding the contract, and to declare
his intention whether or not to conclude
the contract after 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) If the buyer fails to make the
statement within the time limit usually
deemed necessary for testing the thing
or within the deadline set by the seller,
the contract shall remain in effect.
(3) The seller is not liable for any lack
of conformity if able to verify that the
buyer has detected, or should have
detected, the defect during testing.
Section 6:230
[Purchase by sample]
(1) If the parties decide to define a
certain characteristic of the subject
matter of the contract by reference to a
sample, the seller shall supply a thing
corresponding to the cited properties of
the sample.
(2) The seller shall be liable for any
latent defect in a thing if the defect also
existed in the sample.
(3) If the buyer fails to present the
sample, the burden of proof to verify the
characteristic the sample has had shall
lie with the buyer.
Chapter XXXIV
Types of Sales Contracts
Section 6:231
[Forward transactions for the sale of
things defined by type and quantity]
(1) If the seller undertakes an
obligation for the supply in the future of
things defined by type and quantity, and
the parties stipulate the range of
discrepancy as to quantity by which the
seller may deviate from the quantity
fixed in the contract to either direction,
the buyer shall pay the purchase price
for the quantity actually supplied.
(2) If the seller supplies below the
minimum prescribed quantity, the
consequences for such non-
339
performance shall be determined in due
account of the contracted quantity.
(3) If the seller undertakes an
obligation for the supply of things
defined by type and quantity in the
future, the buyer shall have the right to
withdraw from the contract until such
time as the seller’s offer for the delivery
of supplies; if the seller is to perform the
contract in segments, and already
offered to deliver a part of the services
contracted, the buyer shall have the right
to withdraw from the contract with
respect to the part not yet offered. The
buyer shall be held liable for damages
caused to the seller through exercising
the right of withdrawal or the right to
terminate.
Section 6:232
[Sales contracts for the supply of own
produced agricultural goods]
(1) If the seller undertakes an
obligation for the supply of agricultural
goods and/or produce of his own
production or livestock that he himself
has raised at a future date, he shall be
entitled to perform ten per cent below
the quantity stipulated in the contract.
(2) The seller shall also be entitled to
effect performance of the contract
referred to in Subsection (1) before the
stipulated delivery date, provided that
the buyer is notified in advance of
commencement of performance while
ample time is provided to him to make
the necessary preparations.
Section 6:233
[Sales contracts for the supply of
agricultural goods produced with the
buyer’s involvement]
If the seller undertakes an obligation
for the supply of agricultural goods
and/or produce of his own production or
livestock that he himself has raised at a
future date, and based on the parties’
agreement the buyer is required to
provide assistance to facilitate
performance, and to provide information
to the seller in that context, the seller
shall cooperate in the provision of such
service by following the instructions
communicated. The seller shall pay the
contracted price for the buyer’s service
provided to facilitate performance, and
shall repay the part of any production
advance received from the buyer that is
not covered by the purchase price even
if the production result is insufficient to
cover such payments.
Chapter XXXV
Exchange Contracts
Section 6:234
[Exchange contracts]
If the contracting parties undertake
reciprocal transfer of the ownership of
things, other rights and receivables, the
provisions pertaining to sales 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 XXXVI
340
Contracts of Gift
Section 6:235
[Contracts of gift]
(1) A contract of gift means any
contract under which the donor
undertakes to transfer the ownership of
a thing without any consideration, and
the donee undertakes to take
possession of the thing.
(2) If the object of the contract of gift is
a real estate property, in addition to
transferring ownership the donor shall
also transfer possession of the thing. If
the object of the contract of gift is a real
estate property, it shall be executed in
writing.
(3) The provisions relating to gifts shall
also apply to contracts for commitments
for the gratuitous transfer of rights and
receivables.
Section 6:236
[Withholding performance]
The donor shall be entitled to refuse
performance of the contract if he is able
to prove that his performance of the
contract can no longer be expected due
to a significant change in his
circumstances or in his relationship to
the donee after the contract has been
concluded.
Section 6:237
[Recovery of gifts]
(1) The donor shall be entitled to
recover a still existing gift insofar as the
gift is considered essential for his
livelihood on account of changes in his
circumstances after the conclusion of the
contract and returning the gift does not
jeopardize the livelihood of the donee.
The donee shall not be obligated to
return the gift if subsistence of the donor
is appropriately provided for in the form
of alimony or other similar maintenance
provided in kind.
(2) If the donee or his resident relative
commits a serious infringement to the
detriment of the donor or one of his
close relatives, the donor shall be
entitled to reclaim the gift or demand the
replacement value of the gift.
(3) The donor shall also be entitled to
recover a gift or demand its replacement
value if the assumption known to the
parties at the time of conclusion of the
contract, that provided the sole basis for
giving the gift subsequently and
permanently, disappears and if the gift
would never have been given without
this assumption.
(4) A gift cannot be recovered if the gift
itself or its replacement value no longer
exists at the time of the infringement or if
the donor has condoned the injury. The
donor’s failure to reclaim the gift for an
extended period of time without an
appropriate reason shall be construed
as forgiveness and/or waiver of the right
of recovery.
(5) Gifts of ordinary value shall not be
reclaimed.
TITLE XV
CONTRACTS FOR
PROFESSIONAL SERVICES
341
Chapter XXXVII
Works Contracts
1. General provisions on works
contracts
Section 6:238
[Works contracts]
Under a works contract the contractor
undertakes to perform activities to
achieve the result agreed upon
(hereinafter referred to as „works”) and
the customer undertakes to accept
delivery of and pay the contracted fees
for such works.
Section 6:239
[Organization of activities]
(1) The contractor shall arrange the
conditions for carrying out the activity so
as to ensure that the works will be
completed safely and professionally in
due time, in a manner that is
economically viable.
(2) Any material that is required for
completion of the works shall be
obtained by the contractor.
Section 6:240
[Customer’s right to give instructions]
(1) The contractor shall act in
accordance with the customers’
instructions. No instructions shall be
given for the organization of work and
they shall not render performance more
burdensome.
(2) If a customer gives unreasonable
or unprofessional instructions, the
contractor shall be obliged to warn him
thereof. If the customer insists on his
instructions in spite of the warning, the
contractor shall be entitled to withdraw
from the contract or may carry out the
works according to the customer’s
instructions, at the customer’s risk. The
contractor shall refuse to comply with
such instructions if compliance would
constitute an infringement of the law or
any administrative decision, or it would
jeopardize the safety or property of
others.
Section 6:241
[Place of works]
(1) If the work is to be performed at a
work site designated by the customer,
the customer shall make the site
available to the contractor in a condition
as appropriate for carrying out the
activity.
(2) The contractor shall be entitled to
refuse to commence work until the work
site is rendered suitable for carrying out
the activity. If the customer fails to make
available the work site in spite of being
asked to do so by the contractor, the
contractor shall be entitled to withdraw
from the contract and demand
compensation for damages.
(3) If by agreement of the parties the
responsibility for rendering the site
suitable for carrying out the activity lies
with the contractor, the customer shall
be liable to cover the costs thereof.
Section 6:242
342
[Customer’s right of inspection]
(1) The customer may at any time
inspect the work and check the materials
used.
(2) The contractor shall not be relieved
of the consequences of nonperformance
if the customer failed to
inspect the contractor’s activity or did so
inadequately.
Section 6:243
[Coordination of works]
If two or more contractors are working
at the same work site simultaneously or
successively, the customer shall provide
for the necessary conditions for carrying
out the work efficiently and in concert.
Section 6:244
[Additional work. Extra work]
(1) The contractor shall perform the
work covered by the works contract but
not taken into consideration for the
calculation of the contract price, as well
as the work that is considered essential
for the completion of the works in a
condition proper for use or the intended
purpose (additional work).
(2) The contractor shall perform works
ordered subsequently, prompted, in
particular, by changes in the plans or
designs, if carrying out such works is
unlikely to impose unreasonable burden
upon the contractor (extra work).
Section 6:245
[Contract price]
(1) If the parties agreed on a fixed
sum, the contractor shall have the right
to charge for extra works only in addition
to the fee agreed upon, and shall not be
entitled to charge for additional works.
However, the customer shall reimburse
the contractor’s expenses incurred in
connection with carrying out additional
works, which could not have been
foreseen at the time of conclusion of the
contract.
(2) If the contract price is to be paid
according to progress, the contractor
shall be entitled to invoice for the work
phases completed.
(3) The contract price shall be payable
upon contractual performance.
Section 6:246
[Statutory lien]
The contractor shall be entitled to
statutory lien up to the contract price and
expenses on the property of which the
customer gains possession in
consequence of the works contract.
Section 6:247
[Acceptance or verification of services]
(1) The contractor shall deliver the
works within the framework of a
procedure of acceptance or verification.
During the procedure the parties shall
perform the checks and tests
commonplace in the given sector, which
are deemed necessary to verify whether
performance is in conformity with the
contract.
(2) The contractor shall be deemed to
have performed in due time if the
procedure of acceptance or verification
begins within the contracted delivery
period.
343
(3) Acceptance shall not be refused on
the grounds of any defect in the works
that, in the event of repair or
replacement, does not prevent proper
use.
(4) If the customer fails to carry out the
procedure of acceptance or verification,
the legal effects of performance shall
take effect upon the actual transfer of
possession.
(5) If performance of the contract
requires the contractor to transfer
ownership of a thing, ownership shall
pass to the customer when the thing is
delivered and when the price is paid in
full.
Section 6:248
[Nullification of contracts]
(1) If performance becomes
impossible for a reason that cannot be
attributed to either party and:
a) the cause of impossibility has
occurred within the control of the
contractor, he shall not be entitled to
demand remuneration;
b) the cause of impossibility has
occurred within the control of the
customer, the contractor shall be entitled
to remuneration, but the customer shall
be entitled 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;
c) 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.
(2) In the event of nullification, the
customer shall be entitled to demand the
contractor to deliver any works in
progress, which are not yet finished, in
which case the provisions on unjust
enrichment shall apply.
Section 6:249
[Withdrawal, termination]
(1) The customer shall be entitled to
withdraw from the contract at any time
before the beginning of performance,
and shall then be able to terminate the
contract before performance.
(2) In the event of withdrawal or
termination by the customer, the
customer shall pay the commensurate
part of the contract price and shall pay
compensation to the contractor for
damages, with the proviso that the
amount of compensation may not
exceed the contract price.
Section 6:250
[Gratuitous works contracts]
(1) The provisions of this Chapter shall
apply to works contracts where the
customer is not required to provide any
compensation.
(2) If the contractor agrees to provide
services without any compensation, the
customer shall be required to cover the
contractor’s related expenses.
2. Design contract
Section 6:251
344
[Design contracts]
(1) Under a design contract the
contractor undertakes to provide design
services and to deliver the resulting
plans and designs, and the customer
undertakes to accept delivery of and pay
the contracted fees for such.
(2) The design documentation shall
feature technically and economically
feasible and otherwise efficient
solutions, and shall be appropriate for
satisfying the customer’s needs which
can be identified and which are
considered to serve the intended
purpose.
(3) On the grounds of design defects
the rights stemming from nonperformance
may be enforced insofar as
any right exists on account of lack of
conformity attributable to defects in
performance arising from discrepancies
in the design.
(4) The designer shall guarantee that
no third person has any right that can
prevent or restrict the use of the design.
3. Construction contracts
Section 6:252
[Construction contracts]
(1) Under a construction contract the
building contractor undertakes to carry
out building and installation works and to
deliver the works, and the customer
undertakes to accept delivery of and pay
the contracted fees for such works.
(2) The customer shall be responsible
for making arrangements for obtaining
the necessary design documentation
and the official permits that are required
for carrying out the works.
(3) The building contractor is required
to inspect the design documentation
supplied by the customer before the
conclusion of the contract, and shall
bring any notable defects and
discrepancies in the design to the
customer’s attention. If any defect or
discrepancy in the design surfaces in the
process of construction, the building
contractor shall notify the customer
thereof without undue delay.
4. Research contract
Section 6:253
[Research contracts]
(1) Under a research contract the
researcher undertakes to perform
research activities, and the customer
undertakes to accept the results
achieved and pay the contracted fees.
(2) The researcher shall not be entitled
to procure the services of others without
the customer’s consent. No consent is
necessary if outside assistance is
required due to the nature of the
research.
(3) If the result is protected by
copyright or may be protected by
industrial property rights, the researcher
shall transfer the rights stemming from
such protection to the customer. If the
transfer of such right is precluded by
law, the researcher shall grant
exploitation rights to the broadest
permissible extent.
345
(4) In research contracts any exclusion
or restriction of warranty of title shall be
null and void.
(5) The proprietor of the trade secrets
associated with the contract shall be the
customer. The customer’s prior consent
is required for the publication of
intellectual works resulting from the
research activities.
(6) If, by agreement of the parties,
remuneration is provided even if the
research activities fail to produce any
results, the provisions relating to
engagements shall apply to carrying out
the research and to the researcher’s
claims for remuneration.
5. Contract for travel services
Section 6:254
[Contracts for travel services]
(1) Under a contract for travel services
the contractor undertakes to make
arrangements for travel and for
accommodations at points of excursion
and to provide the related services, and
the customer undertakes to accept the
services and to pay the contracted fees.
(2) The contract shall be executed in
writing. Any contract clause that has not
been executed in writing shall be null
and void.
(3) The customer shall be entitled to
transfer before the start of the journey
his rights and obligations stemming from
the contract for travel services to a third
party who meets the conditions set out
in the contract for travel services.
(4) The customer and the third party
shall be jointly and severally liable for
the obligations arising before the
transfer of rights and obligations, and for
any additional costs arising out of or in
connection with the transfer.
(5) Any contract clause that derogates
from the provisions of this Section to the
detriment of the consumer shall be null
and void.
6. Agricultural services contract
Section 6:255
[Agricultural services contracts]
(1) Under an agricultural services
contract the contractor undertakes to
keep the customer’s animals and to
grow crops on the customer’s land, and
the customer undertakes to pay the
contracted fees for such services.
(2) In the event of nullification of the
contract due to any disease of the
animals or plants, the contractor shall
not be held liable if such disease has
occurred in consequence of unavoidable
circumstances beyond his control. In that
case the contractor shall be entitled to
commensurate remuneration.
(3) The producer shall not be entitled
to refuse the repayment of services
performed by the customer on account
or as prepayment on the grounds that
such repayments cannot be covered by
the results of production.
7. Public service contract
Section 6:256
[Public service contracts]
(1) Under a public service contract the
service provider undertakes to provide
346
services of general economic interest,
and the user undertakes to pay a fee.
(2) The service provider shall be
subject to the obligation to contract.
(3) The user shall pay the fee once a
month, subsequently.
Chapter XXXVIII
Contracts of Carriage
Section 6:257
[Contracts of carriage]
Under a carriage contract the carrier
undertakes to transport the consignment
to its destination and deliver it to the
consignee, and the consignor
undertakes to pay the fee agreed upon.
Section 6:258
[Consignment note]
(1) When so instructed by the
consignor, the carrier shall:
a) make out the consignment note and
provide a copy to the consignor; or
b) give an acknowledgement of receipt
of the consignment.
(2) The consignment note made out by
the carrier shall, in the absence of proof
to the contrary, verify the existence of
the contracts of carriage, the receipt of
the consignment, and - in the absence of
any reservation made by the carrier in
the consignment note - that the
consignment and its packaging at the
time of delivery was apparently in a
good condition, and that the amount of
the consignments coincides with the one
shown in the consignment note, if the
consignment note was signed by the
consignor and the carrier both, and the
consignment note contains:
a) the date and place of receipt of the
consignment;
b) the name and address of the
consignor, the consignee and the
carrier;
c) the place where delivery is effected;
d) a description of the consignment,
the type of packaging used, danger
classification for the given transport
sector, number of the goods, label,
number, volume or quantity expressed in
any other way.
(3) The concept of reservation made
by the carrier shall also cover the entry
made on the consignment note, showing
also the reason, indicating that the
carrier was unable to verify the data
referred to in Paragraph d) of
Subsection (2) through no fault of his
own.
Section 6:259
[Packaging; documents]
(1) The consignor shall:
a) package the consignment in a way
to provide sufficient protection for the
goods and prevent it from jeopardizing
the physical safety or property of others;
b) give information necessary for
handling the consignment on the
packaging, or failing this on the
consignment itself; and
c) hand over to the carrier the
documents necessary for transporting
and handling the consignment.
(2) When it is manifest that the
packaging or the information required for
347
handling the consignment is insufficient,
or if the consignor failed to supply the
documents necessary for transporting
and handling the consignment, the
carrier may refuse to accept the
consignment. If the consignor fails to
remedy such discrepancies without
delay, the carrier shall be entitled to
withdraw from the contract.
(3) If discrepancies in the packaging or
in the information required for handling
the consignment becomes clear after the
consignment is accepted, the carrier
shall inform the consignor thereof
without delay. In the absence of the
consignor’s specific instructions as to
carriage, the carrier shall not be liable to
forward the consignment. If the
consignor has given instructions as to
carriage, the carrier shall be entitled to
request adequate safeguards if there is
an imminent risk of loss arising from the
discrepancies in the packaging or in the
information required for handling the
consignment, or if he may be subject to
liability in respect of others. If the
consignor fails to give instructions or to
provide adequate safeguards the carrier
shall be entitled to terminate the
contract.
(4) The carrier shall be required to use
the documents received in accordance
with the instructions of the consignor.
Section 6:260
[Carriage of dangerous goods]
If the consignment contains dangerous
goods, the consignor shall inform the
carrier of the danger classification for the
given transport sector of the goods,
along with information for avoiding risks.
In the absence thereof, the carrier shall
be entitled to refuse to accept the goods
for carriage.
Section 6:261
[Presenting means of transport,
loading]
(1) The carrier shall be required to
present means of transport at the place
and time stipulated in the contract, in a
condition suitable for carriage and to
commence carriage without delay.
(2) Loading the consignment shall be
the responsibility of the consignor. If the
consignee does not unload the
consignment, the carrier may do so at
the consignor’s expense.
(3) As regards loading and unloading,
the carrier shall have the right to give
instructions as to the placement of the
consignment.
Section 6:262
[Consignor’s right to withdraw before
the beginning of transport]
The consignor shall be entitled to
withdraw from the contract prior to the
commencement of carriage.
Section 6:263
[Transport impediments]
(1) If carriage is in any way obstructed,
the carrier shall immediately notify the
consignor and ask for instructions where
deemed necessary.
(2) The consignor shall pay freight
charges up to the amount
commensurate until the impediment has
348
occurred, if non-payment of such would
result in his enrichment, or if the carrier
is able to prove that the impediment
occurred in consequence of
circumstances beyond his control, that
could not have been foreseen at the
time of conclusion of the contract, and
there had been no reasonable cause to
take action for preventing or mitigating
the damage.
Section 6:264
[Right of disposition]
(1) The consignor shall be entitled to
reserve all rights to the consignment
until it is delivered or the consignee
receives it.
(2) The carrier may demand adequate
safeguards in connection with any
instruction the consignor has given after
the commencement of carriage, if
compliance with such instruction is likely
to render performance of the carriage
more burdensome. If the consignor fails
to provide adequate safeguards, the
carrier shall act in accordance with the
principle of reasonable commercial
practices, taking also into account the
consignor’s and the consignee’s
interests. To that end, the carrier has the
option to sell the consignment.
(3) Unless proven to the contrary, it
shall be presumed that the sale of the
consignment is conducted under the
principle of reasonable commercial
practices if:
a) the sale is completed in the stock
exchange, at a price in effect at the time
of sale; or
b) the sale takes place under normal
market terms usually employed in the
commercial sale of the consignment.
(4) If the carrier sells or uses the
consignment, the consignor shall be
notified thereof.
(5) Subsections (2)-(4) shall apply if
the carrier asks for instructions for
performance after the commencement of
carriage, and the consignor fails to give
instructions in due time, or the carrier
requests adequate safeguards for
carrying out the instructions and the
consignor fails to comply.
Section 6:265
[Notice of arrival of the consignment]
(1) The carrier shall be required to
notify the consignee immediately of the
arrival of the consignment. After
notification has been received, the right
of disposition over the consignment shall
pass to the consignee.
(2) An instruction given by the
consignee before the receipt of notice as
per Subsection (1) may be taken into
consideration by the carrier inasmuch as
it does not contradict with the
consignor’s instructions. The carrier may
demand adequate safeguards in
connection with any instruction the
consignee has given, if compliance with
such instruction is likely to make the
carrier’s obligation more burdensome.
The carrier may refuse to carry out the
consignee’s instruction if the consignee
does not provide adequate safeguards.
Section 6:266
[Freight charges]
349
(1) If freight charges are to be
determined on the basis of information
contained in the consignment note, the
data in the consignment note shall be
considered accurate and appropriate,
unless proven to the contrary, even if the
carrier has made a reservation on the
consignment note showing that he was
unable to verify the data.
(2) In the event of loss or destruction
of the consignment in part or in full, the
carrier shall be entitled to collect the
freight charges or a commensurate part
thereof, if able to prove that the loss or
destruction of the consignment occurred
in consequence of circumstances
beyond his control, that could not have
been foreseen at the time of conclusion
of the contract, and there had been no
reasonable cause to take action for
preventing or mitigating the damage.
Section 6:267
[Statutory lien]
The carrier shall be entitled to
statutory lien up to the amount of freight
charges and expenses on the things he
gained possession of in connection with
carriage, or which are at his disposal on
the basis of documentary evidence. The
lien shall also cover other overdue and
uncontested claims of the carrier from
the consignor arising from the contracts
of carriage.
Section 6:268
[Liability of the carrier]
(1) Any contract term limiting or
excluding the carrier’s liability shall be
null and void, also if it pertains to
damages caused deliberately or as a
result of gross negligence.
(2) If the carrier makes shipping
arrangements for the consignment using
different modes of transport, each mode
of transport shall be implemented in
accordance with the rules of the given
transport sector. If the place where the
damages have occurred cannot be
identified, the provisions of this Chapter
shall apply to the carrier’s liability.
(3) If the consignor is a foreigner, the
amount of compensation for which the
carrier is liable may not exceed the
highest amount of compensation that
may be awarded under the law of the
consignor’s home State.
(4) The consignment may be
considered lost when it has not been
delivered within thirty days after the
prescribed period of carriage. If the
consignment is recovered following the
payment of damages, the carrier shall
notify the consignor within the shortest
possible time, upon which the consignor
shall have the right of disposition over
the consignment.
Section 6:269
[Liability of the consignor]
The consignor shall be liable toward
the carrier for the loss or damage
resulting from discrepancies in
packaging, or from the lack or
inaccuracy of, or any flaws in the data,
information and/or documents relating to
the consignment.
Section 6:270
[Statute of limitations]
350
The period of limitation for claims
arising out of or in connection with
contracts of carriage shall be one year,
except for damages caused deliberately
or as a result of gross negligence. The
initial date of this period shall be the
date on which the consignment is
delivered to the consignee or the date
on which the consignment should have
been delivered to the consignee. These
provisions shall also apply if the carrier
makes shipping arrangements for the
consignment using different modes of
transport.
Section 6:271
[Application of the provisions relating
to works contracts]
Unless otherwise provided for by this
Chapter, the regulations governing
works contracts shall apply to contracts
of carriage mutatis mutandis.
TITLE XVI
ENGAGEMENT-TYPE
CONTRACTS
Chapter XXXIX
Personal Service Contracts
Section 6:272
[Personal service contract]
Under a personal service contract the
agent undertakes to carry out the
assignment the principal has entrusted
to him, and the principal undertakes to
pay the remuneration contracted.
Section 6:273
[Instructions]
(1) The agent shall follow the
instructions of the principal.
(2) The agent may disobey the
principal’s instruction if it is essential for
the principal’s interest, and the principal
cannot be notified in advance. In such a
case the principal shall be notified
without delay.
(3) If the principal gives unreasonable
or impracticable instructions, the agent
shall be obliged to warn him thereof. If
the principal insists on his instruction in
spite of the warning, the agent shall be
entitled to withdraw from or to terminate
the contract, or may carry out the
assignment according to the principal’s
instructions, at the principal’s risk. The
agent shall refuse to comply with such
instruction if compliance would constitute
an infringement of the law or any
administrative decision, or it would
jeopardize the safety or property of
others.
(4) All costs of the agent incurred in
connection with the fulfillment of the
instructions shall be reimbursed by the
principal. The agent may demand
adequate safeguards for carrying out the
assignment. If the principal fails to
provide adequate safeguards, the agent
may refuse to carry out the assignment.
Section 6:274
[Right of representation]
351
If a contract or another legal statement
is required for carrying out the
assignment, the contract shall function
as a power of attorney as well.
Section 6:275
[Obligation to provide information]
(1) The agent shall inform his principal
of his activities and the status of the
assignment upon request, or without a
request when deemed necessary. The
agent shall inform his principal if
employment of another person has
become necessary or if the instructions
need to be changed due to the
emergence of new circumstances.
(2) The agent shall notify the principal
as soon as he fulfills the assignment.
Section 6:276
[Remuneration]
(1) The agent shall be entitled to
demand remuneration even if his actions
brought no results, except if the
assignment failed in part or in whole due
to the agent’s actionable conduct.
(2) Remuneration shall be payable at
the time the contract is performed. If the
contract is terminated before the
assignment has been fulfilled, the agent
shall be entitled to demand an
appropriate fraction of the remuneration
agreed upon for his activities.
(3) The agent shall be required to
advance any costs ordinarily required for
carrying out the assignment.
(4) Upon termination of contract the
principal shall exonerate the agent from
obligations assumed in dealings with
third persons on the basis of the
assignment, and shall reimburse his
necessary and justified expenses.
Section 6:277
[Statutory lien]
In order to secure his claims for
expenses and remuneration, the agent
shall be entitled to statutory lien on the
property of the principal that comes into
his possession in consequence of the
assignment.
Section 6:278
[Termination]
(1) Either party shall be entitled to
terminate the contract.
(2) In the event of termination by the
principal, the principal shall pay
compensation to the agent for damages
resulting from the termination, unless the
notice is given on account of the agent’s
non-performance.
(3) If the agent terminates the contract
at an unsuitable time, he shall pay
compensation to the principal for
damages resulting from the termination,
unless the notice is given on account of
the principal’s non-performance.
(4) Any limitation or exclusion of the
right of termination shall be null and
void. In the case of a long-term
engagement, the parties may agree on
limiting the right of termination and may
stipulate that the right of termination by
notice cannot be exercised within a
specific time frame.
Section 6:279
[Settlement]
352
At the time the contract is terminated,
the agent shall be required to give the
principal everything that has been
acquired by him for the purpose of
fulfilling the assignment or as a result of
doing so, except for what he has lawfully
used in the course of his assignment.
Section 6:280
[Gratuitous service contracts]
(1) The provisions of this Chapter shall
apply to personal service contracts
where the principal is not required to
provide any compensation.
(2) If the agent agrees to provide
services without any compensation, the
principal shall be required to cover the
agent’s related expenses.
Chapter XL
Consignment Contracts
Section 6:281
[Consignment contracts]
(1) Under a consignment contract the
consignment agent undertakes to
conclude a sales contract for a movable
property in his own name, on the
principal’s behalf, and the principal
undertakes to pay the commission
agreed upon.
(2) The provisions of this Chapter shall
apply to the consignment contract where
the consignment agent undertakes the
obligation to conclude another contract.
(3) A consignment contract that
requires the consignment agent to
acquire ownership of a real estate
property shall be null and void.
Section 6:282
[Legal status of the consignment
agent]
(1) The sales contract concluded
under a consignment contract shall
entitle and bind the consignment agent
in terms of the party contracting with the
consignment agent.
(2) The consignment agent shall be
responsible to the principal for the
performance of all of the obligations that
are undertaken by his contracting
partner in the contract, if he has
specifically agreed to do so.
(3) Creditors of the consignment agent
shall not lay claims in respect of:
a) receivables from the party
contracting with the consignment agent
and claims due to the principal;
b) things bought by the consignment
agent in the case of consignment
purchases;
c) sums of money received by the
consignment agent and kept or handled
separately, which are apparently due to
the principal.
Section 6:283
[Acquisition of property]
(1) In respect of consignment
purchases the consignment agent shall
transfer to the principal the ownership of
movable property acquired in the course
of performing the contract as part of the
settlement process.
(2) In respect of consignment sales the
consignment agent shall be authorized
353
to transfer the ownership of the
principal’s movable property.
Section 6:284
[Commission]
The consignment agent shall be
entitled to commission if the sales
contract has been concluded, or if the
contract has not been concluded due to
reasons within the principal’s control.
Section 6:285
[Right to accession]
(1) The commission agent may himself
conclude a sales contract with the
principal, if the market value of the thing
can be clearly determined relying on
publicly accessible information.
(2) In the case of accession, the
consignment agent shall be obligated to
conclude the contract under the terms
considered best for the principal.
(3) During the process of settlement,
the consignment agent shall notify the
principal if he himself has concluded the
sales contract with the principal.
(4) The consignment agent’s claim for
commission shall not be affected if the
sales contract with the principal is
concluded by the consignment agent
himself. Otherwise, in respect of the
consignment agent’s accession the
provisions on sales contracts shall apply
to the relationship between the principal
and the consignment agent.
Section 6:286
[Derogation from the terms of the
consignment contract]
(1) If the commission agent concludes
the sales contract under conditions more
favorable for the principal than the ones
set out in the consignment contract, the
benefit originating therefrom shall accrue
to the principal.
(2) If the consignment agent makes a
sale at a price below the one specified in
the consignment contract, he shall
reimburse the principal for the
difference, unless he is able to prove
that the sales contract could not have
been concluded at the stipulated price,
and 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 consignment contract,
he shall notify the principal thereof.
Upon receipt of such notice, the principal
shall be entitled to reject the sales
contract without delay, unless the
consignment agent has effected
purchase at a price higher than
stipulated, but agreed to reimburse the
difference.
Section 6:287
[Application of the provisions relating
to engagements]
Unless otherwise provided for by this
Chapter, the regulations governing
personal service contract shall apply to
consignment contracts mutatis mutandis.
Chapter XLI
Agency Contracts
354
1. General provisions on agency
contracts
Section 6:288
[Agency contracts]
Under an agency contract the agent
undertakes to provide services with a
view to facilitating the conclusion of a
contract between his principal and a
third party, and the principal undertakes
to pay the fee agreed upon.
Section 6:289
[Agent’s scope of representation]
Unless otherwise provided for in this
Act, the agent shall not be entitled to
conclude the contract he helped
negotiating in his principal’s name, nor
to accept performance under that
contract.
Section 6:290
[Obligation to provide information]
The agent shall notify the principal if
he is engaged in providing agency
services to a third person.
Section 6:291
[Agents’ fees]
(1) The fee shall be payable at the
time the mediated contract is concluded.
(2) The fee shall be payable to the
agent also if the parties conclude the
contract after the termination of the
agency contract.
Section 6:292
[Application of the provisions relating
to engagements]
Unless otherwise provided for by this
Chapter, the regulations governing
personal service contracts shall apply to
agency contracts mutatis mutandis.
2. Long-term agency contracts
Section 6:293
[Special rules relating to independent
agents]
(1) Under an agency contract the
agent undertakes to enter into a longterm
relationship and to negotiate acting
independently - contracts for the
principal to be concluded with third
parties, and to conclude such contract in
the principal’s name, and the principal
undertakes to pay the fee agreed upon.
(2) The agent shall be considered as
acting independently if carrying out the
activity referred to in Subsection (1) by
means other than a contract of
employment, executive officer
relationship or any other relationship
invoked by law, court order or
administrative decision, granting the
right of representation of a legal person.
(3) For the purposes of this Chapter,
long-term relationship means when the
agent:
a) is required to negotiate more than
one contract; or
b) is required to negotiate one
contract, and to maintain and renew that
contract.
(4) If the parties concluded the
contract in writing, one of the parties
shall make available to the other party,
355
upon request, a copy of the contract and
any amendment thereto; any derogation
from this provision and any waiver of this
right shall be null and void.
Section 6:294
[Agent’s scope of representation]
If the agent is entitled to conclude the
contract he has negotiated, his right of
representation shall cover all legal
statements which are usually required in
connection with negotiated contracts.
This, however, shall not include the right
to amend an existing contract, or to
accept money or to determine a
payment date.
Section 6:295
[Principal’s obligations]
(1) The principal shall, at his own
expense, provide assistance and supply
information to the agent to the extent
necessary to carry out his assignment.
To this end, the principal shall make
available to the agent documents
pertaining to the object of the contract.
(2) The principal shall notify the agent
without delay if the quantity for which the
contract can be or intended to be
concluded is significantly less than what
the agent has expected.
(3) The principal shall notify the agent
without delay on his decision to accept
or reject the contract the agent has
negotiated, or if the contract concluded
has not been performed.
(4) Any provision of the parties in
derogation from Subsections (1)-(3) shall
be null and void.
Section 6:296
[Duration of the contract]
A contract concluded for a specific
term shall be converted into a contract of
indefinite duration if the parties continue
to perform the services contracted
beyond the term specified.
Section 6:297
[Termination of contracts]
(1) Either party shall be entitled to
terminate a contract for an indefinite
period by notice with effect to the last
day of the calendar month. The notice
period shall be one month during the
first year of the contract, two months
during the second year and three
months during the third and subsequent
years of the contract. Any clause for a
shorter period shall be null and void.
(2) If the parties stipulated a notice
period longer than what is contained in
Subsection (1), the notice period
applicable to the principal may not be
less than the notice period applicable to
the agent. Any agreement of the parties
to the contrary shall be null and void.
(3) If the contract concluded for a
specific term is converted into a contract
of indefinite duration, the entire length of
the contract shall be taken into account
for determining the length of the notice
period.
Section 6:298
[Indemnification of the agent]
(1) If the agency contract is terminated
the agent shall be entitled to
indemnification if deemed justified
356
having regard to all circumstances of
significance to the contract, in light of the
fact that the termination of the contract
deprives the agent of his right to a
commission to which he would be
entitled in connection with the
transactions concluded, or planned to be
concluded if the contract remained in
force, provided that:
a) the agent solicited new clients for
the principal through forming new
business relations, or expanded existing
business relations resulting in at least
one new client, if such business dealings
produce substantial benefits for the
principal even after the termination of
the contract; or
b) the agent completed the assignment
for setting up a long-term relationship,
but he is prone to lose regular income
due to the termination of the agency
contract.
(2) The amount of indemnification may
not exceed one year’s average
commission the agent had received
during the last five years before the
contract was terminated, or if the agency
contract had existed for less than five
years, the average calculated for one
year from the sum received during the
life of the contract.
(3) Claims for indemnification may be
enforced within a preclusive period of
one year.
(4) Indemnification shall not affect the
agent’s claim for compensation and the
fee due on the basis of an agreement
containing a restriction imposed upon
the agent in exercising economic
activities after the time of termination of
the contract.
Section 6:299
[Exclusion of indemnification]
No indemnification shall be paid to the
agent if:
a) the contract was terminated by the
agent, unless termination was based on
any circumstance within the principal’s
control, or for reasons justified by the
agent’s age or health on account of
which the agent’s performance could no
longer be expected; or
b) if, based on an agreement
concluded with the principal, the agent
transfers his rights and obligations
specified in the contract to a third party.
Section 6:300
[Exclusion of derogation from the rules
of indemnification in favor of the agent]
Any agreement that had been reached
between the parties before the contract
was terminated and which contains a
clause that derogates from the
provisions relating to indemnification to
the detriment of the agent shall be null
and void.
Section 6:301
[Restrictions of competition after the
termination of the contract]
(1) An agreement containing a
restriction imposed upon the agent in
exercising economic activities after the
time of termination of the contract shall
be executed in writing.
(2) The agreement containing a
restriction imposed upon the agent in
exercising economic activities shall be
effective for a term of up to two years
357
after the termination of the contract; any
clause for a term of over two years shall
be null and void.
(3) The agreement containing a
restriction imposed upon the agent in
exercising economic activities shall be
null and void inasmuch as it derogates
from the geographical area, client base
and type of goods fixed in the agency
contract.
Chapter XLII
Shipping Contracts
Section 6:302
[Shipping contracts]
Under a shipping contract the
forwarding agent undertakes to conclude
contracts and to make legal statements
relating to shipments in his own name
and on the principal’s behalf, and the
principal undertakes to pay the fee
agreed upon.
Section 6:303
[Enforcement of claims]
The forwarding agent shall enforce the
principal’s claims against the carrier and
other contractors hired by the forwarding
agent, if so instructed by the principal, at
the expense and risk of the principal.
Furthermore, the forwarding agent shall
make statements even in the absence of
the principal’s instructions, where this is
deemed necessary for the protection of
the rights of the principal.
Section 6:304
[Self-contract]
The forwarding agent shall be entitled
to perform carriage himself.
Section 6:305
[Commission]
The forwarding agent shall be entitled
to any freightage discount granted
subsequently and to the referral fees
paid by carriers for the consignments
delivered.
Section 6:306
[Statute of limitations]
The period of limitation for claims
arising out of or in connection with
shipping contracts shall be one year,
except for damages caused deliberately
or as a result of gross negligence.
Section 6:307
[Liability of forwarding agents]
(1) The provisions relating to carrier’s
liability shall also apply to the liability of a
forwarding agent if:
a) he had the consignment forwarded
together with the goods of others, on the
same means of transport, and the
damage was caused for that reason;
b) the consignment in his possession
is lost or damaged.
(2) If the principal is a foreigner, the
amount of compensation for which the
forwarding agent is liable may not
exceed the highest amount of
compensation that may be awarded
under the law of the principal’s home
State.
358
Section 6:308
[Liability of the principal]
(1) The principal shall be liable for any
damage resulting from the instruction,
insufficient packaging and/or labeling of
the consignment, or from any
discrepancies in the data, documents
and information supplied by the
principal.
(2) If there is a risk of any third party
claim, the forwarding agent may require
adequate safeguards from the principal.
If the principal fails to provide adequate
safeguards, the forwarding agent may
terminate the contract.
Section 6:309
[Application of the provisions relating
to consignment and carriage contracts]
Unless otherwise provided for by this
Chapter, the regulations on consignment
contracts shall apply to the relationship
of the forwarding agent and the
principal, and provisions governing
contracts of carriage shall also apply to
the obligation to provide information
relating to the consignment, to the
handling, protection and transport of
consignments, to the forwarding agent’s
lien rights, and also to the period of
limitation on claims arising out of or in
connection with contracts of carriage.
Chapter XLIII
Fiduciary Asset Management
Contracts
Section 6:310
[Fiduciary asset management
contracts]
(1) Under a fiduciary asset
management contract the fiduciary
undertakes to manage the assets, rights
and receivables entrusted to him by the
principal (hereinafter referred to as
„assets managed”) in his one name and
on the beneficiary’s behalf, and the
principal undertakes to pay the fee
agreed upon.
(2) The contract shall be executed in
writing.
Section 6:311
[Definition of beneficiaries]
(1) The right to determine the
beneficiary and the conditions for the
commencement and termination of
beneficiary entitlements lies with the
principal. The beneficiary may be
identified also by reference to the range
of beneficiaries.
(2) The principal may provide that after
a certain period of time or under certain
conditions the assets managed shall - in
part or in whole - pass to himself, to his
successors or to a specific third party.
(3) If the contract contains an
entitlement for the fiduciary to designate
the person of the beneficiary, the
fiduciary shall also be entitled to specify
the share to be allotted to that
beneficiary.
(4) Designating the fiduciary as the
sole beneficiary shall be null and void.
Section 6:312
[Separation of property]
359
(1) The assets managed shall not be
mixed in any way with the fiduciary’s
own assets or with other assets he
manages, and the fiduciary shall keep
separate records of such assets. Any
provision to the contrary shall be null
and void.
(2) Components of the assets
managed and kept separately from the
fiduciary’s own assets and from other
assets he manages, shown as managed
assets shall be deemed to comprise a
part of the managed assets until proven
to the contrary.
(3) Individual assets replacing certain
assets, security deposit, reimbursement,
or any other value of the like, and the
proceeds of such shall comprise a part
of the managed assets, even if they are
not shown in the records.
(4) Individual assets which the
fiduciary did not show in the records as
part of the assets managed shall be
considered to comprise a part of the
fiduciary’s own personal assets, unless
proven to the contrary.
Section 6:313
[Protection of assets managed]
(1) The fiduciary’s spouse and
domestic partner, and personal creditors
and creditors of other assets managed
by the fiduciary shall not lay claim to any
part of the assets managed. The
managed assets shall not be included in
the fiduciary’s estate.
(2) The beneficiary and the principal
both shall have the right to bring action
against the fiduciary’s spouse and
domestic partner, and personal creditors
and creditors of other assets managed
by the fiduciary, requesting the
separation of the managed assets.
Section 6:314
[Claims of the beneficiary and his
creditors]
(1) The beneficiary shall have the right
under contract to request the fiduciary to
release the managed assets and its
proceeds.
(2) Creditors of the beneficiary shall be
entitled to lay claim to the assets of the
beneficiary from the point in time when
said assets and their proceeds are to be
released to the beneficiary.
Section 6:315
[Right to check]
The principal and the beneficiary shall
have the right to check the fiduciary’s
activities relating to asset management.
The costs of such checks shall be borne
by the principal or the beneficiary.
Section 6:316
[Lack of right to give instructions]
The principal and the beneficiary may
not give instructions to the fiduciary; any
clause to the contrary shall be null and
void.
Section 6:317
[Enhanced requirements for the
fiduciary]
(1) Based on the enhanced
requirement stemming from the
relationship that of which is based upon
trust or confidence, the fiduciary’s
360
primary objective is to serve the
beneficiary’s best interest.
(2) Under the principle of reasonable
commercial practices, the fiduciary shall
have the obligation to protect the
managed assets from foreseeable risks.
Section 6:318
[Fiduciary’s right of disposition]
(1) Management of the assets shall
cover the exercise of entitlements
stemming from the ownership and other
rights and receivables entrusted to the
fiduciary, and the performance of
obligations arising therefrom.
(2) The fiduciary shall have the right of
disposition over the managed assets
according to the conditions and within
the limits set out in the contract.
(3) If the fiduciary breaches the
obligation referred to in Subsection (2)
and unlawfully transfers any part of the
assets he manages to a third party, the
principal and the beneficiary shall have
the right to recover such asset and to
have it reinstated among the managed
assets, if the third party did not act in
good faith or there was no pecuniary
interest. This provision shall also apply
when the managed assets are
wrongfully encumbered.
Section 6:319
[Confidentiality]
(1) The fiduciary shall keep
confidential all facts, data and
information about which he gained
knowledge in the course of or in
connection with carrying out his fiduciary
responsibilities. This obligation applies
notwithstanding the asset management
relationship and shall remain effective
following the termination of the fiduciary
asset management contract.
(2) The principal and his successor
may grant an exemption form the
obligation of confidentiality.
Section 6:320
[Obligation to provide information and
to give account]
(1) At the request of the principal or
the beneficiary the fiduciary shall be
required to provide information on the
managed assets. The information given
shall, in particular, cover the actual and
foreseeable growth in the managed
assets, the individual assets managed
and their value, as well as the liabilities
undertaken to the burden of the
managed assets.
(2) Upon request, the fiduciary shall
give account of the management of
assets, and shall give account to the
principal and/or the beneficiary relating
to the managed assets.
(3) The costs of providing the
information and of giving account shall
be borne by the principal and/or the
beneficiary.
Section 6:321
[Fiduciary’s liability towards the
principal and the beneficiary]
(1) The fiduciary shall be held liable for
any breach of his obligations towards
the principal and/or the beneficiary in
accordance with the general provisions
on liability for non-performance of an
obligation.
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(2) If the fiduciary is not remunerated
for his services, the provisions on liability
for damages relating to any breach of
gratuitous contracts shall apply to his
liability.
(3) The principal and the beneficiary
shall have the right to lay claim to any
financial advantage the fiduciary has
acquired through the infringement of his
fiduciary liability, and to add such
financial advantage to the managed
assets.
Section 6:322
[Fiduciary’s expenses and
remuneration]
(1) If the fiduciary is not remunerated
for his services, he may request
compensation for his justified expenses
arising out of or in connection with asset
management.
(2) The fiduciary shall be entitled to
charge his remuneration and justified
expenses, along with other claims
arising out of or in connection with asset
management directly from the managed
assets.
Section 6:323
[Fiduciary’s liability in respect of third
parties for commitments]
(1) The fiduciary shall bear
responsibility for performance of the
obligations undertaken with the assets
entrusted to him.
(2) The fiduciary shall bear unlimited
liability with his personal assets for
claims arising from obligations
undertaken to the burden of the
managed assets, if such claims cannot
be satisfied from the managed assets,
and the other party did not know or
should not have known that the
commitment by the fiduciary reached
beyond the limits of the managed
assets.
Section 6:324
[Multiple fiduciaries]
(1) If the principal appoints more than
one fiduciary, the fiduciaries shall
manage the assets jointly and shall bring
decisions collectively.
(2) If the fiduciaries are subject to
liability with their personal assets, their
responsibility for decisions made
collectively shall be joint and several in
dealings with third parties.
(3) The responsibility of the fiduciaries
for any infringement of their fiduciary
liability shall be joint and several with
respect to the principal and the
beneficiary.
Section 6:325
[Change in the person of the parties]
(1) The principal shall have the right to
recall the fiduciary at any time, and may
appoint a replacement fiduciary at the
same time.
(2) In the event of the principal’s death
or dissolution without succession, if
there is no other principal for the
managed assets, the court shall have
powers to recall the fiduciary at the
beneficiary’s request, and shall appoint
a replacement fiduciary at the same
time, if the fiduciary has seriously
breached the contract.
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(3) Several beneficiaries may exercise
that right collectively, with the proviso
that the court shall rule at the request of
either of them concerning the
termination of the fiduciary’s office and
on the appointment of a new fiduciary.
The court shall not appoint a person to
the office of fiduciary who is objected to
by all of the beneficiaries.
Section 6:326
[Termination of fiduciary asset
management]
(1) Fiduciary asset management shall
terminate if:
a) there are no assets left to manage;
b) the fiduciary resigns, after three
months following the resignation;
c) there is no fiduciary managing the
assets for a period of over three months,
at the time of termination of the fiduciary
mandate;
d) the principal was the sole
beneficiary, at the time of his death.
(2) In the case of resignation, the
fiduciary’s primary objective remains to
serve the beneficiary’s best interest.
(3) If the fiduciary asset management
contract is signed for an indefinite
duration, or for a period of more than fifty
years, it shall terminate after fifty years.
Any clause to the contrary shall be null
and void.
(4) Fiduciary asset management shall
not be terminated on account of the
principal becoming the successor of the
fiduciary.
(5) Fiduciary asset management shall
not be terminated upon the death or
dissolution of the principal, the fiduciary
or the beneficiary.
Section 6:327
[Settlement obligation]
(1) If fiduciary asset management is
terminated, the fiduciary shall remain
subject to the obligation of settlement
and to provide information relating to the
managed assets as if fiduciary asset
management still existed.
(2) If the termination of fiduciary asset
management puts the managed assets
at risk, the fiduciary shall take measures
as necessary according to the contents
of fiduciary asset management until the
time of settlement.
Section 6:328
[Allotment of assets managed]
(1) The fiduciary, if his mandate is
terminated, shall release the managed
assets to an additional or a replacement
fiduciary appointed by the principal or,
failing this, to the principal.
(2) If the fiduciary is dissolved without
succession, the managed assets shall
devolve upon the dissolution of the
fiduciary to an additional or a
replacement fiduciary appointed by the
principal, or, failing this, it shall be
returned to the principal.
(3) The obligations undertaken to the
burden of the managed assets shall
accrue to an additional or a replacement
fiduciary appointed by the principal, or
failing this, to the principal.
(4) If there is more than one principal,
they shall become entitled to a share of
the returned assets in proportion to their
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original contribution to the managed
assets, and they shall be subject to the
reversionary obligations comprising a
part of the managed assets in the same
ratio; their liability to the creditors of the
managed assets shall be joint and
several.
(5) If the contract provides for the
allocation of the assets in the form of
succession of the fiduciary, the rights
and obligations shall accrue to the
successor fiduciary in accordance with
the provisions of Subsections (1)-(4).
Section 6:329
[Fiduciary asset management
established by unilateral act]
(1) If the principal and the beneficiary
is the same person, fiduciary asset
management shall be established by
means of an irrevocable unilateral
statement made by the principal
executed in an authentic instrument.
(2) Where fiduciary asset management
is created under a will, it shall take effect
upon the fiduciary’s acceptance of the
appointment under the conditions set out
in the will.
(3) The regulations governing fiduciary
asset management contracts shall also
apply where fiduciary asset
management is established by means of
a unilateral statement.
Section 6:330
[Application of the provisions relating
to engagements]
Unless otherwise provided for by this
Chapter, the regulations governing
personal service contracts shall apply to
fiduciary asset management mutatis
mutandis.
TITLE XVII
LICENSING CONTRACTS
Chapter XLIV
Lease Agreements
1. General provisions on lease
agreements
Section 6:331
[Lease agreements]
(1) Under a lease agreement the
lessor undertakes to convey temporary
use of a thing, and the lessee
undertakes to accept the thing and pay
the lease charge.
(2) The regulations on the lease of
things shall apply mutatis mutandis to
the conveyance of the exercise of rights
temporarily to another person for
consideration.
Section 6:332
[Lessor’s guarantee]
(1) The lessor shall guarantee that the
thing leased is and will be suitable for
use as contracted for the entire 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 lack of
conformity shall apply with the exception
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that the lessee is entitled to terminate
the contract instead of withdrawal 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 the thing. Concerning
this guarantee, the principle of warranty
of title shall apply with the exception that
the lessee is entitled to terminate the
contract instead of withdrawal.
(3) If the leased thing is a dwelling or
other premises designed for human
habitation, and it is in a condition
representing a potential risks to health,
the lessee may terminate the agreement
even if he was aware, or should have
been aware, thereof at the time of
conclusion of the agreement or at the
time of taking possession. No waiver of
this right of the lessee shall be
considered valid.
Section 6:333
[Use of the thing]
(1) The lessee shall be entitled to use
the thing for its intended purpose and in
accordance with the contract.
(2) The lessor shall have the right to
inspect use without causing any
unnecessary disturbance to the lessee.
(3) If the lessee fails to terminate
inappropriate or non-contractual use of
the thing despite being asked to do so
by the lessor, the lessor shall be entitled
to terminate the agreement.
(4) If the lessee transforms the thing
without permission, the lessee shall be
obliged to restore the original state at
the lessor’s request.
Section 6:334
[Assignment of use to third parties]
(1) The lessee shall be entitled to sublease
or assign the use of the leased
thing to a third party subject to the
lessor’s permission.
(2) If the lessee has sub-leased or
assigned use of the thing to another
person with the lessor’s permission, the
lessee shall be liable for the conduct of
the sub-lessee and the user as for his
own use.
(3) If the lessee sub-leases or assigns
use of the thing to another person
without the lessor’s permission, the
lessee shall be liable for damages that
would not otherwise have occurred.
Section 6:335
[Costs]
(1) Minor expenses required for the
maintenance of the 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 in
the event of imminent danger to which
the thing is exposed or if any work for
which the lessor is responsible is
required.
(3) The lessor shall be permitted to
carry out the work for which he is
responsible and take appropriate
measures for the prevention of losses.
(4) The lessee shall have the right to
carry out the work for which the lessor is
responsible in the lessor’s stead and at
365
his expense, if the lessor did not perform
such work.
Section 6:336
[Lease payments]
(1) The lessee shall be obliged to
make lease payments in advance on a
monthly basis. If the lease agreement is
concluded for a period of less than a
month, the lease payment shall be due
at the time of conclusion of the contract.
(2) No lease payments shall be made
for the period when the thing cannot be
used for reasons beyond the lessee’s
control.
(3) In the event of failure to make
lease payments or other costs charged
to the lessee, the lessor shall be entitled
to terminate the lease, provided that the
lessor has issued a written demand for
remittance of overdue payments within a
reasonable period of time and notified
the lessee of the consequences, and the
lessee fails to remit payment within this
period.
Section 6:337
[Statutory lien]
(1) The lessor of a real estate property
shall be entitled to statutory 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 protest against
a lien, the extent of it, or the lessor’s
action to block the removal of assets
other than those already providing full
cover for his claim, the lessor shall
enforce his lien by court action within
eight days. Failure to do so shall be
construed as forfeiture of the lien.
(4) If the lessee removes the
hypothecated thing without the lessor’s
permission and does not provide
adequate safeguards instead, the lessor
shall be entitled to demand the return of
the thing at the lessee’s expense. The
lien shall be re-established upon the
return of the thing.
Section 6:338
[Termination of fixed-term lease,
destruction of the thing]
(1) If the lessee continues to use the
thing following the expiry of the lease
term specified in the lease agreement
and the lessor does not file a protest
thereto within fifteen days following the
expiry of the term stipulated in the
agreement, the lease agreement
concluded for a specific term shall be
transformed into a lease for an indefinite
period of time.
(2) A lease agreement shall be
terminated if the thing is destroyed.
Section 6:339
[Termination of lease by notice]
(1) Either party shall be entitled to
cancel an open-term agreement:
a) any time in the case daily lease, at
the end of the day to take effect on the
next day;
b) in the case of weekly lease, on the
first day of the week to take effect at the
end of that week;
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c) in the case of monthly lease, at the
latest by the fifteenth day of the month to
take effect at the end of that month;
d) in the case of longer lease terms, at
the latest by the thirtieth day preceding
the end of the lease term.
(2) A fixed-term lease may be
terminated by either party by giving
notice at the latest by the fifteenth day of
the month, to take effect at the end of
the month if termination can be
exercised within the statutory period of
notice.
(3) If lease is terminated without the
notice period defined in Subsection (1),
the lease shall be considered terminated
effective at the end of the lease period
following the time when the notice was
communicated.
(4) The lessee’s heirs shall be entitled
to terminate by notice a fixed-term lease
by giving notice within thirty days. The
notice period shall be calculated:
a) from the date of death of the
testator, if no probate proceeding is
held;
b) from the operative date of the grant
of probate adopted in probate
proceedings with full effect;
c) from the date when the judgment of
the court becomes final, in the event of
inheritance proceedings.
Section 6:340
[Transfer of leased things]
(1) The lessee shall be obliged to
permit any potential buyers of a thing to
inspect it without causing any
unnecessary disturbance to the lessee.
(2) If the lessor transfers ownership of
the leased thing following the conclusion
of the lease agreement, the rights and
obligations of the owner arising out of or
in connection with the lease agreement
shall accrue to the new owner. The
lessor and the new owner shall be jointly
and severally liable toward the lessee for
the lessor’s obligations arising out of or
in connection with the lease agreement.
(3) The new owner of the leased thing
shall be entitled to terminate the fixedterm
lease if he was misled by the
lessee regarding the existence of a
lease or material lease conditions.
Section 6:341
[Rights and obligations of the parties
when lease is terminated]
(1) Prior to the termination of the
lease, 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, the
lessee shall 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
arising from the lease are settled.
(3) If the lessee wrongly withholds the
thing, he shall be liable to pay the lease
charges stipulated in the agreement for
the period of retention, and beyond that
for all damages that otherwise would not
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
367
without causing any damage to the
thing.
2. Residential lease agreements
Section 6:342
[Residential lease agreements]
Where the object of the agreement is a
residential property, the provisions on
lease agreements shall apply with the
following exceptions.
Section 6:343
[Security deposit]
If, by agreement of the parties, the
tenant is required to put down a security
deposit for the landlord to assure
performance of his obligations arising
form the lease agreement, and this sum
exceeds the monthly rent three times
over, such excessive security deposit
may be reduced by the court at the
lessee’s request.
Section 6:344
[Landlord’s maintenance obligation]
The landlord shall fulfill his
maintenance obligation:
a) without delay where emergency
repair is required for fixing problems and
defects which represent a risk to life or
otherwise detrimental to the building’s
condition which significantly impairs the
use of the rental premises or the
neighboring property;
b) in other cases, at the time of
general maintenance or renovation of
the building.
Section 6:345
[Tenant’s right of removal]
(1) The tenant may not exercise his
right of removal if the landlord offers
appropriate compensation for the
redemption of his right of removal, and
this does not harm the tenant’s relevant
lawful interests.
(2) The tenant’s right of removal may
be excluded or limited by the parties to
the agreement upon providing
appropriate compensation for the related
disadvantages. This provision shall also
apply to the exclusion or limitation of the
right to compensation.
Section 6:346
[Tenant’s obligation of sufferance]
(1) The tenant is obliged to permit the
landlord to carry out work which are
deemed necessary to keep the rental
premises in good repair.
(2) The tenant shall not be obliged to
tolerate works for the renewal or
upgrading of the rental premises, except
when it does not significantly impair the
use of the rental premises taking into
account the work to be performed,
architectural consequences and the
foreseeable expenses on the tenant’s
part.
(3) The landlord shall notify the tenant
in writing of the planned works and of
the time they are expected to take in due
time before the commencement of works
under Subsection (2). The tenant shall
have the right to terminate the lease
agreement on or before the last day of
368
the month following the time of receipt of
the notice.
Section 6:347
[Termination by notice]
(1) Either party shall be entitled to
cancel an open-term agreement at the
latest by the fifteenth day of the month,
to take effect at the end of the next
month.
(2) If the agreement is terminated
without the notice period defined in
Subsection (1), the lease shall be
considered terminated effective at the
end of the second month following the
date when the notice was given.
Section 6:348
[Termination for breach of contract]
(1) The landlord shall have the right to
terminate the residential lease
agreement, upon prior warning sent to
the tenant, by giving at least fifteen days’
notice with effect to the last day of the
following month, if the tenant or any
other occupant of the premises is
engaged in any flagrant misconduct
against the neighbors, that of which is
contrary to the requirement of
coexistence; or if using the rental
premises or the connected common-use
areas contrary to the purpose for which
they were intended, or in breach of the
contract.
(2) Prior warning is not required if the
impugned conduct is grave enough,
upon which the landlord cannot be
expected to maintain the lease
agreement. The notice shall be delivered
within eight days after gaining
knowledge thereof.
Chapter XLV
Leasehold Contracts
Section 6:349
[Leasehold contracts]
(1) Under a leasehold contract the
lessee shall be entitled to use
temporarily an economically viable thing
or to exercise an economically viable
right, and to collect the proceeds
thereof, and he shall be obliged to pay
appropriate rent therefor.
(2) Leasehold contracts shall be
executed in writing.
Section 6:350
[Enforcement of the requirements of
prudent management]
(1) The lessee shall be entitled to
collect the proceeds of the thing only in
accordance with the requirements of
prudent management.
(2) The lessee of arable 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 6:351
[Costs]
(1) The lessee shall bear responsibility
for the renovation and repairs that are
necessary for the maintenance of the
369
leased thing as well as all applicable
public dues on the thing.
(2) Extraordinary renovations and
repairs shall be the responsibility of the
lessor.
Section 6:352
[Leasehold payment]
(1) Leasehold payments shall be made
subsequent 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
entitled to request a reduction or
consolidation of lease payments. The
lessee must notify the lessor of such
request prior to having the crop in
question harvested.
(3) Reduced or cancelled lease
payments may not be demanded
subsequently.
Section 6:353
[Statutory lien]
(1) The lessor shall be entitled to
statutory lien on the proceeds of the
thing and/or on the lessee’s property
found in the leasehold area up to the
extent of lease payments.
(2) The provisions on the lien of the
landlords of real estate properties shall
also apply to the lien of lessors afforded
under Subsection (1).
Section 6:354
[Termination of leasehold contracts]
(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.
The provisions on the termination of
lease agreements shall apply to the
notice period of leasehold contracts for
other things or rights.
(2) The lessor shall have the right to
terminate the leasehold contract also if
the lessee fails to cultivate the leased
land despite of being asked to do so, or
is engaged in conduct that seriously
jeopardizes the overall success of
production, the fertility of the land, the
livestock, or equipment.
(3) The lessee’s heirs shall be entitled
to terminate his agricultural leasehold
within thirty days by the end of the fiscal
year, even if the testator died within the
last six months of the fiscal year. The
notice period shall be calculated:
a) from the date of death of the
testator, if no probate proceeding is
held;
b) from the operative date of the grant
of probate adopted in probate
proceedings with full effect;
c) from the date when the judgment of
the court becomes final, in the event of
inheritance proceedings.
Section 6:355
[Returning the leased assets in
agricultural leasehold agreements]
Upon the termination of an agricultural
leasehold agreement, the arable land
and other leased things shall be
returned in a condition that allows
370
immediate and proper continuance of
production.
Section 6:356
[Application of the rules of lease
agreements]
Unless otherwise provided for by this
Chapter, the regulations governing lease
agreements shall apply to leasehold
contracts mutatis mutandis.
Chapter XLVI
Lending Arrangements
Section 6:357
[Lending arrangements]
(1) Under a lending arrangement the
lender undertakes to make available for
use, for a limited period of time and not
for direct or indirect economic or
commercial advantage, a specific thing,
and the borrower shall accept the thing.
(2) The lender shall be entitled to
refuse performance of the contract if he
is able to prove that his performance of
the contract can no longer be expected
due to a significant change in his or in
the borrower’s circumstances or in his
relationship to the borrower after the
contract has been concluded.
Furthermore, the lender shall be entitled
to refuse performance of the contract if
termination can be applied on the
grounds of factors emerging after the
conclusion of the contract.
(3) The regulations on lending
arrangements shall apply mutatis
mutandis to the conveyance of the
exercise of rights temporarily to another
person not for economic or commercial
advantage.
Section 6:358
[Use of a thing made available under
lending arrangements, enjoying the
benefits thereof]
(1) The borrower shall be entitled to
use the thing properly and in accordance
with the contract.
(2) The borrower shall be entitled to
make available the thing for use to a
third person with the consent of the
lender.
(3) If the borrower has made available
the thing for use to another person with
the lender’s permission, the borrower
shall be liable for the conduct of the user
as if it were his own.
(4) If the borrower makes available the
thing for use to another person without
the lender’s permission, the borrower
shall be liable for damages that
otherwise would not have occurred.
(5) Any proceeds from the thing shall
belong to the lender.
(6) The borrower shall be liable to
cover the costs of maintenance of the
thing, and shall be entitled to
compensation for other related
expenses in accordance with the
regulations on negotiorum gestio.
Section 6:359
[Termination of lending arrangements]
(1) A lending agreement shall be
terminated:
a) when the thing is returned;
b) upon the death of the borrower.
371
(2) Either party shall be entitled to
cancel an open-term lending
arrangement by giving fifteen days’
notice. Should the lender die, his heir
shall be entitled to exercise the right of
termination, even if termination were not
otherwise possible.
(3) The borrower shall be entitled to
offer to return the thing at any time, and
the lender shall not be entitled to refuse
to take the thing back without good
cause.
(4) The lender may terminate the
contract if:
a) the specified object of the lending
arrangement has become impossible;
b) the borrower damages the thing,
uses it in a way contrary to the purpose
for which it was intended or in breach of
the contract, make it available to a third
person for use without permission, or if
there is a risk that the borrower will not
return the thing intact;
c) the relationship between the parties
has deteriorated due to the conduct of
the borrower;
d) the lender must have the thing for
reasons unknown at the time the
contract was concluded.
TITLE XVIII
DEPOSIT ARRANGEMENTS
Chapter XLVII
General Provisions Relating to
Deposit Contracts
Section 6:360
[Deposit contracts]
Under a deposit contract the
depositary undertakes to safeguard the
movable property to which the contract
pertains, and to return it when the
contract is terminated, and the depositor
undertakes to pay the fee agreed upon.
Section 6:361
[Use of deposited things, entrusting
them to others, collecting the proceeds,
and handling]
(1) The depository shall safeguard the
deposited thing separate from his own
assets and from other deposited things,
and shall keep records of them
accordingly.
(2) The depositary shall be required to
manage the deposited thing if it is
necessitated by the nature of the
deposited thing. The regulations relating
to engagements shall also apply to the
management of deposited things.
(3) The depositary shall not use or
exploit the deposited thing, or give it to
another person’s possession or for
safekeeping, unless this is necessary in
order to protect the depositor from
suffering any losses. In the event of any
infringement of this provision the
depositary shall be liable for all damages
that otherwise would not have
happened.
(4) The depository shall collect the
proceeds of the deposited thing if, by its
nature, it is economically viable. The
depositary shall give account to the
depositor in relation to the proceeds
372
collected. The depositary shall be
entitled to use the proceeds collected to
cover his expenses, and shall give the
rest to the depositor.
Section 6:362
[Refusal to accept the thing]
The depositary shall be entitled to
refuse to accept a thing upon the
occurrence of conditions under which
the contract should be terminated in the
case of fixed-term contracts.
Section 6:363
[Statutory lien]
In order to secure his due claims for
fees and expenses, the depositary shall
be entitled to statutory lien on the
depositor’s property that is in his
possession as a consequence of the
deposit.
Section 6:364
[Termination of deposit contracts]
(1) The depositor shall be entitled to
terminate the contract at any time.
(2) If, by agreement of the parties, the
depositary is required to release the
thing to a third party specified in the
contract upon the occurrence of
conditions stipulated in the contract or
upon the termination of the contract, the
depositor may terminate the contract
subject to the consent of the third party
specified in the contract.
(3) The depositary shall be entitled to
terminate a deposit contract of
indeterminate duration by giving fifteen
days’ notice.
(4) The depositary shall be entitled to
terminate a deposit contract of fixed
duration if the thing is considered to be
at risk, or 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.
(5) If the deposit is terminated before
expiry of the time that can be inferred
from the contract, the depositor shall pay
a commensurate proportion of the fee.
(6) The depositary shall return the
thing at the place where it was to be
held. If the depositor refuses to receive
the thing, the regulations on negotiorum
gestio shall be applied.
Section 6:365
[Gratuitous deposit]
(1) The provisions of this Chapter shall
apply mutatis mutandis to deposit
contracts where the depositor is not
required to provide any compensation.
(2) The depositary shall be entitled to
demand reimbursement for necessary
expenses, even if the deposit is
otherwise gratuitous.
(3) In connection with gratuitous
deposit the depositary shall be held
liable for loss incurred by the depositor
resulting from the loss, destruction or
damage to the thing according to the
principles of non-contractual liability.
Chapter XLVIII
373
Collective and Exceptional Deposit
Contracts
Section 6:366
[Collective deposit contracts]
(1) If the object of deposit is a fungible
property and if according to the
agreement the depositary is entitled to
safeguard in the same place the fungible
property of several different depositors
together, without having to separate
them according to depositors or to
identify them individually, the depositors
shall become the co-owners of such
fungible properties of the same type and
quality and, when the deposit is
terminated, the depositary shall be
required to return property of the same
type and quality as the property
deposited in the proportion due to the
depositor according to his share of
ownership.
(2) The consent of other co-owners is
not required for releasing a quantity in
proportion to the share of ownership.
(3) The depositary shall be entitled to
place, even without the depositor’s
consent, the securities held in collective
deposit under the care of secondary
depositaries such as investment service
providers or clearing houses authorized
to provide safe custody services.
Section 6:367
[Exceptional deposit contracts]
If the item deposited is a fungible
property and, according to the contract,
the depositary is entitled to use and
dispose over the deposited property, the
depositary shall acquire ownership and
shall be liable to return to the depositor
property of the same type and quality, in
the same quantity when the deposit
contract is terminated.
Section 6:368
[Account-keeping obligation in
connection with collective and
exceptional deposit contracts]
If the depositary is required to open a
safe custody account on the depositor’s
behalf for securities held under collective
and exceptional deposit contracts, the
provisions on the transfer or
encumbrance of dematerialized
securities shall apply mutatis mutandis
to the transfer of such securities.
Chapter XLIX
Hotel Deposit Contracts
Section 6:369
[Hotel deposit contracts]
(1) The liability of hotels shall cover
personal property put by guests in
places in the hotel that are designated or
usually used for this purpose, or in their
rooms, and to property of guests handed
over to an employee of the hotel whom
he could believe to be authorized to
receive his property. The liability of
hotels shall be limited at fifty times the
daily price of the hotel room. Any
limitation to or exclusion of liability in
excess thereof shall be null and void.
(2) The hotel’s liability for securities,
cash and other valuables shall exist if
374
the hotel has taken possession of the
property for safekeeping or if the hotel
has refused to take possession of the
thing for safekeeping. The hotel’s liability
for property placed in such manner shall
be unlimited.
Section 6:370
[Hotel’s lien]
The regulations governing lessors’
liens shall apply mutatis mutandis to the
lien rights of hotels when acting in the
capacity of depositary.
Section 6:371
[Liability of institutions which are open
to the public]
The regulations governing hotel
liability shall apply to the liability of
baths, cafés, restaurants, theaters, and
other similar establishments which are
open to the public, as well as cloakroom
operators, with the following exceptions:
a) their liability 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 property, the
institution shall be liable only for
damages to things deposited in such a
place.
TITLE XIX
DISTRIBUTION CONTRACT AND
LICENSE (FRANCHISE)
AGREEMENT
Chapter L
Distribution Contracts
Section 6:372
[Distribution contract]
Under a distribution contract the
supplier undertakes to sell specific
movable property (hereinafter referred to
as „product”) to the distributor, and the
distributor undertakes to purchase the
product from the supplier and to sell it in
his own name and on his own behalf.
Section 6:373
[Protection of reputation]
(1) The parties shall protect the
reputation of the product.
(2) The supplier shall inform the
distributor of advertisements on the
product, and shall - for a fee - make
available to the distributor promotional
material for marketing the product.
Section 6:374
[Instructions and checking]
(1) The supplier shall have the right to
give instructions as to the proper
distribution of the product.
(2) If the supplier gives unreasonable
or unsuitable instructions, the distributor
shall be obliged to warn him thereof. If
the supplier insists on his instruction in
spite of the warning, the distributor shall
carry out the instruction; any damage
resulting therefrom shall be the liability of
the supplier. The distributor shall refuse
to comply with such instructions if
375
compliance would constitute an
infringement of the law or any
administrative decision, or it would
jeopardize the safety or property of
others.
(3) The supplier shall be entitled to
check fulfillment of the contract and his
instructions.
Section 6:375
[Application mutatis mutandis in
respect of services]
The provisions of this Chapter shall
apply mutatis mutandis to the supply of
services.
Chapter LI
License (Franchise) Agreements
Section 6:376
[License (franchise) agreements]
(1) Under a license agreement the
franchisor undertakes to grant rights of
use, utilization and exploitation rights
relating to assets protected by copyright
or industrial property rights, including
know-how, and the franchisee
undertakes to produce and supply goods
and/or services through the use,
utilization or exploitation of such assets
protected by copyright or industrial
property rights, including know-how, and
to pay the fee agreed upon.
(2) In the process of supply the
franchisee shall act in his own name and
on his own behalf.
Section 6:377
[Copyright and industrial property
rights, protection of know-how]
(1) The franchisor shall ensure that the
franchisee has ongoing and
uninterrupted access to the use,
utilization and exploitation rights, as are
required for running the franchise, during
the full term of the contract.
(2) The franchisee shall take measures
to protect the know-how placed at his
disposal.
Section 6:378
[Supply obligation]
If the franchisee is obligated to obtain
the goods to be sold or supplies of basic
materials for the production of goods
from the franchisor or from a person
designated by the franchisor, and the
franchisor fails to fulfill the order of the
franchisee, the franchisee shall be
entitled to obtain the goods or the basic
materials from other sources.
Section 6:379
[Protection of reputation]
The parties shall undertake the
obligation to protect the network
established through the rights of use,
utilization and exploitation rights granted
under the contract relating to assets
protected by copyright or industrial
property rights, including know-how, as
well as the reputation of the goods and
services produced and/or sold.
Section 6:380
[Instructions and checking]
376
(1) The franchisor shall have the right
to give instructions as regards the
production and sale of goods and
services, and the protection of the
reputation of the network and the goods
and services produced and/or sold.
(2) If the franchisor gives
unreasonable or unsuitable instructions,
the franchisee shall be obliged to warn
him thereof. If the franchisor insists on
his instruction in spite of the warning, the
franchisee shall carry out the instruction;
any damage resulting therefrom shall be
the liability of the franchisor. The
franchisee shall refuse to comply with
such instructions if compliance would
constitute an infringement of the law or
any administrative decision, or it would
jeopardize the safety or property of
others.
(3) The franchisor shall be entitled to
check fulfillment of the contract and his
instructions.
Section 6:381
[Termination of the contract]
(1) Either party shall be entitled to
terminate a contract concluded for an
indefinite period by notice with effect to
the last day of the calendar month. The
notice period shall be one month during
the first year of the contract, two months
during the second year and three
months during the third and subsequent
years of the contract.
(2) Upon termination of the contract,
the rights of use, utilization and
exploitation granted to the franchisee
relating to assets protected by copyright
or industrial property rights, including
know-how, shall cease.
TITLE XX
CREDIT AND ACCOUNT
AGREEMENTS
Chapter LII
Credit Agreements
Section 6:382
[Credit agreements]
(1) Under a credit agreement the
creditor undertakes to ensure the
availability of a specific credit limit, and
to conclude a loan agreement, contract
of suretyship, guarantee contract or
conduct other loan operations up to the
said credit limit, and the debtor
undertakes to pay the fee agreed upon.
(2) The creditor shall enter into a
contract for loan operations when so
requested by the debtor, if the conditions
set out in the credit agreement are met.
The debtor shall be entitled to call upon
the creditor to conclude a contract
during the period of availability fixed in
the credit agreement.
(3) The debtor shall be entitled to
terminate the credit agreement at any
time.
(4) The creditor shall have the right to
terminate the agreement if:
a) any material changes took place in
the debtor’s circumstances, and the
debtor fails to provide adequate
377
guarantees in spite of being requested
to do so;
b) the debtor misled the creditor, and
this had an impact on the conclusion of
the contract and its contents; or
c) the debtor’s conduct, if aimed at
depleting funds, jeopardizes
performance of the contract concluded
on the basis of the credit agreement.
(5) The creditor shall be entitled to
terminate the credit agreement without
requesting the debtor to provide
adequate guarantees, if it is evident that
the debtor is unable to provide adequate
guarantees.
(6) Termination of the credit
agreement shall not entail the
termination of contract concluded on the
basis of the credit agreement.
Chapter LIII
Loan Agreements
Section 6:383
[Loan agreements]
Under a loan agreement the creditor
undertakes to make available a specific
sum of money, and the debtor
undertakes to repay that sum to the
creditor at a later date with interest.
Section 6:384
[Refusal to disburse a loan amount]
The creditor shall be entitled to refuse
disbursement of the loan if, due to any
material changes in the debtor’s
circumstances or in the value or
enforceability of the collateral,
performance of the contract can no
longer be expected, and the debtor fails
to provide adequate guarantees in spite
of being requested to do so.
Section 6:385
[Failure to draw funds from the loan]
(1) The debtor shall not be obligated to
draw funds from the loan.
(2) If the debtor does not draw funds
from the loan, he shall reimburse the
creditor for expenses incurred in
connection with the conclusion of the
agreement.
Section 6:386
[Credit availability]
(1) If according to the contract funds
from the loan may be drawn within a
predetermined period of time following
the time of conclusion of the agreement
or if certain specific conditions are met,
the creditor shall keep the loan amount
available until said time period or until
the conditions mentioned are met.
(2) The debtor shall be liable to pay a
fee to the creditor on the loan amount
kept available, for the duration of
keeping it available.
Section 6:387
[Termination of the loan agreement]
(1) The creditor shall be entitled to
terminate the loan agreement if:
a) any material changes took place in
the debtor’s circumstances, and the
debtor fails to provide adequate
guarantees in spite of being requested
to do so;
378
b) it is impossible to use the loan for
the purpose specified in the agreement,
or the debtor uses the loan for a purpose
other than the one stipulated in the
agreement;
c) the debtor misled the creditor, and
this had an impact on the conclusion of
the agreement and its contents;
d) the debtor impedes any
investigation relating to his solvency,
and concerning collateral, security, or
the realization of the purpose of the
loan;
e) the debtor’s conduct, if aimed at
depleting funds, jeopardizes repayment
of the loan;
f) the collateral provided for the loan
has significantly depreciated in value or
in enforceability, and the debtor has not
supplemented it at the request of the
creditor; or
g) the debtor delays the payment
obligation arising out of the loan
agreement, and fails to remedy such
omission when so requested.
(2) The creditor shall be entitled to
terminate the loan agreement without
requesting the debtor to provide
adequate guarantees, if it is evident that
the debtor is unable to provide adequate
guarantees.
Section 6:388
[Complementary loan]
The debtor shall not be required to pay
interest and other charges if the parties
have expressly provided so or if it
follows from the purpose of the
agreement or from the circumstances of
the case. In this case the provisions on
loan agreements shall apply subject to
the exception that:
a) the creditor shall be entitled to
refuse disbursement of the loan due to
any material changes in his own
circumstances and may move to recover
the loan amount already paid out;
b) the debtor shall not be liable to pay
a fee for keeping the loan amount
available.
Section 6:389
[Application of the provisions
pertaining to loan agreements]
(1) The regulations governing loan
agreements shall apply mutatis mutandis
if the subject of the loan is not money
but some other fungible property given
to the debtor, upon which the debtor
shall be liable to return to the creditor
property of the same type and quality, in
the same quantity at a later date defined
in the agreement. In that case interest
shall be construed as a fee calculated by
the formula for calculating the interest
based on the market value of the
property at the time when transferred.
(2) The provisions on loan agreements
shall apply mutatis mutandis in those
cases where the service provided by
one of the parties precedes the money
to be provided by the other party, or if
payment of the consideration precedes
performance of the main subject matter.
Chapter LIV
Deposit Account Contracts
Section 6:390
379
[Deposit account contracts]
(1) Under a deposit account contract
the deposit holder is entitled to deposit a
specific amount of money to the bank,
and the bank undertakes to accept the
sum of money offered by the deposit
holder and to repay the same amount at
a later date with interest.
(2) In the case of fixed-term deposits
the bank is required to repay the funds
held on the account upon maturity or as
instructed by the deposit holder.
(3) The deposit holder shall be entitled
to request repayment of the funds held
on the account before the expiry of the
term specified in the contract. In the
absence of the deposit holder’s request,
the bank shall not be entitled to repay
the funds held on the account before the
expiry of the term specified in the
contract.
(4) The funds not collected upon
maturity shall be converted into a
deposit of indeterminate duration.
(5) In the case of deposits for an
unfixed term the bank is required to
promptly repay the funds held on the
account as instructed by the deposit
holder.
Chapter LV
Current Account Contracts
Section 6:391
[Current account contracts]
Under a current account contract the
parties shall assume an obligation to
record and settle their enforceable
monetary claims arising from a specific
relationship in a consolidated account.
Section 6:392
[Establishing the balance of current
accounts]
(1) The balance of a current account
shall be established once a year.
(2) The party managing the current
account shall communicate the balance
to the other party in writing, with an
itemized list of transactions. The other
party shall be entitled to contest the
balance or the receivables and payables
that serve as the basis for computing the
balance, in writing, within a preclusive
period of thirty days of receipt of the
written communication.
(3) The individual claims on the current
account shall cease to exist and shall be
substituted by the current account
balance:
a) in the absence of an objection;
b) upon the parties’ agreement
regarding the items contested; or
c) if the court has ruled on the contest.
Section 6:393
[Legal effects related to current
account balance]
(1) After the balance of the current
account has been established, the
parties shall not be entitled to dispose
over any of their claims on the current
account, as their right of disposal applies
to the current account balance only.
(2) The period of limitation on claims
held on current accounts shall be
suspended until the balance is
380
established. The balance shall lapse
according to the general provisions.
(3) Only the current account balance at
the time of attachment may be subject to
judicial enforcement. After the beginning
of enforcement, orders for withdrawal
from the current account shall be
accepted only if the legal basis thereof
originates from before the enforcement
procedure.
(4) The guarantee falling within the
scope of the current account contract
shall cover the balance of the account.
Chapter LVI
Payment Account Contracts
Section 6:394
[Payment account contracts]
Under a payment account contract the
account keeper undertakes to open a
current account for the account holder
for handling his financial transactions
(hereinafter referred to as „payment
account”), and the account holder
undertakes to pay the fee agreed upon.
Section 6:395
[Account keeper’s obligations]
(1) The account keeper shall accept
the account holder’s payment orders
and direct debit orders if they clearly
indicate the amount of the transaction
and the name of the payee. The
payment order may be refused if the
account holder fails to make available
sufficient funds for the execution of the
transaction.
(2) The account keeper shall be
obligated to receive payment
transactions to the account holder’s
credit or debit in the name of the
account holder, and to handle them as
deposits payable on demand.
(3) The transactions carried out by the
account keeper to the debit of the
account holder’s account shall reduce
the payment account balance; payment
collected on the account holder’s behalf
and payments otherwise credited to the
account holder’s account shall increase
the payment account balance.
(4) The account keeper shall provide
monthly statements to the account
holder regarding any sums debited or
credited to his account as well as the
account balance. The legal effects
related to the current account balance
shall not apply to account statements.
Section 6:396
[Right of disposition over the payment
account]
(1) The account holder and the
persons the account holder has
authorized and registered with the
account keeper shall be authorized to
dispose over the balance of the payment
account. If the payment account is held
by more than one person, the account
holders shall be authorized to dispose
over the payment account jointly.
(2) The account keeper shall be
entitled to debit the payment account for
the purpose of correction of errors in
crediting and for the enforcement of any
claim the account keeper may have from
381
the account holder in connection with its
services.
Section 6:397
[Statutory lien]
The account keeper shall be entitled to
statutory lien on the account holder’s
funds held on the account in security of
its claims arising from account
management services. To this end, the
account keeper shall be entitled to
deduct from the balance available on the
payment account its claims arising from
account management services. The lien
shall be considered established at the
time the payment account contract is
concluded, without the lien being
registered in the collateral register.
Section 6:398
[Extended application of provisions on
payment account contracts]
The provisions relating to payment
account contracts shall apply to
securities accounts and safe custody
accounts for securities subject to the
exception that in these cases ownership
claims relating to securities shall be
shown on the account.
Section 6:399
[Application of the provisions relating
to current accounts]
Unless otherwise provided for by this
Chapter, the regulations governing
current account contracts shall apply to
payment account contracts mutatis
mutandis.
Chapter LVII
Payment Service Contracts
Section 6:400
[Payment service contracts]
Under a payment service contract the
agent undertakes to pay a certain
amount of money to the payee
according to the payer’s instructions,
and the payer undertakes to pay the fee
agreed upon.
Section 6:401
[Refusal of the execution of payment
orders]
The agent shall be entitled to refuse to
carry out the payment order until such
time as the payer provides sufficient
funds for carrying out the payment order.
Section 6:402
[Commission]
The agent shall be entitled to a
commission when the funds are:
a) delivered to the payee;
b) credited to the payee’s account; or
c) made available to the payee’s bank.
Section 6:403
[Termination]
The payer shall be entitled to
terminate the contract until such time as
the agent having commenced the
execution of the payment transaction.
Section 6:404
382
[Application of the provisions relating
to personal service contracts]
Unless otherwise provided for by this
Chapter, the regulations governing
personal service contracts shall apply to
payment orders mutatis mutandis.
Chapter LVIII
Factoring contracts
Section 6:405
[Factoring contracts]
Under a factoring contract the factor
undertakes to pay a certain amount of
money, and the debtor undertakes to
assign his claim from a third party to the
factor; if the obligor fails to satisfy the
assigned claim at the time when due,
the debtor shall be liable to repay the
funds received with interest, and the
factor shall be liable to re-assign the
claim.
Section 6:406
[Obligation of registration]
The factor shall be required to register
the factoring assignment and the
debtor’s name in the collateral register.
In the absence of registration the claim
shall not pass to the factor in spite being
assigned, and the factor shall have the
same entitlements on the claim as the
lien holder whose lien on the claim has
not been registered in the collateral
register.
Section 6:407
[Termination of contracts]
(1) The factor shall be entitled to
terminate the contract if:
a) the debtor impedes any
investigation relating to his solvency and
to the legal status of the transferred
claim;
b) the deterioration of the debtor’s
financial standing or his conduct, if
aimed at depleting funds, jeopardizes
fulfillment of his obligation of
reimbursement;
c) the financial standing of the payer of
the transferred claim has deteriorated to
an extent where it jeopardizes
satisfaction of the claim.
(2) If the contract is terminated the
debtor shall reimburse the sum paid by
the factor with interest, and the factor
shall be liable to re-assign the claim to
the debtor.
(3) Where more than one claim is
transferred, the factor shall be entitled to
terminate the contract with respect to
such claims individually.
Section 6:408
[Application of the provisions
pertaining to loan agreements]
Otherwise, the provisions pertaining to
the refusal to disburse a loan, to failure
to draw funds from the loan and to credit
availability shall apply mutatis mutandis.
Chapter LIX
Financial Leasing Agreements
Section 6:409
383
[Financial leasing agreements]
Under a financial leasing agreement
the lessor undertakes to make available
for use, for a limited period of time a
thing or a right he owns (hereinafter
referred to as „leased asset”), and the
lessee undertakes to accept the leased
asset and to make lease payments if the
lessee is given the right under the
agreement to use the leased asset up to
or surpassing its economic lifetime, or - if
use is stipulated for a shorter period - to
acquire the leased asset at the end of
the term of the contract without any
consideration or at a price considerably
lower than the market value prevailing at
the time of conclusion of the contract, or
the total sum of lease payments reaches
or exceeds the leased asset’s market
value prevailing at the time of conclusion
of the contract.
Section 6:410
[Obligation of registration]
(1) If the leased asset is a real estate
property, the lessor shall provide for
having the lease and the name of the
lessee registered in the real estate
register at the time of registration of
ownership. If at the time the lease
agreement is concluded the thing is
owned by the lessor, the registration
must take place before the time of
transfer of possession.
(2) If the leased asset is a movable
property or a right, the lessor shall
provide for having the lease and the
name of the lessee registered in the
collateral register. If ownership of the
movable property or the right is recorded
in a public register and if hypothecation
of the thing is to be registered in the
proper registry by law, the lessor shall
provide for having the lease and the
name of the lessee registered in the
proper registry. In the absence of
registration, where ownership is
acquired from the lessee by a third party
in good faith and for consideration:
a) the transferee shall acquire
ownership of the movable property, or
the right, by way of transfer; and
b) the lessee shall acquire the lien
established by the lessee on the
movable property or right, even if the
lessee has no right of disposition.
Section 6:411
[Guarantee claims]
(1) The lessor shall guarantee that no
third person has any right to the leased
asset that can prevent or restrain the
lessee’s use of it. Concerning this
guarantee, the principle of warranty of
title shall apply with the exception that
the lessee is entitled to terminate the
contract instead of withdrawal.
(2) In connection with any defect in the
leased asset the lessor shall be required
to provide warranty if he took part in the
selection of the leased asset or if waived
his warranty rights arising from the
contract for the acquisition of the leased
asset without the lessee’s consent In
that case, the regulations governing
warranty shall apply with the exception
that the lessee is entitled to terminate
the contract instead of withdrawal and
he shall not be entitled to demand
replacement.
384
(3) Save where Subsection (2) applies,
in respect of any defect in the leased
asset:
a) any request for repair and
replacement shall be demanded by the
lessee from the party subject to warranty
obligation acting as the agent of the
lessor;
b) any claim for price reduction or for
withdrawal shall be enforced by the
lessor against the party subject to
warranty obligation.
(4) The lessee shall inform the lessor if
the party subject to warranty obligation
refuses to provide repair or replacement,
or if price reduction or withdrawal is
allowed on account of the defect.
Section 6:412
[Proceeds, burdens, costs, risks. Use]
(1) The lessee shall, from the date of
conclusion of the contract or - in respect
of a thing - from the date of taking
possession, collect the proceeds of the
leased asset, and shall be liable for its
encumbrances, costs and for the
damages for which no indemnification
can be demanded from anyone.
(2) The provisions on lease
agreements shall apply to the use and
transfer of leased assets mutatis
mutandis.
Section 6:413
[Assignment of use and rights to third
parties]
(1) The lessee shall be entitled to
make available the leased asset for use
to a third party subject to the lessor’s
consent.
(2) If the lessee has made available
the leased asset for use 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 made available the
leased asset for use to another person
without the lessor’s permission, the
lessee shall be liable for damages that
otherwise would not have occurred.
(4) If the lessee has the right to
acquire ownership of or a right to the
leased asset, he shall be entitled to
transfer this right to a third party without
the lessor’s consent.
Section 6:414
[Lease payment]
(1) The lessee shall be required to
make lease payments for predetermined
periods in advance.
(2) No lease payments shall be made
for the period when the leased asset
cannot be used for reasons beyond the
lessee’s control.
Section 6:415
[Termination of contract]
(1) The lessor shall be entitled to
terminate the contract:
a) if the lessee impedes any
investigation relating to his solvency;
b) if the deterioration of the lessee’s
financial standing or his conduct, if
aimed at depleting funds, jeopardizes
fulfillment of his obligation;
c) if the lessee fails to terminate
inappropriate or non-contractual use of
the thing despite being asked to do so
by the lessor;
385
d) in the event of the lessee’s failure to
enforce his warranty rights despite being
asked to do so;
e) in the event of the lessee’s failure to
make lease payments, costs or related
charges, provided that the lessor has
issued a written demand for payment
within a reasonable period of time and
notified the lessee of the consequences,
and the lessee has failed to remit
payment within this period.
(2) If the lease agreement is
terminated by the lessor, the lessor shall
settle accounts with the lessee in
accordance with the provisions on the
enforcement of a pledge.
(3) The lessee shall be entitled to
terminate the contract if the lessor fails
to discharge his obligation to enforce the
right of withdrawal under warranty
despite being asked to do so.
TITLE XXI
GUARANTEE AGREEMENTS
Chapter LX
Contracts of Suretyship
Section 6:416
[Contracts of suretyship]
(1) Under a contract of suretyship the
surety undertakes the obligation of
performance to the creditor in the event
of nonperformance by the principal
debtor.
(2) Suretyship may be provided to
guarantee one or more existing or
future, conditional or unconditional
pecuniary claims of a specific amount or
the amount of which can be determined,
or any other claims of monetary value.
(3) The contract shall be executed in
writing.
Section 6:417
[Suretyship relations]
(1) The obligation of a surety shall be
adjusted to the obligation for which he
has promised to answer. The obligation
of a surety shall not and cannot
subsequently exceed the original
obligation; however, it shall cover the
consequences of the debtor’s nonperformance
and shall include the
collateral claims that fall due after the
suretyship is undertaken.
(2) The surety shall be entitled to
include his own and the debtor’s
counterclaims in the creditor’s claims,
and may effect - in addition to his own
objections - the same objections that
can be enforced by the debtor against
the creditor. After the suretyship is
undertaken, the debtor’s waiver of the
right of objection shall not apply to the
surety.
(3) No claim can be enforced in court
against the surety of a claim that cannot
be enforced by judicial process.
(4) Any respite of payment afforded in
bankruptcy proceedings opened against
the debtor shall not affect the surety’s
obligation. Any composition agreement
reached in liquidation or bankruptcy
proceedings opened against the debtor
shall not affect the surety’s obligation if
the creditor informed the surety of the
386
terms of the composition before it was
concluded. In the event of failure to
provide the said information the surety
shall be relieved of all obligations. After
the information the surety shall be
entitled to satisfy the debtor’s liability.
Following satisfaction the surety shall
replace the creditor in the liquidation or
bankruptcy proceedings.
(5) The surety shall be liable for court
costs and for the costs of enforcement
only if he has been invited by the
creditor to perform prior to taking legal
action without result.
Section 6:418
[Creditor’s obligation to provide
information]
(1) The creditor shall inform the surety
without delay in the event of the debtor’s
default of performance, of any changes
in the date set for performance of the
guaranteed liability and of any changes
in the debtor’s circumstances which may
negatively affect the surety’s claim for
compensation against the debtor. The
information shall include the extent of
the guaranteed liability existing at the
time the information is provided.
(2) If suretyship covers all obligations
of the debtor arising from one or more
specific relationships or all liabilities of
the debtor toward the creditor, the
creditor shall - furthermore - inform the
surety without delay if the extent of the
guaranteed liability has increased by
twenty per cent since the time the
suretyship was undertaken or since the
last time when information was provided.
Section 6:419
[Fallback option]
The surety shall be entitled to refuse
performance as long as the creditor is
able to verify that he had attempted to
recover the debt from the principle
debtor but that did not lead to a result
within a reasonable timeframe. This
provision shall not prevent the bringing
of joint action against the debtor and the
sureties.
Section 6:420
[First-loss guarantee]
The surety shall not have fallback
option if:
a) recovering the debt from the debtor
is considerably impeded due to changes
in the debtor’s address, habitual
residence, place of business or
registered office;
b) the creditor filed for enforcement on
the debtor’s assets in an attempt to
recover his other claims, and the
enforcement procedure has been
unsuccessful; or
c) the debtor was granted a respite of
payment in bankruptcy proceedings, of if
undergoing liquidation.
Section 6:421
[Deficiency liability]
If suretyship expressly covers that part
of the debt that cannot be recovered
from the debtor, the creditor shall be
entitled to demand from the surety
payment for the guaranteed claim, if filed
for enforcement on the debtor’s assets
387
and the enforcement procedure has
been unsuccessful.
Section 6:422
[Surety’s performance]
(1) The surety shall be required to
perform upon being requested to do so
by the creditor.
(2) The surety shall inform the debtor
without delay of receipt of the request for
payment, and shall ask for information
as to the extent of the guaranteed debt,
and also on the objections and claims
the debtor may have in respect of the
creditor.
(3) The surety shall without delay:
a) perform to the creditor, and shall
forthwith notify the debtor of
performance without delay; or
b) refuse performance, and shall
forthwith notify the debtor and the
creditor of its refusal to perform,
indicating the reasons.
(4) After the surety’s performance, the
creditor shall forthwith deliver to the
surety all documents and shall provide
all information that may be necessary for
the surety to recover his claim for the
debtor.
Section 6:423
[Secondary surety’s performance]
If the creditor’s claim is satisfied by a
person who guaranteed performance of
the surety’s obligations, that person shall
also be entitled to enforce, up to the
amount of the claim, all those rights the
surety would have had in the event of
satisfying the creditor’s claim.
Section 6:424
[Suretyship for a fixed duration]
If first-loss guarantee is granted for a
specific period, following expiry of the
fixed term the surety shall be relieved of
all obligations.
Section 6:425
[Termination of open-term suretyship]
If an open-term suretyship covers all
existing and future obligations of the
debtor toward the creditor, the surety
shall be entitled to terminate the contract
of suretyship by giving at least three
months’ notice.
Section 6:426
[Surety’s right of exoneration]
If the creditor waives any right
securing the claim, or if the claim has
become otherwise irrecoverable for
reasons attributable to the creditor or if
recovery becomes increasingly
burdensome, the surety shall be
exonerated inasmuch as he could have
received satisfaction based on the right
guaranteeing the claim.
Section 6:427
[Multiple sureties]
(1) If suretyship is promised by more
than one person for the same liability,
the sureties shall be subject to joint and
several liability toward the creditor.
(2) If suretyship is concurrently
promised by more than one person
independently, in their relationship the
sureties shall be subject to liability in the
388
sequence they have undertaken to
provide suretyship. The surety who had
the fallback option against the creditor,
shall also have the same option in
respect of the surety who satisfied the
creditor’s claim.
(3) If suretyship is jointly promised by
more than one person, in their
relationship the sureties shall be subject
to liability in proportion to their exposure.
Section 6:428
[Lien or suretyship pledged for the
same obligation]
If the same liability is guaranteed by
suretyship and also by lien established
by a person other than the debtor, the
liability of the surety and the lienor, and
their relationship shall be governed by
the provisions on multiple sureties.
Section 6:429
[Statutory suretyship]
The provisions on contracts of
suretyship shall apply to statutory
suretyship mutatis mutandis.
Section 6:430
[Consumer suretyship]
(1) In the case of consumer
suretyship, the creditor shall inform the
consumer before the contract of
suretyship is concluded:
a) of the rights and obligations of the
surety; and
b) about specific risks inherent to the
debtor’s circumstances or to the nature
of the liability, of which the creditor is
aware.
(2) In the event if the creditor fails to
comply with the requirements set out in
Subsection (1), the surety shall be
entitled to withdraw from the contract
without a time limit.
(3) If the consumer guarantee covers
all liabilities of the debtor toward the
creditor, or all obligations of the debtor
arising from specific relationship, the
guarantee shall be considered valid if
the highest amount of debt the
consumer guarantees is specified in the
contract.
(4) In the event of the debtor’s delay,
the creditor shall forthwith notify the
surety thereof, in the absence of
notification the surety shall not be liable
for damages caused by such late
performance or for interest on late
payment.
(5) The provisions on consumer
guarantees shall not apply if the surety
is an executive officer or a member with
majority control of the debtor legal
person.
Chapter LXI
Guarantee Contracts
Section 6:431
[Guarantee contracts]
(1) The guarantee contract, and the
statement of guarantee means a
guarantor’s commitment under which
payment is to be made to the creditor
subject to the conditions laid down in the
statement.
389
(2) The contract and the statement of
guarantee shall be executed in writing.
Section 6:432
[Absence of relationship]
(1) The obligation of the guarantor set
out in the statement of guarantee is
independent of the obligation for which
he has promised to answer; the
guarantor may not enforce the same
objections that can be made by the
debtor against the creditor.
(2) Any reference of a general
character made in the statement of
guarantee to the guaranteed obligation
shall not affect the independence of the
guarantor’s obligation of the guaranteed
obligation.
Section 6:433
[Personality of drawing rights]
The creditor may not transfer the right
of enforcement of the guarantee without
the guarantor’s consent, however, he
shall be entitled to designate a person to
whom payment is to be made by the
guarantor.
Section 6:434
[Change in the person of the creditor]
The right to execute the guarantee
shall pass to the creditor’s successor.
Section 6:435
[Performance of the guarantor]
(1) The guarantor shall be liable to
make payment under the guarantee if
the creditor requested payment in
writing, strictly abiding by the
requirements specified in the statement
of guarantee.
(2) The guarantor shall inform the
debtor without delay of receipt of the
request for payment.
(3) The guarantor shall have the right
to effect all objections to which he is
entitled in his own right against the
creditor.
(4) The guarantor shall without delay:
a) perform to the creditor, and shall
notify the debtor of performance; or
b) refuse performance, and shall notify
the debtor and the creditor of its refusal
to perform, indicating the reasons.
Section 6:436
[Manifestly fraudulent or bona fide
request for payment]
(1) If, based on the information at the
guarantor’s disposal, the creditor
exercises his drawing right in a manner
which manifestly fraudulent or in bad
faith, the guarantor shall not be
obligated to make payment, and shall
have the right to recover payments
already made.
(2) Manifestly fraudulent or bona fide
request shall, in particular, mean when:
a) any of the documents submitted to
the guarantor is forged;
b) the debtor has already performed
the obligation for which the guarantor
promised to answer, or the creditor is not
entitled to the sum requested for other
reasons;
c) the creditor’s intentional behavior
prevented performance of the obligation
for which the guarantor has promised to
answer; or
390
d) the obligation for which the
guarantor promised to answer has been
declared annulled by court decision,
unless the guarantee covers such
instance as well.
Section 6:437
[Termination of open-term guarantee]
The guarantor shall be entitled to
terminate an open-term guarantee
contract after three years by giving at
least three months’ notice.
Section 6:438
[Consumer guarantee]
If the guarantor is a consumer, the
statement of guarantee shall function as
a first-loss guarantee.
TITLE XXII
INSURANCE CONTRACTS
Chapter LXII
General Provisions on Insurance
Contracts
Section 6:439
[Insurance contract]
(1) Under an insurance contract the
insurer undertakes to provide coverage
for the risk specified in the contract, and
to provide settlement or benefits for loss
arising upon the occurrence of a specific
future event after the starting date of risk
coverage, and the insured person
undertakes to pay an insurance
premium agreed upon.
(2) The insurance company’s service
covers the payment for the insured
person’s loss in the amount and in the
manner defined in the contract and other
policy benefits (hereinafter referred to as
„indemnity insurance”) or the payment of
a sum specified in the contract
(hereinafter referred to as „fixed-sum
policies”).
Section 6:440
[Insurable interest]
An insurance contract may be
concluded by any person who has a
vested interest in avoiding the
occurrence of an insured event under
some form of property or personal
relationship; or who has a vested
interest in the occurrence of an insured
event in respect of life insurance policies
which comprises assurance on survival
to a stipulated age only, birth assurance
or marriage assurance, or those who
concludes the contract on behalf of an
interested person. Any indemnity
insurance and group fixed-sum policy
concluded in contradiction to this
provision shall be null and void.
Section 6:441
[Co-insurance]
(1) In the event where the insurance
risk is covered - in a predetermined
percentage - jointly by more than one
insurance company, and the insurance
services are performed collectively, the
contract to that effect shall indicate the
name of all insurance companies
391
participating in the co-insurance,
including their share in risk coverage. In
connection with co-insurance, the
service obligations of insurance
companies shall be limited by their
commitment in the sharing of risks.
(2) A co-insurance contract that fails to
specify the share of participating
insurance companies in risk coverage
shall be null and void.
(3) The insurance companies shall be
represented in respect of the contracting
party by the leading insurer. If the
leading insurer has not been named in
the contract, the contracting party shall
have the option to lawfully perform and
to make legal statements - at his
discretion - to either of the insurance
companies.
Section 6:442
[Group insurance]
(1) Group insurance means where
insured persons are identified according
to their affiliation to a natural group, or
under the relationship between the
insured persons and the contracting
party, and the insurance company’s risk
coverage and the related terms are
custom-tailored to the group
policyholder. If the insured persons are
defined in the contract solely on the
basis of their belonging to a specific
group, the persons of verified
membership in that group at the time of
occurrence of the insured event shall be
considered insured. Family members of
any member of such group may also be
covered by the policy.
(2) The insurance company shall
inform the contracting party; the
contracting party shall be required to
notify the insured persons of the
statements he has received and of any
changes in the policy.
(3) The contract may contain a clause
to limit or exclude the insured person
from entering the contract.
(4) If the contract so provides,
termination of the relationship between
the insured person and the contracting
party shall not affect the insurance
cover.
Section 6:443
[Contracting]
(1) If the contract is not executed in
writing, the insurance company shall
make out a document so as to verify
insurance cover.
(2) If the document verifying insurance
cover differs from the contracting party’s
offer and if this difference is not
contested by the contracting party
without delay upon receipt of the
document, the contract shall take effect
in accordance with the contents of that
document. This provision applies to
significant discrepancies if the insurance
company expressly points out such
discrepancies to the contracting party in
writing at the time the document
verifying insurance cover is delivered. In
the absence of a warning notice, the
contract shall be executed in
accordance with the contents of the
offer.
(3) The offeror shall be bound by the
offer for a period of fifteen days from the
392
time when it was made, of for sixty days
if a health risks assessment is required
for the evaluation of the offer.
Section 6:444
[Insurance company’s implicit conduct
in a consumer contract]
(1) If the contracting party is a
consumer, the contract shall be
executed also if the insurance company
does not respond to the offer within
fifteen days of the time of receipt
thereof, or sixty days if a health risk
assessment is required for the
evaluation of the offer, provided that the
offer was made on the insurance
company’s own standard offer sheet for
the type of policy in question, upon
receipt of the relevant statutory
information, containing the tariffs
applicable.
(2) In the case provided for in
Subsection (1), the contract shall be
executed - under the conditions
contained in the offer - with retroactive
effect to the date on which the offer is
conveyed to the insurance company on
the day following the expiry of the risk
assessment period.
(3) If an insured event occurs during
the risk assessment period, the
insurance company shall be entitled to
refuse the offer only if the offer sheet
contains an express warning to that
effect, and it is instantly clear from the
nature of the insurance cover requested
or from other circumstances of risk
coverage that the individual risk
assessment is necessary for accepting
the offer.
(4) If a contract that is concluded
without the explicit statement of the
insurer deviates in material
circumstances from the insurance
company’s standard contract terms, the
insurance company shall be entitled to
make a proposal within fifteen days from
the date of conclusion of the contract to
have the contract amended in
accordance with the standard contract
terms. If the contracting party does not
accept the proposal or does not respond
to it within fifteen days, the insurance
company shall be entitled to terminate
the contract in writing with thirty days’
notice within fifteen days of receiving the
refusal or the proposal for amendment.
Section 6:445
[Starting date of risk coverage]
(1) The coverage of risk by the
insurance company shall commence at
the time fixed by the parties in the
contract or, failing this, at the time the
contract is concluded.
(2) The parties may agree in writing in
that the insurance company is to cover
the insurance risk from such point in
time preceding the date of conclusion of
the contract (hereinafter referred to as
„preliminary coverage”).
(3) Preliminary coverage shall remain
in effect until such time as the
conclusion of the contract or refusal of
the offer, not exceeding ninety days.
(4) If the contract is concluded, the
premium defined therein shall also apply
to the period of preliminary coverage. If
the contract is not concluded, the
contracting party shall be liable to pay
393
premium for the period of preliminary
coverage calculated by the
predetermined methods prescribed by
the insurance company intended to
cover underwriting liabilities.
Section 6:446
[Significant increase in the level of
insurance risk]
(1) If the insurance company becomes
aware of any material circumstance
regarding a contract, or any changes
thereof, only after the contract has been
concluded, and these circumstances
bring about a considerable increase in
the insurance risk, the insurance
company shall be entitled to make a
written proposal within fifteen days after
gaining knowledge thereof to amend the
contract or may terminate the contract in
writing with thirty days’ notice.
(2) If the contracting party does not
accept the proposal for amendment or
fails to respond to it within fifteen days
from the time of receipt thereof, the
contract shall be terminated on the
thirtieth day following the day of
communicating the proposal for the
amendment, if the insurance company
warned the contracting party of this
consequence when the proposal for
amendment was made.
(3) If the contract covers more than
one asset or person concurrently, and
the considerable increase in insurance
risk applies to some of them only, the
insurance company shall not be able to
exercise its rights under Subsections (1)
and (2) with respect to the remaining
assets or persons.
Section 6:447
[Premium payment obligation]
(1) The first insurance premium
payment shall be due at a time agreed
upon by the parties or, failing this, at the
time the contract is concluded, and all
subsequent premium payments shall be
due on the first day of the period to
which they pertain. A single premium
shall be paid at the time the contract is
concluded.
(2) The period of insurance cover shall
be one year.
Section 6:448
[Premium payment obligation when
the contract is terminated]
(1) If an insurance event occurs, and
the contract is terminated, the insurance
company shall be entitled to demand
payment of the premium for the entire
period of insurance cover.
(2) In other cases of contract
termination, insurance companies shall
be entitled to claim payment of the
premium until such day when risk
coverage ends. If there is an
overpayment in periodic premium, the
insurance company shall refund the
surplus.
Section 6:449
[Consequences of non-payment of
premium]
(1) In the event of non-payment of the
premium as due, the insurance company
shall dispatch within thirty days from the
due date a written request for payment
to the party in default - indicating the
394
potential legal consequences - with an
additional thirty-day deadline from the
date when the warning was dispatched.
In the event of non-compliance within
the additional period, the contract shall
be terminated with retroactive effect to
the original due date, except if the
insurance company forthwith moves to
enforce its claim by judicial process.
(2) If the contract is terminated as
under Subsection (1) for non-payment of
regular premiums, the contracting party
may request the insurance company
within one hundred and twenty days
from the time of termination to reinstate
the risk coverage. The insurance
company may reinstate the insurance
cover under the terms and conditions of
the terminated contract, if the overdue
premium is paid.
Section 6:450
[Contracting party’s obligation to
provide information]
If a contract is not concluded by the
insured person, the contracting party
shall be required to notify the insured
persons of the statements he has
received and of any changes in the
policy until such time as the occurrence
of an insurance event or the entry of the
insured person.
Section 6:451
[Entering the contract]
(1) If a contract was not concluded by
the insured person, the insured person
shall be entitled to enter into the contract
with a written statement addressed to
the insurance company. The insurance
company’s consent is not required for
entering into the contract. Upon entering
into the contract the rights and
obligations conferred upon the
contracting party shall pass to the
insured person.
(2) If the insured person enters into the
contract, the insured person and the
contracting party shall be subject to joint
and several liability for premium
payments due for the current insurance
period. The insured person entering into
the contract shall be liable to cover the
contracting party’s expenses arising
from the contract, including premium
payments.
Section 6:452
[Obligation of disclosure and
notification of changes]
(1) At the time of conclusion of the
contract, the contracting party shall
disclose to the insurance company all
circumstances of which he is or should
be aware and which are important in
terms of providing the insurance
coverage. The contracting party shall
satisfy his disclosure obligation by
truthfully filling out the questionnaire
furnished by the insurance company.
Leaving the questions unanswered shall
not in itself constitute a violation of the
disclosure obligation.
(2) The contracting party shall be liable
to notify the insurance company in
writing of any changes in the material
conditions.
(3) In the event of any breach of the
obligation of disclosure and notification
of changes, the obligation of the
395
insurance company shall not take effect,
unless the contracting party is able to
prove that the insurance company was
aware of the concealed or undisclosed
circumstance when the contract was
concluded or that such circumstance
had no influence on the occurrence of
the insurance event.
(4) If the contract covers more than
one asset or more than one person
concurrently, and the breach of the
obligation of disclosure and notification
of changes pertains to some of them,
the insurance company shall not be able
to allege the breach of the obligation of
disclosure and notification of changes
with respect to the remaining assets or
persons.
(5) The obligation of disclosure and
notification of changes applies to the
contracting party and the insured person
both. Neither of them shall be entitled to
refer to any circumstance that either one
had neglected to disclose or report to
the insurance company though he must
have known about it and should have
disclosed or reported it.
Section 6:453
[Obligation of reporting the occurrence
of an insured event]
The insurance company’s obligation
shall not take effect if the contracting
party or the insured person fails to report
to the insurance company the
occurrence of an insured event within
the time limit specified in the contract,
fails to provide the information
necessary, or fails to facilitate
verification of the information provided,
and, as a consequence, circumstances
which are considered material from the
point of view of the obligation of the
insurance company become
undetectable.
Section 6:454
[Nullification of contracts; lapse of
interest]
(1) If the insurance event occurs, its
occurrence becomes impossible, or the
insurable interest ceases before the
insurance coverage becomes effective,
the contract or the relevant part of it shall
be terminated.
(2) If occurrence of an insurance event
becomes impossible or the insurable
interest ceases during the period of risk
coverage, the contract or the relevant
part of it shall be terminated.
(3) The legal effects attached to cases
of lapse of interest in the insurance shall
not apply, if the lapse of interest results
solely from the transfer of ownership of
the insured property, and the property in
question was held by the new owner
previously under a different title. In that
case, insurance cover shall pass
together with ownership, and the former
and the new owner shall be jointly and
severally liable for premium payments
due at the time of transfer of ownership.
The contract may be terminated by
either of the parties within thirty days
after gaining knowledge of the transfer
of ownership, by giving thirty days’
notice.
Section 6:455
396
[Unilaterally cogent rules of retail
insurance contracts]
If the contracting party is a consumer,
the contract shall be allowed to derogate
from the provisions of this Title only to
the benefit of the contracting party, the
insured person and the beneficiary,
where such provision pertains:
a) to the insurance company’s implicit
conduct in a consumer contract;
b) to any considerable increase in
insurance risk;
c) to the consequences for nonpayment
of premiums;
d) maintaining the amount of insurance
cover;
e) to the obligation to prevent and
mitigate damages;
f) to the obligation of disclosure and
notification of changes and the
obligation of reporting the occurrence of
an insured event;
g) to any composition between the
insured person and the injured party;
h) to premium payment obligation
when the contract is terminated;
i) to the insurance company’s
exemption from settlement obligation;
j) to claims for compensation.
Section 6:456
[Unilaterally cogent rules of retail fixedsum
insurance policies and health
insurance policies]
If the contracting party is a consumer,
the contract shall be allowed to derogate
from the exclusion of derogation only to
the benefit of the contracting party, the
insured person and the beneficiary with
respect to fixed-sum and health
insurance policies.
Section 6:457
[Extended application of provisions on
insurance contracts]
The provisions of this Title shall also
apply to insurance relationships on the
basis of association membership.
Chapter LXIII
Indemnity Insurance Contracts
1. General provisions on indemnity
insurance contracts
Section 6:458
[Prohibition of overinsurance]
(1) The coverage shall not exceed the
value of the insured property. Any
agreement for coverage higher than the
value of the insured interest shall be null
and void, and the premium shall be
reduced accordingly. This provision
notwithstanding, an insurance policy can
include provisions for the estimated
future value of a property, and/or for the
value of restoration or replacement.
(2) Upon the occurrence of an insured
event, the highest amount of settlement
the insurance company is liable to pay
represents the sum insured.
Section 6:459
[Concurrent insurance]
(1) If the same interest is insured by
more than one insurance company
397
independently, the insured person shall
have the right to submit his claim to one
or more of such insurance companies.
(2) The insurance company to which a
claim is submitted shall be liable to make
a settlement payment under the terms
and conditions fixed in the document
verifying insurance cover and up to the
sum insured as specified therein, while
reserving the right to lodge a claim for
compensation relating to the other
insurance companies.
(3) Under the claim referred to in
Subsection (2) for compensation, the
insurance companies shall cover the
claims paid jointly subject to the terms
and conditions and in proportion to the
amounts of coverage according to which
the individual insurance companies
would be liable to the insured person.
Section 6:460
[Underinsurance]
If the amount of coverage is lower than
the value of the insured interest, the
insurance company shall be liable to
cover the loss in such a manner that the
amount of insurance is proportionate to
the value of the property.
Section 6:461
[Maintaining the amount of insurance
cover]
(1) The amount of coverage for a
given period of insurance cover shall be
reduced by the amount paid for claims
for insured events occurred during that
same period, unless the contracting
party supplements the premium
accordingly.
(2) The insurance company shall be
entitled to apply the sanction referred to
in Subsection (1) if the contracting party
has been advised thereof in writing not
later than at the time of settlement, and
notified the fee for maintaining the
amount of insurance cover.
(3) If the contracting party did not
exercise the right of maintaining the
amount of insurance cover, the contract
shall remain in effect with the amount of
coverage reduced by the amount paid
for claims for the ongoing period of
insurance.
Section 6:462
[Insurance settlement]
If an insurance event occurs, the
insurance company shall be liable to
settle within a time limit defined in due
consideration of the preparation time
necessary for claim settlement.
Section 6:463
[Obligation to prevent and mitigate
damages]
(1) The contracting party and the
insured person shall take reasonable
precautions in order to prevent any loss
or damage. The said requirement of
taking reasonable precautions shall
apply also if the obligation of the
contracting party and the insured person
to prevent damage is provided for in the
contract, including the means and
processes and the qualification
requirements.
(2) The contracting party and the
insured person shall mitigate the
damage based on the insurance
398
company’s specifications and according
to its instructions given at the time when
the damage or loss occurred, or failing
this, they shall proceed under the
principle of reasonable conduct.
(3) The justified cost of mitigating
damages shall be borne by the
insurance company within the limits of
the sum insured even if mitigation of
damages has been unsuccessful.
(4) In respect of underinsurance the
insurance company shall reimburse the
cost of mitigating damages in such a
manner that the amount of coverage is
proportionate to the value of the
property.
Section 6:464
[Exemption from settlement obligation]
(1) The insurance company shall be
exempt from its payment obligation if it is
able to prove that damages have been
caused unlawfully, either willfully or by
gross negligence, by:
a) the insured person or the
contracting party;
b) any family member living in their
household, any managing partner or any
employee, member or agent working in a
position specified in the standard
contract terms; or
c) any executive officer of the insured
legal person specified in the standard
contract terms, or any member,
employee or agent of such insured legal
person authorized to manage the
insured property.
(2) The provision referred to in
Subsection (1) shall also apply to any
breach of the obligation to prevent and
mitigate damages.
Section 6:465
[Obligation of preservation]
(1) Following the occurrence of an
insurance event, the insured person
shall be entitled to implement any
changes regarding the condition of the
insured property within a time limit
stipulated in the contract only to the
extent that is necessary for mitigating
damages.
(2) The insurance company’s
settlement obligation shall not take effect
if, as a consequence of any change
greater than that which is permitted, it
becomes impossible to clarify the basic
circumstances from the point of view of
assessing the payment obligation of the
insurance company.
Section 6:466
[Termination by notice]
(1) The parties shall be entitled to
terminate a contract of indeterminate
duration in writing, to take effect at the
end of the period of insurance cover by
giving thirty days’ notice.
(2) The right to terminate may be
excluded for a maximum period of three
years. Any exclusion of the right to
terminate for a period in excess of three
years shall be null and void in respect of
the part exceeding the three year period.
(3) If a contract covers a period of over
three years and the parties do not
stipulate that the contract could be
terminated before the specified period
lapses, either of the parties shall be
399
entitled to terminate the contract as of
the fourth year.
(4) If the contract is terminated by the
contracting party, the insurance
company shall be entitled to demand
repayment of any premium discounts
granted based on a commitment for an
extended contract term (term discount).
Section 6:467
[Partial payment of premium]
(1) If only a part of the due premium is
paid, and the insurance company’s
request - made in accordance with the
provisions on non-payment of premium to
the contracting party for payment of
the sum owed proved unsuccessful, the
contract shall remain in force with the
same amount of coverage for a term to
which the premium paid corresponds.
(2) If a contract is terminated for nonpayment
of the premium, the insurance
company shall be entitled to demand
repayment of the time-proportionate part
of the term discount.
Section 6:468
[Claim for compensation]
(1) The insurance company shall be
entitled to lay claim for compensation
against the person responsible for the
damage up to the amount of settlement
it has paid, unless this person is a family
member of the insured person living in
the same household. The guarantees of
the terminated claim shall remain in
effect, and shall be transferred to the
claim.
(2) If the insurance company did not
provide settlement for the entire claim
and brought action against the person
responsible for the damage, the
insurance company shall inform the
insured person and shall also move to
enforce the claims of the insured at his
request. The insurance company shall
be entitled to enforce the claims of the
insured person contingent upon an
advance on expenses. From the sum
recovered the insured person’s claim
shall be satisfied first.
Section 6:469
[Recovery of insured property]
If the insured property is recovered,
the insured person shall be entitled to
lay claim to it; in that case, however, the
amount received in settlement shall be
repaid.
2. Liability insurance policies
Section 6:470
[Liability insurance policy]
(1) The insured party shall be entitled,
under a liability insurance policy, to
request the insurance company to
exempt him, in the manner and up to the
limit specified in the policy, from paying
for damages for which he is legally
liable.
(2) The policy covers procedural costs,
if incurred under the insurance
company’s guidance or upon its prior
consent. The insurance company shall
be liable to advance the expenses when
so requested by the insured person.
(3) The insurance company shall be
liable to cover the legal expenses,
including interests, of the insured person
400
if he is responsible for the damage, even
if they exceed the amount of coverage
together with the settlement payment.
Section 6:471
[Notification of loss]
The insured person shall - within a
time limit stipulated in the contract notify
the insurance company in writing,
under liability for any breach of the
obligation of reporting, if a claim has
been filed with respect to his activity
specified in the contract, or if he
becomes aware of any circumstance
that is likely to give rise to such a claim.
A time limit of at least thirty days shall be
provided for the notification of an insured
event.
Section 6:472
[Insurance settlement]
(1) The insurance company shall pay
the amount of settlement to the injured
party. The insured person shall only be
entitled to request the insurance
company to pay him if he settled the
injured party’s claim.
(2) If the insured person disputes his
liability for claims lodged against him, or
the amount of his payment obligation on
grounds which are manifestly
unfounded, the insurance company shall
pay the amount of settlement to the
injured party. The additional costs
arising out of said objection on
unfounded grounds shall be borne by
the insured person; if they were covered
by the insurance company, the insured
person shall be liable to repay such
costs to the insurance company.
Section 6:473
[Enforcement of the injured party’s
claim]
(1) Unless otherwise provided for by
law, the injured party shall not be
entitled to lodge his claim directly to the
insurance company.
(2) This rule shall not preclude the
injured party’s right to bring action
against the insurance company asking
the court to determine whether the
insured person’s liability insurance
coverage applied to the injured party at
the time of the occurrence of the
damage.
Section 6:474
[Acknowledgment by the insured
person, effect of performance and
composition in respect of the insurance
company]
(1) The insured person’s
acknowledgement and settlement of the
injured party’s claim, and any related
composition shall be considered
effective with respect to the insurance
company only if the insurance company
has granted prior consent or
acknowledged it after the fact.
(2) The insurance company may not
allege that the insured person’s
acknowledgement and settlement of the
injured party’s claim, and any related
composition has no legal force in
respect of the insurance company, if the
claim is manifestly well founded.
(3) If the court has ruled against the
insured person, it shall apply with
respect to the insurance company if it
401
has participated in the lawsuit, provided
for the insured person’s legal
representation, or he has waived the
above.
Chapter LXIV
Fixed-sum Policies
1. General provisions on fixed-sum
policies
Section 6:475
[Insurable interest in connection with
fixed-sum policies]
In connection with fixed-sum policies,
the written consent of the insured person
shall be required for concluding or
amending the contract if he himself does
not conclude it. If an insurance contract
is concluded without the approval of the
insured person, the section in which the
beneficiary is named shall be null and
void. In such a case, the insured person
or his heir shall be construed as the
beneficiary; he shall, however,
reimburse the expenses of the
contracting party, including premium
payments and the costs of contracting,
with the exception of group insurance.
Section 6:476
[Concurrent insurance]
The parties may obtain several
policies for the same insurable interest
and for the same peril, and may
accumulate insurance services.
2. Life assurance policies
Section 6:477
[Life insurance]
Life insurance means a type of policy
where the insurance company promises
to pay a specific sum of money fixed in
the contract, or annuity for life or for a
specific period of time, upon the insured
natural person’s death or attainment of a
certain age, or at another predetermined
time or occurrence of a specific event.
Life insurance are, in particular:
a) term life insurance, that provides no
benefits upon expiry and that has no
cash surrender value; or
b) ordinary life insurance other than
term life insurance, including unit-linked
life assurance policies where investment
risk is to be borne according to the
contract by the contracting party himself.
Section 6:478
[Beneficiaries]
(1) Beneficiary means:
a) a person named in the contract;
b) a holder of a bearer policy;
c) in the absence of such persons or if
designation of the beneficiary had not
been valid at the time the insured event
occurred, the insured person or his heir.
(2) A contracting party shall be entitled
to designate the beneficiary in a written
statement addressed and delivered to
the insurance company, and shall be
entitled to withdraw such designation the
same way any time before the time of
occurrence of the insured event, or may
supplant the designated beneficiary with
another person. If the contracting party
is not the insured person, the written
402
consent of the insured person shall be
required for all those actions. In respect
of a bearer policy, the subsequent
designation of a beneficiary shall enter
into effect if the policy is destroyed and a
new policy is issued in its stead.
(3) If the contracting party undertakes
in a written statement addressed to the
insured person or the beneficiary to
keep the designation of the beneficiary
in effect without any interruption, the
designation of the beneficiary may not
be withdrawn or altered without the
consent of the person to whom the
commitment was made. The insurance
company shall be informed of the
contracting party’s statement.
(4) Designation of a beneficiary shall
become inoperative if the beneficiary
dies or dissolves without succession
before the occurrence of the insurance
event.
Section 6:479
[Special provisions relating to the
conclusion of contracts]
(1) If the insured person is a minor and
the contract is not concluded by a parent
having legal custody, the guardian
authority’s approval shall be required for
the validity of the contract. The consent
of the guardian authority is required for
the contract if the insured person legal
capacity has been partially limited in
respect of making legal statements
relating to property, or if the insured
person is an incompetent adult.
(2) The insured person shall be
entitled to revoke his consent for
conclusion of a contract at any time in
writing. Group life assurance policies
may provide otherwise. If consent is
revoked, the contract shall be terminated
at the end of the insurance period,
unless the insured person enters into the
contract.
Section 6:480
[Waiting period]
The parties may install a clause in the
contract stipulating that the insurance
company shall begin to cover the risks of
certain perils from a certain point in time
following the time of conclusion of the
contract, or shall be entitled to reduce
the amount of coverage if the insured
event occurs within the stipulated
waiting period. The waiting period shall
not exceed six months; any time in
excess of the stipulated waiting period
shall be null and void.
Section 6:481
[Consequences of non-payment of
premium]
(1) The insurance company shall be
entitled to bring action to enforce its
claim for premium payments for the
entire insurance period in the first year.
The insurance company shall only be
entitled to exercise this right after the
first year if the contracting party makes
any payment in that year, or if they
agreed on deferred payments.
(2) In the event of non-payment of
premium, an ordinary life insurance
policy other than term life insurance shall
remain in effect with the premium
reduced accordingly (hereinafter referred
to as „premium-free reduction”). The
403
contracting party shall have the option to
terminate the contract by notice instead.
(3) The contract may not be rendered
premium-free if the surrender value has
not been calculated at the time of
premium-free reduction. In this case the
contract shall be terminated in the
absence of a settlement value.
Section 6:482
[Consequences of any breach of the
obligation of disclosure and notification
of changes]
(1) The insurance company, if it gains
knowledge after the time of conclusion
of the contract of any material
circumstance that existed at the time the
contract was concluded, shall be entitled
to exercise the rights arising therefrom
only during the first five years of the life
of the contract.
(2) The insurance company’s
obligation shall take effect
notwithstanding an infringement of the
disclosure obligation, if the insurance
event occurs more than five years after
the conclusion of the contract.
(3) The provisions set out in
Subsections (1) and (2) shall apply
mutatis mutandis to the legal
consequences on the infringement of the
disclosure obligation relating to changes
in the material circumstances provided
for in the contract. The five-year period
available for the insurance company to
exercise its related rights shall
commence on the day following the
disclosure deadline.
Section 6:483
[Termination by notice]
(1) The contracting party shall have
the right to terminate the life assurance
policy in writing - if the premium for the
first year is paid up to take effect at the
end of the period of insurance cover by
giving thirty days’ notice.
(2) The insurance company shall not
be allowed to terminate a life assurance
policy, with the exception if the
insurance risk is increased substantially.
Section 6:484
[Residual rights]
(1) If a life assurance policy is
terminated for any reason without
payment of the sum insured, the
insurance company shall be liable to pay
the cash surrender value defined in the
policy.
(2) The insurance company shall be
exempt from payment of the sum
insured, if the insured person dies in
consequence of the willful conduct of the
beneficiary; in this case the cash
surrender value can be claimed by the
heirs, and the beneficiary shall not have
a share therefrom.
(3) The policy shall be terminated
without payment of the sum insured and
the insurance company shall refund the
cash surrender value if the insured
person dies in consequence of or in
connection with a serious criminal
offense he has committed, or if the
insured person has committed suicide
within two years following the time of
conclusion of the contract.
3. Accident insurance policies
404
Section 6:485
[Accident insurance]
Accident insurance means a type of
insurance where the insurance company
promises to pay a specific sum of money
or annuity fixed in the contract, or other
benefits as contracted upon the insured
person’s accidental death, health
impairment or disability resulting from an
accident.
Section 6:486
[Rules to be applied]
(1) The regulations governing life
insurance shall apply to accident
insurance policies with respect to:
a) the revocation of the insured
person’s statement of consent;
b) the designation of beneficiary and
his rights;
c) the exemption of the insurance
company if the death of the insured
person has been caused by the
beneficiary of the insurance money.
(2) The parties shall not be entitled to
agree on limiting the right of termination.
(3) Otherwise, the provisions on
indemnity insurance shall apply to
accident insurance policies subject to
the following exceptions:
a) the insurance company shall not
have the right to enforce any claim for
compensation against the person who
caused the accident;
b) the insured person shall not have
the obligation of preserving the scene
upon the occurrence of the insurance
event.
Chapter LXV
Health Insurance Contracts
Section 6:487
[Health insurance contract]
Health insurance is a type of insurance
where the insurance company promises
to pay benefits as provided for in the
contract in the event of the insured
person’s sickness. The insurance
benefits may also cover the costs of
healthcare services specified in the
contract provided to a person in good
health.
Section 6:488
[Rules to be applied]
(1) The regulations governing life
insurance shall apply to health insurance
policies:
a) with respect to group insurance;
b) with respect to the consent of the
insured person if he is not the
contracting party;
c) with respect to the revocation of the
insured person’s statement of consent;
and
d) when the insurance company’s
obligations take effect upon the
infringement of the disclosure obligation.
(2) If health insurance was obtained as
an indemnity insurance, the provisions
on indemnity insurance shall apply with
the following exceptions:
a) in the obligation to mitigate
damages, the insured person’s refusal in
exercising the right of disposition to
which he is entitled by virtue of law - to a
405
medical procedure shall not constitute a
reason for the insurance company’s
exemption; and
b) the insured person shall not have
the obligation of preserving the scene
upon the occurrence of the insurance
event.
Section 6:489
[Waiting period]
(1) Where the policy pertains to
nursing care services, or if the insurable
person suffers in a permanent illness
and it was known to both parties at the
time the contract was concluded, the
waiting period stipulated in the health
insurance contract by the parties with
respect to such illness may not exceed
three years.
(2) The waiting period shall cover that
time period when the insured person
was eligible - not more than sixty days
before the conclusion of the health
insurance policy - to receive health
insurance benefits under a previous
health insurance contract without
interruption.
Section 6:490
[Termination of health insurance
contracts]
(1) The possibility that the insured
person’s health deteriorates with age
due to natural causes shall not
constitute a considerable increase in
insurance risk.
(2) The insurance company may not
terminate a health insurance policy by
notice in the ordinary way.
TITLE XXIII
MAINTENANCE AGREEMENTS
AND LIFE-ANNUITY
CONTRACTS
Chapter LXVI
Maintenance Agreements
Section 6:491
[Maintenance agreement]
(1) Under a maintenance agreement
the person owing maintenance
undertakes to provide care to the person
to whom maintenance is owed and to
ensure his sufficient living conditions,
and the maintenance creditor
undertakes to provide compensation.
(2) The maintenance agreement shall
be executed in writing.
Section 6:492
[Obligations of persons owing
maintenance]
The obligation of the person owing
maintenance includes to provide a home
for the maintenance creditor, as well as
sufficient nutrition and clothing, to
provide care and - in the case of illness nursing
and health care, and a proper
burial in case of death.
Section 6:493
[Termination of the contract]
(1) The agreement terminates upon
the maintenance creditor’s death.
406
(2) If the agreement promises care to
more than one person, in the event of
death of one of the maintenance
creditors the surviving maintenance
creditor shall have the right to demand unless
otherwise suggested by the
circumstances - the continuation of
indivisible services, including those
required to maintain prevailing living
conditions, and shall be entitled to a
commensurate part of divisible services.
(3) In the event of death of the person
owing maintenance, the obligation to
provide maintenance shall devolve,
according to the regulations governing
liability for the debts of a decedent, to
the heir of the person owing
maintenance if the support provided up
to the death of the obligor does not
cover the consideration.
Section 6:494
[Transfer of real estate property in
exchange for maintenance]
(1) If the person owing maintenance
receives ownership to a real estate
property in exchange for maintenance,
and the person owing maintenance fails
to provide adequate safeguards in
security for his obligations when so
requested by the maintenance creditor,
at the maintenance creditor’s request a
right to maintenance shall be registered
in the real estate register on the
transferred property.
(2) If the person owing maintenance
breaches the contract, the maintenance
creditor may seek satisfaction from the
guarantee provided by the person owing
maintenance, or from the real estate
property if a right to maintenance has
been registered.
Section 6:495
[Amendment to and termination of
maintenance agreements]
(1) The court shall be entitled to alter a
maintenance agreement at the request
of either of the parties, in consideration
of the interests of both parties, if keeping
the agreement in force as it is appears
unreasonable, especially if the parties’
relationship has deteriorated.
(2) If support in kind has become
impossible as a consequence of the
conduct or circumstances of one of the
parties, either party shall be entitled to
request the court to transform the
contract into a life-annuity contract either
permanently or until the aforementioned
circumstances are eliminated. If the
agreement is modified, the court shall
specify in its ruling the service the
person owing maintenance is liable to
provide.
(3) If modification of the agreement
fails to facilitate the object of the
contract, either party shall be entitled to
request the court to terminate the
contract.
(4) The court is not bound by the
parties’ request, however, the court shall
not order such consequence that is
protested by both parties.
Section 6:496
[Gratuitous maintenance agreement]
(1) The provisions of this Chapter shall
apply mutatis mutandis to maintenance
agreements where the maintenance
407
creditor is not required to provide any
compensation.
(2) Unless otherwise suggested by the
circumstances, no consideration is due
for discharging the obligations that
proceed from a maintenance agreement
concluded by close relatives.
(3) A gratuitous maintenance
agreement shall be terminated upon the
death of the person owing maintenance.
(4) The person owing maintenance
shall be entitled to demand termination
of a gratuitous maintenance agreement
if performing it or transforming it into a
life-annuity contract would impose
extreme burdens on him due to changes
in his financial situation after the contract
was concluded.
(5) In the case of gratuitous
maintenance, the provisions on
contracts of gift shall apply mutatis
mutandis to the refusal of maintenance
obligation, and the provisions on liability
for gratuitous contracts shall apply to the
provider’s responsibilities.
Chapter LXVII
Life-annuity Contracts
Section 6:497
[Life-annuity contracts]
(1) Under a life-annuity contract the
annuity provider undertakes to provide a
specific sum of money or other fungible
property to the annuitant periodically,
and the annuitant undertakes to provide
compensation.
(2) Annuity shall be paid monthly, in
advance. The annuitant shall not be
entitled to bring action to demand any
payments that are six months overdue
and have not been enforced without
substantial reason.
(3) Otherwise, the provisions on
maintenance agreements shall apply to
life-annuity contracts.
TITLE XXIV
CIVIL LAW PARTNERSHIP
AGREEMENT
Section 6:498
[Civil law partnership agreement]
Under a civil law partnership
agreement the parties (hereinafter
referred to as „members”) undertake to
cooperate in order to achieve their
common goals and to make capital
contributions necessary for achieving
said common goals, and to bear the
risks of their activities collectively.
Section 6:499
[Capital contribution]
(1) Each member shall provide capital
contribution in equal proportions.
(2) Capital contribution may be
provided in the form of money, a
marketable thing of value or intangible
property, or any other form of service,
such as - in particular - work performed
in person.
(3) Contributions provided in a form
other than money shall be evaluated by
the members themselves, and - on that
408
basis - they shall collectively determine
the share each contribution represents
in the whole.
Section 6:500
[Means of contribution]
(1) As regards the assets contributed,
the ones that can not be consumed will
be used collectively, and the ones that
can be consumed will be owned jointly.
(2) The ownership share of assets
given into common ownership may not
be disposed of by a member individually.
Section 6:501
[Claims against members]
(1) Should a member fail to provide
the contribution agreed upon in the
contract, either of the other members
shall have the right to demand
performance as contracted. That right of
members may not be validly excluded.
(2) If any member is engaged in any
conduct which seriously endangers the
success of collective activities or the
achievement of the purpose of the
partnership, either of the other members
shall have the right to demand the
member to cease such conduct.
Section 6:502
[Gains and losses, liabilities]
(1) The profits and losses from
common activities shall be distributed
among the members in proportion to
their capital contributions.
(2) Any agreement excluding any
member from receiving a share of the
profits or from covering the losses shall
be null and void.
(3) If the members responsibility for
covering losses derogates from the ratio
previously agreed upon based on a
contract concluded with a third party,
they shall settle accounts with each
other as laid down in the contract.
Section 6:503
[Administration]
(1) Members shall be entitled to
manage the partnership’s affairs
collectively.
(2) Members may also provide that
authorization for management is granted
to a certain member or members, in
which case those members not
expressly authorized shall not be entitled
to exercise management rights.
(3) If several members are granted
joint management rights, they shall bring
management decisions unanimously.
(4) Non-members shall not be granted
management rights. Management shall
be carried out personally. Any stipulation
that is contrary to these provisions shall
be null and void.
Section 6:504
[Opposition]
The management decisions of a
member with sole management rights
may be contested by either member,
and management decisions adopted
under joint management rights may be
contested by any non-management
member. Members shall decide on the
opposition collectively. The proposed
measure may not be carried out pending
409
decision of the members. The right of
opposition may not be validly excluded.
Section 6:505
[Cessation of administration rights]
(1) If management is not exercised by
all members collectively, the right of
management may be revoked from the
member so authorized by the other
members acting unanimously, in which
case continued management will be
decided by the members. Any exclusion
or restriction of this right shall be null
and void.
(2) The member granted management
rights under the partnership agreement
shall be entitled to waive this right. Such
waiver, however, shall not be made at
an unsuitable time.
(3) If there is no member with the right
of management, all members shall be
entitled to exercise management rights.
Section 6:506
[Representation]
Members may grant authorization in
the partnership agreement to either of
the members to represent the other
members in dealings with third parties.
Section 6:507
[Relationship of members]
Each member shall have access to
management processes, that is to say
they shall have the right to inspect the
related documents and books. Any
agreement of the parties to the contrary
shall be null and void.
Section 6:508
[Creditors of members]
(1) If the partnership agreement is
terminated, the creditor of any member
shall be entitled to lay claim to the
partner’s share of the settlement of final
accounts.
(2) If a creditor files to have this share
attached, he shall be entitled to exercise
the right of termination that is
customarily due to the member, but he
shall not be entitled to demand that the
member’s share be delivered in kind.
(3) If the partnership agreement was
concluded for a specific term, the
member’s creditor shall have the right to
terminate the agreement by giving a
three months’ notice, provided that more
than one year remains from the fixed
term.
Section 6:509
[Termination by notice]
(1) The partnership agreement
concluded for an indefinite period may
be terminated by either of the members
with a three months’ notice. The right to
terminate may not be validly excluded.
(2) If a member terminates the
agreement at an unsuitable time, he
shall be liable to pay compensation for
damages resulting from the termination,
if the other members indicated that the
time was unsuitable and the member
maintained his intention to terminate
nonetheless.
Section 6:510
[Termination without notice]
410
(1) The partnership agreement may be
terminated without notice where justified
by substantial reasons. Any exclusion of
that right shall be null and void.
(2) Substantial reason shall, in
particular, include any actionable
conduct of a member resulting in the
infringement of a major contractual
obligation.
Section 6:511
[Death or dissolution of a member]
(1) The partnership agreement shall
be terminated upon the death or
dissolution of a member.
(2) The surviving members may decide
to carry on the agreement without the
deceased or dissolved member.
(3) If so requested by the successor of
the deceased or dissolved member, and
if the surviving members consent, the
successor shall replace the predecessor
in the partnership agreement.
Section 6:512
[Exclusion]
(1) The partnership agreement may
provide that a member may be excluded
from the partnership by unanimous
decision of the other members in the
event where either member has the right
to terminate with immediate effect for a
reason attributable to the member to be
excluded.
(2) Accounts shall be settled with the
excluded member.
(3) The excluded member may not
demand any asset comprising part of the
common property to be provided in kind.
However, the other members shall have
the option to release the asset
demanded in kind, or to provide
adequate compensation in value.
Section 6:513
[Settlement]
(1) If the partnership agreement is
terminated accounts shall be settled
among the members. Any prior
agreement for the exclusion of
settlement shall be null and void.
(2) In the process of settlement,
common assets shall be distributed
among the members in proportion to
their capital contribution.
(3) The assets made available for
collective use shall be returned to their
owners.
TITLE XXV
CIVIL PARTNERSHIP
Section 6:514
[Establishment and termination of civil
partnership]
(1) Civil partnership means when two
persons are living together outside of
wedlock in an emotional and financial
community in the same household
(hereinafter referred to as
„cohabitation”), provided that neither of
them is engaged in wedlock or
partnership with another person,
registered or otherwise, and that they
are not related in direct line, and they
are not siblings.
(2) Civil partnership shall come to
existence upon the couple’s cohabitation
411
established under the conditions
referred to in Subsection (1), and shall
terminate upon the couple’s marriage or
their entry into registered partnership, or
when their relationship is terminated.
Section 6:515
[Partnership contracts]
(1) Domestic partners may arrange
their relationship in terms of property by
means of a contract for the duration of
their partnership. The contract shall be
considered valid if executed in an
authentic instrument or in a private
document countersigned by an attorney.
(2) The partnership contract may
contain any provision relating to property
rights, which could apply to married
couples under contract or in accordance
with this Act.
(3) A partnership contract shall be
considered effective in dealing with third
parties if the contract is recorded in the
national register of partnership contracts,
or if the partners are able to prove that
the third party was aware, or should
have been aware that such contract
existed, including its contents.
(4) The provisions pertaining to the
register of marriage contracts shall apply
mutatis mutandis to the register of
partnership contracts.
Section 6:516
[Property regime of couples in civil
partnership]
(1) Unless otherwise provided for by
the partnership contract, the partners
shall be considered independent in their
property acquisitions during their
cohabitation. If cohabitation is
terminated, either partner may request
the division of property jointly acquired
during the period of cohabitation. Any
property that is considered separate
property in the case of spouses shall not
be treated as jointly acquired property.
(2) Partners shall be entitled to a share
of jointly acquired property primarily in
kind, in proportion to their contribution.
Work done in the household and in child
raising, and also in the other partner’s
enterprise shall be construed as
contributing to acquisition.
(3) If the ratio of contribution cannot be
determined, it shall be considered equal,
unless this would constitute inequitable
financial loss in respect of either of the
partners.
(4) Unless otherwise provided for in
this Act, the provisions on the marital
property acquisition regime of spouses
shall apply mutatis mutandis to the
protection of a partner’s share from
jointly acquired property and for the
division of jointly acquired property
among the partners.
Section 6:517
[Contractual arrangement of the right
of tenancy]
(1) The partners may enter into an
agreement before entering into and
under the duration of civil partnership
regarding further use of their common
home following the termination of their
partnership. The agreement shall be
considered valid if executed in an
authentic instrument or in a private
document countersigned by an attorney.
412
(2) Where the right of tenancy is
provided for in advance by means of an
agreement, the provisions on the use of
the common home of spouses shall
apply mutatis mutandis to the right of
tenancy of a child.
(3) Following the termination of their
relationship the partners may agree
regarding further use of their common
home. There are no formal requirements
for such an agreement.
PART FOUR
NON-CONTRACTUAL LIABILITY
FOR DAMAGES
TITLE XXVI
GENERAL PROVISIONS AND
COMMON RULES ON LIABILITY
FOR DAMAGES
Section 6:518
[General prohibition of torts]
All torts are prohibited by law.
Section 6:519
[General provisions on liability]
Any person who causes damage to
another person wrongfully shall be liable
for such damage. The tortfeasor shall be
relieved of liability if able to prove that
his conduct was not actionable.
Section 6:520
[Unlawfulness]
All torts shall be considered unlawful,
unless the tortfeasor has committed the
tort:
a) with the consent of the aggrieved
party;
b) against the assailant in order to
prevent an unlawful assault or a threat
suggesting an unlawful direct assault, if
the tortfeasor did not use excessive
measures to avert the assault;
c) in an emergency, to the extent
deemed proportionate; or
d) by way of a lawful conduct, and
such conduct does not violate the legally
protected interests of others, or if the
tortfeasor is required by law to provide
compensation.
Section 6:521
[Foreseeability]
No causal relationship shall be
deemed to exist in respect of any
damage that the tortfeasor could not and
should not have foreseen.
Section 6:522
[Extent of liability]
(1) The tortfeasor shall compensate
the aggrieved party for all his losses in
full.
(2) Under the principle of the right to
full compensation the tortfeasor shall
cover:
a) any depreciation in value of the
property of the aggrieved party;
b) any pecuniary advantage lost; and
c) the costs necessary for the
mitigation or elimination of the financial
losses sustained by the aggrieved party.
413
(3) The amount of compensation shall
be reduced by any financial advantage
of the aggrieved party resulting from the
tort, unless this is deemed redundant
having regard to the circumstances of
the case.
(4) In cases of exceptional
circumstances, the court may award
compensation in an amount lower than
the amount of the total loss.
Section 6:523
[Exposure to tort acts]
In the event of the presence of
imminent danger, the endangered
person shall be entitled to request the
court, as it follows from the
circumstances of the case:
a) to restrain the person imposing such
danger from continuing such conduct;
b) to order the person imposing such
danger to take sufficient preventive
measures;
c) to order the person imposing such
danger to provide sufficient guarantee.
Section 6:524
[Joint tortfeasors]
(1) If the damage is caused jointly by
two or more persons, their liability shall
be joint and several towards the
aggrieved person.
(2) The court shall be entitled not to
establish joint and several liability if the
aggrieved person has himself
contributed to the occurrence of the
damage or if appears unjustified in
cases of exceptional circumstances. In
the event of non-application of joint and
several liability the court shall condemn
the tortfeasors consistent with the
degree of their culpability, or - if this
cannot be determined - in proportion to
their respective involvement. If the
degree of involvement cannot be verified
either, the court shall condemn the
tortfeasors equally.
(3) Liability for damages shall be borne
by the tortfeasors involved consistent
with the degree of their culpability, or - if
this cannot be determined - in proportion
to their respective involvement. If the
degree of involvement cannot be
verified, the tortfeasors shall cover the
damages equally.
(4) The provision applicable to joint
tortfeasors shall apply mutatis mutandis
also if any one of the activities carried
out concurrently would in itself be
sufficient to cause the damage, or if the
particular activity that in fact caused the
damage cannot be identified.
Section 6:525
[Contributory negligence]
(1) The aggrieved party shall be
subject to the obligation of damage
control and the obligation of prevention
and mitigation of damages. In the event
of any actionable breach of those
obligations, the tortfeasor shall not be
obliged to provide compensation.
(2) Liability for damages shall be borne
by the tortfeasor and the aggrieved party
consistent with the degree of their
culpability, or - if this cannot be
determined - in proportion to their
respective involvement. If the degree of
involvement cannot be verified either,
414
the tortfeasors and the aggrieved party
shall cover the damages equally.
(3) The aggrieved party shall be liable
for any omission by the persons for
whose conduct he is responsible.
Section 6:526
[Limitation or exclusion of liability]
Any contract term limiting or excluding
liability for intentional tort resulting in
loss of life, or harm to physical integrity
or health shall be null and void.
Section 6:527
[Mode of compensation]
(1) The tortfeasor shall provide
compensation in cash, unless
compensation in kind is justified by the
circumstances.
(2) In the case of compensation for
recurrent future loss, the court may
award periodic payments to be made in
advance in a specific amount.
(3) In determining the mode of
compensation the court shall not be
bound by the aggrieved party’s request,
however, court shall not order any mode
of compensation such that is objected to
by all of the parties.
Section 6:528
[Payments for loss of income]
(1) Any person whose capacity to work
has been reduced as a result of a tort
shall be entitled to demand payments for
loss of income if - for reasons beyond
his control - his earnings after the tort
are less than his earnings before.
(2) Payments for loss of income shall
be determined based on the degree of
incapacity and on the extent of loss of
income combined.
(3) The loss of income of the
aggrieved party shall be generally
determined on the basis of the regular
monthly average income acquired during
the previous year. If the amount of
income changed significantly during the
previous year, the average income after
the change shall be taken into account.
(4) If the loss of income cannot be
assessed under Subsection (3), the
average monthly salary of persons
performing the same or similar work
shall apply to determining the loss.
(5) When determining the loss of
income, any future change the
occurrence of which is anticipated shall
also be taken into account.
(6) When determining the loss of
income, the income acquired by the
aggrieved party through extraordinary
performance of work in spite of his
incapacity shall not be taken into
account.
Section 6:529
[Payments for loss of maintenance]
(1) If the tort results in death,
payments for loss of maintenance shall
be provided to any person who was
supported by the person who died in
consequence of the tort. Furthermore,
the tortfeasor shall be liable to provide
payments for loss of maintenance also if
such outcome could not have been
anticipated.
415
(2) The tortfeasor shall be liable to
provide payments for loss of
maintenance also if the person who has
died had in fact failed to discharge his
maintenance obligation or if the person
to whom maintenance is provided has
not enforced his claim for maintenance
or annuity for an excusable reason.
(3) In determining the amount of
payments for loss of maintenance, the
lost maintenance and the income of the
person claiming payments shall be taken
into account.
(4) When establishing the amount of
payments for loss of maintenance, it
shall be considered if the person
claiming payments is without sufficient
income for reasons within his control,
and whether the person claiming such
payments has enforced or is eligible to
enforce a claim against the persons
whose obligation to support him is equal
to that of the deceased person.
(5) Otherwise, the rules relating to the
calculation of payments for loss of
income shall apply mutatis mutandis to
the calculation of annuities.
Section 6:530
[Amendment or termination of annuity
payments]
In the event of considerable changes
in the circumstances, either party shall
be entitled to demand a reduction in the
amount of the annuity or a change in the
annuity payment period, or the
termination of annuity payment
obligations.
Section 6:531
[General measure of damages]
If the extent of damage cannot be
precisely calculated, the person
responsible for causing the damage
shall be compelled to pay a general
indemnification that would be sufficient
to compensate the aggrieved party.
Section 6:532
[Due date of compensation]
Compensation shall be due
immediately upon the occurrence of the
damage.
Section 6:533
[Statute of limitations]
(1) The provisions on statute of
limitations shall apply to compensation
with the proviso that in respect of
damages caused by the commission 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.
(2) The period of limitation on annuity
claims shall commence uniformly for the
whole claim when the damage
underlying the annuity claim emerges for
the first time.
Section 6:534
[Consideration of changes in living
conditions in determining the measure of
damages]
(1) In the event of any substantial
changes in the value conditions between
the time when the tort was committed
and the time when the court verdict was
416
passed due to the passage of time or
other circumstances, the court shall
award damages based on the conditions
prevailing at the time of the verdict. In
that case, the tortfeasor shall be liable to
pay interest on late payment from the
time when the value was established.
(2) If the aggrieved party fails to
enforce his claim for compensation in
due time for reasons within his control,
he shall bear the risk of changes in
prices and values himself.
TITLE XXVII
SPECIFIC CASES OF LIABILITY
Chapter LXVIII
Liability for Highly Dangerous
Activities
Section 6:535
[Liability for hazardous operations]
(1) A person who pursues an activity
that is considered highly dangerous shall
be liable for any damage caused
thereby. Where such person is able to
prove that the damage occurred due to
an unavoidable cause that falls beyond
the realm of highly dangerous activities,
he shall be relieved from liability.
(2) These provisions on liability for
hazardous operations shall also apply to
persons who cause damage to other
persons through activities that endanger
the human environment.
(3) Any exclusion or limitation of
liability shall be null and void; this
prohibition shall not apply to damage
caused to a tangible thing.
Section 6:536
[Operators]
(1) The person on whose behalf the
hazardous operation is carried out shall
be recognized as the pursuer of a highly
dangerous activity.
(2) Where hazardous operations are
carried out on behalf of more than one
person, they shall be treated as joint
tortfeasors.
Section 6:537
[Contributory negligence]
(1) No compensation shall be provided
for any damage insofar as it originates
from an activity attributable to the
aggrieved party. In the spreading of
losses, the highly dangerous nature of
the activity shall be taken into
consideration to the burden of the
operator.
(2) If a nonpunishable person has
contributed to the occurrence of the
damage through his avoidable conduct,
the operator shall be subject to full
liability toward the nonpunishable
aggrieved party. The operator shall be
entitled to lodge a claim for
compensation under Subsection (1)
against the guardian of the
nonpunishable person.
Section 6:538
[Statute of limitations]
The period of limitation for claiming
damages in connection with liability for
417
hazardous operations shall be three
years.
Section 6:539
[Interaction of hazardous operation
and relationship of operators in liability
for torts committed jointly]
(1) Where damage is caused by one
hazardous operation to another, the
operators shall be liable to provide
compensation as commensurate
according to attributability. If the damage
is caused by a person other than the
operator, the operator shall be liable to
provide compensation as commensurate
according to the attributability of the de
facto tortfeasor.
(2) If the cause of damage is not
attributable to either party,
compensation shall be provided by the
party whose highly dangerous activity is
responsible for the malfunction that
contributed to causing the damage.
(3) If the cause of mutual damage is a
malfunction that occurred in the scope of
both parties’ highly dangerous activity,
or if such malfunction cannot be
attributed to one of the parties, each
party shall, where individual
responsibility cannot be established,
bear liability for his own loss.
(4) The provisions of this Section shall
apply to the relationship of operators
also if the damage is caused by several
hazardous operations jointly, with the
proviso that in the absence of
attributability and irregularity each party
shall bear liability equally.
Chapter LXIX
Liability for the Acts of Another
Person
Section 6:540
[Liability for the acts of employees and
members of legal persons]
(1) If an employee causes damage to
a third party in connection with his
employment, liability in relation to the
injured person lies with the employer.
(2) If a member of a legal person
causes damage to a third party in
connection with his membership, liability
in relation to the injured person lies with
the legal person.
(3) Liability of the employee or the
member and the employer or the legal
person shall be joint and several if the
damage was caused intentionally.
Section 6:541
[Liability for the actions of executive
officers]
If an executive officer of a legal person
causes damage to a third party in
connection with his office, liability in
relation to the injured person lies with
the executive officer and the legal
person jointly and severally.
Section 6:542
[Liability for the actions of agents]
(1) If an agent causes damage to a
third party in connection with his
assignment, liability in relation to the
injured person lies with the principal and
the agent jointly and severally. The
principal shall be relieved of liability if he
is able to prove that he has not acted
418
wrongfully in terms of choosing,
instructing, and supervising his agent.
(2) In respect of permanent agency,
the injured party shall be inter alia
entitled to enforce his claim according to
the regulations governing the liability for
damages caused by employees.
Section 6:543
[Liability for the actions of the obligors
of other contracts]
The obligee of other contracts shall be
liable for damages caused by the obligor
of the contract to a third party in the
course of performance of the contract,
insofar as he reveals the identity of the
tortfeasor, if unknown to the injured
party.
Chapter LXX
Liability for the Actions of
Nonpunishable Persons
Section 6:544
[Liability for the actions of
nonpunishable persons]
(1) Any person whose discretionary
ability is limited to an extent whereby
such person is unable to comprehend
the consequences of his actions leading
to the damage shall not be held liable for
the damage he has caused.
(2) The person known as the legal
custodian of the nonpunishable person
shall held liable in place of the
nonpunishable person. The person
having custody of the nonpunishable
person at the time the damage was
caused shall also be regarded as a
custodian.
(3) The custodian shall be relieved of
liability if able to prove that he has not
acted wrongfully in providing care and in
exercising custody.
(4) The provisions applicable to joint
tortfeasors shall apply to liability where
more than one custodian is involved.
Section 6:545
[Compensation on grounds of fairness]
If a tortfeasor has no custodian or the
liability of the custodian cannot be
established, under special
circumstances the nonpunishable
tortfeasor 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.
Section 6:546
[Actionable conduct]
A nonpunishable tortfeasor may not
allege his mental incapacity or
impairment if such condition was inflicted
by the person himself.
Section 6:547
[Liability for the actionable conduct of
minors]
If damage has been caused by a
minor who is punishable, and who has
an appointed custodian, and the injured
party is able to prove that the custodian
has knowingly breached his obligations,
the custodian as well as the tortfeasor
419
shall be subject to joint and several
liability.
Chapter LXXI
Liability for the Actions of Public
Authorities
Section 6:548
[Liability for the actions of
administrative authorities]
(1) Liability for damages caused within
the scope of administrative jurisdiction
shall be established only if the damage
results from actions or omissions in the
exercise of public authority, and if the
damage cannot be abated by common
remedies or in proceedings for the
judicial review of an administrative
decision.
(2) Liability for damages caused within
the scope of administrative jurisdiction
lies with the legal person exercising
public authority. If the person exercising
public authority is not a legal entity,
liability for damages shall lie with the
administrative body having legal
personality, on whose behalf the
relevant administrative body operates.
Section 6:549
[Liability for the actions of courts,
public prosecutors, notaries public and
court bailiffs]
(1) The provisions on liability for
damages caused within the scope of
administrative jurisdiction shall apply
mutatis mutandis to liability for the
actions of courts and public prosecutors,
with the proviso that claims shall be
enforced against the court or the
Prosecutor General in connection with
liability for the actions of courts and
public prosecutors, respectively. If the
acting court is not a legal entity, the
claim shall be enforced against the court
having legal personality, that is located
in the area of jurisdiction of the acting
court. A claim may be lodged only if
common remedies have been
exhausted.
(2) The provisions on liability for
damages caused within the scope of
administrative jurisdiction shall apply
mutatis mutandis to liability for the
actions of notaries public and court
bailiffs. A claim may be lodged only if
common remedies have been
exhausted.
Chapter LXXII
Product Liability
Section 6:550
[Liability for damage caused by
defective products]
Liability for damage caused by
defective products lies with the
manufacturer of such products.
Section 6:551
[Definition of products]
Product means any movable property,
even if it subsequently becomes a
component or part of another thing.
Section 6:552
420
[Damage caused by defective
products]
Damage caused by defective products
means:
a) any damage incurred by the death,
bodily injury or any impairment in the
health of a person caused by a defective
product; and
b) any damage caused by a defective
product to other objects valued in
excess of five hundred euros as
converted to forints by the official
exchange rate of the Magyar Nemzeti
Bank (National Bank of Hungary) for the
day on which the damage occurs if such
object is for private use or private
consumption according to its intended
purpose and if generally used for such
purpose by the injured party as well.
Section 6:553
[Manufacturer]
(1) For the purposes of this Chapter,
manufacturer means a producer of a
finished or semi-finished product, or raw
material, furthermore the person who
depicts himself as the manufacturer of
the product by the indication of his
name, trademark or some other
distinguishing mark on the product.
(2) As regards imported goods, a
person whose regular occupation or
business is the importation of products
into the territory of the European
Economic Area shall also be construed
a manufacturer. This provision shall not
affect the counterclaims of an importer
filed against a manufacturer.
(3) If the manufacturer of a product
cannot be identified, all distributors of
such product shall be regarded as
manufacturers until such distributors
reveal to the injured party the identity of
the manufacturer or the distributor from
whom the product was obtained. This
provision shall also apply to imported
products mutatis mutandis where the
manufacturer is indicated but the
importer cannot be identified.
(4) Distributors shall make the
aforementioned statement within thirty
days from the date of the written request
of the injured party.
Section 6:554
[Defective product]
(1) A product shall be considered
defective if it fails to provide a level of
safety generally expected, with special
regard to the purpose of the product and
the way in which it can be reasonably
expected to be used, the information
provided in connection with the product,
the date of the sale of the product, and
the current state of scientific and
technological achievements.
(2) A product shall not be considered
defective solely on the basis that
subsequently a product providing a
higher level of safety will be placed on
the market.
(3) The burden of proof of defect lies
with the injured party.
Section 6:555
[Exemption from liability]
(1) The manufacturer shall be relieved
of liability if able to prove that:
a) he did not place the product on the
market;
421
b) the product was not produced for
retail purposes, or it was not produced or
distributed within the framework of
regular business activities;
c) the product was in perfect condition
at the time when it was placed on the
market, and the cause of the defect
developed subsequently;
d) at the time the product was placed
on the market the defect could not have
been discovered according to the
current state of scientific and
technological achievements; or
e) the defect in the product was
caused by the application of a statutory
or regulatory provision.
(2) The producer of raw material or a
component shall be exempt from liability
upon providing proof that:
a) the defect was caused by the
structure or composition of the final
product; or
b) the defect was the consequence of
instructions given by the manufacturer of
the final product.
(3) With regard to damages resulting
from the proper application of a
medicinal product, the manufacturer
shall not be exempted from product
liability relying on Paragraph d) of
Subsection (1).
Section 6:556
[Third party influence]
The manufacturer shall not be exempt
from liability alleging that a third party
contributed to the occurrence of the
damage. This provision shall not affect
the legitimate claims of the manufacturer
against a third party.
Section 6:557
[Limitation or exclusion of liability]
Any limitation or exclusion of the
manufacturer’s liability towards the
injured party shall be null and void.
Section 6:558
[Claim deadlines]
(1) The injured party may claim his
right to compensation within a three-year
limitation period.
(2) The term of limitation shall
commence when the injured party
became, or could be expected to have
become, aware of the damage, the
defect in the product as well as of the
identity of the manufacturer.
(3) The manufacturer shall remain
subject to liability for a period of ten
years effective from the date of placing
the given product on the market. This
deadline shall apply with prejudice.
Section 6:559
[Miscellaneous provisions]
(1) In the application of this Chapter,
even in cases of exceptional
circumstances the amount of
compensation awarded may not be
lower than the amount of the total loss.
(2) The provisions of this Chapter shall
not apply to the damages defined in the
Act on Atomic Energy, and to damages
caused by the type of nuclear accidents
which are addressed by international
treaties ratified by the Republic of
Hungary.
Chapter LXXIII
422
Liability for Building Damages
Section 6:560
[Building owner’s liability]
(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 by 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 he has not
acted wrongfully in the course of
construction and maintenance with
regard to the prevention of damage.
(2) The provision set out in Subsection
(1) shall apply to liability for damages
caused by any object falling off a
building, with the exception that the
person in whose interest the object has
been installed on the exterior of a
building shall be jointly and severally
liable with the owner of the building.
(3) These provisions shall not affect
the right of the responsible party to
demand compensation from the persons
who have caused the damage.
Section 6:561
[Liability for damage caused by fallen,
thrown or dumped objects]
(1) Liability for damages caused by
objects that are thrown out, dropped, or
poured out from a dwelling or other
rental premises lies with the tenant or
other user of the dwelling or premises.
(2) If the tenant or user identifies the
person who caused 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.
Chapter LXXIV
Liability for Damage Caused by
Animals
Section 6:562
[Damage cause by farming operations]
(1) Any person who keeps animals
shall be liable for damages caused by
the animals to other persons, unless he
is able to prove that he has not acted
wrongfully in the keeping of animals.
(2) The keeper of a dangerous animal
shall be held liable in accordance with
the provisions on liability for hazardous
operations.
Section 6:563
[Liability for damage caused by wild
game]
(1) Liability for damages caused by
huntable animals lies with the authorized
hunter on whose hunting ground the
damage took place. If the damage was
423
caused in a place other than a hunting
ground, liability lies with the authorized
hunter from whose hunting ground the
animal arrived.
(2) The authorized hunter shall be
relieved from liability if he can prove that
the damage is the result of an
unavoidable cause beyond his control.
(3) The period of limitation for claiming
damages shall be three years.
TITLE XXVIII
LIABILITY FOR EXCUSABLE
DAMAGES
Section 6:564
[Indemnification]
Where indemnification obligation is
prescribed by law for excusable
damages, the provisions on liability for
damages shall apply mutatis mutandis to
the mode and measure of
indemnification.
PART FIVE
SECURITIES
TITLE XXIX
GENERAL RULES
Section 6:565
[Definition of securities]
(1) Where a person undertakes a
unilateral commitment in writing, made
out in a format other than electronic, or
in a (dematerialized) document
electronically recorded in a securities
account to provide either by himself or
by another person indicated in the
relevant statement the exercise of rights
set out in the statement to a person
shown as the beneficiary in the
document or in the securities account
under the conditions laid down in the
statement, or to provide the service
specified in the document or in the
statement recorded electronically to the
person shown as the beneficiary in the
document or in the securities account,
such document or electronically
recorded instrument shall be recognized
as a security.
(2) Any person who transfers a
security that contains his commitment
into the possession of another person
for the purpose of undertaking a
commitment, or who takes action for
having the dematerialized securities
credited to the beneficiary’s securities
account, shall become the debtor in
accordance with the contents of the
securities in respect of the person shown
as the beneficiary on the securities in
question.
(3) Enforcement of a right or claim to
which the security pertains, and the
verification or transfer of such right or
claim may be done by way of the
security only.
(4) Where mandatory terms and
conditions are prescribed by law for
certain types of securities, only the
document or computer-generated
instrument corresponding to such terms
and conditions may be recognized as
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securities that have been constituted as
the given type of securities.
(5) In the case of specific types of
securities which are not regulated by
law, the document or computergenerated
instrument shall be
recognized as a security if the issuer
included at least the following
information in the security:
a) the name and address of the issuer;
b) an indication that the statement is
recognized as a security;
c) the rights attaching to the security;
d) an indication of the securities series,
where applicable, the securities code of
the series and the quantity of securities
included in the series;
e) the place and date of issue;
f) the issuer’s signature in the case of
paper-based securities.
(6) Securities are transferable. The
issuer may prohibit the transfer of his
securities, with such prohibition shown
on the securities.
Section 6:566
[Limitation of objection]
Apart from the objections evident from
the contents of the security or the
securities account, in dealings with a
bone fide beneficiary, 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.
Section 6:567
[Permissible derogations]
Statutory provisions may be laid down
elsewhere in derogation from the
provisions of this Chapter relating to
securities on the basis of an
international convention.
TITLE XXX
SECURITIES MADE OUT IN THE
FORM OF PRINTED
CERTIFICATES
Section 6:568
[Issue error relating to securities made
out in the form of printed certificates]
The issuer of securities made out in
the form of printed certificates shall be
held liable for the obligations fixed in the
securities in dealings with the bona fide
holder of such securities if the securities
were released for circulation without
issue or through an invalid transaction.
Section 6:569
[Transfer of securities made out in the
form of printed certificates]
(1) Securities made out in the form of
printed certificates which do not indicate
the holder’s name, or which indicates
the holder’s name, however, the
securities are of a type that contain
instructions to render it payable on
demand to the bearer, whether or not
such person is the registered holder
(hereinafter referred to as „bearer
security”) may be transferred by way of
transfer of possession under a contract
for transfer.
(2) Securities made out in the form of
printed certificates which does indicate
the holder’s name, and it does not
425
contain instructions for the obligor to
render it payable on demand to the
bearer (hereinafter referred to as
„registered security”) may be transferred
by way of transfer of possession under a
contract for transfer with express or
blank endorsement.
(3) Express endorsement is a written
statement which bears the holder’s
signature and is made on the negotiable
instrument itself or on an attached sheet
(hereinafter referred to as „attachment”)
declaring the holder’s intention to
transfer the security and specifying the
name of the transferee.
(4) Blank endorsement is a written
statement which bears 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
construed a blank endorsement.
(5) When a security made out in the
form of a printed certificate 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 with blank or
express endorsement;
c) transfer possession of the security
to a third person without filling out the
blank endorsement or affixing a new
endorsement.
(6) Legislation may authorize the
issuer to install a restrictive clause by
means of a written statement executed
in the registered security, hence making
it non-negotiable by endorsement
(hereinafter referred to as „negative
endorsement”), such security may be
transferred within the facilities of
assignment.
Section 6:570
[Legal effects of transfer of securities
made out in the form of printed
certificates]
All rights and obligations arising out of
a bearer security or from a registered
security that do not contain a negative
endorsement shall pass to the new
holder upon the transfer of the security
irrespective of the transferor’s previous
rights.
Section 6:571
[Legal effects of formalities relating to
securities made out in the form of printed
certificates]
(1) In the case of bearer securities the
person having possession of the
securities shall be construed to be
entitled to exercise the rights and carry
out the obligations arising out of the
security.
(2) In the case of registered securities
the holder of the securities whose name
is indicated on the securities as
beneficiary, or who is named in the
constant chain of endorsements as the
transferee shall be construed to be
entitled to exercise the rights and carry
out the obligations arising out of the
security. If the last endorsement is blank,
the holder of the security shall be
recognized as the beneficiary, provided
that the chain of endorsements is
426
constant. 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.
(3) The rights arising out of securities
of a bona fide person who qualifies as
beneficiary shall be in force irrespective
of whether a previous transfer or other
form of acquisition was illegitimate, or it
took place under invalidated or void title.
(4) If the person of beneficiary of a
registered security changes by means
other than transfer, the new beneficiary
shall be required to verify his acquisition.
If acquisition is made by means other
than transfer, the constant chain of
endorsements shall verify the holder’s
beneficiary right any proof of acquisition
by means other transfer notwithstanding.
Where a specific person is authorized by
law to indicate his acquisition by means
other than transfer in the chain of
endorsements, such entry shall serve to
ensure the constancy of the chain of
endorsements, and any lack of
acquisition, or its invalidity or annulment
shall have no bearing on the rights
arising from the security of a bona fide
third party who is to be recognized as
the beneficiary of the security.
Section 6:572
[Destruction of securities made out in
the form of printed certificates]
(1) If any security made out in the form
of a printed certificate is lost or
physically destroyed, or damaged to an
extent where its contents can no longer
be recognized, such securities may be
discarded following the appropriate
procedure.
(2) If securities are discarded, all legal
effects arising from such securities shall
cease to exist, and the rights attaching
to such securities may be enforced
according to the general provisions
pertaining to such rights.
TITLE XXXI
DEMATERIALIZED SECURITIES
Section 6:573
[Issue of dematerialized securities]
(1) Dematerialized securities shall be
issued as part of a series.
(2) The central depository shall open
central securities accounts when so
requested by the issuers of
dematerialized securities.
(3) The central depository shall
maintain central securities accounts
separately for each securities series in
the name of securities account
managers who maintain securities
accounts for the given securities series.
The central securities account shall
indicate the updated quantity of
dematerialized securities of the same
series, which are recorded by the
securities account manager.
(4) For the opening of a central
securities account, the issuer shall
communicate to the central depository,
in a document that does not qualify as a
security, the following:
427
a) the contents of the decision on the
issue, and the date when it was
adopted;
b) the information prescribed by law for
the dematerialized securities of the
series to be issued, or if statutory
information is not prescribed by law, the
information to be included in such
dematerialized securities;
c) the quantity of dematerialized
securities of the series to be issued, and
their nominal value where appropriate;
d) an indication of the securities
account managers who will maintain
securities accounts for the holders of
securities of the securities series to be
issued;
e) the quantity of securities held on
account by the securities account
managers separately.
(5) If additional dematerialized
securities are issued within the same
series of dematerialized securities, or
any other change takes place in the
document deposited with the central
depository, the issuer shall submit to the
central depository a new document
containing the information defined in
Subsection (3). When the new document
is submitted, the previous document
underlying the issue of dematerialized
securities shall cease to have effect.
Section 6:574
[Conversion of securities into
dematerialized securities]
(1) If the issuer adopts a decision for
the conversion of printed securities into
dematerialized securities, he shall notify
the holders of such securities by way of
public notice to surrender the securities
made out in the form of printed
certificates to the issuer, and to disclose
the name of the securities account
manager and the number of the
securities account where they wish to
have the dematerialized securities
credited. The above-specified public
notice shall contain information as to the
procedure or the sale or withdrawal of
securities representing membership
rights which have not been surrendered.
(2) The public notice shall also indicate
the deadline of not less than sixty days
within which the holders of securities are
required to surrender their securities.
(3) The issuer shall prepare the
document necessary for the issue of
dematerialized securities and shall
submit it to the central depository on the
first working day following the expiry of
the deadline for the submission of
securities, or after all securities to be
converted are surrendered. On that
basis, the central depository shall open
the central securities account and shall
credit the account with dematerialized
securities of the same quantity and
contents as the printed securities. At the
same time the securities made out in the
form of printed certificates shall become
invalid.
Section 6:575
[Rules relating to securities not
presented for conversion]
(1) The central depository shall credit
the dematerialized securities issued to
replace printed securities which the
holders failed to surrender in
428
accordance with the previous Section to
the central securities account opened for
the issuer. The issuer shall have the
right of disposition over the securities
held on such central securities accounts
as provided for in this Section.
(2) If the dematerialized securities
issued in place of securities not
surrendered as instructed expire, the
issuer shall deposit the monetary
equivalent of such dematerialized
securities on the holder’s behalf.
(3) The issuer shall be entitled to sell
or withdraw from circulation securities
representing membership rights, which
have not been surrendered as
instructed, under the conditions set out
in the public notice. The issuer shall
deposit the sum received from the sale,
or the sum payable to the holder for
securities withdrawn from circulation,
with a credit institution on the holder’s
behalf.
(4) The holder of securities made out
in the form of printed certificates, who
failed to surrender his securities as
instructed, may request to have the
dematerialized securities credited to his
securities account, or to have the sum
deposited on his behalf released,
following payment of the issuer’s
expenses arising from his delay.
Section 6:576
[Securities account]
(1) The securities account is an
electronic account intended to keep
records of dematerialized securities and
the holders of such securities, that is
opened by an organization authorized to
operate securities accounts under an
agreement concluded with the holder of
dematerialized securities.
(2) At the time of conclusion of the
agreement for the opening of a
securities account, the securities
account manager shall record the data
necessary for the identification of the
holder of the account.
(3) When the central securities
account is opened, the central
depository shall notify the securities
account managers under whose name
the dematerialized securities are
recorded on the central securities
account. Upon receipt of such notice,
the securities account managers shall
be entitled to credit dematerialized
securities on the securities account of
the holder of such dematerialized
securities as of the time indicated in the
notice.
Section 6:577
[Transfer of dematerialized securities]
(1) For the transfer of dematerialized
securities a contract for transfer or other
legal title is required and, in that context,
the transferor’s securities account shall
be debited and the new holder’s
securities account shall be credited with
the dematerialized securities transferred.
(2) If the securities account of the new
holder of dematerialized securities is not
maintained by the transferor’s securities
account manager, the transferor’s
securities account manager shall
disclose to the central depository at the
time of debiting the securities account
the name of the securities account
429
manager and the number of the
securities account to which the
dematerialized securities are to be
credited. The central depository shall
debit the central securities account of
the transferor’s securities account
manager with the quantity to be
transferred and shall credit it to the
central securities account of the
securities account manager keeping the
new holder’s securities account. The
central depository shall notify the new
holder’s securities account manager
when the account is credited, upon
which the account manager shall credit
the dematerialized securities transferred
to the new holder’s securities account.
(3) All rights arising out of
dematerialized securities shall pass to
the new holder upon the transfer of such
securities irrespective of the transferor’s
previous rights.
Section 6:578
[Legal effects of formalities relating to
dematerialized securities]
(1) The holder of dematerialized
securities shall mean the holder of the
securities account on which the
dematerialized securities are recorded.
(2) The holder of dematerialized
securities shall be able to verify his
entitlement by the account statement
issued by the keeper of the securities
account or with a certificate of
entitlement when the account statement
or the certificate of entitlement is made
out. The account statement and the
certificate of entitlement shall not be
recognized as securities. In the event of
any divergence between the data shown
on the account and what is contained in
the account statement, the data shown
on the account shall be considered
authentic.
(3) The rights arising out of
dematerialized securities of a bona fide
person who qualifies as holder shall be
in force irrespective of whether a
previous transfer or other form of
acquisition was illegitimate, or it took
place under an invalidated or void title.
(4) If the person of the holder of a
dematerialized security changes by
means other than transfer, the new
holder shall be required to verify his
acquisition and may request to have the
dematerialized security credited to his
securities account. The previous holder’s
account shall be debited and the
dematerialized securities shall be
credited to the new holder’s account in
accordance with the provisions relating
to the transfer of dematerialized
securities.
PART SIX
OTHER FACTS ESTABLISHING
OBLIGATIONS
TITLE XXXII
UNJUST ENRICHMENT
Section 6:579
[Unjust enrichment]
(1) Any person who unlawfully
acquires any financial advantage at the
430
expense of another shall be obliged to
return the advantage.
(2) Any person who has been deprived
of gains before they are reclaimed shall
not be obliged to return them, unless:
a) the gains had been acquired in bad
faith; or
b) he has acted wrongfully as regards
the loss of the gains.
Section 6:580
[Compensation of value]
If a financial advantage cannot be
returned in kind, its value shall be
compensated.
Section 6:581
[Recovering grants provided for
subsistence]
Grants that are provided and used for
subsistence cannot be reclaimed on the
grounds of unjust enrichment, unless the
grant has been criminally obtained.
Section 6:582
[Joint enrichment]
The persons who has been unjustly
enriched jointly shall be jointly and
severally obligated to return the unjustly
received property.
TITLE XXXIII
NEGOTIORUM GESTIO
Section 6:583
[Negotiorum gestio]
Any person acting 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 6:584
[Appropriate intervention]
(1) Intervention in the affair of another
person without authority shall be
considered appropriate if it is in
conformity with the interest and
presumed intent of the other person,
especially if the intervention saves him
from loss or injury.
(2) Intervention is considered
appropriate in order to avert life
threatening situations even against the
will of the person whose life is
endangered, to prevent or avert
extensive potential hazards even against
the will of the owner or another duly
authorized person, or to fulfill the
obligation to provide support even
against the will of a person who is
obliged to provide support.
Section 6:585
[Unauthorized agent]
(1) An unauthorized 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 unauthorized
agent has been appropriate, he shall be
entitled to the rights of an agent,
431
irrespective of whether his intervention
was successful or not.
(3) If intervention has not been
appropriate, the unauthorized agent
shall not be entitled to demand
remuneration; he shall be entitled to
demand reimbursement for his expenses
only in accordance with the regulations
governing unjust enrichment, and he
shall be liable for all damages that would
not have occurred without his
intervention.
(4) As regards the obligations of
separation, safeguarding, settlement
and allocation of the unauthorized agent
relating to any foreign property in his
possession, the provisions relating to
fiduciary asset management contracts
shall apply mutatis mutandis.
Section 6:586
[Handling the affairs of another person
without due authority]
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
negotiorum gestio. If these rights are
enforced, the acting person shall be
entitled to include his expenses
according to the regulations governing
unjust enrichment.
TITLE XXXIV
IMPLICIT CONDUCT
Section 6:587
[Implicit conduct]
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.
TITLE XXXV
OFFERING REWARDS
Section 6:588
[Offering rewards]
(1) If a person publicly offers a reward
to anyone who achieves a certain
performance or accomplishment, he
shall be obligated to give the reward to
the person who first achieved the
performance or accomplishment. This
person shall be bound by this obligation
even if the performance or
accomplishment is achieved irrespective
of the reward offer.
(2) If the performance or
accomplishment was achieved by two or
more persons jointly, the reward shall be
divided among these persons in
proportion to their participation. If the
proportion of participation cannot be
determined or if the performance or
accomplishment was achieved by two or
more persons independently, the reward
shall be divided in equal shares.
(3) Withdrawal of a reward offer shall
be considered valid only if the person
making the offer has expressly reserved
the right to do so and withdrawal is
effected by at least the same degree of
publicity that accompanied the reward
432
offer. Withdrawal of a reward offer shall
be inoperative in respect of the person
who achieved the performance or
accomplishment, if it takes place after
the time the performance or
accomplishment had in fact been
implemented.
TITLE XXXVI
PUBLIC COMMITMENTS
Section 6:589
[Public commitments]
Where a person undertakes an
obligation to offer financial benefits
without compensation for a public-policy
objective of his choice, he shall be
allowed to stipulate the conditions under
which the contribution is to be used for
the purpose specified, and to designate
a person for whose benefit the
contribution should be appropriated.
Section 6:590
[Designated bodies]
(1) If the obligor has not appointed a
body to appropriate the contribution for
the specified purpose, the court shall
appoint one on the basis of the public
prosecutor’s petition.
(2) If the appointed body fails to
appropriate the contribution for the
specified purpose, the public prosecutor
shall also be entitled to enforce the
claims arising therefrom.
Section 6:591
[Withdrawal]
(1) A commitment to perform a onetime
contribution can be validly
withdrawn prior to performance if
performance of the contract can no
longer be expected due to significant
changes that have occurred in the
obligor’s circumstances since he
undertook the obligation.
(2) The obligor shall, at any time, be
entitled to withdraw a commitment to
make regular contributions for an
indefinite period of time.
(3) If the commitment is withdrawn, a
contribution that has already been made
cannot be reclaimed.
Section 6:592
[Cessation of commitments]
(1) The commitment shall cease:
a) upon the obligor’s death;
b) when the purpose of the
commitment has been achieved; or
c) if achievement of the purpose of the
commitment is no longer possible.
(2) If a commitment has been
extinguished because the purpose has
been accomplished or has become
impossible, any unused contributions
shall be returned to the obligor.
BOOK SEVEN
LAW OF SUCCESSION
PART ONE
GENERAL RULES
433
TITLE I
SUCCESSION
Section 7:1
[Inheritance]
The estate of a person shall devolve
upon an heir in its entirety after the
testator’s death.
Section 7:2
[Right of inheritance]
The right to inheritance shall not lapse.
Section 7:3
[Wills and intestate succession]
(1) The disposition of one’s property
after death may take place by will or
intestate succession.
(2) If the testator died leaving a valid
testamentary disposition, it shall
determine the order of succession.
TITLE II
DEBARMENT FROM
SUCCESSION
Section 7:4
[Debarment from succession]
(1) Any person who did not survive the
testator shall be debarred from
succession. Persons who died in the
same accident or in any similar incident
shall be considered debarred in terms of
consecutive succession irrespective of
the time of their death.
(2) Furthermore, a person shall be
debarred from succession under the
following circumstances:
a) if undeserving of the inheritance;
b) if he has been excluded from the
inheritance or disinherited by the
decedent;
c) if he has waived his right to the
inheritance;
d) if he has disclaimed the inheritance.
Section 7:5
[Debarment from beneficial rights,
compulsory share, legacy or devise]
The provisions on debarment from
succession shall also apply to the
inheritance of beneficial rights, to
compulsory share, legacy and devise,
with the exception that the debarment of
the legatee or devisee shall, if there has
been no substitution in this regard, mean
the exemption of the person compelled
by the legacy or devise.
Section 7:6
[Unworthiness]
(1) A person is unworthy of inheritance
if he has:
a) attempted to take the decedent’s
life;
b) willfully obstructed the decedent in
freely manifesting his last will, frustrated
the enforcement of the will, or attempted
either of these;
c) attempted to take the life of the legal
heir or the life of a person named to
receive property in the decedent’s will
with the intention of receiving a part of
the inheritance.
434
(2) Unworthiness shall not be taken
into consideration if the conduct leading
to unworthiness, regardless of the
person against whom it was directed,
has been pardoned by the decedent or
the person against whom it was directed.
(3) Unworthiness can only be alleged
by a person who, as the result of the
unworthy person’sdebarment, would
himself inherit or would be exempted
from an obligation or other burden to
which he is bound by virtue of the
testamentary disposition.
(4) Any person who is debarred from
succession for reason of unworthiness
shall not be entitled to administer the
inheritance of the person replacing him.
The provisions pertaining to the
termination of the parents’ asset
management right shall apply mutatis
mutandis to the administration of such
assets.
Section 7:7
[Waiver of succession]
(1) Any legal heir shall be entitled to
renounce his right to succession - in
whole or in part - in a written agreement
concluded with the testator.
(2) Renouncement may be contested,
in the same manner as a will, for lack or
deficiency of contractual intent.
Section 7:8
[Personal effects of waiver]
(1) The waiver shall not affect the
descendants of the person making the
waiver, except if it is so stated in the
agreement or if it occurs in return for
satisfaction reaching the compulsory
share.
(2) If the waiver is made in favor of a
specific person it shall only apply unless
the parties have agreed
otherwise - if that specific person stands
to inherit from the decedent. Any waiver
made by a descendant of the testator
shall apply - unless the parties have
agreed otherwise - in favor of the other
descendants.
Section 7:9
[Scope of waiver]
(1) Renouncement of the inheritance
shall - unless the parties have agreed
otherwise - also constitute a waiver of
the compulsory share. However, waiver
of the compulsory share shall not imply
disclaiming that which comes down to
the person making the waiver under
other titles of inheritance.
(2) In the absence of any agreement to
the contrary, a waiver shall also cover
that part of the estate by which the share
of the person making the waiver later
increases as a consequence of the
debarment of another person.
(3) Likewise, unless the parties have
agreed otherwise, the waiver shall also
apply to property acquired by the
decedent after the waiver has been
made, unless the acquisition results in
such an extraordinary increase in the
testator’s estate that the person making
the waiver, had he been aware of the
increase, would not have issued a
waiver.
PART TWO
435
SUCCESSION BY WILL
TITLE III
TYPES OF WILLS, VALIDITY OF
WILLS, INTERPRETATION OF
WILLS
Section 7:10
[Freedom of testamentary disposition]
Testators shall be entitled to freely
dispose of their property, or a part
thereof, at time of death by a will.
Section 7:11
[Personal nature of testamentary
disposition]
Wills shall be drafted in person.
Section 7:12
[Wills]
An instrument shall be recognized as a
will if it contains the testator’s disposition
of his property to take effect after his
death, and if it manifestly appears to
have been made out by the testator.
Section 7:13
[Types of wills]
Disposition of property may be
accomplished by means of a notarial will
or holographic will; noncupative wills are
permissible in the cases specified in this
Act.
Section 7:14
[Notarial will]
(1) A notarial will shall be drafted
before a notary public. The provisions
pertaining to the validity of notarial
deeds shall apply to the formal
requirements of notarial wills.
(2) Notarial wills may not be validly
drafted before a person who is a
relative, guardian, or conservator of the
testator or the testator’s spouse or
domestic partner.
(3) Any bequest in favor of a person
participating in the drafting of a notarial
will or in favor of the relative of such
person or a person under his
guardianship or conservatorship shall be
invalid.
(4) The testamentary disposition of a
minor of limited legal capacity or a
person whose legal capacity has been
partially limited in respect of making
legal statements relating to property
shall be considered valid only if made in
the form of a notarial will. The consent of
their legal representatives, or the
approval of the guardian authority shall
not be required for the wills of such
persons to be valid.
(5) The testamentary disposition of
blind or illiterate persons, or persons
who are incapable of reading or
subscribing their names shall be
considered valid only if made in writing
in the form of a notarial will.
Section 7:15
[Holographic will]
A holographic will can be validly made
only in a language that the testator
understands, and that he is able to write
if written by the testator in his own
436
handwriting, or that he is able to read if
written by others.
Section 7:16
[Wills written by the testator in his own
handwriting and wills written by others]
(1) A holographic will may be written
by the testator in his own handwriting or
by another person on his behalf.
(2) Type-writing shall not be
recognized as one’s own handwriting
even if typed by the testator himself.
(3) Personal wills drafted in shorthand
writing or another symbol or code
writing, other than normal writing, shall
be invalid.
Section 7:17
[Formal validity requirements for
holographic wills]
(1) A holographic will shall be
considered valid from a formal point of
view if the date when it was drafted is
clearly indicated, and:
a) if it is entirely written and signed by
the testator in his own handwriting;
b) if written by other persons, it is
signed by the testator in the
contemporaneous presence of two
witnesses or, if it was signed previously,
the testator declares the signature to be
his own before two witnesses in their
contemporaneous presence, and if the
will is also signed in both cases by the
witnesses, indicating their capacity as
such; or
c) if written by the testator himself or
by other persons, it is signed by the
testator, and deposited personally with a
notary public either as an open
document or a sealed document,
specifically marked as a will.
(2) A holographic will written by the
testator in his own handwriting,
consisting of several separate pages
shall be deemed valid if each page is
numbered in sequence.
(3) A holographic will consisting of
several separate pages, if written by a
person other than the testator, shall be
deemed valid if each page is numbered
in sequence and signed by the testator
and by both witnesses.
Section 7:18
[Attesting a holographic will]
(1) A holographic will may not be
witnessed by:
a) any person who is unable to verify
the testator’s identity;
b) a minor or incompetent adult, or by
any person whose legal capacity has
been partially limited in respect of
serving as a witness;
c) any person who is illiterate.
(2) The witness’ knowledge of the
contents of a will and his awareness that
he has participated in the drafting of a
will are not conditions of the validity of a
holographic will.
Section 7:19
[Devise made to a subscribing witness
or another participating person]
(1) Any devise made in favor of a
subscribing witness of a holographic will
or another participating person or one of
their relatives shall be invalid, unless this
section of the will is handwritten and
signed by the testator himself.
437
(2) A devise made in favor of a
subscribing witness or one of his
relatives shall not be null and void if two
witnesses other than the subscribing
witness himself have participated in
drafting the will.
(3) The person who drafted, edited or
wrote the will, and any person whose
activity carries the potential to influence
the contents of the will shall be
recognized as a participating person.
(4) Where a devise made in favor of a
legal person, or any member, executive
officer, representative or supervisory
board member, or any employee of such
legal person may not participate as a
witness. Participation by such person in
drafting the will shall render the devise
made in favor of that legal person
invalid.
Section 7:20
[Exceptional nature of nuncupative
wills]
Nuncupative wills can be made by
persons who are in an extraordinary life
threatening situation where making a
written will is not within their reach.
Section 7:21
[Validity requirements for nuncupative
wills]
A nuncupative will shall be considered
valid if a testator orally exhibits his will in
its entirety in the contemporaneous
presence of two witnesses, in a
language understood by the witnesses or
in sign language if the testator uses
sign language - and concurrently
announces that his oral statement
constitutes his will.
Section 7:22
[Witness to a nuncupative will]
The restrictions concerning the person
of the witnesses of holographic wills and
their interests and those of their relatives
shall also apply to nuncupative wills, with
the proviso that the witness’ literacy is
not a prerequisite for a nuncupative will
to be valid.
Section 7:23
[Joint will]
(1) The wills of two or more persons
executed in the same document in any
form shall be invalid.
(2) The written will of spouses made
during their marriage and executed in
the same document shall be considered
valid if:
a) it is entirely written and signed by
one of the testators in his own
handwriting, and the other testator
declares in the same document in a
signed statement executed in his own
handwriting that the document also
contains his last will and testament;
b) if written by other persons, it is
signed by the testators in the
contemporaneous presence of the other
testator and the witnesses, or both
testators declare separately in the
contemporaneous presence of the other
testator and the witnesses that the
signature on the document is their own;
or
c) the spouses made a notarial will.
438
(3) A joint will consisting of several
separate pages, if written by a person
other than the testators, shall be
deemed valid if each page is numbered
in sequence and signed by the testators
and by both witnesses. A joint will written
by the testator in his own handwriting
shall be deemed valid if each page is
numbered in sequence and signed by
the other testator.
Section 7:24
[Interpretation of wills]
Where there is any doubt, the will shall
be interpreted in accordance with the
testator’s presumed intent, finding the
true meaning of words aiming to execute
the decedent’s last will, if possible. This
provision may not be relied on for
remedying any formal discrepancies of
the will.
TITLE IV
CONTENTS OF WILLS
Section 7:25
[Naming heirs]
(1) A testator shall be entitled to name
one or more heirs in his will.
(2) Heir means a person to whom a
testator leaves his estate, or a specific
portion or part thereof.
(3) In case of doubt, an heir could be
any person to whom a testator leaves
one or more designated properties that
constitute a significant part of the value
of the entire estate, if the recipient also
shares in the debts and liabilities of the
estate in accordance with the presumed
intent of the testator.
(4) A foundation to be established
upon the founder’s death shall - after it is
registered - be able to acquire the
property the founder has provided as if it
has existed at the time of the opening of
the succession.
Section 7:26
[Share in the succession]
If the testator has named two or more
heirs either for the entire estate, a part
thereof, or for a specific property item
and has not defined the size of their
shares, the recipients shall succeed in
equal shares.
Section 7:27
[Alternate heir]
(1) The testator shall be entitled to
name another person as heir in the
event the heir is debarred from
succession.
(2) If the designated heir is also the
testator’s legal heir, his descendant shall
be considered his alternate heir in the
case of his debarment, unless otherwise
provided for in the will, if the descendant
would - under intestate succession replace
the designated heir if debarred.
Section 7:28
[Substitute heir]
(1) The testator’s testamentary
disposition according to which another
heir shall, as of some event or a date,
replace the previous heir in respect of
439
the inheritance or a part thereof, shall be
invalid.
(2) In the event of the death of the heir
named as the primary heir, an heir shall
enter as an alternate heir if the
conditions thereof have been satisfied.
(3) The testator shall be entitled to
validly designate a substitute heir in the
event of death of his/her spouse named
as the primary heir for the estate
devolving upon the spouse. The
designation of a substitute heir shall not
affect the spouse’s quid pro quo right of
disposition and his/her right to give
advancements not exceeding gifts of
ordinary value.
(4) The testator shall be entitled to
validly designate a substitute heir for
his/her estate devolving upon a
descendant named as a primary heir for
the eventuality if the descendant is
lacking testamentary capacity at the time
the succession has been opened, and
he/she dies without acquiring such
capacity. Naming a substitute heir shall
not affect the right of disposition of the
descendant named as a primary heir
applicable within the limits of the
provisions on legal capacity.
Section 7:29
[Disinheritance]
(1) The testator shall be entitled to
disinherit his/her legal heir or persons
who could become his/her legal heirs
from intestate succession, either by
naming other persons as an heir or by
making an explicit statement in the will.
Disinheritance need not be justified.
(2) Persons eligible for a compulsory
share of inheritance may also be denied
a share in the succession exceeding the
compulsory share.
Section 7:30
[Residuary estate]
If the shares of the heirs do not
exhaust the entire estate, intestate
succession shall be effected with respect
to the remaining assets, unless
otherwise provided for by this Act or
otherwise inferred from the will.
Section 7:31
[Legacy]
(1) A legacy is any property in an
estate that is bequeathed directly to a
specific person if such share is not
regarded as inheritance (specific
legacy).
(2) It shall also be a legacy if a testator
compels an heir to perform a material
service for a legatee (obligatory legacy).
(3) A legacy can also be left to an heir.
A person who is himself a legatee can
also be burdened by a legacy. In case of
doubt, a legacy shall burden the heir.
Section 7:32
[Substitute legatee]
(1) A testator’s testamentary
disposition according to which another
person shall, as of some event or a date,
replace the previous legatee in the
bequest, shall be valid.
(2) Unless otherwise provided for by
the testator, the designation of a
substitute legatee shall not affect the
440
primary legatee’s quid pro quo right of
disposition and his/her right to give
advancements not exceeding gifts of
ordinary value.
Section 7:33
[Devise]
(1) If the testator has burdened a
person who receives a part of the estate
with an obligation to be performed for
the benefit of a third person, the person
named in the will shall become entitled
to the claim. Performance of a devise for
which the will contains no instructions
whatsoever may be demanded by the
executor of the will and by any other
person who receives a part of the estate.
Performance of a public interest devise
may be demanded by the competent
authority as well.
(2) In case of doubt, a devise shall
burden the heir.
(3) Where there is reason to believe
that the testator wished to make a
bequest pending discharge of a devise,
the person burdened with the devise
shall be required to forfeit the bequest
according to the provisions on unjust
enrichment if he fails to discharge the
devise or if discharging the devise
becomes impossible for reasons within
his control. Forfeiture of the bequest
may be demanded by the executor of
the will and by any other person who
receives a part of the estate. The value
of the forfeited property shall be
allocated to discharging the devise.
(4) In case of doubt, legacy shall also
include the testator’s instruction to grant
property to a specific person.
Section 7:34
[Application of the rules of testate
succession to legacy and devise]
The provisions of testate succession
shall apply mutatis mutandis to legacies
and devices, unless otherwise provided
for in this Act.
Section 7:35
[Right of accretion]
(1) If a testator has named two or
more heirs for the whole estate or a part
thereof, thereby excluding intestate
succession, and if an heir is debarred
without having an alternate heir, the
shares of the other heir named for the
same part of the estate shall be
increased proportionately.
(2) If the designated heir is debarred,
and he/she is also the legal heir of the
testator, the share of the other heirs in
the succession who are also legal heirs
of the testator shall be increased
proportionately on the basis of the right
of accretion on condition that there is no
alternate heir for the debarred person
and none can be otherwise inferred from
the will.
(3) An heir named for a specific
property item shall have a right of
accretion only as a result of the
debarment of another heir named for the
same property and only with respect to
that property.
Section 7:36
[Right of accretion on legacy and
devise]
441
Legatees named jointly for the same
property item or for the same service
and the beneficiaries of the devise made
in favor of more than one person shall
be entitled to the right of accretion in an
orderly fashion under the same
conditions as the heirs named in respect
of specific property items.
TITLE V
INVALIDITY AND ANNULMENT
OF WILLS
Section 7:37
[Contest of will]
(1) A will may be declared invalid and
annulled on the basis of a statement of
contest. The statement of contest shall
indicate the reasons for invalidity or
annulment.
(2) A contest may be filed by a person
who, as the result of invalidity or
annulment, would himself inherit or
would be exempted from an obligation or
other burden to which he is bound by
virtue of the testamentary disposition.
(3) Invalidity or annulment of the will
may be established on the grounds on
which the contest is based, for the
person who filed to contest.
(4) The right of contest shall lapse
after five years from the time of the
opening of the succession.
(5) The right of contest shall be
suppressed if the party entitled to
contest waives his right to do so after the
time of the opening of the succession.
The legal statement in which the party
entitled to contest acknowledges the will
as valid and/or effective shall be
construed a waiver.
Section 7:38
[Revocation of the probate of a will]
(1) Any condition that is manifestly in
contradiction to good morals,
unintelligible, impossible, or
contradictory shall be invalid. The
invalidity of a condition shall not affect
the validity of a testamentary disposition,
unless it can be established that the
testator would not have made the
disposition without the condition.
(2) A testamentary bequest rendered
contingent on an unlawful condition
precedent shall be invalid, and an
unlawful condition subsequent shall be
disregarded.
Section 7:39
[Validity of the will of a person placed
under a conservatorship]
The will of a person placed under a
conservatorship shall be valid if the
reason for being placed under
conservatorship ceases to exist by the
time the will is drafted.
Section 7:40
[Defects in the intention of the person
making the disposition]
(1) A testamentary disposition shall be
invalid if:
a) the testator was mistaken
concerning the contents of his
statements or did not want to make a
statement of such content at all;
442
b) the testator had been persuaded to
make the statement by a mistaken
assumption or some subsequently
abandoned expectation;
c) the testator had been coerced into
making the disposition by the use of
threat or unfair influence;
provided that the testator would not
otherwise have made the disposition.
(2) An invalid provision shall become
valid if the testator subsequently
approves it in the form prescribed for a
will.
Section 7:41
[Revocation of will]
(1) A will shall become inoperative if
revoked. Unless otherwise provided for
in this Act, the provisions governing the
making of wills shall also apply to
revocation.
(2) If the testator drafts a new
holographic will, the previous will shall
be deemed revoked. The dispositions of
the previous will that are not in
contradiction to the dispositions of the
new will shall remain in force if the
contrary intention of the testator cannot
be established.
Section 7:42
[Destruction of holographic wills
intentionally and otherwise]
(1) A holographic will shall become
inoperative if it is destroyed either by the
testator, having testamentary capacity,
or by another person with his consent. If
a holographic will has remained in the
testator’s possession but has not been
found, it shall, until proven to the
contrary, be presumed that the testator
has destroyed it.
(2) Neither a public nor a holographic
will shall cease to have effect if the
document containing the will is
destroyed for reasons beyond the
control of the testator or if it cannot be
found, except if the testator acquiesces
to destruction.
Section 7:43
[Annulment and revocation of joint
wills]
(1) The joint will of spouses shall
become inoperative if their matrimonial
relationship ceases after making the will,
and it is not reconciled before the time of
the opening of the succession.
(2) The joint will shall become
inoperative if one or both of the testators
have a child born after the will is made,
except if the will provides otherwise.
Adoption shall have the same effect.
(3) The arbitrary revocation of a
testamentary disposition made in a joint
will shall be null and void if it was
precluded in the will, or if carried out
without notifying the other testator.
(4) If either spouse revokes his/her
disposition contained in the joint will
unilaterally, the disposition of the other
spouse shall remain in effect, unless it
can be established from the will that
neither of the parties would have made
his/her disposition without the other’s
disposition.
Section 7:44
[Withdrawal of a will deposited with a
notary public]
443
A personal will deposited with a notary
public shall become inoperative if it is
withdrawn by the testator.
Section 7:45
[Annulment of nuncupative wills]
A nuncupative will shall become
inoperative if the testator had the
opportunity to draft a written will without
any difficulty during a period of thirty
consecutive days following the cessation
of the situation underlying the making of
the nuncupative will.
Section 7:46
[Annulment of a will made for the
benefit of a spouse or domestic partner]
A will made for the benefit of the
spouse or domestic partner during the
period of matrimonial relationship or
cohabitation shall be inoperative if the
marriage or partnership no longer exists
at the time of the opening of the
succession, and it is manifestly evident
from the circumstances that there was
no reasonable expectation of
reconciliation and that the testator did
not wish to leave any property to his/her
spouse or domestic partner.
Section 7:47
[Partial invalidity and partial annulment
of wills]
If any disposition from among the
several dispositions of a will is invalid or
inoperative, the other dispositions shall
remain valid or effective, unless
otherwise provided for by the testator
and provided that continuance of certain
parts of the will is not in contradiction to
the presumed intent of the testator.
TITLE VI
AGREEMENTS AS TO
SUCCESSION
Section 7:48
[Agreements as to succession]
(1) An agreement as to succession
means an agreement where the testator
names the other party to the agreement
his/her heir in exchange for
maintenance, annuity or care to be
provided to the testator him/herself or to
a third person specified in the
agreement for his entire estate or a
specific part thereof, or in respect of
certain property, and the other party
undertakes the commitment to provide
said maintenance, annuity or care.
(2) If the commitment of the party to
the agreement with the testator covers
the period after the testator’s death in
respect of the third person, in the
probate proceedings the devise provided
in the form of real estate property shall
be transferred to the third person
encumbered with the right to
maintenance, and the right to
maintenance shall be recorded in the
real estate register at the request of the
notary conducting the probate
proceedings.
(3) The testator shall be entitled to
make any testamentary disposition in the
agreement as to succession. Any
testamentary disposition made in the
444
agreement as to succession by the other
party to the agreement with the testator
shall be invalid.
Section 7:49
[Validity of a contract of inheritance]
(1) The provisions on holographic wills
shall apply to the validity of agreements
as to succession with the exception that
the formal requirements of wills written
by other persons shall apply to such
agreements even if they are drafted in
the handwriting of one of the parties.
(2) If the testator is a minor of limited
legal capacity or a person whose legal
capacity has been partially limited in
respect of making legal statements
relating to property, the consent of their
legal representatives or the approval of
the guardian authority shall be required
for their agreement as to succession to
be valid.
Section 7:50
[Transfer of estate]
(1) In the absence of an agreement of
the parties to the contrary, any
disposition of the testator inter vivos or
causa mortis for the alienation or
encumbrance of the property to which
the agreement as to succession pertains
shall be null and void. This provision
shall not affect the rights of a third
person, acquired in good faith and for a
consideration.
(2) In the absence of an agreement of
the parties to the contrary, a prohibition
of alienation and encumbrance of the
real estate property bound by the
agreement as to succession may be
recorded in the real estate register
without the testator’s consent.
Section 7:51
[Joint agreement of spouses as to
succession]
(1) Spouses shall be entitled to validly
conclude an agreement as to
succession during their marriage
executed in the same document.
(2) In the absence of an agreement of
the parties to the contrary, the surviving
spouse shall have life estate on the
dwelling inherited by the party to the
agreement with the testators, including
furnishings and appliances, if he/she
used them together with the testator.
Section 7:52
[Amendment and termination of
contracts of inheritance]
(1) In respect of the amendment and
termination of an agreement as to
succession, the provisions on
maintenance and life-annuity contracts
shall apply.
(2) The regulations governing the
creation of agreements as to succession
shall apply to termination and
amendment in terms of formal
requirements. Termination of the
agreement made in the absence of
statutory formalities shall be deemed
valid, if the actual state conforming
thereto has been established upon the
parties’ mutual consent.
TITLE VII
445
TESTAMENTARY GIFTS.
DISPOSITION OF EXPECTED
INHERITANCE
Section 7:53
[Testamentary gift]
(1) If a gift has been given under the
condition that the donee outlives the
donor, the regulations governing gifts
shall apply to the contract with the
exception that the formal requirements
to be applied shall be the same as those
for agreements as to succession.
(2) A testamentary gift shall be
deemed valid only for a bequest that
would qualify as a specific legacy in a
will.
Section 7:54
[Agreement on expected inheritance]
(1) Descendants of a testator shall be
entitled to conclude an agreement
among themselves regarding their
expected inheritance even during the
lifetime of the testator.
(2) Such agreements shall be
executed in writing.
PART THREE
INTESTATE SUCCESSION
TITLE VIII
INTESTATE SUCCESSION
GENERALLY
Section 7:55
[Inheritance by descendants]
(1) The child of a decedent shall be
the primary legal heir.
(2) Two or more children shall succeed
in equal shares.
(3) In the place of a child or a more
distant descendant debarred from
succession, the children of a debarred
person shall succeed in equal shares.
Section 7:56
[Obligation to restore gifts]
(1) If several descendants succeed
together, each heir shall add to the value
of the estate the value of advancements
they received from the decedent during
his lifetime if the decedent expressly
stipulated such advancements to be
included in the heir’s share of the estate
or the circumstances suggest that the
bequest was made under the obligation
of inclusion.
(2) Where several descendants
succeed together, they shall be subject
to the obligation to restore gifts also if
they receive their legal share in the
succession based on the testator’s
testamentary disposition.
(3) Advancements of common value
and the maintenance provided to
descendants who are in need of support
shall not be treated as advancements
even if the decedent expressly stipulates
it.
Section 7:57
[Implementation of the obligation to
restore gifts]
(1) The intestate share of each heir in
the succession shall be determined by
446
dividing the consolidated total net value
of the estate and all of the restored
advancements into appropriate shares,
and the value of such advancements
restored by each heir shall be deducted
from this.
(2) The value restored shall be
determined on the basis of the value of
the advancement at the time it was
given. If applying the value of the
advancement at the time when it was
given is considered grossly unfair for
either party, such party may bring action
asking the court to revise such value
relying on the prevailing circumstances.
(3) If a person debarred from
succession has a descendant, such
descendant shall be obliged to restore
the advancements received by the
debarred person. Any advancement
received by an ancestor shall be
deducted from the share of two or more
descendants calculated on the basis of
the restored values in proportion to their
shares of the estate.
(4) If the value restored by a co-heir
reaches or exceeds the value of his
share of the estate as calculated on the
basis of restored values, he shall be
considered satisfied from the inheritance
to be divided, but he shall not be
compelled to refund any excess. In such
a case, the advancement of the co-heir
who does not receive a share from the
estate and that of the aforementioned
co-heir shall not be included when
dividing the estate among the other co-
heirs.
Section 7:58
[Spouse’s share from the estate
contemporaneously with a descendant]
(1) The testator’s spouse shall be
entitled contemporaneously with the
legal heir to:
a) life estate on the family dwelling
used together with the testator, including
furnishings and appliances; and
b) one share of a child from the
remainder of the estate.
(2) Life estate may not be limited, and
no redemption value may be demanded
from the spouse.
(3) Under an allocation agreement,
instead of a child share, the spouse may
be granted estate for life in respect of
the entire estate.
Section 7:59
[Spouse’s right to redemption]
(1) The spouse may at any time
request redemption of his/her life estate
for future considerations. Redemption of
life estate shall be carried out in due
consideration of the spouse’s and the
descendant’s reasonable interests.
(2) The spouse shall be entitled to one
child share - in kind or in money - from
the estate to be redeemed.
Section 7:60
[Spouse’s share from the estate over
parent]
(1) If there is no descendant, or if the
descendant is excluded from
succession, the testator’s spouse shall
inherit the family dwelling used together
with the testator, including furnishings
and appliances.
447
(2) Half of the estate to which
Subsection (1) does not apply shall be
inherited by the testator’s spouse, and
the other half shall be inherited by the
testator’s parents in equal shares. If a
parent is debarred from succession, the
other parent and the testator’s spouse
shall succeed in equal shares.
Section 7:61
[Spouse as the sole heir]
If there is no descendant or parent, or
if they are excluded from succession, the
surviving spouse shall receive the entire
estate.
Section 7:62
[Spouse’s debarment from intestate
succession]
(1) The testator’s spouse shall be
debarred from succession if they were
separated at the time of the opening of
the succession and it is manifestly
evident from the circumstances that
there was no reasonable expectation of
reconciliation.
(2) Debarment of the testator’s spouse
can only be alleged by a person who, as
the result of debarment, would himself
inherit or would be exempted from an
obligation or other burden to which he is
bound by virtue of the testamentary
disposition.
Section 7:63
[Inheritance by parent and parent’s
descendant]
(1) If there is no descendant or
spouse, or if they are excluded from
succession, the parents of the decedent
shall succeed in equal shares.
(2) In the place of a parent debarred
from succession, the descendants of
such parent shall succeed in the same
manner in which the descendants of a
child succeed in the stead of the child.
(3) If a parent debarred from
succession has no descendant, or if the
descendant is excluded from
succession, the other parent alone or his
descendants shall succeed.
Section 7:64
[Inheritance by grandparent and
grandparent’s descendant]
(1) If there are no descendants,
spouse, parents, or descendants of
parents, or if they are excluded from
succession, the grandparents of the
decedent shall become legal heirs in
equal shares.
(2) In the place of a grandparent
debarred from succession, the
descendants of such grandparent shall
succeed in the same manner in which
the descendants of the parent succeed
in the stead of that parent.
(3) If a grandparent debarred from
succession has no descendant, or if the
descendant is excluded from
succession, the spouse of such
grandparent shall succeed in his/her
stead, and if he/she too is debarred,
his/her descendants shall succeed in
his/her place.
(4) If either set of grandparents has
been debarred and there are no
descendants in their place or if they are
excluded from succession, the entire
448
estate shall be inherited by the other set
of grandparents or their descendants.
Section 7:65
[Inheritance by great-grandparent and
great-grandparent’s descendant]
(1) If there are no grandparents and
descendants of grandparents, or if they
are excluded from succession, the greatgrandparents
of the decedent shall
become legal heirs in equal shares.
(2) In the place of a great-grandparent
debarred from succession, the
descendants of such great-grandparent
shall succeed in the same manner in
which the descendants of the
grandparent succeed in the stead of that
grandparent.
(3) If a great-grandparent debarred
from succession has no descendant, or
if the descendant is excluded from
succession, the spouse of such greatgrandparent
shall succeed in his/her
stead, and if he/she too is debarred,
his/her descendants shall succeed in
his/her place.
(4) If either set of great-grandparents
has been debarred and there are no
descendants in their place or if they are
excluded from succession, the entire
estate shall be inherited by the other set
of great-grandparents in equal shares.
(5) If either of the great-grandparents
succeeding under Subsection (4) is
debarred, the provisions set out in
Subsections (2) and (3) shall apply.
Section 7:66
[Inheritance by distant relatives]
If there are no great-grandparents and
descendants of great-grandparents, or if
they are excluded from succession, the
distant relatives of the decedent shall
become legal heirs in equal shares.
TITLE IX
LINEAL SUCCESSION
Section 7:67
[Lineal property]
(1) If the legal heir is not a descendant
of the decedent, any property that has
come down to the decedent from an
ancestor by inheritance or gift shall be
subject to lineal succession.
(2) Property inherited or received as a
gift from a sibling or his descendant shall
also be subject to lineal succession if the
property had been inherited or received
as a gift by the sibling or his/her
descendant from his/her and the
decedent’s common ancestor.
(3) Whosoever would inherit under this
title shall prove the lineal nature of the
property.
Section 7:68
[Lineal heirs]
(1) A parent shall succeed to property
that has come down to the decedent
from him/her or one of his/her ancestors.
Descendants of a debarred parent shall
succeed in his/her place according to
the general provisions on intestate
succession.
(2) If the parent who is entitled to
succeed to a lineal property and the
449
parental descendant are both debarred,
the grandparent, and if the grandparent
is also debarred, a more distant ancestor
of the decedent shall inherit the property
that has come down to the decedent
from him/her or from one of his
ancestors.
(3) If there is no lineal heir, lineal
property shall be treated the same as
the decedent’s other property.
Section 7:69
[Spouse’s life estate on lineal property]
(1) The spouses shall be entitled to life
estate on lineal property.
(2) The spouse and the lineal heir both
shall be entitled to request the
redemption of the right to life estate any
time for future considerations.
Redemption from the spouse relating to
life estate on the family dwelling used
together with the testator, including
furnishings and appliances, may not be
requested.
(3) With respect to redemption, the
spouse is entitled to one-third of the
lineal property.
(4) Redemption of life estate shall be
carried out in due consideration of the
reasonable interests of the holder of life
estate and the heir of the property.
Section 7:70
[Property excluded from lineal
succession]
(1) The provisions on lineal succession
shall not apply to gifts of ordinary value.
(2) The provisions on lineal succession
shall not apply to any property that no
longer exists at the time of the testator’s
death, however, they shall apply to any
substitute property or a property
purchased from the proceeds received
for such property.
(3) No claim can be filed, on the
grounds of lineal succession, for
furnishings and/or household
accessories of common value against
the testator’s spouse.
Section 7:71
[Lineal estate]
Lineal property shall be inherited in
kind. If succession in kind appears to be
impossible or impractical, the court may
- at the request of either of the parties
affected - order payment of the monetary
value of the lineal property.
TITLE X
PROVISIONS ON INHERITANCE
RELATING TO ADOPTION
Section 7:72
[Inheritance by adopted persons]
(1) An adopted person shall, during
the existence of adoption, inherit as a
blood descendant of the adoptive parent
from the estate of the adoptive parent
and his/her relatives.
(2) Adoption shall not affect the
adopted person’s legal right to inherit
from his/her blood relatives, if adoption
was implemented by the adopted
person’s relative in the ascending line,
sibling, or a descendant of such relative
in the ascending line.
450
Section 7:73
[Inheritance of the adopted person’s
property]
(1) The adopted person’s descendant
and spouse, or if there are no
descendants, his/her spouse and
adoptive parent, or if there are neither
descendants nor spouse, the adoptive
parent and his/her relatives shall be the
heirs of the adopted person according to
the provisions on intestate succession.
The adoptive parent and his/her
relatives shall inherit if the adoption
existed at the time of the opening of the
succession.
(2) If the persons referred to in
Subsection (1) shall not inherit after the
adopted person, the adopted person’s
blood relatives shall be legal heirs
according to the provisions on intestate
succession, provided that adoption was
implemented by the adopted person’s
relative in the ascending line, sibling, or
a descendant of such relative in the
ascending line.
TITLE XI
ESCHEAT
Section 7:74
[Succession by the State of necessity]
(1) In the absence of legal heirs the
estate shall revert to the State.
(2) The State, as a legal heir, shall not
be entitled to disclaim an inheritance.
PART FOUR
COMPULSORY SHARE OF
INHERITANCE
TITLE XII
ENTITLEMENT TO
COMPULSORY SHARE
Section 7:75
[Compulsory heirs]
The descendants, spouse, and
parents of a testator shall be entitled to a
compulsory share if such person is a
legal heir of the testator or would be one
in the absence of a testamentary
disposition at the time of the opening of
the succession.
Section 7:76
[Lapse of right to compulsory share]
The period of limitation for claims for
compulsory share shall be five years.
Section 7:77
[Disinheritance]
A person validly disinherited by a
testator in his testamentary disposition
shall be denied a compulsory share.
Disinheritance shall be valid if the
testamentary disposition expressly
indicates the reason therefor.
Section 7:78
[Grounds for disinheritance]
(1) Disinheritance can take place if a
person entitled to a compulsory share:
451
a) is undeserving of inheritance from
the testator;
b) has committed a serious crime to
the injury of the testator;
c) has attempted to take the life of the
testator’s spouse, domestic partner or
his next of kin or has committed another
serious crime to their injury;
d) has seriously violated his legal
obligation to support the testator;
e) lives by immoral standards;
f) has been sentenced to an
executable term of imprisonment, and
has not yet served his term;
g) has failed to offer aid or assistance
as it may be expected by the testator at
a time of need.
(2) The testator may disinherit a
descendant of legal age for reasons of
gross ingratitude the descendant has
displayed toward the testator.
(3) A parent may be disinherited by the
testator for wrongful conduct which
would also serve grounds for the
termination of parental custody rights.
(4) A testator may disinherit his/her
spouse because of a conduct seriously
violating conjugal rights.
(5) Any person who is debarred from
succession for reason of disinheritance
shall not be entitled to administer the
inheritance of the person replacing him.
The provisions pertaining to the
termination of the parents’ asset
management right shall apply mutatis
mutandis to the administration of such
assets.
Section 7:79
[Condonation]
(1) If the testator has condoned the
reason for disinheritance before making
his/her testamentary disposition, the
disinheritance shall be annulled and the
heir shall be entitled to a compulsory
share.
(2) If the testator has condoned the
reason for disinheritance after making
his/her testamentary disposition, the
disinheritance shall become invalid even
if the testamentary disposition is not
revoked.
Section 7:80
[Basis of compulsory share of
inheritance]
(1) The basis of a compulsory share of
inheritance is the net value of an estate,
and the net value, at the time of
advancement, of the advancement
granted by the testator inter vivos.
(2) If applying the value of the
advancement at the time when it was
given is considered grossly unfair, the
party affected may bring action asking
the court to revise such value relying on
the prevailing circumstances.
(3) When calculating the net value of
an estate, legacies and devises shall not
be considered as encumbrances.
(4) If succession has opened within
two years from the time of conclusion of
the agreement, the value of assets
transferred under an agreement as to
succession, a maintenance or lifeannuity
agreement or an agreement for
providing care to the extent not covered
by the maintenance, annuity or care
actually provided shall be added to the
basis of a compulsory share. The value
452
of the transferred asset, maintenance or
care provided, and the amount of the
annuity shall be taken into account at
the value prevailing at the time of the
opening of the succession.
Section 7:81
[Donations deducted from the basis of
compulsory share of inheritance]
(1) The following shall not pertain to
the basis of a compulsory share of
inheritance:
a) the values of advancements granted
by the testator to anybody more than ten
years prior to his death;
b) the value of advancements granted
by the testator before the creation of a
relationship conveying entitlement to a
compulsory share of inheritance;
c) the value of advancements not
exceeding the common value;
d) the value of maintenance given to a
spouse or domestic partner and
descendants;
e) the value of maintenance provided
without consideration to other persons in
need up to the extent necessary for
subsistence.
(2) The time of entering into a
relationship conveying entitlement to a
compulsory share shall mean the date of
marriage in respect of a child born in
wedlock or adopted by the spouses in
community, the date of adoption in
respect of other adopted children, or the
date of conception of the child in other
cases.
(3) Advancements the inclusion of
which has been canceled by the testator
shall not be added to the basis of a
beneficiary’s own compulsory share.
Section 7:82
[Extent of compulsory share of
inheritance]
(1) Under the title of compulsory share
of inheritance, the person entitled to a
compulsory share shall be entitled to
one third of what is due to a legal heir as
calculated on the basis of the
compulsory share.
(2) If a spouse is entitled to beneficial
interest as a legal heir, his/her
compulsory share of inheritance shall be
the limited degree of beneficial interest
that provides for his/her needs, in
consideration of the property he/she has
inherited.
(3) The spouse who is entitled to
beneficial interest as a legal heir shall be
entitled to lay claim to his/her
compulsory share as if his/her beneficial
interest had been redeemed.
TITLE XIII
SATISFACTION OF A
COMPULSORY SHARE
Section 7:83
[Inclusion]
(1) Everything received by a
beneficiary from an estate under any title
as well as any advancements he has
received from the testator shall be
applied to satisfy the compulsory share,
on condition that it shall be added to the
basis of the compulsory share.
453
(2) If a descendant entitled to a
compulsory share has been debarred
from succession, the value of all of the
advancements received by that person
or his descendants shall be included in
his descendant’s compulsory share. Two
or more descendants shall include
advancements in proportion to their
shares in the estate.
(3) A testator shall be entitled to cancel
inclusion with an express statement.
Cancellation of inclusion shall not be
effected if it would injure the compulsory
share of another compulsory heir.
Section 7:84
[Responsibility for satisfaction of a
compulsory share]
(1) Dispensation, or completion, of
compulsory shares can be demanded in
the following order:
a) responsibility for satisfaction of a
compulsory share primarily falls on
persons having a share of the estate;
b) the persons receiving
advancements from a testator within ten
years prior to his death shall be
responsible for that part of the
compulsory share that cannot be
satisfied from the estate, irrespective of
the chronological order in which the
advancements were received.
(2) The share of responsibility of
several persons shall be determined by
the applicable value of their grants.
(3) A person who has lost a grant
through no fault of his own shall not be
liable for a compulsory share.
Section 7:85
[Limited liability of compulsory heirs
and their family members]
(1) Any person who has received an
advancement grant shall be responsible
for satisfying a compulsory share up to
the total value of his advancement. A
compulsory heir shall be responsible
only up to the value of the advancement
that is in excess of his legitimate share
in the succession.
(2) The spouses and descendants of
persons entitled to a compulsory share
as well as the descendants’ spouses
shall be exempt from responsibility if the
total value of their advancements, even
if combined with the value of the
advancement of the compulsory heir, do
not exceed the legitimate share of the
compulsory heir in the succession. This
provision shall not apply if the
compulsory heir asserts his claim
against his/her spouse or descendant, or
his/her descendant’s spouse.
(3) In the aforementioned cases, the
legal share in the succession shall be
taken into account in accordance with
the basis of the compulsory share.
Section 7:86
[Dispensation of compulsory share]
(1) Compulsory shares of inheritance
shall be dispensed without any
encumbrance or limitation. If, however, a
compulsory share is dispensed and the
remaining property is insufficient to
ensure the limited right of survivorship of
the testator’s spouse, the part of the
compulsory share ensuring limited
enjoyment can only be dispensed after
enjoyment is terminated.
454
(2) If the testator has left property with
any limitation or encumbrance to a
compulsory heir, the limitation shall only
apply to that of which is above and
beyond the compulsory share.
Furthermore, the testator shall be
entitled to provide that the beneficiary
shall only receive the compulsory share
if he/she does not accept the limitation
or encumbrance in respect of the
compulsory share.
(3) A compulsory heir shall be entitled
to request that his/her share be
dispensed in money. Apart from the right
of survivorship, a compulsory share may
be requested in kind if it was the
testator’s intention declared inter vivos
or by a testamentary disposition.
(4) If dispensation of a compulsory
share of inheritance in money is injurious
either to the beneficiary or to the obligor,
the court shall, in light of all of the
circumstances, be entitled to order the
compulsory share to be dispensed
wholly or partly in kind.
PART FIVE
LEGAL EFFECTS OF
SUCCESSION
TITLE XIV
ACQUISITION OF INHERITANCE
Section 7:87
[Descent and distribution]
(1) Succession shall open upon the
death of the testator.
(2) Upon the opening of the
succession the heir shall acquire an
estate, or his/her rightful share or certain
objects from an estate, without
acceptance or other legal act.
Section 7:88
[Delivery of specific property from the
estate encumbered by right of
survivorship]
If the spouse of the testator has the
right of survivorship on a property as an
heir, such property shall be released
after the right of survivorship is
terminated.
Section 7:89
[Disclaimer of inheritance]
(1) An heir shall be entitled to disclaim
an inheritance after the time of the
opening of the succession.
(2) The heir shall be entitled to
separately disclaim inheritance of a
farmland and/or its equipment,
accessories, livestock, and tools and
implements, if he is not engaged in
agricultural production by profession.
(3) If the heir inherits property by
testate and intestate succession alike,
he/she shall be entitled to refuse to
accept property under either title
separately.
(4) Any disclaimer rendered contingent
on a condition or time or made with a
restriction, as well as any unlawful partial
disclaimer shall be invalid.
Section 7:90
[Waiver of the right of disclaimer]
455
(1) An heir who explicitly or implicitly
waives the right to disclaim his
inheritance after the time of the opening
of the succession shall no longer be
entitled to disclaim the inheritance.
(2) Taking possession of the
inheritance or any other act relating to
the estate that demonstrates the heir’s
unambiguous intention to accept the
inheritance shall also be construed as
abjuration of the right to disclaim an
inheritance. An heir’s failure to file a
disclaimer of the inheritance within the
time period set by a notary public at the
request of any person concerned shall
also be construed as a disclaimer.
Section 7:91
[Acquisition of legacy and devise]
The provisions on the acquisition of
inheritance shall also apply with regard
to legacies and devises mutatis
mutandis.
TITLE XV
LEGAL STATUS OF HEIRS
Section 7:92
[Legal status of co-heirs]
(1) Two or more heirs shall be jointly
entitled to the property of an estate
before the division of the succession
(hereinafter referred to as „sharing the
inheritance”).
(2) The general provisions of coownership
shall apply to the community
of co-heirs, with the proviso that before
the sharing of the inheritance any claim
as to succession may only be enforced
in the name and for the benefit of all
heirs, and the debtor shall be liable to
effect performance to all of the heirs.
(3) A community of co-heirs shall
cease upon the division of the
succession. The mode of division of the
succession may be determined by the
testator by way of testamentary
disposition. Unless the testamentary
disposition provides otherwise, the
provisions on the termination of joint
ownership shall apply mutatis mutandis
to the division of the succession.
Section 7:93
[Allocation agreement]
The heirs shall be entitled to share the
estate - pertaining to succession
property exclusively - by agreement
concluded within the framework of
probate proceedings. In the case of an
allocation agreement the estate shall be
delivered under the title of succession
according to the agreement.
TITLE XVI
ESTATE DEBTS AND THEIR
SATISFACTION
Section 7:94
[Estate debts]
(1) The following shall be construed as
estate debts:
a) costs of a proper burial for the
testator;
b) applicable costs of acquiring,
securing, and handling an estate
456
(hereinafter referred to as „estate
costs”), as well as the costs of probate
proceedings;
c) the testator’s debts;
d) obligations based on the
compulsory share;
e) liabilities based on legacies and
devises.
(2) The nature and existence of an
estate debt shall not be affected by the
fact that it was incurred in favor of the
heir as a creditor either before or after
the time of the opening of the
succession.
Section 7:95
[Order of satisfaction of estate debts]
(1) Debts shall be satisfied in the
sequence established for the different
categories of estate debts.
(2) In respect of a debt category in
which full satisfaction of all of the debts
is no longer possible, satisfaction shall
be made according to the proportion of
claims.
Section 7:96
[Responsibility for estate debts]
(1) Heirs shall be responsible to
creditors for estate debts with the
objects and proceeds of the estate. If the
objects or proceeds of an estate are not
in the heir’s possession at the time the
claims are enforced, the heir’s other
property shall also be appropriated up to
the value of their inheritance to cover the
claims.
(2) The items of property that have not
come into the heir’s possession, the
claims and other rights that could not be
enforced, as well as the non-existing
proceeds of the received property shall
be taken into account when determining
the degree of the heir’s responsibility
only so far as the heir has lost these for
reasons within his control.
(3) The heir shall bear liability with
his/her personal assets for estate costs
and for the costs of probate
proceedings.
(4) The spouse shall endure the
satisfaction of creditors’ claims, with the
exception of legacies and devises, from
the property encumbered with a right of
survivorship.
Section 7:97
[Liability of co-heirs]
(1) Co-heirs shall be subject to joint
and several liability for common estate
debts both before and after the division
of the succession.
(2) The heir to whom a testator has left
a specific property or right that is of no
greater value than a gift of usual value
shall be liable for the claims of estate
creditors only if the claims cannot be
recovered from the other co-heirs.
Section 7:98
[Satisfaction by an heir]
(1) The heir shall be allowed to satisfy
debts without adhering to the order of
satisfaction as long as there are grounds
to assume that the estate debts are fully
covered by the estate, if he disregards
the obligations assumed by the testator
inter vivos without consideration as well
as the obligations based on legacies and
devises. Otherwise, the heir shall be
457
entitled to provide satisfaction only in
accordance with the prescribed order.
(2) Any creditor who holds a lien on
some item of property that belongs to an
estate shall be entitled to seek full
satisfaction up to the value of the
collateral, irrespective of its place in the
sequence of estate debts.
(3) If the heir fails to observe these
provisions for reasons within his control,
he shall, for this reason, be responsible
to creditors who remain unsatisfied with
his entire property.
Section 7:99
[Liability of the legatee]
(1) A legatee who has received
satisfaction at the expense of another
estate creditor shall, in accordance with
the regulations governing unjust
enrichment, be liable to that creditor if
the creditor has not been able to obtain
satisfaction from the heir.
(2) A legatee shall be responsible, as
would an heir, with respect to the legacy
or devise burdening him.
Section 7:100
[Notification of estate creditors]
(1) If there are reasonable grounds for
assuming that there are unknown estate
debts, heirs shall be entitled to request
the notary public to advise the estate
creditors to notify their claims.
(2) A creditor who does not notify his
claim within the period specified in the
notice of the notary public shall not be
entitled to raise objections to
satisfactions effected before his notice
with regard to the order of satisfaction
and the proportion of the satisfaction of
creditors within the same category. If an
estate has already been distributed, the
aforementioned creditor shall only be
entitled to seek satisfaction from the coheirs
in proportion to their respective
shares, unless, in both cases, the heirs
have been aware of the claim even
without the notification.
BOOK EIGHT
CLOSING PROVISIONS
PART ONE
INTERPRETATIVE PROVISIONS
Section 8:1
[Interpretative provisions]
(1) For the purposes of this Act:
1. ‘close relative’ shall mean spouses,
next of kin, adopted children,
stepchildren, foster children, adoptive
parents, stepparents, foster parents, and
siblings;
2 ‘relative’ shall mean close relatives,
domestic partners, spouses of the next
of kin, spouse’s next of kin and siblings,
and spouses of siblings;
3. ‘consumer’ shall mean any natural
person acting for purposes which are
outside his trade, business or
profession;
4. ‘business party’ shall mean any
person acting for purposes which are
outside his trade, business or
profession;
458
5. ‘asset’ shall mean tangible property,
rights and claims;
6. ‘bank’ shall mean any person
authorized to conduct the business of
taking deposits and keeping payment
accounts.
(2) For the purposes of this Act, any
directly applicable Community legislation
that is binding in its entirety shall also be
construed as part of the legal system.
(3) For the purposes of this Act, orders
for payment shall also be recognized as
court proceedings.
(4) For the purposes of this Act, half
brothers and half sisters shall also be
construed as siblings.
(5) For the purposes of this Act, the
concept of stock exchange shall also
cover markets authorized by the
competent supervisory authority of the
State where established, where
securities are traded.
Section 8:2
[Influence]
(1) Majority control means a
relationship where a natural or legal
person (holder of a participating interest)
controls over fifty per cent of the voting
rights in a legal person, or in which it has
a dominant influence.
(2) The holder of a participating
interest is deemed to have dominant
influence on a legal person if it is a
member of or shareholder in that
company and:
a) it has the right to appoint and recall
the majority of the executive officers or
supervisory board members of the legal
person; or
b) other members of or shareholder in
that legal person are committed under
agreement with the holder of a
participating interest to vote in concert
with the holder of a participating interest,
or they exercise their voting rights
through the holder of a participating
interest, provided that together they
control more then half of the votes.
(3) Majority control is also deemed to
exist if the entitlements referred to in
Subsections (2)-(3) are ensured
indirectly to the holder of a participating
interest.
(4) Indirect control on a legal person
means a relationship where a person is
able to exercise influence on a legal
person that has voting right in that legal
person (intermediary legal person). The
scope of indirect control means the
percentage of control held by the
intermediary legal person that
correspond to the percentage of control
the holder of a participating interest has
in the intermediary legal person. If the
holder of a participating interest controls
more than half of the votes in the
intermediary legal person, the control
the intermediary legal person has in the
legal person shall be taken into account
in its entirety as indirect control held by
the holder of a participating interest.
(5) The direct and indirect ownership
interest and voting rights of close
relatives shall be applied
contemporaneously.
Section 8:3
[Time limits]
459
(1) The time limits prescribed in days
for making legal statements or to do or
not to do certain other acts shall not
include the day from which the period
runs.
(2) A time limit specified in weeks,
months or years shall expire on the day
that, by definition or number,
corresponds to the day from which the
period runs. If there is no such day
during the last month, the time limit shall
expire on the last day of the month.
(3) If the last day of the time limit is a
public holiday, the time limit shall expire
on the following working day.
(4) Where a right is contingent upon a
specific day, it shall take effect at the
beginning of that day.
PART TWO
ENTRY INTO FORCE AND
TRANSITIONAL PROVISIONS
Section 8:4
[Entry into force]
This Act shall enter into force on 15
March 2014.
Section 8:5
[Transitional provisions]
The transitional provisions shall be
established by an act of Parliament.
PART THREE
COMPLIANCE WITH THE
LEGISLATION OF THE
EUROPEAN UNION
Section 8:6
[Compliance with the Acquis]
This Act serves the purpose of
compliance with:
a) Council Directive 82/891/EEC of 17
December 1982 based on Article
54(3)(g) of the Treaty, concerning the
division of public limited liability
companies;
b) Council Directive 85/374/EEC of 25
July 1985 on the approximation of the
laws, regulations and administrative
provisions of the Member States
concerning liability for defective
products, and Directive 1999/34/EC of
the European Parliament and of the
Council of 10 May 1999 amending it;
c) Council Directive 86/653/EEC of 18
December 1986 on the coordination of
the laws of the Member States relating
to self-employed commercial agents;
d) Council Directive 90/314/EEC of 13
June 1990 on package travel, package
holidays and package tours;
e) Council Directive 93/13/EEC of 5
April 1993 on unfair terms in consumer
contracts;
f) Directive 1999/44/EC of the
European Parliament and of the Council
of 25 May 1999 on certain aspects of the
sale of consumer goods and associated
guarantees;
g) Directive 2000/31/EC of the
European Parliament and of the Council
of 8 June 2000 on certain legal aspects
of information society services, in
460
particular electronic commerce in the
Internal Market;
h) Directive 2002/47/EC of the
European Parliament and of the Council
of 6 June 2002 on financial collateral
arrangements;
i) Directive 2004/25/EC of the
European Parliament and of the Council
of 21 April 2004 on takeover bids;
j) Directive 2007/36/EC of the
European Parliament and of the Council
of 11 July 2007 on the exercise of
certain rights of shareholders in listed
companies;
k) Directive 2009/44/EC of the
European Parliament and of the Council
of 6 May 2009 amending Directive
98/26/EC on settlement finality in
payment and securities settlement
systems and Directive 2002/47/EC on
financial collateral arrangements as
regards linked systems and credit
claims;
l) Directive of the European Parliament
and of the Council of 16 September
2009 on coordination of safeguards
which, for the protection of the interests
of members and third parties, are
required by Member States of
companies within the meaning of the
second paragraph of Article 48 of the
Treaty, with a view to making such
safeguards equivalent;
m) Directive 2009/102/EC of the
European Parliament and of the Council
of 16 September 2009 in the area of
company law on single-member private
limited liability companies;
n) Directive 2009/109/EC of the
European Parliament and of the Council
of 16 September 2009 amending
Council Directives 77/91/EEC,
78/855/EEC and 82/891/EEC, and
Directive 2005/56/EC as regards
reporting and documentation
requirements in the case of mergers and
divisions;
o) Directive 2011/7/EU of the
European Parliament and of the Council
of 16 February 2011 on combating late
payment in commercial transactions;
p) Directive 2011/35/EU of the
European Parliament and of the Council
of 5 April 2011 concerning mergers of
public limited liability companies;
q) Directive 2011/83/EU of the
European Parliament and of the Council
of 25 October 2011 on consumer rights,
amending Council Directive 93/13/EEC
and Directive 1999/44/EC of the
European Parliament and of the Council
and repealing Council Directive
85/577/EEC and Directive 97/7/EC of
the European Parliament and of the
Council;
r) Directive 2012/30/EU of the
European Parliament and of the Council
of 25 October 2012 on coordination of
safeguards which, for the protection of
the interests of members and others, are
required by Member States of
companies within the meaning of the
second paragraph of Article 54 of the
Treaty on the Functioning of the
European Union, in respect of the
formation of public limited liability
companies and the maintenance and
alteration of their capital, with a view to
making such safeguards equivalent.