Contract Law in Slovenia 9789403513232, 9789403513546, 9789403513850, 9403513233

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DAMJAN MOŽINA & ANA VLAHEK

Derived from the renowned multi-volume International Encyclopaedia of Laws, this practical analysis of the law of contracts in Slovenia covers every aspect of the subject – definition and classification of contracts, contractual liability, relation to the law of property, good faith, burden of proof, defects, penalty clauses, arbitration clauses, remedies in case of non-performance, damages, power of attorney, and much more. Lawyers who handle transnational contracts will appreciate the explanation of fundamental differences in terminology, application, and procedure from one legal system to another, as well as the international aspects of contract law. Throughout the book, the treatment emphasizes drafting considerations.

Contract Law in Slovenia

Contract Law in Slovenia

An introduction in which contracts are defined and contrasted to torts, quasi-contracts, and property is followed by a discussion of the concepts of ‘consideration’ or ‘cause’ and other underlying principles of the formation of contract. Subsequent chapters cover the doctrines of ‘relative effect’, termination of contract, and remedies for non-performance. The second part of the book, recognizing the need to categorize an agreement as a specific contract in order to determine the rules which apply to it, describes the nature of agency, sale, lease, building contracts, and other types of contract. Facts are presented in such a way that readers who are unfamiliar with specific terms and concepts in varying contexts will fully grasp their meaning and significance.

DAMJAN MOŽINA ANA VLAHEK

DAMJAN MOŽINA & ANA VLAHEK

Its succinct yet scholarly nature, as well as the practical quality of the information it provides, make this book a valuable time-saving tool for business and legal professionals alike. Lawyers representing parties with interests in Slovenia will welcome this very useful guide, and academics and researchers will appreciate its value in the study of comparative contract law.

CONTRACT LAW IN SLOVENIA

Contract Law in Slovenia

Contract Law in Slovenia

Damjan Možina Ana Vlahek

This book was originally published as a monograph in the International Encyclopaedia of Laws/Contracts. Founding Editor: Roger Blanpain General Editor: Frank Hendrickx Volume Editor: Jacques Herbots

Published by: Kluwer Law International B.V. PO Box 316 2400 AH Alphen aan den Rijn The Netherlands E-mail: [email protected] Website: lrus.wolterskluwer.com Sold and distributed in North, Central and South America by: Wolters Kluwer Legal & Regulatory U.S. 7201 McKinney Circle Frederick, MD 21704 United States of America Email: [email protected] Sold and distributed in all other countries by: Air Business Subscriptions Rockwood House Haywards Heath West Sussex RH16 3DH United Kingdom Email: [email protected]

DISCLAIMER: The material in this volume is in the nature of general comment only. It is not offered as advice on any particular matter and should not be taken as such. The editor and the contributing authors expressly disclaim all liability to any person with regard to anything done or omitted to be done, and with respect to the consequences of anything done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this volume. No reader should act or refrain from acting on the basis of any matter contained in this volume without first obtaining professional advice regarding the particular facts and circumstances at issue. Any and all opinions expressed herein are those of the particular author and are not necessarily those of the editor or publisher of this volume.

Printed on acid-free paper ISBN 978-94-035-1323-2 e-Book: ISBN 978-94-035-1354-6 web-PDF: ISBN 978-94-035-1385-0 © 2019, Kluwer Law International BV, The Netherlands All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Permission to use this content must be obtained from the copyright owner. More information can be found at: lrus.wolterskluwer.com/policies/permissions-reprints-and-licensing Printed in the United Kingdom.

The Authors

Dr Damjan Možina received his bachelor’s degree from the University of Ljubljana in Slovenia in 1999 and his LLM in 2001 from the Humboldt University in Berlin. In 2005 he obtained a PhD from the University of Ljubljana, with a thesis on comparative contract law. In 2006 he was appointed senior lecturer, in 2011, associate professor, and in 2016, a full professor of civil and commercial law at the University of Ljubljana, where he teaches Law of Obligations, Introduction to Private law and European Private Law. In these and other fields of private law he has published extensively, mostly in Slovenian language, but also in English, German and Serbian. Dr Damjan Možina is the author of the following chapters of this monograph: General Introduction, Introduction to the Law of Contracts (§§ 1, 2, 4, 5, 10), Part I and Part II (Chapter 30). Dr Ana Vlahek is associate professor of civil and commercial law and university docent of European law. She obtained her bachelor’s degree in law from the University of Ljubljana, Faculty of Law, in 2003 and continued her education at University of Ljubljana with postgraduate studies in civil and commercial law including short-term research and education visits to Cambridge, Cologne and Salzburg. In 2005, she was also an intern at UNCITRAL in Vienna. She obtained her PhD in 2009 by defending a thesis on derivative transfer of movables in the European legal environment. Since 2003, she has been employed at the Faculty of Law of the University of Ljubljana, first as teaching assistant, and subsequently as university professor. Since 2008, she has also been employed as a researcher at the Institute for Comparative Law at the Faculty of Law in Ljubljana. She has published several academic articles and has delivered papers at national and international conferences, her major interests being European law, private enforcement of antitrust, property law and contracts. She has been dealing with contract law as a lecturer of the law of obligations at the Faculty of Law in Ljubljana, as well as within her PhD and other research. Besides Slovenian, the author speaks English, German, Croatian and Serbian, and additionally 3

The Authors she has working knowledge of French. Dr Ana Vlahek is the author of the following chapters of this monograph: Introduction to the Law of Contracts (§§ 3, 6, 7, 8, 9) and Part II (Chapters 1–29).

4

Table of Contents

The Authors

3

List of Abbreviations

15

General Introduction

17

§1. GENERAL BACKGROUND ON SLOVENIA

17

§2. ECONOMIC SYSTEM

19

§3. LEGAL BACKGROUND ON SLOVENIA

20

Introduction to the Law of Contracts

23

§1. DEFINITION OF CONTRACT

23

§2. HISTORICAL BACKGROUND OF THE LAW OF CONTRACTS I. Contract Law in Socialist Yugoslavia II. Contract Law in the RS

23 23 27

§3. CLASSIFICATION OF CONTRACTS I. Nominate Contracts Versus Innominate Contracts II. Civil Law Contracts Versus Commercial Law Contracts Versus Consumer Law Contracts Versus Administrative Contracts III. Formal Contracts Versus Informal Contracts IV. Consensual Contracts Versus Real Contracts V. Contracts with Obligation of Effort Versus Contracts with Obligation of Result VI. Contracts for the Transfer of Ownership Versus Contracts for the Transfer of Use VII. Bilateral Versus Unilateral Contracts VIII. Synallagmatic (Onerous) Contracts Versus Non-synallagmatic (Gratuitous) Contracts IX. Commutative Contracts Versus Aleatory Contracts X. Contracts with One-Time Performance Versus Contracts with Continuous Performances XI. Contracts drafted a novo Versus ‘take-it-or-leave-it’ contracts

30 31

43 43

§4. CONTRACT AND TORT

44

32 38 40 41 41 41 42 42

5

Table of Contents §5. CONTRACT AND QUASI-CONTRACT

47

§6. CONTRACT AND THE LAW OF PROPERTY

48

§7. CONTRACT AND TRUST

50

§8. GOOD FAITH AND FAIR DEALING

51

§9. STYLE OF DRAFTING

52

§10. SOURCES OF THE LAW OF CONTRACTS

53

Part I. General Principles of the Law of Contract

57

Chapter 1. Formation

57

§1. AGREEMENT AND QUID PRO QUO (RECIPROCITY) I. Offer and Acceptance A. Offer B. Invitation to Submit an Offer C. Acceptance II. Intention to Create Legal Relations III. Consideration and Cause A. Does this Requirement Exist in Slovenian Law? B. Gratuitous Promises C. Natural Obligations IV. Preliminary Contract V. Modifications of the Contract VI. Withdrawal from the Contract

57 57 57 60 60 63 63 63 65 66 67 68 68

§2. FORMAL AND EVIDENTIAL REQUIREMENTS I. Formal Requirements A. General B. Written Form C. Notarial Deed and the Function of the Notary II. Evidential Requirements: A. The Parole Evidence Rule III. Burden of Proof A. Is There a Distinction Between ‘Obligation of Means’ and ‘Obligation of Result’?

70 70 70 71 72 73 73 74

§3. LIABILITY AND NEGOTIATIONS

74

Chapter 2. Conditions of Substantive Validity §1. CAPACITY OF THE PARTIES 6

74

76 76

Table of Contents §2. DEFECTS OF CONSENT I. General II. Mistake (Distinction from Value; Distinction from Motive) III. Gross Disparity (Laesio Enormis) IV. Fraud V. Threat VI. Usurious Contract VII. Other Forms of Improper Pressure VIII. Simulated Contract (Sham) IX. Other Pre-contractual Information Duties

77 77 77 79 80 81 82 82 83 84

§3. OTHER CONDITIONS OF VALIDITY I. Existing and Licit Cause II. Determined or Determinable, Possible and Licit Object III. Initial Impossibility IV. Illegality and Public Policy V. Unenforceable Contracts

85 85 85 85 86 87

§4. THE CONSEQUENCES OF A DEFECT OF CONSENT OR A LACK OF SUBSTANTIVE VALIDITY I. Avoidance of the Contract and Nullity II. Retroactive Effect of Avoidance or Nullity III. Damages

87 87 89 90

Chapter 3. The Contents of a Contract §1. THE DIFFERENT CLAUSES I. Ascertaining of Express Terms II. Usages and Practices III. Implied Terms IV. Dispositive Provisions of the OC V. Good Faith VI. Categories of Contractual Obligations VII. Standard Contract Terms VIII. Exemption Clauses IX. Penalty Clauses X. Arbitration Clauses

92 92 92 92 93 93 94 94 95 97 98 99

§2. INTERPRETATION

100

§3. CONDITIONAL CONTRACTS

100

Chapter 4. Privity of Contract §1. THE RULE OF PRIVITY OF CONTRACT I. Third Parties and the Contract II. Contract for the Benefit of a Third Party

102 102 102 103 7

Table of Contents §2. TRANSFER OF CONTRACTUAL RIGHTS I. Cession (Assignment of Claims) II. Subrogation III. Assignation IV. Transfer of Obligation V. Accession to Debt and Assumption of Performance VI. Transfer of Contract

104 104 106 107 108 108 109

§3. THE SPECIAL CASE OF A ‘SUBCONTRACT’, E.G. THE (NOMINATED) SUBCONTRACTOR IN BUILDING CONTRACTS

109

§4. BREACH OF PRE-EMPTIVE RIGHT AND ACTIO PAULIANA

111

Chapter 5. Termination of the Contract §1. PERFORMANCE AND BREACH I. Rules on Performance of (Contractual) Obligations II. The Notion of Breach of Contract and the Introduction to the System of Remedies for Breach of Contract

113 113 113 116

§2. IMPOSSIBILITY AND CHANGE OF CIRCUMSTANCES: ‘THE UNFORESEEN’ 117 I. Impossibility of Performance 117 II. Change of Circumstances 119 §3. DISCHARGE BY AGREEMENT

Chapter 6. Remedies

8

121 122

§1. GENERAL PROVISIONS

122

§2. SPECIFIC PERFORMANCE AND INJUNCTIONS ASTREINTE I. Non-performance (Debtor’s Delay) II. Specific Performance and Unreasonable Expenses III. Specific Performance and ‘Personal’ Obligations IV. Penalty Set by the Court under Article 269 of the OC for the Enforcement of Judgements V. Defective Performance

124 124 125 126

§3. TERMINATION I. Non-performance (Delay) II. Defective Performance A. Material Defects in Sales Contract B. Material Defects in Contract for Work C. Legal Defects in Sales Contract

131 131 133 133 134 134

§4. EXCEPTIO NON ADIMPLETI CONTRACTUS (THE DEFENCE OF NONPERFORMANCE BY THE OTHER PARTY)

135

126 127

Table of Contents §5. FAULTY BEHAVIOUR OF THE CREDITOR

136

§6. LIMITATION OF ACTIONS

137

§7. DAMAGES AND EXEMPTION CLAUSES I. Exemption from Liability II. The General Measure of Damages and the Foreseeability of Loss III. The Recovery of Loss IV. Recovery of Loss Due to Material Defects in Sales Contract

139 139 140 142 144

§8. RESTITUTION

146

Part II. Specific Contracts

147

Chapter 1. Donation

147

Chapter 2. Contract on Delivery of Property, Contract on Subsistence, Lifelong Support Contract

152

§1. CONTRACT ON DELIVERY OF PROPERTY

153

§2. CONTRACT OF SUBSISTENCE

154

§3. LIFELONG SUPPORT CONTRACT

155

Chapter 3. Gaming and Wagering

157

Chapter 4. Sale of Goods

159

§1. GENERAL

159

§2. DEFINITION AND CHARACTERISTICS OF SALES CONTRACT I. Definition and Basic Characteristics of Sales Contract II. Right of Pre-emption and Right of Purchase III. Sale by Specification IV. Trial Purchase V. Sale by Sample or Model VI. Sale of Someone Else’s Thing VII. Delimiting Contract of Sale from Contract of Work VIII. Payment of the Price IX. Passing of Risk X. Delivery XI. Storage of Sold Goods

162 162 164 166 166 167 167 168 168 171 172 173

§3. SELLER ’S DEFECTIVE PERFORMANCE I. Liability for Material Defects

174 174 9

Table of Contents A. Prerequisites of the Seller’s Liability B. Remedies in Case of Material Defects II. Compulsory and Voluntary Guarantee III. Liability for Legal Defects

175 179 184 185

Chapter 5. Barter Contract

187

Chapter 6. Contract for Sale or Return

188

Chapter 7. Lease Contract

190

§1. DIFFERENT TYPES OF LEASE

190

§2. GENERAL RULES ON LEASE

191

§3. AGRICULTURAL LEASE

198

§4. LEASE OF APARTMENTS

200

§5. LEASE OF COMMERCIAL BUILDINGS AND COMMERCIAL PREMISES

204

§6. LEASE OF SHIPS

206

Chapter 8. Loan for Use Contract

208

Chapter 9. Loan Contract

211

§1. TYPES OF LOAN CONTRACTS

211

§2. GENERAL RULES ON LOAN CONTRACT

211

§3. CREDIT CONTRACT

213

§4. CONSUMER CREDIT CONTRACT

214

Chapter 10. Contract for Work

218

§1. REGULATION OF CONTRACT FOR WORK

218

§2. GENERAL RULES ON CONTRACT FOR WORK

219

Chapter 11. Building Contract

226

Chapter 12. Bailment

229

10

Table of Contents §1. TYPES OF BAILMENT

229

§2. BAILMENT CONTRACT

230

§3. CATERER BAILMENT

232

§4. EX LEGE BAILMENT IN SALES CONTRACT

233

§5. EX LEGE BAILMENT IN THE CASE OF A PLEDGE

234

§6. EX LEGE BAILMENT IN THE CASE OF CONTRACT ON CONTROL OF THE GOODS AND SERVICES

234

§7. WAREHOUSE CONTRACT

235

§8. BANK MONEY DEPOSIT CONTRACT, DEPOSIT OF SECURITIES CONTRACT, SAFE DEPOSIT BOX CONTRACT

237

Chapter 13. Package Travel Contracts

238

§1. GENERAL

238

§2. TIMESHARE

240

§3. CONTRACTS ON PACKAGE TRAVEL AND LINKED TRAVEL ARRANGEMENTS

240

§4. INTERMEDIARY CONTRACT ON PACKAGE TRAVEL

241

§5. ALLOTMENT CONTRACT

242

Chapter 14. Contract on Control of Goods and Services

244

Chapter 15. Contract of Carriage

246

Chapter 16. Shipping Contract

247

Chapter 17. Banking Services Contracts

250

§1. BANK GUARANTEE

250

§2. LETTER OF CREDIT

252

§3. PAYMENT SERVICE CONTRACT

253

11

Table of Contents §4. BANK MONEY DEPOSIT CONTRACT, DEPOSIT OF SECURITIES CONTRACT, SAFE DEPOSIT BOX CONTRACT

253

Chapter 18. Licence Contract

254

Chapter 19. Contract of Mandate

260

Chapter 20. Commercial Agency Contract

264

Chapter 21. Brokerage Contract

271

Chapter 22. Commission Agency Contract

274

Chapter 23. Suretyship

278

Chapter 24. Contract on Lien

283

§1. GENERAL ON LIEN

283

§2. CONTRACTUAL POSSESSORY PLEDGE

287

§3. CONTRACTUAL NON-POSSESSORY PLEDGE

289

§4. CONTRACTUAL MORTGAGE

290

Chapter 25. Compromise

293

Chapter 26. Insurance Contract

294

Chapter 27. Partnership Contract

295

Chapter 28. Modern Types of Contracts (‘ing’ Contracts)

297

Chapter 29. Contracts with the Government and Other Public Administrations

298

Chapter 30. Quasi-contracts

301

§1. NEGOTIORUM GESTIO

301

§2. UNJUSTIFIED ENRICHMENT

302

12

Table of Contents

Selected Bibliography

307

Index

315

13

Table of Contents

14

List of Abbreviations

ABGB (or Austrian ABGB) Austrian Civil code ACHCP Act on Commercial Houses and Commercial Premises ALA Agricultural Land Act B2B Business to Business B2C Business to Consumer C2C Consumer to Consumer CCA Consumer Credit Act CISG UN Convention on Contracts for International Sale of Goods CPA Consumer Protection Act DCFR Draft Common Frame of Reference EU European Union FOIPCDA Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act HA Housing Act IA Inheritance Act LRA Land Registry Act MC Maritime Code MFRA Marriage and Family Relations Act NA Notary Act NATO North Atlantic Treaty Organization Yugoslav OA Yugoslav Obligations Act OC Obligations Code OECD Organisation for Economic Co-operation and Development PECL Principles of European Contract Law PLC Property Law Code RS Republic of Slovenia

15

List of Abbreviations SFRY SRS

16

Socialist Federal Republic of Yugoslavia Socialist Republic of Slovenia

1–4

General Introduction

§1. GENERAL BACKGROUND ON SLOVENIA 1. Slovenia is a small country in Central Europe.1 It covers 20,273 km2 and borders Austria to the north, Croatia to the south, Italy to the west and Hungary to the east. It also has a short coastline of the Adriatic Sea to the west. It has a population of around 2,050,000 and some 100 inhabitants per km2. The Republic of Slovenia (RS) proclaimed its independence from the former Socialist Federal Republic of Yugoslavia (SFRY) in 1991. Slovenia joined the European Union (EU) and North Atlantic Treaty Organization (NATO) in 2004 and the euro area in 2007, while it also became a member of the Organisation for Economic Co-operation and Development (OECD) in 2010. 2. A large majority of the 2 million inhabitants (85%) are Slovenian by nationality. There are two official minorities which are protected by the Constitution: (1) the Italian in the west (0.1%) and (2) the Hungarian in the east (0.3%); the respective regions are bilingual. Other nationalities include Serbs (2.0%), Croats (1.8%) and Muslims/Bosnians (1.6%). Slovenian is a Slavic language. The majority of inhabitants are Catholics. The capital of Slovenia is Ljubljana which has about 270,000 inhabitants. 3. The Constitution of the RS was adopted on 23 December 1991, formally bringing the former communist regime to an end. The Constitution defines Slovenia as a democratic republic and a social state governed by the rule of law. The first free and democratic elections were held in 1990, still in the time of Socialist Federal Yugoslavia, and were won by the united opposition movement DEMOS. At a plebiscite held in the same year, more than 95% of voters (more than 88% of all registered voters) opted for a sovereign and independent Slovenia. The declaration of independence on 25 June 1991 was followed by an attack on Slovenia by the Yugoslav National Army. After the ‘ten-day war’ in which Slovenian forces prevailed, a truce was signed, calling for the withdrawal of the Yugoslav National Army from Slovenia. 4. The Constitution sets out the principle of separation of legislative, executive and judicial powers, with a parliamentary system of government. In principle, all 1. This chapter is an updated version of Možina, in: Možina, Kovacˇ, Commercial and Economic Law Slovenia, International Encyclopaedia of Laws, Kluwer Law International, The Hague 2014.

17

5–8

General Introduction

powers are held by the people and being exercised through elections. The main legislative power lies with the parliament (National Assembly, Sl. Državni zbor), which has ninety members, elected according to the principle of proportional representation, with a 4% threshold at the national level. Two members of parliament are elected by members of the Italian and Hungarian ethnic minorities. The second representative body is the National Council, which consists of forty indirectly elected members who represent social, economic, professional and local interests. The competences of the National Council are limited, the most important being that it may require that the National Assembly vote again with a greater majority on a law it has already passed. 5. Slovenia has several political parties. Slovenian political and everyday life is characterized by a very intense division into two blocs: (1) a so-called left and (2) a so-called right bloc. They disagree on most issues, especially on the attitude to the communist period of Slovenian history and politics, but also on the concept of economic development (protection of the ‘national interest’ through state ownership of a controlling share in companies and banks vs. a more liberal market approach). For most of the time after the independence (with the exception of the period 2004–2008), Slovenia has been led by left-bloc coalitions. Presently, the coalition government is led by Mr Marjan Šarec, whose party, bearing his name, won thirteen of ninety seats in the Parliament at the election in June 2018. The other parties in the coalition are Social Democrats (former Communist Party) with eleven seats, the Modern Center Party (former Party of Miro Cerar) with nine, the Party of Alenka Bratušek and the Democratic Party of the Pensioners both with five and the Left party with nine seats. 6. The President of the RS holds little important executive power; his task is mostly to represent the country, but he or she enjoys considerable public attention. The competences include being commander-in-chief of Slovenia’s armed forces, proposing candidates for Constitutional Court judges and members of the Court of Audit, as well as appointing ambassadors and accepting the credentials of foreign diplomats. In 2017, Borut Pahor (the former prime minister) started his second presidential term. 7. On the level of first instance courts, the Slovenian judicial system comprises forty-four local courts dealing with civil and criminal matters and eleven district courts dealing with civil, commercial and criminal matters. At the second instance, there are four appellate courts (Ljubljana, Celje, Maribor and Koper), and at the third instance there is the Supreme Court of RS. Besides the general courts, there are four courts with the jurisdiction for labour and social disputes, as well as an administrative court. The judicial system also includes the State Prosecutor – an independent office for prosecuting criminal offences, State Attorney – an office representing the state in civil disputes, and other offices. 8. The highest judicial authority as regards constitutionality and the protection of human rights is the Constitutional Court made up of nine judges appointed by the Parliament for nine-year terms. The terms cannot be repeated. 18

General Introduction

9–14

9. On the level of local administration, Slovenia is divided into 212 autonomous municipalities (Sl. obcˇina). Each municipality has a mayor (Sl. župan) and a municipal council. 10. In 2018, Slovenia has a population of 2,065.000. The total labour force is 964.000 (53.7% men, 46.3% women). A relatively large share of them, around 25%, are employees in the public sector (state 17%, companies under state control 8%). The registered unemployment rate in 2018 is 5.9% (48.6% men, 51.4% women). 11. Before the country’s independence, the most important form of economic activity was large (state-owned) companies. However, after independence and the re-establishment of free entrepreneurship, the shift has shifted towards small businesses. In 2008, small- and medium-sized enterprises employed 66.4% of workers. 12. Slovenia’s economic development since independence has been very successful, with stable economic growth of about 4% (on average), reaching 6.8% in 2007. It was the first former Eastern bloc country to join the euro area in 2007. However, the economy was hit hard by an economic and financial crisis in 2008, accentuated by the deep-seated structural problems of the Slovenian economy. In 2009, GDP dropped 7.8%, while in 2010, the annual growth rate was 1.2% and in 2011 just 0.6%. However, the export-oriented economy started to improve in 2014. In 2015, it grew 2.6%, in 2016 already 3.1% and in 2017 5.0%. In 2016, GDP per capita was USD 32.730. 13. In socialist Yugoslavia, although Slovenians represented only around 8.5% of the total population, Slovenians accounted for around one-fifth of total GDP and one-third of exports, indicating its relatively high level of productivity. However, it must be borne in mind that Slovenia is a young market economy. Before it attained independence, Slovenia was a socialist economy where businesses were stateowned, private property was limited and private entrepreneurship strictly limited to very small trade. Of course, a lot has changed since 1991 but Slovenia remains a very young democracy. Many leaders and opinion makers from the socialist times have retained or even increased their influence after 1991. Some of the legal and economic principles introduced by the new Constitution, such as private property, free entrepreneurship and individualism in general need some time to take full effect especially since some sentiments from socialist times, such as a general ‘anticapitalist attitude’ in the form of a creeping fear of neoliberalism and fear of overwhelming privatization as well as the idea of protectionism from the economic ‘enemy from the outside’ (both with little connection to actual facts) continue to be strongly present in Slovenian public debate. §2. ECONOMIC SYSTEM 14. Slovenia can be described as a market economy where the basic liberal approach is strongly influenced by the principle of a social state. The legacy of a 19

15–17

General Introduction

socialist economy still exists in many areas. One of them is the large share of stateowned or state-controlled companies – a consequence of the privatization model which earmarked 20% of companies (that existed before 1991) to state-owned funds, above all the state pension fund (Sl. ‘KAD’) and the compensation fund (Sl. ‘SOD’). Coupled with a very low degree of foreign direct investment in Slovenia, the result is that Slovenia has a very small share of private sector activity in its GDP. The state is, directly or indirectly, still the most important player in the Slovenian economy. Ineffective corporate governance and allocation of funds, especially in the banking sector which is also partially state-owned, has proven to be a major structural weakness in the financial crisis. Two biggest banks had to be recapitalized several times with taxpayers’ money. Still, there are political parties and public figures striving for a protectionist approach and calling for the preservation of state ownership and control under the motto of the ‘national interest’. §3. LEGAL BACKGROUND ON SLOVENIA 15. Slovenia has existed as an independent state only since 1991. Before 1918, Slovenian territory had formed part of Austria (mostly the regions Carniola and Lower Styria) for centuries. Austrian law, especially the Austrian Civil code (ABGB) of 1811, was directly applicable in the territory of Slovenia. In 1855, the code was translated into Slovenian and in later decades the Slovenian language was used as the official language of the courts at first instance in the territory that would later become Slovenia. In 1918, the Austro-Hungarian Empire fell apart and a new country emerged: The Kingdom of Serbs, Croats and Slovenians. The country, later named the Kingdom of Yugoslavia, only existed between the First and Second World Wars. As a new civil code had not been adopted in this period, the ABGB continued to be applied in Slovenian courts. 16. During the Second World War, a communist revolution under the leadership of Josip Broz Tito was carried out. After the termination of the Nazi–Soviet Pact, his partisans started resisting the German and Italian occupying forces and fought the antagonists of the revolution in a civil war. After the Second World War, the authorities annulled all pre-war ‘bourgeois’ legislation. However, since new legislation could not be adopted in foreseeable future, the ABGB continued to be applied by the courts in Slovenia – not as directly binding law but as individual ‘legal rules’ – as long as it did not contravene the new laws and social order.2 17. The communist revolution and socialism as the official ideology strongly influenced civil and commercial law in this period. In some areas, the new law departed from the classical individualist liberal approach of civil and commercial law. This is especially true with real property. After the war, real property was subjected to several kinds of limitations (such as the maximum amount of land a farmer 2. For further details, see Podobnik, Vlahek, Slovenia: Chronology of Development of Private Law in Slovenia, in: Lavický, Hurdík (eds), Private Law Reform, Acta Universitatis Brunensis, Iuridica, No. 501, Masaryk University, Brno 2014, pp. 298–300.

20

General Introduction

18–22

could own (10,000 m2) and expropriations (big landowners, banks, the Church)). A new form of common ownership was introduced: the social ownership which was supposed to be ‘self-managed’ by the people but, in fact, it functioned very similarly to state property. Factories were nationalized, as was building land in the cities. The state had a monopoly over ‘the means of production’, while the pooling of private capital was prohibited. At first, economic decisions were taken centrally (central planning), but later more autonomy was given to companies, formally within the ‘self-management’ system. Only state companies were allowed, they managed only state capital and the responsibility of managers was blurred. The market’s functioning according to supply and demand was limited. 18. Tito’s Yugoslavia never adopted a Yugoslav civil code, also because the competence between the federation and the republics was divided. For example, the Act on Obligations Yugoslav Obligations Act (1978) and the Property Act (1980) were federal laws, whereas the Inheritance Act (IA) (1976) and Family Law Act (1976) were laws of the Socialist Republic of Slovenia (SRS). However, not all areas of private law were equally affected by the socialist ideology. This, for example, was relatively modern and certainly comparable to the Western codes. Of course, due to the nature of the (state-owned) socialist economy, commercial law in Tito’s Yugoslavia was poorly developed, and in some areas not developed at all, as private companies did not exist, and the courts were not the most important place for resolving disputes. 19. The process of legal and economic reform started in the final years of Yugoslavia (Act on Enterprises, 1988). After Slovenia obtained its independence, priority was given to key areas where socialist legislation was most incompatible with the new social and legal order based on the new Constitution. Among the first key steps in this context were the process of denationalization (returning expropriated land), the privatization of companies and the new Companies Act (under the influence of the German GmbH-Gesetz and Aktiengesetz). Majority of private law continued to be in force because it was not in conflict with the new Constitution. A new property law code (PLC) was adopted in 2002. Family law and inheritance law have basically remained unchanged thus far, however, with development in the area of same-sex marriages and unions. 20. A new code of obligations was adopted in 2001, but, in fact, its contents are almost entirely the same as that of the Yugoslav OA. 21. One of the last important steps in the historical development was the country’s EU membership in 2004 and the validity and application of EU law. 22. It should also be mentioned that the Slovenian judicial system has been criticized in the last two decades especially with regard to its effectiveness. The European Court of Human Rights in Strasbourg has delivered a large number of judgments with regard to judicial backlogs of Slovenian courts. Public confidence in the judicial system as a whole is an alarmingly low level.

21

22–22

22

General Introduction

23–25

Introduction to the Law of Contracts

§1. DEFINITION OF CONTRACT 23. The notion of contract (Sl. pogodba) as such is not explicitly defined by the Slovenian legislation. However, it can be inferred from the provisions of the Obligations Code (OC), that a contract is an agreement of two or more parties, the purpose of which is to create a binding legal relationship. An agreement can also be described as an exchange of promises, acknowledged by the law.3 As Slovenia has neither a civil code nor an act regulating the general part of the civil code, the rules of the OC relating to ‘contracts’ are being applied in a more abstract way, as the basis for all ‘legal acts’. §2. HISTORICAL BACKGROUND OF THE LAW OF CONTRACTS I. Contract Law in Socialist Yugoslavia 24. As described in §3 of the General Introduction to this monograph, the Austrian ABGB continued to be applied on Slovenian territory also after the establishment of the State of Slovenes, Croats and Serbs and later the Kingdom of Serbs, Croats and Slovenes (1918, later to be named Kingdom of Yugoslavia) following the decay of the Austro-Hungarian Empire. After the World War II, although the new Communist authorities retroactively invalidated all pre-war legislation (1946), but – since a new civil code was not adopted – the ABGB continued to be applied in the majority of areas of civil law, insofar as compatible with the new social order.4 In principle, this remained so until the adoption of the Yugoslav federal OA in 1978, with the exception of some areas where the new legislation was adopted. 25. Apart from the federal Act of 1953 on prescription of claims, which radically shortened the limitation periods from the ABGB, two further pieces of new Yugoslav legislation must be mentioned with regard to the development of contract law in Slovenia. The first is the General Usances for the trading with goods, adopted 3. Možina, Kršitev pogodbe, GV Založba, Ljubljana 2006, p. 21. 4. For details, see Brus, Veljava ODZ in druge avstrijske zakonodaje od prve svetovne vojne do danes, in: Polajnar Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, GV Založba, Ljubljana 2013, pp. 93–110.

23

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Introduction to the Law of Contracts

in 1954 by the State Arbitration Tribunal, at the time the supreme authority for commercial disputes, and published in the Official Gazette.5 Although the name suggests a collection of trade usages, the General Usances are, in fact, more than that: a codification of commercial contract law – a systematic collection of provisions, of which many were inspired by the Swiss Obligationenrecht and the case law of some other European countries.6 For decades, the Usances were the most important source of commercial contract law and were also influential in the preparation of the Yugoslav OA. They remained to be applicable also after the adoption of the Yugoslav OA. 26. The second important new Yugoslav legislation, adopted well before the adoption of the Yugoslav OA, is the federal Regulation of 1959 on the conditions for bringing industrial products into circulation.7 This regulation introduced a mandatory guarantee of the producer (and the seller, liable in the second degree) for proper functioning of the sold goods, an instrument of consumer protection, however, without reference to consumer and applicable to all buyers, including buyers in Business-to-Business (B2B) contracts. The guarantee gradually developed into a system, parallel to the liability for material defects and found its way into the Yugoslav OA (Articles 501–507). Although the contents of the guarantee (proper functioning for a certain time, in most cases one year) are slightly different from the contents of the liability of the seller for defects (i.e., that the goods are free from defects at the time of transfer of risk), the institute bears a strong resemblance to the liability of the seller for material defects. The purpose of both systems is the protection of the same interest of the buyer. The rights of the buyer are basically the same as in case of material defects (repair, replacement, price reduction, termination, damages); however, there are in hierarchy: the buyer may first only claim repair, than, if repair does not take place within reasonable time, replacement, and only then he or she may proceed to price reduction or termination of the contract. In any case, the buyer is entitled to damages.8 The instrument of mandatory ‘guarantee for proper functioning of the goods’ still exists in Slovenian law (see infra Part II, Chapter 4). 27. The Yugoslav OA is largely based on a draft prepared by Prof. Mihajlo Konstantinovic´ from the Belgrade Law Faculty. The relatively extensive draft (1066 articles), a so-called Sketch (Sl. Skica) was published in 19699 and contains draft provisions with no comments and only a short introduction. In the introduction. In the introduction, Konstantinovic´ wrote about mentioned three categories of sources for the draft: (1) the case law of the Yugoslav courts, (2) different foreign codes (without any details) and (3) the Hague Uniform Sales Law of 1964. Indeed, the Sketch generalizes some solutions from the Hague Uniform Sales Law, i.e. it makes 5. Official Gazette FNRY, Nos. 40/53, 57/54. 6. Goldštajn, Obvezno pravo – 1. Vol, 2 ed., Informator, Zagreb 1978, p. 10. 7. See Official Gazette FNRY, No. 25/59. See also Official Gazette SFRY, Nos. 1–8/67, 38/77, 37–459/ 88. 8. See Arts 501–507 of the Yugoslav OA. 9. Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969.

24

Introduction to the Law of Contracts

28–30

them applicable not just in sales contracts, but in general. With regard to foreign legislative models, the Swiss Obligationenrecht is to be mentioned, as well as the Austrian ABGB, the French Code civil, the Italian Codice civile and the German BGB and HGB. 28. Several commissions were formed by the authorities, mainly from law professors of Yugoslav universities, to work on the preparation and redaction of the legislative proposal of the Draft Yugoslav OA.10 Although the final text had retained most of the features of the Sketch, the commissions deviated from them in numerous points to the extent that Konstantinovic´ refused to further partake in the project. For various reasons, including the new distribution of competences between the federation and republics brought about by the 1974 Yugoslav Constitution, but also for ideological reasons, some contract types, regulated in the Sketch, such as donation,11 gratuitous lending12 and civil partnership (societas), were not adopted in the Yugoslav OA.13 29. The Yugoslav OA was adopted by the Yugoslav Assembly in March 1978 and entered into force on 1 October 1978. It was comprised of 1109 articles which is rather a lot compared to other codes. It regulated civil and commercial contracts in a uniform (monistic) way, however, with several exceptions for commercial (B2B) contracts. The adoption of the Yugoslav OA had an enormous effect on Yugoslav private law. It had unified the law of obligations in a country which was, until then, not an area of uniform private law as the courts were applying pre-war legislation, different in each republic. The Yugoslav OA, furthermore, brought about (and unified) a large part of what is called ‘general part of the civil law’, i.e., rules for all private legal acts (Sl. pravni posli). Moreover, the Yugoslav OA sparked an exceptional development of legal theory. Several commentaries were published already in the first years after the adoption of the act, with numerous books and articles following.14 30. Although adopted in times of socialism, the Yugoslav OA had surprisingly little features of socialist law. Apart from the few introductory provisions, which referred to the constitutional concepts of ‘self-management’ and ‘associated labour’ or the morals of socialist society, and described the purpose of the act, inter alia, as ‘creating conditions for the satisfying the material and other needs of working people and citizens, ensuring the responsibility of organizations of associated 10. The process and the membership are described by Slijepcˇevic´, Evolucija nastanka Zakona o obligacionim odnosima, Pravni život 10–12/1988, pp. 1429–1448. 11. Articles 509–522 of the Sketch. 12. Articles 560–570 of the Sketch. 13. Articles 590–627 of the Sketch. 14. See, e.g., the following commentaries: Krulj, Blagojevic´ (eds), Komentar zakona o obligacionim odnosima, Savremena Administracija, Beograd 1980; Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984; Vizner, Bukljaš, Komentar Zakona o obveznim (obligacionim) odnosima, Zagreb 1978–1979; see, e.g., collection of papers, published in journal ‘Pravni život’ at the 10th anniversary of the act, Nos. 10–12/88 and 1/89.

25

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Introduction to the Law of Contracts

labour and other participants in legal transactions in order to fulfil their obligations, and thus to realize and develop socialist self-management socio-economic relations’,15 it did not contain many provisions which would substantially deviate from the way the law of obligations was regulated by the western codes.16 That is probably also why it could be applied without any problems in the new socioeconomic circumstances of the new and independent states emerging after the decay of SFRY. 31. Of course, the development of contract law in the circumstances of the socialist economy was hampered. Although the Yugoslav OA referred to party autonomy, the latter was in fact substantially limited, as private property was restricted; there was no free entrepreneurship, as only state-owned businesses were allowed on the market (with only marginal exceptions). The state-run businesses were being formally ‘self-managed’ by the workers and political authorities (i.e., the Communist party). These had also control over the banks and capital market.17 The inefficiency of the system was one of the reasons for a decade-long economic crisis, including hyperinflation (exceeding 2000% per year in 1989), which preceded the collapse of SFRY in 1991. From this point of view, it can be said that the Yugoslav OA was adopted in difficult times. Furthermore, its application by the courts in the first decade of its validity – also due to the crisis of the legal system – was described as seriously deficient.18 32. However, the Yugoslav OA had outlived Yugoslavia for many years. In Slovenia, it was applicable to obligations arising until 1 January 2002, when the OC came into effect. However, the new Slovenian OC contains almost all the provisions of the Yugoslav OA. The Yugoslav OA is often described as good and relatively modern legislation on obligations.19 33. Indeed, the Yugoslav OA certainly had some features, which can be described as modern at the time. Apart from some features aiming at consumer protection – albeit not limited to Business-to-Consumer (B2C) relationships – such as judicial fairness control of standard terms (Articles 142–144 of the Yugoslav OA), liability of the producer for defective products (Article 179 of the Yugoslav OA) or 15. See Art. 1 of the OA. 16. An example of such provisions is Art. 399/1 of the Act (the Sketch limited all contractual interest to max. 8%, see Art. 319 /1 of the Sketch) according to which the interest rate in a contract between individuals (i.e., not commercial) may not exceed the interest rate payable for standard deposit savings at place of performance. A further example is Art. 191/1 of the OA, allowing a court to reduce the amount of damages for (non-contractual) loss, taking into consideration the financial circumstances of the parties. If the liable person is in a weak financial situation and the payment of damages would bring him or her into poverty, and the loss was not caused intentionally or by gross negligence, the court may reduce the damages at its discretion. 17. See, e.g., Estrin, Yugoslavia: The Case of Self-Managing Market Socialism, Journal of Economic Perspectives, Vol. 5, nr. 4/1991, pp. 187–194. 18. See Perovic´, Deset godina primene i neprimene Zakona o obligacionim odnosima, Pravni život 10–12/1988, XIII–LXVI. 19. See, e.g., Ilešicˇ, Uvodna pojasnila k OZ, Obligacijski zakonik, Uradni list, Ljubljana 2003, pp. 25 et seq.

26

Introduction to the Law of Contracts

34–35

the mandatory buyer protection in the form of guarantee for proper functioning (Articles 501–507 of the Yugoslav OA), this can be said, e.g., for those features of contract law which were inspired by the Hague Uniform Sales Law.20 The most prominent examples include the nature of contractual liability, which was not based on fault but on the concept of liability of the debtor for the circumstances under his or her control (Article 263 of the Yugoslav OA) and the limitation of the contractual damages by the foreseeability principle (Article 266/1 of the Yugoslav OA). 34. However, the Yugoslav OA also had shortcomings. Examples from contract law include the lack of uniform notion of breach of contract and, in particular, very different treatment of the debtor’s non-performance (in the sense of delay) and defective performance (material and legal defects), in particular with regard to the time limits for the remedies of the creditor (see infra Part I, Chapter 6).21 Some of these shortcomings can be ascribed to the work of the commissions which reworked the Sketch (e.g., the shortening the time period of seller’s liability for material defects). Furthermore, some important contract law provisions are not clearly set out but are scattered throughout the act.22 Also, automatic termination of contracts in case of non-performance of the so-called fixed term contracts (where time of performance is of the essence) without any notice to the debtor can be too harsh towards the debtor and can create uncertainty (see infra Part I, Chapter 6, §2). II. Contract Law in the RS 35. After Slovenian independence, the Yugoslav OA, having been well accepted by Slovenian lawyers, continued to be in force. However, very soon a decision was made to reform the law of obligations. Somewhat ironically, the group of experts23 entrusted with a preparation of the reform, proceeded from the standpoint that a reform is, in fact, unnecessary, as the Yugoslav OA was seen as adequate and modern enough, but also as the work on a new codification would take too long.24 No study of the Yugoslav OA was published, neither from the point of view of domestic literature and case law nor from the point of view of comparative law or EU law. Nevertheless, it was decided that the law of obligations should be reformed, but without any significant changes. Indeed, only minor and mostly cosmetic modifications were made to the Yugoslav OA, together with a new numeration of articles. 20. See, e.g., Cigoj, Das jugoslawische Schuldrecht unter dem Einfluß der Vereinheitlichungsbestrebungen auf dem Gebiet des Warenkaufs, Zeitschrift für Rechtsvergleichung (ZfRV) 1987, pp. 97–106. 21. See Možina, Kršitev pogodbe, GV Založba, Ljubljana 2006, pp. 325 et seq. 22. For example, the consequences of debtor’s default are not laid out in the chapter on debtor’s default (Art. 324 of the OA). The rights of the creditor to withhold his performance and to terminate the contract due to non-performance are found in chapter on synallagmatic contracts (Arts 122–126 of the OA), while others, such as right to damages and the intensification of debtor’s liability (liability for coincidence), contractual penalty and default interest are found in the chapter ‘effects of contracts’ (Arts 262–279 of the OA). 23. The members are listed by Ilešicˇ, Uvodna pojasnila k OZ, Obligacijski zakonik, Uradni list, Ljubljana 2003, p. 27. 24. Ilešicˇ, Uvodna pojasnila k OZ, Obligacijski zakonik, Uradni list, Ljubljana 2003, pp. 28 and 29.

27

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Introduction to the Law of Contracts

The contracts that were left out by the Yugoslav OA (donation, lending and partnership) were codified, mostly in a way the case law had already dealt with them (i.e., applied the Austrian ABGB). The regulation of contract of commercial agency was modified with a view to implement the EU Directive on self-employed commercial agents.25 The regulation of some contracts that were previously regulated in the IA (lifelong support contract, contract of subsistence) were transferred to the OC, without changes as to the substance (see infra Part II, Chapter 2). 36. It is fair to say that the aim of the reform was more a formal ‘slovenization’ than an actual modernization of the law of obligations. Furthermore, the decision was taken to implement the EU consumer acquis in a separate act (the Consumer Protection Act (CPA)) and in a way that will interfere as little as possible with the non-consumer law of obligations. 26 37. The ‘reform’ had not only transferred the almost entire contents of the Yugoslav OA (together with its shortcomings) to the OC but has also brought about some new unreasonable solutions. There were some unnecessary terminological changes that are only causing confusion.27 The rule ne ultra alterum tantum according to which the interest calculation (delay and contractual) stops when the amount of unpaid interest reaches the amount of the principal was introduced for both contractual and delay interest. It caused a lot of confusion with regard to the latter and was being misused by the businesses; after a series of decisions of the Constitutional Court28 it needed to be corrected by the legislator in 200729 – since then, the rule only applies to contract interest. 38. The most serious mistake was made in the new law of contract damages: whereas in the Yugoslav OA (Article 266), as well as in the UN Convention on Contracts for International Sale of Goods (CISG) (Article 74), the reference point for the debtor’s foreseeability of loss is the moment of the conclusion of the contract, the moment of the breach of contract is relevant in the new OC (Article 243/1). The new solution has a potential to significantly increase the amount of damages in some situations. It creates an unacceptable shift in the distribution of contractual risks: if, e.g., a contract party, after the conclusion of the contract, notifies the other party (future party in breach) of some heavy, perhaps even extreme circumstances and consequences of his or her breach of contract, the latter party (the party in breach) 25. See Arts 807–836 of the OC and Directive 86/653/EEC of 18 Dec. 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents, OJ L 382. 26. See also Možina, Harmonisation of Private Law in Europe and the Development of Private Law in Slovenia, Juridica International, 1/2008, pp. 173–180. 27. For example, the term for rescission of a contract due to a breach (Sl. razdor pogodbe) was replaced by another term (Sl. odstop od pogodbe) – the same term used also for withdrawal of a contract. Now the same term is used for these different forms of termination of contract. See, e.g., Možina, Razdor, odpoved in odstop od pogodbe, Pravni letopis, 2011, p. 65. 28. See the decisions by the Constitutional Court, Nos. U-I-300/04 of 2. Mar. 2006; U-I-267/06 of 15 Mar. 2007; Up-227/05 of 24 May 2007. See Možina, Ne ultra alterum tantum in evropsko pravo, Podjetje in delo, 3–4/2010, p. 497. 29. Official Gazette RS, No. 40/2007.

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39–41

cannot in any way react, e.g., by raising the price or withdrawing from the negotiation. If she could have foreseen such circumstances at the moment of conclusion of contract, she would probably never have concluded a contract under these terms. As no explanation for this change has ever been offered, it is also conceivable that the ‘change’ might be a consequence of an error. The new approach also opens the door wide to fraud.30 39. The new Slovenian OC was adopted on 3 October 2001 and came into force on 1 January 2002. It was applicable to all obligations established after that moment. Since then, it was amended only once, preceding a series of decisions by the Constitutional Court (as mentioned supra, with regard to delay interest), which is quite remarkable for Slovenia, as the laws usually change frequently. Furthermore, the Constitutional Court annulled a provision on the transferability of damages claims with regard to non-material loss.31 40. Contract law was subject to important changes already before the adoption of the new OC. In 1998, the CPA was adopted, creating a new branch of law of obligations by introducing special rules for relationships between businesses and consumers (B2C). In 1998, the areas of consumer protection included product liability, guarantee for proper functioning, standard contract terms, sales contract, services contract, distance sales, door-to-door sales, instalment sales and time-sharing. When Slovenia was approaching its membership in the EU (2002), the CPA was substantially reformed so as to implement a series of EU consumer protection directives. In these areas, the CPA, being the lex specialis, modified and derogated the regulation in the OC. From the point of view of general contract law, the most important changes concerned the fairness assessment of standard contract terms, consumer sales contract and pre-contractual information duties, and right of withdrawal in distance contracts. 41. There was also other (i.e., non-consumer protecting) legislation that modified the OC. Some of it was a result of the implementation of the non-consumer EU contract law, such as the Act on prevention of late payments (Late Payments Directive).32 Others, such as Protection of Buyers of Apartments and Single Occupancy Buildings Act, are uniquely Slovenian and were adopted in response to particular

30. See, e.g., the facts of the case before the Supreme Court of RS, judgment No. II Ips 316/2016 of 16 Feb. 2017. 31. Former Art. 184/1 of the OC or Art. 204/1 OA. See Constitutional Court of RS, No. U-I-88/15–9 of 15 Oct. 2015. 32. Official Gazette RS, No. 57/12.

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Introduction to the Law of Contracts

problem areas.33 The Notary Act,34 Road Transport Contracts Act,35 Railway Transport Contracts Act,36 Maritime Code (MC),37 Agricultural Land Act (ALA),38 Housing Act (HA),39 Act on business buildings and business premises40 can be listed as further examples of legislation modifying the contract law of the OC (or, in some cases, already of the Yugoslav OA). §3. CLASSIFICATION OF CONTRACTS 42. Various criteria exist for the classification of contracts. The following list shows the most important delimiting factors for the classification of contracts,41 of which the first eleven are presented in detail below: – Is the contract regulated in national legislation or not? – Are there any form requirements laid down as a prerequisite of the validity of the contract or not? – Is the contract concluded by the mere exchange of statements of will or only by performing the contract at the same time? – Does an obligation of effort or an obligation of result arise out of the contract? – Is the performance of the contract in transferring of ownership or in transferring of use? – Is the contract synallagmatic or not? – For how many of the contractual parties do obligations arise upon conclusion of the contract? – Are the obligations of the parties determined and clear upon the conclusion of the contract or only at a later stage of the contractual relationship? – Who are the parties to the contract? – Is performance of the contract a one-time performance or an ongoing performance? – Have both parties intensively partake in the drafting process or was the contract concluded on the basis of one parties’ standard terms? – Does causa ensue from the contract or not? – How detailed is the content of the contract? – Are the parties of the contract in a relationship intuitu personae or not? – Do the effects of the contract take place before or upon a party’s death? – Does a contract have effect in the parties’ property or personal sphere? 33. 34. 35. 36. 37. 38. 39. 40. 41.

30

Official Gazette RS, No. 18/04. Official Gazette RS, No. 13/94, with further amendments. Official Gazette RS, No. 126/03, with further amendments. Official Gazette RS, No. 61/00. Official Gazette RS, No. 26/01, with further amendments. Official Gazette. RS, No. 56/96, with further amendments. Official Gazette RS, No. 69/03, with further amendments. Official Gazette SRS, No. 18/74, with further amendments. See, for example, Štempihar, Civilno pravo, I. osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, pp. 61–63; Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1952, pp. 42–55.

Introduction to the Law of Contracts

43–45

– What are the effects of the contract in terms of the finality of the parties’ obligations? – Does a contract produce effects for third parties or not? – Does a concluded contract produce mere natural obligations or fully enforceable obligations? I. Nominate Contracts Versus Innominate Contracts 43. Categorization of contracts as nominate (Sl. nominatne or imenovane or imenske42) and innominate (Sl. inominatne or neimenovane or brezimenske43) is based on the question of whether a particular type of contract is regulated (and thus named, nominated) in national legislation or not. This delimitation could also be based on the question of whether a particular type of contract has a name in practice (irrespective of whether it is regulated in the legislation), but the first option seems more appropriate.44 44. Majority of the contract types that are used in practice are regulated in Slovenian legislation. The rules on most of them are set out in the Special Part of the OC: sales contract, barter contract, contract for sale or return, donation contract, contract on delivery and distribution of property, contract on lifelong maintenance, contract on subsistence, loan contract, loan for use contract, lease contract, contract for work, construction contract, contract of carriage, licence contract, bailment contract, warehouse contract, contract of mandate, commission agency contract, commercial agency contract, brokerage contract, shipping contract, contract on control of goods and services, contract on the organization of package travel, intermediary contract on package travel, allotment contract, insurance contract, suretyship, assignatio, bank money deposit contract, securities deposit contract, bank account contract, safe deposit box contract, credit contract, credit contract by pledging securities, letter of credit, bank guarantee and settlement. Some contracts, such as contract on the assignment of a claim, are, however, regulated in the General Part of the OC. 45. Some contracts are regulated in special legislation, such as the PLC (contract on lien, contract on the establishment of superficies, contract on the establishment of an easement etc.), the HA (contract on apartment lease), the ALA (contract on agricultural lease), the Act on Commercial Houses and Commercial Premises (ACHCP) (contract on lease of business premises) and the Companies Act45 (e.g., contract on the establishment of a limited liability company). One part of the CPA lays down provisions on various consumer protection issues relevant in contractual relationships that that are otherwise as a whole regulated in the OC (e.g., consumer 42. Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, pp. 43–44. 43. Ibid. 44. Such delimitation is offered also by Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, pp. 43–44. 45. Sl. Zakon o gospodarskih družbah (ZGD-1), Official Gazette RS, No. 42/06, with further amendments.

31

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sales, consumer services contracts), while in one part, the CPA, too, contains whole sets of provisions on specific consumer contracts, i.e., those that are not regulated in the OC or those to which the existent general regulation does not fit well and the legislator decided to regulate them as a whole in the CPA (e.g., package travel contract, timeshare contract). Some consumer contracts are regulated in special pieces of legislation, such as the Consumer Credit Act (CCA).46 46. Some contractual types which are being used in practice are not regulated in Slovenian legislation. These are the innominate contracts (although some bear a special name, they are deemed innominate for the reason of non-regulation). Slovenian law does not lay down any rules on ‘modern’ or ‘ing’ contracts, such as leasing, franchising and factoring.47 Although such contracts (financial leasing in particular) are very common in practice, they are intentionally not regulated enabling the evolution of the definition and the contents of various types of these contracts. These are left to the business and courts to develop. With regard to issues not regulated by the parties, the courts apply general contract law and the law of the regulated contracts which they deem appropriate. Slovenian legal theory has also covered them rather intensively.48 II. Civil Law Contracts Versus Commercial Law Contracts Versus Consumer Law Contracts Versus Administrative Contracts 47. One of the main features of the Yugoslav OA of 1978 which is mirrored in the Slovenian OC was a monistic regulation of contracts meaning that the provisions of the Yugoslav OA applied irrespective of who the parties to the contracts were. As in the case of Italian and Swiss civil codes, all contracts were regulated in one piece of legislation, i.e., the Yugoslav OA (no separate civil and commercial codes were enacted as is the case of Germany, France, Austria, to name a few), and in principle, no differentiation was made between civil, commercial, consumer and other types of contracts within the Yugoslav OA in the form of special chapters on commercial or consumer contracts (nor is in the OC). 48. Nevertheless, some specific rules were laid down in the Yugoslav OA that deviated from the general provisions and applied only to commercial contracts within the meaning of Article 25/2 of the Yugoslav OA (now Article 13 of the 46. Sl. Zakon o potrošniških kreditih (ZPotK-2), Official Gazette RS, No. 77/16. 47. For further details, see Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996. 48. See, e.g., Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996; Grilc, Pravna narava distribucijske pogodbe, Zbornik znanstvenih razprav, 2010, 70; Grilc, Kompleksne pogodbe gospodarskega prava kot izziv pravnega reda, Zbornik znanstvenih razprav, 1994, 54; Grilc, Pravna narava pogodbe o leasingu, Zbornik znanstvenih razprav, 1993, 53; Grilc, Pravna narava in kavza pogodbe o franchisingu, Zbornik znanstvenih razprav, 1991, 51; Grilc, Moderni pogodbeni tipi in obligacijski zakonik, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava, Inštitut za primerjalno pravo, Ljubljana 2002; Grilc, Juhart, Slovenia, in: Campbell (ed.), International franchising, 2nd ed., Juris Publishing, Huntington, NY 2015.

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49–50

OC49). Thus, certain difference in regulation of commercial (B2B) contracts on the one hand, and all other contracts on the other, did exist and still exists in the OC.50 These are the relevant parts of the OC where a special rule deviating from the general one is laid down: regulation of statute of limitations for contractual claims;51 regulation of interest;52 regulation of assignment of claims;53 regulation of suretyship;54 relevance of business customs, usages and parties’ practices;55 relevance of the price determination for the validity of the sales contract;56 regulation of time limits for notifying the seller of the defected goods;57 receipt of larger quantities of goods than those ordered;58 (non-)gratuitousness of a loan contract;59 the effect of handing over the goods to a warehouse keeper;60 joint and several liability of the debtors;61 sale by model.62 49. It must also be stressed that former Yugoslavia was a CISG Member State as of 1988 while Slovenia succeeded to CISG in 1993 with the effect as of its independence in 1991. As of 1996, Slovenia is also a party to the Convention on the Limitation Period in the International Sale of Goods, while former Yugoslavia acceded to the Convention in 1978.63 In cases or with regard to questions to which these conventions are applicable (in principle, the majority of questions of international commercial sale of goods),64 the provisions of the OC do not apply. 50. Yugoslav OA did not lay down specific rules on consumer (B2C) contracts. Some of the general concepts of the act were nevertheless aimed at protecting the consumers. Here are some examples: regulation of usurious contracts and laesio 49. A commercial contract is a contract concluded between commercial entities. The following entities are deemed commercial entities for the purposes of the OC: companies and other legal persons that perform lucrative activities as well as sole traders (sole entrepreneurs). Other legal persons (such as associations, clubs, chambers) are deemed commercial entities for the purposes of the OC when they are, in accordance with the law, occasionally or in addition to their primary activity involved in lucrative activities. Only contracts concluded by such persons in connection with such lucrative activities are deemed commercial. For further details, see Plavšak in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, pp. 138–149; Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇgp delo, tozd gospodarski vestnik, Ljubljana 1987, pp. 19–32. 50. See Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇgp delo, tozd gospodarski vestnik, Ljubljana 1987, pp. 229–238. 51. Article 349/1 of the OC. 52. Article 377/2 of the OC. 53. Article 417/4 of the OC. 54. Article 1019/4 of the OC. 55. Article 12 of the OC. 56. Article 442/2,3 of the OC. 57. Articles 461 and 462 of the OC. 58. Article 473/1 of the OC. 59. Article 570/2 of the OC. 60. Article 304/2 of the OC. 61. Article 394 of the OC. 62. Article 517 of the OC. 63. For further details, see Schlechtriem, Možina, Pravo mednarodne prodaje: Konvencija Združenih narodov o mednarodni prodaji blaga, Uradni list Republike Slovenije, Ljubljana 2006, pp. 1 ff. 64. See Schlechtriem, Možina, Pravo mednarodne prodaje: Konvencija Združenih narodov o mednarodni prodaji blaga, Uradni list Republike Slovenije, Ljubljana 2006, pp. 1 ff.

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enormis; producers’ strict liability for damage caused by dangerous products; fairness review of standard contract terms; special judicial review of clauses limiting liability for breach of contract; a general mandatory one-year warranty for ‘proper functioning’ parallel to the seller’s liability for latent defects. In contrast to the OC that does not even mention consumers and consumer contracts, the Yugoslav OA required the commercial entities (plausibly those rendering public services) to perform their services towards the citizens regularly and qualitatively and so as to guarantee the citizens as favourable conditions for the enjoyment of such services.65 Commercial entities were also prohibited to cause damage to their competitors, consumers and the society as a whole.66 51. In the last two decades, the monism of Slovenian contract law coupled with partial dualism of civil and commercial contracts has morphed into the triad of civil Consumer-to-Consumer (C2C), commercial (B2B) and consumer (B2C) contracts, whereby consumer contracts are set out in special legislation that deviates to some extent from the general scheme of the OC. As in other parts of Europe and elsewhere, in Slovenia, too, the laissez faire and caveat emptor doctrines have been relativized by realizing that insistence on the inviolable principle of autonomy of the parties is particularly unfair in B2C relationships, where one party is economically stronger, more experienced and in a privileged bargaining position from the outset, all this enabling it to abuse its power at the expense of the weaker consumer. The evolution of consumer protection in Slovenia is motivated in particular by the activities of Slovenia being a Member State of the EU to align its legislation to the European consumer acquis. 52. The focal piece of legislation in the field of consumer protection in Slovenia is the CPA of 1998.67 Its provisions are mandatory, and the parties can therefore not derogate from them (to the detriment of the consumer).68 With regard to those questions that are not covered by the CPA, the general provisions of the law of obligations, i.e., the OC, apply.69 Surprisingly, Slovenian courts sometimes wrongly apply the OC instead of the CPA in B2C and other relationships regulated in the CPA.70 So far, the CPA has been amended nine times – in 2002, 2004, 2007, 2009, 2011, 2014, 2015, 2017 and 2018.71 The majority of the amendments have implemented

65. Article 8 of the Yugoslav OA. This was, however, a mere programmatic provision not producing any direct rights and obligations. A similar provision is now included in the CPA (see Art. 3 of the CPA). 66. Article 9 of the Yugoslav OA. 67. Sl. Zakon o varstvu potrošnikov (ZVPot), Official Gazette RS, No. 20/98, with further amendments. 68. Article 1/29 of the CPA. 69. Article 1/28 of the CPA. 70. See Možina, Kaj je narobe z Zakonom o varstvu potrošnikov?, Podjetje in delo, No. 6/7, GV Založba, Ljubljana 2012. 71. The CPA’s text as currently valid is available (in Slovene and English) at: http://www.pisrs.si/ Pis.web/pregledPredpisa?id=ZAKO513 (accessed on 7 Aug. 2018); http://www.svz.gov.si/fileadmin /svz.gov.si/pageuploads/prevodi/List_of_Slovene_laws_and_regulations_in_English.pdf (accessed on 22 Aug. 2018).

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the EU consumers’ directives.72 The most extensive amendment was made in 2002 before Slovenia had joined the EU in 2004. 53. Definition of a B2C contract is not provided in the OC nor in the CPA. Despite being the focal act regulating the law of obligations, the notions of ‘consumer’, ‘undertaking’ and ‘consumer contract’ have not been defined in the OC. Instead, the legislator decided to define the first two in the CPA, while the definition of consumer contracts still has not been provided but can be deducted from the definitions of the parties to the contract. According to the CPA, a consumer is a natural person who obtains or uses goods and services for the purposes outside his or her professional or profit-making activity,73 while an undertaking is a legal or natural person performing a profit-making activity irrespective of his or her legal organizational or ownership status.74 Other institutions and persons providing goods and services to consumers also have the same obligations towards the consumers.75 The definitions mirror those usually set out in EU consumer directives.76 An identical definition is laid down in the CCA,77 and in the Act on Consumer Protection against Unfair Commercial Practices.78 In contrast to some other jurisdictions where consumer status is given also to some legal persons (usually those contracting outside

72. For example, Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products, as amended by Directive 1999/34/EC; Directive 85/577/EEC to protect the consumer in respect of contracts negotiated away from business premises; Directive 90/314/EEC on package travel, package holidays and package tours; Directive 93/13/EEC on unfair terms in consumer contracts; Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts; Directive 97/7/EC on the protection of consumers in respect of distance contracts as amended by Directive 2007/64/EC; Directive 97/55/EC amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising; Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers; Directive 98/27/EC on injunctions for the protection of consumers’ interests, as amended by Directive 2005/29/EC; Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees; Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market; Directive 2002/65/EC concerning the distance marketing of consumer financial services, as amended by Directive 2007/64/EC; Directive 2011/83/EU on consumer rights, amending Directive 93/13/EEC and Directive 1999/44/EC and repealing Council Directive 85/577/EEC and Directive 97/7/EC; Directive (EU) 2015/2302 on package travel and linked travel arrangements, amending Regulation (EC) No. 2006/2004 and Directive 2011/83/EU and repealing Council Directive 90/314/EEC; Directive 94/19/EC on deposit-guarantee schemes. 73. Article 1/2 of the CPA. 74. Article 1/3 of the CPA. 75. Article 1/4 of the CPA. 76. See Tertnik, Kdo je potrošnik: pojem potrošnika v pravu Evropske unije, Podjetje in delo, 5/2012, GV Založba, Ljubljana 2012. 77. Strict caveats are provided in this act to protect the consumers without being clear whether they are to be applied also in cases where the natural person is asking for a credit for launching its business. See Cepec, Opredelitev pojma potrošnik v pogodbenem pravu EU, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, p. 128. 78. Sl. Zakon o varstvu potrošnikov pred nepoštenimi poslovnimi praksami (ZVPNPP), Official Gazette RS, No. 53/07.

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Introduction to the Law of Contracts

their business practices)79 Slovenian legislation and case law applying it do not extend consumer rights to any legal persons thus following the CJEU’s interpretation of the minimal harmonization rule of Directive 93/13 in Idealservice.80 The CPA’s narrow definition of consumer essentially corresponds to the interpretations given by the CJEU albeit it is not clear to what extent the courts pay due regard to the purpose of concluding the contracts (for personal use v. for the natural person’s business) as interpreted in DiPinto, Dietzinger, Gruber81 and laid down in Directive 2011/83 as well as in the CPA. There are not many cases registered where the question of double-purpose contracts and the relevance of the perception of the purpose of the contract by the trader was addressed by the court, or cases where one of the parties was claiming that consumer protection legislation should be applied to it irrespective of its status.82 54. Apart from the CPA, further specific consumer legislation was enacted in order to implement EU consumers’ directives, such as Act on Consumer Protection against Unfair Commercial Practices83 and CCA.84 The consumers are also in focus of the Protection of Buyers of Apartments and Single Occupancy Buildings Act of

79. See Cepec, Opredelitev pojma potrošnik v pogodbenem pravu EU, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, pp. 116–119; Ilešicˇ, Varstvo majhnih in srednje velikih podjetij v okviru potrošniškega prava, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, pp. 140–146. 80. Joined Cases Cape Snc v. Idealservice Srl (C-541/99) and Idealservice MN RE Sas v. OMAI Srl (C-542/99), ECLI:EU:C:2001:625. 81. Judgment in Case Criminal proceedings against Patrice Di Pinto, C-361/89, ECLI:EU:C:1991:118; judgment in Case Bayerische Hypotheken-und Wechselbank AG v. Edgard Dietzinger, C-45/96, ECLI:EU:C:1998:111; judgment in Case Johann Gruber v. Bay Wa AG, C-464/01, ECLI:EU:C:2005:32. 82. The Supreme Court of RS has stated that the notion of professional activity presupposes an element of durability and that thus a one-time project does not represent a professional activity although more individual contracts were concluded with different persons (judgment of the Supreme Court of RS, No. II Ips 203/2007 of 1 Oct. 2009). The Supreme Court has also held that relationships of consumers with public funds are indeed B2C relationships and thus both the CPA and the Act on Consumer Protection against Unfair Commercial Practices apply. In 2008, the Slovenian Consumers’ Association and the International Institute for Consumer Studies proposed that the definition of doublepurpose contract is inserted into the CPA and that it is explicitly stated in the CPA that in cases of double-purpose contracts, a person is deemed a consumer if the purpose of business activities is so narrow that it does not dominate in the whole context of the contract. Cepec, Opredelitev pojma potrošnik v pogodbenem pravu EU, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakultetiv Ljubljani, Ljubljana 2015, pp. 125, 128–129. 83. Sl. Zakon o varstvu potrošnikov pred nepoštenimi poslovnimi praksami (ZVPNPP), Official Gazette RS, No. 53/07, that implemented Directive 2005/29/EC on unfair commercial practices. 84. The first Slovenian consumer credit act (Sl. Zakon o potrošniških kreditih (ZPotK)) was enacted already in 2000 but was replaced by a new consumer credit act (Sl. Zakon o potrošniških kreditih (ZPotK-1)) in 2010 (Official Gazette RS, No. 59/10, with further amendments) in order to implement Directive 2008/48/EC on consumer credit agreements. Another new consumer credit act (Sl. Zakon o potrošniških kreditih (ZPotK-2)) was enacted in 2016 (Official Gazette RS, No. 77/16).

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Introduction to the Law of Contracts

55–55

200485 that applies, in general, irrespective of the type of relationship but is in fact aimed at protecting weaker parties, in particular the consumers – a fact which is mirrored in some of its provisions that apply specifically to B2C relationships. 55. Although being rather modern in substance, the current regime of consumer contracts in Slovenia is somehow confused and could undoubtedly be made more concise, clear and user-friendly. As the law stands now, it is far from a complete and coherent system of consumer protection. First, there are at least two sets of laws regulating B2C contracts: the CPA as lex specialis and the OC as lex generalis; some of the concepts are regulated in only one of these acts, some in both, of which some are regulated similarly, and some differently. Provisions on warranty, product liability and general contractual terms as well as on sales, services contracts and package travel can, for example, be found in both acts, and it is sometimes – despite having regard to the lex specialis derogat legi generali doctrine – not clear which of the provisions are to be applied. This is particularly so where the regulation of the CPA is incomplete. A more synchronized and coordinated approach to regulating consumer contracts should have been applied when the CPA was drafted. Further, some of the chapters of the CPA (i.e., chapters on warranty, on liability for damage caused by dangerous products and on advertising of the goods and services) apply not only to B2C contracts but also to B2B contracts.86 Third, as the CPA is to a large extent a result of EU directives’ implementation, its provisions are to be read together with the directives and their interpretation by the CJEU; this is at times difficult as some of the concepts set out in the CPA are regulated differently from the directives. In these cases, it is often not clear whether such difference is a result of improper implementation or, for example, of the intention of the Slovenian legislator to guarantee higher protection for consumers as allowed by some directives.87 The CPA’s inappropriate structure, language inconsistencies and substantive flaws also call for a reform of Slovenian consumer legislation.88 In the last couple of years, a new, reformed CPA is being drafted by the Ministry of Economic Development and Technology.89 The current draft was prepared in 2017, but the attempts to finalize it were stayed in 2018 by another amendment of the existent CPA that had to be enacted in order to implement in a timely manner the Package Travel Directive of 2015.

85. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS, No. 18/04. 86. The CPA states that the rights set out in these chapters go also to persons who are not defined as consumers by the CPA (Ch. II on product liability and Ch. IV on guarantees), or that they apply also to marketing not targeting the consumers (Ch. III on advertising of goods and services). 87. See, for example, Art. 8 of Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees. 88. See also: Možina, Kaj je narobe z Zakonom o varstvu potrošnikov? Podjetje in delo, No. 6/7, GV Založba, Ljubljana 2012. 89. See http://www.mgrt.gov.si/si/zakonodaja_in_dokumenti/notranji_trg/predlogi_predpisov/sektor_za _varstvo_potrosnikov_in_konkurence/ (accessed on 6 Aug. 2018).

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56. The notion of ‘administrative contracts’ is unknown in Slovenian legislation, and it has been defined only in the legal theory.90 There is, however, special legislation setting out the rules on contracts concluded by the state or local authorities, such as the Public Procurement Act,91 Public–Private Partnership Act of 2006.92 III. Formal Contracts Versus Informal Contracts 57. If the law lays down any form requirement as a prerequisite of the validity of the contract, such contract is categorized as a formal contract (Sl. oblicˇna pogodba). Otherwise, the contract is informal (Sl. neoblicˇna pogodba). The evolution of contract law shows that different contractual form types have evolved in history and that, in the long term, formality gradually made way to informality.93 In recent years, however, intensification of formalities can be detected for the protection of consumers as weaker parties.94 58. According to Slovenian law, most of the contracts are informal, i.e. they need not be concluded, made or evidenced in writing or any other form. They are usually concluded orally, sometimes even by a non-verbal conduct (implied-in-fact contract).95 59. In some cases, however, form is required according to the agreement of the parties or by the law.96 For example, the OC requires that contracts for the transfer of ownership and establishment of limited property rights on immovables are in a

90. Pirnat, Pravni problemi upravne pogodbe, Javna uprava, 36, No. 2; Kerševan, Upravne pogodbe, Javna uprava, 2007, 43, No. 1; Pirnat, Pravna narava internih aktov uprave z eksternim ucˇinkovanjem, Javna uprava, 1995, 31, No. 3; Pirnat, Upravna pogodba – ali jo slovensko pravo potrebuje?, in: VI. dnevi javnega prava, Portorož, 5.-7. junij 2000, Inštitut za javno upravo, Ljubljana 2000; Pirnat, Obligacijsko pravo in upravnopravne pogodbe, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava: 7. – 9. marec 2002, Inštitut za primerjalno pravo, Ljubljana 2002; Pirnat, Javne pogodb, Pravna praksa, 27. Mar. 2008, 27, No. 12; Plicˇanicˇ, Pravna narava pogodbenih in nepogodbenih (odškodninskih) razmerij med upravnimi in zasebnopravnimi subjekti ter drugih ‘civilisticˇnih’ položajev, Javna uprava, 1994, 30, No. 3; Plicˇanicˇ, Razvoj pravnih razmerij med upravnimi in zasebnopravnimi subjekti, Javna uprava, 1993, 29, No. 3/4. 91. Sl. Zakon o javnem narocˇanju (ZJN-3), Official Gazette RS, No. 91/15, with further amendments. 92. Sl. Zakon o javno-zasebnem partnerstvu (ZJZP), Official Gazette RS, No. 127/06. 93. Formality was very much emphasized in Roman law (mancipatio, stipulatio etc.). See Kranjc, Rimsko pravo, Pravna obzorja, Ljubljana 2014, pp. 232–233, 754–768. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 360–368. 94. See also Part I, Ch. 1, §2 I of this monograph. 95. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 360–363. 96. See Arts 51/1 and 54/1 of the OC.

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59–59

written form.97 Written form98 is set out also for the allotment contract,99 instalment sales contract,100 donation contract unless the gift is handed over to the recipient (promise of a gift),101 building contract,102 licence contract.103 The following ‘tourist contracts’ have to be in writing according to the CPA:104 package travel contract,105 timeshare contract,106 long-term holiday product contract,107 resale contract,108 exchange contract,109 auxiliary contract.110 Special rules on the form are set out in the OC for commercial agency contract where in principle, no form is required, but any of the parties may request that a document on the substance of the contract is written.111 Written form is set out also for some contractual provisions (not the whole contract)112 or parties’ unilateral declarations, such as declaration of surety,113 bank guarantee,114 withdrawal of the contract.115 For reasons of perfection and clarity of the substance of the contract, as well as for reasons of special protection of the parties disposing of more valuable assets, the law has intensified the form requirements by setting out a notarial deed as a form of the contract. These are examples of contracts that have to be concluded in a notarial deed: contract regulating property relations between spouses and cohabiting partners; 116 contract about

97. Article 52 of the OC. It must be stressed here that the written form is laid down for sales, donation and other contracts within the law of obligations that produce merely an obligation to transfer or encumber the property whereas different form requirement is set out for the property law agreement on the transfer or encumbrance itself. This property law agreement is manifested through a clausula intabulandi issued by the owner of the immovable in question. This clause has to be written and the signature of the author must be attested (the identity verified) by the notary. See Art. 23 of the PLC and Art. 61 of the Notary Act (Sl. Zakon o notariatu (ZN), Official Gazette RS, No. 13/94, with further amendments). 98. For a definition of written form, see Part I, Ch. 1, §2 I of this monograph. 99. Article 910 of the OC. 100. Article 523 of the OC. 101. Article 538/1 of the OC. 102. Article 649/2 of the OC. 103. Article 705 of the OC. 104. Article 60 of the CPA. 105. Article 57cˇ of the CPA that requires a written contract unless a travel confirmation containing all required information is issued to the consumer before the conclusion of the contract. 106. Article 60 of the CPA. 107. Ibid. 108. Ibid. 109. Ibid. 110. Ibid. 111. Article 808/1 of the OC. 112. See, e.g., Art. 836/2 of the OC. 113. Article 1013 of the OC. 114. Still valid Art. 1083/2 of the Yugoslav OA. 115. See, e.g., Art. 53(a) of the CPA. 116. Article 47 of the Notary Act.

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the property of persons without the capacity to conduct business;117 contract on the giving up of future inheritance;118 contract on delivery of property;119 contract of subsistence;120 lifelong support contract;121 contract of partnership upon which a limited company is established;122 contract on transfer of a share in a limited liability company.123 60. In some of these cases, the form is prescribed merely as forma ad probationem, while in others, it is conditional to the validity of a contract as forma ad valorem. Under the prerequisites set out in the OC, form imperfections may in some cases be remedied so that the contract remains valid despite the lack of form. For further details on form requirements, see Part I, Chapter I, §2 I of this monograph. IV. Consensual Contracts Versus Real Contracts 61. If the contract is concluded by a mere exchange of statements will (agreement), it is categorized as a consensual contract. If, however, it is validly concluded only if the stipulation phase is joined by the performance phase, i.e., if the obligations undertaken by the contract are at the same time already being (partially) fulfilled (i.e., if, in addition to the agreement of the parties, a sum of money or another object has to be transferred from one party to another in order to give effect to the contract), the contract is categorized as real. The purpose of real contracts is similar to that of formal contracts, i.e., assuring that the party disposing of his or her assets (in particular if that is done gratuitously) is fully aware of his or her actions: once a donator is physically separated from his or her thing, he or she can fully understand the consequences of entering into a donation contract. An additional purpose is to ensure publicity of the agreement. 62. Evolution of contract law shows that consensual contracts have become the rule. Less and less contracts require the ‘real’ momentum for their valid conclusion. Sales contract, for example, evolved to being consensual already in Roman law.124 Civil law codifications of the nineteenth and twentieth century have made a step forward in this regard in comparison to Roman law. The OC has further intensified consensuality in comparison to the Austrian ABGB.125 The loan for use contract, for example, was a real contract until the adoption of the OC as the rules of the Austrian ABGB applied requiring handing over the leased goods to the lessee. Contract

117. 118. 119. 120. 121. 122. 123. 124. 125.

40

Ibid. Ibid. Article 547/2 of the OC. Article 558 of the OC. Article 567 of the OC. Article 474/1,2 of the Companies Act. Article 481/3 of the Companies Act. Kranjc, Rimsko pravo, Pravna obzorja, Ljubljana 2014, pp. 755–756, 793–794. See Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, p. 45.

Introduction to the Law of Contracts

63–65

of donation, however, still requires the handing over of the gift if it is not in a written form. However, the contract is nevertheless concluded, albeit a mere unenforceable obligation of the donator arises without this requirement having been met. V. Contracts with Obligation of Effort Versus Contracts with Obligation of Result 63. It is typical for some contracts that the parties with the characteristic performance have to show mere duty of best effort to fulfil their contractual obligations (Sl. obveznost prizadevanja) and are not liable for not achieving the final result (socalled duty of result, Sl. obveznost rezultata). Contract of mandate and contracts derived out of it are typical contracts with obligation of effort. In these cases, the parties may, however, explicitly agree that the result must be achieved (del credere liability) followed by a special payment for undertaking this extra liability (del credere payment).126 Contract for work and contracts evolved from it, on the other hand, require a result for the obligation to be fulfilled. Typically, a contractual promise implies the duty of achieving specific result, whereas the duty of best efforts is an exception. VI. Contracts for the Transfer of Ownership Versus Contracts for the Transfer of Use 64. This categorization delimits contracts the purpose of which is transfer of ownership (Sl. pogodbe o prenosu lastninske pravice), such as sales contract, donation contract, barter contract, loan contract, contract on delivery of property, contract of subsistence, lifelong support contract, from those the purpose of which is merely a transfer of use (Sl. pogodbe o prenosu rabe), such as contract of lease and loan for use contract. VII. Bilateral Versus Unilateral Contracts 65. Contracts are bilateral legal transactions meaning that there must be at least two persons expressing their will for an obligation to arise. Some contracts produce obligations for all contractual parties while some produce obligations only for one of the parties. The former are categorized as bilateral contracts whereas the latter are unilateral contracts. A unilateral contract is a contract meaning that here, too, more than one person takes part in the legal transaction and forming the legal relationship. Being unilateral means that by concluding a contract, only one of the parties has undertaken to perform the obligation arising out of the contract. A donation contract is a good example: it is obviously a contract meaning that both the donator and the gift recipient had to express their will to enter into the legal relationship arising out of it. However, by concluding the contract, only the donator has undertaken 126. See, for example, Arts 798/1,2 and 819/1,3 of the OC.

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an obligation (of handing over gratuitously the gift to the recipient) while no obligation has arisen on the side of the gift recipient. 66. Bilateral contracts may be synallagmatic or non-synallagmatic according to the values of the obligations of the parties. If these are more or less equal, the contract is synallagmatic, and if, however, the values do not match, the contract is bilateral, but non-synallagmatic. VIII. Synallagmatic (Onerous) Contracts Versus Non-synallagmatic (Gratuitous) Contracts 67. Onerous contracts are synallagmatic bilateral contracts. The obligation of one party is understood as price for the obligation of the other party. The buyer pays the seller a price for the goods sold, the lessee pays the lessor a price for the leased thing etc. In case of gratuitous contracts there is no contra-performance, and one party performs his or her obligation without receiving any performance back from the other party. 68. To some extent, the law treats gratuitous contracts differently from onerous contracts. In some situations, the will of the donor is given more weight with regard to mistake and interpretation. Mistake in motive is considered fundamental (thus enabling challenging a contract before the court).127 In doubt, donation should be interpreted in a sense less burdensome for the donor.128 Further, the donor is not liable for material and legal defects of its performance the same way as the debtor in reciprocal contracts (i.e., regardless of fault), but only in damages and only in certain instances of fault.129 The donor can, in some cases of important changes of circumstances, withdraw from the contract after it has been performed and claim back what he had donated.130 IX. Commutative Contracts Versus Aleatory Contracts 69. Aleatory contracts (Sl. aleatorne pogodbe or tvegane pogodbe or pogodbe na srecˇo131) are contracts where, at the moment of the conclusion of the contract, the scope of one party’s obligation is uncertain. The rights and obligations of the parties are thus not clear in the stipulation phase. By concluding such contracts, the parties assume the risk regarding the scope of obligation under the contract, hence denomination of such contracts as ‘contracts of chance’132 (Sl. pogodbe na srecˇo) or aleatory – alea iacta est. Gaming and wagering contracts, insurance contracts as 127. 128. 129. 130. 131. 132.

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See Art. 47 of the OC. Article 84 of the OC. Article 537 of the OC. For details, see Part II, Ch. 1 of this monograph. See Part II, Ch. 1 of this monograph. Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, p. 45. See, e.g., title of Ch. 29 of the Austrian ABGB. See also Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 84–86.

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70–73

well as contracts on delivery of property, contracts of subsistence and lifelong support contracts are aleatory. Other contracts are commutative contracts meaning that at the moment of the conclusion of the contract, the scope of the performances of the parties is clear. X. Contracts with One-Time Performance Versus Contracts with Continuous Performances 70. Contractual obligations are usually performed soon after the conclusion of the contract has taken place, and in the form of one single act (one-off contracts). A donation contract is, for example, performed by delivery of the gift, barter contract is usually performed by one-time delivery of the goods, etc. In cases of such contracts, the contractual relationship dissolves the moment their performance in the form of a single act takes place. 71. Some contracts, however, require continuous performances or partial performances in instalments. Contractual relationship in these cases usually lasts longer and is in some cases deemed permanent (for indefinite period of time). Typical examples are relationships arising out of a lease contract, leasing contract, contract of subsistence, lifelong support contract, instalment sale, etc. 72. One of the differences between these two types of contracts, apart from their durability, is in the effects of avoidance/termination of such contracts. In case of contracts with one-time performance, the avoidance of the contract has an ex tunc effect meaning that everything that has already been handed over to the other party on the basis of the contract is to be returned. Avoidance or termination of contracts with continuous performances, however, has an ex nunc effect as it would usually be unreasonable to wind back all the performances having already been made. A special feature of permanent legal relationships, i.e. those concluded for an indefinite period of time, is termination of the contract. In contrast to termination of contract which is the general ultima ratio sanction for a breach of contract, cancellation of a contract enables, in principle, the parties to exit their permanent legal relationships without providing any reason for that. The ratio of giving the parties such option is that it is unreasonable to force the parties to remain in legal relationships for good. XI. Contracts drafted a novo Versus ‘take-it-or-leave-it’ contracts 73. Contracts may also be categorized according to the intensity of the parties’ involvement in the drafting process. Some contracts are drafted a novo in full cooperation of both parties, while others, usually those complex ones, are drafted in advance by one of the parties by incorporating its general terms and conditions or

43

74–75

Introduction to the Law of Contracts

(in B2C relationships) standard contract terms into the contract.133 Such ‘take-it-orleave-it contracts’ (Sl. tipizirane pogodbe or množicˇne pogodbe or adhezijske pogodbe134) lay down the details of the rights and obligations of the parties but do not take into account all circumstances of each individual case and specific needs of the parties. They (and/or the terms attached to them or referred to by them) are usually written in small print and are in practice rarely read (let alone understood) by the opposing contractual party. 74. General terms and conditions are regulated in Articles 120 and 121 of the OC135 while Articles 22–24 of the CPA being lex specialis apply for terms and conditions in consumer contracts.136 If the terms and conditions can be qualified as unfair, then also specific Act on Consumer Protection against Unfair Commercial Practices137 applies. There are also a number of cases reported in case law databases138 dealing with the question of validity of providers’ terms and conditions (most of them cover B2C relationships).139 §4. CONTRACT AND TORT 75. It is obvious that the archetypical situations on which contractual and noncontractual (delictual) liability are based are different in essence. Whereas a breach of a contractual obligation presupposes a voluntary exchange of promises between parties who, theoretically, know each other or at least are free to choose each other, 133. For a detailed analysis of the institutes of the general terms and conditions and the standard contract terms, see Part I, Ch. 3, §1 of this monograph. See also Kaluža, Splošni pogodbeni pogoji v evropskem in slovenskem pravu, Master thesis, Pravna fakulteta Univerze v Ljubljani, Ljubljana 2016. 134. Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1951, p. 45. 135. See also Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇgp delo, tozd gospodarski vestnik, Ljubljana 1987, pp. 350–384. 136. The draft CPA-1 regulates contractual terms in Part II, Ch. IV (Arts 21–26). 137. Sl. Zakon o varstvu potrošnikov pred nepoštenimi poslovnimi praksami (ZVPNPP), Official Gazette RS, No. 53/07. 138. See www.sodisce.si; www.iusinfo.si. Judgements are available in Slovene only as only some of the key judgments of the Supreme Court of RS are translated into English (http://www.sodisce.si/ znanje/supreme_court_key_decisions/). 139. See, for example, the following judgments of the Supreme Court of RS, Nos. IV Ips 208/2010 of 22 Nov. 2011, II Ips 324/2013 of 27 Aug. 2015, II Ips 248/2006 of 8 May 2008; judgements of the Administrative Court of RS, Nos. I U 1499/2009 of 20 Oct. 2010, II U 296/2013 of 12 Mar. 2014, I U 1955/2011 of 10 Jul. 2012, II U 426/2009 of 6 Jul. 2011, I U 1432/2012 of 23 May 2013, II U 41/2013 of 6 Nov. 2013, II U 470/2012 of 20 Nov. 2013; judgments and/or orders of the High Court of Ljubljana, Nos. I Cp 1214/2012 of 21 Nov. 2012, I Cp 1816/2011 of 18 Jan. 2012, II Cp 1547/2015 of 8 Sep. 2015, II Cp 143/2009 of 15 Apr. 2009, II Cp 1518/2015 of 15 Jul. 2015, II Cp 4014/2009 of 19 May 2010, II Cp 1753/2015 of 19 Aug. 2015, I Cp 292/2009 of 4 Mar. 2009, II Cp 1647/2015 of 4 Nov. 2015; an order and a judgment of the High Court of Maribor, No. I Ip 289/2017 of 14 Jun. 2017, I Cp 1344/2016 of 14 Mar. 2017; and judgments of the High Court of Celje, Nos. Cp 427/2012 of 18 Oct. 2012, Cp 1418–72006 of 6 Jun. 2007. Some of these judgments are presented in Damjan, Podobnik, Vlahek, Slovenia, in: Slovenia. Vilac¸a (ed.), Congress proceedings. Vol. 1, The internal market and the digital economy (Le marché intérieur et l´économie digitale) (Der Binnenmarkt und die digitale Wirtschaft), Coimbra, Almedina 2018, pp. 681–687.

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Introduction to the Law of Contracts

75–75

the obligation to make good the non-contractual loss (damage) stems from the collision of two legal spheres of parties one of whom broke the rules of peaceful coexistence in the society (protection of status quo) and who, as a rule, previously did not know each other. However, it seems that the archetypical contract and delict, although their differentiation is undoubtedly important for a number of reasons, including didactical purposes,140 are merely two extreme positions, between which a number of intermediary situations are placed. Some of these may be seen as contract or tort.141 In Slovenian law, the rule ‘non-cumul’, known from the French law, according to which where there is a contract, a claim can only be based on contract, and where no contract exists, a claim can only be based on delict does not apply. In principle, therefore, situations which can be assessed from the viewpoint of both parts of law of obligations are possible. In Slovenian law, e.g., these situations include important cases such as pre-contractual liability and medical liability. There are also some other damages cases which some courts considered from the viewpoint of contract law and some others from the viewpoint of tort law.142 However, 140. See the famous and most influential ‘Institutions’ of Gaius, second century AD, who considered the division between the obligations ex contractu and ex delictu as the most important differentiation in the law of obligations, see Gai. III, 88: ‘Nunc transeamus ad obligationes, quarum summa divisio in duas species diducitur: omnis enim obligatio vel ex contractu.’ 141. See Možina, Pogodbena in nepogodbena odškodninska odgovornost, ODZ (1811) in OZ (2001), in: Polajnar-Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, GV Založba, Ljubljana 2013, p. 343. 142. See judgment of the Supreme Court of RS, No. II Ips 70/1998 of 26 May 1999. The Supreme Court held a following case for contractual damages while the High Court of Ljubljana (judgment No. II Cp 1050/96 of 03 Oct. 1997) saw it as a tort-based claim and, moreover, even as a case of objective liability (no fault). In this case, an alpine association (a mountaineering club), a non-profit civil society organization, had invited its members on a hiking trip. A certified mountain guide was appointed the tour leader. No payment was foreseen, but the participants shared the costs of the bus transfer and organization. During the descent, five people slipped off the path and three of them died, while two were severely injured. According to the Supreme Court, the invitation by the association to its members and their acceptance constituted a contractual relationship by which the alpine association assumed a duty of care aimed at the safe ascent and return of the participants. The court found that the association had breached its duties already in the planning phase: the preparation should have been much more thorough; as there was still snow in the mountains, the notice (invitation) should have mentioned the necessary equipment and information on the length of the hike, furthermore, the information on the difficulty of the hike (‘easy to medium’) was inaccurate (‘medium to difficult’ would have been more accurate), the group was too heterogeneous with regard to age, experience and fitness; the woman appointed as a guide did not know the area well enough. The ascent started too late in the day. When the group reached the cabin under the mountain peak, the guide should have stopped those unfit or unequipped for snow from going any further and should have accompanied the part of the group that went to the summit. The court awarded damages for patrimonial and non-patrimonial loss, including loss to one of the plaintiffs, who himself was a certified mountain guide but was – as explained by the court – acting only as a participant on this tour. The Supreme Court did not specify what kind of contract came into existence between the parties. Essentially, the court applied the concept of liability for the safety of passengers from the contract of carriage of passengers (Art. 702 OC) to the contract of organizing a mountain hike. It seems that the court did not take into account the circumstance that this was a gratuitous contract. The court also did not take into account that anyone going for a hike in the high mountains, especially experienced members of a mountaineering club, does so, in principle, at his own risk. Whether in the given circumstances this risk was transferred to the association by way of construing a contract, as the Supreme Court held, is questionable. In this regard, the court did not consider the consequences of its judgment for alpine associations. It should be borne in

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76–78

Introduction to the Law of Contracts

when there is a contract between the parties, the contractual basis for damages should, as a matter of principle, enjoy priority, the main reason being that the agreement of the parties comes before the provisions of the law. 76. Pre-contractual liability is based on the provision of the OC on liability for negotiations (Article 20).143 If, as a consequence of breach of pre-contractual duties based on the good faith principle, the contract is not concluded, the liability for loss cannot be based on contract, but on a general clause on non-contractual liability in Article 131/1 of the OC.144 However, the liability does not include lost profit but principally refers to expenses incurred in reliance on the future conclusion of the contract.145 Similarly, loss arising from the fact that a contract is null (e.g., for contravening mandatory provisions of the law) or avoidable (e.g., due to a mistake or fraud) can be claimed from the responsible party.146 In these cases, liability is described by the institute of culpa in contrahendo. 77. In the past, the courts have considered damages claims due to medical malpractice on the basis of tort law.147 Accordingly, the claimant had to prove the wrongfulness of the medical doctor’s action or omission, legally relevant damage and the causal link between them; the doctor’s fault was presumed until proven otherwise, i.e., that due care according to the professional standards was exercised.148 Lately, this approach has changed: it seems that now, the courts consider damages claims due to medical malpractice as contractual damages.149 The key issue in these cases, however – whether the doctor violated his or her duty of care (acted contra legem artis) – is essentially the same in contract and in tort. 78. Older literature considers contractual and non-contractual liability for loss as a uniform institution.150 Lately, there have been some cases where the courts seem to have supported this view.151 Furthermore, this view seems to be corroborated by

143. 144. 145. 146. 147. 148. 149. 150. 151.

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mind, however, that the majority of the losses (medical expenses, loss of income, etc.) were covered by the national health insurance system. The damages were awarded mainly for nonpatrimonial losses from injuries that could not be cured (pain and suffering, reduction of activities, disfigurement, etc.). See Možina, Some remarks on damages for breach of contract in Slovenian law, Evropski pravnik, 2/2015, p. 49. A party who enters negotiations without the intention to conclude a contract is liable for the loss it causes to the other party, Art. 20/1 of the OC. See, e.g., Fakin, Predpogodbene dolžnosti informiranja, PhD thesis, University of Ljubljana, Ljubljana 2015, pp. 224–243. See judgment of the Supreme Court of RS, No. III Ips 60/2011 of 21 May 2013, and Kranjc, in: Juhart and Plavšak (eds), OZ s komentarjem, GV Založba, Ljubljana 2003, Art. 20, p. 230. See Art. 91 of the OC (the liability of the party at fault for the nullity of the contract) and Art. 97 OC (the liability of the party bearing responsibility for the avoidability of the contract). See, e.g., judgments of the Supreme Court of RS, Nos. II Ips 929/2008 of 31 May 2012; II Ips 1018/ 2008 of 19 May 2011; II Ips 214/2008 of 26 May 2011; II Ips II Ips 302/2011 of 26 Apr. 2012. Ovcˇak Kos, Božicˇ Penko, Dileme v primerih odškodninskega prava v zvezi z odgovornostjo za medicinsko napako (1.), Odvetnik, Nr. 83 (2017), pp. 11, 13. See, e.g., judgments of the Supreme Court of RS, Nos. II Ips 342/2014 of 22 Jan. 2015 (at Nr. 15); II Ips 94/2015 of 2 Jul. 2015; II Ips 207/2015 of 14 Jan. 2016. See, in particular, Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984, p. 963. See, e.g., judgment of the Supreme Court of RS, No. II Ips 316/2016 of 16 Feb. 2017, at No. 16.

Introduction to the Law of Contracts

79–79

Article 246 of the OC, according to which, with regard to issues not regulated by the provisions on damages for breach of contract, the provisions on non-contractual damages are to be ‘reasonably’ applied. Indeed, this is especially true for the provisions on legally relevant loss. However, with regard to the basis of liability and the amount of damages, the differences between tort and contract are of fundamental nature, making it difficult to speak of a uniform institution. Whereas liability in tort is based on fault (with exceptions regarding liability regardless of fault in cases of extremely increased risk of loss), contractual liability is based on a concept of debtor’s liability for his or her own sphere of influence. The amount of liability in tort is usually limited by the element of causation (e.g., adequate causation theory), whereas in contract, the limitation of liability is achieved by a different mechanism – the doctrine of foreseeability of the loss. Further differences between damages in tort and in contract include the prescription of claims.152 §5. CONTRACT AND QUASI-CONTRACT 79. The questions regarding the relationship between the law of contract and the law of unjustified enrichment are most likely to arise in connection with the consequences of non-validity of contracts (termination due to a breach, nullity, avoidance). Contract law sets out some provisions regarding the consequences of invalidity and termination of contract. On the one hand, the performance claims are extinguished. On the other – as the invalidity of contract, as a rule, is effective from the moment of conclusion of the contract, i.e., ex tunc (with the exception of longterm contracts, see infra Part I, Chapter 6, §8) – the parties have to return to each other any performances they might have already made.153 The same situation is also covered by the general clause on unjustified enrichment (Article 190 of the OC); it is considered that the legal grounds for the parties to keep such performances never existed (nullity, avoidance) or (subsequently) fell away (termination, withdrawal). The more special provisions of contract law, in particular Article 111 of the OC regarding termination due to a breach, take precedence over the more general provisions on unjustified enrichment (see also infra Part II, Chapter 30). But the latter are applicable with regard to all issues not regulated by the provisions of contract law. One of the most important adaptations of the general unjustified enrichment regime to the situation arising after termination of contracts is Article 111/3 of the OC. The provision states that the rules on synallagmatic contracts are to be applied to the claims of the parties. Articles 190 et seq. of the OC (unjustified enrichment) deal with a restitution claim of one party against the other party (the enriched party), whereas in an unwinding of a contract, both parties have restitution claims against each other.

152. See Možina, Pogodbena in nepogodbena odškodninska odgovornost, ODZ (1811) in OZ (2001), in: Polajnar-Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, GV Založba, Ljubljana 2013, p. 343. 153. Articles 87, 96 and 111 of the OC.

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80–83

Introduction to the Law of Contracts

§6. CONTRACT AND THE LAW OF PROPERTY 80. Slovenian derivative inter vivos transfer system is one of causal tradition/ registration system with a separation of underlying obligation and real agreement. The principles enshrined in it, namely that of causality, delivery/registration and separation, reflect the reception of German and Austrian law into the Slovenian legal system.154 81. The principle of separation (Sl. nacˇelo locˇitve, Ger. Trennungsprinzip) of an underlying legal transaction, from which the obligation to transfer ownership derives (Sl. zavezovalni pravni posel, Ger. Verpflichtungsgeschäft), and a real agreement (Sl. razpolagalni pravni posel, Ger. Verfügungsgeschäft) plays a central role in Slovenian private law. The substance of the underlying legal transaction is an obligation to transfer property. The contract itself has no proprietary effects. In order for ownership to pass, a further real agreement on the passing of ownership (followed by a real act of delivery in case of movables/registration in case of immovables producing erga omnes effects of the transfer) must be concluded between the transferor and the transferee. Although the principle of separation is not expressly and unambiguously set down in Slovenian legislation, the modern Slovenian legal theory has been cogently stressing its role in the structure of property law.155 82. Contracts of sale, exchange, donation and every other contract giving rise to obligation to transfer ownership can serve as the underlying contract. According to the principle of causality, no transfer of property can take place unless such legal transaction is valid.156 83. A real agreement (disposition agreement, conveyance, Sl. razpolagalni pravni posel, stvarnopravni posel) is an agreement between the transferor and the transferee that the ownership shall pass. It must be valid for the ownership to pass: general rules of the OC on validity of contracts apply whereas in cases of immovables, special rules of the PLC on clausula intabulandi (land registry permission, Sl. intabulacijska klavzula, zemljiškoknjižno dovolilo) apply regarding the form of the transferor’s declaration.

154. This chapter is a shortened version of Part III, Ch. 1, §§1–5, of Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016. 155. For further details, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 162–164. 156. Article 40 of the PLC. For details on the prerequisites of validity and on the various forms and effects of invalidity of contracts, see Part I, Ch. 2 of this monograph.

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Introduction to the Law of Contracts

84–87

84. Two conforming declarations of will are required for the conclusion of the real agreement. The transferor’s declaration is manifested in the land registry permission. Declaration of the acquirer that he or she accepts the property right is, on the other hand, presumed or can be derived from taking hold of the paper containing clausula intabulandi.157 85. According to Article 23 of the PLC, the land registry permission is an express and unconditional written statement of the owner that he or she accords to the registration of the transferee as the new owner of an immovable. Additionally, the Land Registry Act (LRA) requires that the permission contains the transferor’s statement having the exact substance as set out in Article 23 of the PLC. It also sets out which data on the transferor must be included in the land registry permission.158 The land registry permission is usually incorporated in the sales contract or other obligatory contract or is (rarely) drafted as a separate document. The owner’s signature on the land registry permission must be attested by the notary159 or else the permission is invalid. In case of immovables, the form requirement for the real agreement (written statement with prescribed substance, and with the transferor’s signature attested by the notary) is therefore stricter than the form requirement for the obligatory agreement (written contract). 86. In case of movables, the real agreement can be adduced from the underlying contract, and even more from the act of delivery. As in case of obligatory agreement, no form is required, an exception being the fiduciary transfer where the real agreement must be in the form of notarial protocol.160 87. The final step in transferring ownership on a movable is, in principle, its delivery to the transferee.161 Ownership on some types of movables, such as registered aircraft and watercraft, is transferred by registration in respective registers, and not by delivery. Similarly, rights incorporated in the dematerialized securities are acquired upon entry into the Central Register of Dematerialized Securities.162 It must be stressed that, in principle and contrary to the general perception, the payment of the price has absolutely no effect on the question of the time of transfer of ownership. Only if the parties have agreed on the reservation of title (Lat. pactum reservati dominii, Sl. pridržek lastninske pravice), transfer of ownership is stayed until the price is fully paid.163 157. See Tratnik in: Juhart, Tratnik, Vrencˇur (eds), Stvarnopravni zakonik s komentarjem, GV Založba, Ljubljana 2003, p. 174. 158. Article 32 of the LRA. 159. Article 23 of the PLC and Art. 33 of LRA. 160. Article 202 of the PLC. 161. For details on the principle of tradition in Slovenian property law, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 165–166. 162. For further details, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 166–167. 163. See Arts 520–521 of the OC. For further details on the reservation of title, see Kramberger Škerl in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of

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88–89

Introduction to the Law of Contracts

88. Acquisition of ownership of an immovable by means of a legal transaction requires an entry in the land register on the basis of an obligatory contract and a document containing the land registry permission.164 Entry in the land register is of a constitutive, and not merely of declarative, nature. In recent years, Slovenian legal theory and the courts have, however, started stressing that inter partes, i.e., between the parties, ownership passes already with the conclusion of the real agreement (i.e., by issuance and handing over of the land registry permission), while erga omnes effects take place with registration.165 Theory and case law speak of ‘expected ownership’ and ‘ownership in formation’ (Sl. pricˇakovana lastninska pravica) and of ‘expected owner’ (Sl. pricˇakovani lastnik).166 In some cases, possession of the land registry permission of the acquirer suffices even to preclude third persons (even if in good faith) from obtaining rights on such immovable.167 §7. CONTRACT AND TRUST 89. The mechanism of trust is not known to Slovenian legal system. The OC nor any other legislation of private law mentions the institute of trust let alone regulate it. The RS did not sign the 1985 Hague Convention on the Law Applicable to Trusts and on Their Recognition.168 The aim of instituting a trust can thus be achieved only by applying the existent general rules which do not fit well the purpose behind trust. Some of the characteristics of trust can, however, be found in some of the regulated legal mechanisms, such as the notary’s fiduciary account, the fiduciary account of the stock brokerage company, the fiduciary money account of the insolvency administrator.169

164. 165.

166.

167. 168.

169.

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Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 173–174; Vlahek, Pravnoposlovni prenos lastninske pravice na premicˇninah v evropskem pravnem prostoru, GV Založba, Ljubljana 2010. Article 49 of the PLC. See, e.g., Juhart. Nekaj dodatnih premislekov k stvarnopravnim izhodišcˇem pri prenosu lastninske pravice na nepremicˇninah, Pravna praksa 2/2013, pp. 6–9; Hudej, Šcˇernjavicˇ, Ponovni premislek o nekaterih temeljnih izhodišcˇih stvarnega prava pri prenosu lastninske pravice na nepremicˇninah, Pravna praksa No. 3/2012, p. 23; Plavšak, Vrencˇur, Pomen razpolagalnega upravicˇenja pri razpolaganju z lastninsko pravico na nepremicˇnini, Podjetje in delo, 2016, 595 ff. See, e.g., the following judgments/orders of the Supreme Court of RS, Nos. II Ips 475/2008 of 5 Apr. 2012, II Ips 924/2008 of 5 Apr. 2012, II Ips 132/2009 of 12 Jul. 2012, II Ips 324/2011 of 26 Apr. 2012, II Ips 78/2010 of 13 Sep. 2012. See also judgment of the High Court of Koper, No. I Ips 243/2013 of 22 Jan. 2015. For further details, see Tratnik, Lastninska pravica na nepremicˇnini v pricˇakovanju, Pravna praksa 2/2013, pp. II–VIII. See https://www.hcch.net/en/instruments/conventions/status-table/?cid=59 (accessed on 7 Aug. 201 8). Kramberger Škerl in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, p. 58. Žnidaršicˇ Skubic, Zasebna ustanova, trust, fiduciarni pravni posli in njihov vpliv na dedovanje, Uradni list, Ljubljana 2015, pp. 81–82.

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90–91

90. Slovenian legal theory on the mechanism of trust, too, is rather scarce.170 Legal theory as well as practice have, however, started acknowledging the importance of the mechanism and its regulation, in particular within the law of foundations.171 To date, the Foundations Act172 has not enabled the establishment of private foundations as it requires that foundations are of general or of charitable interest.173 In these cases, they can be established by a natural or legal person174 by way of a legal transaction inter vivos in the form of a notarial deed, or by last will in the form as is set out in the IA for testaments,175 and after obtaining consent to the establishment by the ministry in charge of a particular type of foundations.176 §8. GOOD FAITH AND FAIR DEALING 91. The principle of good faith and fair dealing (called principle of conscientiousness and fairness, Sl. nacˇelo vestnosti in poštenja, Lat. bona fides, Ger. Treu und Glauben)177 is one of the basic principles of Slovenian law of obligations. It is set out in Article 5/1 of the OC178 requiring the participants of contractual relationships to observe the principle of conscientiousness and fairness when entering into such relationships and when exercising the rights and performing their obligations

170. Trstenjak, Temeljno o trustu, Podjetje in delo, 4/1995; Žnidaršicˇ Skubic, Zasebna ustanova, trust, fiduciarni pravni posli in njihov vpliv na dedovanje, Uradni list, Ljubljana 2015; Žnidaršicˇ Skubic, Zasebna ustanova in dedovanje, Zbornik v cˇast Karla Zupancˇicˇa, Univerza v Ljubljani, Ljubljana 2014; several diploma thesis have also been written in recent years: Jadek, Sledi prava trustov v slovenskem financˇnem pravu, Univerza v Ljubljani, Ljubljana 2008; Bogataj, Razvoj equity v angleškem pravu: primer trusta, Univerza v Ljubljani, Ljubljana 2007; Gruden, Primerjava ustanove slovenskega prava in trusta po anglosaksonskem pravu, Univerza v Ljubljani, Ljubljana 2000; Gašperin, Zasebne ustanove s poudarkom na avstrijski pravni ureditvi, Univerza v Ljubljani, Ljubljana 2018. 171. See, for example, Žnidaršicˇ Skubic, Zasebna ustanova, trust, fiduciarni pravni posli in njihov vpliv na dedovanje, Uradni list, Ljubljana 2015; Žnidaršicˇ Skubic, Zasebna ustanova in dedovanje, Zbornik v cˇast Karla Zupancˇicˇa, Univerza v Ljubljani, Ljubljana 2014; Gašperin, Zasebne ustanove s poudarkom na avstrijski pravni ureditvi, Univerza v Ljubljani, Ljubljana 2018. 172. Sl. Zakon o ustanovah (ZU), Official Gazette RS, No. 60/95, with further amendments. 173. Article 2 of the Foundations Act which defines the general interest as one within the field of science, culture, sport, education, health, children’s, handicapped and social care, protection of environment, natural and cultural heritage, religious purposes, and similar, while the charitable interest is defined as one for the help of persons in need. 174. Article 4 of the Foundations Act. 175. Article 5/1 of the Foundations Act. 176. Article 5/2 of the Foundations Act. 177. For further details on the terminological issues, see Blagojevic´, Krulj, Komentar Zakona o obligacionim odnosima, Savremena administracija, Beograd 1983, pp. 61–62. 178. Yugoslav OA regulated it in Art. 12 without adding a paragraph on good business practices as is the case with the OC. Although Art. 5, as a whole, bears a title ‘nacˇelo vestnosti in poštenja’, only its first paragraph addresses it directly.

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92. The principle of good faith and fair dealing limits the free undertaking of the parties in addition to the Constitution of the RS, mandatory rules and moral principles as set out in Article 3 of the OC.179 It requires a party to a contract to take into account not only his or her own interests but also the interest of the other party.180 This general principle is mirrored in several provisions of the general part, as well as the special part of the OC, such as those on culpa in contrahendo,181 on fraud,182 on the substance of general contract terms,183 on the liability of the seller for material defects.184,185 Commentators emphasize that the principle of good faith and fair dealing should not be equated with moral principles mentioned in Article 3 of the OC. Namely, performance in breach of the principle of good faith and fair dealing is not necessarily in breach of moral principles as the latter are aimed at safeguarding the basic social values while the former only the interest of the other contractual party.186 §9. STYLE OF DRAFTING 93. The majority of contracts, at least in terms of their number, not, however, their importance, are oral contracts or implied-in-fact contracts. Those contracts that are drafted may be categorized according to various criteria. Focus can be placed upon the reasons for drafting: contracts may be drafted in a specific form because the law requests so and sets out the form as one of the prerequisites for the validity of the contract (forma ad valorem) or because the parties themselves wish to do so irrespective of the law and for the purpose of having a clear proof of the existence of the contract and its substance (forma ad probationem). Further, focus may be placed upon the intensity of drafting: simple contractual relationships require a shorter text, usually containing only essentialia negotii whereas with regard to the rest, the rules of the OC or other relevant legislation apply; complex legal relationships in which commercial entities will most often partake will, on the other hand, result in longer texts laying down all the details of the rights and obligations of the parties taking into account all circumstances of each individual case and specific 179. For details on these, see Part I, Ch. 10 of this monograph; Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, pp. 92–96; Možina in: Juhart, Možina, Novak, Polajnar-Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list Republike Slovenije, Ljubljana 2011, pp. 51–54. 180. Pavcˇnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 97; Blagojevic´, Krulj, Kmentar Zakona o obligacionim odnosima, Savremena administracija, Beograd 1983, pp. 62–63; Možina in: Juhart, Možina, Novak, Polajnar-Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list Republike Slovenije, Ljubljana 2011, p. 53. 181. Article 20 of the OC. 182. Article 49 of the OC. 183. Article 121 of the OC. 184. Article 465 of the OC. 185. Pavcˇnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 97; Blagojevic´, Krulj, Kmentar Zakona o obligacionim odnosima, Savremena administracija, Beograd 1983, p. 67. 186. Pavcˇnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 98. See also: Blagojevic´, Krulj, Komentar Zakona o obligacionim odnosima, Savremena administracija, Beograd 1983, p. 64.

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needs of the parties. Another categorization may be made according to the intensity of the parties’ involvement in the drafting of a contract. Some contracts are drafted a novo in full cooperation of both parties, whereas some contracts are drafted in advance by one of the parties by incorporating its general terms and conditions or (in B2C relationships) standard contract terms into the contract.187 Such ‘take-it-orleave-it contracts’ or the terms attached to them or referred to by them are usually written in small print and are in practice rarely read by the opposing contractual party. 94. In recent years with the opening of the Slovenian market to foreign investments, more and more contracts, in particular complex commercial contracts, are drafted in English and by using foreign contract models. By doing that, due regard has to be paid to the substance of the model provisions so as to prevent contracting that does not accord to the rules and principles of Slovenian law. In general, contracts are often drafted on a copy-paste basis without much critical assessment of the copied text. In particular when this is done by laymen or non-proficient lawyers, the contract can be full of false or invalid provisions. This was, for example, typical also for contract forms that used to be sold in stationery shops or kiosks and of which a lot of laymen had made use of. §10. SOURCES OF THE LAW OF CONTRACTS 95. Any hierarchy of sources of contract law inevitably begins with the agreement of the parties. The parties decide whether or not to conclude a contract, with whom to conclude a contract and on the contents of a contract. Of course, the agreement of the parties or, in other words, freedom of the parties is subject to mandatory rules. 96. According to Article 3 of the OC, it is the Constitution, mandatory provisions and the moral principles that the parties cannot deviate from with their contract. However, as the Constitution primarily regulates the rights of the citizens against the state (and the organization of the state), and not the private legal relationships, including contracts, it does not contain many provisions regulating contract law. Of course, the general principle such as the principle of social state (Article 2 of the Constitution) can also be seen as a limitation of contractual freedom of the parties, but can, by way of principle, not be applied directly as, on the one hand, they are too abstract and, on the other, as the contractual freedom is also a constitutional value with which social state must be carefully balanced against.188 In publicly available case law no decisions can be found where the court would invalidate a contract as being contrary to the Constitution. 187. For a detailed analysis of the institutes of the general terms and conditions, and the standard contract terms, see Part I, Ch. 3, §1 of this monograph. 188. It is an expression of the general right to freedom (Art. 35 of the Constitution) and right to free entrepreneurship (Art. 74 of the Constitution), see e.g., Constitutional Court of RS, No. U-I-199/ 02–42 of 21 Oct. 2004.

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97. Other mandatory rules, apart from the provision of the OC, refer, in particular, to consumer protection in contracts with businesses (B2C). Here, the relevant provisions are laid down in the CPA and in the CCA. In both acts, the relevant EU consumer directives are implemented. Important mandatory provisions are contained in a special act on the protection of buyers of apartments and houses189 (Protection of Buyers of Apartments and Single Occupancy Buildings Act), which, however, is not limited to protecting consumers, but all buyers, including buyers in B2B contracts. Further, Act on Payment Delays that implements Directive 2011/7/ EU on late payments limits party autonomy in B2B contracts with regard to agreements on payment date and the consequences of delay. The purpose here is to protect a weaker business against abuse by the stronger business. Further examples of mandatory contract law outside B2C contracts include mandatory provisions, aiming mostly at the protection of the company, in the Companies Act.190 98. In all situations where domestic legislation is implementing EU law, the legislation has to be interpreted in the light of the wording and the purpose of the directives, which, as such, are not directly applicable in horizontal relationships. The highest authority for the interpretation of the EU law is the Court of Justice of the EU. 99. Apart from the (explicit or implicit) agreement of the parties, usages and practices established between the parties are a source of contract law. The parties may agree on the application of certain usages, but they also apply regardless of the parties’ agreement. Article 12 of the OC only refers to the usages and practices in ‘commercial contracts’ (B2B), where they are applicable unless excluded by the parties, but the usages and, in particular, the practices established between the parties are being used as a source of contract law, especially with regard to interpretation of contracts, also outside commercial contracts (see infra Part I, Chapter 3, §1). 100. If the parties did not regulate a certain issue, the (dispositive) legal rules are to be used. Most of them are found in the OC, such as the provisions on time, place and quality of performance, but some of them are also outside the OC. An important piece of legislation, relevant for contract law, is the Statutory Default Interest Rate Act.191 Regulating interest rate outside the OC is a relic of Yugoslav legislative approach where the delay interest was changing frequently due to high inflation. The delay interest rate (currently 8%) as such is not mandatory.192

189. Protection of Buyers of Apartments and Single Occupancy Buildings Act (Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES)), Official Gazette RS, No. 18/04. 190. Sl. Zakon o gospodarskih družbah (ZGD-1), Official Gazette No. 42/06, with further amendments. See, e.g., Arts 38a/9, 106/2, 107/4, 247/4, 248, 252/2, 280/3, 311/2. 191. Official Gazette RS, No. 56/2003, with further amendments. 192. However, in B2C contracts, the parties cannot agree on a higher default interest rate for the consumer; see Art. 27a of the CPA. In B2B contracts, the agreements on interest rate may be subject to judicial fairness control by the Act on Payment Delays. See also supra Introduction to the Law of Contracts, §10.

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101. There are also other sources of contract law which the courts may use for their argumentative power. The courts may, for example, refer to legislation, literature or case law from other countries.193 However, such cases are not very common. This is a pity, in particular with regard to the provisions of contracts law that represent a high degree of conformity with the CISG. The Hague International Sales Law was an important source of influence in the preparation of the Yugoslav OA.194

193. See, e.g., judgment of the High Court of Ljubljana, No. I Cp 396/2016 of 8 Jun. 2016, referring to the literature on CISG and PECL. 194. See Možina in: Ferrari (ed.), The CISG and its Impact on National Legal Systems, 2008, pp. 265 ff.

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Part I. General Principles of the Law of Contract

Chapter 1. Formation §1. AGREEMENT AND QUID PRO QUO (RECIPROCITY) I. Offer and Acceptance A. Offer 102. Article 15 of the OC states that ‘[a] contract is concluded when the parties reach an agreement on its essential elements’. The essential elements of a contract (essentialia negotii) can be determined from the main obligations of contractual parties, characteristic for a particular type of contract, e.g., the goods (object of sale) and the price with regard to the contract of sale or the object of lease and the price with regard to the contract of lease. The agreement on the essential elements is a minimum requirement for a valid conclusion of a contract; in principle, the answers to all other questions can be found in the OC. However, situations are possible where the parties reach an agreement on the essential elements of a contract (price and object), but at the same time fail to reach an agreement on some other (nonessential) elements of a contract (accidentalia negotii). In such a case, as a rule, a contract does not come into existence, as the consensus of the parties did not encompass their entire agreement.195 Only if the parties intended to be contractually bound in spite of disagreement on non-essential elements, the contract is considered concluded and Article 22/2 of the OC empowers the court to regulate the open issues, taking into account the negotiations, the practice established by the parties, and customs (so-called open dissensus). No case law relating to this unusual provision can be found. Under Slovenian contract law, interventions into party autonomy by replacing missing agreements of the parties are generally not a task for the court. In doubt, the parties can be considered as intending to conclude a comprehensive agreement. As long as they do not agree on open questions, they do not agree at all.

195. Možina in: Juhart, Možina, Novak, Polajnar Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 189.

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If the parties mistakenly held that they had reached an agreement, but in fact disagree on the nature of the contract, the purpose of the contract (cause) or the object of the contract, a contract is not concluded (the so-called hidden dissensus, see infra Part I, Chapter 2, §2 II).196 103. As a rule, an agreement (consensus) is established when conforming declarations (statements) of intent of each of the parties meet. These declarations constitute an offer and an acceptance. However, an agreement may also come into existence by other means than offer and acceptance, e.g., by way of an option (Sl. opcija) for one party to sell or buy an asset at a price and by a date, predetermined by both parties in an earlier agreement. 104. The OC defines an offer (Sl. ponudba) in Article 22/1 as ‘a proposal to conclude a contract, addressed to a specific person, which contains all the essential elements of the contract so that by its acceptance the contract can be concluded.’ Furthermore, if written or other form is required for a conclusion of a particular contract, e.g., written form for a contract for transfer of immovable property, a valid offer must also be made in that form. 105. If an offer is addressed to an undetermined circle of people, e.g., in a television advertisement, it is not considered an offer, but an invitation to submit an offer (invitatio ad offerendum), with different legal effects (see infra Part I, Chapter 1, §1 I B). There is, however, one exception: exhibition of goods with a price tag, e.g. in a window shop, constitutes an offer although it is not addressed to a specific or a specifiable person (Article 23 of the OC). 106. The contents of an offer must be determined or determinable in such a way that upon its acceptance, a contract can be concluded. With regard to determination of the price, an exception applies to commercial contracts of sale: here, the contract is considered concluded although the parties did not agree on the price (and did not disagree on the price, either). In such a case, a normal or reasonable price is owed (see Article 442/2, 3 of the OC). The parties may also entrust a third person with the determination of the price (Article 445 of the OC). However, as it would deviate too much from the principle of party autonomy, an agreement according to which the price may be determined solely by one of the parties to a contract is void (Article 446 of the OC). 107. As any other declaration of will, an offer becomes effective the moment when the offeree (addressee) receives it.197 A declaration of will is received when it

196. Article 16 of the OC. In fact, this is a case of mistake relating to the essential characteristics of a contract. 197. With regard to the receipt rule, see e.g., Arts 21/1, 25/2 and 28/3 of the OC.

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reaches the addressee’s sphere of control, such as his or her home or his or her mailbox, and the addressee may be normally expected to take note of it.198 A declaration of will sent by electronic means is received when it enters the addressee’s information system.199 108. The legal effect of an offer is that it is binding on the offeror, i.e. the offeror may not change his or her mind and revoke the offer or change it while the offer is effective.200 However, an exception applies if the offeror (explicitly or implicitly) excluded his or her obligation regarding the offer, e.g., by stating that the offer is merely informative or that the offer is only valid until the goods are stocked. Such exception may also arise from the circumstances of a particular case.201 109. As with other declarations of will, an offeree, after having dispatched the offer towards the offeree, may withdraw the offer only if the statement of withdrawal reaches the offeree before or at the same time as the offer, i.e. before or at the time when the offer becomes effective.202 Once an offer becomes effective, it cannot be withdrawn or revoked. 110. An offer is binding on the offeror (unless he or she had excluded his or her obligation, or such exclusion can be concluded from the circumstances, as mentioned earlier) until it is effective (valid). If the offeror had set a time frame for the validity of the offer, the offer remains effective, i.e., a contract comes into existence by its acceptance, until this time lapses.203 The OC contains an outdated rule on computation of time in case the offeror who had set a time frame for the acceptance and sent the offer in a letter or wired it to the offeree; in this case, the time frame starts to lapse on the day indicated in the letter or on the envelope or on the day the telegram was dispatched at the post office.204 If an offeror set a time frame in a phone conversation or by using other means of direct communication, the time runs from the moment the offeree received the offer (i.e., when the offeror had communicated the offer to him). In case that the offeror did not set a time frame for the acceptance of the offer: the OC distinguishes two situations: first, if the offeror and offeree had communicated directly, i.e., by phone or other means of direct communication, the offer is considered to be rejected if it is not accepted immediately, or, within reasonable time, if the circumstances require a reasonable time to consider the offer;205 and second, if the offeror had indirectly communicated the offer to the offeree, i.e., by mail or e-mail, the offer stays effective for a reasonable time, 198. Možina in: Juhart, Možina, Novak, Polajnar Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 160. 199. Ibid. 200. Article 25/1 of the OC. 201. Article 25/1 of the OC. However, this is only true in cases where the addressee had explicitly or implicitly consented to the use of electronic communication in question, e.g., by sharing his electronic contact address. 202. Article 25/2 of the OC. 203. Article 26/1 of the OC. 204. Article 26/2 of the OC. 205. Article 26/4 of the OC.

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required for the offer to reach the offeree, for the latter to consider it and take a decision, and for this decision to reach the offeror.206 In any case, an offer expires the moment the offeror receives the statement on the rejection of the offer by the offeree.207 If the offeror dies or becomes incapable of concluding a contract after he or she had dispatched the offer and within the time when the offer is effective, this does not affect the offer, unless the purpose of the parties, custom or the nature of the transaction dictate the contrary.208 Therefore, unless the offer relates to an individual personal capacity of the offeror, the legal position of the offeror can be inherited. Thus, upon the acceptance of the offer, a contract is concluded with the offeror’s heir(s). B. Invitation to Submit an Offer 111. If a proposal to conclude a contract is not addressed to a specified or specifiable circle of recipients, e.g. advertisements in the media, this is not considered an offer but an invitation to submit an offer (invitatio ad offerendum).209 An acceptance of the invitation to submit an offer does not mean that the contract is concluded; instead, it is considered an offer. It is then the initial offeror, i.e. the person sending the invitation, who must accept or refuse the offer. However, although the legal effect of acceptance of the invitation is not a contract, the party who sent the invitation is still legally bound by it, as it may be liable in damages if it refuses to accept an offer without a justified reason.210 The liability in this case is not based on breach of contract (as there is no contract), but on culpable behaviour before the conclusion of the contract (culpa in contrahendo) which may be subsumed under the general clause on non-contractual liability set out in Article 131/1 of the OC. Even before the conclusion of the contract, the parties have a duty to act in good faith. If the addressee had incurred costs acting in reliance of an invitation, he or she may recover these costs. He or she may not, however, recover lost profit, as the latter presupposes a breach of a contractual duty. C. Acceptance 112. As mentioned above, an offer must contain essential elements of a contract so that by its acceptance the contract can be concluded. Therefore, an acceptance (Sl. sprejem) must only express consent and the contract is concluded. As an acceptance of offer, too, is a declaration of will, it is effective the moment it is received

206. 207. 208. 209. 210.

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Article Article Article Article Article

26/3 of the OC. 26/5 of the OC. 32 of the OC. 24/1 of the OC. 24/2 of the OC.

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by the offeror. A contract is therefore concluded when the offeror receives the statement of acceptance by the offeree (Article 28/2 of the OC).211 A contract is deemed to be concluded at the place where the offeror had its domicile or place of business at the time he or she had dispatched the offer;212 this can be relevant in certain circumstances, e.g. in private international law.213 113. An acceptance may be expressed explicitly but also by conduct implying intent, such as payment of price, dispatching of goods. Whether certain conduct may be understood as acceptance, the offer, the practice established between the parties and usages are to be taken into account.214 Of course, if a contract must be concluded in a specific form, this form is also a requirement for the acceptance. Although an acceptance is a declaration of will and is effective when it reaches the offeror, an exception applies for the acceptance by conduct: here, the acceptance is effective the moment the conduct occurred (if the offer is still valid at that moment). As is the case with the offer, an acceptance may be withdrawn only if a statement on withdrawal reaches the offeror before or at the same time as the statement of acceptance.215 114. A tacit declaration of will must be distinguished from declaration of will by conduct. Here, the party does not act at all and remains passive. In principle, the silence of the offeree does not constitute acceptance.216 A statement in the offer that passivity of the offeree shall be understood as acceptance has no effect.217 Thus, a contract will not be concluded by the passivity of the offeree if the offeror sends unsolicited goods to the offeree with a statement that a contract will be concluded unless the offeree returns the goods within a certain time frame. If the offeree is a consumer, he or she has ‘no duties whatsoever’ in such a case according to Article 45/1 of the CPA.218 The Latin proverb Qui tacet consentire videtur therefore does 211. Although this seems self-evident, the law explicitly prescribes it twice, see Arts 21/1 and 28/1 of the OC. 212. Article 21/2 of the OC. 213. See Art. 7 of the Private International Law and Procedure Act (Sl. Zakon o mednarodnem zasebnem pravu in postopku (ZMZPP), Official Gazette RS, No. 56/99, with further amendments), according to which a legal act is valid with regard to form if it is either valid under the law where it was concluded or under the law applicable to the contents of the legal act. This act is only valid for cross-border situations with parties from third countries; with regard to parties from EU states, the Rome I Regulation (Regulation No. 593/2008 of 17 Jun. 2008 on the law applicable to contractual obligations) applies. 214. Article 28/2 of the OC. 215. Article 28/3 of the OC. 216. Article 30/1 of the OC. 217. Article 30/2 of the OC. 218. The provision is somewhat controversial: it is not clear what ‘no duties whatsoever’ means. Certainly the consumer does not become owner of the goods. In principle, therefore, he does not have any rights in the goods either. He is not allowed to keep them. Their owner (i.e., offeror) may claim back the goods under the PLC. A consumer is also not allowed to use them; as he or she has no ‘legal grounds’ in the sense of Art. 190 of the OC, the offeror should in principle claim compensation for the acquired benefit under the rules of unjustified enrichment. A consumer who damages or destroys the goods should be in principle liable in damages. In principle, it means that these rules are applicable unless the legislator intended that the notion ‘no duties whatsoever’ covers not only

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not apply by the way of principle. However, some situations require a different approach. If, e.g., the offeror and the offeree already have an established business relationship with regard to the goods in question, the offeree would be expected to refuse the offer if he or she does not intend to conclude a contract.219 In such a case, an offer will be tacitly accepted if the offeree does not refuse it immediately or within the given time frame.220 Furthermore, the situation of delivery of greater quantity of goods in a B2B contract of sale is subject to special regulation in Article 473/1 of the OC: if the buyer does not refuse to take delivery in reasonable time (i.e., if he or she remains passive), the contract is deemed to be concluded also with regard to excessive quantity, and the buyer must pay the same price also for the additional quantity. In these situations, therefore, the aforementioned proverb nevertheless applies, albeit with an amendment: Qui tacet, cum loqui potuit et debuit, consentire videtur. Certainly, the parties may agree on the duties and assumptions with regard to the offers between them in the future. 115. An acceptance must comply with the offer. If the offeree’s answer expresses consent, but at the same time proposes some modifications or amendments to the offer, the offeree is considered to have rejected the offer and proposed his or her own offer back to the initial offeree.221 It is for him or her to decide whether to agree with or reject the modified offer. However, this only applies to modifications and amendments fundamentally amending the offer.222 Modifications and amendments relating to price, payment, quality or quantity of goods, time and place of performance, liability of one party compared to the liability of the other or dispute resolution are considered fundamental.223 116. An offer may only be accepted until it is in force. If the offeree accepts the offer with delay, i.e., if the offeror receives the offeree’s statement of acceptance after the expiration of the offer, a contract is not concluded, unless the offeror immediately informs the offeree that the contract is nevertheless concluded.224 However, the delayed acceptance is considered as a new offer given back to the initial offeror.225 If the reason for delay is in the transfer of the statement of acceptance, and it is apparent from the statement that it would not have been delayed if its transfer

219.

220. 221. 222. 223. 224. 225.

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the conclusion of a contract (i.e., duty to pay) but also duties arising from unjustified enrichment and non-contractual liability for damage, for which, however, there is no evidence in draft legislation. Article 30/3 of the OC. According to Art. 30/4 of the OC, the same rule is applicable to a situation where ‘a person had offered to another person to perform certain tasks (transactions) according to his/her orders’ as well as to a situation where a person who performs such tasks as his or her business activity is given an offer. If he or she does not intend to conclude a contract, he or she is expected to refuse it immediately. Article 30/3 of the OC. Article 29/1 of the OC. Article 29/2 of the OC. Article 29/3 of the OC. Article 31/1 of the OC. Ibid.

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was ‘regular’, the contract is nevertheless concluded unless the offeror immediately informs the offeree that he or she is not bound by his or her offer.226 II. Intention to Create Legal Relations 117. A proposal to conclude a contract must also reflect an intention of the offeror to create a binding legal relationship (animus contrahendi). This follows from the general rules on legal acts.227 Proposals or promises intended to create effects in other spheres than the legal sphere (such as in the sphere of social or emotional life) are not offers. III. Consideration and Cause A. Does this Requirement Exist in Slovenian Law? 118. A consideration in the sense of the common law doctrine, i.e. that a contractual promise, unless in the form of a deed, is only binding and enforceable if given in view of a counter-performance by the other party or another form of disadvantage by which the promise was ‘paid for’,228 is not a requirement of validity or enforceability under Slovenian contract law. Although the OC contains a general principle of equivalency of contractual obligations (Article 8 of the OC), an imbalance of obligations does not per se render a contract invalid and does not give rise to any claims without an additional factor, such as conscious exploitation of the precarious situation of the other party resulting in significant imbalance of performances (usurious contract, Article 119 of the OC, see infra Part I, Chapter 2, §2 VI), or a special form of mistake of a party with regard to the value of (counter)performance (laesio enormis, Article 118 of the OC, see infra Part I, Chapter 2, §2 III). Not-individually negotiated clauses in contracts between businesses and consumers (B2C) are void, if they cause a significant imbalance in contractual rights and obligations contrary to good faith (Articles 22–24 of the CPA, see infra Part I, Chapter 3, §1); here, the fact that the clauses were drafted in advance and the parties did not negotiate over them is the additional element; however, the ‘core terms’ relating in particular to the adequacy of the price and remuneration are excluded from judicial review. In general, an objectively ‘good bargain’ is not a condition of validity of a contract. It suffices that at the time of the conclusion of the contract, both parties considered the counter-performance to be an adequate remuneration for their own performance (so-called subjective equivalence).

226. Article 31/2 of the OC. 227. See also Art. 18/2 of the OC: ‘A declaration of will must be free and serious’. 228. See, e.g., Kötz, European contract law, Oxford University Press, Oxford 2017, p. 53.

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119. However, every contractual obligation must have a cause (Lat. causa) – a reason (purpose). The cause must not be illicit (illegal).229 If the cause is missing or is illicit, the contract is void.230 The cause is the reason for assuming of contractual obligations. As opposed to the one-sided motive for the conclusion of contract, which, as a rule, does not affect the validity of the contract, the cause is common to both parties and is a requirement of validity. There are several forms of appearance of causa.231 The purpose of obligations, and thus of the contract, may be specifically agreed upon by the parties. Another form of causa is that a purpose of one party is known or could not have remained unknown to the other party. The causa can also be abstract in the sense of a mere reciprocal nature of contract (quid pro quo), i.e. one party promises its performance in exchange of the performance by the other party. 232 Furthermore, according to some authors, also the circumstances of conclusion of a contract, of which the parties said nothing, may represent a cause.233 The writers in Yugoslav times have developed a range of very different theories about the cause.234 Although the idea of quid pro quo reminds that of consideration, the concept of cause is different: even a contract of gift has a cause: to endow somebody with something without a consideration (causa donandi). A surety contract, too, has a cause, although it may not be immediately apparent and it is not a part of the transaction. 120. It appears that the doctrine of causa which was characteristic for Romanic codes (Code civil, Codice civile) was conceived as a fundamental element of contract law of the Yugoslav OA of 1978. However, the jurisprudence shows that the applicability of the doctrine is rather limited.235 One of the reasons might be that in the light of the multitude of theories and forms of appearance of ‘causa’, its meaning is too vague and unclear.236 Furthermore, a requirement that the purpose of the contract is not illicit is sometimes difficult to distinguish from the requirement that 229. Article 39/1,4 of the OC uses the rather inadequate term ‘base’ (Sl. podlaga), which is being used also in other contexts. 230. Article 39/1,4 of the OC. 231. According to Varanelli, Pogodbeno pravo II, GV Založba, Ljubljana 2015, p. 191 et seq., the cause is performing several functions in the concept of the Yugoslav OA and Slovene OC: not just as a condition of validity of contract (in the sense of common purpose) but also as the means of classification of contract, means of exclusion of (one-sided) motives, measure for distinguishing essential and non-essential elements of contract, measure of interpretation of contract, condition for resolution of contract due to change of circumstances, measure of validity of general contract terms, measure for applying rules on linked contracts etc. 232. Juhart, Možina, Novak, Polajnar Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 176. 233. See, e.g., Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984, p. 432, who looks upon the causa in the sense of the German ‘Geschäftsgrundlage’; for him, Art. 133 of the Yugoslav OA (i.e., Art. 112 of the Slovenian OC) is applicable, if the contract no longer fits the ‘causa’. 234. See overview at: Grilc, in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, pp. 289–319. 235. See the well-justified critique of the causa doctrine: Varanelli, Kavza pogodbe, sodobni pogledi, Pravna praksa 39–40/2017, p. 10. 236. See the overview of different theoretical views in yugoslav literature at: Grilc, in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, pp. 289–319.

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the object of contract shall not be illicit, too. Some institutes of contract law purporting to be based on the idea of the cause, such as judicial dissolution of contract due to a change of circumstances set out in Article 112 of the OC (rebus sic stantibus, see infra Part I, Chapter 5, §2), are in fact self-standing instruments with autonomous requirements. It seems that one of the main functions of the cause in practice is the returning of donations given by third persons to the bride and maid after the divorce (or dissolution of extramarital relation). Here, the jurisprudence holds that the donations were given with a view of the marriage or non-marital partnership, and once this is dissolved, the cause subsequently falls away, the donation becomes void and the gifts are to be returned under the rules on justified enrichment.237 This, however, is a very specific institute, and it seems that the courts could arrive at similar solutions by applying the notion of an implied (resolutive) condition. 121. As already mentioned, a motive leading one party to a conclusion of contract does not, in principle, affect the validity of contract.238 However, there are some exceptions, too: when an illicit motive fundamentally influenced the decision of a party to conclude a contract and the other party knew or should have known about it, the contract is void.239 In essence, the (illicit) motive became a cause with the knowledge of the other party. With regard gratuitous contracts, the illicit motive of one party, without the knowledge of the other party, suffices to render the contract void.240 B. Gratuitous Promises 122. Gratuitous promises are valid and enforceable. However, in some circumstances, additional form requirements may apply, motivated by the legislator’s desire to protect the donor against ill-conceived gifts through form. A donation (gift) is a contract, although not reciprocal; the donee must consent to the donation (i.e., accept the offer). If the object of donation is handed over to the donee right away, the contract requires no special form. It may be proven in the court by any means available. An exception applies to donations (and other contracts) of real property where a written form is a condition of validity of the contract.241 If, however, the donor promises to hand over the (moveable) object of donation to the donee at some

237. See Art. 84 of the Marriage and Family Relations Act (Sl. Zakon o zakonski zvezi in družinskih razmerjih (ZZZDR), Official Gazette SRS, No. 15/76, with further amendments); e.g., judgment of the Supreme Court of RS, No. II Ips 29/2016 of 30 Nov. 2017; and Možina, So diamanti res vecˇni? darilna pogodba, družinska razmerja in spremenjene okolišcˇine, Podjetje in delo 5/2014, p. 833. 238. Article 40/1 of the OC. 239. Article 40/2 of the OC. 240. Article 40/3 of the OC. 241. Article 52 of the OC.

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later point in time (promise of a donation), a contract of donation must be concluded in written form to be enforceable.242 In the absence of written form, a promise of a donation is not enforceable (a mere natural obligation arises). However, the voluntary handing over of a gift by the donor remedies this defect (convalidation).243 123. The need for written form is usually explained in a way that a donor, when promising a gift and handing it over right away, is ‘warned’ sufficiently by the ‘feeling of loss’ of the thing, whereas this function is performed by written form of promises of future gifts. Furthermore, donations between spouses must be made not only in written form but also in the form of a notarial deed.244 The reason for the introduction of notarial form is not just a warning to the parties that they are assuming obligations but also to provide an independent legal advice by the notary public and to prevent undue influence (emotional and other influencing on contractual will). 124. Although donations are contracts, they are treated differently from reciprocal contracts. On the one hand, in some situations the will of the donor is given more weight with regard to mistake and interpretation: mistake in motive is considered fundamental (thus enabling challenging a contract before a court),245 and in doubt, donation should be interpreted in a sense less burdensome for the donor.246 On the other, the donor is not liable for material and legal defects of his or her performance the same way as the debtor in reciprocal contracts (i.e., regardless of fault), but only in damages and only in certain instances of fault.247 Furthermore, the donor can, in some cases of important changes of circumstances, withdraw from the contract after it has been performed and claim back what he or she had donated.248 C. Natural Obligations 125. Natural obligations are obligations the performance of which cannot be claimed in court. An obligation to perform nevertheless exists, and, if executed voluntary, the performance cannot be claimed back for the lack of legal ground under the rules on unjustified enrichment. A natural obligation is an obligation without a legal claim to enforce it. Two categories of natural obligations exist: (1) time-barred obligations (claimed), where the debtor has raised an objection of prescription,249

242. 243. 244. 245. 246. 247. 248.

Article 538/1 of the OC. See Art. 58 of the OC. See Art. 47 of the Notary Act (Official Gazette RS, No. 13/94, with further amendments). See Art. 47 of the OC. Article 84 of the OC. See Art. 537 of the OC. See Art. 539 of the OC (hardship), Art. 540 of the OC (ingratitude), Art. 541 of the OC (a later child), and Art. 84 of the Marriage and Family Relations Act (dissolution of marriage). 249. See Art. 335 of the OC.

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and (2) non-enforceable obligations, such as a promise of a gift (movable property) not given in written form,250 or an obligation from a game or bet (not in the form of organized gaming).251,252 IV. Preliminary Contract 126. When the parties agree on establishing some kind of a legal obligation but for some reason cannot or do not wish to conclude a contract at that point in time, they may conclude a preliminary contract (pactum de contrahendo). With a preliminary contract the parties assume an obligation to conclude the ‘main’ contract at some time in the future.253 A preliminary contract must contain an agreement on essential elements (main obligations) of a contract, i.e. the object of sale and the price with regard to a sales contract.254 If a certain form is prescribed (by law or by the parties) for the main contract it should also be respected with regard to the preliminary contract.255 Based on an agreement, a preliminary contract can be binding on both parties or can represent an option for one of them. 127. Contrary to a mere declaration of intent (letter of intent) a preliminary contract is a binding instrument; if a party refuses to conclude the main contract, the conclusion can be claimed before a court (whereby the Judgment of a court substitutes the conclusion). The conclusion can only be claimed within a short time frame: in six months following the time the parties stipulated the main contract should be concluded or, in the absence of such stipulation, in six months following the time when a contract should be concluded taking into account the circumstances and the nature of the transaction.256 The time limit of six months is not a prescription-type time limit; with the expiry, the right to claim conclusion is extinct, without a possibility of interruption or suspension (strict time limit). 128. A preliminary contract is no longer binding if, after its conclusion, the circumstances had changed so fundamentally that the parties would not have concluded the (preliminary) contract under these circumstances. 257 The doctrine of

250. Article 538/2 of the OC. 251. See Gaming Act (Sl. Zakon o igrah na srecˇo (ZIS), Official Gazette RS, No. 27/95, with further amendments). 252. As the Yugoslav OA, the Slovenian OC, too, does not regulate the issue of validity of obligations arising from a game or bet; the jurisprudence applies the rules of §§ 1271 and 1272 of the Austrian ABGB; see, e.g., judgment of the High Court of Koper, No. I Cp 1227/2006 of 18 Dec. 2007. According to these rules, an obligation arising from a (non-illicit) bet or a game is only enforceable, if the bet was paid or deposited. 253. Article 33/1 of the OC. 254. Article 33/3 of the OC. 255. Article 33/2 of the OC. 256. Article 33/ of the OC. 257. Article 33/6 of the OC.

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change of circumstances (rebus sic stantibus) is thus applicable to preliminary contracts. A party cannot rely on change of circumstances if the change was foreseeable at the time of the conclusion of the contract,258 or if it relates to a normal business risk.259 Furthermore, the parties may exclude the application of the doctrine of change of circumstances.260 At the time when they agree on a preliminary agreement, the parties may also agree on an earnest (money),261 which must also be handed over as it is a ‘real’ contract (see infra Part I, Chapter 3, §1). V. Modifications of the Contract 129. Contracts can be modified in the same way they are concluded: by agreement of the parties. The parties may modify the contractual obligations of both or just one of them, dissolve the contract or substitute it with a new contract by way of novation (novatio, i.e., substitution of contractual obligation with a new obligation with different content or legal grounds).262 Formal requirements for dissolution of a contract are milder from those for its conclusion: by way of principle, formal contracts may be dissolved by a formless agreement, unless otherwise provided for by the law or arising from the purpose of the norm prescribing form.263 VI. Withdrawal from the Contract 130. A contract is binding on the parties. That means, inter alia, that a party – unless this was specifically agreed in the contract – cannot simply change his or her mind and revoke his or her contractual promise. However, in some situations, the law provides exactly that: it gives one of the parties the right to change his or her mind and ‘withdraw’ from the contract within a very limited time period, sometimes referred to as ‘cooling-off’ period.264 The withdrawal needs no justification or explanation. This is clearly an exception from the most basic principle of contract law – pacta sunt servanda – and is motivated by the legislator’s desire to improve the position of a consumer in contracts with businesses (B2C). A consumer’s right to change his or her mind – a withdrawal (Sl. odstop) from the contract – is not a general remedy in consumer contract law; it exists only where the law explicitly so provides. 131. The main source of the right to withdrawal from the contract is EU consumer contract law. The right to withdraw exists in distance contracts and contracts 258. Article 112/2 of the OC. 259. See Art. 114 of the OC. 260. See, e.g., judgments of the Supreme Court of RS, Nos. III Ips 107/2014 and III Ips 83/2015 of 25 Sep. 2015. 261. See, e.g., judgment of the Supreme Court of RS, No. II Ips 992/2007 of 11 Nov. 2010, at No. 11. 262. See Art. 323/1 of the OC. 263. Article 53 of the OC. 264. See Možina, Razdor, odpoved in odstop od pogodbe, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011. p. 65.

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concluded outside business premises (Directive 2011/83/EU on consumer rights), consumer credit contracts (Directive 2008/48/EC on consumer credit and Directive 2014/17/U on mortgage credit), time-sharing contracts (Directive 94/47/EC on time-sharing contracts) and life insurance contracts (Directive 2002/83/EC on life assurance). Furthermore, the right to withdrawal exists in instalment sales and in package travel contracts. The reasons for the introduction of withdrawal period in these contracts are different. Whereas in distance contracts, the main reason is to enable the consumer to inspect the goods for which he or she had previously only had the information of the seller, the reason for the right to withdrawal with regard to door-to-door contracts is to remedy the possible psychological pressure on the consumer in his or her home. In credit contracts and life insurance contracts, it is the long-term effects of contracts on the consumer which require additional deliberation. A similar reason might be relevant in instalment sales. Also the time periods differ: whereas in distance contracts and door-to-door contracts, the time period for withdrawal is fourteen days after the delivery of goods265 (with exceptions and prolongation to up to twelve months in case of breach of pre-contractual information duties); in consumer credit contracts, it is fourteen days after the conclusion of the contract,266 and in instalment sales, it is fifteen days after the conclusion of the contract.267 In life insurance contracts, the time period for withdrawal is thirty days after the conclusion of the contract.268 In package travel contracts, the consumer may withdraw from the contract any time, the tour organizer may, however, charge an adequate ‘withdrawal money’269 in this case. 132. The consequence of withdrawal is that a contract is no longer binding. Both parties must return to each other the performances they might have already received.270 In distance contracts and door-to-door contracts, the business is not allowed to claim from the consumer any compensation for the use of the goods up to the moment of withdrawal.271 The only cost that might be charged to the consumer is the cost of sending the goods back, provided that the consumer was correctly informed about this duty.272 However, the consequences of withdrawal in case of instalment sales are different: here, the consumer must nevertheless pay compensation for the value of the use of goods.273 Similarly, the creditor may charge some interest in case where the consumer withdraws from the credit contract and he or she had already used the money.274 Furthermore, in case where a contract for the

265. 266. 267. 268. 269. 270. 271. 272. 273. 274.

See Art. 43cˇ/1 of the CPA. See Art. 18/1 of the CCA. Article 53a of the CPA. Article 48cˇ of the CPA. Article 57f/1,2 of the CPA. See Art. 43d/2,3 of the CPA. See CJEU, C-489/07 from 3.9.2009 (Messner). See Art. 43d/7 of the CPA. See Art. 54/2 of the CPA. See Art. 18/3 of the CCA.

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purchase of goods or property is linked with a credit contracts (so-called linked contracts) and if the consumer withdraws from the contract for the purchase of goods or property, the withdrawal is effective also for the credit contract.275 §2. FORMAL AND EVIDENTIAL REQUIREMENTS I. Formal Requirements A. General 133. Contracts under seal are not recognized as a particular form of contracts; they are, of course, possible, but they are not treated differently from other (written) contracts. The general principle with regard to contractual form is freedom, i.e., that, as a rule, no particular form must be observed for conclusion of a contract, unless the law or the agreement of the parties provide otherwise.276 The most important exceptions are contracts for the transfer of immovable property, for the conclusion of which Article 52 of the OC requires a written form. The rules on evidence in civil procedure do not exclude any possibility of proving the existence of a contract. In spite of the freedom of form, the number of contracts concluded formally, above all in written form is growing. On the one hand, the law provides for ever-growing number of formal contracts, often with a view to protect the weaker party with the ‘warning functions of the form’, especially in consumer protection law.277 On the other, the rationalization of business demands as uniform conduct of business as possible so that many contracts are being concluded on the basis of prearranged forms. Furthermore, due to the complexity of social and legal relationships many contracts which could be concluded formlessly are concluded in written form so as to provide a better proof (forma ad probationem). 134. If a particular form of a contract, prescribed by the law or by the parties, is not observed, the contract is nevertheless not automatically void; the sanction depends on the interpretation of the ratio legis of the act or agreement prescribing form: if the form was prescribed for the purposes of evidence (forma ad probationem), non-observance does not render the contract void;278 however, if the form was prescribed as a condition of validity (forma ad valorem) or if it serves to protect public interest, a contract is void.279 Furthermore, if a contract was not concluded in the prescribed form, but nevertheless executed in substantial part, a contract is valid, unless the purpose of the prescription of the form clearly indicates 275. Article 19 of the CCA. 276. See Arts 51/1 and 54/1 of the OC. 277. See, e.g., Art 45a/3 of the CPA (signed confirmation of a contract concluded over telephone), Art 49/2 of the CPA – written contract of installment sale, Art. 60/1 of the /3CPA (written time-sharing contract), Art. 12/1 of the CCA (written consumer credit contract). 278. See Art. 54/3 of the OC. 279. Article 55 of the OC.

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otherwise (convalidation by realization).280 The form is strictly observed only with regard to notarial contracts (see infra Part I, Chapter 1, §2 C). 135. The law does not only prescribe the written or other form for the conclusion of contracts but also in other situations, such as with regard to pre-contractual or contractual information from one party to another, in particular in contracts with consumers,281 but also with regard to some unilateral declarations, such as withdrawal from the contract.282 B. Written Form 136. The law prescribes written form for a number of contracts. The most prominent example, regulated by the OC in the general part of contract law, is the contract on the transfer of ownership or on the establishing of other property rights in immovable property: it must be concluded in written form.283 Apart from that, several examples are provided for by the ‘special part’ of the OC: promise of a gift,284 building contract,285 declaration of surety etc.286 In several cases written form is prescribed for contract between businesses and consumers.287 In general, written form means a text, incorporated on a carrier (not necessarily paper) with the signature by one’s own hand. If a party cannot read and/or write, he or she can make a sign or stamp a fingerprint in front of two witnesses, (1) a notary or (2) a judge.288 137. The OC adopted a flexible approach to form. The essence of written form is not ‘pen and paper’ but the possibility of reliable ascertaining of the text as well as identity of the signatory. In this sense, Article 57/2 of the OC ascribes the quality of written form to ‘any kind or form of communication, which guarantees that the record of the contents of the statement will not change and enables the determination of the source (i.e., the signatory) with the use of generally accepted means’. Thus, also an electronic message, such as e-mail or SMS, can – in some circumstances, in particular if the parties had previously communicated in this way – represent written form. However, the conclusion of some contracts in this way is not

280. Article 58 of the OC. See, e.g., judgment of the Supreme Court of RS, No. II Ips 158 /2014 of 18 Feb. 2016 (contract for rent of business premises, which should be in writing (Art. 21 of the Act on business buildings and premises) was nevertheless performed. The court held that the contract is valid. 281. See, e.g., Art. 7/1 of the CCA – written or other durable form of pre-contractual information. 282. See, e.g., Art. 53a of the CPA (withdrawal from a contract in written form). 283. Article 52 of the OC. 284. Article 538 of the OC. 285. Article 649 of the OC. 286. Article 1013 of the OC. 287. See supra fn 270. 288. Article 57/3 of the OC.

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possible.289 The Act on electronic signature and electronic commerce290 explicitly considers contracts concluded in electronic form as equivalent to written contracts, provided that the information is accessible and legible, with some exceptions.291 Furthermore, with regard to validity and evidence, a ‘qualified electronic signature’ is equal to hand signature.292 C. Notarial Deed and the Function of the Notary 138. The notarial form (i.e., the form of notarial deed, Sl. oblika notarskega zapisa) is prescribed by the law in situations where there is a particularly strong need for legal certainty in the sense of clarity of contractual wording, but also evidence. Furthermore, as the notary is an independent legal professional, he or she also provides independent legal advice which is particularly important in situations where one of the parties to a contract seems to be in a weaker (bargaining) position, such as a minor or a very old person. A notary, after ascertaining the identity of the parties (authentication), draws up the draft wording of the contract on the basis of the party’s agreement. Then, he or she describes the contents and the effects of the transactions to the parties and warns them about typical risks. He or she then reads the contents of the document to the parties before they sign it. Furthermore, he or she also stores the documents (deeds) he or she had prepared. If the parties so agree, he or she may also take part in the performance of a contract; he or she may, e.g., issue certain documents or money to a contractual party upon receiving the required documents of proofs. 139. The notarial forms applies, e.g., to contracts regulating property relations between spouses and extramarital partners, contracts about the property of persons without the capacity to conduct business and contracts on the giving up of future inheritance.293 Some other contracts related to inheritance, such as a life annuity contract, must also be concluded in the form of notarial deed.294 Furthermore, a contract of partnership upon which a limited company is established (societas) requires a notarial form, as well as a contract on transfer of a share in a limited company.295 With regard to some contracts, i.e. if one of the parties cannot read or write, or with

289. These are contracts for the transfer of immovable property, contracts between spouses, promises of gifts etc., see Art. 13/2 of the Act on electronic commerce and electronic signature (Sl. Zakon o elektronskem poslovanju in elektronskem podpisu (ZEPEP), Official Gazette RS, No. 57/2000, with further amendments). 290. Ibid. 291. See Art. 13/2 of the Act on electronic commerce and electronic signature. 292. Article 15 of the Act on electronic commerce and electronic signature. 293. See Art. 47 of the NA. 294. See Arts 545, 547/2, 558 (life annuity) and 567 of the OC. 295. See Arts 474 and 481 of the Companies Act (Official Gazette RS, No. 42/06, with further amendments).

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regard to life annuity contract and some other inheritance-related contracts, two witnesses must be present at the conclusion.296 Of course, the parties may choose the form of notarial deed also with regard to other contracts, where such form is not prescribed by the law. 140. A notarial deed, containing a mature claim, in which the debtor has agreed to direct enforceability, is also an enforceable title, i.e. it can be executed without first having to file a civil claim.297 141. A notarial authentication is a much simpler procedure. A notary may confirm the authenticity of signatures, copies and other facts. He or she merely ascertains the identity of a party and does not review the contents of a document.298 A notarial authentication is not a condition of validity of contracts; however, it is required for the performance of some contracts, notably the contracts on transfer of immovable property which have to be entered into the land register. Such a contract is validly concluded without the authentication of the seller’s signature; the latter is required for its performance (transfer of ownership) and can, if the seller refuses, be claimed at the court. II. Evidential Requirements: A. The Parole Evidence Rule 142. In Slovenian law there is no rule that contractual agreements may only be proven in a certain way (e.g., in a written or notarial form). However, a rule exists according to which in cases where the law or the parties’ agreement requires a particular form, only agreements in that particular form are deemed valid.299 However, this is subject to some exceptions which do not contribute to the clarity and legal certainty: simultaneous oral agreements on issues on which the formal contract is silent are valid if they do not contravene the formal contract or the purpose of prescribing the form.300 Furthermore, simultaneous oral agreements, which ‘reduce’ the obligations of one or both parties, are valid if the form is prescribed only in the interest of the parties, and not in the public interest.301

296. 297. 298. 299. 300. 301.

See Art. 51 of the NA. See Art. 4 of the NA. See Art. 61 of the NA. Article 56/1 of the OC. Article 56/2 of the OC. Article 56/3 of the OC.

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III. Burden of Proof A. Is There a Distinction Between ‘Obligation of Means’ and ‘Obligation of Result’? 143. In general, liability for breach of contractual obligations is not dependant on fault; the debtor cannot be exempt from liability for breach by proving that he or she had exercised due care or that he or she had done his or her best to perform the contract.302 He or she must prove that unforeseeable and unavoidable circumstances beyond his or her control prevented him or her from performing a contract.303 However, the general exemptions rule of Article 240 of the OC is based on rules on the sale of goods.304 The obligation of the seller is traditionally one of achieving a specific result (obligation de résultat),305 as is, as a rule, e.g., the obligation of a contractor in a contract of work.306 There are, however, also other kinds of contractual obligations, where, by the nature of things, a party does not guarantee a specific result but only that he or she will exercise due care. If due care is exercised, a party has performed his or her obligation regardless of specific result (obligation of means, obligation de moyen).307 Such is, e.g., the obligation of an attorney representing a client in court or of a doctor healing a patient. However, even in these contracts, a party may have some obligations to achieve a specific result. For example, an attorney must file an appeal within the deadline for appeal, and a doctor must use safe and sterile equipment. Here, a mere effort does not suffice. Of course, the parties may agree on a stricter obligation and thus transfer an obligation of means into an obligation of result. 144. The two aforementioned types of contractual obligations are not distinguished with regard to burden of proof. In both cases, the liability of the debtor is presumed if a breach of contract is proven; the debtor may, however, prove that he or she was prevented from performing by unforeseeable and unavoidable circumstances beyond his or her control, or that he or she had exercised due care. §3. LIABILITY AND NEGOTIATIONS 145. Until a contract is concluded, the parties are not bound by contractual obligations. If during negotiations to conclude a contract, a party considers that the contract will not protect his or her interests in a way he or she intends, he or she can, of course, withdraw from further negotiations. A party is not obliged to continue negotiations or even conclude a contract. That does not mean, however, that there are no obligations between the parties prior to conclusion of the contract. Certainly, 302. See Art. 240 of the OC and Možina, Odškodninska odgovronost za kršitev pogodbe, Podjetje in delo 2/2016, pp. 260, 267. 303. Ibid. 304. Ibid. 305. See Art. 458/1 of the OC. 306. See Arts 633–640 of the OC. 307. Možina, Odškodninska odgovornost za kršitev pogodbe, Podjetje in delo 2/2016, pp. 260, 267.

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the parties are bound by good faith. They are certainly not allowed to mislead the opposing party that a contract will be concluded if this is not the case. In other words, they are expected to take the interests of the opposing party into consideration and, to a certain extent, protect the other party from incurring loss. 146. If a party incurs expenses in reliance on behaviour of the other party which turns out to be misleading, he or she has a right to recover these expenses. If a party enters negotiations for conclusion of a contract without having a real intention to conclude it, he or she is liable for loss thereby caused to the other party.308 The same applies to a party who has negotiated with an intention to conclude a contract but has abandoned this intention without a justified reason.309 147. The liability covers expenses which, in case no contract is concluded, turn out to be useless (frustrated). Such is a case, e.g., if a party, in reliance of the other party intending to sell certain property with the intention of building, hires an expert to discover what kind of building is possible in the premises. If the other party never really intended to sell the property, these costs have been worthless from the outset. As there is no contract between the parties, liability is not based on contract, but on the general clause on non-contractual liability for damage set out in Article 131/1 of the OC. The liability in this case is described by the German doctrine on culpa in contrahendo.310 Only the so-called negative interest, i.e., expenses incurred in reliance, can be claimed, and not the so-called expectation damages, i.e., in particular lost profit.

308. Article 20/2 of the OC. 309. Ibid. 310. See, e.g., Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, pp. 225 et seq.

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Chapter 2. Conditions of Substantive Validity §1. CAPACITY OF THE PARTIES 148. For a person to be able to conclude a valid contract, he or she must have, first, a legal capacity, and second, the capacity to act. The legal capacity is capacity to be the holder of rights and obligations. Every natural person has the legal capacity, and the legal capacity of all natural persons is equal. The legal capacity of a natural person is synonymous with the notion of a person. It is acquired by birth and it lasts until the death of a person.311 The legal capacity of legal persons is equal to their legal subjectivity. It is not identical with the legal capacity of natural persons, as some rights, by their nature, can only belong to natural persons. Legal persons acquire the legal capacity (legal subjectivity) the moment they are established and entered into the register of companies or the register of incorporated societies respectively. They cease to exist when they are erased from the register, which can be preceded by a voluntary decision or by other grounds such as bankruptcy or liquidation procedure. 149. The capacity to act means capacity to acquire rights and obligations by legal acts, i.e., capacity to validly express intention to create, change or terminate legal relationships. As a rule, a natural person acquires full capacity to act with the completion of the 18 years of age.312 In two cases, the full capacity to act can be acquired before the completion of 18 years: in case of marriage and in case of parenthood (in the latter case only if a court decides so).313 A limited capacity to act is acquired with the completion of 15 years of age. A minor with limited capacity to act can validly conclude ‘less important’ legal acts, i.e. acts that bear no ‘fundamental influence’ on the minor´s life.314 For a valid conclusion of ‘important’ legal acts, a minor requires consent of his or her parents or legal guardians. The consent can also be given retroactively.315 In the absence of such consent, these legal acts are challengeable. They may be challenged by the legal representative of a minor (parents, guardian) in the time period of one year after he or she had gained knowledge of the contract, and at the latest three years after the conclusion of a contract.316 However, such cases are extremely rare. If a contract is not challenged within the time frame, it becomes defect-free (convalidation). 311. Death refers to the natural or legal death. Under some conditions, a person missing for a longer period of time can be declared legally dead. See Non-Litigious Civil Procedure Act (Sl. Zakon o nepravdnem postopku (ZNP), Official Gazette SRS, No. 30/86, with further amendments), Arts 82–96. 312. Article 117 of the existing Marriage and Family Relations Act (Official Gazette SRS, No. 15/76, with further amendments), see also Art. 152 of the new Family Act, in force since 15.4.2019 (Official Gazette RS, No. 15/2017). 313. Ibid. 314. See Art. 108 of the existing Family Act (official Gazette of the SRS, nr. 15/1976, 14/1989, official Gazette of the RS 13/94, last am. 82/15), see also Art. 146 of the new Family Code in force since 15.4.2019 (Official Gazette RS, No. 15/17). 315. See Art. 41/3 of the OC. 316. Article 99 of the OC. See also Arts 42–44 of the OC.

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150. If, due to an illness or other reasons, a person of age is not capable of taking care of itself, the capacity to act can also be limited or taken away by a court.317 Furthermore, an illness or other reasons such as drugs can cause temporary injudiciousness during which a person – although his or her capacity to act was not limited or taken away in a formal procedure – is declared by a court to be temporary unable to conclude valid contracts and other legal acts (such as wills).318 151. The capacity to act of legal persons is linked to the capacity to act of their agents. In principle, legal persons can conclude contracts and other legal acts only within the frame of the activity they were registered for.319 However, a contract concluded outside of the registered activity is valid, unless the counterparty knew or could not have been unaware of that, in which case it is null.320 §2. DEFECTS OF CONSENT I. General 152. A contract is concluded when the parties reach consent with regard to concluding a contract. An agreement is reached when conforming statements of the parties’ will meet. If, however, the true will of a party deviates from his or her statement, the parties’ consent has a defect. Mistake (error) is the fundamental defect of consent (Article 46 of the OC); other forms are duress (Article 45 of the OC) and fraud (Article 49 of the OC). However, apart from mistake in the narrow sense (Article 46 OC), there are two other institutes that represent special cases of mistake: first, the so-called dissensus (disagreement) in Article 16 of the OC and the ‘excessive lesion’ (laesio enormis, Article 118 of the OC) – a mistake as to the value (see infra Part I, Chapter 2, §2 III). With regard to mistake, duress and fraud (but also gross disparity), a particular feature of Slovenian law should be mentioned: the way of their enactment. A contract concluded in mistake, under duress or fraud, is avoidable. However, avoidability (Sl. izpodbojnost) must be enacted through court. Only a court may dissolve contract due to a defect of will which presupposes that a party must file a claim (see infra Part I, Chapter 2, §2 III). II. Mistake (Distinction from Value; Distinction from Motive) 153. A contract is avoidable due to mistake (Sl. zmota) if the mistake is (a) fundamental and (b) excusable. According to Article 46/1 of the OC, a mistake is ‘essential’ if it relates to ‘essential characteristics of the object of the contract’, to the ‘person of the counterparty if the latter is relevant for the contract’, or to the 317. See Arts 44–65 of the Non-Litigious Civil Procedure Act. 318. See, e.g., judgment of the Supreme Court, No. II Ips 450/2005 of 23 Feb. 2006; or judgment No. II Ips 405/2009 of 7 Jul. 2011. 319. See Art. 6/3 of the Companies Act. 320. See Art. 6/5 of the Companies Act.

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‘circumstances which, according to the purpose of the parties or the commercial usages, are considered decisive, as otherwise the mistaking party would not have concluded such a contract’. The excusability criterion relates to the diligence of the mistaking party: he or she must have exercised due diligence; in other words, his or her mistake must not be attributable to him or her. If a mistake is essential and excusable, a contract is voidable, Article 46/2 of the OC. The mistake of a person through which a party makes a statement (indirect statement) is considered as a mistake of a party (Article 48 of the OC). 154. However, a mistake of a party with regard to his or her motive for conclusion of the contract is only relevant for gratuitous contracts such as gifts (Article 47 of the OC). That relevance of the motive of the donor is understandable as it is the only party assuming an obligation; therefore, there are fewer reasons for protection of the other party (donee). In general, however, a (one-sided) motive does not affect the validity of contract, only a (common) cause does.321 155. The cases of successful avoidance of a contract due to mistake are very rare in practice.322 The reason is not just the time (particularly in the light of judicial delays, characteristic for Slovenia), the costs and the uncertainty connected to the mentioned judicial intervention, but also the high standards of ‘excusability’ of mistake set by the jurisprudence. Often the courts have held that the party relying on mistake (often the buyer in a sales contract) should have made more inquiries, e.g., clarify the excerpt from the land register he or she did not understand well,323 obtain additional information as to the constructability of land324 or acquire more credible bookkeeping information and analyse more carefully the business bought.325 A party may not rely on mistake as to law, e.g., not being aware of all legal consequences of his or her statement.326 The same standards apply to natural persons (legal laymen),327 including the employees in relations with employers.328 If a party was represented by a lawyer, e.g., in contract negotiations, or even instructed by a notary public with regard to the contents and legal effects of a contract, his or her mistake can hardly be excusable.329 321. See Art. 40/1 of the OC. It could be claimed that the motive of the donor becomes the cause (or very close to it), as it is the only relevant reason for assuming obligations. 322. See, e.g., judgment of the Supreme Court of RS, No. II Ips 652/2005 of 12 Dec. 2007. However, in this case, the mistake seems to have been induced by the other party (seller of the company who claimed that the company only has the specified debt; later, however, the amount of (tax) debt exceed the specified sum by 22 times). 323. Judgment of the Supreme Court of RS, No. II Ips 749/2008 of 22 Dec. 2011. 324. Judgment of the Supreme Court of RS, No. II Ips 117/2007 of 18 Jun. 2009. 325. Judgment of the High Court of Ljubljana, No. I C 2777/2014 of 4 Feb. 2015, No. 8. 326. See, e.g., judgment of the Supreme Court of RS, No. II Ips 982/2007 of 17 Jan. 2008 (recognition of paternity); II Ips 1274/2008 of 28 Oct. 2009 (the procedural effects of judicial settlement). 327. See, e.g., judgment of the High Court of Ljubljana, No. III Cp 952/2016 of 20 Apr. 2016 (hereditary agreement, signed at the court). 328. See, e.g., judgments of the High Labour and Social Court, Nos. VDSS Pdp 559/2016 of 10 Nov. 2016 (agreeing on termination of employment) and VDSS Pdp 815/2017 of 18 Jan. 2018 (even as a legal layman, the claimant, as any average diligent person should be aware of legal effects of assumed obligations). 329. See, e.g., judgment of the High Court of Ljubljana, No. VSL I Cp 1109/2015 of 24 Jun. 2015.

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156. The court will not dissolve a contract if the other party is willing to perform the contract as if there is no mistake (Article 46/4 of the OC). If a court dissolves a contract due to mistake of a party, the other bona fide party may claim recovery of loss due to the avoidance, regardless of fault of the mistaking party (Article 46/3 of the OC). 157. Furthermore, as already mentioned, two exceptions apply with regard to what the mistake relates to (i.e., essentiality criterion). First, if the mistake relates to the ‘object of the contract’, the ‘nature of the contract’ or the ‘cause’ of the contract, rules on ‘dissensus’ laid down in Article 16 of the OC take precedence. In this case, the sanction is different: a contract is not voidable, but does not even come to existence, as it is considered that no agreement between the parties was reached. The sanction for these forms of mistakes is therefore stricter: nullity of contract. It is difficult to see why the mistake as to the mentioned ‘objects’ of mistake would prevent the coming into existence of a contract. In fact, every mistake means that an agreement of the party has a defect, whereas the mistake with regard to other circumstances would render a contract voidable. If the statements of the parties coincide, a contract comes into existence. Furthermore, differentiation between the ‘object of the contract’ (dissensus) and ‘essential characteristics of the object of the contract’ (mistake) is not convincing and seems to be rather difficult in the light of the very different consequences. As has been convincingly explained, the rather awkward provision of Article 63 of the Yugoslav OA (identical to Article 16 of the Slovenian OC) is a clumsy hybrid of l’erreur obstacle from the French legal theory, and the so-called hidden dissensus known from Roman law.330 In Yugoslav law, the views of authors on the subject were divided.331 The provision represents a special case of mistake. However, in the Slovenian OC, the provision was moved from the chapter on defects of consent to the chapter on conclusion of contract, right next to ‘consent’ (Article 16). Although no reasons for this transfer were ever given, the Slovenian legislator obviously considered ‘hidden dissensus’ to be a matter of ‘consensus’ rather than defect of consent. Judicial decisions with regard to this provision are rare. They are difficult to understand and reflect the inconsistency of differentiation between the mistake regarding the essential characteristics of the object of the contract, and the hidden ‘disagreement’ on the object of contract.332 III. Gross Disparity (Laesio Enormis) 158. Second, if a mistake relates to the value of the object of a synallagmatic contract, or, in other words, to the balance between the obligations of the parties, rules on laesio enormis (gross disparity, Sl. cˇezmerno prikrajšanje) take precedence as lex specialis. Laesio enormis is characteristic for the oldest civil codes such as 330. Dolenc, O nekaterih vprašanjih sklepanja pogodb, Pravosodni bilten 2/09, p. 117. 331. See overview in: Dolenc, Napake volje pri sklepanju pravnih poslov, Cankarjeva založba, Ljubljana 2003, pp. 170 et seq. 332. See, e.g., judgment of the Supreme Court of RS, No. II Ips 335/2015 of 23 Mar. 2017.

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Austrian and French civil code, and not for codifications of the twentieth century.333 Furthermore, it is based on a different concept of contractual fairness as is the case with usurious contracts (Article 120 of the OC, see infra Part I, Chapter 2, §2 VI). If the values of the parties’ obligations are clearly imbalanced (Sl. ocˇitno nesorazmerje), the deprived party may avoid the contract, if, at the time of conclusion, he or she was unaware and could not have been aware of the ‘proper value’ (Article 118/1 of the OC). The ‘excusability’ criterion is essentially the same as in Article 46/2 of the OC. The consequence – avoidability (before the court) – is the same as with regard to mistake; however, the time period is shorter: avoidance can be claimed only within one year after the conclusion of the contract (Article 118/2 of the OC). One needs to be careful, however: Article 118 of the OC is applicable only when a party’s mistake relates to the value of his or her own obligation, or of the value of the counter-obligation. If it relates to characteristics of the object of the contract, although the characteristics might strongly influence the price (value), Article 46 of the OC (mistake) remains applicable. With regard to aleatory contracts and contracts concluded at public auctions, gross disparity cannot be claimed (Article 118/5 of the OC). The court will not dissolve the contract if the other party offers to perform the contract at its ‘real’ value (Article 118/4 of the OC). The rules on gross disparity are mandatory and cannot be waived by the contract (Article 118/3 of the OC). Cases of successful claims due to gross disparity are almost nonexistent, also due to high standards regarding the excusability of mistake. IV. Fraud 159. If a party causes a mistake in the other party or ‘keeps’ him or her in the mistake with an intention to induce conclusion of contract (fraud, Sl. prevara), the other party may avoid the contract even if the mistake is not essential (Article 49/1 of the OC). The requirement of ‘excusability’ of mistake is not mentioned. However, the party should nevertheless exercise at least minimal care with regard to his or her mistake (i.e., he or she may not rely on fraud in case of recklessness).334 The courts demand that the cheating party was acting mala fide, with the purpose of inducing conclusion of contract.335 160. A fraud may be committed not only by active behaviour but also by not revealing to the other party that he or she is mistaken. However, the fact that a party did not explicitly reveal to the other party all the relevant information does not yet per se mean that he or she acted with purpose of inducing contract conclusion.336 Nevertheless, a party is obliged to inform the other party of important information,

333. 334. 335. 336.

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See, e.g., Cepec, Laesio enormis v gospodarskem pogodbenem pravu, Pravnik 1–2/2015, p. 5. See, e.g., judgment of the High Court of Ljubljana, No. I Cpg 682/2014 of 23 Sep. 2015. See, e.g., judgment of the Supreme Court of RS, No. III Ips 58/2013 of 19 Nov. 2013. Ibid.

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crucial for the contract, such as of his or her own imminent insolvency.337 The issue of pre-contractual information duties will be dealt with infra in Part I, Chapter 2, §2 IX. 161. A fraud may also be committed by a third person who is not party to the contract. In this case, the contract is avoidable only if a contracting party knew of the fraud or the latter could not have been unknown to him or her (Article 49/3 of the OC). However, a gratuitous contract may be avoided due to fraud by a third person regardless of that (Article 49/4 of the OC). 162. As in the case of mistake (supra) and threat (infra), damages can be sought also in case of fraud. In principle, the damages claim can accompany the claim for avoidance of contract.338 It would appear that damages cannot be sought if the contract is not avoided. However, this seems to be different with regard to fraud, also due to Article 49/2 of the OC: here, damages can be sought regardless of avoidance.339 V. Threat 163. If a party concludes a contract under the influence of threat (Sl. grožnja), the contract is avoidable (Article 45/1 of the OC). Only a forbidden threat to life, health or other important legal good of a party or a third person causing intense and justified fear is relevant (Article 45/2 of the OC). A mere pressure by threading with actions that are not per se illegal, such as termination of employment or initiation of criminal proceedings, is not enough.340 164. However, in some cases, the courts also allow nullity of contract as a sanction for some forms of threat. Contracts are considered not just avoidable but null particularly in cases where the courts find that the party was a victim of blackmail, and they consider that the will to conclude a contract was not expressed at all. Such is the case when a party is forced to sign a credit contract and acknowledge receipt of money which he or she has in fact never received (and he or she was in fact not meant to ever receive) but should nevertheless return it with interest.341 In addition, the courts justify the result (nullity of contract) also with the provision on nullity due to an illegal motive affecting the decision of one party while the other party was aware or could not be unaware of it (Article 40 of the OC).342 Some courts also 337. See, e.g., Dolenc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 357; and judgment of the High Court of Ljubljana, No. I Cpg 682/ 2014 of 23 Sep. 2015. 338. See Art. 97 of the OC ‘damages due to avoidance of contract’. 339. See Cigoj, Komentar zakona o obligacijskih razmerjih, CˇZ Uradni list, Ljubljana 1984, p. 61. 340. See, e.g., judgment of the Supreme Court of RS, No. VIII Ips 113/2017 of 21 Nov. 2017 (agreement on termination of employment, signed under pressure). 341. See judgments of the Supreme Court of RS, Nos. II Ips 124/2015 of 1 Dec. 2016 and II Ips 281/ 2017 of 1 Feb. 2018. 342. See judgment of the Supreme Court of RS, No. II Ips 94/2016 of 23 Mar. 2017.

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argue that a contract signed as a result of serious threat (e.g., a forced sale of property) is null as an agreement is simulated, without actual animus contrahendi (Article 50 of the OC),343 or merely explain that a contract where an essential element (price) was determined by applying improper pressure on a party (for which the perpetrator was criminally convicted) is null as there was no agreement.344 VI. Usurious Contract 165. Another form of improper pressure is usury. A usurious contract is defined as purposeful abuse of a difficult situation of the other party (hardship, difficult financial situation, insufficient experience, frustration or addiction) by a party who thereby gains a significantly imbalanced contract (Article 119/1 of the OC). A usurious contract is null. Usury is a combination of two elements: (1) the exploitation of limited negotiation capability of the other party (the so-called subjective element), and (2) significant imbalance of contractual rights and obligations (the so-called objective element).345 166. A special case of usury relates to usurious interest (Article 377/1 of the OC): if the agreed interest rate is more than 50% higher than the prescribed delay interest rate, such agreement is considered usurious; however, the creditor may prove that he or she did not abuse the difficult situation of the other party or that the contract is not significantly imbalanced. This presumption does not apply to B2B contracts. However, in B2C relationships, this does not apply to interest for delay of the consumer as Article 27a of the CPA forbids agreements on delay interest higher than the legally prescribed delay interest. VII. Other Forms of Improper Pressure 167. In different ways, the law recognizes also other forms of improper pressure. There are, e.g., special formal requirements with regard to contracts between spouses (notarial form, see supra Part I, Chapter 1, §2). The legislator considers that in these contracts, the forming of contractual will might not be entirely free. Furthermore, special legislation exists with regard to unfair commercial practices in B2C relationships, implementing EU Directive 2005/29/EC, banning in particular

343. Ibid. 344. See judgment of the Supreme Court of RS, No. II Ips 894/93 of 24 Feb. 1994. 345. See, e.g., judgments of the Supreme Court of RS, Nos. II Ips 231/2015 of 6 Apr. 2017, and II Ips 123/2014 of 21 Jan. 2016. See also Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 625.

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aggressive and misleading commercial practices.346 However, it does not directly affect the coming into existence of a contract, and it sanctions the unfair practices by a fine.347 168. A further form of undue influence on contractual will is conclusion of a contract by a party with conflicting interests. Such is the case, e.g., when a party is represented by an agent who is somehow connected to the opposing party. It might be that the representative of a party is also a shareholder of the other party, in which case he or she is, in a way, concluding a contract with him or herself, or he or she is representing both parties which are forbidden,348 or he or she is cooperating with the other party (so-called collusion). In corporate law, a contract concluded in the name of a company by its manager who is also a shareholder (more than 10%) of the other contractual party is null if it is not confirmed by the board.349 In family law, e.g., a contract between a guardian and a client (minor, mentally ill etc.) must be confirmed by the social assistance office.350 In general, conclusion of a contract under conflict of interest may be invalid due to illicit cause (Article 39 of the OC).351 VIII. Simulated Contract (Sham) 169. If the parties make the appearance that they are concluding a certain contract but in fact agree on a different contract for which the first contract is just a cover, the latter (simulated contract, Sl. simulirana pogodba) produces no legal effect (Article 50/1 of the OC). There is no real agreement. The parties may, e.g., conclude a contract of sale to cover up a donation to circumvent the rules on inheritance law, rules on relations between spouses,352 taxation353 or the rule on creditor protection.354 The covered contract is valid if the conditions of validity for that particular type of contract are met.

346. See Consumer Protection against Unfair Commercial Practices Act (Sl. Zakon o varstvu potrošnikov pred nepoštenimi poslovnimi praksami (ZVPNPP), Official Gazette RS, No. 53/07, with further amendments). 347. See Arts 2/1 and 15 of the Consumer Protection against Unfair Commercial Practices Act. 348. See Art. 5/2 of the Attorneys Act (Sl. Zakon o odvetništvu (ZOdv), Official Gazette RS, No. 187–93, with further amendments). 349. See Art. 38a of the Companies Act. 350. Article 193 of the Marriage and Family Relations Act. 351. Cf. Art. 3:205 of the PECL and Art. 2.2.7 of the UNIDROIT Principles (PICC): contract concluded under conflict of interest is avoidable. See also Arts IV. D.-5:101 and IV.D.-5:102 of the DCFR. 352. Judgment of the Supreme Court of RS, No. II Ips 121/2017 of 15 Jan. 2018 (a sales contract covering a donation). 353. Judgment of the Supreme Court of RS, No. II Ips 55/2016 of 8 Sep. 2016 (a sales contract covering a donation). 354. Judgment of the Supreme Court of RS, No. II Ips 426/2010 of 19 Dec. 2013 (a credit contract covering a donation).

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IX. Other Pre-contractual Information Duties 170. Some pre-contractual information duties are specifically prescribed by the law. Such is the case in consumer protection law, in particular with regard to distance contracts where the CPA implements the requirements of the EU Consumer Rights Directive (2001/83/EU),355 or consumer credit contracts, where the CCA implements the EU Consumer Credit Directive (2008/48/EC)356 and the Mortgage Credit Directive (2014/17/EU).357 In most cases, the acts also provide the sanctions for the breach of particular information duties.358 In some other cases, precontractual information duties are prescribed by the law indirectly: if, e.g., a seller in a sales contract withholds important information which the buyer cannot reasonably acquire him or herself, he or she is liable for breach of contract (material defect).359 The seller’s liability in this case is also a bit stricter, i.e., he or she is liable regardless of the buyer’s inspection and timely notification of the defect (otherwise a prerequisite of liability), furthermore, the warranty time period does not apply.360 In recent years, the legal writers have proven that the pre-contractual information duties may also be established solely on the basis of the good faith principle and may in some instances also supplement the specifically prescribed precontractual information duties.361 These duties are established in situations when particular important information is known only to one party whereas the other party cannot acquire the information or can do so only with unreasonable effort. In these cases, the authors propose analogue application of sanctions for defects of consent, i.e. avoidance of contract and (in some but not all cases) liability for loss.362

355. Directive 2011/83/EU of the European Parliament and of the Council of 25 Oct. 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, OJ L 304. 356. Directive 2008/48/EC of the European Parliament and of the Council of 23 Apr. 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, OJ L 133. 357. Directive 2014/17/EU of the European Parliament and of the Council of 4 Feb. 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No. 1093/2010, OJ L 60L 133. 358. With regard to distance contracts, several different sanctions are provided by the CPA for the breach of pre-contractual information duties from Art. 43d: apart from fine (Art. 77/1(13)), also the prolongation of withdrawal period (Art. A43d/1) and the rule that the consumer does not bear the costs of returning the goods (Art. 43b/7) or is not liable for loss due to the damaging of goods in case of withdrawal (Art. 43d/9 of the CPA). 359. See, e.g., judgments of the High Court of Ljubljana, Nos. VSL II Cp 3990/2011 of 4 Jul. 2012, and I Cp 2600/2013 of 9 Apr. 2014. 360. See Art. 465 of the OC. 361. See Fakin, Predpogodbene dolžnosti informiranja, PhD thesis, University of Ljubljana, Ljubljana 2016, and Rozman, Odgovornost banke za nasvet in pojasnilo, PhD thesis, University of Ljubljana, Ljubljana 2016. See also: Fakin, Merila za vzpostavitev predpogodbenih dolžnosti informiranja, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017, pp. 9–24, and Rozman, Predpogodbena dolžnost obvešcˇanja bank pri sklepanju pogodb, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017, pp. 25–40. 362. See Fakin, Predpogodbene dolžnosti informiranja, PhD thesis, University of Ljubljana, Ljubljana 2016, pp. 221 et seq.

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171. Pre-contractual information duties in B2C contracts also exist with regard to standard contract terms (non-individually negotiated terms), first with regard to making the standard contract terms known to the consumer,363 and second, as the case law of the CJEU shows, with regard to informing the consumer about the potentially significant economic consequences of a standard contract clause (in credit contracts containing a foreign currency clause).364 §3. OTHER CONDITIONS OF VALIDITY I. Existing and Licit Cause 172. As already explained (supra Part I, Chapter 2), a valid contract must have an existing and licit cause (purpose), or the contract is void. A cause is the purpose of the contract, common to both parties. In most cases, the cause of a contract will be in simple reciprocity of promises (do ut des). The doctrine of cause was far more important in the Yugoslav legal theory than it is in practice.365 II. Determined or Determinable, Possible and Licit Object 173. The object of contract must be determined or determinable, i.e. the contract must contain information with which the object may be determined. The determination may also be left to a third person. If the object is not determined or determinable or the third person will not or cannot determine the object, the contract is void (Articles 35 and 37 of the OC). The parties must be able to know what their rights and obligations are. Furthermore, an undetermined or indeterminable object cannot be enforced. An exception applies to the determination of price in a commercial contract (B2B): if the parties do not determine the price (but also do not disagree on the price), the contract is nevertheless valid and the buyer must pay the ‘usual’ price or a ‘reasonable’ price (i.e., the market price).366 In all other cases, the sales contract is void if the price is not determined or determinable.367 III. Initial Impossibility 174. The object of a contract must be possible at the time of conclusion of the contract. A contract with (objectively) impossible object is void (Article 35 of the OC). If performance of a contract is impossible to the debtor, but a third person could still perform (subjective impossibility), a contract is valid. A sale of goods that 363. 364. 365. 366. 367.

See Art. 22/2,3 of the CPA. CJEU, C-186/16 (Radiciuc) from 20 Sep. 2017. Article 4 /2 of the EU Unfair Terms Directive (93/13/EEC). See Art. 442/2,3 of the OC. Article 442/1 of the OC.

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do not belong to the seller is not invalid.368 In principle, it is still possible for the seller to acquire the goods. Financial capability of the debtor to perform the contract, in particular, is not a reason for invalidity. By entering an (objectively possible) contract, the debtor guarantees its financial capability. There are also exceptions to the rule of nullity due to initial impossibility: the sale of (nonexisting) receivable is valid (Article 423 of the OC); the sale of goods without certain qualities is valid and the seller is liable for breach (Articles 458 et seq. of the OC); the parties may also consciously allocate the risk of initial impossibility of performance to one of them.369 The doctrine of initial impossibility (Sl. zacˇetna nemožnost) was criticized as being outdated and causing inconvincible and inconsistent results; its abolition was proposed.370 If a contract (its object) becomes impossible later (supervening impossibility, Sl. naknadna nemožnost), the contract is not void. The legal consequences depend on whether or not and if, which of the parties is responsible for impossibility.371 IV. Illegality and Public Policy 175. The object of the contract must not be illicit. A contract with illicit contents is void. As stated in Article 3 of the OC, the contract must not contravene the Constitution, mandatory provisions of law or moral principles. It is not easy to imagine a contract being contrary to the Constitution, as the latter contains few and only very general provision that regulate contract law; furthermore, the human rights regulated by the Constitution are directly applicable against the state (vertical relationships) and principally not in contracts between private persons (horizontal relationships).372 176. With regard to mandatory provisions, the legal prohibitions (provisions prohibiting certain actions, such as sale of parts of a human body (Article 113 of the Criminal Code)) are to be distinguished from provisions regulating certain actions in a mandatory way. They both represent limitations of private autonomy. There are not many mandatory provisions in the OC (e.g., usurious contract, Article 119 of the OC). More such limitations are to be found, e.g., in the CPA and the CCA. Their purpose is to protect the consumer as the weaker party in legal relationships with businesses (B2C). 177. Moral principles are also sources of law. Of course, most moral principles are already implemented by existing provisions of the law of obligations. However, there are two particular institutes through which moral principles are primarily 368. Article 440 of the OC. 369. See Možina, Impossibilium nulla obligatio est? Zacˇetna nemožnost izpolnitve obveznosti v slovenskem in primerjalnem pogodbenem pravu, Zbornik znanstvenih razprav 2006, pp. 175 et seq. 370. Ibid. 371. See Arts 329 and 116–117 of the OC. 372. See Možina in: Juhart, Možina, Novak, Polajnar Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 51.

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applied in contract law: the principle of good faith (Sl. vestnost in poštenje, lit. consciousness and honesty) laid down in Article 5/1 of the OC, and the principle of good commercial practices laid down in Article 5/2 of the OC. In substance, they are interrelated. In principle, a contract – even if not contrary to mandatory provisions – may in certain circumstances be null as being contrary to good faith and thus immoral. However, there are not many cases where the courts would annihilate a contract solely on the basis of the good faith principle.373 V. Unenforceable Contracts 178. Unenforceable contracts were dealt with supra in Part I, Chapter 1, §1 III C (Natural Obligations). §4. THE CONSEQUENCES OF A DEFECT OF CONSENT OR A LACK OF SUBSTANTIVE VALIDITY I. Avoidance of the Contract and Nullity 179. Two kinds of sanctions are prescribed for defect of consent and lack of substantive validity: (1) nullity (Sl. nicˇnost) and (2) avoidance (Sl. izpodbojnost), the first for the lack of substantive validity (illegality, indeterminability of object, initial impossibility of performance, lack or illegality of cause), and the second for most cases of defect of consent (mistake, threat, fraud), whereas the so-called hidden dissensus and simulated contract, although they are, in essence, defects of consent, are sanctioned with nullity of contract. Both forms of invalidity of contract have essentially the same effect, i.e., the contract is invalid with retroactive effect, as from the moment it was concluded (ex tunc). If only a part of a contract is null, the rest can remain in force, unless the null part is essential (Article 88 of the OC). However, nullity and avoidance are enforced in a very different way: whereas it is a duty of a court to consider possible reasons for nullity ex officio, on its own motion, even without an explicit claim of the party, as long as there are enough factual grounds,374 the avoidance of a contract can only be enforced by filing the claim with the court. It is a firm standpoint of Slovenian judiciary that only a court may dissolve a contract due to avoidance.375 A statement of a party to the other party is not

373. See, e.g., judgment of the Supreme Court of RS, No. II Cp 546/2006 of 22 Nov. 2007 (the parties agreed on ‘coordinated action’ in a judicial auction of a house). 374. See, e.g., judgment of the Supreme Court of RS, No. II Ips 277/2014 of 10 Mar. 2016. 375. See, e.g., judgment of the Supreme Court of RS, Nos. II Ips 765/93 of 9 Feb. 1995 and II Ips 113/ 97 of 14 May 1998.

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enough; rather, a claim376 must be filed with the court, making it a court-based remedy377 With regard to nullity, the court merely finds that the contract was null from the beginning. Furthermore, a contract may only be avoided within a relatively short time period (one year after the party has gained knowledge of the reason for avoidance or the duress has stopped, at the latest within three years after the conclusion of the contract), whereas nullity is not subject to any time limit.378 If the claim for avoidance is not filed within the time limit, the contract is ‘healed’ (convalidates). This is not a prescription (Sl. ‘zastaranje’) but a cut-off time period (Sl. ‘prekluzija’); therefore, there is no possibility of interruption or suspension. 180. The standpoint of the jurisprudence with regard to avoidance of a contract only by filing a claim with the court is somewhat unusual as there is no such requirement set out in the OC. On the contrary, unilateral rights to alter legal relationships (Sl. oblikovalna pravica) are generally exercised by simple notice to the other party.379 The OC, e.g., expressly allows a party to terminate the contract due to a breach with a simple formless notice to the other party (see, e.g., Article 103 of the OC).380 181. The differences in the way of enforcement between avoidance and nullity are of essential importance in practice. The avoiding party must necessarily bear the costs, the uncertainty and above all the necessary time connected to the judicial intervention. They also highlight the fact that the differentiation, e.g., between a mistake as to the object of contract (hidden dissensus, nullity), and a mistake as to the essential characteristics of contract (mistake, avoidance), is not convincing and may be very difficult. This raises the question whether persuasive arguments exist for such a strong differentiation of legal consequences.

376. A particular kind of claim is demanded; not just a claim for performance but a claim that shapes the legal relationship (Sl. oblikovalna tožba). 377. An exception applies to the case of preliminary contract: if a party concluded a preliminary contract under (essential and excusable) mistake, then it need not file a claim but is not bound to the preliminary contract, see judgment of the High Court of Ljubljana, No. II Cp 1966/2014 of 19 Nov. 2014. 378. See Art. 99 (time for avoidance) and Art. 93 (no limitations for nullity) of the OC. 379. Polajnar-Pavcˇnik, Izpodbojnost pogodb, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011, pp. 47, 53, sees an argument in the fact that the OC is referring to a ‘claim’ for avoidance of contract in Art. 95/1 of the OC. However, the OC does not use the language of procedural, but substantive law, i.e., a claim is another word for a right. Furthermore, Art. 95/2 of the OC implies the contrary, as it allows the counterparty to ask the mistaking party (or party under duress or fraud) whether it will maintain the contract in force within the minimum time of thirty days; if the counterparty is silent or declares that it will not maintain the contract, the contracts is ‘considered as avoided without judicial intervention’. Avoidance by notice rather than by a judicial intervention is also advocated by Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984, p. 397; and Dolenc, Napake volje pri sklepanju pravnih poslov, Cankarjeva založba, Ljubljana 2003, p. 191. 380. For a comprehensive and well-founded critique, see Dolenc in: Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017, pp. 21–37.

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II. Retroactive Effect of Avoidance or Nullity 182. As already mentioned, the essence of both forms of invalidity of contract is the same: the contract is invalid and non-binding from the moment of conclusion. This means that there are no legal grounds for the parties to keep whatever they might already have given to each other under an invalid contract. This implies the application of restitution claims. Each party must return what he or she had received (in natura). If this is not possible (e.g., because it was consumed, as in case of services), a monetary compensation for the acquired benefit is to be paid. The OC states this first in Article 87 (1) (effects of nullity), and again, identically, in Article 96 (effects of avoidance). However, both provisions are in fact superfluous as the duties of the parties in cases when property is shifted from one to the other party without a legal ground or the ground subsequently falls away are regulated by the law of unjust enrichment (Articles 190–198 of the OC). In any case, the latter is applicable with regard to amount of the claim and other issues not regulated by Articles 87 and 96 of the OC.381 The parties must return not just what they have received, but must, in accordance with the law of unjust enrichment, also pay compensation for having used the object of the contract.382 If money is to be returned, interest must be paid. However, Article 193 of the OC only refers to the ‘fruits and interest for delay’ – an ‘honest’ holder must pay the interest for delay from the time ‘when the claim was filed’ (better: from the time he or she was acquainted with the lack of legal ground for keeping the money) whereas a mala fide holder must pay interest for delay from the moment he or she received the money. The provision does not mention the duty of the bona fide holder, i.e. the holder who had reasons to believe that he or she is entitled to the money, from the moment he or she received it to the moment when he or she has to return it (i.e., moment when he or she acquires bad faith and the delay commences). It arises from Articles 190 and 198 of the OC that the recipient (holder) has a duty to return the benefit achieved by having had the property without legal grounds, also when he or she is in good faith.383 There seems to be no reason for him or her to treat money (and fruitbearing goods) differently: there is no legal ground for the receiver to keep the benefit.384 Article 111/5 of the OC which regulates the parallel situation of restitution after termination of contract due to a breach corroborates this as it prescribes the duty to pay interest (not interest for delay) from the moment the money was received under the contract later to be terminated. The OC is silent on the applicable interest rate in this case. It would appear that the benefit gained by having had the sum of money depends on the person of a holder. It is difficult to expect that a consumer would gain, e.g., 6% of benefit, however, a financial institution could. Furthermore, the type of contract is relevant, too. If the money was received under 381. See Dolenc, Pravne posledice nicˇnosti pogodbe (o nekaterih problemih kondikcijskih zahtevkov), Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011, pp. 24 et seq. 382. See Arts 190/1 and 198 of the OC. 383. See also Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2003, p. 592. 384. However, the jurisprudence sees this differently, see judgment of the Supreme Court of RS, No. III Ips 88/2016 of 7 Mar. 2017.

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a loan contract, the recipient could be expected to pay interest in the amount of costs he or she would have had if he or she took a loan on the market, i.e. market interest for the loan in question. If, however, the money was received under a sales contract, the recipient had considered it to be ‘his or her’ money, which implies a duty to pay a much lower interest, e.g., at the interest rate for bank deposits. 183. If the contract was null because its object or its cause is contrary to basic moral principles, the court may, at its own discretion, deny the restitution claim of the mala fide party (Article 87/2 of the OC). The provision described as condictio ob turpem vel iniustam causam reflects the principle that no one should be given legal protection for his or her own dishonest behaviour (Nemo audiatur propriam turpitudinem allegans). 184. Although the enforcement of nullity is not limited in time, the restitution claims following the (retroactive) invalidation of contract due to nullity and avoidance are subject to prescription. The general five-year prescription period from Article 346 of the OC is applicable; it runs from the moment the claim is born (actio nata). The jurisprudence interprets this as the moment the party knew or should have known about the nullity of contract385 or, more precise, as the moment when the party knew (or should have known) about the circumstances establishing nullity.386 III. Damages 185. In both cases, i.e., a null contract and an avoided contract, the party who is in good faith may claim recovery of loss caused by invalidity of contract. There are, however, some differences: the party who is at ‘fault’ for the conclusion of a null contract, i.e. the party who knew about the reason for nullity, is liable for loss to the counterparty ‘who did not know and could not have known of the reason for nullity’ (Article 91 of the OC). This implies fault liability. On the other hand, if a contract is avoided, the party ‘at whose side’ the reason for avoidance is, is liable for damages to the bona fide other party, i.e. the party who did not know and could not have known for the reason for avoidance (Article 97 of the OC) which implies strict (objective) liability. In both cases there is no valid contract, so the liability is based on tort (Article 131/1 of the OC). This can be explained by the fact that the legal relationship between the parties containing the basic duty of fairness and preventing loss commences already before conclusion of the contract, when the parties had established business contact. If they breach this duty when negotiating or concluding a contract (culpa in contrahendo), they must recover the loss. In both situations, i.e. nullity and avoidance, the measure of damages is generally the recovery of costs which the party had in reliance of a valid contract, and which lose their purpose after

385. Judgment of the Supreme Court of RS, No. II Ips 226/2014 of 31 Mar. 2016. 386. Judgment of the Supreme Court of RS, No. II Ips 269/2015 of 10 Mar. 2016.

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the contract is invalid.387 Not recoverable is the expectation interest, in particular lost profit, as there is no valid contract, which would justify such expectation.

387. See, e.g., judgment of the High Court of Ljubljana, No. II Cp 84/2013 of 9 Oct. 2013, No. 10.

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Chapter 3. The Contents of a Contract §1. THE DIFFERENT CLAUSES I. Ascertaining of Express Terms 186. The OC does not expressly list the sources of the rights and obligations of the parties, but it is clear from the basic principles of contract law (Article 2 of the OC – dispositive nature of legislation, Article 3 of the OC – autonomy) that the agreement of the parties is on top of the hierarchy of sources, subject to any mandatory provisions of the OC or other legislation. An agreement of the parties may be express (expressis verbis) or by conduct clearly implying intent. Of course, the document of a contract is not necessarily identical with the entire agreement as the parties may have also agreed on some points orally or in some other way. Admittedly, Article 56/1 of the OC contains a provision reminiscent of parole evidence rule; however, even if the legislation or the parties’ agreement require a particular form for a contract, simultaneous oral (formless) agreements on which the contract is silent are valid, as long as they are not contrary to the formal contract (see supra Part I, Chapter 1). II. Usages and Practices 187. Rights and obligations of contractual parties may also derive from trade usages and practices established between the parties. The parties may, of course, agree on the application of certain usages. But these may also apply regardless of specific agreement. At a first glance, it appears from Article 12 of the OC, contained in the introductory provisions of the code, that the trade usages, ‘usances’ (collections of usages, Sl. uzance) and practices established between the parties are only a source of law in B2B contracts (or, more precise, commercial contracts within the meaning of Article 12 of the OC), unless the parties expressly exclude their application. However, the usages and, in particular, the practices established between the parties are relevant for all kinds of contractual relationships, including B2C and C2C contracts. By its nature, the practice previously established between the contractual parties is a measure for their behaviour in the future, specifically for the interpretation of their agreement. This stems from the general principle of reliance in private law, which is connected to the good faith principle.388 A party may rely on the past behaviour of the other party in contractual (and other legal) relationships.389 Several provisions of the OC confirm this view. According to Article 22/2 of the OC, a court, when fulfilling the (intentional) gaps in the agreement – in case the parties have reached consent on essential elements of contract and have agreed that the contract should be concluded in spite of their disagreement on some 388. Možina in: Juhart, Možina, Novak, Polajnar Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 57. 389. The prohibition of behaviour contrary to one’s previous behaviour (Lat. venire contra factum proprium) is a reflection of the principle of reliance.

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ancillary points – should take into account their negotiations, established practice and usages. A further example is set out in Article 30/3 of the OC, according to which the silence of the offeree with regard to the offer may amount to acceptance if the parties have an established practice to this effect (see supra Part I, Chapter 1, §1). III. Implied Terms 188. When drafting a contract, the parties – particularly in contracts of smaller value – rarely regulate all issues which may, in some circumstances, become relevant. They might for example forget to expect that some circumstances, on the continuing existence of which they base their contractual considerations, may change. The issues on which the parties did not agree, but an agreement could, in the light of the nature and purpose of the contract and the circumstances at the time of conclusion, be expected from them, can also be called implied terms. They may become relevant in some situations, such as the one described in Article 89 of the OC: if a contract is null but could be valid if it was considered a different kind of contract, the latter is valid if it fits the common purpose of the parties (cause) and if it could be expected that the parties, had they known about the nullity, would have concluded this contract. A similar idea is also the basis of the doctrine of change of circumstances (Article 112 of the OC): although the parties did not specifically regulate a certain issue, it is considered that their agreement is binding until the circumstances on which it was based, change so fundamentally, that the contract does not fit their expectations anymore. In such a situation, a party can ask the court to dissolve the contract due to change of circumstances (see nr. 126 of this monograph). IV. Dispositive Provisions of the OC 189. One of the functions of any contract law legislation is also to reduce transaction costs. Therefore, a contract is considered concluded the moment the parties reach an agreement on essential elements of the contract (Article 15 of the OC). They do not have to agree on everything. In the absence of other agreements, the OC contains answers to all other issues that may arise, such as the time and the place of performance,390 quality of performance,391 consequences of breach of duties392. However, if the parties, although agreeing on the essential elements, fail to reach an agreement on some other issues (partial dissensus), the contract is usually not concluded. Only if they clearly intended to conclude a contract in spite of disagreement on some, albeit non-essential, elements, the contract is considered concluded and Article 22/2 applicable (see nr. 102 of this monograph). 390. See Arts 289–294 of the OC. 391. See, e.g., Art 459 of the OC (material defects). 392. See, e.g., Arts 103 et seq. of the OC, Arts 239 et seq. of the OC etc.

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V. Good Faith 190. The principle of good faith (Sl. nacˇelo vestnosti in poštenja393) is also a source of rights and obligations of the contractual parties, supplementing their agreements, serving as a basis for their interpretation and sometimes, as in the case of judicial control of the standard contract terms, also affecting their validity. The principle of good faith is also the foundation for pre-contractual liability. However, decisions of Slovenian courts based solely on the principle of good faith are relatively rare. VI. Categories of Contractual Obligations 191. Several different categorizations of contractual obligations exist. The traditional categorization of elements of any legal act since the middle ages includes the essentialia negotii (essential parts, necessary parts), naturalia negotii (natural parts, they are a part of contract unless excluded) and accidentalia negotii (accidental parts, they are not part of contract, unless specifically included). Similar is the differentiation between main contractual obligations, i.e. the obligations characteristic for a certain type of contract, forming the contractual synallagma (e.g., for sales: the goods and the price) and ancillary obligations. The latter are further divided between the self-standing ancillary obligations, i.e. obligations with regard to which the creditor’s interest can be separated from the main duties (e.g., a non-compete clause),394 and the non-self-standing ancillary obligations which serve the performance of main obligations (e.g., the duty to provide adequate packaging for the goods sold)395 and the performance of which (or damages for non-performance) can be claimed together with performance (or damages for non-performance) of main obligations. 192. A further category of contractual obligations should be mentioned, namely, that of a cooperation expectation of the creditor.396 The creditor, too, has some duties with regard to the debtor’s performance. At the least, the creditor must accept the performance offered by the debtor. Often, however, the creditor plays a much more active role in making the debtor’s performance possible. In the Slovenian OC, as in other European codes, these expectations are not considered ‘duties’ in the sense of the debtor’s obligations. Rather, they are understood as less intense duties (obligations of lower category), named ‘burden’ (Sl. breme, Ger. Obliegenheit). For example, the buyer’s duty to take over the goods in sales contracts is considered a burden. The difference with regard to debtor’s duties lies in the consequences of their breach: in general, they cannot be specifically enforced, and the debtor cannot generally terminate the contract due to a breach. Still, a breach of cooperation 393. 394. 395. 396.

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Meaning literally the principle of ‘consciousness and honesty’. See, e.g., Art. 807 of the OC. See, e.g., Art. 33/1 of the CPA. With regard to the notion ‘cooperation expectations’, see Schmidt-Kessel, Mora creditoris in: Hopt, Basedow, Zimmermann, Stier, Max Planck Encyclopedia of European Private Law, Oxford University Press, Oxford 2012, p. 1183.

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expectations does have some legal consequences for the creditor. They can be described by a special institute of creditor’s delay (mora creditoris) set out in Articles 300–310 of the OC. The purpose of the creditor’s delay is to exonerate the debtor of the consequences of non-performance which is caused by the creditor’s breach of ‘Obligenheit’. If the creditor gets in delay, the debtor’s delay (mora debitors) is stopped (Article 301/1 of the OC), the creditor’s bears the costs for the debtor’s further preservation of the goods. The debtor, furthermore, has a possibility to discharge him or herself of his or her obligation by depositing or storing the object of performance for the creditor to take over (Articles 302–310 of the OC) and in some cases even to sell the object of performance and deposit the money received for the creditor. The peculiarity of Slovenian law is that a creditor is liable for loss caused by his or her breach of cooperation expectations (Article 301/3 of the OC) which means that the difference between a cooperation expectations and ‘real’ duties is less evident. For example, the buyer’s duty to take over the goods in sales contracts is considered an Obligenheit. VII. Standard Contract Terms 193. The existence of two uncoordinated regulations of standard contract terms in Slovenian law can only be explained by the historical development. The OC contains the general rules on standard terms in Articles 120 and 121, which it ‘inherited’ from the Yugoslav OA of 1978. When Slovenia joined the EU, the EU Unfair Terms Directive (93/13/EEC) was implemented into the CPA (Articles 22–24); the latter is applicable only to standard terms in B2C contracts; as lex specialis, it derogates the OC in its sphere of application. Both sets of rules follow a similar concept but are rather different in detail. 194. According to Article 120/2 of the OC, ‘general terms, determined by one of the parties’, contained in a ‘formulary’ contract or referred to by the contract, supplement specific agreements of the parties. They are to be ‘published in a usual way’ (Article 120 /2 of the OC). They become part of the contract only if, at the time of conclusion of contract, ‘they were known or should have been known’ to the other party. Thus, the party who prepared the general terms has a (precontractual) duty to raise awareness about the general terms and to make them available to the other party in a usual way depending on the kind of transaction. This means that in contracts which are concluded in writing, the general terms should also be made available in writing, possibly but not necessarily in the same document. However, if the parties have already concluded several contractual transactions which also included general terms (of one of them or of a third party), such general terms become part of a contract also if the party was not explicitly made acquainted with them.397 It is presumed that the other party is aware of the general terms and the parties tacitly agreed on including general terms in their agreement, 397. See Vilus in: Blagojevic´, Krulj (eds), Komentar zakona o obligacionim odnosima, I, Savremena administracija, Beograd 1980, p. 373.

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i.e. the concrete terms which had been at least once before a part of their contract.398 Contract terms which are contrary to the purpose of the contract or to good commercial practices are null, even if they were confirmed by the competent authority (Article 121/1 of the OC). Furthermore, a court may ‘refuse to apply’ provisions of general terms, according to which the other party loses rights or time periods from the contract or are in another way unjust or too harsh towards that party. Furthermore, in doubt, the standard terms prepared by one party are to be interpreted in favour of the other party (Article 83 of the OC). Articles 120 and 121 of the OC are applicable to B2B and C2C contracts. The courts have applied the provisions in B2B contracts with regard to different issues, in particular with regard to the question whether a particular general contract term became part of the contract, above all in cases where a party (e.g., an insurance company) changed its general terms after conclusion of the contract.399 The cases of assessment of fairness of particular term are rare.400 195. Articles 22–24 of the CPA are applicable only to ‘standard contract terms’ in B2C contracts. The provisions implement Directive 93/13/EEC and must be interpreted as far as possible in the sense and the purpose of the directive. Contrary to the directive, the CPA does not define them as ‘non-individually negotiated clauses’, but refers only to contractual terms, determined by the business, in particular those in the form of a formulary contract (not defined) or general terms of operation (not defined).401 As Article 120 of the OC, also Article 22/3 of the CPA contains a condition: in order for the ‘contractual terms’ to become a part of the contract, the consumer must be ‘acquainted with their entire wording’. However, it is presumed that the consumer is acquainted if the business made an explicit reference to them and if they were easily accessible to the consumer.402 Here, the (pre-contractual) duty to raise awareness about the general terms and to make them available is more explicit than in the OC: explicit reference and easy accessibility are required. If these are met, it is not relevant at all, whether or not the consumer is acquainted with the general terms. Furthermore, the terms should be clear and understandable.403 Unfair contract terms are forbidden and null (Article 23 of the CPA). However, the unfairness is defined in a broader way than in the directive: while in the latter, contract terms are unfair if they cause, contrary to good faith, a significant imbalance in rights and obligations to the detriment of the consumer (Article 3/1 of Directive 93/13/EEC), the Slovenian CPA (Article 24/1) sets a presumption that a term is unfair if it either a) causes significant imbalance in the rights and obligations of the parties to the detriment of the consumer, or b) contravenes the good faith principle, 398. Ibid. 399. See, e.g., judgment of the Supreme Court of RS, No. II Ips 299/2011 of 2 Jul. 2013; judgment of the High Court of Ljubljana, No. I Cpg 45/2013 of 29 May 2014. 400. For example judgments of the High Court of Ljubljana, Nos. II Cp 895/2010 of 5 May 2010, II Cp 585/2009 of 1 Jul. 2009. 401. See Art. 22/1 of the CPA. 402. Article 22/2,3 of the CPA. 403. Article 22/4 of the CPA. However, it is not quite clear what the sanction is. See, e.g., judgment of the High Court of Ljubljana, No. II Cp 1518/2015 of 15 Jul. 2015.

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or c) causes the performance of contract unjustifiably to be detrimental to the consumer, or d) causes the performance of contract essentially different of what the consumer had reasonably expected it to be. Furthermore, the CPA has not implemented Article 4/2 of the directive, according to which the so-called core terms (the definition of the main subject matter of the contract or the adequacy of price) are not subject to fairness assessment if they are drafted in plain and intelligible language. However, it seems that in both points, the courts are interpreting the act in the sense of the unfair terms directive.404 Article 24/3 of the CPA also contains a list of examples of contractual terms which might be unfair (a so-called grey list). However, these terms are not unfair per se; the general clause of Articles 23 and 24 of the CPA must still be applied (i.e., the grey list).405 In doubt, the general terms are to be interpreted to the benefit of the consumer (contra proferentem, Article 22/5 of the OC). VIII. Exemption Clauses 196. Of course, the parties may, by their agreement, modify the conditions and consequences for breach of contract. They may, e.g., agree on a stricter liability than the one in the OC (based on Article 240 of the OC), or on a milder liability than the one in the OC, or may limit the liability to certain cases or to certain amount of damages, or even entirely exclude the liability for breach of contract. In the law of individual contracts, such as sales, the parties can also agree on limitations of the seller’s liability by using clauses such as ‘tel-quel’ (goods as they are) or limit the remedies, such as repair to a certain value. The parties may also set a contractual penalty or agree on liquidated damages. All these agreements are valid only if they are in accordance with good faith.406 If, e.g., a seller knows that the goods are nonconforming, and the liability is excluded or limited in the contract, such a clause is null.407 The liability for intentional and reckless (grossly negligent) breaches of contract cannot be excluded.408 Furthermore, clauses limiting or excluding contractual liability may be subject to special fairness assessment by the court: the court may invalidate a clause limiting liability for regular negligence if the agreement arises from ‘monopole’ or otherwise unequal position of the parties.409 If the clauses modifying the liability are contained in the general terms of contracts, they can be subject to fairness assessment also from this point of view, not just in B2C (CPA), but also in B2B contracts (OC). However, there is little room for any limitations of liability in B2C contracts, as the CPA makes all the ‘rights’ of the consumer mandatory in the sense that they cannot be limited or excluded (Article 1/29 of the OC).

404. 405. 406. 407. 408. 409.

See judgment of the Supreme Court of RS, No. II Ips 201/2017 of 7 May 2018, Nos. 25–37. See, e.g., judgment of the Administrative Court of RS, No. II U 41/2013 of 6 Nov. 2013. See Arts 241 and 242 of the OC. See Art. 466/2 of the OC. Article 242/1 of the OC. Article 242/2 of the OC.

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IX. Penalty Clauses 197. The parties may agree on a contractual penalty for breach of contract, i.e. set an amount of money or other property which the debtor has to pay in case of breach. By doing this they place additional pressure on the debtor to perform as agreed. A further reason is to avoid possible future problems with regard to proving the amount of loss arising from a breach of contract. The punitive element (pressure) can clearly be seen from Article 253/1 of the OC according to which, in case of a stipulated breach, the agreed amount is owed regardless of the amount of actual loss arising from the breach, and also if there is no loss at all. The function of damages is reflected in Article 253/2 of the OC: if the amount of the actual loss is higher than the agreed penalty, the creditor may claim the difference by relying on rules on contractual damages. The parties may agree otherwise, i.e., that the damages claim is excluded if the penalty is claimed. A contractual penalty may be agreed for any kind of breach of contract, in doubt; however, it is presumed that it was meant for delay (default). The parties are not entirely free with regard to the amount of penalty: the court may reduce the penalty if it is disproportionate considering the value and the significance of the object of the contract (Article 252 of the OC), but not the actual loss. 198. The contractual penalty is owed if the debtor is liable for breach; liability is presumed but the debtor may prove that circumstances from Article 240 of the OC (unforeseeable circumstances beyond his or her control which could not be avoided) prevented him or her from performing as agreed. The contractual penalty may be agreed for all kinds of contractual obligations except monetary obligations (Article 247/3 of the OC). It is considered that interest for delay already performs the function of penalty in monetary obligations. This solution is being justifiably criticized, inter alia because of its inconsistency as the earnest money – an institute with many parallels to contractual penalty – is, on the other hand, allowed also for monetary obligations.410 However, with regard to interest for payment delays, the parties in B2B and C2C contracts may agree on a higher interest rate than the statutory (set for all obligations as the reference rate of the European Central Bank plus 8% as prescribed by the EU Late Payments Directive (2011/7/EU)).411 In B2C contracts, the CPA (Article 27a) prohibits interest for delay higher than the statutory interest. In C2C contracts, the limitation is set in Article 377 of the OC in the form of (rebuttable) presumption of usury if the agreed interest rate is more than 50% higher than the statutory delay interest. 199. Liquidated damages clauses are similar to penalty clauses, and their function is to set and, possibly, limit the amount of damages thus avoiding the problems with proving the amount of loss. However, the creditor still has to prove that the damage occurred due to the breach (but not the amount). 410. Plavšak in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2003, p. 234. 411. Directive 2011/7/EU of the European Parliament and of the Council of 16 Feb. 2011 on combating late payment in commercial transactions, OJ L 48.

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200. There are also cases of statutory penalties for breach of contractual duties. If the seller of an apartment or a single occupancy house is in delay with handing over the apartment (house), he or she must pay 0.05% of the agreed price for every day of delay.412 201. The ‘earnest money’ (Sl. ara) is quite common in Slovenian contract law, in particular with regard to contracts over real property. It is an amount of money or generic goods given at the conclusion of the contract from one party to another as a sign that a contract was concluded, and also to exert additional pressure on the parties to perform the contract.413 The contract over ‘earnest’ is considered to be a so-called real contract, i.e. it is not concluded already when the parties agree to it but when the earnest is actually handed over. The idea behind the real contracts is twofold. On the one hand, by demanding that, for the contract to be valid, a sum of money or some other valuable thing be transferred by one party to another, the legislator aims at protecting the party giving the value. Because of the ‘tangibility’ of the immediate loss, the party will think twice before assuming the obligation. On the other hand, the act of giving money or a valuable thing to the other party also has a publicity effect – it is known to the members of the community that the parties entered a binding legal relationship. 202. If the contract is performed as agreed, the earnest money is simply considered a part of performance. However, if a party who gave the earnest does not perform as agreed and does also not prove that he or she is exempt from liability (Article 240 of the OC), the other party can claim performance and damages (and count the earnest in the damages), or just keep the earnest (Article 65/1) of the OC). If the party who received the earnest is responsible for breach, the other party may claim performance or damages and return of earnest, or the return of double amount of earnest (Article 65(/2 of the OC). As with the contractual penalty, the court may reduce the unreasonably high amount of earnest (Article 65/4 of the OC). A party who paid the earnest cannot just withdraw from the contract by leaving the earnest to the other party; however, the party may agree also to this effect (earnest as withdrawal money, Article 68 of the OC). They can agree in advance but also tacitly, at the time of the breach: the creditor keeps the earnest and does not claim performance. X. Arbitration Clauses 203. The conditions for the validity of arbitration clauses are prescribed not only in the OC but also in the Arbitration Act.414 According to the latter, the arbitration agreement should, inter alia, be in writing (Article 10). An exchange of electronic messages or any other means of communication is considered to be ‘in writing’ as long as the text of the agreement is available for later use. An arbitration agreement 412. Article 17/1 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 413. See Art. 64/1) of the OC. 414. Sl. Zakon o arbitraži (ZArbit), Official Gazette RS, No. 45/08.

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can be a self-standing agreement or a part of a contract. The fact that the latter is terminated, e.g. due to a breach, does not affect the validity of the arbitration agreement.415 §2. INTERPRETATION 204. The provisions of Articles 82–85 of the OC contain some principles of interpretation of contracts. It arises from a somewhat unclear Article 82/1 of the OC that the starting point of any interpretation is the wording of an agreement (grammatical interpretation). However, the literal meaning alone is not decisive. The contract must be interpreted in the light of the common purpose and understanding of the parties at the time of conclusion of the contract (Article 82/2 of the OC). If the parties meant the same but denominated it wrongly, their common understanding is decisive (Falsa demontratio non nocet). With regard to the common purpose of the parties, also the circumstances such as the characteristics of the language used, trade usages and the practice established between them are to be taken into account.416 In doubt, a party’s statement is to be understood in the way it could be understood by an average addressee.417 Furthermore, the interpretation also has a normative function: statements and agreements must be interpreted not just in accordance with the common purpose of the parties but also in the light of the principles of contract law set out in the OC, i.e., in the light of what, in the court’s view, is the reasonable and just distribution of contractual risks.418 In the contracts the content of which was prepared by one party, any ambiguities are to be interpreted to the benefit of the other party (contra proferentem, Article 84 of the OC). The parties may agree that a third person is to interpret their contract in case of dispute; if they do not agree otherwise, the third person must submit its interpretation if he or she can before any claim may be filed (Article 85 of the OC). §3. CONDITIONAL CONTRACTS 205. The parties’ agreement can make contractual obligations dependant on the occurrence of uncertain future events (conditions).419 A condition can be suspensory (postponing the effect) or resolutory (ending the effect). If a party causes the occurrence of a condition to his or her own benefit and in bad faith, such condition is considered as not having occurred.420 A contract depending on a condition contrary to the Constitution, mandatory provisions or moral principles is null (Article 415. See Možina, Razdor, odpoved in odstop od pogodbe, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011, p. 65. 416. Možina in: Juhart, Možina, Novak, Polajnar-Pavcˇnik, Žnidaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010, p. 161. 417. Ibid., p. 16. 418. See also Art. 84 of the OC. 419. See Art. 59/1 of the OC. 420. Article 59/4 of the OC.

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60/1 of the OC).421 A contract containing an impossible suspensory condition is null, whereas an impossible resolutory condition is considered non-existing (Article 60/2 of the OC).

421. However, the provision is unnecessary, this clearly arises from Art. 3 of the OC.

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Chapter 4. Privity of Contract §1. THE RULE OF PRIVITY OF CONTRACT I. Third Parties and the Contract 206. In principle, a contract can only produce legal effects between the parties (inter partes, Article 125/1 of the OC). In contract law, a party assumes obligation only by his or her own promise. A third party, i.e. a party who did not express his or her contractual promise, cannot be bound by a contract between two parties. 207. However, a third party may become a beneficiary from a contract between two parties (contract for the benefit of a third party, see infra Part II, Chapter 30). Furthermore, rights (claims) from a contract or even the whole position of a party (creditor) may be transferred to another party or inherited, as long as there are no obligations strictly connected to a particular person (Article 125/2 of the OC). In the particular case of contracts where a party performs his or her obligations using the work of subcontractors, the latter may under some conditions claim payment from the purchaser (building owner, see infra Part II, Chapter 11) 208. Moreover, a range of different situations exists where it seems appropriate to allow a third party a claim (usually a damages claim) against a party who, although he or she breached his or her contractual obligations towards his or her counterparty, he or she (the third person) has no contract with. 209. Such is the case with the liability of auditors. They must have liability insurance to the benefit of third parties who might incur loss by relying on the reports which the auditors produced on the basis of contracts with their clients.422 Their liability is based on reliance of third parties based on a ‘special relationship’.423 Furthermore, persons who, in connection with a public offering of bonds or shares, produced a ‘prospectus’ – a mandatory document which should inform the potential investors about some characteristics of the investment – are liable to the investors for any false or missing information.424 Similar provisions exist with regard to public offer accompanying a takeover of a company.425 210. The OC contains a special mandatory regulation of liability with regard to building contracts. The builder is liable for loss arising from severe defects which result in the reduced stability of a building for ten years following the handing over of the building (Article 662/1 of the OC). Furthermore, they are liable not just to their contractual partners but to ‘every acquirer’ of the building (Article 662/4 of 422. See Art. 67 of the Auditing Act (Sl. Zakon o revidiranju (ZRev-2), Official Gazette RS, No. 65/08, with further amendments). 423. See also judgment of the Supreme Court of RS, No. III Ips 37/2010 of 22 Jan. 2013. 424. See Art. 58/3 of the Financial Instruments Market Act (Sl. Zakon o trgu financˇnih instrumentov (ZTFI), Official Gazette RS, 67/07, with further amendments). 425. See Art. 29 of the Takeovers Act (Sl. Zakon o prevzemih (ZPre-1), Official Gazette RS, No. 79/06, with further amendments).

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the OC). Moreover, not just the builder but also the designer of the building is liable for severe defects (Article 662/3 of the OC).426 211. It is possible to imagine a similar liability also with regard to persons closely connected to one of the parties, such as family members or guests. It could be claimed that the protective scope of contract covers them regardless of the fact whether these situations may also be covered with rules of tort law. If, for example, a contractor fails to properly instal gas pipes and a family member or a house guest of the person who concluded the contract is hurt as a consequence, it seems fair that the contractor is liable. 212. The experts, such as court experts, valuers, legal experts including notaries, attorneys may be liable to third persons without explicit legislation. Their liability arises from the public trust because of which people rely on their expert work. However, they are not liable to any third person which came in contact with their expert opinion in any way, but only to those persons which they could have reasonably expected that they would come across his expert opinion an rely on it with regard to a business decision of certain type.427 A typical case involves a valuer who, under a contract with his or her client, produces a valuation of property. The client then enters a credit agreement with the bank which is secured by a mortgage on the property valuated according to the valuation report. When the credit taker defaults and the bank seizes the property, it is revealed that the property is worth much less than the report indicates. The bank can claim damages from the valuer in the amount of loss sustained due to his or her breach.428 In the absence of a contract between the claimant and the respondent, the courts apply the law of noncontractual recovery of loss (delict). II. Contract for the Benefit of a Third Party 213. A contract for the benefit of a third party is possible. The parties may agree on establishing a right in favour of a third party. The contract party may claim from the other party to perform to the third party (Article 126/2 of the OC). Until the third party accepts this claim, the party entitled to claim performance from its counterparty (creditor) may revoke or modify the claim (Article 127/1 of the OC). The parties may also agree that performance to the third party is not owed until a contract party dies; in this case, the party (debtor) may revoke or modify the claim until his or her death and also in his or her will (Article 127/2 of the OC). The party (debtor) may invoke all defences from the contract with the counterparty also against the

426. For further details, see infra Part II, Ch. 11. 427. See Možina, Odškodninska odgovornost za nasvet in informacije ter vprašanje zahtevkov tretjih oseb, Podjetje in delo 2/2015, pp. 291, 303. 428. See, e.g., judgment of the High Court of Ljubljana, Nos. VSL II Cp 373/2016 of 6 Jul. 2017 and VSL II Cp 1650/2017 of 6 Sep. 2017.

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third party (Article 128 of the OC). If the third party does not accept the claim or if the party (creditor) revokes it before it is accepted, it falls back to the original contract party (Article 129 of the OC). 214. Although a third person cannot be liable from a contract it is not party to, the parties may nevertheless agree that a third person will perform some obligation. However, only the party who promised that is liable. The promise may take the form of a guarantee, i.e. liability regardless of fault (obligation of a certain result), or in the form of a promise to exercise care and try to persuade the third person to perform (obligation of care).429 If, in spite of due care, the third person does not perform, the promising party is not liable as he or she has performed his or her duty. §2. TRANSFER OF CONTRACTUAL RIGHTS I. Cession (Assignment of Claims) 215. A cession (Sl. odstop terjatve)430 is a transfer of a claim from one creditor to another. It can be ordered by the law (cessio legalis),431 by the decision of a court or by a contract. Here, only the latter will be dealt with. The creditor can transfer his or her claim by contract to a new creditor (Article 417/1 of the OC). 216. Some claims cannot be transferred by contract as they are considered too personal, such as the right to recovery of loss due to death of a relative, or due to injury or health impairment in the form of regular monthly payments (Article 176/1 of the OC). The maintenance claims and claims from scholarship agreements are considered personal in this sense, too. Some claims are not transferrable by nature, i.e., a claim from the mandate contract (e.g., a contract between attorney and client). Some claims are transferrable and can be pledge only to a certain maximum limit: such are for example the claims of a worker being a party to an employment contract may be pledged to a limit set by the Claim Enforcement and Security Act.432 A transfer of a part of a claim is also possible as long as the claim is divisible. The parties may have agreed in advance on non-transferability of the claim (pactum de non cedendo); in this case, the transfer does not take place. The debtor can still effectively perform to the old creditor. However, such an agreement (pactum de non cedendo) is not effective in B2B contracts (commercial contracts), i.e. claims from B2B contracts are always transferrable.433 429. See Art. 130 of the OC. 430. In English, the term ‘assignment of claims’ is often used, however, in order to avoid confusion with the institute of assignment (Sl. nakazilo, Ger. Anweisung which is a different instrument (see infra), the term ‘cession’ is being used. 431. See, e.g., Art. 188 of the OC. 432. According to Art. 102/1(1) of the Claim Enforcement and Security Act (Sl. Zakon o izvršbi in zavarovanju (ZIZ), Official Gazette RS, No. 51/98, with further amendments) two-thirds of a pay claim can be pledged (i.e., transferred); however, the debtor must be left with at least the amount of 76% of minimal wage. 433. See Art. 417/2 of the OC.

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217. The effect of the cession is that a claim is transferred from the property of the former creditor to the property of the new creditor. In the event of insolvency of the old creditor, the transferred claim is out of reach for his or her creditors. Together with the claim, the ancillary rights are transferred, such as collaterals, sureties, contractual penalties.434 However, the object of a pledge may be handed over to the new creditor only if the person who gave the pledge agrees to it; in the absence of his or her permission, the old creditor keeps the object of the pledge for the new creditor.435 Furthermore, the old creditor must hand over all documents relating to the claim. 218. The debtor need not agree with the cession (transfer). In principle, he or she should only be notified about it.436 However, the cession is effective between the old and the new creditor even if the debtor is not being notified (so-called quiet cession). Until the debtor is notified, however, he or she may still perform the claims towards the old creditor, if he or she did not know about the cession.437 If the creditor transferred the same claim to several persons, the claim belongs to the person about which the creditor first notified the debtor.438 The cession means both an agreement establishing an obligation to transfer the claim (Sl. zavezovalni posel) and also disposition and execution agreement (Sl. razpolagalni posel), by which the claim is actually transferred, provided that the old creditor is entitled to dispose of the claim. The validity of the first is a condition for the latter.439 219. The position of the debtor should not worsen by the transfer. The debtor keeps all the defences (objections) that he or she could have used against the old creditor until he or she was notified of the transfer, also against the new creditor (Article 421/2 of the OC). 220. If a claim is transferred for money (not gratuitously), the old creditor guarantees its existence, i.e., is liable in case it did not exist (Article 423 of the OC). The old creditor is liable for the enforceability of the claim only if this was specifically agreed upon, but also in this case, only up to the amount of what he or she had received for the claim (purchasing price). An agreement of any higher liability of a bona fide creditor is not valid.440 221. The claim may also be transferred to the new creditor as a form of performance of obligation the old creditor has towards him or her. Instead of performing 434. 435. 436. 437. 438. 439.

Article 418/1 of the OC. Article 418/2 of the OC. Article 419/1 of the OC. Article 419/2 of the OC. Article 420 of the OC. See Juhart in: Juhart, Plavšak (ur.), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2003, p. 573. However, the role of the notification of the debtor is somewhat unclear. On the one hand, the claim is transferred from the property of old creditor to the property of the new creditor by their agreement, without notice to the debtor; on the other, in case of multiple transfer, only the creditor about whom the old creditor first notified the debtor. 440. Article 424/2 of the OC.

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his or her obligation, the old creditor transfers to his or her creditor (i.e., the new creditor) his or her claim against the debtor.441 Of course, the new creditor must agree with this substitute performance (datio in solutum). The claim between the debtor (old creditor) and the creditor (i.e., the new creditor) is extinguished the moment the contract is concluded. If the new creditor later enforces the claim in higher amount than he or she was entitled to under the agreement with the old creditor, he or she must pay the balance back to the latter. 222. A claim may also be transferred only as form of collecting (incasso). A debtor (old creditor) transfers his or her claim toward a third person (debtor) to his or her creditor (new creditor). In this case, his or her debt towards his or her creditor (new creditor) does not extinguish the moment the contract about the transfer of claim is concluded, but only when his or her creditor (new creditor) in fact succeeds in enforcing the claim, i.e., in getting paid (datio pro solvendo). 223. Fiduciary cession (cession of a claim as a form of collateral) is a particular form of transfer of claim. The debtor (old creditor) transfers a claim towards a third person (debtor) to his or her creditor (new creditor, fiduciary creditor). The parties also agree that if the debtor performs his or her debt, the creditor (new creditor, fiduciary creditor) will transfer the claim back to the debtor (old creditor). On the outside it appears that the new creditor is fully entitled with regard to the claim; however, under the contract, he or she is not allowed to dispose of the claim; he or she is allowed to collect it if it is not paid voluntary, deduct what the debtor (old creditor) owes him or her and return to him or her any balance. The OC regulates only the duty of the new creditor to collect and to return any balance (Article 426), while the PLC (Articles 207–209) contains other rules on fiduciary cession. A particular form of fiduciary cession is the so-called global fiduciary cession, whereby the old creditor transfers all existing and future (determinable) claims to the bank as a form of collateral for a credit. II. Subrogation 224. Subrogation is also a form of change of creditor. Namely, if a third party performs the debtor’s obligation toward the creditor in his or her own legal interest (such as also his or her own obligation towards the creditor), he or she acquires the legal position of the creditor towards the debtor, including the ancillary rights such as collaterals (Article 275 of the OC). The creditor must hand over all means necessary to prove or enforce the claim (Article 277/1 of the OC). 225. The transfer may take place automatically, on the basis of the law (cessio legis). Such is the case in the mentioned Article 275 of the OC and in case of a guarantor who settles the debtor’s debt (Article 1018 of the OC). On the other hand, a transfer can also be based on an agreement between the parties (cessio voluntaria). In the latter case, the ancillary rights including collaterals are transferred only if the 441. Article 425/1 of the OC.

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parties have agreed so (Article 274/1 of the OC). In case of partial settlement of debt by a third person (with legal interest), the ancillary rights are transferred to this person only insofar as they are necessary to the transferor to enforce the performance of the rest of the debt (Nemo contra se subrogasse censetur),442 unless otherwise agreed (Article 276/1 of the OC). III. Assignation 226. As opposed to the cession (assignment of claim, Sl. cesija), an assignation (Sl. nakazilo) does not involve a change of the creditor. However, by an assignation, a certain property can be shifted between two parties using the performance of the third party. An assignation is a trilateral relationship based on two authorizations: a party (assignor) authorizes the second party (assignee) to perform to a third party (beneficiary), who is authorized to receive the performance (Article 1035 of the OC). The main economic purpose is to make payment transactions easier. Instead of two payments (performances) only one is performed. This is particularly the case when a debtor authorizes his or her own debtor to perform directly to the creditor of the first debtor.443 In this case, an acceptance of assignation by the assignee is not required. Also, the assignation serves as a basis for different legal transactions. An assignation performs the functions of a check, in part also that of a bill of exchange, as an institute of civil law.444 Assignation is abstract in the sense that the relationships between the parties are independent from the relationships that formed the basis for assignation. Until the assignee’s statement to the beneficiary that he or she accepts the assignation, there are no enforceable claims between the parties, and the beneficiary cannot claim performance (Article 1036/1 of the OC).445 With the statement of acceptance, an obligation is established between the assignee and the beneficiary, which is independent from the relationships between the assignor and the beneficiary, and the assignee and the beneficiary.446 The beneficiary’s claim is subject to a short prescription period of one year from the assignee’s statement of acceptance, or the statement to the beneficiary (whichever comes first).447 442. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2003, p. 310. 443. The creditor is not obliged to accept this way of performance; however, he or she has to notify his or her refusal without hesitation to the debtor, see Art. 1040/1 of the OC and judgment of the Supreme Court of RS, No. III Ips 143/2015 of 9 Dec. 2016. However, a creditor (beneficiary) who accepted the performance is obliged to claim it from the debtor’s debtor (assignee), see Art. 1040/2 of the OC. 444. Habersack, in: Habersack (ed.), Münchener Kommentar zum BGB, Beck, München 2017, § 783, No. 1. Analogue application of assignation (Ger. Anweisung) is also possible in cashless payment transactions (bank transfer, direct debiting system, credit card, debit card) and letter of credit. However, the bank practice had developed more efficient methods, in particular credit cards, giro cards and POS terminals. 445. See also Art. 1046/1 of the OC: the assignor can revoke the authorization of the assignee, until the latter has notified the beneficiary of his or her acceptance of the assignment. 446. Article 1037/1 of the OC. 447. Article 1039/1 of the OC.

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IV. Transfer of Obligation 227. A debtor (old debtor) and a third person (new debtor) can agree that the third person will take the debtor´s place in the legal relationship with the creditor. The old debtor is thereby free. However, for a valid transfer of obligation (transfer of debt, change of debtor) the creditor must agree.448 For the creditor it is important to know whether he or she can rely on the creditworthiness and willingness of the new debtor. The creditor can agree formlessly and also by conduct, e.g., by accepting performance from the new debtor. If the creditor does not agree in the time period, it is presumed that he or she disagrees.449 228. The effect of assumption of debt is that a new debtor is in the place of the old one, while the old one is free. In principle, the ancillary rights still exist against the new debtor; however, any pledges and suretyships by third persons are valid only if the pledge givers and guarantors agree to the new debtor (Article 430/1 of the OC). If not agreed otherwise, the new debtor is not liable for interest accrued until the moment of transfer (Article 430/2 of the OC). 229. The new debtor keeps all the defences (objections) which the old debtor had against the creditor. However, the new debtor cannot object to any reasons arising from the relationship between him or her and the old debtor (Article 431/2 of the OC). V. Accession to Debt and Assumption of Performance 230. Accession to debt means that a new debtor joins the old debtor in the obligation towards the creditor. It is a contract between the creditor and the new debtor (Article 432 of the OC). It is rather similar to surety; however, no formalities are required (while the statement by the guarantor must be in writing, Article 1013 of the OC) and the new debtor, if he or she performs the debt, does not have the right to claim back what he or she had paid from the old debtor (subrogation claim). Both forms of additional liability (i.e., in addition to the original debt) are to be distinguished based on the purpose of the parties with regard to the agreement, i.e., in particular whether the new debtor was to provide collateral or to act in his or her own economic interest and perform his or her own debt. 231. Assumption of performance (Article 434 of the OC) means that a third party promises the debtor that he or she will perform against the creditor. Only the

448. Article 427/1 of the OC. 449. Article 427/4 of the OC. However, a different rule applies with regard to claims secured by mortgage: if it was agreed between the seller and buyer of mortgaged property that the buyer will pay the seller’s debt to the creditor; it is presumed that the creditor agrees, if he or she does not reply to a written request for agreement within three months (Art. 428 of the OC).

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debtor can claim performance or damages for non-performance. The creditor, however, cannot claim performance from this person as they have no direct legal relationship. VI. Transfer of Contract 232. Not only individual claims but also the entire position of a party to a contract may be transferred to another person. Transfer of contract makes it possible to transfer the entirety of rights and obligations of a contractual party in one transaction. It is practically important in particular with regard to long-lasting contracts, such as lease contracts450 but also with regard to selling companies in the form of asset deals.451 A party can only transfer his or her entire contractual position with the approval of the other party (Article 122/1 of the OC).452 The transfer takes place once the other party approves it. Unless agreed otherwise, the transferor is liable to the transferee for the validity of the transferred contract, but not for the performance of the other party (Article 123 of the OC). §3. THE SPECIAL CASE OF A ‘SUBCONTRACT’, E.G. THE (NOMINATED) SUBCONTRACTOR IN BUILDING CONTRACTS 233. A subcontractor works under a contract with the main contractor, who, in turn, has a contract with the client. A subcontractor and the client do not have a contract. Nevertheless, under certain circumstances a subcontractor can claim payment for the work done directly from the client. According to Article 631 of the OC, the ‘co-workers’ may enforce the claims that they have against the main contractor (their counterparty in the contracts), against the ordering party (client): he or she must pay them from the money that he or she, at that moment, owes the main contractor, if the claims of the subcontractors are ‘recognized’. 234. The ‘co-workers’ are to be understood as subcontractors, i.e., persons, who, under a contract with the main contractor, are performing works directly connected to the main contract in question.453 An indirect connection is not enough; the court

450. Article 610/1 of the OC: ‘If a leased thing is sold, the buyer (new owner) steps in the place of the lessor.’ 451. An asset deal means that a company is sold in a way that all individual rights are transferred onto the buyer (assets of the company), as opposed to a share deal where the buyer acquires all shares of the company. 452. However, a transfer of contract takes place also if a contractual party (natural person) dies and his or her heirs step into his or her position (unless something else is stipulated for by the contract or the contract is of a personal nature), see Art. 125/2 of the OC. 453. See Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017, p. 1123.

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had refused to recognize a direct connection, e.g., with a company providing accommodation for workers working at the building site.454 The rules of public procurement law define a subcontractor in a similar way.455 Public procurement law also prescribes the possibility of subcontractors with regard to public contracts, to claim payment directly from the client (person subject to public law). Differently from the OC, the public procurement law makes a direct payment claim possible even for the subcontractors of subcontractors. In this case, in principle, both the subcontractors and their subcontractors must also be nominated in the offer. 235. A direct claim of the subcontractor is established under the following conditions: (1) the main contractor456 has recognized the subcontractor’s claim, (2) the subcontractor’s claim against the main contractor must be due, (3) the claim of the main contractor against the ordering party must exist and be due, (4) both claims must refer to the same works, and (5) the subcontractor must claim payment from the ordering party.457 The direct claim only comes into existence when the subcontractor claims payment from the ordering party. Although the OC does not explicitly say, the courts demand that the claim must be in writing.458 Both claims, i.e. the claim of the subcontractor against the main contractor and the claim of the main contractor against the ordering party, must be connected, i.e. they must refer to the same work.459 236. However, the issue as to when the subcontractor is allowed to claim payment is often very important; namely, if he or she could claim payment only after his or her own claim against the main contractor is due, he would run the risk that the ordering party would have already paid to the main contractor before the subcontractor even requested the payment.460 In such a case, of course, a subcontractor’s claim would be unfounded as a direct claim under Article 631 of the OC only relates to the amount that the ordering party still owes to the main contractor. The courts therefore allow the subcontractor to send his or her claim (request) already at the time when the ordering party’s obligation towards the main contractor exists, regardless of whether the subcontractor’s claim is then already due or not.461 237. When the subcontractor claims payment, a new obligation is established between the ordering party and the subcontractor. It is considered that the main contractor’s claim is transferred onto the subcontractor by way of cessio legis.462 After having been notified of the direct claim, the ordering party cannot pay the amount 454. Judgment of the Supreme Court of RS, No. II Ips 232/2015 of 26 Jan. 2017. 455. See Art. 94/1 of the Public Procurement Act (Sl. Zakon o javnem narocˇanju (ZJN-3), Official Gazette RS, No. 91/15, with further amendments). 456. See judgment of the Supreme Court of RS, No. III Ips 80/2015 of 9 May 2017. 457. See Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017, p. 1123. 458. See judgment of the High Court of Ljubljana, No. I Cpg 1261/2015 of 9 Feb. 2016. 459. Judgment of the Supreme Court of RS, No. II Ips 202/2017 of 31 Jan. 2017. 460. Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017, p. 1123. 461. Judgment of the High Court of Ljubljana, No. II Cp 557/2016 of 29 Jun. 2016. 462. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1980, p. 1788.

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claimed to the main contractor any more.463 If the ordering party had paid the main contractor prematurely, before the claim of the latter was due, he or she may be liable to the subcontractors for loss.464 §4. BREACH OF PRE-EMPTIVE RIGHT AND ACTIO PAULIANA 238. Although a contract has effect only between its parties, in some exceptional situations a third party has a right to interfere with this contract. Such a right only exists for a limited time period and only if, by concluding the contract, one of the parties infringed the rights of the third party, and this was also known or should have been known to his or her counterparty (i.e., bad faith by both parties to a contract). Such is the case with the breach of pre-emptive right (a right to buy): if the parties had agreed that the owner of some property will inform the other party of the intended sale to a specific person, and will offer to sell it to the other party (beneficiary) under equal conditions (pre-emptive right, Article 507 of the OC), and the owner breaches this duty, i.e., he or she sells the property to a third person without notice to the beneficiary or with notice containing false conditions, the third party (beneficiary) may claim that the contract be dissolved and the property is sold to him or her only if the third person knew or should have known about the breach.465 This right only exists for six months after the party had acquired knowledge of the sale or of the true conditions of sale, and extinguishes in five years after the sale had taken place.466 239. The other case where a third party may interfere with a contract between the parties is Actio Pauliana (claim against fraudulent conveyance). In principle, a debtor may freely dispose of his property. However, with acts which are per se not illegal, such as contracts of sale, donations, remissions of debts, a debtor may diminish his or her property so that it does not suffice to cover the creditor’s claim. Since Roman times, the creditors were allowed to interfere with the acts of the debtor in such cases. In Slovenian law, two regulations of this institute exist: (1) general rules on claim against fraudulent conveyance (Articles 255–260 of the OC) and (2) rules on the said claims in insolvency proceedings (Articles 269–278 of the Insolvency Act).467 Only the first will be dealt with here. 240. A creditor of a due claim may ask the court to invalidate an act of his or her debtor which caused damage to the creditors (Article 255/1 of the OC). It is presumed that the act caused damage to the creditors if, because of the act, the debtor’s property does not suffice to cover the claims of the creditors. If the debtor concluded a sales contract by which he or she received adequate remuneration for the property, such as a market price, the property of the debtor is not diminished, only 463. Judgment of the Supreme Court of RS, No. II Ips 69/2016 of 28 Nov. 2017. 464. Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017, p. 1123. 465. Article 512/1 of the OC. 466. Article 512/2 of the OC. 467. The Financial Operations, Insolvency Proceedings and Compulsory Winding-up Act.

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its structure is changed.468 Asking for ‘invalidation’ means a claim that the court should declare the acts as ineffective against the creditor in the amount necessary to settle his or her claim.469 An ‘act’ refers not just to contracts the debtor concluded, but to any act, including omissions. 241. Bad faith of the contract parties is a condition for the claim: in general, it is necessary to show that the debtor knew or should have known that he or she is damaging his or her creditors and that the third person with whom he or she had concluded the contract, knew or should have known about the damaging, too (Article 256/1 of the OC). However, if the third person is a relative of the debtor it is presumed that he or she knew that the debtor was damaging the creditors (Article 256/2 of the OC). Furthermore, if the act was gratuitous, it is presumed that the debtor knew that he or she was damaging the creditors, whereas the knowledge of the third person is irrelevant (Article 256/3 of the OC). 242. The claim is subject to strict time limits: the claim can only be filed within one year after the act was committed, or three years if the act was gratuitous (Article 257 of the OC). The claim does not extend to everyday gifts proportional to the financial situation of the debtor (Article 258 of the OC).

468. See, e.g., judgment of the Supreme Court of RS, No. II Ips 398/2010 of 4 Jul. 2013. 469. Article 260 of the OC.

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Chapter 5. Termination of the Contract §1. PERFORMANCE AND BREACH I. Rules on Performance of (Contractual) Obligations 243. The parties may regulate every detail of their relationship in the contract. However, the OC and other legislation contain a set of rules on performance of obligations (and, of course, on non-performance and remedies, but these shall be dealt with later) which are applicable in the absence of the contractual agreement. Most of these rules are applicable not just to contractual but to any obligations. 244. From the viewpoint of privity of contract, it appears obvious that each of the contractual parties has to perform his or her obligations towards the other party. In a synallagmatic (reciprocal) contract, each party is a debtor and a creditor. However, sometimes a third party will perform instead of the debtor. This is for example the case if a third party (for whatever reason) promises the debtor that he or she will perform instead of him or her (assumption of performance, Article 434 of the OC). The creditor must accept performance by a third person if the debtor agrees (Article 271/3 of the OC). Furthermore, the creditor must accept performance by a third person if this person has justified interest to do so (Article 271/2 of the OC). The creditor may accept performance by a third person even if the debtor does not know about it and also in case the debtor had informed him or her that he or she does not want him or her to accept performance by a third person (Article 271/4 of the OC). However, the creditor is not allowed to accept performance from a third person if the debtor has offered to perform him or herself (Article 271/5 of the OC). 245. Special provisions exist with regard to performance by a person without legal capacity to act (minors until 15 years of age and people whose capacity to act was taken away by a court due to their illness). The purpose of the provisions is to protect such persons. An incapable debtor can nevertheless validly perform if the existence of the obligation is without a doubt, and the obligation is due; however, if such a person performed an unenforceable obligation (a time-barred debt or a debt from a game or bet), such performance may be challenged in court.470 246. Furthermore, if obligation is performed by a third person, the effect of performance may be subrogation, i.e., the third person acquires the position of the creditor against the debtor, including collaterals, and may claim recovery of what it was performed from the debtor (see supra Part I, Chapter 4, §2). Subrogation occurs ex lege if a third party has a special interest in performing (Article 275 of the OC) or if the third party agrees about subrogation with the creditor (Article 274/1 of the OC) or with the debtor (Article 274/2 of the OC). Of course, if subrogation is based 470. This option refers to avoidance (Sl. izpodbojnost), Arts 94–99 of the OC. It is only possible within the time limits of Art. 99 of the OC (one year after the person authorized to file a claim had gained knowledge, at the latest in three years after conclusion of contract).

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on an agreement the parties may also determine the extent to which the ancillary rights and collaterals are to be transferred onto the third person. 247. With regard to the object of performance it seems obvious that the debtor has to perform, and the creditor has to accept only exactly what was the content of obligation; neither may the debtor perform with something else than what was agreed, nor may the creditor demand something else.471 248. However, the parties may agree that the debtor hands over to the creditor something else in lieu of performance, i.e. change the object of obligation by their agreement (datio in solutum).472 The parties may also agree that the debtor hands over to the creditor something else as the object of obligation which is not performance per se; rather, the creditor is to sell it and settle his or her debt from the proceeds (datio pro solvendo), and return the difference (if any); in this case, the obligation is considered performed when the creditor’s debt is settled.473 249. If generic goods are sold and the parties do not agree on their quality, the medium quality is owed; however, if the debtor knew about the purpose of the purchase, he or she is to hand over the appropriate quality.474 The latter can be seen as a form of tacit agreement or it could be described as a particular form of causa (form of an agreement (one party aware of the needs of the other)). 250. If the debtor offers to perform only a part of obligation (partial performance), the creditor may reject it unless the nature of obligation implies a different solution.475 A different rule applies to monetary obligations: here, the creditor is obliged to accept partial payment unless he or she has justified interest to reject it.476 251. If the debtor (seller of generic goods) delivers more than he or she owes (excessive performance), the creditor (buyer) is not obliged to accept it and pay for the surplus. However, in a commercial contract (B2B) the buyer is obliged to raise an objection. If he or she does not do so within reasonable time, he or she is considered to agree and must pay equal price for the surplus.477 252. The creditor is not obliged to accept a performance with a material or a legal defect (defective performance).478 He or she may choose to accept such performance and enforce the so-called warranty claims (repair, replacement, price 471. 472. 473. 474. 475. 476. 477. 478.

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Expressly so in Art. 282/1 of the OC. Article 283/1 of the OC. Article 284 of the OC. Article 286 of the OC. Article 285/1 of the OC. Article 285/2 of the OC. Article 473 of the OC. For an exception, see Art. 19/4 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act (Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS, No. 18/04): ‘The buyer may not refuse to accept the apartment in case of minor defects

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reduction, termination, damages), or he may reject it, i.e. consider it as complete non-performance and get the debtor in delay (mora debitoris). However, a creditor may not reject performance due to a nonconformity so small that it is irrelevant (i.e., it does not affect the creditor’s interests)479 as this would mean that he or she is acting against good faith. 253. Obligations may also be performed by a set-off (compensatio). That means that reciprocal480 obligations between the parties which are due and of the same kind are effectively discharged as if they were mutually performed.481 In order for set-off to occur, one of the parties must give notice to the other party; however, the notice has retrospective effect: both obligations are considered to be set off at the time when the conditions were met.482 There are some obligations which cannot be set off.483 254. If the time of performance of an obligation is not determinable from the agreement or from the nature of obligation, the creditor may claim performance immediately after the obligation is established; he or she is also obliged to accept debtor’s performance.484 However, a different rule applies to time of delivery under a sales contract: if time is not determined or determinable by the contract, the seller has to deliver within reasonable time after conclusion of the contract.485 Sales law contains an additional rule which is applicable to all synallagmatic contracts: a party is not obliged to perform his or her obligation unless the other party is ready to perform his or her reciprocal obligation.486 If a period of time for the delivery under a sales contract is fixed or determinable from the contract, and if the circumstances do not indicate that the buyer is to choose the time of performance, the seller may choose any time within that period.487

479. 480.

481. 482. 483.

484. 485. 486. 487.

that do not hinder the normal use of the property. However, he or she is entitled to withhold 5 per cent of the purchase price until the property is brought into conformity with the contract.’ Article 458/3 of the OC. There are some exceptions to the ‘reciprocity’ condition: First, with regard to surety: a guarantor may set off the obligations of the debtor against the creditor with the debtor’s claim towards the creditor (Art. 313/2 of the OC). Second, in case of assignment of claim (cession) the debtor may set off claims he could have set off against the old creditor until he was notified the assignment of claims, against the new debtor, and also claims against the old creditor acquired before the notice of assignment of claims and were not yet mature at the time, but only if they mature before or at the time of maturity of the assigned claim. An exception applies to claims which are entered into public registers. See Art. 315 of the OC. See Art. 311 of the OC. Article 312/2 of the OC. These are: claims that cannot be pledged (see Arts 101 and 102 of the Claim Enforcement and Security Act (Sl. Zakon o izvršbi in zavarovanju (ZIZ), Official Gazette RS, No. 51/98, with further amendments)), furthermore claims arising from a breach of trust, damages claims arising from intentional causing of loss, maintenance claims (based on the law), damages claims arising from injury and death. See Art. 316 of the OC. Article 289 of the OC. But see, e.g., Art 7:102 (c) of the PECL: In reasonable time after conclusion of contract. See Art. 450 of the OC. See Arts 101 and 455 of the OC. Article 449 of the OC.

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255. If in B2B contracts for the sale of goods or provision of services, the parties did not determine the time of payment, it is to be effected in thirty days after receipt of an invoice (or, in the absence of invoice, from delivery).488 This is required by the EU Late Payments Directive.489 Furthermore, if the parties had agreed the time of payment in excess of sixty days after receipt of an invoice (or from delivery, if there was no invoice), such an agreement is subject to judicial fairness control; the court may find it null if it is manifestly unfair towards the supplier.490 An agreement of time of payment exceeding sixty days after receipt of invoice must also be in writing.491 256. In general, the creditor is not obliged to accept premature performance; he or she may, however, accept it and reserve the right to claim recovery of loss, as premature performance is also a breach of contract.492 An exception applies to the situation where the ‘time of performance was agreed exclusively in the interest of the debtor’ – then, the debtor may perform before the time agreed; however, he or she must notify his or her intention to the creditor, and ‘make sure that it is not at a wrong time’,493 having in mind all circumstances. 257. If the place of performance is not determined or determinable from the parties’ agreement or other circumstances, the obligation is to be performed at the place of the debtor’s domicile or place of business at the time when the obligation was incurred.494 A different rule applies to monetary obligations: they are to be performed at the creditor’s place of business or domicile.495 II. The Notion of Breach of Contract and the Introduction to the System of Remedies for Breach of Contract 258. The system of remedies for breach of contract in Slovenian law is not based on a uniform notion of breach of contract. Technically, all situations where the debtor’s performance is not exactly as agreed represent a breach of contractual duty. However, several different types of breaches exist, each with a different system of remedies. In particular, non-performance of an obligation in the sense of nondelivery, triggering the system of sanctions for debtor’s delay, is to be distinguished from performance with a material or legal defect, which is a basis for the system of remedies for defective performance (‘warranty claims’, Sl. jamcˇevalni zahtevki). 488. See Art. 12 of the Act on Prevention of Late Payments (Sl. Zakon o preprecˇevanju zamud pri placˇilih (ZPreZP-1), Official Gazette RS, No. 57/12). 489. Directive 2011/7/EU of the European Parliament and of the Council of 16 Feb. 2011 on combating late payment in commercial transactions, Text with EEA relevance, OJ L 48, 23.2.2011, see Art. 1/3. 490. See Art. 9 of the Act on Prevention of Late Payments (Sl. Zakon o preprecˇevanju zamud pri placˇilih (ZPreZP-1), Official Gazette RS, No. 57/12). 491. Ibid. 492. Article 290/(2) of the OC. 493. Article 290/1 of the OC. 494. Article 29(1) of the OC. For sales contracts, this is the place of the seller, Art. 451 of the OC. 495. Article 2942 of the OC.

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The notion of non-performance is not defined. Furthermore, the OC contains two sets of rules on ‘supervening impossibility of performance’. If the debtor is liable for the occurrence of impossibility, this is also a breach of contract. The breach of ancillary obligations is also a form of breach of contractual duties. Some other situations, such as premature performance,496 are difficult to classify in this scheme but they, too, are breaches of contract. 259. As already mentioned, the cooperation duty of the creditor is not perceived as a proper duty (equal to the duties of the debtor) but rather as an expectation (Ger. Obligenheit).497 The consequences of breach of this expectation are dealt with within a special institute of ‘creditor’s delay’. 260. The regulation of the remedies for the breach of contract in the OC is neither clearly arranged nor very coherent. Important parts of the regulation are also outside the OC – in the CPA and in the Protection of Buyers of Apartments and Single Occupancy Buildings Act.498 §2. IMPOSSIBILITY AND CHANGE OF CIRCUMSTANCES: ‘THE UNFORESEEN’ I. Impossibility of Performance 261. Three sets of rules exist with regard to impossibility of performance, first, rules on initial impossibility of performance which prevents valid conclusion of a contract (Articles 34–36 of the OC), second, rules on supervening impossibility of performance of an obligation (Articles 329–331 of the OC) and on the effects of supervening impossibility of performance of an obligation in a synallagmatic contract on the obligation of the other party (Articles 116–117 of the OC). 262. The initial impossibility of performance and its legal effect (nullity) were already dealt with (see supra Part I, Chapter 2, §3). The judicial decisions about this issue are almost non-existent. It should also be noted that the regulation was subject to critique as being incoherent, particularly in the light of the delimitation between objective (nullity) and subjective initial impossibility (validity), but also outdated and even redundant.499 263. If the performance of a contract which was possible at conclusion becomes impossible later (supervening impossibility of performance), the effects on the contract depend on whether a party is responsible for the occurrence of impossibility. Again, only objective impossibility is relevant, whereas subjective impossibility, i.e., when the debtor cannot perform but a third person theoretically still could, does 496. Article 290 of the OC. 497. See supra Part I, Ch. 3, §1. 498. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS, No. 18/04. 499. See Možina, Impossibilium nulla obligatio est? Zacˇetna nemožnost izpolnitve obveznosti v slovenskem in primerjalnem pogodbenem pravu, Zbornik znanstvenih razprav 2006, pp. 175 et seq.

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not affect the existence of an obligation.500 The liability of debtor for the occurrence of supervening impossibility of performance is presumed until proven otherwise.501 The debtor may prove that the impossibility was caused by unforeseeable, unavoidable circumstances beyond his or her control (Article 240 of the OC). However, objective impossibility in fact only relates to the individual obligations (species), as generic obligations (genus) are considered to be imperishable;502 thus, the debtor bears the procurement risk. By agreement or by the nature of the obligation, this risk may be reduced (limited generic obligations).503 264. If none of the parties is liable for impossibility of the debtor’s performance, the obligations of both parties are extinguished; thus, the contract does not exist anymore.504 If the debtor is liable for the impossibility of his or her performance (as presumed), the creditor in a synallagmatic contract may choose either damages in lieu of his or her performance and perform his or her obligation, or rescind the contract and claim damages for non-performance.505 If the creditor is liable for impossibility of debtor’s performance (a situation comparable to creditor’s delay), the debtor’s obligation is extinguished, whereas the creditor’s own obligation continues to exist, however, reduced for the amount of ‘benefit which the debtor had by being discharged of his obligation’.506 The rules on impossibility are not applicable if the impossibility occurs while the debtor is already in default (delay).507 The debtor in delay is liable also for accidental events. 265. As was suggested, the institute of supervening impossibility of performance does not play a significant role and could easily be abolished. 508 First, it is not relevant for the exoneration of the debtor as the latter has to prove the ‘circumstances’ from the general provision for exemption of liability for damages for breach of contract (Article 240 of the OC). The only logical consequence of impossibility of performance is the exclusion of specific performance. Here, it does not matter whether the impossibility is initial or supervening, objective or subjective, and whether the debtor, creditor or nobody is liable. However, the limitations of claim for specific performance are not regulated by the OC. Second, the effects of supervening impossibility upon the reciprocal obligation of the other party are basically the same as the consequences of any other non-performance. The result of application of general rules for non-performance would be the same. A duty to transfer the so-called substitute commodum (e.g., a claim against the insurance company or a third party, liable for the occurrence for impossibility, Article 331 of the OC) 500. See Možina, Naknadna nemožnost izpolnitve obveznosti in njen pomen za obligacijsko pravo, Zbornik znanstvenih razprav 2008, pp. 185 et seq. 501. Article 329/2 of the OC. 502. Article 330/1 of the OC. 503. Article 330/2 of the OC. 504. Article 116/1 of the OC. If the creditor had already performed in part, he or she may claim it back relying on rules on unjust enrichment. 505. Article 117/3 of the OC. 506. Article 117/1 of the OC. 507. Article 239/4 of the OC. 508. Možina, Naknadna nemožnost izpolnitve obveznosti in njen pomen za obligacijsko pravo, Zbornik znanstvenih razprav 2008, pp. 185 et seq.

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seems the only well-grounded provision but is hardly a reason for the existence of complicated regulation that is difficult to understand.509 Also, there has so far hardly been any judicial decision at all regarding the said provisions. II. Change of Circumstances 266. If, after the conclusion of the contract, the change in circumstances causes the performance to become not objectively impossible (in this case, provisions on impossibility are applicable), but rather extremely difficult for the debtor, including the situation of subjective impossibility, he or she may, under certain conditions, ask the court to dissolve the contract due to change of circumstances (Sl. sprememba okolišcˇin). 267. In principle, contracts are to be performed regardless of change of circumstances. The debtor must perform even if the performance becomes more difficult for him or her. If the parties wanted to make the continuance of the contract dependant on certain circumstances, they could have done so. However, the question is whether contract law should recognize that there is a ‘limit of sacrifice’ with regard to the debtor’s duty to perform. Article 112/1 of the OC (identical with Article 133/1 of the former Yugoslav OA) allows the contractual party whose performance becomes more difficult due to circumstances arisen after conclusion of contract, to ask the court to dissolve (repudiate) the contract. The same right exists when, due to subsequent change of circumstances, the purpose of the contract cannot be achieved. In both cases the change must be of such intensity that the contract ‘obviously does not fit the expectations of the parties anymore and it would, in general opinion, be njust if it would continue to be binding’. Thus, if a change in circumstances causes the contract to become ‘more onerous’ for one party to perform, or the purpose of the contract to become frustrated, the validity of the contract becomes questionable. 268. The repudiation of contract due to changed circumstances cannot be claimed if these circumstances were foreseeable at the time when the contract was concluded, or if the party could have avoided them or their effects (Article 112/2 of the OC). Indeed, the concept of changed circumstances is the same as in the general exemption provision of Article 240 of the OC, i.e. the concept of unforeseeable circumstances beyond control of the debtor. 269. Furthermore, the party may not rely on a change of circumstances if it occurred when that party is already in delay (mora debitoris). In delay, the debtor’s liability becomes stricter and he or she is liable for accidental events, including force majeure. The repudiation means that the party whose performance became more onerous is exempt from liability for non-performance. However, the exemption is not absolute as the other party may claim the recovery of equitable part of 509. Ibid.

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the loss it suffered due to repudiation.510 Therefore, the court may divide the consequences of repudiation between both parties and enjoys a wide margin of discretion with regard to what it considers equitable. 270. In Article 114, the OC lists some circumstances which the court – who enjoys a rather large discretion – must take into account when considering repudiation (dissolution): the purpose of the contract, the risks which are common with regard to similar contracts and the balance of interests of the parties. Of course, a party may not claim repudiation due to common and well-known risks. These are, on the other hand, also objectively foreseeable at the conclusion of the contract. Although not stated in the OC, the court may also take into account the actions of the claimant after the occurrence of the changed circumstances, i.e. how he or she reacted to the change of circumstances and what efforts he or she undertook in order to perform in spite of change of circumstances.511 A repudiation presupposes a comprehensive analysis of obligations assumed with the contract, intensity and foreseeability of change, common risks in contracts of this kind and of the activity of the parties. 271. The court may only repudiate the contract; it is not allowed to modify it.512 However, the other party can prevent repudiation if he or she offers a fair change of contract terms.513 A party who is entitled to claim repudiation must inform the other party without hesitation of such intention and is liable for loss due to a delayed notice.514 The parties can limit or exclude the possibility to rely on change of circumstances in their contract if they do so in good faith.515 272. In practice, claims for repudiation of changed circumstances are almost never successful before Slovenian courts.516 510. 511. 512. 513. 514. 515. 516.

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See Art. 112/5 of the OC. Judgment of the High Court of Ljubljana, No. VSL I Cpg 772/2013 of 11 Feb. 2015. See Možina, Kršitev pogodbe, GV Založba, Ljubljana 2005, pp. 371 et seq. Article 112/4 of the OC. Article 113 of the OC. Article 115 of the OC. See, e.g., judgment of the Supreme Court of RS, No. III Ips 154/2015 of 24 Jan. 2017 (it is a prerequisite, that the contract is manifestly unfair in the sense of really significant imbalance between the value of both performances; changes on real estate market due to financial crisis are not such a case, the claimant should have taken the risk of cyclic market changes into account; furthermore, he or she could have avoided conclusion of contract, having detected the falling of prices, but he or she did not). See also judgment of the High Court of Ljubljana, No. I Cpg 573/2015 of 08 Jul. 2015 (a contract for the sale of real property; between conclusion and performance (the course of a denationalization proceedings) the prices had risen, however, the court held that – from the viewpoint of gradually rising prices – it is not unforeseeable that the prices may rise as much as 100% over a longer course of time, a different solution would apply in case of sudden and extreme rise of prices); see also High Court of Ljublkjana, No. II Cp 829/2912 of 16 May 2012 (at the time of conclusion, the prices were rising 12% a year, therefore a rise of 46% in three years cannot be regarded as fundamental). See also: Grilc, Gospodarska/financˇna kriza kot spremenjena okolišcˇina, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011, pp. 33–46; Drnovšek, Institut spremenjenih okolišcˇin v novejši sodni praksi, Podjetje in delo 8/2016, p. 1486.

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§3. DISCHARGE BY AGREEMENT 273. Of course, as the agreement of the parties in the sense of exchange of promises makes a binding contract, the latter can also be cancelled, and the parties discharged in whole or in part by their agreement.

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Chapter 6. Remedies §1. GENERAL PROVISIONS 274. The system of remedies for breach of contract is not based on a uniform notion of breach. Instead, there are different types of breaches with different legal consequences. In particular, the system of sanctions for non-performance in the sense of delay (mora debitoris) is to be distinguished from the system of sanctions for performance with material and legal defects, the so-called warranty claims (Sl. jamcˇevalni zahtevki). The legal position of the parties is significantly different. With regard to the warranty claims, Article 100 of the OC generalizes the application of the regime of the liability of the seller under sales contract (Articles 458–495 of the OC): it is to be applied ‘reasonably’ to other contracts insofar as there are no specific regulations. That means, inter alia, that the remedy of price reduction is of general nature, i.e., applicable to all reciprocal contracts in the absence of specific regulation. 275. Indeed, specific regulations exist, first in the special part of the OC, in particular with regard to contract for work and building contract, and second, in two further sets of mandatory provisions: the regulation of consumer sales contract in the CPA, implementing the EU Consumer Sales Directive,517 and the regulation in the Protection of Buyers of Apartments and Single Occupancy Buildings Act, an act unique to Slovenia, containing rules on protection of ‘final buyers’ (in B2C and B2B contracts)518 from the risk of breach of obligations by the investors or sellers, with mechanisms such as the right of the buyer to withhold 5% of the purchase price if defects are discovered at the handing over of the property,519 mandatory bank guarantee to be set up by the seller for the repair of the hidden defects in the amount of 5% of the purchase price,520 and the prolongation of warranty time period.521 276. The regulation of consequences of breach of contract in the OC has different levels of abstraction. For example, some conditions and consequences of delay (debtor’s delay, Article 299 of the OC) are applicable to all obligations, contractual and non-contractual. Statutory interest for delay with payment obligation is an example of that.522 277. Liability for loss (Articles 239–246 of the OC) is applicable only to contractual obligations, but some, such as the right withhold performance due to other 517. 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, OJ L 171. 518. See Art. 4/5 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 519. See Art. 15 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 520. See Art. 26 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 521. From six months (OC) to two years, see Art. 23 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 522. See Art. 378/1 of the OC and Art. 2 of the Statutory Default Interest Rate Act (Sl. Zakon o predpisani obrestni meri zamudnih obresti (ZPOMZO) Official Gazette RS, No. 56/2003, with further amendments).

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party’s breach (Articles 101–102 of the OC) and the right to terminate the contract due to non-performance (Articles 103–111 of the OC), are applicable only to synallagmatic contracts. The legal consequences of the most common breach of contract – delay – are not clearly set out, but are rather scattered throughout the OC. In addition, there are separate specific regulations of delay (and defective performance) laid down in the CPA and the Protection of Buyers of Apartments and Single Occupancy Buildings Act. One can hardly say that the regulation is clearly arranged. 278. A further characteristic of the remedies of breach of contract, although limited to the sales contract, is the existence of mandatory guarantee ‘for proper functioning of the technical goods’, in addition to ‘commercial’ (voluntary) guarantee, regulated by the EU Consumer Sales Directive.523 It is a remainder from socialist law. It runs parallel to warranty for material defects, and the system of remedies is very similar (i.e., repair, replacement, price reduction, termination, damages), apart from the fact that not only the seller but also the producer is liable.524 Furthermore, there is a hierarchy of remedies: the buyer may first claim repair; if the seller (or producer) does not comply with that within reasonable time, he or she may claim substitute goods;525 only if the seller does not comply with that in reasonable time, the buyer may terminate the contract or reduce the price.526 In any event, he or she is entitled to damages, including explicitly the damages for ‘loss of use of the goods’.527 279. The guarantee requirement applies in commercial sales, too. The minimum duration of a guarantee is one year (new goods), and in case of used cars, trailers and motorbikes, the minimum duration is one month. However, in the light of the mandatory warranty for material defects in B2C contracts, introduced by the EU Consumer Sales Directive, and in particular with regard to the time period of the liability of the seller (two years for new goods, one year for used goods), there seems to be little sense for maintaining a parallel system of mandatory protection of the buyer.528

523. That is household appliances, products of automobile and similar industries, machines and appliances for (family) farming, products of information technology, audio–video techniques, sports equipment. The rules of the OC are complemented by the list of goods ‘which may only be sold with a guarantee’ (Rules on goods under mandatory guarantee, Sl. Pravilnik o blagu, za katero se izda garancija za brezhibno delovanje, Official Gazette RS, No. 14/12) and the provisions of CPA, see Arts 15b–1cˇ. 524. For used goods, only the seller is liable for the minimum duration of one month, see Art. 19 of the CPA. 525. Article 481/1 of the OC. 526. Article 484 of the OC. 527. Articles 482/2 and 484 of the OC. 528. See, e.g., Možina, Obvezna garancija za brezhibno delovanje in varstvo kupca v evropskem pravu, Podjetje in delo1/2011, p. 38.

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§2. SPECIFIC PERFORMANCE AND INJUNCTIONS ASTREINTE I. Non-performance (Debtor’s Delay) 280. In the case of the debtor’s delay, the creditor may claim specific performance or rescind the contract (Article 103 of the OC). The creditor must also accept the debtor’s performance although the latter is in delay, i.e. he or she cannot claim damages in lieu of performance without a further ado. 281. The debtor is in delay (mora debitoris) if he or she does not perform when his or her obligation is due. If the parties have agreed on time of performance or such is determinable from their agreement or from the circumstances, the delay starts automatically (dies interpellat pro homine).529 If time for performance is not determined or determinable, the delay starts when the creditor reminds the debtor of performance (i.e., claims performance).530 No particular form is required. Also, the debtor need not be at fault for the delay to start. However, the debtor’s delay does not arise if the debtor’s non-performance is due to the creditor’s breach of his or her cooperation duties (creditor’s delay, mora debitoris)531 and also if the debtor does not perform because he or she is relying on the creditor’s own nonperformance (not of his or her cooperation duty but of his or her primary obligation), i.e. objecting non-performance.532 282. In some situations, however, the claim for specific performance is automatically extinguished with the start of debtor’s delay. If the time of performance is of the essence (the so-called fixed-deal or fixed-time contract) and the debtor does not perform at maturity, the contract is automatically (ex lege) rescinded.533 The time is of the essence if the parties so agree and when such an agreement may be seen as implicit under the circumstances. If the creditor nevertheless wants to maintain the contract, he or she can do so only if he or she notifies the debtor ‘without hesitation’ after the expiry of the time for performance. The automatic termination of the contract may be very hard for the debtor; in comparative law, it is unusual outside the commercial contracts (B2B).534 It may also be noted that the automatic termination does not contribute to the clarity of the situation. Although Article 109 of the OC demands the party who ‘intends’ to terminate the contract, to notify the other party without hesitation, and the failure to do so may result in damages (Article 245 of the OC), this does not apply to fixed-time contracts. And in any case, the effects of termination take place regardless of the notice.535

529. 530. 531. 532. 533. 534. 535.

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Article 299/1 of the OC. Article 299/2 of the OC. Article 301/1 of the OC. Article 101 of the OC. Article 104/1 of the OC. See, e.g., Možina, Kršitev pogodbe, GV Založba, Ljubljana 2015, pp. 168 et seq. See, e.g., judgment of the High Court of Koper, No. VSK II Ip 635/2009 of 5 Feb. 2010.

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283. In other situations, the claim for specific performance continues to exist while the debtor is in delay (Sl. zamuda). The claim for specific performance extinguishes when it becomes definitely clear that the debtor will not perform. In order to achieve this, the creditor can set a reasonable additional time for the debtor to have a final chance of performing the contract.536 If the reasonable additional time lapses without the debtor performing, the contract turns into a ‘fixed-time’ contract, i.e., it is terminated ex lege, without any statement from the creditor.537 If the creditor nevertheless wishes to keep the contract, he or she may notify the debtor of this without hesitation after the expiry of the additional time. The setting of the additional time is not necessary if it is obvious from the debtor’s action that he or she will not perform in additional time,538 i.e., if he or she notifies the creditor that he or she will not or cannot perform, or if this is clear from the circumstances of the case. In this case, the creditor rescinds the contract by notice to the debtor.539 284. If the creditor terminates (rescinds, Sl. ‘odstop’ or ‘razdor’) the contract, the claim for specific performance is obviously extinguished and replaced by a claim for damages in lieu of performance. However, the claim may extinguish and be replaced with damages in lieu of performance also in situations where the contract continues to exist, namely, if the creditor, as a reaction to the debtor’s nonperformance, undertakes a cover transaction (Sl. kritni posel). There is a set of provisions authorizing him or her to do so (Articles 265–266 of the OC). The condition for the cover transaction is a notice to the debtor which has the same function as setting the reasonable additional time, i.e., to give the debtor one last chance to perform. The contract can therefore continue with damages claim replacing the claim for performance. II. Specific Performance and Unreasonable Expenses 285. Apart from the regulation of changed circumstances (see Part I, Chapter 5, §2), the OC does not regulate the situations where the performance becomes more onerous, as e.g., Article 9:102 of the Principles of European Contract Law (PECL) or 7.2.2. of the UNIDROIT PICC do. If the performance becomes objectively impossible and the debtor proves that he or she is not liable, the contract extinguishes according to Article 116 of the OC. However, if the performance becomes impossible only for the debtor (the subjective impossibility), the contract remains and may still be, at least theoretically, enforced. However, for an exclusion of claim for specific performance, it should not matter when the impossibility occurred, whether it is objective or subjective, or who is responsible. If the debtor cannot perform, no enforcement proceedings can make him or her perform and is therefore

536. 537. 538. 539.

Article Article Article Article

105/2 of the OC. 105/3 of the OC. 106 of the OC. 106 of the OC in combination with Art. 103 of the OC.

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pointless. With regard to reasonable efforts being a limit of the claim for repair or replacement under the sales contract and the contract for work, see Part II, Chapters 4 and 10. III. Specific Performance and ‘Personal’ Obligations 286. The limits of the claim for specific performance are not set by the OC, but by the Enforcement Act.540 There are different methods of enforcement. A claim for the delivery of generic goods or services is enforced in a way that these goods or services are bought at the expenses of the debtor. Thus, the claim for specific performance turns into a damages claim. An individual thing may be taken away from the debtor and handed over to the creditor or, if this is not possible, the claim turns into a damages claim. However, if only the debtor can perform a certain action, it has to be enforced in a different way. While the PECL exclude the claim for specific performance in this situation, for reasons that it would, on the one hand, infringe the debtor’s freedom, and on the other hand, that enforced performance of this kind would hardly be of the expected quality, and furthermore, as it would be problematic for the court to supervise such enforcement.541 Such ‘personal’ claims may nevertheless be enforced under the Enforcement Act (Article 226). The court would set a reasonable additional time and a monetary fine for non-performance (up to EUR 10.000 for natural persons, up to EUR 500.000 for legal persons and businessman; in the determining the amount, regard is to be given to the significance of the action to be done by the debtor, and other circumstances). If the debtor does not perform, the court enforces the fine on its own motion (ex officio) and sets a new additional time and a new, higher fine. This procedure may be repeated until the sum of the fine reaches ten times the first limit. IV. Penalty Set by the Court under Article 269 of the OC for the Enforcement of Judgements 287. While in the latter situation the personal obligations are enforced using a system of putting pressure on the debtor by a fine payable to the state budget, a system introduced by Article 269 of the OC is different. Here, the money functioning as a means of pressure on the debtor to perform is payable to the creditor regardless of his or her loss. It is, therefore, a private penalty. A further difference is that here, the creditor’s claim is already recognized in the form of a judgment by a court, ordering debtor to perform an obligation. And here, the penalty is not limited to a ‘personal’ obligations but applies to any ‘non-monetary’ obligation. Thus, the penalty can be used (theoretically) also in cases where the obligation could be enforced in another way, e.g., performed by a third person with the costs charged to the 540. Claim Enforcement and Security Act (Sl. Zakon o izvršbi in zavarovanju (ZIZ) Official Gazette RS, 51/98, with further amendments). 541. See Commission on European Private Law, Principles of European Contract Law, I and II, Art. 9:1092, p. 480. See also UNIDROIT PICC, Art. 7.2.2.

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debtor. If the debtor does not perform within the set time limit, the set payment goes to the creditor. No limits are set for a fine. Such an unlimited private penalty opens the door for abuse. Furthermore, it may be contrary to the constitutional principle of nullum crimen nulla poena sine lege previa.542 If the creditor had already started a regular enforcement procedure, he or she cannot claim judicial penalties. V. Defective Performance 288. When the debtor is not merely passive – as in the case of ‘nonperformance’ (delay – but undertakes some efforts and delivers the goods or provides the services, but his or her performance has shortcomings, i.e., material or legal defects, the legal position of the creditor is different from his position when the debtor is in delay. The main differences regard the requirements and time limits of the creditor’s claims (see infra Part I, Chapter 6). He or she may, first, decide to refuse to accept defective performance, putting the debtor in delay.543 If he or she decides to accept the defective performance or, at the time, is not yet aware of any defects, but they become apparent later, he or she may make use of warranty claims for specific performance aiming at establishing conformity with the contract. Depending on the situation, he or she may claim repair of defective performance or replacement with defect-free goods or services. 289. A material defect is defined in Article 459 of the OC as the (1) absence of qualities for normal use or resale, (2) or for particular use which was known or could not have remained unknown to the seller, or the absence of (3) explicitly or tacitly agreed qualities, or (4) nonconformity with the sample or model. For consumer sales (B2C), the definition in the CPA is very similar, but the qualities for normal use are assessed also from the viewpoint of statements given by the seller or by the producer in the advertising or on the packaging.544 290. However, as already indicated, the claims for repair (Sl. popravilo), replacement (Sl. zamenjava) but also price reduction (Sl. znižanje cene), rescission (Sl. odstop or razdor) and damages (Sl. povrnitev škode) are available to the creditor only under the condition that he or she had notified the debtor of the defect within the set (relatively short) time limits and that he or she used one of the remedies within the prescribed time limits. 291. With regard to material defects of the goods sold (the regime of sales contract is applicable to all cases of defective performance), the regulation of the notification requirement and time limits is quite complicated. First, there is a range of different notification time limits, distinguishing first commercial (B2B), noncommercial (C2C) and consumer sales (B2C), and second, with regard to the first 542. See Možina, Kršitev pogodbe, GV Založba, Ljubljana 2006, p. 362. 543. Ibid., p. 411. 544. More detailed: Možina, Pravice kupca na podlagi stvarne napake pri prodajni pogodbi, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2012, pp. 85 et seq.

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two, the ‘manifest’ and ‘hidden’ defects. In non-commercial sales, the ‘obvious defects’ (i.e., defects discoverable at ‘normal inspection’) have to be notified to the seller within eight days after discovery, while in the commercial sales, they have to be notified ‘without hesitation’.545 If both parties are present at inspection, the obvious defects have to be notified ‘immediately’.546 The hidden defects have to be notified in eight days (non-commercial sales) or ‘without hesitation’ (commercial sales) after discovery of the defect.547 Furthermore, the notice must contain a description of the defect and ‘an invitation to the seller to inspect the goods’.548 For consumer sales (B2C), the CPA prescribes the notification in two months after discovery, without distinguishing obvious and hidden defects.549 The purpose of notification of the seller seems to be the protection of his or her interests: he or she should be prepared for the fact that his or her performance is not complete and that the buyer is going to make use of the remedies.550 However, if the idea of protection of the seller may be persuasive for some forms of sale, such as commercial sales, there seems to be little sense in the existence of the complicated system of time limits for notification. A simple reference to ‘reasonable time’ after discovery would suffice.551 292. Only the defects which become apparent within the so-called warranty time period are relevant. For commercial and non-commercial sales, the time period is six months from delivery (Article 462/2 of the OC), whereas in consumer contracts, this time period is two years from delivery (Article 37b of the CPA).552 However, this is not the only time period which the buyer has to observe: the claims can only be made within a further, one year (commercial and non-commercial sales in Article 480 of the OC) or two years (Article 37c/3 of the CPA being a mandatory regulation). The time limit is considered to be a cut-off one, i.e., no interruption or suspension is possible. The combination of these two time periods is unusually harsh towards the buyer. 293. However, both requirements – the notification of defects as well as warranty time period are quite different with regard to the contract for work in the OC. Here, the purchaser must notify a hidden defect within one month after the discovery while the supplier is liable for latent defects which become apparent within two years after the purchaser had accepted the work.553 The remedies of the purchaser,

545. 546. 547. 548. 549. 550. 551. 552. 553.

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See Arts 461/1 and 462/1 of the OC. Article 461/2 of the OC. Article 462/2 of the OC. Article 464/1 of the OC. Article 37a of the CPA. Two months is also the time limit set in the Protection of Buyers of Apartments and Single Occupancy Buildings Act, see Art. 24/1. See Možina, Predpostavke in cˇasovni okviri odgovornosti prodajalca za stvarne napake, Podjetje in delo 3–4/2008, pp. 407 et seq. Ibid. The same time limit applies according to Protection of Buyers of Apartments and Single Occupancy Buildings Act, see Art. 23. Article 634 of the OC.

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however, may only be used within an additional year (cut-off period).554 It is difficult to see why the parties are treated so differently in contracts for sale and contracts for work. 294. Another issue is the relationship between claims for supplementary performance themselves, i.e. between repair and replacement, and the relationship between them and other warranty claims (price reduction, damages and rescission). In the regulation of sales contract, the OC did not introduce a hierarchy between warranty claims (as it did with regard to the claims arising from the guarantee for proper functioning).555 It did, however, limit the right to rescission: as in the case of non-performance (delay), the debtor (seller) must be given a reasonable additional time before the creditor can rescind the contract.556 A reasonable time need not pass if the seller has notified the buyer that he or she will not repair or replace in additional time, or if this is clear from the circumstances.557 However, the buyer can reduce the price right away, without giving the seller a chance to repair or replace. Therefore, the seller (debtor) has only a limited right to cure his or her performance: he or she must be given a chance to perform only before rescission, but not before price reduction. The immediate possibility of price reduction is not consistent with the idea of the seller having a chance to cure his defective performance. Furthermore, no reason is apparent for a different sequence of remedies with regard to guarantee for proper functioning (which was meant to be mandatory in Yugoslav law) and warranty for material defects as both institutions serve to protect essentially the same interest of the buyer. 295. Furthermore, the OC did not limit the creditor’s right to choose freely among the remedies (except, as already explained, in case of rescission). The EU Consumer Rights Directive (99/44/EC) was transposed into the CPA in a way that was as much similar to the sales law in the OC as possible.558 This approach is probably also the reason why Article 3/3 of Directive 99/44 establishing a limitation due to the impossibility and the disproportionate costs of repair in relation to replacement and vice versa,559 as well as Article 3/5 of the Directive establishing the relation between the first (repair, replacement) and the second-grade remedies, was not transposed into Slovenian law at all.560 That does not per se mean that the Slovenian consumers are worse off; however, the balance of rights and obligations is leaned a bit towards the side of the buyer in Slovenia. In B2C contracts, the seller

554. Article 635 of the OC. 555. See Art. 481–484 of the OC: first repair (in reasonable time), then replacement (in reasonable time), only then rescission or price reduction, in any case also damages. 556. Article 470/1 of the OC. 557. Article 470/2 of the OC. 558. See Možina, Potrošniška prodajna pogodba, in: Trstenjak, Knez, Možina, Evropsko pravo varstva potrošnikov, GV Založba, Ljubljana 2005, pp. 71 et seq. 559. See CJEU, C-65/95 and C-87/09 (Weber, Putz) from 16 Jun. 2011. 560. See Možina, Pravice kupca na podlagi stvarne napake pri prodajni pogodbi, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2012, pp. 93 et seq.

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cannot object the (relative) disproportionality according to Article 3/3 of the Directive. The buyer can claim price reduction straight away.561 There is, however, some (older) case law which goes in the direction of limiting the free choice of the buyer: if the interest of the buyer can be satisfied by a remedy that is less expensive for the seller, the choice of the more expensive remedy (in casu: the repair was much more convenient than replacement) would represent an abuse of law.562 296. It seems, however, that the idea that the (supplementary) performance, or, in other words, bringing the performance into conformity with the contractual (or other) obligations, should not be disproportionately difficult or costly for the debtor is nevertheless accepted in (Yugoslav and) Slovenian law. This is apparent from the regulation of contract for work in the OC: according to Article 637 of the OC, the supplier may, in case the purchaser claims the repair of the defect, refuse such repair if it would cause ‘excessive’ costs; the purchaser retains the right to reduce the price or rescind the contract and, in both cases, claim recovery of loss. Also, a provision within the regulation of contract for work expressly gives the supplier a right to cure his or her defective performance in all cases except if the work has a defect which makes it unusable, or if the work was done against explicit terms of the contract. The purchaser is obliged to let the supplier remove the defect.563 He or she may set a reasonable time for that and if the supplier does not remove the defect by then, the purchaser may remove the defect him or herself and have the supplier pay, or reduce the price, or rescind the contract, unless the defect is minor.564 In all cases, he or she can also claim damages. 297. In cases of ‘legal defects’, i.e., rights of third persons relating to the object of contract (performance) which exclude or reduce the rights of the creditor,565 the creditor can also claim (supplementary) specific performance in the sense that the debtor ‘frees’ the performance of such rights. However, the situation is different from material defects in two important respects. First, the creditor’s rights (claims) arising from legal defect do not depend on the notification of defects by the creditor.566 And second, they are not dependent on a ‘warranty’ time period. In principle, the creditor may rely on legal defects for an unlimited amount of time (which opens serious issues). A legal defect might therefore become apparent long time after conclusion of the contract. However, once the legal defect becomes apparent, i.e. a third 561. With regard to the enforcement of price reduction: lately, the Supreme Court of RS has formed an opinion that a price reduction can only be achieved with the judgment of the court, see judgment of the Supreme Court of RS, No. II Ips 36/2012 of 17 Oct. 2013, and a critical assessment in Možina, Problem uveljavljanja znižanja pogodbene cene, Pravna praksa 43/2016, p. 16. The standpoint of the Supreme Court is not valid for consumer sales (B2C), see judgment of the High Court of Ljubljana, No. II Cp 1438/2014 of 26 Jan. 2015. 562. Judgment of the Supreme Court of RS, No. II Ips 968/93 of 6 Apr. 1995. 563. Article 639/1 of the OC. 564. Article 639/3 of the OC. 565. See Art. 488/1 of the OC. 566. See Art. 491 of the OC. However, if the creditor does not notify the debtor of the defect and loses a dispute with the third person (owner of the right), the debtor can object that he or she could have prevented the third person from winning.

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person claims its right in the object of contract, the creditor may claim specific performance or price reduction or rescission and, in any case, damages, within one year.567 Limitations of use of contractual object arising from public law are also considered legal defects.568 §3. TERMINATION I. Non-performance (Delay) 298. Articles 103–111 of the OC contain a regulation of termination of contract due to ‘non-performance’. The latter is to be understood as total absence of performance, e.g. non-delivery, including the delivery of something completely different than agreed (so-called aliud). In principle, the OC had accepted the German ‘Nachfrist’ model. As a rule, a creditor cannot terminate the contract straight away due to the debtor’s non-performance of an obligation which is due. 299. An exception applies to the so-called fixed-time contracts, i.e. contracts where the performance in agreed time is of the essence.569 This may be agreed explicitly, but it may also be inferred from the circumstances of the case, such as the nature of contract. If a fixed-time contract is not performed the moment it is due, the contract is considered automatically terminated.570 The creditor need not give notice to the debtor as regards the termination. However, the creditor may nevertheless maintain the contract in force, if he or she notifies the debtor about it ‘without hesitation’ after his or her obligation is due.571 300. In all other cases, i.e., where time of performance is not of the essence, the debtor’s duty to perform the contract is unchanged by his or her delay, and the creditor remains to be obliged to accept the delayed performance. If the creditor wants to terminate the contract, he or she must set the debtor an additional reasonable time to perform.572 An exception applies to the situation where it is obvious that the debtor would not perform in additional time.573 301. The function of the additional time is to allow the debtor ‘a last chance’ to perform the contract as agreed. If the additional time lapses without performance, the creditor can terminate the contract. However, the creditor need not notify the 567. 568. 569. 570. 571. 572.

Article 495/1 of the OC. Article 494 of the OC. Article 104/1 of the OC. Ibid. Article 104/2 of the OC. Article 105/2 of the OC. The creditor must ‘set’ a reasonable time; it is not enough if he or she merely claims performance and waits a reasonable time, see judgment of the Supreme Court of RS, No. III Ips 113/2015 of 24 Mar. 2017. Art. 105/2 of the OC speaks of the creditor ‘letting’ the debtor a reasonable additional time. 573. Article 106 of the OC.

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debtor of his or her termination as the contract is considered automatically terminated (ex lege).574 Only if the creditor notifies the debtor ‘without hesitation’ that he or she wishes to hold on to the contract, the contract is not automatically terminated.575 302. Although the termination is not possible if the ‘non-performance’ of contract is not minor (Article 110 of the OC), this cannot be understood in the sense of fundamental breach but rather as a rule excluding irrelevant breaches.576 The Yugoslav legislator did not accept the idea of Konstantinovic´ whose draft allowed termination of contract only in case of a fundamental breach. 577 303. The remedy of termination is not, in principle, limited in the sense that it could only be used within certain time after the breach occurred. Although the party who ‘intends’ to terminate the contract should notify the other party without hesitation (Article 109 of the OC), a failure to do so may result in liability for damages, but does not prevent the termination.578 Therefore, the creditor can, in principle, set an additional time long after the breach had occurred. From the perspective of the debtor, who perhaps relied on the behaviour of the creditor (who did not terminate the contract), this may seem harsh and contrary to legal certainty. 304. The legislator, however, accepted the proposal of Konstantinovic´ with regard to anticipatory breach.579 A contract may be terminated, and damages claimed before the obligation of the other party is due, if it is obvious that he or she will not perform its obligations (Article 107 of the OC). Here, the contract is terminated by notice to the other party. However, a parallel provision with the notion of ‘essential’ time (fixed-time contract) – as proposed by Konstantinovic´ (a contract may be terminated before maturity if it is clear that there will be a fundamental breach of contract) – would seem consistent. 305. A termination of the contract with successive performances (recurring obligations) is subject to a special rule (Article 108 of the OC): in principle, a breach of one partial obligation in a contract with recurring obligations only entitles a party to terminate the part of the contract where the breach occurred. The past performances and the future recurring obligations are not affected by the partial termination. However, if it is obvious that also the future obligation will not be performed, the creditor may terminate the contract pro futuro.580 Again, the termination does not affect past performances. Only if the performance, including past performances, 574. 575. 576. 577.

Article 105/3 of the OC. Article 104/2 of the OC. See the parallel provision in sales law, Art. 458/3 of the OC: a minor material defect is irrelevant. See, e.g., Arts 94 (termination for non-performance), 99 (anticipated fundamental breach), 417 (termination due to material defect under sales contract), 637 (termination for material defect under contract for work) of the Konstantinovic´’s Sketch for the Law of Obligations. 578. See, e.g., judgment of the High Court of Koper, No. VSK II Ip 635/2009 of 5 Feb. 2010. 579. See Art. 99 of the Sketch, Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969. 580. Article 108/1 of the OC.

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without the missing part (i.e., the part with the breach), has no meaning to the creditor, he or she may terminate the contract as a whole.581 II. Defective Performance A. Material Defects in Sales Contract 306. In principle, the creditor can terminate the contract due to any material defect as long as it is not minor (i.e., irrelevant) and he or she has set the debtor a reasonable additional time.582 If it is clear that the debtor will not repair or replace the goods in additional time, the setting of additional time is not necessary.583 307. Furthermore, as already mentioned (see Part I, Chapter 6, §3), the termination is one of the buyer’s ‘warranty’ remedies and is available only if performance has a material defect which the creditor did not know of at the time of the conclusion of the contract584 and has notified the debtor (seller) in timely and correct manner, and within the ‘warranty’ time period. As explained, there are big differences with regard to both elements depending on the kind of sales contract (commercial sale, non-commercial sale, consumer sale) and also the type of defect (apparent, hidden). The time period for notification ranges from ‘immediately’ (both parties in non-consumer sale present at inspection) to ‘two months’ after discovery (consumer sales). 308. There is an additional requirement for termination due to material defect in sales contract in Article 475 of the OC. The creditor can terminate only if he or she is able to return the goods in the condition he had received them. The purpose of the provision is clearly to protect the seller (the debtor). However, if the deterioration or destruction of the goods is not attributable to the buyer, but to the defect or to an accident, he or she may nevertheless terminate the contract. Deterioration due to normal use is considered not attributable to the buyer.585 309. The mechanics of termination due to material defects are similar to the mechanics of termination due to non-performance. If the creditor sets an additional reasonable time which lapses without repair or replacement, the contract is terminated automatically, ex lege, at the time the additional time lapses.586 No notice (separate from the setting of additional time) is necessary. Again, the creditor may ‘resurrect’ the contract by notifying the debtor of it ‘without hesitation’. The question is whether the contract is automatically terminated in case the parties agreed 581. 582. 583. 584. 585. 586.

Article 108/2 of the OC. See Arts 470/1 and 458 of the OC. Article 470/2 of the OC. Article 460 of the OC. See Art. 475/2,3 of the OC. Article 471 of the OC.

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that defect-free performance in certain time is of essence to the contract. In the light of termination due to non-performance, such an agreement with such an effect certainly seems possible. B. Material Defects in Contract for Work 310. The regulation of termination due to material defect in the contract for work is different. It appears that the idea of immediate termination due to fundamental breach is still traceable, perhaps due to the fact that a different member of the legislative commission was working on these provisions of the Sketch. Namely, with regard to contract of work, the creditor (purchaser) can terminate the contract immediately if the work has a defect which makes the work unusable, or if it was done contrary to explicit contract terms (Article 638 of the OC). The contract is terminated by notice to the supplier.587 In all other cases, the creditor can terminate only after he or she had set a reasonable additional time.588 The debtor has an explicit right to cure defective performance.589 The legal situation is very close to the one proposed by the Sketch,590 albeit without an explicit reference to fundamental breach. The result is nevertheless the same in most cases. C. Legal Defects in Sales Contract 311. The regulation of termination due to legal defects of the object sold is simple. If a third person takes the goods away from the buyer (i.e., so-called eviction, Sl. evikcija), the contract is terminated automatically (ex lege).591 However, if the right of the creditor with regard to the object of sale is merely reduced and not excluded, the creditor can choose either to terminate the contract or to reduce the price.592 Although the wording of Article 490/1, 2 of the OC is a bit unclear, there is an additional requirement for termination: the creditor may only terminate if, due to the legal defect, ‘the purpose of the contract cannot be achieved’. As with regard to termination due to a defect in contract for work, it is obvious, in particular in comparison of the text of the provisions, that these are remains from the proposed termination due to fundamental breach.593 If the purpose of the contract, i.e. the main reason why the parties concluded a contract (also the so-called causa), cannot be achieved, this is clearly a fundamental breach according to Konstantinovic´.

587. 588. 589. 590.

Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1985, p. 1801. Article 639/3 of the OC. Article 639/1 of the OC. Articles 647 and 648 of the Sketch, Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969. 591. Article 490/1 of the OC. 592. Ibid. 593. See Art. 438 of the Sketch, Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969.

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§4. EXCEPTIO NON ADIMPLETI CONTRACTUS (THE DEFENCE OF NONPERFORMANCE BY THE OTHER PARTY) 312. A party can withhold the performance of his or her obligation if the other party is not ready to perform his or her reciprocal obligation which is due.594 The purpose of this defence is twofold: on the one hand, a party exerts pressure on the other party to perform while on the other it protects the party from the risk of performing without receiving the reciprocal performance in exchange.595 There is some uncertainty in the case law with regard to the extent of the non-performed part of the obligation which justifies a party to withhold its performance. Some courts seem to think that the defence is only available if the main obligation is not performed, and not just ancillary obligations.596 However, other courts held that also a defective performance by the other party justifies a party to withhold the entire performance.597 One can conclude from the fact that a party is not obliged to accept defective performance that the objection is also possible in case of defective performance.598 However, the good faith principle has to be observed, too. In some cases, the good faith principle might prevent the full operation of the right.599 In case of partial non-performance by the other party, and if the first party’s obligation is divisible, the defence is to be used accordingly, i.e., proportionally.600 313. However, simultaneous performance is not always the case in practice. If one of the parties has to perform first, Article 101 of the OC cannot be applied as the obligation of the other party is not yet due. However, Article 102 of the OC provides a solution for this situation: if the economic situation of the other party has deteriorated since conclusion of contract to the extent (or before conclusion, but the first party could not have known about it) that it is questionable whether he or she will be able to perform his or her obligation or not, or other serious reasons justify such concerns, then a party can withhold the performance of his or her obligation until the other party is ready to perform or until adequate security (collateral) is provided.601 If the latter is not provided within reasonable time, a party can terminate the contract.602 314. As already mentioned, there is also a statutory right of the buyer of an apartment or a house to withhold a part of the purchase price for the purposes of repairing hidden defects.603 594. 595. 596. 597. 598. 599. 600. 601. 602. 603.

Article 101/2 of the OC. See Možina, Kršitev pogodbe, GV Založba, Ljubljana 2005, pp. 264 et seq. See, e.g., judgment of the Supreme Court of RS, No. III Ips 82/2004 of 20 Mar. 2012. See judgment of the High Court of Ljubljana, No. I Cpg 1307/2012 of 23 Jan. 2013. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003, p. 555. See also: Shelhaas in: Vogenauer, Commentary to UNIDROIT principles (PICC), Oxford University Press, Oxford 2015, p. 843. Ibid. Article 102/1 of the OC. Article 102/3 of the OC. See Protection of Buyers of Apartments and Single Occupancy Buildings Act, Art. 15. If the seller does not enable the buyer to check whether the seller is able to deliver the property as agreed, the

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315. The right of retention from Articles 261–264 of the OC bears some similarity with the right to withhold performance. However, the right of retention is much broader and does not apply only to contractual but to all obligations. If a creditor whose claim towards the debtor is due (mature), holds anything that belongs to the debtor, he or she may withhold the delivery until the debtor performs his or her obligation.604 If the debtor is insolvent, his or her obligation need not be due.605 There is no right to retention with regard to the things that were taken away from the creditor against his or her will (e.g., stolen or taken by force) or things which were given to the creditor for storage or gratuitous loan.606 Also, some documents of the debtor, such as his or her ID and similar things which cannot be sold, cannot be withheld.607 If the debtor offers adequate collateral, the creditor must return the things. If the debtor does not perform his or her obligation in spite of retention, the creditor is allowed to sell the things and settle his or her debt as if the things were pledged; he or she must notify the debtor of his or her intent in advance.608 §5. FAULTY BEHAVIOUR OF THE CREDITOR 316. As already explained (see Part I, Chapter 5, §1, and Chapter 6, §2), the creditor’s breach of cooperation duty (which is not considered a real enforceable obligation, but rather an expectation) is the basis for creditor’s delay or mora creditoris (Articles 300–310 of the OC). The purpose of mora creditoris is to exonerate the debtor of the consequences of non-performance of his or her obligation which is attributable to the debtor. In sales contract, the situation where the buyer does not take over the goods is mora creditoris. The seller has to preserve the goods for the buyer and can recover the costs. In some cases, the seller can sell the goods and hand over the proceeds to the buyer.609 The risk of accidental damage is transferred on to the buyer.610 If the buyer, in addition to not taking delivery, refuses to pay the price, the seller can terminate the contract.611 Also in the terms liability for loss due to the breach of contract the debtor is not liable to the loss attributable to the creditor (Article 244 OC, see infra Part I, Chapter 6, §7).

604. 605. 606. 607. 608. 609. 610. 611.

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buyer may withhold 10% of the purchase price. If, at the inspection, defects are discovered, the buyer may withhold (additional) 5% of the purchase price. If, at the delivery, the seller does not put forward a bank guarantee for the repair of defects, the buyer may withhold (additional) 5% of the price and if the buyer is not able to enter his or her ownership rights in the land register, he or she may withhold another 5% of the price. Article 261/1 of the OC. Article 261/2 of the OC. Article 262/1 of the OC. Article 262/2 of the OC. Article 264 of the OC. Article 502 of the OC. Article 437 of the OC. Article 499/2 of the OC.

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§6. LIMITATION OF ACTIONS 317. As already explained (see Part I, Chapter 6, §2), all claims arising from defective performance are subject to the so-called warranty time period which are considerably shorter than prescription time periods, which, in principle, apply to remedies for non-performance (delay), including creditor’s delay. These time periods are different for different types of contract: with regard to sales, the shortest warranty period (the time, in which relevant defects can become apparent) is six months from delivery; this is applicable to commercial sales (B2B) and noncommercial sales except consumer sales (C2C) unless the parties agree a different time period. For consumer sales (B2C), the (mandatory minimum) time period is two years from delivery, and the same time period applies to sales of apartments and houses according to the Protection of Buyers of Apartments and Single Occupancy Buildings Act. The two-year warranty time period also applies to contract for work. However, in addition to the warranty time periods, of which the six months’ time period in the OC is extremely short, also from a comparative point of view,612 all remedies of the creditor can only be used within one-year cut-off after notifying the debtor of the defects (two years in B2C Sales). It seems that the source of inspiration for this provision of Article 480 of the OC (Article 500 of the Yugoslav OA, Article 429 of the Sketch) was Article 49 of the Hague Uniform Sales Law Convention,613 which, however, was to be understood together with the two-year time limit, running from the handing over of the goods, in which nonconformity was to be notified, in Article 39/1 of the Convention614 However, the provision, which was also criticized,615 was not taken over into the CISG;616 furthermore, the Convention on Limitation Period in the International Sale of Goods was adopted in 1974, introducing a different approach.617 In Yugoslav literature, the purpose of one-year cutoff period was explained as a means to prevent the speculations of the buyer with regard to rising or falling of the prices after the conclusion of the contract.618

612. See, e.g., Možina, Predpostavke in cˇasovni okviri odgovornosti prodajalca za stvarne napake, Podjetje in delo 3–4/2008, pp. 407–426. 613. Convention relating to a Uniform Law on the International Sale of Goods (The Hague, 1964). 614. The purpose of the cut-off time period was to achieve clarity and uniformity in international sales contracts, as for interruption and suspension, which are connected to prescription period, the national law would have to be applied, see Beß, Die Haftung des Verkäufers für Sachmängel und Falschlieferungen im Einheitlichen Kaufgesetz, Carl Winter Universitätsverlag, Heidelberg 1971, p. 137. 615. See, e.g., Mertens, Rehbinder, Internationales Kaufrecht, Kommentar zu den einheitlichen Kaufgeesetzen, Alfred Metzner Verlag, 1975, Art. 49, No. 3; Stötter, Internationales Einheits-Kaufrecht, Wilhelm Goldmann Verlag, München, 1975, p. 280. 616. United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980). 617. The core of the Convention is the prescription time limit of four years, which, in case of defects, is running from the handing over of the goods (or buyer´s default), see Arts 8 and 10. See, e.g., Boele-Woelki, The limitation of rights and actions in the international sale of goods, Uniform Law Review 3/1999, p. 621. 618. See Kapor in: Blagojevic´, Krulj (eds), Komentar zakona o obligacionim odnosima, Savremena administracija, Beograd 1981, p. 998.

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318. With regard to prescription of damages claims arising from ‘nonperformance’ of contracts (in the sense of total absence of performance or completely different performance) Article 352/3 of the OC provides that for the damages claim arising from breach of contractual obligation, the prescription period set for the prescription of ‘that contractual obligation’ is relevant. The provision is somewhat odd, as the OC – apart from claims from contracts for rent (Article 351 of the OC), the so-called domestic claims (i.e., claims for the electricity, subscription for magazines, television, with the prescription period of one year, running from 1 January of the next year, following the year in which the claim became due)619 and insurance contracts620 – does not really specifically regulate the prescription of claims from individual contracts. The cut-off periods for the warranty claims in sales contract, contract for work and building contract are not subject to rule on prescription. For contractual claims, therefore, the following general rules on prescription are relevant: first, the prescription period starts to run when the claim is ‘born’ (actio nata),621 i.e., when the contractual claim (for specific performance) is due. Second, the general prescription period is five years (Article 346 of the OC), and third, the claims from commercial contracts (B2B) is three years, running from each individual delivery of goods or provision of services.622 Fourth, with the lapse of time period for prescription, nothing happens automatically. A court may not consider that a claim is time-barred on its own motion but only if the debtor relies on prescription.623 319. However, the courts seem to follow a different path with regard to prescription of contractual claims. They apply the provision of Article 352/1 of the OC – the provision regulating the prescription of non-contractual (delictual) damages.624 A claim is time-barred in three years after the aggrieved person had gained knowledge of the loss and the person who caused it (the so-called subjective time limit); however, the claim is time-barred in any case in five years from the occurrence of loss.625 In cases when the loss accrues continuously, such as when, due to breach of contract, a party was unable to use his or her business promises for a longer period of time, the courts apply a rule that the prescription period (with regard to future damage) starts to run already at the moment when the loss is foreseeable (and not the moment when the loss actually occurs).626 Thus, in this type of situations (continuous loss), the claim for all foreseeable future loss must be filed before the claim for the first loss of this kind is time-barred, although the future loss has not yet occurred. 619. 620. 621. 622. 623. 624.

See Art. 355 of the OC. Article 357 of the OC. Article 336 of the OC. Article 349 of the OC. Article 335/3 of the OC. See, e.g., judgments of the Supreme Court of RS, Nos. III Ips 87/2017 of 13 Mar. 2018, No. 20, and III Ips 75/2013 of 18 Feb. 2015 (in case where the creditor made a substitute transaction, he or she is considered to gain knowledge of the loss at the time the transaction was made and not before that). See also judgment of the High Court of Ljubljana, No. I Cp87/2017 of 29 Mar. 2017. 625. Article 352/1,2 of the OC. See also: Možina, Zastaranje nepogodbeneih odškodninskih zahtevkov, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, p. 227. 626. See judgment of the High Court of Ljubljana, No. I Cpg 986/2016 of 21 Jun. 2017.

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320. The position of the creditor with regard to defective performance is much different from non-performance (delay), where his or her claims are subject to prescription claims. General prescription time period is five years and three years in commercial contracts (from the time the claim arose).627 There are no convincing reasons for such a strong differentiation, in particular if we consider that the difference between a partial non-performance, triggering the sanctions for delay, and defective performance, triggering warranty claims, can be very subtle.628 The very short time periods in combination with a further one-year cut-off period in sales contact are unusually harsh towards the buyer (the creditor). It could be considered as one of the weakest points of the entire OC. §7. DAMAGES AND EXEMPTION CLAUSES I. Exemption from Liability 321. The liability for loss due to breach of contract in the Yugoslav and the Slovenian laws is not based on fault.629 According to the general exemption provision (Article 240 of the OC) the debtor is exempt if he or she proves that ‘circumstances arising after the conclusion of the contract that he or she could not have overcome or avoided’ prevented him or her from performing the contract as agreed. From the fact that only circumstances arising after the conclusion are relevant, it can be concluded that these must be unforeseeable at the time the contract was concluded; if they were foreseeable, the debtor should have taken them into consideration. In Yugoslav literature there was some discussion whether the provision (Article 163 of the Yugoslav OA) should nevertheless be understood as a ‘subjective’ concept of liability, as the wording (after the originally proposed text, which was much clearer,630 was being modified and the words ‘force majeure’ and ‘external’ circumstances removed).631 Certainly, the liability of the seller for the nonconformity of the goods with the contract is independent of fault.632 The prevailing view in Slovenian law today is that the debtor is liable for circumstances from his or her own sphere of influence.633 For circumstances under his or her control (‘internal’ risks), 627. See Arts 346, 349 and 336 of the OC. 628. See, e.g., judgment of the High Court of Ljubljana, No. VSL I Cpg 1258/2011 of 11 Dec. 2012 (the court held that an unfinished building project is not a defective performance but a partial performance). 629. See also: Možina, Some remarks on damages for breach of contract in Slovenian law, Evropski pravnik 2/2015, pp. 49–91. 630. See Art. 208 of the Sketch, Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969. 631. See, e.g., Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1980, p. 939; Ðor evic´ in: Perovic´, Stojanovic´ (eds), Komentar zakona o obligacionim odnosima, Pravni fakultet, Kragujevac 1980, p. 762. 632. See Art. 478/1 of the Yugoslav OA, now Art. 458/1 of the OC: ‘regardless whether he or she knew of the defects or not.’ 633. See Plavšak, in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2004, p. 214; judgments of the High Court of Ljubljana, Nos. Cpg 59/2011 of 22 Mar. 2011, I Cpg 100/2011 of 15 Nov. 2011, I Cpg 603/2011 of 24 Feb. 2012. However, there are also

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such as the organization of production (if the debtor is a producer) or his financial capacity to perform the contract, the debtor is always liable. The debtor is also responsible for the work of the persons involved in performance on his side.634 He or she is only exempt if he proves the breach is a result of unforeseeable and unavoidable circumstances beyond his or her control. This concept is very close of the principle of strict liability for a breach of contract under Article 79/1 of the CISG, Article 7.1.7/1 of the Unidroit PICC and Article 8:108/1 of the PECL. 322. There are, however, also contract types where not a specific result is owed, as, e.g., in contract of sale or contract for work (obligation de résultat), but rather the exercise of certain diligence (obligation de moyen): such is the case of mandate contract.635 Furthermore, the OC also contains cases of slightly differently formulated exemptions, such as with regard to the obligation of the carrier to ensure the safety of passengers636 or to carry the passenger without delay to the destination.637 II. The General Measure of Damages and the Foreseeability of Loss 323. In general, the damages should compensate the aggrieved party in full for his or her loss: damages are to be awarded in an amount that should put the creditor in the position (or as near as possible) in which he or she would have been if the contractual obligation had been duly performed.638 This includes the loss that the creditor suffered (damnum emergens, Sl. navadna škoda) as well as the reasonably expected profit of which he or she was deprived (lucrum cessans, Sl. izgubljeni dobicˇek).639 Although the wording of Article 243/1 of the OC seems to refer only to patrimonial (material) loss, it is clear that also non-material loss is to be compensated.640 This has always been the case with regard to injury or death caused by a breach of contract;641 but lately – as a result of EU law – also with regard to lost holiday, i.e. dissatisfaction and distress without any physical injury due to the

634. 635. 636.

637. 638. 639. 640. 641.

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different decisions, see, e.g., judgment of the Supreme Court of RS, No. I Ips I 78/2014 of 21 Feb. 2016 (liability for breach of contract is based on fault). See Art. 630 of the OC (contract for work), Art. 244 of the OC (indirectly). See Art. 768 of the OC. Article 702/1 of the OC: the carrier is liable for the safety of passengers, regardless whether the transport is gratuitous, and must repay any damage due to impairment of health, injury or death, unless it occurred due to an action of the passenger or an unforeseeable, external and unavoidable cause. Article 701/2 of the OC: The carrier is liable for loss of the passenger due to delay, unless the delay is a result of a cause, which he or she could not have overcome even with the diligence of an expert. See Arts 169 and 246 of the OC. Article 168/3 of the OC. See Možina, Nepremoženjska škoda zaradi kršitve pogodbe, Izbrane teme civilnega prava, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2006, pp. 33–51. See, e.g., judgment of the High Court of Koper, No. Cp 689/99 of 17 Nov. 1999 (a plaintiff fell off a horse due to the negligence of a riding instructor), judgment of the Supreme Court of RS, No. II Ips 160/2013 of 23 Apr. 2015. See also: Možina, Nepremoženjska škoda zaradi izgube pocˇitnic: Leitner pri nas doma, Podjetje in delo 1/2014, pp. 41–56.

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breach of tourist package contract.642 The circumstances arising after the breach are to be taken into account as well, i.e. any benefit the creditor might have obtained due to the breach, must be deducted from the damages (compensatio lucri cum damno). 324. However, damages will be awarded only for the loss that the debtor foresaw or could have foreseen. Article 243/1 of the OC limits the scope of the debtor’s liability by the principle of the foreseeability of the loss. The uniform sales law (ULIS) was the source of inspiration for the Yugoslav legislator.643 It is not the precise amount of loss that must have been foreseen or foreseeable, but loss of the same nature and general amount as the loss that actually occurred.644 The basic standard of foreseeability is an objective one: the debtor is always liable for what a reasonable person in his or her position would have foreseen on the basis of the circumstances known to him or her. In other words: the amount of damages is primarily limited to the average foreseeable loss.645 Loss that is a result of the ordinary course of events is objectively foreseeable.646 What is objectively foreseeable also depends on the parties to the contract: some losses that are considered foreseeable in B2B contracts, such as loss of production or loss of profit from resale, are not generally foreseeable in B2C contracts. The objective test is supplemented by a subjective one: the loss which the debtor ought to foresee with regard to the facts known to him or her.647 With regard to the burden of proof of the foreseeability of loss, the Supreme Court of RS took a surprising standpoint that it is the debtor (not the creditor) who should prove that he or she did not foresee the loss; namely, it is presumed that the typical course of events was foreseeable to the debtor.648 325. When the Slovenian OC was adopted, the legislator changed the reference point for foreseeability. Whereas in the Yugoslav OA (Article 265), as in the CISG (Article 74) and in all other systems with a foreseeability doctrine in contract law, the reference point in time is the foreseeability of loss at the moment of the conclusion of the contract, Article 243 /1 of the Slovenian OC contains the reference to debtor’s foreseeability of loss at the time of the breach of contract.649 As the parties make the calculations with regard to contractual risks, costs and benefits at the time of conclusion of contract, it is only logical that this moment is the reference for the 642. Judgment of the Supreme Court of RS, No. II Ips 160/2013 of 23 Apr. 2015. See also: Možina, Nepremoženjska škoda zaradi izgube pocˇitnic: Leitner pri nas doma, Podjetje in delo 1/2014, pp. 41–56. 643. See Mitrovic´ in: Blagojevic´, Krulj (eds), Komentar zakona o obligacionim odnosima, Savremena admonstracija, Beograd 1980, p. 667. 644. See judgment of the High Court of Ljubljana, No. I Cp 3992/2010 of 10 Nov. 2010, and Schwenzer, in: Schlechtriem, Schwenzer (eds), Commentary on CISG, 3rd ed., Oxford University Press, 2010, Art. 74, p. 1020. 645. Judgment of the Supreme Court of RS, No. III Ips 50/2010 of 20 Mar. 2013. 646. Mckendrick, in: Vogenauer, Kleinheisterkamp (eds), Commentary on UNIDROIT’s Principles of International Commercial Contracts, 2009, Art. 7.4.4., No. 6, p. 887. 647. Article 143/1 of the OC. 648. See judgment of the Supreme Court of RS, No. II Ips 178/2014 of 21 Jan. 2016 and II Ips 316/ 2016 of 16 Feb. 2017. 649. Article 243/1 of the OC.

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foreseeability of loss. No explanation for this change was offered by the legislature. It seems probable that the ‘change’ might be in fact a consequence of an error.650 If the change is nevertheless taken seriously, it could mean a significant shift in the amount of liability for breach of contract, as the debtor normally knows more about his or her counterparty at the time of a breach than at the time of the conclusion of the contract.651 326. If the breach of contract is intentional or grossly negligent, the foreseeability limitation on damages does not apply (Article 243/2 of the OC). This approach is the same as in the PECL,652 but is also a subject of a well-justified criticism.653 The question arises as to what amount of loss is recoverable in this case. The case law did not deal with this issue yet. Certainly, only the loss which is a direct consequence of the breach (i.e., not too remote) can be relevant. 327. The creditor is not entitled to damages to the extent that he or she, or the persons he or she is responsible for, contributed to the breach of contract (Article 244 of the OC). This applies both in cases where the creditor’s conduct contributed to the breach in part or in whole, and in cases where the creditor, although not contributing to the breach, contributed to its effect, i.e. the amount of loss, by not taking reasonable measures to reduce the loss or even by increasing the loss (mitigation of loss). However, the creditor is entitled to recover reasonable expenses in attempting to reduce the loss.654 III. The Recovery of Loss 328. The first section (right to damages) of the third chapter of the OC (The effects of obligations) contains provisions on damages for breach of contractual duties, including provisions on contractual penalty (Articles 239–254 of the OC). Some other sections, such as the third section of the same chapter (Retention right) contain further provisions regulating the calculation of damages in case of substitute transactions (Articles 265–267 of the OC), and judicial penalty (Article 269 of the OC). With regard to issues not regulated by the provisions on damages for breach of contract, the provisions on non-contractual damages are to be ‘reasonably’ applied.655 In the first line, this refers to the provisions on legally relevant loss 650. Možina, Odškodninska odgovrnost za kršitev pogodbe, Podjetje in delo 2/2016, p. 277. 651. Indeed, it is understood like this by the case law, see judgment of the High Court in Ljubljana, No. II Cp 2280/2008 of 25 Feb. 2009. In this case an apartment was sold and was to be delivered in a year. Well after the conclusion of the contract, the buyer sold his own apartment, expecting to move in to the newly acquired one. A penalty clause for delay was agreed upon. However, the seller was late, and the buyer could not move out of his own apartment and had to pay penalties under his contract with the buyer of his old apartment. The court awarded him damages covering these penalties. See also: Možina, Kršitev pogodbe, GV Založba, Ljubljana 2006, p. 388. 652. See Art. 9:503 of the PECL. 653. See Zimmernann, Limitation of Liability for Damages in European Contract Law, The Edinburgh Law Review 18.2. (2014), pp. 193, 209. 654. See, e.g., judgment of the Supreme Court of RS, No. II Ips 765/2007 of 30 Oct. 2008. 655. Article 246 of the OC.

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(material and non-material) and its recovery in Articles 164–185 of the OC. However, it has to be kept in mind that there are some fundamental differences with regard to contractual damages, such as the nature of liability and the limitations of liability (foreseeability). 329. In principle, a damages claim can accompany the claim for specific performance (e.g., damages for delay) or, if absence of performance is definite, it can substitute the claim for specific performance (damages in lieu of performance, which also include damages for delay). Loss due to delay can take the form of the cost of a bridging measure, such as the hire of substitute goods for the time of the delay. Loss due to delay can also take the form of a contractual penalty that the creditor has to pay to a third party, if it was foreseeable to the debtor. Loss of use of things is another form of loss due to delay. In principle, this constitutes material (economic) loss. In B2B contracts, loss of use is reflected in loss of profit. In B2C or C2C contracts, damages for loss of use of things are awarded if a substitute good was hired; however, the courts are reluctant to acknowledge abstract damages for loss of use of things.656 However, abstract damages in the form of interest or delay (default) are recognized with regard to payment delays, regardless of the actual loss of the creditor.657 If the loss due to a delay in the performance of monetary obligations is higher than the interest accrued, the creditor may claim the difference.658 In B2B contracts, any delay of payment for goods and services also triggers a EUR 40 lump-sum compensation for recovery costs.659 330. A further characteristic of the OC is relatively extensive regulation of substitute transactions.660 The creditor can – after he had notified the debtor and let him an additional reasonable time to react – conclude a substitute transaction, if it is possible under the circumstances and claim its costs (or the difference in price, as the case may be) as damages. In some situations, the duty to mitigate loss from Article 243/4 of the OC might demand the creditor to conclude a substitute transaction. The right to calculate damages on the basis of substitute transaction is not limited to termination of contract. It also exists in cases of defective performance where the buyer repairs the defect him or herself and claims the cost as damages: he or she may do so after notifying the debtor and giving him or her a reasonable period of time.661 Of course, he or she can only get the recovery of reasonable costs, taking into consideration his or her duty to mitigate loss. The notice and additional time are not necessary, if it is clear that the debtor will not or cannot perform. 656. See, e.g., judgment of the Supreme Court of RS, No. II Ips 39/2017 of 18 May 2017 (loss of use of house due to defects in the performance of contract for installation of the heating system). See also: Možina, Odškodnina za nemožnost uporabe stvari, zlasti motornih vozil, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2010, p. 129. 657. See Art. 378 of the OC and Art. 2 of the Statutory Default Interest Rate Act (Sl. Zakon o predpisani obrestni meri zamudnih obresti (ZPOMZO-1), Official Gazette RS, No. 11/07). 658. Article 381/2 of the OC. 659. See Art. 14 of the Act on Prevention of Late Payments (Sl. Zakon o preprecˇevanju zamud pri placˇilih (ZPreZP-1) Official Gazette RS, No. 57/12), and Art. 6 of Directive 2011/7/EU on combating late payment in commercial transactions, Official Gazette EU, L 48. 660. See Arts 265–267 of the OC and Arts 503–505 (sales contract) of the OC. 661. See judgment of the High Court of Ljubljana, No. I Cp 801/2014 of 21 May 2014.

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331. The material loss is principally reflected in the reduction of (value of) the creditor’s property. The amount of damages can be calculated in different ways: on the basis of the cost of a cure, either concretely (the cost of a concrete transaction) or abstractly (with reference to the market price, regardless of a concrete transaction), or on the basis of a reduction of the value (a comparison of the value before and after the breach). With regard to loss of profit, the creditor is to prove that profit was reasonably expected, having in mind a ‘normal course of events, or special circumstances’.662 In fact, the amount of loss, in particular lost profit, can be calculated in a number of ways, depending on the available information. In a situation where it is evident that the defendant is liable for the loss, but the amount of damages is impossible or disproportionally difficult to ascertain, the law of civil procedure empowers the court to determine the amount of it at its discretion.663 IV. Recovery of Loss Due to Material Defects in Sales Contract 332. Article 468/1 of the OC (Article 488 of the Yugoslav OA) lists the remedies of the buyer in case of a material defect. Of course, the buyer must have notified the seller of the defect within the applicable time limit in order to be able to resort to remedies (see infra Part II, Chapter 4). All remedies (repair, replacement, price reduction and termination) can be combined with a damages claim (Article 468/2 OC). The notification requirement and the time limits apply to damages claim, too. Of course, the buyer may not combine the damages claim with the chosen remedy in an inconsistent way, i.e., claim damages in the amount of difference of value of the good due to a defect together with repair. The general measure of damages is, in principle, full compensation, but only the loss which was foreseeable to the debtor at the time of conclusion (or breach, see Article 243/1 of the OC) is recoverable. However, Article 468/3 of the OC contains a further provision on damages which has been the source of many misunderstandings. The provision says: ‘In addition, and independently of that the buyer may also claim damages for loss afflicted to his or her other goods according to the general rules on recovery of damage’. This has been interpreted in a way that direct loss caused by the defect (in Slovenian law sometimes inadequately named ‘reliance damages’)664 can be claimed under the same conditions as other buyer’s remedies, i.e., time limits and notification, whereas the ‘loss on other goods’ (in Slovenian law sometimes named consequential or ‘reflex’ loss, as it appears, after the Swiss ‘Reflexschaden’)665 can be claimed under the general rules of (contractual) damages, i.e., within the general prescription

662. Article 168/3 of the OC. 663. Article 216 of the Civil Procedure Act (Sl. Zakon o pravdnem postopku (ZPP), Official Gazette RS, No. 26/99, with further amendments). 664. See, e.g., judgment of the Supreme Court of RS, No. II Ips 497/2009 of 11 Nov. 2010. 665. See, e.g., judgment of the Supreme Court of RS, No. II Ips 152/2015 of 08 Dec. 2016.

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period.666 The motives of the legislators for setting a different regime for the recovery of ‘loss on other goods’ are unclear, as also the issue how the two kinds of losses should be distinguished as any (material) loss is reflected in the creditor’s property. It would seem logical that all the loss caused by the breach, including the loss due to a defect, is recoverable insofar as the debtor is liable (i.e., not exempt from liability) and the loss was foreseeable to him or her. It is up to the court to decide which loss is too remote to be recoverable. This is one of the basic issues to be answered by the law of damages for breach of contract. For this purpose, losses due to breach of contract are being distinguished.667 However, no reason exists for a different treatment of direct and consequential loss with regard to notification and time limits in Slovenian law. Article 468/3 of the OC was not a part of the original draft,668 but was inserted in the OC in a later phase of the legislative procedure without any explanation as to its meaning. It appears that the legislator wanted to import the Swiss differentiation between direct loss in Article 2008/2 of the OR (Ger. unmittelbarer Schaden, Mangelschaden), for which the seller is strictly liable, and the consequential loss in Article 208/3 of the OR (Ger. weiterer Schaden, Mangelfolgeschaden), including lost profit, for which the seller is liable if he or she is at fault.669 However, this differentiation in Yugoslav (Slovene) law is obsolete as the seller is liable for all loss regardless of his or her fault (see Article 458/1 of the OC). It is thus not surprising that the provision has never been plausibly explained.670 Unfortunately, this was overlooked by the Slovenian legislator in 2001 upon drafting the OC.

666. See Plavšak in: Juhart, Plavšak (eds), Obligacijski zakon s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 176 et seq. In commercial sales contracts (B2B), the prescription period is three years after maturity (Art. 349 of the OC), whereas the otherwise applicable general prescription period is five years (Art. 346 of the OC). 667. In general, ‘loss of what was due’ (i.e., the loss which any creditor would be likely to suffer due to non-performance) is distinguished from ‘other loss’ (i.e., loss resulting from particular circumstances), see Lando, Beale (eds), Principles of European Contract Law, Parts I and II, Art. 9:502, Comment B, p. 439; see also: DCFR, Full Edition, Art. II.-3:702, Comment C, p. 924. Similarly, various authors distinguish ‘non-performance loss’, in the sense of primary or direct loss, from ‘incidental loss’, i.e., expenses incurred and not related to the realization of the expectation interest, but to avoid any additional disadvantage, and from ‘consequential loss’, which consists of additional losses beyond those caused by the non-performance as such, see Schwenzer in: Schlechtriem, Schwenzer (eds), Commentary on the UN Convention on the International Sale of Goods, Art. 74, at Nos. 21 et seq. (p. 1006), No. 27 (p. 1009) and No. 32 (p. 1012); Gotanda in: Kröll, Mistelis, Viscasillas (eds), UN Convention on the International Sales of Goods (CISG), 2011, Art. 74, Nos. 15 et seq. 668. See Konstantinovic´, Obligacije i ugovori – skica za zakonik o obligacijama i ugovorima, Pravni fakultet, Beograd 1969. 669. See, e.g., Honsell in: Honsell, Vogt, Wiegand (eds), Obligationenrecht I, Basler Kommentar, 6 ed., VerHelbing Lichtenhahn Verlag, Basel Reih 2015, pp. 1193–1196. 670. Klaric´, Odštetno pravo, Zagreb 1996, p. 172, has used the classification of interests from ius commune: damnum quoad remm, which he explained as direct loss caused by the defect, damnum circa rem, which, to him, referred to reliance loss, and damnum extra rem, which he called indirect or ‘reflex’ loss and which was supposed to describe the former Art. 488/3 of the Yugoslav OA. However, the difference between circa rem and extra rem is unclear, as is the reason for the different treatment of two kinds of losses arising out of the same breach of contract.

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§8. RESTITUTION 333. When the contract is terminated, the claims for specific performance are extinguished. The parties no longer have to perform the outstanding obligations and they are also not obliged to accept performances from each other. However, a termination does not mean that the contract entirely and retroactively disappears from the world. Firstly, the contract remains a basis for damages for breach of contract. That includes penalty and liquidated damages clauses. Secondly, the parts of contract that were specifically agreed for the case of dispute, such as arbitration clauses, remain in force. Thirdly, after the termination of contract, the parties should, in principle, return to each other, what they had received under the contract.671 In this sense, the termination does have a retroactive effect (ex tunc), however, not in all contracts. In long-time contracts and contacts with recurring performances, the termination only has a prospective effect (ex nunc). All the performances which were competed in accordance with the contract and paid for, remain valid.672 Therefore, in principle, termination has a retroactive effect only in contracts which are performed at once and which do not include many partial performances over time or continuous performance (one-off contracts). In such cases, e.g., in case of a (simple) contract for the sale of goods, a special set of rules of Article 111 of the OC applies. In principle, these rules form a part of the law on unjust enrichment (Articles 190–198 of the OC). The termination of contract means that the legal ground for the parties to keep what they received fell away (condictio ob causam finitam). The parties must not only return to each other what they had received under the contract but also make restitution for the benefits achieved by having had the goods or consuming the service.673 If money is to be returned, interest is to be paid.674 However, whereas the law of unjust enrichment is focused on a single obligation to return things by one party to another, Article 111/3 of the OC regulates a reciprocal obligation to return: in this case, the rules on synallagmatic contracts should be applied. That means, in particular, that a party is – in principle – only obliged to return what it had received insofar as also the other party is ready to return. If this is impossible for a party, e.g., due to force majeure, the restitution obligation of the other party is also extinguished.675

671. Article 111/2 of the OC. 672. Možina, Razdor, odpoved in odstop od pogodbe, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011. p. 66. 673. Article 111/4 of the OC. 674. Article 111/5 of the OC. With regard to the applicable interest rate, see, e.g., judgment of the High Court of Koper, No. Cpg 66/2017 of 11 May 2017. Also, the party in good faith has to pay interest. Default interest rate is not applicable, as the purpose of default interest is different. The interest should represent an adequate payment for the benefit gained by having had the money. However, the party in bad faith (such as a seller, who knowingly sold a stolen good which was then taken away from the buyer) should pay interest for default from the moment he or she had received the money, see judgment of the High Court of Ljubljana, No. I Cp 1163/2016 of 7 Sep. 2016. 675. See Art. 116 of the OC. For a discussion whether ‘change of position‘ defence applies also to restitution after termination of a contract, see Lutman, Odpad obogatitve pri prenehanju vzajemnih pogodb, Podjetje in delo 8/2015, p. 1537.

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Chapter 1. Donation 334. Being a typical civil law contract, a donation contract (Sl. darilna pogodba) is regulated in the OC (Chapter IV of the Special Part of the OC, Articles 533–545 OC). The Yugoslav OA did not regulate the donation contract as it was not particularly relevant for the functioning of the Yugoslav market on which the federal Yugoslav legislation was focused. Its regulation was thus left to the legislators of the republics. As the Slovenian legislator had not adopted any laws on donation (same goes for commodatum, contract of partnership, personal easements etc.), the rules of the Austrian ABGB676 regulating the donation contract (§§ 938–956 of the Austrian ABGB) continued to be applied by the courts all up until the entry into force of the OC on 1 January 2002.677 These rules, however, still apply with regard to those donation contracts entered into before 1 January 2002. When drafting the provisions of the OC on donation, the Slovenian legislator mirrored to some extent the Austrian ABGB. 335. According to the OC, a donation contract is a gratuitous bilateral legal transaction where the donator (Sl. darovalec) obliges him or herself to transfer gratuitously ownership or other right to the gift recipient (Sl. obdarjenec) or to enrich him or her in any other way, whereas the gift recipient accepts the donation.678 It must be underscored that donation is a contract and thus requires the consent of both parties. Unless the gift recipient gives his or her consent to it, donation does not take place. A donation contract is a legal transaction of obligatory nature, i.e., it produces obligations, albeit only on the donator’s side. 676. For details on the application of the legal rules of the Austrian ABGB on the Slovenian territory, see Podobnik, Vlahek, Slovenia: Chronology of Development of Private Law in Slovenia, in: Lavický, Hurdík (eds), Private Law Reform, Acta Universitatis Brunensis, Iuridica, No. 501, Masaryk University, Brno 2014, pp. 298–300; Juhart, Spremna beseda, Obcˇni državljanski zakonik, faksimilirana izdaja iz leta 1928; Juhart, Obcˇni državljanski zakonik in razvoj slovenskega civilnega prava, Pravnik, No. 11/12, 2011, pp. 631–638; Juhart: Pomen avstrijskega Obcˇnega državljanskega zakonika (ODZ) za razvoj slovenskega civilnega prava, in: Polajnar Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, Zbirka Pravna obzorja, 46, GV Založba, Ljubljana 2013, pp. 55–71. See also General Introduction, §3, and Introduction to the Law of Contracts, §2 of this monograph. 677. Analysis of the ABGB is available in Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 458–476. 678. Article 533 of the OC.

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336. The OC explicitly states that a contract concluded in gratitude or other moral duty (remunerative donation, donation as a reward, Sl. darilo iz hvaležnosti, remuneratorno darilo) is also deemed a donation contract as long as the recipient had no legal right to request the remuneration.679 If under the donation or any other contract not only the donator but also the recipient is to enrich the other party (Lat. negotium mixtum cum donatione, Sl. mešano darilo), the donation contract has been concluded only with regard to the exceeding amount.680 337. As the donation contract is gratuitous, the law sets out specific requirements for its full effectiveness: for it to produce fully enforceable rights, it has to be concluded either in a written form,681 or the gift itself has to be handed over to the recipient at the moment of the conclusion of the contract,682 i.e., the contractual obligation of the donator has to be fulfilled the moment the contract is concluded. This applies only to donations of movable property or other objects; contracts over immovable property must be in writing (Article 52 OC). If the contract is not in a written form or the gift is not handed over, only an unenforceable right arises for the recipient meaning that the donator has a mere natural obligation to hand over the gift as provided by the contract.683 A mere ‘promise of a gift’ (Sl. darilna obljuba) takes place. However, the voluntary handing over of a gift by the donor remedies this defect (convalidation).684 338. A special form requirement is set out for cases of ‘gifts in anticipation of death’ (Lat. donatio mortis causa, Sl. darilo za primer smrti685), i.e., donation contracts the obligation arising out of which is to be fulfilled only after the donator’s death. For such contract to be validly concluded, it must be in the form of a notarial deed that has to be handed over to the recipient.686 The Notary Act687 further requires that two witnesses are present at the notary’s office when such notarial deed is being drafted.688

679. Article 534 of the OC. 680. Article 535 of the OC. 681. See Arts 51–58 of the OC on form requirements and Part I, Ch. 1, §2 of this monograph. Tavcˇar explains that in the late nineteenth century, a form of a notarial deed was required and a simple written form did not suffice. Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 459–460. 682. Article 538/1 of the OC. 683. Article 538/2 of the OC. 684. See Art. 58 of the OC. See also Part I, Ch. 1, §2 of this monograph. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 458–459; Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 80. 685. An older expression is daritve na primerljaj smrti. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 465. 686. Article 545 of the OC. 687. Sl. Zakon o notariatu (ZN), Official Gazette RS, No. 13/94, with further amendments. 688. Article 51 of the Notary Act.

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339. The Inheritance and Gift Taxation Act689 sets out the rules on the taxation of gifts (and bequests which are also deemed gifts). If the gift is composed of movables, money and/or securities, it is not taxed if the total value of these assets is under EUR 5.000.690 If it exceeds it, only the value above this threshold is taxable.691 Donated household movables are also exempt from taxation unless they are of a greater value.692 Tax is to be paid by the gift recipient as of the date of the acceptance of the gift whereby the latter is deemed to have taken place at the moment the contract was signed, or at the moment the gift was handed over to the recipient.693 The act sets out tax rates for different categories of gift recipients,694 and lists the persons relieved from paying any gift tax.695 Detailed procedural rules are also laid down there696 while additional Rules on Gift Tax Return697 regulating the contents of the tax return and its form, were issued by the Minister for Finance. 340. Proverbs such as ‘don’t look a gift horse in the mouth’, ‘long in the tooth’ (Lat. ‘equi donati dentes non inspiciuntur’, Sl. ‘podarjenemu konju se ne gleda v zobe’)698 or ‘beggars can’t be choosers’ reveal that the donator is not liable for defects on the donated things in the same way as in reciprocal contracts. This is a consequence of the contract’s gratuitous character. Only if a defect or a dangerous feature of a gift cause damage to the recipient, the donator will be liable for such damage under the proviso he or she knew or ought to have known of the defect or the dangerous feature.699 Similarly, a person who donates a gift belonging to a third person, and does not reveal this to the recipient, is liable for the damage sustained by the recipient.700

689. Sl. Zakon o davku na dedišcˇine in darila (ZDDD), Official Gazette RS, No. 117/6, with further amendments. 690. Article 2/4 of the Inheritance and Gift Taxation Act. According to Art. 5/4 of this Act, the value of all gifts received in twelve months after the first gift was accepted, count in the total value relevant for the taxation. 691. Article 5/1,2,3 of the Inheritance and Gift Taxation Act. 692. Ibid. 693. Article 6/3 of the Inheritance and Gift Taxation Act. 694. Article 8 of the Inheritance and Gift Taxation Act. 695. Articles 9 and 10 of the Inheritance and Gift Taxation Act. 696. Articles 12–19 of the Inheritance and Gift Taxation Act. 697. Sl. Pravilnik o napovedi davka na darilo, Official Gazette RS, No. 85/16. 698. The reason for such terminology (having been reported already by St Augustine) lies in the fact that a horse’s age and thus value can be detected by looking at its teeth (the longer they look the older the horse (while in fact only the gums shorten with age)). 699. Article 537/2 of the OC. By setting these conditions, this article derogates from the general rule set out in Art. 100 of the OC according to which the liability for defects is an objective one, i.e., it is not dependent upon whether the contractual party knew or ought to have known of the defect. For further details on the general rule, see supra Part I, Ch. 6, §1 of this monograph. 700. Article 537/1 of the OC. As in such case the transfer is of a gratuitous nature, Art. 64 of the PLC on a non domino acquisition cannot be applied. For further details on this type of transfer of ownership on movables, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 172–173.

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341. Gratuitousness is also the reason for setting out the right of the donator to revoke the contract after it had been concluded.701 Revocation is the donator’s right to unilaterally terminate the relationship arising out of the donation contract. The circumstances enabling him or her to do that are the following: (i) hardship of the donator taking place after the conclusion of the contract and threatening his or her living,702 (ii) gross ingratitude of the recipient toward the donator or his or her close relatives taking place after the conclusion of the contract, 703 (iii) a first child is born to the recipient.704 Revocation is thus available for reasons of changed circumstances requiring the protection of financial situation of the donator, or for reasons of the recipient’s improper behaviour. The donator may not give up in advance his or her right of revocation, such renouncement is null and void.705 By revoking the contract, the donator requests the recipient to return to him or her the gift or its value.706 If the contract has not yet been fulfilled at the moment of its revocation, the donator’s obligation arising out of it ceases.707 The donator may revoke the contract in one year after he or she has become aware of the revocation reason708 meaning that this act may take place at a very distant time from the moment(s) of conclusion and fulfilment of the contract. 342. Apart from the specific rules of the OC on the revocation of a donation contract, some general rules of civil law on the cause, motive, error and fraud, that are more favourable to donators than to parties to non-gratuitous contracts, also enable the donator to terminate his or her contractual relationship with the recipient.709 The Marriage and Family Relations Act (MFRA)710 additionally sets out the rules on the

701. Articles 539–543 of the OC. Similar rules on revocation were laid down in the Austrian ABGB. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 460–465; Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 83–84. 702. Article 539 of the OC. The recipient may retain the gift if he or she instead guarantees the living to the donator. The reason of distress may, however, not be referred to if the recipient’s living would be threatened had he or she returned the gift. 703. Article 540 of the OC. The contract may be revoked also by the donator’s heir. It may also be revoked against the recipient’s heir (for the recipient’s behaviour only). If the donator has forgiven the recipient, the revocation is not available. 704. Article 541 of the OC. If the recipient had children before the conclusion of the contract, he or she cannot revoke the contract for the reason of a newly born child. The purpose behind such rule is to enable a donator who had no children when disposing of his ownership (and thus no experience in what it meant having children cost-wise) to obtain back this property for the sake of the child. 705. Article 544 of the OC. The donator can, however, give up his right of revocation once the reason for the revocation is already existent. See Podgoršek in Juhart, Pavšak (eds), Obligacijskizakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 499. 706. Article 542/1 of the OC. 707. Article 542/2 of the OC. 708. Article 543 of the OC. 709. See Arts 40, 47, 48 of the OC. For further details, see supra Part I, Ch. 2, §2 of this monograph, and Možina, So diamanti res vecˇni? Darilna pogodba, družinska razmerja in spremenjene okolišcˇine, Podjetje in delo, 5/2014, pp. 833 ff. 710. Sl. Zakon o zakonski zvezi in družinskih razmerjih (ZZZDR), Official Gazette SRS, No. 15/76, with further amendments. This act of the former SRS (one of the Yugoslav republics) has been replaced by the new Slovenian Family Code (Sl. Družinski zakonik (DZ), Official Gazette RS, No. 15/17)

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return of the gifts donated between the spouses or cohabiting partners.711 Specific rules apply to gratuitous contracts also within insolvency law. Rules on fraudulent conveyance, for example, differ according to whether the insolvent debtor’s legal transaction in question was onerous or not.712 343. Special rules on donation are set out in the LRA (Articles 17a–25) for agricultural land, forests and farms. The LRA limits the scope of persons to whom these immovables may be donated: (i) a spouse or a cohabiting partner, children or adoptees, parents or adopters, siblings, nieces and nephews, and grandchildren; (ii) daughter-in-law or son-in-law or the child’s cohabiting partner if they are members of the farm household; (iii) holder of the farm who obtained funds as a young heir to the farm from the state programme for the development of the countryside; (iv) local community or the state. Further, the LRA prohibits division of protected farms and lays down exceptions to this rule. Specific procedural rules of the LRA provide for conditions of approval of transactions of agricultural land by an administrative unit and the legal remedies against the unit’s decisions.

that will start to apply in April 2019. It regulates the questions of gifts between the spouses (form of such gifts, options for their return upon termination of marriage or partnership) slightly differently than the current act. 711. See Art. 84 of the Marriage and Family Relations Act. 712. See Financial Operations, Insolvency Proceedings and Compulsory Winding-up Act (Sl. Zakon o financˇnem poslovanju, postopkih zaradi insolventnosti in prisilnem prenehanju (ZFPPIPP)), Official Gazette RS, No. 126/07, with further amendments). See also: Ðor evic´, Izpodbijanje pravnih dejanj stecˇajnega dolžnika (pravne osebe), PhD thesis, Univerza v Ljubljani, Ljubljana 2003; Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 468–476.

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Chapter 2. Contract on Delivery of Property, Contract on Subsistence, Lifelong Support Contract 344. Contract on delivery of property, contract on subsistence and lifelong support contract are sometimes (inadequately) called ‘inheritance contracts’.713 They are regulated in the OC. Prior to the adoption of the OC, two of them (contract on delivery of property and lifelong support contract) were regulated in the IA of SRS of 1976,714 whereas contract on subsistence existed only in practice and had not been regulated in legislation.715 Their purpose is very similar. Usually, it is to enable subsistence to an elderly person having the means for it in the form of a valuable immovable but cannot take care of him or herself due to age, illness etc. His or her property is thus transferred to another person (usually his or her descendant) who is willing to take care of the elderly in exchange for his or her property. The elderly usually stays in this immovable until his or her death – be it as an owner or mere usufructuary of this property depending on the moment of transfer of the property onto the other party. It must be stressed that, upon the initial owner’s death, this property is not a part of his or her inheritance mass meaning that his or her heirs cannot take hold of it or (with a possible exception in the case of contract on delivery of property) have any claims out of it. These contracts are usually aleatory as, at the moment of conclusion of the contract, the scope of one party’s obligation is uncertain.716 The three sets of rules regulating these contracts are very similar but vary to the extent that the legislators have decided to regulate them separately. In practice, they are often misidentified by the parties. Due to their important effects on the property of the parties that are excluded from the inheritance mass,717 and due to their aleatory character, all three contracts must be concluded in the form of a notarial protocol.718 Despite their strict form, these contracts are frequently refuted as being null and void by third parties (usually those who would have otherwise inherited the property in question). It must be stressed that only property existent at the moment of the conclusion of these contracts may be disposed of by the parties. Contracts of disposal of property that will exist at the time of death of the person disposing of it are prohibited.719 713. Apart from the contract on delivery of property, they even do not have to be concluded between the relatives or potential heirs. Apart from that, only property existent at the conclusion of the contract, not property existent in the future at the moment one party dies, is covered by these contracts. Real ‘inheritance’ contracts are, in principle, unknown to Slovenian law: contract, obliging a party to will his or her estate to a co-contractor or another person, is prohibited under Art. 103 of IA; contract on the content of will is prohibited as well (Art. 105 of IA); contract on alienation of expected inheritance or legacy is also invalid (Art. 104 of IA); contract between a predecessor and his or her successor on the rejection of inheritance that would occur in case of predecessor’s death is, however, permitted (Art. 137/2 of IA). 714. Sl. Zakon o dedovanju (ZD), Official Gazette SRS, No. 15/76, with further amendments. 715. See also Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 86. 716. Cf. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 85–86. 717. Article 549 of the OC. 718. Articles 547/2, 558 and 567 of CO. If the land registry permission is in a separate document, and not part of the obligatory contract, only the owner’s signature must be authenticated by the notary, while the land registry permission itself need not be in the form of a notarial protocol. 719. See Art. 548/2 of the OC.

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§1. CONTRACT ON DELIVERY OF PROPERTY 345. By concluding a contract on delivery of property (Sl. izrocˇilna pogodba or pogodba o izrocˇitvi in razdelitvi premoženja, Chapter V of the Special Part of the OC, Articles 546–556), the deliverer (Sl. izrocˇitelj) undertakes to deliver and distribute all or a part of his or her property existent at the moment of conclusion of the contract to his or her descendants, adopted children, or adopted children’s descendants. The deliverer’s spouse, too, may benefit from the contract if the deliverer and the spouse have agreed so. If this is not the case, the spouse’s obligatory share in the decedent’s estate remains intact720 while the delivered property is deemed to be a gift for the purposes of determining the heirs’ shares.721 346. The person to whom the property has been delivered on the basis of the contract on delivery of property, is not liable for the deliverer’s debts unless this was agreed upon.722 The deliverer’s creditors may refute the contract in accordance with the general rules on refuting gratuitous transactions.723 If there are more recipients, they are liable among each other for any defects of the property obtained in the same manner as co-heirs according to the IA.724 The deliverer may (in turn of transferring the ownership) reserve for him- or herself, his or her spouse, or any other person the right to usufruct on all or part of the delivered property, or claim a lifelong annuity in kind or in cash, lifelong maintenance, or any other compensation.725 347. In contrast to the other two contracts, the contract on delivery of property requires a consent of those (other) deliverer’s descendants that would have otherwise (i.e., would this property not be covered by the contract of delivery but would be, instead, part of the deliverer’s inheritance mass) inherited the property in question.726 If such consent is not given, the property delivered to other descendants on the basis of the contract on delivery of property is deemed to be a gift and has the same status as regular gifts given to heirs by the deceased. The same rule applies if after the conclusion of contract on delivery of property, a child is born to the deliverer or a missing descendant appears who was declared dead.727 720. Article 552/2 of the OC. In Slovenian law, the principle of testamentary freedom is combined with the concept of the so-called obligatory heirs (Sl. nujni dedicˇi) – that is, statutory heirs who cannot be omitted as heirs by the testator. For further details on Slovenian inheritance law, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 175–180. 721. Article 552/3 of the OC. 722. Article 553/1 of the OC. 723. Article 553/2 of the OC. 724. For further details, see Zupancˇicˇ, Žnidaršicˇ Skubic, Dedno pravo, Uradni list Republike Slovenije, Ljubljana 2009, p. 228. 725. Articles 551 of the OC. If these benefits are agreed for both the deliverer and his or her spouse, the whole amount is due to one of them if the other one dies unless the parties have agreed otherwise, or the circumstances of the case show otherwise. 726. Article 547/1,3,4 of the OC. Consent may also be given at a later time. The contract remains in force despite the lack of consent if the person who has not given consent dies before the deliverer without leaving his or her descendants, waives his or her right to inherit, is disinherited, or is unworthy to inherit. 727. Article 550 of the OC.

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348. The deliverer may revoke the contract unilaterally (i) for gross ingratitude of the recipient towards the deliverer or any of his or her close relatives, taking place after the conclusion of the contract so that enabling the recipient to retain the property, would not be deemed fair according to common moral principles; (ii) if the recipient does not pay subsistence to the deliverer or a third person according to what was agreed in the contract, or if he or she does not pay the deliverer’s debts as was agreed in the contract.728 In cases of other breaches of obligations by the recipient, the court is to decide whether the deliverer has the right to revoke the contract, or merely a right to request fulfilment of the contract.729 §2. CONTRACT OF SUBSISTENCE 349. Contract of subsistence (Sl. pogodba o preužitku, Lat. reservatum rusticum,730 Chapter VII of the Special Part of the OC, Articles 564–568 OC) is similar to contract on delivery of property as regards the time of the transfer of the property in question. Through the contract of subsistence, the owner (Sl. preužitkar) undertakes to transfer title to specific immovable property731 to the recipient (Sl. prevzemnik) already after the conclusion of the contract. The transfer does thus not take place upon the owner’s death (as is the case with a lifelong support contract presented below), but already beforehand. In contrast to the contract on delivery of property, however, in the case of contract of subsistence, the recipient need not have any family ties with the owner. 350. In turn of receiving ownership on the immovable property, the recipient undertakes to provide specific benefits and services to the owner or any other person until the death thereof.732 The right to such benefits and services is usually registered in the land register as a property right called encumbrance (Sl. stvarno breme).733 If the recipient disposes of the received immovables, the new acquirer is also liable for the performance of the obligations in the contract of subsistence if the subsistence is recorded in the land register.734 351. In order to prevent the recipient from disposing of his or her property, the owner usually insists on establishing a right on prohibition of disposal (prohibition to alienate and encumber, Sl. pravica prepovedi odsvojitve in obremenitve). This 728. Article 555/1 of the OC. 729. Article 555/2 of the OC. See also Art. 556 of the OC on the consequences of the revocation on the position of the descendants. 730. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 86. 731. According to Art. 564/2 of the OC, movables intended for the use of the immovable in question, too, are covered by the contract unless the parties have agreed otherwise. 732. Article 564/1 of the OC. Art. 565 states that the recipient’s obligations may cover occasional monetary amounts, basic life necessities, regular supply, guaranteeing housing, enabling use of land etc. 733. For further details on this type of right, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 112–114. 734. Article 566 of the OC.

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right prohibits the recipient to dispose of his or her property. If concluded between the persons specified in the PLC (i.e., between spouses or cohabiting partners, parents and their children, as well as adopted children and adoptive parents),735 this right may be, despite being of obligatory nature, registered in the land register having thus erga omnes effect.736 352. If the parties to the contract are living together and their relationship weakens to the extent that living together becomes unbearable, each of the parties may request that the contract is terminated by the court.737 The contract may also be terminated by one party if the other party is not fulfilling his or her contractual obligations.738 §3. LIFELONG SUPPORT CONTRACT 353. A lifelong support contract (Sl. pogodba o dosmrtnem preživljanju, Chapter VI of the Special Part of the OC, Articles 557–563 OC) is concluded between a supportee (Sl. preživljanec) and a supporter (Sl. preživljalec) and is similar to contract of subsistence. The focal difference lies in the moment of transfer of the owner’s (supportee’s) property: in the case of a lifelong support contract, the ownership passes onto the supporter upon the supportee’s death,739 whereas in the case of contract of subsistence (same goes for contract on delivery of property), the ownership passes from the owner onto the recipient right after the conclusion of the contract. 354. As in the case of contract of subsistence, the property covered by the lifelong support contract may consist of immovables and movables intended for the use of immovables,740 as well as other specifically listed movables.741 The prohibition of disposal on the side of the supportee may be agreed by the parties.742 Such supporter’s right has erga omnes effects irrespective of the identity of the parties concluding the lifelong support contract.743 355. After the supportee’s death, the supporter is not liable for the supportee’s debts. The contract may, however, set out that the supporter is liable for the supportee’s existent debts.744 735. See Art. 38/2,3,4 of the CPA. 736. See Art. 13/2 of the LRA. The registration does not, however, expand the effects of the prohibition to the subsequent owners. Courts will delete such entry on their own motion when the right of ownership is being registered in favour of a new owner. See Art. 47/4 of the LRA. 737. Article 568/1 of the OC. 738. Article 568/2 of the OC. See judgment of the Supreme Court of RS, No. II Ips 55/2011 of 24 Apr. 2014. 739. Article 557/1 of the OC. 740. Ibid. 741. Article 557/2 of the OC. 742. Article 559 of the OC. 743. See Art. 13/2 of the LRA. 744. Article 560 of the OC.

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356. The parties can terminate a lifelong support contract consensually also after they have begun fulfilling their contractual obligations. As in the case of the contract of subsistence, each of the parties may request the court to terminate the contract if the parties to the contract are living together and their relationship weakens to the extent that living together becomes unbearable, or if the other party is not fulfilling his or her contractual obligations.745 A specific rule of rebus sic stantibus is set out for cases where, after the conclusion of a lifelong support contract, the circumstances change to the extent that fulfilment of the contract is aggravated. In this case, each party may request the court to amend or terminate the contractual relationship taking account of all the circumstances of the case.746 In case of the supporter’s death, his or her obligations are transferred to his or her spouse and those descendants that are his or her heirs if they consent to it. If they do not, the lifelong support contract is terminated, and they may not request compensation for subsistence that has already been given. However, they may request it if they are unable to take over the contractual obligations. When determining the amount of such compensation, the court must take into account the financial status of the supportee and those entitled to continuation of the contract.747

745. Article 561/2,3 of the OC. 746. Article 562 of the OC. 747. Article 563 of the OC.

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Chapter 3. Gaming and Wagering 357. The OC does not regulate gaming and wagering contracts. Neither did the Yugoslav OA. Gaming, wagering and drawing was, however, regulated in the Austrian ABGB of 1811 as amended by 1914–16 Teilnovellen748 in the chapter on aleatory contracts (Chapter 29 titled ‘contracts of chance’, §§ 1267–1273)749 the rules of which the courts still apply to gaming, wagering and drawing. Namely, the Yugoslav and Slovenian legislation in force (i.e., the Yugoslav OA and the OC) have not regulated these contracts meaning that the legal rules of the ABGB remained applicable on the Slovenian territory with regard to these contracts.750 Specific legislation on gaming was introduced in Slovenia in 1995751 regulating (only) the system of organizing and controlling gaming events, preventing laundering of money, frauds and other related criminal acts and protecting minors and other weaker parties from the negative effects of excessive gaming. 358. The ABGB defines contracts of chance (Sl. pogodbe na srecˇo, Ger. Glücksverträge) as contracts promising and accepting hope of uncertain benefit for or without a remuneration.752 The general rule of the ABGB for all types of contracts of chance (contracts on gaming, wagering, drawing, emptio spei (‘sale of hope’), insurance, lifelong subsistence, annuity etc.) is that the rules on laesio enormis do not apply.753 Contracts on gaming, wagering and drawing are denoted as ‘contracts of chance in the narrow sense’.754 Their object is assuming of risk.755 Goals of the parties are, however, different: in the case of wager, for example, the parties wish to get a confirmation that their assertions were correct and thus strengthen their statements, whereas in the case of gaming, winning and entertainment are in focus.756 748. For details on the application of the legal rules of the Austrian ABGB on the Slovenian territory, see Podobnik, Vlahek, Slovenia: Chronology of Development of Private Law in Slovenia, in: Lavický, Hurdík (eds), Private Law Reform, Acta Universitatis Brunensis, Iuridica, No. 501, Masaryk University, Brno 2014, pp. 298–300; Juhart, Spremna beseda, Obcˇni državljanski zakonik, faksimilirana izdaja iz leta 1928; Juhart, Obcˇni državljanski zakonik in razvoj slovenskega civilnega prava, Pravnik, No. 11/12, 2011, pp. 631–638; Juhart: Pomen avstrijskega Obcˇnega državljanskega zakonika (ODZ) za razvoj slovenskega civilnega prava, in: Polajnar Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, Zbirka Pravna obzorja, 46, GV Založba, Ljubljana 2013, pp. 55–71. See also General Introduction, §3, and Introduction to the Law of Contracts, §2 of this monograph. 749. For further details, see Karner in: Koziol, Bydlinski, Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007, pp. 1408–1411. 750. Juhart, Spremna beseda, Obcˇni državljanski zakonik, faksimilirana izdaja iz leta 1928, p. 15. See also judgment of High Court of Koper, No. I Cp 1227/2006 of 18 Dec. 2007. 751. Gaming Act (Sl. Zakon o igrah na srecˇo (ZIS)), Official Gazette RS, No. 27/95, with further amendments. 752. § 1267 of the ABGB. 753. § 1268 of the ABGB. See also: Karner in: Koziol, Bydlinski, Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007, p. 1411; Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 410 ff. 754. Karner in: Koziol, Bydlinski, Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007, p. 1408. 755. Ibid. 756. Ibid.

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359. According to the relevant text of the Austrian ABGB, wagering (Sl. stava, Ger. Wette) is a contract where a specific price is set for a realization of an event being asserted by one of the parties to take place while its realization is still uncertain to both parties at the conclusion of the contract.757 An obligation arising from a (non-illicit) wager is only enforceable if the price was paid or deposited, and not merely promised.758 One or both parties may be obliged to pay the price, the amount of each of these prices to be paid may vary.759 If the party claiming the realization of the event had certain knowledge of it and it did not reveal this to the other party, it is liable for deception, and the wagering contract is thus null and void.760 The losing party that knew of the result, is on the other hand deemed to be a donator. These rules on wagering apply, in principle, mutatis mutandis to gaming (Sl. igra, Ger. Spiel)761 and drawing (Sl. žreb, Ger. Los).762

757. § 1270 of the ABGB. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 411–414; Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 84–85. 758. § 1271 of the ABGB. It is thus merely a natural obligation. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 413. 759. Karner in: Koziol, Bydlinski, Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007, p. 1409. 760. Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 412. 761. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 414 ff. 762. § 1272 and § 1273 of the ABGB. For further details, see Karner in: Koziol, Bydlinski, Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007, pp. 1408–1411.

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Chapter 4. Sale of Goods §1. GENERAL 360. Contract for the sale of goods (Sl. prodajna pogodba)763 is regulated in Chapter I of the Special Part of the OC (Articles 435–527). Of all chapters of the Special Part of the OC, chapter on the sale of goods is the most extensive. This is reasonable having regard to the importance and the extent of sale transactions in practice. Apart from that, the OC refers to the rules on the sales contract in other chapters of the Special Part, e.g., in regulating barter contract.764 Further, Article 100/3 of the OC states that the provisions of the OC on the seller’s liability for material and legal defects apply also to liability of parties to other types of contracts unless the rules on the latter state otherwise. The OC’s regulation of sales contracts is based on that of the Yugoslav OA which was largely based on the Austrian ABGB.765 361. General rules on the sales contract in B2C relationships are laid down in the CPA (Chapter VI, Articles 25–41). Some of these rules, i.e., some aspects of the liability of the seller for defected goods, apply mutatis mutandis to consumer services contract.766 The CPA is lex specialis to the OC and other general legislation covering the aspects of sale. The latter apply only if no special provision is laid down in the CPA.767 Provisions of the CPA are mandatory, the parties can therefore not derogate from them to the detriment of the consumer).768 Apart from the general rules on consumer sales contract, the CPA lays down the rules on specific consumer sales contracts or their specific aspects, such as home delivery, distance sale, off-premises sale and instalment sale. 362. The evolution of consumer sales law in Slovenia has been motivated mostly by the activities of Slovenia being a Member State of the EU to align its legislation to the European consumer acquis. The CPA provisions on sales law are thus to be read together with the relevant directives and their interpretation by the CJEU; this is at times difficult as some of the concepts set out in the CPA are regulated differently from the directives. In these cases, it is often not clear whether such difference is a result of improper implementation or, for example, of the intention of 763. Sometimes called also kupna pogodba or kupo-prodajna pogodba. Chapter I of the Special Part of the OC is titled Prodajna pogodba (the same title was in the Yugoslav OA while the Austrian ABGB uses the term ‘buying contract’ (Ger. Kaufvertrag; in Roman law, it was emptio venditio), the CPA uses the same terminology. In recent times, this term has also been used most frequently in practice. As it refers to the characteristic performance, i.e., the performance of the seller (Sl. prodajalec) and not the buyer (Sl. kupec), such terminology is adequate. Older Slovenian legal literature referred to it as buying contract (Tavcˇar) or buying-selling contract (Korošec, Kranjc, Krek, Štempihar). 764. Article 529 of the OC. 765. For details on the regulation of the ABGB, see Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952, pp. 9–23. 766. Article 38 of the CPA. 767. Article 1/28 of the CPA. 768. Article 1/29 of the CPA.

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the Slovenian legislator to guarantee higher protection for consumers as allowed by some directives.769 Hopefully, the new CPA that is in the process of drafting at the Ministry of Economic Development and Technology770 will regulate consumer sales contracts better. 363. It must be stressed that some of the CPA’s chapters regulating various aspects of sales contract (i.e., chapter on guarantee, chapter on advertising of the goods and services) apply not only to B2C contracts but also to B2B contracts. Additionally, provisions of the CPA on sales contract, on guarantee and on general contractual terms are laid down in both the CPA and the OC making it somewhat difficult to decide – despite having regard to the lex specialis derogat legi generali principle – which provision of the two acts to apply. 364. Apart from the general provisions of the OC on the sales contract (Articles 435–506), Chapter I of the Special Part of the OC lays down also the rules on some specific types of sales contracts and institutes related to sales contracts (Articles 507–527), such as the right of pre-emption (Sl. predkupna pravica), trial purchase (Sl. kup na poskušnjo), sale by sample or model (Sl. prodaja po vzorcu ali modelu), sale by specification (Sl. prodaja s specifikacijo), conditional sale (Sl. prodaja z lastninskim pridržkom), sale by letter of credit (Sl. akreditivna prodaja), and instalment sale (Sl. prodaja na obroke). Instalment sale is regulated also in the CPA (Articles 49–56) that regulates further sets of specific types of sales contracts: home delivery (Sl. dostava blaga na dom, Article 42), distance sale contracts (Sl. prodaja na daljavo, Articles 43–45a) and contracts concluded away from the business premises (Sl. pogodbe, sklenjene zunaj poslovnih prostorov, Articles 43–45a), and distance sale of financial services (Sl. trženje financˇnih storitev na daljavo, Articles 48a–48e). Further types of sales contract or special rules on some of its aspects are regulated in sector legislation, such as the Energy Act771 and the Rules on the Classification, Packaging and Labelling of Dangerous Goods.772 365. Further consumer specific legislation that is relevant also for consumer sales contract, was enacted in order to implement EU consumers’ directives, such as Act on Consumer Protection against Unfair Commercial Practices.773 The consumers are also in focus of the Protection of Buyers of Apartments and Single Occupancy Buildings Act of 2004774 that, in general, applies irrespective of the type of 769. See, for example, Art. 8 of Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees. 770. See http://www.mgrt.gov.si/si/zakonodaja_in_dokumenti/notranji_trg/predlogi_predpisov/sektor_ za_varstvo_potrosnikov_in_konkurence/ (accessed on 6 Aug. 2018). 771. Sl. Energetski zakon (EZ-1), Official Gazette RS, No. 14/17, with further amendments. 772. Sl. Pravilnik o razvršanju, pakiranju in oznacˇevanju nevarnih snovi, Official Gazette RS, No. 35705, with further amendments. 773. Sl. Zakon o varstvu potrošnikov pred nepoštenimi poslovnimi praksami (ZVPNPP), Official Gazette RS, No. 53/07, implemented Directive 2005/29/EC on unfair commercial practices. According to Art. 2/1 of the Act, this Act does not have any effects on the laws laying down the rules on conclusion, validity or effects of the contracts. 774. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS No. 18/04.

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relationship but is in fact aimed at protecting weaker parties, in particular the consumers.775 This act was (and still is) of great importance amid the financial crisis when a lot of construction projects for which the buyers had already paid, failed with their investors ending up in insolvency proceedings leaving the buyers without their purchase money and the property they had paid for.776 The Protection of Buyers of Apartments and Single Occupancy Buildings Act aims at preventing such scenarios by setting out the rules protecting the buyers from the risk of default by the sellers. The act is voluminous and rather complex. It sets out the details on the following issues: the prerequisites for conclusion of the sales contract covered by the act; essentialia negotii of the contract; determination and payment of the price; various aspects of handing over the immovable; remedies available to the buyer (and also all successive buyers) in case of material defects, such as the right of the buyer to withhold 5% of the purchase price if defects are discovered at the handing over of the property; a prolonged two-year warranty time period in which the defects have to arise for the buyer to be able to refer to them; mandatory bank guarantee to be set up by the seller for remedying any hidden defects in the amount of 5% of the purchase price; mechanisms for ensuring registration of the immovable in the land register; bank guarantee for the return of the price paid; notary’s fiduciary account; control of the implementation of the act in practice; fining.777 366. Some aspects of the sales contracts are regulated also in the LRA (list of holders of a right of pre-emption in sale of agricultural land, specific procedural rules on such sale, including the administrative units’ approvals of transactions of such land),778 the Spatial Planning Act (municipalities’ and state’s right of preemption on land, specific procedural rules on such sale).779 367. It must be also stressed that Slovenia is a CISG Member State. Former Yugoslavia was a CISG establishing Member State as of 1988, while Slovenia succeeded to the convention in 1993 with the effect as of its independence in 1991. As of 1996, Slovenia is also a party to the Convention on the Limitation Period in the International Sale of Goods, while former Yugoslavia acceded to the Convention in

775. Chapter 2 of the Act is, however, explicitly applicable to B2C contracts (only some of the provisions of this chapter apply also to non-consumer contracts). The parties may not derogate from these provisions unless that is allowed by the Act itself (or is in a clear interest of the buyer if the latter is a consumer. See Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 31–33, 35–38. 776. See Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 19–25. 777. For details, see Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 19–91. 778. See Arts 17a–25 of the LRA. 779. Articles 189–191 of the Spatial Planning Act (Sl. Zakon o urejanju prostora (ZUreP-2), Official Gazette RS, No. 61/17).

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1978. In cases in which these two conventions apply, the OC does not.780 An analysis of available case law has shown that Slovenian courts have been struggling in the application of the convention.781 368. An important source of sales law is also General Usages for the Sale of Goods,782 issued in Yugoslavia in 1954 by the State Arbitration Tribunal, at the time the supreme authority for commercial disputes. The General Commercial Usages were the most important source of commercial contract law in Yugoslavia and were also an important model in the process of drafting the Yugoslav OA. They remained to be applicable also after the adoption of the Yugoslav OA and the OC. Namely, Article 21/2 of the Yugoslav OA stated that commercial practices, usages and practice established between parties shall be taken into consideration in the assessment of contractual relationships if the parties have agreed on their application, or if such will of the parties ensues from the circumstances of the case. Somewhat differently, Article 12 of the OC states that commercial practices, usages and practice established between parties shall be taken into consideration in the assessment of obligational relationships of commercial entities.783 369. Autonomous sources of sales law, such as ICC’s sets of Incoterms editions, commercial practices,784 practices established between the parties, general terms and conditions also represent important aspects of sales law. §2. DEFINITION AND CHARACTERISTICS OF SALES CONTRACT I. Definition and Basic Characteristics of Sales Contract 370. The OC defines a sales contract as a contract through which the seller (Sl. prodajalec) undertakes to deliver the thing being sold to the buyer (Sl. kupec) so that the latter acquires the ownership on it, whereas the buyer undertakes to pay the 780. For further details, see Schlechtriem, Možina, Pravo mednarodne prodaje: Konvencija Združenih narodov o mednarodni prodaji blaga, Uradni list Republike Slovenije, Ljubljana 2006; Vlahek (ed.), Mednarodna prodajna pogodba v praksi slovenskih gospodarskih subjektov, Pravna fakulteta, Ekonomska fakulteta, Ljubljana 2017. 781. See Vlahek (ed.), Mednarodna prodajna pogodba v praksi slovenskih gospodarskih subjektov, Pravna fakulteta, Ekonomska fakulteta, Ljubljana 2017; Možina, Cˇetrt stoletja Konvencije ZN o mednarodni prodaji blaga (CISG) v Sloveniji: izzivi in izkušnje, Podjetje in delo 2/2018; Možina, Cˇetrt stoletja Konvencije ZN o mednarodni prodaji blaga (CISG) v Sloveniji: izzivi in izkušnje, in: Pavliha (ed.), Izzivi prava v življenjski resnicˇnosti (Challenges of law in life reality: liber amicorum Marko Ilešicˇ), Pravna fakulteta, Ljubljana 2017. 782. Sl. Splošne uzance za blagovni promet, Official Gazette of FLRJ, No. 15/54. See judgment of the High Court of Ljubljana, No. I Cpg 9/2011 of 29 Jun. 2011. 783. For further details on commercial usages, see Kranjc in: Juhart, Plavšak, Obligacijski zakonik s komentarjem (OZ), 1. knjiga, pp. 123–138; Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇgp delo, tozd gospodarski vestnik, Ljubljana 1987, pp. 341–345; Isakovic´, Šurlan, Opšte uzanse za promet robom s objašnjenjima i sudskom praksom i posebne uzanse, Privredni pregled, Beograd; Bukljaš, Uzance s objašnjenjima i sudskom praksom uz kupoprodaju, Progres, Zagreb 1962. 784. See Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇgp delo, tozd gospodarski vestnik, Ljubljana 1987, pp. 339–340.

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price for it to the buyer.785 If the object of sale is a (transferrable patrimonial) right, such as a claim, a corporate right, industrial property right,786 the seller undertakes to provide the buyer this right or, if the exercise of the right requires possession of a thing, to deliver such thing.787 371. Sales contract has the following characteristics: it is a nominate, bilateral, onerous, consensual, commutative, causal, inter vivos, in principle informal788 contract producing effects in the sphere of obligations, not ownership of the parties, transfer of which is merely one of the seller’s obligations being performed outside the stipulation phase.789 Sales contract can be of commercial, civil, consumer or administrative nature.790 372. The CPA provides for a definition of a consumer sales contract, a consumer, an undertaking, goods and other terms relevant for B2C relationships arising out of a sales contract falling under the CPA.791 Sales contract is defined as a contract through which an undertaking (Sl. podjetje) obliges itself to deliver the goods being sold to the consumer (Sl. potrošnik) so that the latter acquires the ownership on it, whereas the consumer undertakes to pay the price for it to the undertaking. Contracts combining sale of goods and services are also deemed sales contracts.792 A consumer is defined as a natural person who obtains or uses goods and services for the purposes outside his or her professional or profit-making activity, while an undertaking is a legal or natural person performing a profit-making activity irrespective of its legal organizational or ownership status.793 Other institutions and persons providing goods and services to consumers also have the same obligations towards the consumers. Goods are defined as all movable things except those being sold in enforcement or other judicial proceedings. Water, gas and electric energy are also deemed to be goods if they are being sold in fixed volume or quantity. Immovables are not covered by the CPA.794 They are, however, covered by the Protection of Buyers of Apartments and Single Occupancy Buildings Act of 2004.795 373. The object of sale under the general rules of the OC is thus broader than that under the CPA. According to the OC, the objects of sales contracts may be all 785. Article 435/1 of the OC. 786. See Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 83–84. 787. Article 435/2 of the OC. 788. See supra, Introduction to the Law of Contracts, §3, III, and Part I, Ch. 1, §2. 789. See supra, Introduction to the Law of Contracts, §6. 790. A definition of these types of contracts are given supra in Introduction to the law of contracts, §3 II. 791. Article 1 of the CPA. 792. Article 1/19 of the CPA. 793. For details on these definitions, see supra, Introduction to the Law of Contracts, §3, II. 794. See judgement of the Supreme Court of RS, No. II Ips 68/2012. As the general regime under the OC that is applied in all cases that do not fall under the CPA or the Protection of Buyers of Apartments and Single Occupancy Buildings Act of 2004, sets out very strict and inflexible time limits for enforcing the buyer’s remedies, it seems inappropriate that it applies to immovables. 795. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS No. 18/04.

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things (these are defined in the PLC796) that are not extra commercium.797 Goods that are yet to be produced may also be sold (Lat. emptio rei sperate, Sl. prodaja bodocˇe stvari).798 374. A special provision is provided in the OC on delivery of larger quantity of goods than that agreed in a commercial sales contract. If the buyer in commercial sales contract does not declare within an appropriate period after the delivery that the surplus is being refused, the buyer is deemed to have also accepted the surplus and must pay for it the price that was agreed for the rest of the goods. The seller must reimburse any damages to the buyer who does not wish to accept the surplus.799 The OC does not regulate specifically the outcome of such scenario in cases of non-commercial sales contracts. The general rules of the OC on the offer and acceptance would apply. The CPA, however, prohibits non-ordered goods asking the consumer addressees to make a payment for the delivered goods, and clarifies that in cases of such deliveries, the consumers are under no obligation to react to them and their activity can in no way be deemed acceptance of an offer.800 II. Right of Pre-emption and Right of Purchase 375. The seller’s right to sell his or her property to a chosen buyer may be limited by a third person’s right of pre-emption (Sl. predkpuna pravica). A right of preemption may be established by the will of the parties (contractual right of preemption, Sl. pogodbena predkupna pravica) or by law (statutory, ex lege right of pre-emption, Sl. zakonita predkupna pravica), such as the PLC (co-owners’ right of pre-emption in case the ideal share of another co-owner of an immovable is being sold;801 divided co-owners’ right of pre-emption in the event one of the individual parts in divided co-ownership is being sold, but only if an immovable has two or more divided co-owners and no more than five individual parts802), the MFRA (if a share of one of the spouses is sold in enforcement proceedings, the other spouse has a right of pre-emption),803 the Spatial Planning Act (municipalities’ and state’s right of pre-emption on land),804 the LRA (list of holders of a right of pre-emption on agricultural land, forests and farms), etc. Articles 507–513 of the OC lay down the general rules on the contractual right of pre-emption that apply also to statutory 796. Article 15 of the PLC defines a thing as individual corporeal object as well as various forms of energy and waves that can be controlled by a man. For further details, see Kramberger Škerl in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 32–39. 797. Article 438/1 of the OC. Special legislation, such as the LRA, limits transactions with certain goods and/or immovables. 798. Article 438/2 of the OC. 799. Article 473 of the OC. 800. Article 45 of the CPA. 801. Article 66/3 of the PLC. 802. Article 124 of PLC. 803. Article 57 of the Marriage and Family Relations Act. 804. Articles 189–191 of the Spatial Planning Act (Sl. Zakon o urejanju prostora (ZUreP-2), Official Gazette RS, No. 61/17).

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rights of pre-emption unless the specific rules regulating them do not provide otherwise. The OC defines the contractual clause on the right of pre-emption as a clause through which the owner of a thing (pre-emption obligor, Sl. predkupni zavezanec) undertakes to notify the pre-emption beneficiary (Sl. predkupni upravicˇenec) regarding the intended sale of his or her thing to a specific third person and the conditions of such sale, and to offer the beneficiary the opportunity to buy the thing under the same conditions.805 If the right of pre-emption covers an immovable, the clause stipulating it must be in writing according to the general rules of the OC.806 The right of pre-emption may not be inherited or alienated, unless stipulated otherwise by law.807 According to the CPL and LRA, pre-emption rights on immovables based on a legal transaction may be registered808 (while statutory pre-emption rights exist without any registration). If the parties have not set the period of existence of a contractual right of pre-emption, this period is five years after the contract on the establishment of the right of pre-emption was concluded,809 while statutory rights of pre-emption exist, in principle, for an unlimited time period. If the preemption obligor makes the offer and notifies the pre-emption beneficiary of it, the beneficiary must notify the seller in a reliable manner of his or her decision to exercise the right of pre-emption within thirty days after receiving notification of the intended sale.810 If the beneficiary decides to make use of the right of pre-emption, he must not only accept the offer, but must also pay the price stipulated in the owner’s notification of the intended sale, or deposit the price with the court.811 If the owner stipulated a specific deadline for payment of the price in the conditions of sale, the pre-emption beneficiary may only exploit this deadline by providing sufficient security.812 In case of a compulsory public auction, the pre-emption beneficiary may not refer to his or her right of pre-emption. However, if his or her right of pre-emption was recorded in a public register (e.g., the land register), he or she may request that the auction is invalidated if he or she was not specifically invited thereto.813 If the seller sells a thing and transfers the ownership to a third person without notifying the pre-emption beneficiary of the intended sale, and the beneficiary’s right of pre-emption was known or could not have remained unknown to the third person (i.e., the buyer), the pre-emption beneficiary may within six months of learning of the sales contract request that the sales contract between the seller (the pre-emption obligor) and the third party (the buyer) be annulled and the thing be sold to him or her under the same conditions.814 The same may be done if the seller did notify the buyer of the intended sale, but gave him or her false information on the conditions of the sale to the third person, and this was known or could not have 805. 806. 807. 808. 809. 810. 811. 812. 813. 814.

Article 507 of the OC. See Arts 27 and 52 of the OC. Article 509 of the OC. Statutory pre-emption rights are not registered. Article 511 of the OC. Article 508/1 of the OC. Article 508/2 of the OC. Article 508/3 of the OC. Article 510 of the OC. Article 512/1 of the OC.

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remained unknown to the third person.815 In this case, the six-month deadline runs from the day the pre-emption beneficiary learnt of the true contractual conditions.816 The annulment may not be requested after five years from when the property was transferred onto the third person.817 376. The potential seller can also be limited in taking a decision to sell by a right of purchase (Sl. odkupna pravica). In contrast to the general rules on the right of pre-emption that are laid down in the OC, the right of purchase is regulated in the PLC (Article 38/5,6). According to the PLC, an owner of a certain thing can conclude a contract establishing the right of purchase, stating that he or she will sell a certain thing to the other contracting party upon request by that party under the agreed conditions. This right cannot be transferred and expires upon death or dissolution of the other contracting party. In case of immovables, it has effects against third persons (erga omnes effects) if it is entered in the land register.818 III. Sale by Specification 377. The parties may agree in the contract that the buyer has the right to subsequently determine the form, size or any other detail of the sold thing, whereas the type and quantity of the sold thing being essentialia negotii have to be determined already at the conclusion of the contract). Such sale is called sale by specification (Sl. prodaja s specifikacijo).819 If the buyer fails to determine the form, size or other detail by the agreed date or in a reasonable period of time counted from the seller’s request to do so, the seller may withdraw from the contract, or perform the specification according to what was known to him or her about the buyer’s needs. A seller that performs the specification alone must inform the buyer of the details thereof and set the buyer a reasonable period of time to make his or her own specification. If the buyer fails to make use of this opportunity, the specification made by the seller shall be binding. IV. Trial Purchase 378. Articles 514–517 of the OC lay down the rules on the so-called trial purchase (Sl. kup na poskušnjo).820 The parties to a sales contract may agree that the 815. 816. 817. 818. 819. 820.

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Ibid. Article 512/2 of the OC. Article 512/3 of the OC. See Art. 13/2 of the LRA. Article 519 of the OC. Article 517 of the OC states somewhat ambiguously that these rules apply mutatis mutandis also to cases of ‘purchase after inspection’ and cases of ‘purchase reserving a trial’ without even defining these two mechanisms. Juhart states that, contrary to the trial purchase, in case of these two mechanisms the sales contract has yet to been concluded after the inspection or a trial. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 342.

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buyer will have taken the purchased thing for the purpose of testing it in order to determine whether it complies with his or her needs. The buyer must afterwards (i.e., by the deadline set in the contract or by the customary deadline, or, if these do not exist, by a reasonable deadline stipulated by the seller) notify the seller whether the contract is being adhered to,821 or else it will be deemed that the buyer has withdrawn from the contract.822 The validity of the contract that has been concluded is thus pending depending on the actions of the buyer. If, however, the thing was delivered to the buyer on trial until a specific deadline, and the buyer fails to return it without delay after the deadline passes, or fails to declare to the seller that he or she is withdrawing from the contract, the buyer shall be deemed to be adhering to the contract.823 If the trial was agreed in order to determine whether the thing has a specific attribute or is suited for a specific use, the existence of the contract is not dependent upon the buyer’s discretion but on whether the thing in fact has the attribute or is suited to the specific use.824 In cases of trial purchase, the risk does not pass onto the buyer until the buyer declares that the contract is being adhered to, or until the end of the deadline by which the buyer was obliged to return the thing. V. Sale by Sample or Model 379. The OC lays down also the rules on liability of the seller in cases of sale by sample or model (Sl. prodaja po vzorcu ali modelu). Article 518 of the OC differentiates commercial sales contracts from other types of sales contracts: if the thing delivered to the buyer does not conform to the sample or model, the seller in a commercial contract shall be liable under the rules on the seller’s liability for material defects, whereas in other cases, he or she will be liable under the general rules on liability for non-performance.825 However, the seller shall not be liable for nonconformity if the sample or model was only shown to the buyer to provide information in order to enable the buyer to approximately determine the attributes of the thing without any seller’s promise of conformity being made.826 VI. Sale of Someone Else’s Thing 380. As the conclusion of the sales contract merely produces obligations for the parties that are to be performed sometime in the future (at least a ‘juridical second’ 821. This may also be done by paying the price the object of sale. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 337. 822. Article 514/1 of the OC. 823. Article 514/2 of the OC. This type of sale called ‘objective trial purchase’ in contract to the ‘ordinary trial purchase’, called also ‘subjective trial purchase’ regulated in Art. 514 of the OC presented above. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 340. 824. Article 515 of the OC. 825. Article 518/1 of the OC. 826. Article 518/2 of the OC.

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after the contract was concluded) and does not have a direct effect on the transfer of ownership on the sold goods, a thing belonging to a third person, and not the seller, may be the object of sales contract (sale of someone else’s thing, Sl. prodaja tuje stvari).827 If the seller obtains ownership before he or she is obliged to deliver the object of the sale to the buyer and transfer ownership onto him or her, the seller will be able to perform his or her contractual obligation. If, however, the seller cannot transfer the ownership to the buyer, the buyer may nevertheless obtain ownership (on movables only) upon delivery of the goods to him or her on the basis of the PLC’s rules on a non domino acquisition of ownership.828 The OC gives the buyer who did not know and was not supposed to know of the fact that the sold thing is not the seller’s, a special right of avoidance of the sales contract and the right to damages if in such a case the buyer cannot achieve the purpose of the contract.829 Rules of the OC on breach of warranty of tittle (i.e., on liability for legal defects) also apply.830 Sale of a disputed right is also valid unless it has been bought by an attorney or a mandate who was given the power to enforce this right.831 VII. Delimiting Contract of Sale from Contract of Work 381. The OC sets out the rules for delimiting sales contract from contract for work.832 A contract by which one party undertakes to make a specific movable from his or her own material shall in case of doubt be deemed a sales contract. However, a contract shall remain a contract for work if the ordering party undertook to supply the essential part of the material required to make the thing. In any case, a contract shall be deemed a contract for work if the contracting parties primarily had contracted work in mind. VIII. Payment of the Price 382. Apart from the object of the sales contract, the price the buyer is to pay for it is, in principle, also essentialia negotii of the sales contract. Sine pretio nulla venditio. A sales contract without a determined833 or at least determinable price is in

827. Article 440 of the OC. 828. Article 64 of the PLC. Provisions of the PLC on acquisition of ownership by acquisitive prescription (in this case only after a set period of time has passed) could also apply if the prerequisites under Art. 64 are not met. For further details see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 169–173. 829. Article 440 of the OC. 830. See infra in this chapter. 831. Article 441 of the OC. 832. Article 620 of the OC. Cf. Art. 3 of the CISG. 833. The parties are in principle free to determine the price. However, the general rules on laesio enormis or on usurious contracts could apply. See supra, Part I, Ch. 2, §2. See also Art. 443 of the OC for cases of goods where the price is set by an authority.

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principle null and void.834 However, an exception to this rule is set out for commercial contracts. There, the contract is, in favorem contractus, valid even in the absence of any price determination. For such cases, the OC itself sets out the rules for the determination of the price: the buyer is to pay the seller the price that the seller has been charging the buyer in their previous transactions; if there is no such price, an appropriate price is to be paid.835 The appropriate price is defined as the daily price on the day the contract was concluded (i.e., in cases of genus), or, if the latter does not exist (i.e., if the object of the sale is genus that does not have a daily price, or species), the price determined by the court taking into consideration the circumstances of the case.836 Irrespective of the type of sales contract, the parties may agree that the price is determined by a third person.837 They may not, however, agree that one of them will set the price after the conclusion of the contract.838 Such clause (sic! not the contract as a whole) would be null and void and the destiny of the sales contract would depend on the nature of the relationship: if the sales contract is a commercial one, the price would not be determined or determinable meaning that substitute rules of the OC for the determination of the price would apply; if it was a civil or consumer sales contract, the lack of the price being determined or determinable in the contract would result in its nullity. 383. The buyer must pay the price at the time and place stipulated in the contract. Unless it is agreed or customary otherwise, he or she must pay the price upon delivery in the place where the goods are delivered. If payment upon delivery is not required, it must be made at the seller’s place of residence or head office.839 If the goods are being delivered in multiple instalments, the buyer must pay the price for each supply when delivery is taken, unless agreed otherwise or unless it follows otherwise from the circumstances of the case.840 If in such cases the buyer provided an advance payment, the first instalment of the supplied goods shall be charged from the advance payment, unless agreed otherwise.841 384. It must be stressed that, in principle and contrary to the general perception, the payment of the price has absolutely no effect on the question of the time of transfer of ownership.842 Only if the parties have specifically agreed on the reservation of title until the buyer has paid the price (Lat. pactum reservati dominii, Sl. pridržek lastninske pravice), transfer of ownership (on a movable only) is stayed until the price is fully paid. The reservation of title has effects against the buyer’s creditor 834. 835. 836. 837. 838. 839. 840. 841. 842.

Article 442/1 of the OC. Article 442/2 of the OC. Article 442/3 of the OC. Cf. Arts 14/1 and 55 of the CISG. Article 445 of the OC. Article 446 of the OC. Articles 496–498 of the OC. Article 498/1 of the OC. Article 498/2 of the OC. For details on inter vivos derivative acquisition of ownership on movables, see Vlahek, Pravnoposlovni prenos lastninske pravice na premicˇninah v evropskem pravnem prostoru, GV Založba, Ljubljana 2010.

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only if the buyer’s signature on the contract containing the provision on the reservation of title was attested by a notary prior to the buyer’s bankruptcy or seizure.843 The risk of the accidental destruction of or damage to the thing is borne by the buyer from when the thing is delivered to him or her.844 385. The parties may also agree that the price will be paid in instalments (Sl. prodaja na obroke). In this case, the special provisions of the OC on sale in instalments apply (Articles 522–526) whereas special rules on consumer sale in instalments are laid down in the CPA (Articles 49–56). The OC defines sale by instalments as a contract through which the seller undertakes to deliver to the buyer a specific movable before the price is fully paid, and the buyer undertakes to pay the price in set instalments.845 Contract on sale by instalments must be in written form.846 The OC lists the essential substance to be inserted in the contract: the movable sold and the price to be paid; total amount of all instalments including the amount that was possibly paid at the conclusion of the contract; amounts of individual instalments, their number and due dates for their payment.847 Special rules on the seller’s avoidance of the contract are laid down for cases where the buyer is late in paying the instalments: (i) the seller may avoid the contract if the buyer is in delay with the initial instalment; (ii) after payment of the initial instalment has been made, the seller may avoid the contract if the buyer is in delay with at least two successive instalments covering at least one-eighth of the total price; (iii) in exceptional cases, the seller may avoid the contract if the buyer is in delay only with a single instalment when no more than four instalments were envisaged by the contract. In the cases specified under (ii) and (iii), the seller may instead of avoiding the contract request that the buyer pay the entire remainder of the price but must allow the buyer an additional fifteen-day period before doing so. If a contract has been avoided, the seller must return the received instalments to the buyer together with interest from the day they were received, and refund the buyer the necessary costs he or she had with the movable i the meantime, whereas the buyer must return the movable to the seller in the state in which it was delivered and must pay the seller for the use of the movable for the period up to the moment the contract was avoided. The provisions of the CPA on the sale by instalments are in part identical to those set out in the OC (e.g., the definition and the form of the contract, prerequisites for and the effects of the seller’s avoidance of the contract in case the instalments are not paid) whereas in part, they offer extra protection of the buyerconsumer by regulating cases of null and void contractual clauses, the rights of the consumer to terminate unilaterally the contract, or to request the court to amend the conditions of the agreed instalment sale.848 386. The payment may also be made by using the instrument of letter of credit. Sale by letter of credit (Sl. akreditivna prodaja) is regulated in one article within 843. 844. 845. 846. 847. 848.

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Article 520/2 of the OC. Article 521 of the OC. Article 522 of the OC. Article 523 of the OC. Article 524 of the OC. Articles 49–56 of the CPA.

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Chapter I of the Special Part of the OC on the sales contract (Article 527). In contrast to the OC, the Yugoslav OA did not regulate sale by letter of credit. The rules on it were laid down in the General Commercial Usages for the Sale of Goods.849 The Yugoslav OA, however, did set out the rules on letter of credit as a banking transaction (Chapter XXXVII of the Yugoslav OA that still apply in accordance with Article 1061/2 of the OC), but the OC emphasizes that these are without prejudice to the rules of the OC on sale by letter of credit, and vice versa.850 The OC lays down the following rules on sale by letter of credit: If the payment is agreed upon using a letter of credit (usually by a so-called letter of credit clause contained in the sales contract, Sl. akreditivna klavzula), the buyer is obliged to ensure at his or her own expense and within a reasonable period of time that a first-rate bank opens a letter of credit that must be in accordance with the sales contract. The letter of credit must be valid for a sufficient period of time after the seller performs his or her contractual obligation so that the seller is able to prepare and submit the documents to the bank.851 If the bank fails to open the letter of credit accordingly or fails to pay the agreed amount even though the seller submitted all relevant documents, the provisions of the OC on the debtor’s delay shall apply to the relationship between the buyer and the seller.852 A seller that does not make use of a letter of credit opened by a bank in accordance with the sales contract does not lose the right to request the price to be paid, but is obliged to reimburse any damage sustained by the buyer because of that.853 The parties may stipulate that the opening of a letter of credit is a condition for the validity of the sales contract.854 If the validity of the letter of credit is prolonged by an agreement of the parties, each of them bears half of the costs, whereas only one party bears all the costs of such prolongation if the reasons for it are on his or her side.855 IX. Passing of Risk 387. According to the principle casus sentit dominus (i.e., the economic, not necessarily the formal dominus), the risk, as a rule, passes onto the buyer at the moment the object of the sale is handed over to him or her.856 The OC, however, sets out an exception to this rule for cases of the buyer’s delay in accepting performance (mora creditoris) where the risk passes onto the buyer upon his or her delay despite the object of the sale is still with the seller.857 Despite the handing over of the object of the sale, the risk does not, however, pass onto the buyer if he or she 849. 850. 851. 852. 853. 854. 855. 856.

Commercial usages Nos. 193 and 194. Article 527/6 of the OC. Article 527/1 of the OC. Article 527/2 of the OC. Article 527/3 of the OC. Article 527/4 of the OC. Article 527/5 of the OC. Article 436/1 of the OC. Special rules apply to goods in transfer (Art. 452 of the OC). Cf. Arts 66–70 of the CISG. 857. Article 437 of the OC.

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has terminated the contract or has requested substitute goods due to their nonconformity.858 Rules on passing of risk are laid down also in the CPA.859 It must be stressed that the risk will pass onto the buyer with delivery irrespective of whether the parties have agreed that the ownership is reserved to the seller until the price is fully paid (reservation of title, Lat. pactum reservati dominii, Sl. pridržek lastninske pravice).860 X. Delivery 388. The OC lays down the rules on the time and place of delivery that apply in cases where the parties have not determined them in the contract. If the day of delivery to the buyer is not stipulated, the seller must deliver the object of sale within an appropriate time after the conclusion of the contract having regard to the nature of the object as well as other circumstances of the case.861 If the parties agreed that the delivery is to take place within a fixed time frame, and they did not agree which of the parties has the right to set the date of delivery, this right foes to the seller unless it is clear from the circumstances of the case that this decision is to be made by the buyer.862 Special rules on the time of delivery in the absence of the parties’ agreement are laid down in the CPA that requires the seller to deliver the goods ‘immediately and not after thirty days after the conclusion of the contract unless the parties have agreed otherwise’.863 If the place of delivery is not stipulated, the seller must deliver the goods at the place where the seller’s head office or place of residence was when the contract was concluded.864 If, however, the parties knew at the conclusion of the contract where the goods were located or were to be made, then the goods must be delivered at that place.865 Special rules on the place of delivery are set out in the OC for cases of distance sale.866 389. Rules on simultaneous performance (Sl. socˇasna izpolnitev) of the parties to the sales contract are also laid down in the OC.867 Unless provided otherwise by the parties’ agreement or by the customs, the seller is not obliged to deliver the object of the sale if the buyer is not willing to pay to the seller at the same time the purchase money. The buyer is, however, not obliged to pay the purchase money before having the opportunity to inspect the goods. When the goods are being delivered by delivery to a transporter, the seller may defer the dispatch of the goods until the payment of the purchase money, or may send the goods while reserving the right 858. Article 436/2 of the OC. 859. Article 25c of the CPA. 860. Article 521 of the OC. For details on the instrument of reservation of title, see Kramberger Škerl in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 240–242. 861. Article 450 of the OC. 862. Article 449 of the OC. 863. Article 25a of the CPA. 864. Article 451/1 of the OC. 865. Article 451/2 of the OC. 866. Articles 452–454 of the OC. 867. Article 455–457 of the OC.

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to dispose of them during the transport. In the latter case, the seller may demand that the goods are not delivered to the buyer at the final destination until the purchase money is paid, whereby the buyer is not obliged to pay the purchase money before having the opportunity to inspect the goods (unless the parties to the contract have envisaged payment upon delivery of an appropriate document). If after the dispatch of the goods the buyer’s financial situation raises justifiable concerns as to his or her ability to pay the purchase money, the seller may prevent the delivery of the goods to the buyer even when the buyer already possesses the document by which he or she is entitled to request delivery of the goods. The seller may, however, not prevent the delivery if it is requested by a third person having the document giving such person the right to request delivery of the goods, unless the document contains reservations regarding the effect of the transfer, or if the seller shows that the holder of the document knowingly acted to the detriment of the seller when acquiring the document. 390. The delivery of the goods is comprised of all actions necessary to facilitate delivery and enable the buyer to take hold of the goods. If the buyer refuses without justifiable grounds to take hold of the goods the delivery of which was offered to him or her on time in the agreed or in a customary manner (creditor’s delay), the seller may avoid the contract if there is reasonable doubt as to whether the buyer will pay for the goods.868 XI. Storage of Sold Goods 391. In some cases, the buyer or the seller, respectively, have the obligation to store the goods until they are delivered or returned to the other party.869 The situations covered by this rule are the following: (i) the buyer is late in taking the goods that remain in the possession of the seller;870 (ii) the buyer avoids the sales contract or requests replacement of goods due to their defects, and will return the goods on that basis – until the goods are returned, they remain in the possession of the buyer;871 (iii) the buyer refuses to take over the goods at the place of destination, but must nevertheless take possession over them for the seller if the latter or his or her representative is not present at the place of destination and if it can be arranged without the payment of the price and without excess expenses or larger discomfort.872 In these cases, the seller and the buyer do not conclude a separate bailment contract, their safekeeping relationship arises ex lege on the basis of their seller–buyer relationship. The party storing the goods has the right to recover any necessary costs incurred for storing the goods.873 In contrast to the bailee, it has the right to retain the goods until the costs are settled. The buyer and the seller may also 868. 869. 870. 871. 872. 873.

Article 499 of the OC. Articles 500–502 of the OC. Article 500/1 of the OC. Article 500/2 of the OC. Article 501 of the OC. Article 500/3 of the OC.

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decide to (i) lodge the goods with the court, (ii) hand over the goods in storage to a third person, or (iii) sell the goods for their owner in accordance with the rules set out in the OC.874 §3. SELLER ’S DEFECTIVE PERFORMANCE I. Liability for Material Defects 392. General rules on liability of the seller for material defects (Sl. odgovornost za stvarne napake) are laid down in Articles 458–480 of the OC.875 These vary to some extent according to the type of the sales contract in question: some specific provisions are laid down in the OC for commercial sales contracts deviating from the general OC’s regime of the seller’s liability for material defects. 393. Specific rules on liability of the seller for material defects are laid down in the Protection of Buyers of Apartments and Single Occupancy Buildings Act of 2004876 that applies to all types of legal relationships unless set out otherwise in the act. To name a few: the right of the buyer to withhold 5% of the purchase price if defects are discovered at the handing over of the property; a prolonged two-year warranty time period in which the defects have to arise for the buyer to be able to refer to them (the rule is the same as in the CPA, while the OC that would have otherwise applied, sets out a very short warranty time period of six months); mandatory bank guarantee to be set up by the seller for remedying any hidden defects in the amount of 5% of the purchase price; bank guarantee for the return of the price paid; etc.877 394. Specific rules on the liability of seller in consumer sales contracts are set out in the CPA (Chapter VI, Articles 25–41, in particular Articles 37–40) that complements the general regime of the OC that applies with regard to all questions of the liability not regulated in the CPA.878 It should be noted that the parties may not derogate from the provisions of the CPA to the detriment of the consumer.879 395. As the CPA is implementing Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees,880 the directive’s provisions and their interpretation by the CJEU should accordingly be taken into account in the application of the CPA. One of the difficulties in doing that is that Directive 1999/ 874. That is in Arts 302–308 of the OC. Article 502 of the OC. 875. See also supra Part I, Ch. 6, §2. 876. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS No. 18/04. 877. For details, see Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 68–74. 878. See Arts 1/29 and 37/4 of the CPA. 879. Article 37cˇ of the CPA implementing Article 7/1 of Directive 1999/44. 880. OJ L 171, 7.7.1999.

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44 and corresponding CJEU case law are not entirely clear and are also not properly implemented in Slovenian legislation. Another reason lies also in the fact that, surprisingly, Slovenian judges are sometimes not well familiar with national consumer legislation, let alone with the provisions of the directives, relevant CJEU case law and their effects in the national legal system. The courts have sometimes even applied the OC instead of the CPA in B2C and other relationships regulated in the CPA.881 The application of EU consumer legislation in Slovenia would surely be of higher quality had the directives and the national implementing legislation be clearer.882 396. It must also be stressed that a new CPA is being drafted by the Ministry of Economic Development and Technology. In 2017, the Ministry published a draft CPA-1883 containing 200+ articles, a dozen of which cover the remedies for nonconformity of consumer sales contract. The new rules will, as the draft stands now, amend the existent regime of the buyers’ remedies to quite a large extent.884 A. Prerequisites of the Seller’s Liability 397. The seller is required to deliver the goods to the buyer in conformity with the contract, i.e., without material defects. According to the OC, a defect shall be deemed material if: 885 (i) the thing does not have the attributes necessary for the customary use or marketing of the thing; (ii) the thing does not have the attributes necessary for the special use for which the buyer has bought it, and this was or should have been known to the seller; (iii) the thing does not have the attributes and features that were expressly or tacitly agreed or requested; (iv) the seller delivered a thing that does not match the sample or model, unless the sample or model was only shown for information purposes.886 The OC states that insignificant material defects (minor defects, Sl. neznatne napake) shall not be taken into consideration as defects for which the seller would be liable.887 The CPA provides for a similar definition of a material defect.888 Additionally, obligation to appropriate packaging is 881. See, for example, the following judgments: the High Court of Ljubljana, II Cp 2207/2011 of 30 Nov. 2011; the Local Court of Slovenj Gradec, No. P 248/2003 of 20 Aug. 2009. For details on the first judgment, see Možina, Kaj je narobe z Zakonom o varstvu potrošnikov?, Podjetje in delo 6–7/ 2012; for details on the second judgment, see Fercˇicˇ, Nepošteni pogodbeni pogoji v potrošniških pogodbah, Pravna praksa 2/2010. 882. Damjan, Podobnik, Vlahek, Slovenia, in: Slovenia. Vilac¸a (ed.), Congress proceedings. Vol. 1, The internal market and the digital economy (Le marché intérieur et l´économie digitale) (Der Binnenmarkt und die digitale Wirtschaft), Coimbra, Almedina 2018, pp. 670–677. 883. Sl. Zakon o varstvu potrošnikov (ZVPot-1). 884. For details, see Damjan, Podobnik, Vlahek, Slovenia, in: Slovenia. Vilac¸a (ed.), Congress proceedings. Vol. 1, The internal market and the digital economy (Le marché intérieur et l´économie digitale) (Der Binnenmarkt und die digitale Wirtschaft), Coimbra, Almedina 2018, pp. 674–675. 885. Article 459 of the OC. 886. See Art. 518 of the OC and the corresponding commentary to it supra. 887. Article 458/3 of the OC. 888. Article 37 of the CPA and Art. 2 of Directive 1999/44.

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set out.889 Further, mirroring the regime of Directive 1999/44, the CPA states that conformity of the goods with the contract is assessed also by taking into account any statements on the specific characteristics of the goods made about them by the seller or the producer, particularly in advertising or on labelling.890 The current CPA (this is about to change with the new CPA-1), however, fails to implement two important provisions of Directive 1999/44. First, it does not implement the ‘Ikea clause’,891 and second, it does not set out the right of redress.892 398. The seller is liable only for defects that existed (or their cause existed) already at the moment the risk passed onto the buyer, i.e., in principle, at the moment of delivery.893 He is thus not liable for the defects the cause of which has arisen only after the goods were already within the buyer’s sphere. Taking into account Directive 1999/44, the CPA sets out a rule that any lack of conformity which becomes apparent within six months shall be presumed to have existed at the time of delivery.894 This rule merely shifts the burden of proof as regards whether the defect existed at the moment of delivery or not. If the defect will appear in the first six months after the delivery, it will be presumed that the defect existed at the moment of the deliver whereas it will not if the defect appeared after the first six months after the delivery. If it will appear in two years after the delivery (or one year in case of used goods), the seller will still be liable for it, but in the absence of the presumption, the buyer will have to show that the defect existed at the moment of the delivery. 399. The seller is liable for nonconformity of the goods irrespective of whether he or she had knowledge of them.895 His or her liability is thus an objective one and does not depend upon the seller’s knowledge of defects or any fault. The seller’s liability may only be excluded in cases set out in Article 240 of the OC.896 If, however, the seller did have knowledge of the defects, the buyer will keep his or her remedies despite being late in notifying the seller of the defects and/or despite the defect will appear after the lapse of the period of liability for defects and/or despite being late in advancing his or her requests.897

889. 890. 891. 892. 893. 894.

Article 36/1,3 of the CPA. Article 37/3 of the CPA. Article 2/5 of Directive 1999/44. Article 4 of Directive 1999/44. Article 458/1,2 of the OC. Article 37b/3 of the CPA differing slightly from Art. 5/3 of the directive that limits this presumption by stating that it does not apply if it is incompatible with the nature of the goods or the nature of the lack of conformity. See also CJEU’s Judgment in Case C-497/13 Froukje Faber v Autobedrijf Hazet Ochten BV, ECLI:EU:C:2015:357, para. 4 of the operative part. 895. Article 458/1 of the OC. 896. That is in cases the debtor was unable to perform the obligation or was late in performing the obligation owing to circumstances arising after the conclusion of the contract that could not be prevented, eliminated or avoided. 897. Article 465 of the OC.

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400–402

400. The seller is not liable for the defects that were known or could not have been unknown to the buyer upon conclusion of the contract.898 According to the OC, the following defects are deemed defects that could not remain unknown to the buyer: defect which would be noticed during a customary inspection by a diligent person with the average knowledge and experience of a person of the same occupation or profession.899 However, the seller will in any case be liable for defects (i.e., even if the buyer could easily have noticed the defects) if he or she declared that the thing is without any defects or that it has specific attributes or features.900 The seller’s liability for defects is excluded also for sales at a compulsory public auction.901 401. According to the OC, the contracting parties may themselves limit or exclude the seller’s liability for material defects.902 Such contractual provision is, however, null and void (i) if the defect was known to the seller and the seller failed to inform the buyer of it, or (ii) if the seller forced such a provision upon the buyer by exploiting his or her bargaining power.903 The latter situation is typical for B2C relationships for which the CPA explicitly prohibits any clauses limiting or excluding the seller’s liability.904 Contractual clauses excluding the seller’s liability are typical in C2C relationships regarding the sale of used goods. Clauses such as ‘tale quale’ (Sl. ‘takšno, kakršno’, ‘videno, kupljeno’) are very common despite the fact that their meaning is not clear. The OC does not clarify whether the clauses on the limitation or exclusion of liability of the seller apply only to apparent defects or also to hidden defects. In practice, the seller wishes, by insisting on such clause, to exclude all kinds of liability for the defects in order to close the transaction as fully as possible. That is why in such cases, the goods are typically inspected (also for any cases of potential hidden defects) by the buyer even before the conclusion of the contract. In this case, any apparent defects would be known to the buyer already upon conclusion of the contract and the seller would not be liable for them meaning that the exclusion clause would not have any purpose. It seems only reasonable that exclusion clauses cover also the hidden defects. 402. Upon taking possession of the thing,905 the buyer must inspect it in the customary manner or forward it for inspection as soon as this is possible under the normal course of events.906

898. 899. 900. 901. 902. 903. 904. 905. 906.

Article 460/1 of the OC. Article 460/2 of the OC. Article 460/3 of the OC. Article 467 of the OC. If the buyer waived only the right to withdraw from the contract because of a material defect, he or she shall retain other remedies (Art. 466/3 of the OC). Article 466 of the OC. Article 37cˇ of the CPA. In case of defects, the buyer may as well refuse to take over the delivered things. See supra Part I, Ch. 6, §2. Article 461 of the OC. The CPA and Directive 1999/44 do not address this question.

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403. After inspection, the buyer must inform the seller of the apparent defects (Sl. ocˇitne napake) in eight days after the delivery (in case of civil sales contract) or without delay upon/after the delivery (in case of commercial sales contract)907 or in two months after the delivery (in case of consumer sales contract).908 If both parties were present during the inspection, the notice has to be made immediately at the spot.909 If the buyer does not notify the seller in the set time periods, he or she loses the remedies. If the buyer dispatches the goods onward without repacking it, and the seller knew of or should have known of such arrangement, the inspection may be deferred until the goods reach the intended new destination; in this case, the buyer must notify the seller of any defects as soon as the buyer could learn of them from the customers under the normal course of events.910 404. In case of hidden defects (they are defined as defects that could not be noticed during a customary inspection upon delivery – but the cause for them existed already at the moment of delivery), the deadlines for the notification of the defects starts to run upon the moment the defect was noticed.911 The seller is not liable for defects that appear more than six months after the delivery, unless a longer period (called warranty time period. Sl. jamcˇevalni rok) was stipulated in the contract.912 In consumer sale, the liability of the seller is extended from six months after the delivery to two years after the delivery for new products,913 and to one year after the delivery for used products.914 It is, however, not entirely clear from the CPA whether this period is relevant for cases of all defects or only hidden defects (as is the case with B2B and C2C contracts regulated in the OC), although the first option seems more plausible given the broad text of the provision and the implied intent of the legislator in favour of the consumer.915 405. If, due to a defect, the seller had to repair a thing, deliver another thing, replace parts, etc., the period for notification and the period of the seller’s liability for the defects shall be counted from the delivery of the repaired thing, the delivery of the substitute thing, the replacement of the parts, etc.916

907. Article 461/1 of the OC. 908. Article 37a of the CPA implementing Art. 5/2 of Directive 1999/44. See also CJEU’s Judgment in Case C-497/13 Froukje Faber v. Autobedrijf Hazet Ochten BV, ECLI:EU:C:2015:357, para. 3 of the operative part. 909. Article 461/2 of the OC. 910. Article 461/3 of the OC. 911. Article 462/1 of the OC. 912. Article 462/2 of the OC. 913. Article 37b/1 of the CPA implementing Art. 5/1 of Directive 1999/44. 914. Article 37b/1 of the CPA implementing Art. 7/1 of Directive 1999/44. 915. See also supra Part I, Ch. 6, §2. 916. Article 463 of the OC.

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406–409

406. In his or her notice, the buyer must precisely describe the defect and invite the seller to inspect the item.917 If the notice was sent to the seller on time by registered post, telegram or any other reliable manner, and it arrives to the seller with a delay, or the seller fails to receive it, the buyer shall nevertheless be deemed to have performed the notification obligation in due time.918 The CPA adds to this that the consumer may notify the seller of the defect in person, and the seller shall in this case either give the consumer a receipt, or refer the consumer to the shop where the item was purchased, or to the representative of the seller with whom the consumer concluded the contract.919 407. The CPA sets out specific obligations of the seller upon receipt of the defects notification.920 If the existence of a defect is not contested, the seller must comply with the consumer’s requests under the CPA as soon as possible, but not later than eight days after receiving the request. If the seller contests the buyer’s allegations, the seller must send the consumer a written reply within eight days of receipt of the request at the latest. If the seller fails to do so, the Market Inspectorate can fine them.921 B. Remedies in Case of Material Defects 408. The OC lists the following remedies available to the buyer in case of material defects of the thing bought (sometimes referred to as damnum quod rem, i.e., damage of the thing itself that manifests in the defects): (i) performance of the contract (repair (Sl. popravilo) or replacement of the thing (Sl. izrocˇitev druge stvari brez napake) or (ii) reduction of the price (Sl. znižanje kupnine), or (iii) avoidance of the contract (Sl. odstop od pogodbe).922 In principle, no hierarchy of these remedies is set out in the OC (nor is in the CPA).923 The only clear exception to this is that according to the OC (not, however, the CPA that is silent on this question), the buyer must, in principle, set the seller reasonable additional time for performance before he or she avoids the contract.924 409. There are quite some inconsistencies and ambiguities in the CPA’s regulation of remedies in case of material defects of the sold goods. The CPA has unfortunately not been drafted very thoroughly and lacks precision and perfection.925 917. Article 464/1 of the OC. Identical provision is set out in Art. 37a/1 of the CPA which does not accord fully to Directive 1999/44 as the latter does not provide for any consumers’ obligation to enable the sellers the inspection of the goods. 918. Article 464/2 of the OC. 919. Article 37a of the CPA. 920. Article 39 of the CPA. 921. Article 78/1 of the CPA. 922. Articles 468/1 of the OC. 923. It is, however, not clear what the meaning of Art. 469 of the OC is as it might also be interpreted as putting the remedies into some sort of hierarchy. Other provisions, however, signal the opposite. 924. See Arts 470 (1) and 458 OC. 925. See also: Možina, Harmonisation of private law in Europe and the development of private law in Slovenia, in: Varul (ed.), European initiatives (CFR) and reform of civil law in new Member States:

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Directive 1999/44, too, has not been implemented with much consideration. For example, Article 37c of the CPA implementing Article 3 of the Directive does not set out a hierarchy of consumers’ remedies as anticipated by Directive 1999/44 (and interpreted by the CJEU in Weber & Putz926). As the Directive enables Member States to grant higher protection to consumers as the one set out in the Directive, it is not clear whether in case of Article 37c, the Slovenian legislator has in fact opted for a higher protection or it has merely overlooked Article 3 of the Directive. The outcome of such inconsistency is that the businesses, the consumers, the attorneys and the judges are not certain how to interpret and/or apply Article 37c of the CPA. It is not clear whether the buyer’s remedies are set out as equal or not, and whether the reference to the Directive and Weber & Putz is thus at all relevant. If it is, a question arises as to whether the provisions of the CPA can be interpreted harmoniously in line with the Directive, and further, whether they may be applied directly despite the horizontal relationship between the trader and the consumer or only indirectly through harmonious interpretation of Slovenian law.927 Even if the provisions of the CPA on the availability of the remedies are to be interpreted as granting higher protection to the consumers than the Directive and need not be interpreted in accordance with the Directive, it is not clear how they should be read taking into account that, to some extent, they differ from the general rules of the OC. Under the general contract law set out in the OC, the buyers have, in principle, the right to choose freely from any of the available remedies for breach of contract, i.e., repair, replacement, price reduction, they may also avoid the contract after giving the other party reasonable time to perform the contract. Under the OC, the objection of disproportionality is available to the services provider (contract for work),928 but not to the seller (sales contract).929 However, as has been emphasized in some older Slovenian judgments, the seller may invoke at least the general principle of prohibition of abuse of right in order to deny their customer to choose a remedy that does not correspond fairly to the circumstances of the case. The CPA, as it stands now, too, lists the remedies of the buyer (and, in contrast to the CO, also of the services receiver) without any hierarchical order and without any explicit option for the seller or the services provider to refer to disproportionality. The general principle of prohibition of abuse of right would possibly apply here, too.930 In contrast to the CO, however, the CPA does not even limit the right to avoid the contract by requesting the buyer to first give the seller or service provider reasonable time to perform

926. 927.

928. 929. 930.

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international conference dedicated to the 375th anniversary of the University of Tartu, 15–16 Nov. 2007, Juridica international, Vol. 14, No. 1, Tartu 2008. Joined Cases C-65/09 and C-87/09 Gebr. Weber GmbH v. Jürgen Wittmer and Ingrid Putz v. Medianess Electronics GmbH, judgement of 16 Jun. 2011, ECLI:EU:C:2011:396. This question was relevant in the Ribicˇ case dealing with the Package Travel Directive (Council Directive 90/314/EEC of 13 Jun. 1990 on package travel, package holidays and package tours, OJ L 158, 23.6.1990, pp. 59–64) where even the Supreme Court of RS struggled with understanding the effects of the directive (see order No. II Ips 160/2013 of 23 Apr. 2015). Articles 637–640 of the OC. Articles 468–480 of the OC. See also: Berdnik, Žefran, Uveljavljanje zahtevkov v primeru napake na blagu pri cˇezmejnem spletnem poslovanju, in: Vlahek, Damjan (eds), Varstvo potrošnikov pri spletnem poslovanju, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017, pp. 33–58, 236, 244.

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410–411

the contract.931 Again, it is not clear whether by omitting such rule of the CO in the CPA, the legislator has intentionally derogated from it, or has merely overlooked it, or has left it with the general regime of the OC that applies subsidiarily. Similarly, the CPA does not provide for a provision set out in Article 3/6 of Directive 1999/44 that the consumer is not entitled to have the contract rescinded if the lack of conformity is minor. That is, however, stated in the general part of the OC932 which applies where the CPA is silent.933 410. It is clear from the case law of the CJEU that in B2C relationships, the seller may not request the buyer to pay for the use of the defected goods that were later substituted with new ones.934 This is a deviation from the general rules on unjustified enrichment. Further, in case the defected goods were installed in the consumer’s premises, the costs of replacement (not only in the form of delivering new defectless goods but also in the form of any cost required for removing the defective goods and installing substitute ones) are also covered by the remedy of substitute performance (but, according to the CJEU, the buyer may have to cover these costs in part).935 The CPA does not address any of these questions and merely lists the requests for repair and request for new substitute goods as two of the consumer’s remedies. 411. As to the remedy of price reduction, the OC states that the price shall be reduced in relation to the value of the thing without defects and the value of the thing with the defect at the time when the contract was concluded.936 The CPA erroneously lists reimbursement of the price paid as one of the buyer’s remedies instead of listing the price reduction as a remedy (the consequence of which is reimbursement if the price already paid).937 Some courts have thus mistakenly been making a differentiation between this remedy under the CO and the CPA. Such improper terminology leads also to improper application of the time limits for bringing an action (two years after the seller had been notified of the defect by the consumer) also to unjustified enrichment claims (where the time limit should be the general five-year limitation period). It has also not been clear whether the remedy of reduction of the

931. See, for example, the following judgments of the High Court of Celje, Nos. Cp 133/2015 of 27 Aug. 2015, Cp 74/2015 of 11 Jun. 2015. 932. Article 110 of the OC. It is interesting, however, that in the chapter on sales contract, the OC states that minor lack of conformity is not even deemed lack of conformity (Art. 458/3 of the OC). 933. Article 37/4 of the CPA. See also the commentary of the status of the CPA in Part I, Ch. 6, §2 supra. 934. See Judgment in Case C-404/06 Quelle AG v. Bundesverband der Verbraucherzentralen und Verbraucherverbände, judgment of 17 Apr. 2008, ECLI:EU:C:2008:231. 935. See Judgment in Joined Cases C-65/09 and C-87/09 Gebr. Weber GmbH v. Jürgen Wittmer and Ingrid Putz v. Medianess Electronics GmbH, Judgment of 16 Jun. 2011, ECLI:EU:C:2011:396. 936. Article 478 of the OC. 937. Article 37c/1 of the CPA.

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price is pursued out of court or only by making a claim with the court (this is particularly relevant with regard to the time limits set out for resorting to this remedy).938 The recent Supreme Court judgments have, at least outside B2C relationships, opted for the latter interpretation. 412. Termination of the contract939 is a remedy ultima ratio as its result is that the relationship between the parties to the contract terminates and is rewind as if they had never entered it. That is why additional prerequisites are set out before the buyer may advance with it. In principle, the buyer may avoid the contract due to any material defect, as long as it is not minor, and under the condition that he or she has set the debtor a reasonable additional time for performance of the contract.940 If it is clear that the debtor will not repair or replace the goods in additional time, the setting of additional time is not required.941 Further, the buyer can terminate the sales contract only if he or she is able to return the goods in the condition he or she had received them.942 If, however, the deterioration or destruction of the goods is not attributable to the buyer, but to the defect itself or to an accident, the buyer may nevertheless avoid the contract.943 Deterioration due to normal use or due to the inspection of the goods itself is also not attributable to the buyer.944 Minor inconsistencies are also excluded.945 If the creditor sets the additional reasonable time which lapses without repair or replacement, the contract is terminated automatically, ex lege, at the time the additional time lapses.946 No notice of termination (separate from the setting of additional time) is necessary. The buyer may, however, prevent termination of the contract by notifying the seller without hesitation of his 938. Some authors and judgments state that both the claim for reduction of the price and the following claim for reimbursement of the price paid should be filed with the court whereas others opine that only the reimbursement claim is to be filed with the court (in the time limits set out for unjustified enrichment claims) whereas it suffices that the claim for the reduction of the price is made to the seller out-of-court (in two years after the seller had been notified of the defect by the consumer). See Možina, Problem uveljavljanja znižanja pogodbene cene, Pravna praksa 43/2016; Možina, Uveljavljanje znižanja kupnine in drugih jamcˇevalnih zahtevkov, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, pp. 321–331, 482–483, 495; Mežnar, Uveljavljanje jamcˇevalnih zahtevkov za znižanje placˇila po OZ in ZVPot v sodni praksi – je res potrebno razlikovanje, in Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, pp. 305–319, 482, 494–495; Galicˇ, Znižanje pogodbene cene – z nasprotno tožbo ali z ugovorom?, Pravna praksa 8/2014, pp. 9–11; see also the following judgments: the Supreme Court of RS, Nos. II Ips 348/2013 of 20 Aug. 2015, II Ips 38/2012 of 17 Oct. 2013, II Ips 68/2012 of 18 Sep. 2014, III Ips 89/2013 of 20 Jan. 2015; the High Court of Koper, No. Cp 1010/2011 of 27 Mar. 2012, the High Court of Ljubljana, No. I Cp 327/2016 of 4 May 2016. 939. Articles 470–472, 474 of the OC. The rules of the general part of the OC on avoidance of bilateral contracts also apply. The interrelation of these general rules on termination/avoidance of bilateral contracts, and the special rules on avoidance of the sales contract is sometimes not clear enough. See supra Part I, Ch. 6, §2. 940. See Arts 470/1 and 458 of the OC. 941. Article 470/ of the OC. 942. Article 475/1 of the OC. The CPA does not address this issue. 943. Article 475/2 of the OC. 944. Article 475/2,3 of the OC. 945. Article 475/3 of the OC. 946. Article 471 of the OC.

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or her decision to stay with the contract. If the setting of additional time is not necessary, the buyer can terminate the contract by giving the seller notice of termination.947 If the parties agreed that defect-free performance in a fixed period of time is essential, the contract will be, according to the general rules of the OC on termination of bilateral contracts, terminated automatically (ex lege). The CPA does not set out any rules on termination. It merely lists (erroneously again) the consequences of avoidance (i.e., the return of the price paid) among the remedies available to the consumer.948 413. The rights of a buyer that notified duly the seller of the defects expire one year from the day the notification was sent, unless the buyer was unable to exercise these rights owing to the seller’s fraud.949 After this deadline passes, a buyer that notified duly the seller of the defects, and has not yet paid the price for the purchased items, may object to the seller’s claim to pay the price by setting a counterclaim for the reduction of the price and damages due to defects irrespective of whether such advancement is within the usual time limits (Sl. perpetuacija ugovora).950 In favorem consumatorum, the CPA sets out a two-year deadline starting to run from the notification.951 414. In addition to one of the remedies listed above, the buyer has the right to request the reimbursement of (i) damage sustained because of the defect952 as well as the (ii) damage on other property of the buyer.953 Commentators interpret damages under (i) as damages on the buyer’s interest in conform performance of the contract manifesting, e.g., as inability to use the bought item and as costs incurred for storing or repackaging (Lat. damnum circa rem, Sl. škoda zaradi zaupanja).954 They opine that in this case, the damages claim must be made in one year after the damage has been sustained (mirroring as far as the length is concerned the one-year period for advancing with one of the remedies) and under the proviso the buyer has made the all required activities in due time (notification, advancement of the claim).955 Damages on other property of the buyer (Lat. damnum extra rem, Sl. refleksna škoda), may, however, in their view be claimed in accordance with the general rules on contractual liability for damage.956

947. Article 103 of the OC. 948. Article 37c/1 of the CPA. The main substantive problem here is that it ensues from the text that the claim for returning the buyer the possible price paid is to be made in the same time limit as avoidance/price reduction claim which is erroneous as the claim for returning is a condictio with its own time limits to be applied. 949. Article 480/1 of the OC. 950. Article 480/2 of the OC. 951. Article 37c/3 of the CPA. 952. Article 468/2 of the OC. 953. Article 468/3 of the OC. The general rules on limitation will, for example, apply here. 954. Plavšak in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 172–178. 955. Ibid. 956. Ibid.

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415. After listing the remedies of the buyer, the CPA adds that in any case, the consumer has the right to require the seller to reimburse them for any damage, in particular reimbursement of costs of material, spare parts, labour, transfer and transport of products incurred in relation to the advancement with the remedies for nonconformity of the contract.957 It thus mentions explicitly only damnum circa rem, and is silent on other types of damages that might be sustained by the buyer because of the defects (provisions of the OC will thus apply with regard to these). The CPA does not, however, set out any rules on filing damnum circa rem requests meaning that the whole damages regime is to be assessed according to the rules of the OC on material defects in sales contract. II. Compulsory and Voluntary Guarantee 416. An additional set of remedies (with its own hierarchy and prerequisites) in the form of a compulsory one-year guarantee (Sl. garancija) for new technical goods (of the producer and the seller), and a compulsory one-month guarantee (of the seller only) for used technical goods, is (as the law stands now) available to the buyers of specific technical goods listed in a ministerial decree.958,959 The provisions on compulsory guarantee (as well as on voluntary guarantee) are laid down in Chapter IV of the CPA (Articles 15b–21cˇ). It must be emphasized that this chapter applies irrespective of who the buyer is, i.e., in both B2C and B2B contractual relationships.960 Voluntary guarantee is, in addition, regulated also in the OC in the chapter on sales contract (Articles 481–487) making the regulation of the instrument rather ambiguous. 417. Unfortunately, the consumers in Slovenia are poorly informed of the substance of the remedies available to them under both sets of rules, i.e., under the rules on the liability of the seller for nonconformity of the goods on one hand, and the rules on the liability of the seller (and the producer) for flawless functioning of the technical goods on the other. They are somewhat misled to believe that guarantee is the only, and in any case the most advantageous tool for remedying the defected goods. The reason for referencing to guarantee on the side of the sellers often lies in the regulation of remedies available to buyers under the CPA guarantee scheme according to which the primary remedy for the lack of conformity is repair.961 Only if after forty-five days the goods are not repaired, the buyer may request delivery of substitute goods.962 If this, too, is not provided, the buyer may reduce the price or avoid the contract. 957. Article 37c/2 of the CPA. See judgment of the High Court of Ljubljana, No. II Cp 154/2012 of 29 Aug. 2012. 958. See also supra Part I, Ch. 6, §§1, 2. 959. Sl. Pravilnik o blagu, za katerega se izda garancija za brezhibno delovanje, Official Gazette, Nr. 14/2012. 960. See Art. 21cˇ of the CPA. 961. Article 21b of the CPA. 962. The claim must be filed with the court in two years after the buyer had requested performance.

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418. In recent years, ideas on the abolition of compulsory guarantee in Slovenia have intensified stating that the regime restricts the fundamental freedoms guaranteed in the EU internal market, and that the competition itself would guarantee the quality of the goods.963 Compulsory guarantee is deemed a relic of the former Yugoslav regime where it represented a form of protection of buyers of goods against the undertakings operating in central planning economy.964 In 2011, the first draft of the 2011 CPA amendments provided for the abolition of compulsory guarantee, but the idea was later abandoned under pressure of the consumers’ organizations fearing that without the compulsory guarantee the buyers’ rights would be too restricted. The current draft CPA-1 is, however, retaining only the voluntary type guarantee. III. Liability for Legal Defects 419. Liability for legal defects (breach of warranty of title, Sl. odgovornost za pravne napake) in the sold items is regulated in the OC (Articles 488–495) uniquely for all types of legal relationships (B2B, C2C, B2C). 420. The seller is liable for a legal defect if a third person has a right on the sold thing which excludes, reduces or restricts the buyer’s rights, and the buyer was not informed of such right and did not consent to take hold of the thing encumbered with it.965 If an object of the sales contract was a right (not a thing), the seller is liable for the existence of such right without any legal obstacles to its exercise.966 The parties may limit or exclude the seller’s liability for legal defects unless the seller was aware or could not have been unaware of the defect at the moment of conclusion of the contract.967 In that case, a contractual provision on the limitation or exclusion of liability for legal defects is null and void.968 If the seller was aware of any legal defects of public nature or knew that they might be expected, and did not inform the buyer of them, he or she is liable also for such defects.969

963. For a critique of compulsory warranty in Slovenia, see Možina, Obvezna garancija za brezhibno delovanje in varstvo kupca v evropskem pravu, Podjetje in delo 1/2011, pp. 38–48; and Kovacˇ, Garancija za brezhibno delovanje: obvezna in/ali prostovoljna, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2012, pp. 105–118, 236–237. For a proponent view, see Pintar, Potrošnik in garancija za brezhibno delovanje stvari: tudi po (zdaj že umaknjenem) predlogu ZVPot-E, Pravna praksa 1/2011, pp. II–VII. 964. For details on the evolution of the system of warranty in Yugoslavia, see Ilešicˇ, Garancija za trajno kakovost proizvoda, Združeno delo 6/1981. See also: Možina, Obvezna garancija za brezhibno delovanje in varstvo kupca v evropskem pravu, Podjetje in delo 1/2011, pp. 38–48. 965. Article 488/1 of the OC. If, upon conclusion of the contract, the buyer knew of the possibility of the thing being taken, or his or her rights being reduced or restricted, he or she does not have the right to compensation if this in fact happens but does retain the right to request a reduction of the price or to avoid the contract. See Plavšak in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 264–265. 966. Article 488/2 of the OC. 967. Article 493/1,2 of the OC. 968. Article 493/2 of the OC. 969. Article 494 of the OC.

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421. The buyer must notify the seller of a legal defect on the sold thing (unless this is already known to the seller) and request that he or she either sees to it and ensures that the resold thing is freed from the third person’s right, or that he or she delivers a substitute thing without any legal defects.970 A buyer that entered into a dispute with a third person without notifying the seller thereof, and lost the case, may nevertheless refer to the seller’s liability for legal defects, unless the seller shows that the seller had the means available to refute the third person’s claim.971 The buyer has the right to refer to the seller’s liability for legal defects also if he or she recognizes the well-founded right of the third person without the seller’s notification and without entering into a dispute with the third person.972 If the buyer paid out the third person so that the latter waived his or her well-founded right in the sold item, the seller may be released from his or her liability for legal defects by reimbursing the buyer for the sum paid to the third person and the damage incurred because of the legal defect.973 422. In case of eviction, i.e., if a third person in fact takes hold of the goods, the sales contract is automatically (ex lege) terminated.974 However, if the right of the buyer is merely reduced by that, and not excluded, the buyer can choose either to reduce the price or to terminate the contract.975 A prerequisite for termination is, however, that due to the legal defect, the purpose of the contract cannot be achieved.976 In any case, the buyer is entitled to compensation of damages.977 The buyer’s right to a remedy expires one year after the buyer learnt of the third person’s right.978 If the third person initiates a dispute during this period and the buyer requests that the seller intervene therein, the buyer’s right shall only expire six months after the final outcome of the dispute.979 In contrast to cases of material defects where the defect has shown in the so-called warranty time period (of six months in C2C and B2B, and in two years in B2C cases) in order for the buyer to be able to refer to the seller’s liability, the OC does not set out any such period for cases of legal defects. The buyer could thus in theory rely on legal defects forever.

970. 971. 972. 973. 974. 975. 976. 977. 978. 979.

186

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489 of the OC. 491 of the OC. 492/1 of the OC. 492/2 of the OC. 490/1 of the OC. 490/2 490/3 495/1 495/2

of of of of

the the the the

OC. OC. OC. OC.

423–424

Chapter 5. Barter Contract 423. Barter contract (exchange contract, Sl. menjalna pogodba) is regulated in only two articles of the OC (Chapter II of the Special Part of the OC, Articles 528–529 OC). The reason for such short regulation lies in the fact that in the case of a barter contract, the rights and obligations of both contractual parties correspond mainly to those of the seller in the sales contract (these are set out in Chapter I of the Special Part of the OC regulating the sales contract).980 Another reason is that today (better say, as of the invention of money) barter contracts do not play an important part of contractual relationships. 424. By concluding a barter contract, both parties agree that they will hand over the things or other transferrable rights that are to be exchanged to the other party and transfer ownership on them onto the other party.981 A barter contract is a bilateral, consensual, synallagmatic, informal contract representing a legal basis for the transfer of ownership on the exchanged goods. Usually, a movable or an immovable thing is the object of a barter. A future thing as well as another person’s thing may also be the object of a barter. If money is being exchanged as goods, not as a monetary value, then it may also be the object of a barter contract. Negotiable instruments can also be exchanged. It is not clear, however, whether exchanging a thing for a monetary claim (in particular if it is a certain one) is to be characterized as a barter or a sales contract. This difference might be relevant for taxation purposes or for circumvention of the rules on the right of pre-emption.982

980. Article 529 of the OC. 981. Article 528/1 of the OC. See also Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952, p. 23. See also Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 443–448. 982. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 445–447.

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Chapter 6. Contract for Sale or Return 425. Contract for sale or return (Lat. contractus aestimatorius, Sl. prodajno narocˇilo or starinarska pogodba) is regulated in three articles of Chapter II of the Special Part of the OC (Articles 530–532 OC). By concluding a contract for sale or return, a person receiving an order (Sl. prevzemnik narocˇila) obliges him or herself either to sell for a specified price in a specified time-frame a particular thing that was handed to him or her by another person (Sl. narocˇitelj), or to return the thing back to this person.983 The order to sell or return cannot be revoked.984 According to theory, the contract for sale or return is a mixed contract combining elements of a sales contract and a mandate contract.985 It is an informal bilateral contract that may be onerous or not.986 It obliges the person receiving the order to effort to sell the item as agreed in the contract.987 426. The person giving the order to sell or to return remains the owner of the thing that was handed over to the other party and bears the risk of casus mixtus.988 The person receiving the order must safeguard the item with ordinary diligence and is liable for any damages in the item arising out of his or her omission of proper duty to safeguard the item.989 The person receiving the order is authorized to sell the item as the owner’s direct or indirect representative. In the first case, the legal relationship is similar to that arising out of a contract of mandate,990 while in the later case, it is similar to that of a commission agency contract.991 427. If the person receiving the order does not sell the thing and hand over the specified price or the thing itself to the owner in a specified period, it is deemed that he or she has bought the thing him or herself.992 It is explicitly stated that in this case, his or her creditors may not take hold of the thing until the price is paid to the former owner.993 If the person receiving the order sells the item for the price higher than the one agreed with the owner, he or she is entitled to the sum above the agreed price making the contract an onerous one.994 If the person receiving the order is not

983. Article 530/1 of the OC. 984. Article 530/2 of the OC. This provision safeguards the interest of the person receiving the order by enabling him or her to perform the contract and potentially earn profit by it. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 455. 985. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 451. 986. Ibid, pp. 451–452. 987. Ibid, pp. 452–454. 988. Article 531 of the OC. See Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 456–457. 989. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 456. 990. For details on the contract of mandate, see infra Part II, Ch. 19 of this monograph. 991. For details on commission agency, see infra Part II, Ch. 22 of this monograph. 992. Article 532/1 of the OC. 993. Article 532/2 of the OC. 994. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 452.

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successful in selling the item as agreed, he or she must either return it to the owner without any remuneration or buy it him or herself.

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Chapter 7. Lease Contract §1. DIFFERENT TYPES OF LEASE 428. General rules on lease contract (Lat. locatio conductio rei, Sl. najemna pogodba, zakupna pogodba) are set out in the OC (Chapter X of the Special Part of the OC, Articles 587–618 OC) and generally apply unless the parties have agreed otherwise. Specific types of lease are regulated in detailed special legislation, such as the HA (Articles 83–114),995 ACHCP (Articles 10–32),996 ALA (Articles 26–38),997 and MC (Articles 643–657).998 In cases of these specific types of leases, the general rules on the lease contract of the OC apply only if the specific legislation (or the contract itself) being at least to some extent of cogent nature, does not regulate the relevant question, i.e., the rules of the OC apply subsidiarily. The rules of the OC are identical to the rules on lease that were set out in the Yugoslav OA and applied in Slovenia until the entry into force of the OC on 1 January 2002. 429. Leasing being one of the ‘modern’ or ‘ing’ contracts999 is not regulated in Slovenian law. Although leasing contracts (in particular financial leasing) are very common in practice, they are intentionally not regulated for the purpose of enabling the evolution of the definition of various types of this contract and the rights and obligations of the parties to it. Operative leasing which has (in contrast to financial leasing) features of common lease (the ownership here does not pass to the other party as is the case of financial leasing) has to date been used mainly in B2B relationships while it is rarely available to consumers. In contrast to the Draft Common Frame of Reference (DCFR),1000 the OC and the CPA do not set out any rules on lease in B2C relationships, ‘consumer contract for the lease of goods’ as a special notion is thus unknown to Slovenian law. However, a specific type of lease is in fact regulated in the CPA. Chapter 7 of the CPA regulates, inter alia, a timeshare contract which is defined as a contract of duration of more than one year under which a consumer, for reimbursement paid to the undertaking, acquires the right to use movable or immovable property that provides the customer with overnight accommodation for more than one-time period of use.1001 Some aspects of timeshare contract were regulated already in the first Slovenian CPA of 1998 (written form of the contract and information to be included in it as well as the consumer’s cooling-off right), possibly taking into account the

995. Sl. Stanovanjski zakon (SZ-1), Official Gazette RS, No. 69/03, with further amendments. 996. Sl. Zakon o poslovnih stavbah in poslovnih prostorih (ZPSPP), Official Gazette SRS, No. 18/74, with further amendments. 997. Sl. Zakon o kmetijskih zemljišcˇih (ZKZ), Official Gazette RS, No. 59/96, with further amendments. 998. Sl. Pomorski zakonik (PZ), Official Gazette RS, No. 26/01, with further amendments. 999. Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996; Grilc, Pravna narava pogodbe o leasing, Zbornik znanstvenih razprav 1993. 1000. Article IV.B. – 1:102 of the DCFR. 1001. Article 1/23 of the CPA.

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Timeshare Directive of 19941002 although at the time, Slovenia had not yet entered the EU. The provisions of the PA on timeshare were later amended so as to correspond to those set out in the EU Timeshare Directive of 2008.1003 §2. GENERAL RULES ON LEASE 430. According to the OC, a lease contract (Lat. locatio conductio rei, Sl. najemna pogodba or zakupna pogodba) is a contract concluded between a lessor (Lat. locator, Sl. najemodajalec, zakupodajalec) and a lessee (Lat. conductor, Sl. najemojemalec, zakupojemalec) under which the lessor undertakes to provide the lessee with a temporary right of use of a particular thing in exchange for rent.1004 431. Chapter X of the Special Part of the OC is titled ‘Zakupna (najemna) pogodba’. Mirroring the Austrian ABGB regulation, the OC uses two terms for lease contract (Ger. Bestandvertrag1005): zakupna pogodba (Ger. Pachtvertrag) and najemna pogodba (Ger. Mietvertrag). It does not, however, define these two terms nor does it set out different rules on these two types of lease. According to the Austrian ABGB,1006 the difference lies in the manner of using the leased thing: if it can be used by the lessee without any further cultivation or other work, it is called najemna pogodba (Ger. Mietvertrag), whereas in cases where the leased thing can only be used through work and effort, it is called zakupna pogodba (Ger. Pachtvertrag).1007 The first notion is typically used for leases of apartments, cars and other movables while the latter is typically used for leases of land and ships. 432. The OC does not set out any rules on the form of the lease contract. It may as well be concluded orally. Specific legislation, however, sets out specific form requirements (written form) for contracts of lease of apartments, business premises, ships and agricultural land. In contrast to the Austrian ABGB as applied in the Slovenian territory, the OC does not require that for a valid conclusion of the contract, the leased thing is to be physically handed over to the lessee. Consent of the parties on the essentials of the contract suffices.

1002. Directive 94/47/EC of the European Parliament and the Council of 26 Oct. 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis, OJ L 280, 29/10/1994. 1003. Directive 2008/122/EC of the European Parliament and of the Council of 14 Jan. 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (Text with EEA relevance), OJ L 33, 3.2.2009. The implementation deadline was 23 Feb. 2011. The act was published on 5 Nov. 2011 and started to apply on 20 Dec. 2011. 1004. Article 587/1 of the OC. 1005. § 1090 of the ABGB. 1006. § 1091 of the ABGB. 1007. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 515; Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952, pp. 25–26.

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433. The leased item must be an individual thing determined by the lease contract. The OC does not limit the scope of things that fall under this term,1008 they must, however, not be intended for consumption (at least not within the lease contract) as the same thing is to be returned to the lessor at the dissolvement of the contractual relationship. Any movable property, which is, with the general belief, intended for commercial use or embellishment of the leased thing (i.e., appurtenance, Sl. pritiklina),1009 too, must be handed over to the lessee.1010 434. Unless the contract or usages state otherwise, this right of use encompasses the consumption of any fruits or other produces of the leased thing.1011 If the characteristics of the leased thing require that it is in fact used (e.g., a leased horse must be ridden), then the lessee’s right of use is transformed into his or her obligation of use.1012 The lessee must use the leased thing with due diligence and in line with the contract or in line with the thing’s purpose. If this is not the case and there is a threat of gross harm to be sustained by the lessor, the lessor may terminate the contract without any notice.1013 The lessee is in any case liable for loss caused by improper use irrespective of whether the thing was in use by him or herself or any other person the lessee has entrusted it.1014 435. According to the OC, the lessee may sublease the leased thing (or hand it over into any other form of use) without the lessor’s consent unless the parties have agreed otherwise.1015 A prerequisite for such sublease (Lat. sublocatio, Sl. podnajem, podzakup) is that it does not cause harm to the lessor.1016 It must be underlined that special legislation on lease of agricultural land, apartments etc., prohibits sublease without the lessor’s consent.1017 In cases where it was agreed that sublease is not allowed without the consent of the lessor, the latter may deny giving his or consent only with good reason.1018 In the case of a sublease, the lessee remains liable for the performance of the lessee’s obligations under the contract for lease.1019 Sublease is terminated the moment of termination of the original lease1020 reflecting that sublease is accessory to the original lease. If the lessee subleases the leased thing without the lessor’s consent when such is required by the contract or the law, the 1008. See Art. 587 of the OC. 1009. For further details on appurtenances, see Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 33–34. 1010. Article 588 of the OC. 1011. Article 587/2 of the OC. 1012. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 636. 1013. Article 601 of the OC. 1014. Article 600/3 of the OC. 1015. Article 605/1 of the OC. 1016. Ibid. 1017. See, e.g., Art. 84 of the HA. 1018. Article 606 of the OC. 1019. Article 605/2 of the OC. 1020. Article 609 of the OC.

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lessor may terminate the contract.1021 In cases of sublease, the lessor may request payment of the rent directly from the sub-lessee (only in the amount as is owed by the sub-lessee to the lessee).1022 436. The OC does not provide for any rules on the rate of the rent to be paid for the lease or its determination. It is silent also on the form of the rent to be paid to the lessor. The rent may thus be in the form of money or any other value.1023 The ALA, however, prohibits a rent in the form of work on the leased agricultural land or in the form of the harvest or other produce of the leased agricultural land.1024 Rent is payable at the end of each period for which the rent is agreed or set out by the law.1025 If this is not the case, it is payable in periods that are common at the place where the leased thing was handed over to the lessee.1026 If the periods are not set out by the contract, the law or the usage, the rent is to be paid at the end of each half year in all cases where lease is agreed to last at least a year. If, however, the lease period is shorter than one year, the rent is to be paid at the end of the agreed lease period.1027 The lessor has the right to terminate the lease if the lessee does not pay the rent in fifteen days after the lessor has requested payment.1028 In such cases, the contract remains valid if the lessee has paid the rent before he or she receives the termination notice.1029 437. It is to be underscored that the rent to be paid to the lessor is one of the main features of lease delimiting it from commodatum (loan for use contract) which is always gratuitous. That is why the Austrian ABGB as applied in the Slovenian territory used the notion ‘contract of buying use’ (Sl. rabokupna pogodba) and called the parties ‘buyer of use’ (Sl. rabokupnik) and ‘seller of use’ (Sl. raboprodavec).1030 Both lease and commodatum have the same purpose, i.e., to enable the recipient to make use of the leased item for some period of time before returning it back to the lessor/lendor (i.e., why they are being categorized as ‘contracts for the transfer of use’, Sl. pogodbe o prenosu rabe). The focal difference, however, lies in the obligations of the lessee – if he or she is to pay the rent, the contract of lease was concluded, whereas in cases where he or she is not obliged to pay a rent, a loan for use contract was concluded activating the application of the rules of the OC on commodatum. Another important delimitation is to be made between a lease contract and a loan contract which are sometimes wrongly misidentified (this is even 1021. Article 607 of the OC. 1022. Article 608 of the OC. 1023. Juhart in: Juhart, Plavšak (eds), Obligacjski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 684. 1024. Article 35 of the ALA. 1025. Article 602/1 of the OC. 1026. Ibid. 1027. Article 602/2 of the OC. 1028. Article 603/2 of the OC. 1029. Article 603/2 of the OC. The notice may be in a written form or given orally. Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 687–689. 1030. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 514; Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952, p. 24.

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more so in the case of commodatum and loan). As in the case of loan contracts, the ownership on the goods or money passes onto the borrower (who, upon the return, transfers onto the lender ownership on other goods or money of the same type, quality and quantity), they are categorized as ‘contract for the transfer of ownership’ (Sl. pogodbe o prenosu lastninske pravice), whereas in the case of lease and commodatum, ownership on the thing handed over to the borrower is not transferred to him or her and the exact borrowed thing is afterwards returned to the lender.1031 438. During the period of lease, the lessor must maintain the leased thing and repair it if necessary.1032 The lessee is obliged to inform the lessor of all necessary repairs.1033 If the lessee covered the costs of maintenance, the lessor is obliged to reimburse them.1034 The costs of small repairs caused by regular use of the thing, as well as the costs of the use as such, however, burden the lessee.1035 If the repairs hinder the use of the leased thing to a larger extent or for a longer time, the lessee may terminate the contract. Otherwise, he or she has the right to reduce the price in proportion to the extent to which the use was hindered.1036 Without the consent of the lessee, the lessor may also not make any changes to the leased thing during the period of lease if this would hinder the use of the thing.1037 439. The lessor is liable for the defects in the leased thing, with the exception of minor defects, that hinder its agreed or ordinary use.1038 He or she is liable also for all missing properties of the leased thing that were explicitly or tacitly agreed.1039 The lessor is liable for them irrespective of whether he had knowledge of them or not.1040 The lessor’s liability is thus an objective one taking into account the liability exemptions set out in Article 240 of the OC. The lessor is free of his or her liability if the lessee knew of the defects or the defects could not be unknown to him or her.1041 If the lessor intentionally withheld information on the defect from the lessee, he or she is liable for the defect even if the lessee was unaware of the defect due to his or her own gross negligence.1042 If the lessor had explicitly stated that the leased thing is without any defects, he or she will, however, always be held liable for the defects.1043 The parties may validly exclude or limit the lessor’s liability 1031. For further details on commodatum, see Ch. 8 of this monograph. 1032. Article 589/1 of the OC. It is not clear why Art. 601 of the OC gives the lessor the right to terminate the contract if the lessee does not maintain the leased thing and there is a threat of gross harm to be sustained by the lessor, if it is the lessor who is responsible for maintaining the leased thing. Juhart offers an explanation in: Juhart, Plavšak (eds), bligacjski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 681–682. 1033. Article 589/4 of the OC. 1034. Article 589/2 of the OC. 1035. Article 589/3 of the OC. 1036. Article 590 of the OC. 1037. Article 591 of the OC. If the changes hinder to some extent the use of the thing, the rent is to be reduced proportionally. 1038. Article 592/1,2 of the OC. 1039. Article 592/1 of the OC. 1040. Ibid. 1041. Article 593/1 of the OC. 1042. Article 593/2 of the OC. 1043. Article 594 of the OC.

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unless (i) the lessor intentionally withheld information on the defects from the lessee, (ii) the defect is such as to prevent the use of the leased thing, or (iii) the lessor has taken advantage of his or her dominance and has forced the lessee to agree to such exclusion or limitation.1044 440. Unless the lessor is already aware of the defects, the lessee must inform the lessor without undue delay of the defects of the leased thing or of unexpected threats to the leased thing.1045 If the lessee does not do so, he or she is not entitled to damages (and is him or herself liable for the loss caused by not informing the lessor of the defects or threats) but retains other available remedies for the breach of contract.1046 441. If the lack of conformity cannot be cured, the lessee has the right to terminate the lease or to reduce the rent.1047 If the lack of conformity can be cured without larger inconvenience for the lessee, and receiving the leased thing on a fixed date was not essential to the lessee upon conclusion of the contract, the lessee may first request that the lessor remedies the lack of conformity within a reasonable period of time. Only after the lessor has not done so, the lessee may terminate the contract or reduce the price.1048 In any case, the lessee is entitled to damages.1049 442. The lessor is liable also for the legal defects.1050 If a third party is claiming it has a right on the leased thing or takes possession of the thing from the lessee, the latter must inform the lessor about it as he or she may otherwise be held responsible for the loss sustained by the lessor. If it is established that a third person has the right to the leased thing, the lease contract is terminated ex lege and the lessor is to compensate the lessee for the damage he or she has sustained because of that.1051 If, however, a third person’s right merely limits the lessee’s right to use the leased thing, the lessee may either terminate the contract or reduce the price and claim damages.1052 443. The lessor may sell the leased thing to a third person (or otherwise dispose of it) without the lessee’s consent. The OC differentiates two situations and provides for different rules in these two situations with regard to the effect of such sale on the lease. If the leased thing has been handed over to the lessee prior to sale, the latter has no effect on lease and the relationship of lease continues with the buyer who becomes the new lessor (‘sale does not break the lease’, Sl. ‘prodaja ne zlomi

1044. 1045. 1046. 1047. 1048. 1049. 1050. 1051. 1052.

Article Article Article Article Article Article Article Article Article

595 of the OC. 596/1,2 of the OC. 596/3 of the OC. 579/1 of the OC. 597/2 of the OC. 597/3 of the OC. 599/1 of the OC. 599/2 of the OC. 599/3 of the OC.

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najema’, Ger. Kauf bricht die Miete nicht).1053 The lessee has in this case the right to terminate the contract by giving prior notice.1054 If, however, the leased thing is not yet in possession of the lessee (not bene: contract of lease is of consensual nature, i.e., it the transfer of the leased thing to the lessee is not a prerequisite for its conclusion) when the contract of sale is concluded and the thing is handed over to its buyer, the latter becomes the lessor and the lease continues only insofar the buyer was aware of the lease contract. If the new buyer was not aware of the lease, he or she is not required to hand over the bought thing to the lessee and does not step into the contractual relationship with the lessee. The latter may in such cases only require the lessor to reimburse him or her the damage sustained by termination of lease. The lessor is liable for the buyer’s obligations towards the lessee as a joint and several guarantor.1055 444. There are several ways of how the legal relationship arising out of a lease contract can end. If the contract of lease has been concluded for a definite period, the lease ends at the time specified by the contract or the law (Lat. dies interpellat pro homine, Sl. cˇas opozarja za cˇloveka). 445. If the lessee has continued to use the leased thing after the expiry of the set lease period, and the lessor has not opposed to that, it is deemed that a new contract of lease for an indefinite lease period has been concluded, while all other terms of the contract stay the same as in the initial lease contract.1056 Although according to the OC, a new contract of lease is deemed concluded in such a case (not merely the initial contract prolonged), it is being called (also by the OC) tacit prolongation (Sl. molcˇe obnovljen zakup, Lat. relocatio tacita). Specific rules on tacit prolongation differing from the general rules of the OC are set out in the ALA, the ACHCP, the HA, and the MC. 446. If the contract has been concluded for an indefinite lease period, either party may terminate it by giving notice to the other party.1057 Termination of an indefinite lease contract is available to the parties irrespective of any breaches of obligations by the other party and enables dissolvement of permanent legal relationships that would otherwise last forever. If in such cases the period of notice is not determined by the contract, the law or local customs, the period of notice is eight days.1058 Termination must not take place at an inconvenient time.1059 If the leased 1053. Article 610 of the OC. The buyer may in these cases not request the lessee to hand over the thing before the lease period runs out. After the transfer, the initial lessor is liable as a joint and several guarantor for the buyer’s (i.e., the new lessor’s) obligations arising out of the lease contract. For further details on suretyship, see Ch. 23 of this monograph. According to Art. 611 of the OC, the buyer is entitled to rent as of the first day following the acquisition of ownership on the leased thing unless the parties to the sales contract have agreed otherwise. If the transferor has obtained the rent in advance, he or she is to transfer it to the new lessor. From the moment the lessee is informed of the transfer, he or she is to pay the rent to the new lessor. 1054. Article 613 of the OC. 1055. Article 612/3 of the OC. 1056. Article 615 of the OC. 1057. Article 616/1 of the OC. 1058. Article 616/2 of the OC.

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things are dangerous to health, the lessee has the right to terminate the contract without giving notice even if he or she was aware of this fact at the conclusion of the contract.1060 He or she cannot give up this right of termination.1061 447. Lease ends also in cases where the leased thing is destroyed due to force majeure.1062 If the thing is only partially destroyed or damaged, the lessee may either terminate the contract or request the reduction of the rent.1063 448. Death of the lessor or the lessee does not have influence on lease unless agreed otherwise. In this case, the deceased’s heirs become a party to the contract. 449. Special legislation also contains provisions on termination of lease. Rules on insolvency state, for example, that the insolvency debtor may, once insolvency proceedings have started, terminate with a one month’s notice any lease contract entered into by the debtor as a lessee or a lessor before the start of insolvency proceedings.1064 In this case the period of notice starts on the last day of the month in which the termination notice was received by the other party, and ends on the last day of the following month. The other party has the right to claim damages sustained due to such termination deviating from the general rules on lease period whereby it must submit such damages claim within insolvency proceedings as a regular, non-privileged creditor. 450. Insolvency legislation sets out also specific rules on leasing the insolvency debtor’s things during insolvency proceedings as one way of administering and enriching the debtor’s assets. The insolvency administrator may file a request with the insolvency court to allow him or her to lease the debtor’s assets for a definite period that may not exceed one year.1065 The administrator must show to the court that leasing debtor’s things will not prolong their sale. With the consent of the court, the administrator may grant the lessee a right of pre-emption on the leased goods. 451. At the end of the lease period the lessee must return the goods intact at the place where they were made available for the lessee.1066 The lessee is not liable for any wear and tear of the leased items caused by their ordinary use.1067 If the lessee has made any changes to the leased thing during the lease period, he or she is to return the goods as they were at the conclusion of the contract.1068 If the lessee has 1059. 1060. 1061. 1062. 1063. 1064. 1065. 1066. 1067. 1068.

Ibid. Article 616/3 of the OC. Article 616/4 of the OC. Article 617/1 of the OC. Article 617/2 of the OC. Article 248 of the Financial Operations, Insolvency Proceedings and Compulsory Winding-up Act. Article 323 of the Financial Operations, Insolvency Proceedings and Compulsory Winding-up Act. In practice, such leases are typically prolonged for additional periods of maximum one year by the consent of the insolvency court. Article 604/1,2 of the OC. Article 604/3 of the OC. Article 604/4 of the OC.

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added anything to the leased thing that may be removed from it without any damages, he or she may remove and take that unless the lessor decides that such accessory is to remain with the leased thing (in that case, the lessor has to refund the lessee for such accessory).1069 §3. AGRICULTURAL LEASE 452. Agricultural lease is regulated in the ALA (hereinafter: ALA) of 1996 being lex specialis to the OC.1070 The ALA sets out quite some special rules on agricultural lease that deviate from the general rules of the OC. One of them is that to have legal effects, the contract of lease of agricultural land must be in writing.1071 Although being an obligatory right, not a property right, the right to agricultural lease must be registered in the land registry.1072 Apart from these two rules, the provisions of the ALA do not apply in cases where agricultural land is being leased for special reasons (such as temporary work abroad, illness and similar) and for the period of existence of these reasons if this period does not exceed two years.1073 453. The object of agricultural lease is agricultural land with corresponding facilities, devices and permanent plantations.1074 The ALA lists which essential information the agricultural lease contract has to provide: land registry and cadastral information on the leased plot of land, description and non-amortized value of the facilities, devices and plantations, amortized period of permanent plantations, the rate of the rent, the period of lease, the purpose of the lease, and a provision on whether the lease is inheritable or not.1075 454. The ALA lays down a list of persons that have priority in leasing agricultural land, woods or farms. The order of priority is the following: (1) the lessee of the land in question;1076 (2) the lessee of the land bordering the land in question1077

1069. Article 604/5 of the OC which has been criticized us unfair to the lessee by Juhart in: Juhart, Plavšak (eds), bligacjski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, pp. 692–693. 1070. Article 27/5 of the ALA. 1071. Article 26/5 of the ALA. 1072. Article 28 of the ALA. See Art. 13 of the LRA (Sl. Zakon o zemljiški knjigi (ZKZ-1), Official Gazette of RS, No. 58/03) that lists which obligatory rights may be published in the land registry if the parties wish to do so. Lease in general is one of them, whereas in the case of agricultural lease, registration is required by the ALA. 1073. Article 30 of the ALA. 1074. Article 26/1 of the ALA. 1075. Article 26/2,3 of the ALA. If the lease is inheritable, provisions of the Inheritance of Agricultural Holdings Act (Sl. Zakon o dedovanju kmetijskih gospodartev (ZDKG), Official Gazette RS, No. 70/95) or the general Inheritance Act (Sl. Zakon o dedovanju (ZD), Official Gazette SRS, No. 15/76) apply, depending on whether the agricultural land in question is or is not a protected farm as defined by the Inheritance of Agricultural Holdings Act. 1076. Not the one who breached the lease contract leading to its termination. Article 27/3 of the ALA. 1077. Article 27/3 of the ALA.

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and the farmer whose land borders the land in question; (3) other farmer, agricultural organization or an entrepreneur that needs the land for performing their agricultural or forest activities.1078 455. The ALA prohibits a rent in the form of work on the leased agricultural land or in the form of the harvest or other produce of the leased agricultural land. A lease contract setting out such rent is null and void.1079 456. The period of agricultural lease must correspond to the purpose of use of the land in question and may not be shorter than:1080 (i) twenty-five years if the land is intended for growing new vineyards, orchards or hop gardens; (ii) fifteen years if the land is intended for growing new plantations of fast-growing deciduous; (iii) ten years if the land is intended for other purposes.1081 Unless the parties have agreed otherwise, the lease contract is prolonged for the initial period of lease if none of the parties terminates the contract in writing at least six months before the initial period of lease ends.1082 The contract of lease may be terminated by the parties at any time.1083 It is also terminated ex lege if the leased land is no longer agricultural.1084 457. The lessor may terminate the contract of agricultural lease if the lessee (i) does not use the land as a diligent landowner; (ii) does not cultivate the land in accordance with the contract; or (iii) subleases the land contrary to the contract of lease.1085 458. The ALA also lays down specific rules on rebus sic stantibus1086 that is otherwise regulated in the OC: if, due to events that could not be expected at the time of conclusion of the lease contract, the fulfilment of an obligation becomes too difficult for one of the parties or would cause excessive loss, the affected party may request that the contract be amended or invalidated. When assessing whether such request is justified, the benefits of both parties must be taken into account, such as prevention of the introduction of spatial planning operations, illness, exhaustion or other disability of the lessee.

1078. Article 27/2 of the ALA. If there is more than one person within one of the priority groups, the one whose agricultural activity is his or her only or main activity representing a principal financial source for his or her or living or business, has priority over the other(s). 1079. Article 35 of the ALA. 1080. According to Art. 29/3 of the ALA, the period of lease may be shorter if (i) the lessor is unsuccessful in leasing land for the set lease period; (ii) a law provides so; (iii) the lessee is not a farmer according to the ALA’s definition; (iv) a request for the return of the nationalized land or for setting up of agricultural communities has been made in accordance with relevant legislation. 1081. Article 29/1 of the ALA. 1082. Article 31 of the ALA. 1083. Article 32/1 of the ALA. 1084. Article 32/2 of the ALA. 1085. Article 33 of the ALA. 1086. Article 34 of the ALA.

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459. Detailed rules are laid down in the ALA on the consequences of termination of lease on any permanent plantations and facilities or devices built on leased agricultural land. The general rule is that unless the parties have agreed otherwise, the lessor is the one entitled to them but must pay the lessee their non-amortized value if the lessor had given consent to grow the plantations or erect the facilities or devices in question.1087 If such consent had not been given, the lessee is not entitled to any compensation. He may, however, remove the devices if that is possible without any loss. §4. LEASE OF APARTMENTS 460. Lease of apartments is regulated in Chapter VI of the HA of 2003 (hereinafter: HA). The HA differentiates between the following for types of apartment leases: (i) non-profit apartment lease; (ii) profit apartment lease; (iii) employment apartment lease; (iv) apartment lease for a particular purpose of institutional care of the elderly, retirees or special groups of adults.1088 461. The contract of lease can be concluded for a definite or for an indefinite period of time,1089 whereby the HA itself provides detailed rules on the duration of the contract depending also on the type of apartment lease.1090 If a contract of lease is concluded for a definite period and the lessee wishes to prolong the lease, he or she must (unless the contract of lease states otherwise) obtain approval for that from the lessor in the form of an annex to the contract at least thirty days before the initial period of lease runs out.1091 462. The lessee may sublease the apartment only for a definite time (not for longer than the original lease period) and in accordance with the provisions of the HA.1092 The lessor must agree to it.1093 Unless stated otherwise by the HA, provisions of the HA on lease apply mutatis mutandis to sublease.1094 Sublease is accessory to the initial lease.1095 463. Both the contract of lease and the contract of sublease must be in writing. The HA does not state that the contract would otherwise be null and void (as is, for example, the case with contracts of lease of agricultural land). It is thus not clear

1087. 1088. 1089. 1090. 1091. 1092. 1093. 1094. 1095.

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Article 38 of the ALA. Article 83 of the HA. Article 86 of the HA. See, for example, Art. 90 of the HA stating that non-profit leases may only be for an indefinite time. Article 95 of the HA. Article 84/3 of the HA. Ibid. Article 101 of the HA. Implicit Article 113/2 of the HA.

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whether the form requirement has been set out as a prerequisite of contract validity or merely as proof of entering into a contractual relationship.1096 464. The HA lists the essential contents of apartment lease contracts:1097 – the description of the apartment, its size, year in which it was built, its public utility equipment status, and how the apartment is intended to be used; – cadastre identifier; – name and surname of the owner, his or her tax number, name and surname of the lessee and other persons using the apartment;1098 – grounds for terminating the contract set out in Article 103 of the HA; – type of lease according to the type of apartment (non-profit, profit, … ); – provisions on the rights and obligations regarding the use and maintenance of the apartment and the common parts in the multi-unit building; – rent rate and rules on the time and manner of its payment;1099 – scope and manner of payment of costs not covered in the rent (costs for electricity, water, heating and other similar costs for the functioning of the apartment and the common parts of the building)-, – rules on the manner of use of the apartment and of the checks to be performed on the apartment by the owner;1100 – period of lease if it is lease for a definitive period; – manner of handing over the apartment. 465. If an apartment owner leases his or her apartment, he or she must inform immediately the building administrator of the lease contract and its amendments, of the lessee’s name and the number of persons stated in the lease contract. Until such notice is given, the owner remains the sole debtor of all claims related to the apartment or to the common parts of the apartment building.1101 According to the HA, the lessor may transfer onto the lessee the exercise of rights he or she has as the apartment owner.1102 If the owner gives the lessee a written authorization and

1096. See Juhart in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 640. 1097. Article 91 of the HA. 1098. If the number of these persons rises for one or more persons whom the lessee is obliged to support under the law, the owner must sign an annex to the lease contract on the request of the lessee. In all other cases, the lessor must do so only if the size of the apartment is suitable for the enlarged number of persons. This rule does not apply for institutional care leases defined in Art. 83 of the HA. Art. 94 of the HA adds that if a person not listed in the lease contract is using the apartment for more than sixty days in a period of three months, the lessee must obtain consent for such use from the lessor. 1099. According to Art. 115, rent is determined freely by the parties of the contract. The only exception is rent for non-profit apartments that is to be determined in accordance with methodology laid down in Art. 117 of the HA. 1100. According to Art. 95 of the HA, the owner may do so maximum twice a year. 1101. Article 24/6 of the HA. 1102. Article 24/1 of the HA.

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informs the building administrator of that, the lessee may represent him or her in dealings with other apartment owners.1103 466. Regarding the use of apartment and the common parts of the apartment building, the lessee of an apartment has equal rights and obligations as his or her lessor – the apartment owner. Unless the lease contract states otherwise, the lessee has to cover all expenses for the operation of the apartment building (the owner has subsidiary liability for these) whereas the owner is to cover all other expenses in connection to the common parts of the building.1104 467. The lessor must ensure the lessee normal use of the apartment which has to be in accordance with the apartment building standards. For that purpose, the lessor must maintain the apartment and the common parts of the building throughout the period of lease in accordance with the rules on standards for the maintenance of apartment buildings and apartments,1105 and is liable for legal and material defects of the apartment.1106 If the lessor does not ensure a normal use of the apartment, the lessee may request the apartment inspectorate to request the lessor the performance of works required for ensuring the normal use of the apartment. If the lessor fails to do that, the lessee may do the work him or herself and may set off the costs of such work with the rent.1107 The lessee may instead request that the lessor provides him or her with a proper substitute apartment.1108 He or she is also entitled to proportional rent reduction for the period in which normal use of the apartment was not ensured as well as to compensation for the loss sustained because of that.1109 468. Without prior consent of the lessor, the lessee may not make any changes or useful investments or improvements to the apartment or its equipment and devices.1110 The lessor may not, however, decline giving his or her consent if (i) the intervention of the lessee is in line with modern technical requirements and is in the personal interest of the lessee;1111 (ii) the lessee covers its costs; (iii) the intervention does not endanger the interests of the lessor and other apartment owners in the building; (iv) and does not cause any damage to the common parts of the building 1103. Article 24/2 of the HA. 1104. Article 24/4,5 of the HA. 1105. Official Gazette RS, No. 20/04, with further amendments. These rules were issued by one of the ministers on the basis of Art. 125 of the HA. In cases of non-profitable leases, the lessees, too, are liable for maintenance of the apartment in accordance with the Rules on management of multiple dwellings. The rules list all maintenance activities and mark those that are to be covered by lessees of non-profit apartments (such as, among others, costs for cleaning of cellars, chimneys, balcony fences, staircases, windows, mailboxes etc.) in addition to the rent and the costs of operation of the apartment and the building. 1106. Article 92 of the HA. 1107. Article 93/1,2 of the HA. 1108. Article 93/3 of the HA. 1109. Article 100 of the HA. 1110. Article 97/1 of the HA. 1111. Article 97/2 of the HA lists works that are deemed to fall under this criterion. In these cases, the lessor may only condition his or her consent by requesting (i) that the lessee hands over the apartment once the lease ends in the state in which it was when the lease started or (ii) that he or she gives up his or her right to restitution of the investments he or she has made in the apartment (Art.

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or building exterior. If in this case, the lessor fails to give his or her consent, the lessee may request the court in non-litigious proceedings to decide on it.1112 469. The lessee may perform him or herself those repairs in the apartment that are urgent to protect the life or health of the residents, or to protect the apartment and its equipment from larger damage. He or she may request reimbursement of the costs related to such repairs.1113 Repairs and improvements of the apartment are otherwise made by the lessor in accordance with the rules of the HA.1114 470. Both the lessor and the lessee may terminate the contract of lease.1115 The lessee may always terminate it without giving any reasons for termination.1116 Termination must be in writing and must give a ninety-days’ notice.1117 On the other hand, the HA provides for three categories of reasons for termination of the contract by the owner of the apartment the application of which varies according to the type of apartment lease (profit, non-profit, … ): (i) reasons of various lessee’s breaches for which the lessee is culpable and are listed in Article 103 of the HA;1118 (ii) additional reasons agreed by the parties and listed in the contract of lease;1119 (iii) all other reasons that the owner may refer to only in so far he or she is able to provide the lessee with a substitute apartment.1120 The owner terminates the contract by giving a notice of at least ninety days.1121 In case of a dispute, the contract is terminated by a court decision, for which a claim must be filed; the claim enjoys a special priority. In the case the claimant prevails, the court’s decision sets out in its decision a deadline between sixty and ninety days for the lessee to move out of the apartment.1122 471. The HA also lays down detailed rules on how transfer of ownership on the apartment and lessee’s death or divorce influence the relationships arising out of the apartment lease contract.1123

1112. 1113. 1114. 1115. 1116. 1117. 1118.

1119. 1120. 1121. 1122. 1123.

97/4 of the HA). Namely, according to Art. 98 of the HA, the lessee may claim restitution of nonamortized part of useful and necessary investments that were made in accordance with the lessor’s consent. Article 97/3 of the HA. Article 100 of the HA. See Art. 99 of the HA. For details see Vlahek, Odpoved stanovanjske najemne pogodbe, Podjetje in delo, 32 (2006), št. 6/7, Gospodarski vestnik, Ljubljana 2006. Article 102 of the HA. Ibid. According to Art. 103/3 of the HA, the lessor must first notify the lessee about the breach and give him or her at least fifteen days to take the necessary remedies. Only if the lessee fails to do that, may the lessor turn to the court. Article 112/6 states that the contract may not be terminated unless the lessee proves that the breach cannot be attributed to him or her or that he or she was objectively unable to stop it in the given period of time. Article 102 of the HA. Ibid. Article 112/1 of the HA. Article 112/3,4,5 of the HA. Articles 107, 109, 110 of the HA.

203

472–475

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§5. LEASE OF COMMERCIAL BUILDINGS AND COMMERCIAL PREMISES 472. Lease of commercial buildings and commercial premises is regulated in a special chapter of the – still valid – Yugoslav ACHCP of 1974 (hereinafter: ACHCP). This chapter of the ACHCP which is the only remaining chapter of the act in force deviates to quite a large extent from the rules of the HA making it important to delimit cases of application of both acts. The HA regulates not only apartment buildings (Sl. stanovanjska stavba) but also some cases of combined apartment and commercial premises buildings (Sl. stanovanjsko-poslovna stavba). It defines combined apartment and commercial premises buildings as buildings consisting of apartments and commercial premises where more than half of the surface of the building is intended for apartments. The HA does not mention such buildings in other provisions and does not make it clear whether they fall in their entirety under the rules of the HA or not. As for the rules on the lease of the units in such buildings, Article 114 of the HA makes it clear that the rules of the HA on lease apply only to apartments whereas business premises (irrespective of the type of multi-unit building they are located in) fall under the rules on lease as set out in the ACHCP.1124 The rules of the ACHCP apply both to lease of commercial buildings and lease of commercial premises. These rules are obsolete and should be modernized and possibly equated so far as possible with the rules on apartment lease. 473. A contract of lease of business buildings and business premises is null and void unless it is concluded in writing.1125 474. Unless the contract states otherwise, the lessee must pay the rent in advance on a monthly basis on the fifth day of the month at the latest. The lessee must also reimburse the costs of use of common parts in the building.1126 475. Unless the parties have agreed otherwise, the lessor must hand over to the lessee and maintain throughout the lease such premises that are suitable for use in accordance with the contract.1127 If the lessor does not do so, the lessee is entitled to compensation for the loss it has sustained because of that.1128 He or she may also terminate the contract or take all necessary maintenance measures him or herself on the lessor’s cost after giving the lessor reasonable time to do that instead.1129

1124. It ensues from the ACHCP that the act applies to cases where the lessee performs an economic activity whereas it is irrelevant who the lessor is (a natural or a legal person irrespective of his or her or its activity). See Arts 1, 2, 3, 10, 11 of the ACHCP. 1125. Article 12/2 of the ACHCP. 1126. Article 19 of the ACHCP. 1127. Article 14 of the ACHCP. The maintenance must hinder the lessee as little as possible. According to Art. 16 of the ACHCP, the lessee must immediately inform the lessor of all necessary works to be done in the premises and give him or her reasonable time to perform them. According to Art. 17 of the ACHCP, the notice is not required in case of urgent repairs. 1128. Article 15 of the ACHCP. 1129. Ibid.

204

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476–480

476. The lessee must use the premises with due care and only for those purposes that are stated in the contract.1130 He or she must reimburse the damages on the premises he or she has caused but is not liable for the deterioration of the premises caused by their normal use in accordance with the contract.1131 Unless the contract allows it, the lessee may not rebuild the premises or sublease them without the consent of the lessor.1132 477. The ACHCP states that sale or other disposal of ownership of commercial premises does not have any effect on the continuation of the lease and that the new owner becomes the holder of the rights and obligations of the previous lessor.1133 478. The parties may jointly agree to terminate the contract at any time.1134 The relationship ends also if the object of the lease ceases to exist or is not anymore characterized as a commercial building or commercial premises, or if the owner of the premises has been expropriated.1135 479. A lease contract concluded for a definite time ends when the set period runs out. A specific form of relocatio tacita is also regulated in the ACHCP. If the lessee has continued to use the premises after the expiry of the set lease period, and the lessor has not opposed to that, it is deemed that a new contract of lease for an indefinite lease period has been concluded if the lessor does not request the court in one month after the expiry of the contractual period of lease to issue an order requesting the lessee o move out of the premises.1136 480. A lease contract concluded for an indefinite period ends by its termination by one of the parties after the termination period has run out.1137 The ACHCP lays down an enormously long termination period that does not correspond to the needs of modern contractual relationships. According to the ACHCP, the period may not be shorter than one year.1138 In addition to that, some types of lease contracts may only be terminated if a consent to that is given by the authorities.1139 Contracts of lease under the ACHCP can only be terminated by a court’s decision.1140 The termination request must state the date until which the lessee is to move out of the premises and hand them over to the lessor.1141

1130. Article 20 of the ACHCP. 1131. Article 21 of the ACHCP. 1132. Article 22 of the ACHCP. According to Art. 32 of the ACHCP, rules on lease apply mutatis mutandis to sublease. It is also explicitly stated that sublease ends at the moment the lease ends. 1133. Article 31 of the ACHCP. 1134. Article 23/1 of the ACHCP. 1135. Article 23/2 of the ACHCP. 1136. Article 27 of the ACHCP. 1137. Article 24/1 of the ACHCP. 1138. Article 24/2 of the ACHCP. 1139. Article 25 of the ACHCP. 1140. Article 26/1 of the ACHCP. 1141. Article 26/2 of the ACHCP.

205

481–485

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481. The lessor may terminate the contract irrespective of any period of lease set in the contract or the law if:1142 (i) the lessee uses the premises in breach of contract or without due care causing significant damage despite the warning received from the lessor; (ii) the lessee is late in paying the rent for two months after being notified by the lessor that he is late with paying the rent; (iii) the lessor needs the premises to perform his or her own business. 482. Upon return of the premises, a special record on the status of the premises has to be drafted.1143 §6. LEASE OF SHIPS 483. Special rules on the lease of ships are laid down in the MC (Articles 643–657). The MC requires a written lease contract and states explicitly that the contract is otherwise null and void.1144 Lease of ships is registered in the Slovenian Shipping Register (Sl. Slovenski ladijski register).1145 484. According to the MC, the rent is to be paid monthly and in advance. The lessor is not entitled to rent for the period in which the lessee cannot use the ship for the reasons on the lessor’s side or for reasons of the ship’s hidden defects.1146 If the lessee fails to pay the rent when it is due, the lessor may request him or her to pay the whole rent under the contract or may terminate the contract, he or she may also claim compensation for the loss sustained because of that.1147 If the lessee fails to return the ship to the lessor upon expiration of the contract, he or she is to pay a double rent for the extra period plus any damages exceeding this double rent amount if the lessee is liable for the delay in returning the ship.1148 Any award for making a rescue with the leased ship goes to the lessee.1149 485. The ship handed over to the lessee must be in a state enabling its use for the purposes set out in the contract or for ordinary purposes.1150 Without any explicit provision laid down in the contract, the ship is handed over without the crew.1151 If it is handed over with a crew, the members of the crew must obey the orders of the

1142. 1143. 1144. 1145. 1146. 1147. 1148. 1149. 1150. 1151.

206

Article 28 of the ACHCP. Article 30 of the ACHCP. Article 644 of the MC. For further details on the register and the entries in it, see Arts 207–218 of the MC. Article 650 of the MC. Article 651 of the MC. Article 655 of the MC. Article 656 of the MC. Article 645/1 of the MC. Article 645/2 of the MC.

Part II, Ch. 7, Lease Contract

486–487

lessee if the contract provides so.1152 The lessee has the right to replace the crew.1153 The lessee may also sublease the ship only by obtaining a written consent of the lessor.1154 486. The ship operating costs are borne by the lessee.1155 He or she must also maintain the ship during the period of lease and return it in the original condition and at the same place where it was handed over to him or her.1156 The lessee is, however, not liable for ordinary wear and tear of the ship.1157 The lessee does not bear the costs of the repairs required due to hidden defects of the ship, nor is the lessee liable for the loss of the ship due to force majeure.1158 The lessor is not liable for damages sustained due to the ship’s lack of conformity if he or she proves that he or she could not have detected them showing the care of a prudent shipwright.1159 487. The contract of lease can be concluded for a definite or indefinite time.1160 It can be concluded for one or more voyages.1161 Contract of lease for a definite time can be prolonged by signing a written agreement.1162 Contract of lease for an indefinite time can be terminated in writing by giving at least a three months’ notice.1163 The contractual relationship ends also if the ship is ruined, permanently useless or if it cannot be used during the period of lease because of force majeure.1164 Further, if the repairs of the ship burdening the lessor take or may take too long, the lessee can terminate the lease contract.1165

1152. 1153. 1154. 1155. 1156. 1157. 1158. 1159. 1160. 1161. 1162. 1163. 1164. 1165.

Article Article Article Article Article Article Article Article Article Ibid. Article Article Article Article

648/1 of the MC. 648/2 of the MC. 657 of the MC. 646/1 of the MC. 646/2 of the MC. 646/3 of the MC. 646/4 of the MC. 647 of the MC. 652 of the MC. 653/1 653/2 654/1 654/2

of of of of

the the the the

MC. MC. MC. MC.

207

488–490

Chapter 8. Loan for Use Contract 488. The purpose of the loan for use contract (Lat. commodatum, Sl. posodbena pogodba, Ger. Leihe) is to enable the borrower (Sl. izposojevalec,1166 komodatar) to make use of the leased thing without remuneration for some period of time before returning it back to the lender (Sl. posodnik,1167 komodant).1168 That is why it is categorized as one of the ‘contracts for the transfer of use’ (Sl. ‘pogodba o prenosu rabe’), contract of lease being the other one. The focal difference between a loan for use contract and a lease contract lies in the obligations of one of the parties – if rent is to be paid, the contract of lease was concluded, whereas in cases of gratuitous transfer of use, a loan for use contract was concluded. This difference reflects also in the rules on maintenance of the leased thing. 489. Another important delimitation is to be made between a loan for use contract (Sl. posodbena pogodba) and a loan contract (Sl. posojilna pogodba) which are frequently misidentified. As in the case of a loan contract, the ownership on the goods or money passes onto the borrower (who, upon the return, transfers onto the lender ownership on other goods or money of the same type, quality and quantity), it is categorized as ‘contract for the transfer of ownership’, whereas in the case of a loan for use contract, ownership on the thing handed over to the borrower is not transferred to him or her and the exact borrowed thing is afterwards returned to the lender (irrespective of whether it has a characteristic of species or genus). This difference becomes relevant also in enforcement or insolvency proceedings.1169 Another difference between a loan for use contract and a loan contract is that the former is always gratuitous whereas the latter may be either gratuitous or onerous.1170 490. Being a typical civil law contract, loan for use contract is regulated in the OC (Chapter IX of the Special Part of the OC, Articles 579–586 OC). The Yugoslav OA did not regulate loan for use contracts as, being typical intuitu personae contracts, they were not of particular importance for the functioning of the Yugoslav market on which the federal Yugoslav legislation was focused. Its regulation was thus left to the legislators of the republics. As the Slovenian legislator had not adopted any laws on commodatum, the courts continued to apply the provisions of the Austrian ABGB regulating (§§ 971–982 Austrian ABGB) up until the entry into force of the OC on 1 January 2002. They, however, still apply with regard to those contracts entered into before 1 January 2002. When drafting the OC, the Slovenian legislator mirrored to some extent the Austrian ABGB regulation of loan for use 1166. An older expression was posodojemnik. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 476. 1167. An older expression was posoditelj. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 476. 1168. Article 579 of the OC. 1169. For details on insolvency proceedings, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 201–210. 1170. See Part II, Ch. 10 of this monograph.

208

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491–493

contract although it has regulated some focal questions differently (it did not, for example, set out handing over of the leased goods to the borrower as a prerequisite of validity of the loan for use contract, the loan for use contract is thus, under Slovenian law, a consensual one, not a real one;1171 another difference is that the OC enables lending also consumable, not only non-consumable goods; grounds for termination also differ to some extent). Being a gratuitous contract, loan for use contract is usually concluded among family members or friends and acquaintances. It is thus not of great importance for the market and is regulated rather parsimoniously. 491. Intuitu personae characteristic of a loan for use contract reflects also in the prohibition of subcommodatum (Sl. podkomodat) without prior consent of the lender, 1172and in the right of the lender to terminate the contract if the recipient dies.1173 As the loan for contract is gratuitous and intuitu personae, the borrower does also not have the right of retention of the lent item before any costs are reimbursed to him or her by the lender.1174 As is the case with the donation contract,1175 gratuitousness is also the reason why the lender is not liable for the defects and dangerous characteristics of the leased thing. He or she is liable only for the loss sustained because of that, but only if the he or she knew or ought to have known of the defects and characteristics and did not inform the borrower of them.1176 492. The borrower may use the leased thing only for the purpose set out by the contract.1177 If the purpose is not set out in it, he or she may use it as a prudent person in accordance with the type and the purpose of the leased item.1178 If the borrower fails to do so, he or she is liable for casus mixtus.1179 The same liability arises if the recipient subleases the leased thing without the consent of the lender as well as if he or she does not return the thing as required. 493. Costs of ordinary maintenance of the leased thing (i.e., those required for the sole use of the thing) are borne by the borrower 1180 whereas the exceptional costs of maintenance are borne by the lender.1181 If the borrower has added a device onto the leased thing, he or she may remove it if this is possible. The borrower is not liable for wear and tear of the leased thing.1182 1171. 1172. 1173. 1174. 1175. 1176. 1177. 1178. 1179. 1180. 1181. 1182.

See Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 67. Article 582 of the OC. Article 584 of the OC. Article 262 of the OC. See Part II, Ch. 1 of this monograph. Article 586 of the OC. Article 590/1 of the OC. Article 590/2 of the OC. If the characteristics of the leased thing require that it is in fact used (e.g., a leased horse must be ridden), then the recipient’s right of use is transformed into his or her obligation of use. Article 590/3 of the OC. Article 581/1 of the OC. Article 581/2 of the OC. Article 585 of the OC.

209

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Part II, Ch. 8, Loan for Use Contract

494. The leased thing must be returned on the date set in the contract.1183 If the date of the return has not been set, the thing must be returned as soon as the recipient uses it or could have used it for the purpose set out in the contract.1184 If neither the period of loan for use nor the purpose of use have been set, the thing must be returned as soon as the lender requests so which may be at any time he or she wishes (Sl. prekarij, posodba do preklica).1185 495. The lender may always terminate the contract without giving notice if (i) the borrower dies; (ii) if the borrower is not using the leased thing in accordance with the contract or transfers possession of the thing to another person; (iii) if the lender urgently needs the leased thing for reasons of unexpected circumstances.1186 Additional rules on early performance of the contract in terms of early return of the leased thing (be it on the initiative of the lender or the borrower) are set out in the general part of the OC on the time of performance.1187

1183. 1184. 1185. 1186. 1187.

210

Article 583/1 of the OC. Article 583/2 of the OC. Article 583/3 of the OC. Article 584 of the OC. See Arts 290–291 of the OC.

496–498

Chapter 9. Loan Contract §1. TYPES OF LOAN CONTRACTS 496. Loan contract (Sl. posojilna pogodba) is regulated in various acts depending on who are the parties to the contract. In B2C contracts, CCA1188 transposing EU Consumer Credit Directive1189 applies. All relevant CJEU case law interpreting the Directive applies as well. If the money is being borrowed by the bank and the borrower is not a consumer, the still valid provisions of the Yugoslav OA on credit contract (Sl. kreditna pogodba) apply (Articles 1065–1071). In all other cases, the general rules of the OC on loan contract apply (Chapter VIII of the Special Part of the OC, Articles 569–578 OC). Slovenian legislation uses the term ‘credit contract’ in cases the borrower is (i) a bank (the Yugoslav OA) or (ii) a natural or a legal person lending money within his or her business activity (CCA). Otherwise, the general expression ‘loan contract’ is being used (the OC). §2. GENERAL RULES ON LOAN CONTRACT 497. By concluding a loan contract (Sl. posojilna pogodba), the lender (Sl. posojilodajalec) obliges him or herself to provide the borrower (Sl. posojilojemalec) a certain sum of money or a certain quantity of other replaceable goods, whereas the borrower obliges him or herself to return after a specified period of time the same amount of money or the same quantity of the goods of the same type and quality as those borrowed.1190 The borrower may also oblige him or herself to pay interest in addition to the principal.1191 A loan contract may thus be either gratuitous or onerous: if the parties have agreed on the remuneration, the contract is onerous, if they have not, it is gratuitous. However, in the case of commercial loan contracts, the borrower must pay interest although this was not set out in the loan contract.1192 Therefore, if the parties of a commercial loan contract are silent on the remuneration, the loan is onerous. The parties to commercial loan contract could, however, state explicitly in the contract that the loan is gratuitous.1193 498. Under the OC and the Yugoslav OA, the loan contract is of consensual nature whereas under the older rules of Austrian law, the object of the loan had to be delivered to the borrower at the conclusion of the contract.1194 1188. Official Gazette RS, No. 77/16. 1189. Directive 2008/48/EC of the European Parliament and of the Council of 23 Apr. 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, L 133 66. 1190. Article 569/1 of the OC. 1191. Article 570/2 of the OC. 1192. Ibid. 1193. Ilovar Gradišar in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004, p. 600. Article 570 of the OC does not state this explicitly but can be ensued from its provisions. It would be unreasonable to limit the will of the parties in this respect. 1194. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 478; Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 62–63.

211

499–501

Part II, Ch. 9, Loan Contract

499. An important characteristic of a loan contract is that the ownership on the goods or money passes onto the borrower1195 who, upon the return, transfers onto the lender ownership on other goods or money of the same type, quality and quantity. A loan contract is thus categorized as ‘contract for the transfer of ownership’ differing from a loan for use contract, where ownership on the thing handed over to the borrower is not transferred to him or her and the exact borrowed thing is afterwards returned to the lender. This difference becomes relevant also in enforcement or insolvency proceedings.1196 Another difference between a loan for use contract and a loan contract is that the former is always gratuitous whereas the latter may be either gratuitous or onerous. 500. If the moment in which the lender is obliged to provide the borrower with the goods is not determined in the contract, the lender must make the goods available when the borrower requests so.1197 The borrower’s right to make this request is time-barred in three months after the lender is in delay in providing the borrower with the goods.1198 In any case, it is time-barred in one year after the conclusion of the contract.1199 If the borrower’s performance of the contract is uncertain due to his or her financial situation, the lender may refuse to provide him or her with the loan if the lender was not aware of such situation at the time of the conclusion of the contract, or if the financial situation has deteriorated only after the conclusion of the contract.1200 The lender must, however, nevertheless provide the borrower with the agreed loan if he or she is provided with a proper security by the borrower or a third person.1201 501. As is the case with the donation contract and the loan for use contract, the lender on the case of a gratuitous loan contract is not liable for the defects of the borrowed things. In case of a gratuitous loan contract, the lender is liable only for the loss sustained because of the defects under the proviso he or she knew or ought to have known about the defects and did not inform the borrower about them.1202 He or she is liable for legal defects in accordance with the general rules on liability for legal defects.1203

1195. Article 569/2 of the OC. 1196. For details on insolvency proceedings, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 201–210. 1197. Article 571/1 of the OC. 1198. Article 571/2 of the OC. 1199. Ibid. 1200. Article 572/1 of the OC. 1201. Article 572/2 of the OC. 1202. Article 573/2 of the OC. 1203. See supra, Part I, Ch. 6, §2, and Part II, Ch. 4, §3 III.

212

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502–507

502. The borrower is obliged to repay the loan at the time determined in the loan contract. If the time the borrower is to repay the loan is not determined in the contract or cannot be determined from the circumstances of the case, the borrower is obliged to repay it in a reasonable time of no less than two months after the lender has made a request for repayment.1204 503. If the borrower did not borrow money but was agreed that he or she will repay the loan in money, the borrower may, despite the agreement, choose from the two types of repayment.1205 504. The borrower may terminate the contract before the lender provides him or her with the loan. If the lender sustains loss because of such termination, the borrower must compensate him or her.1206 The same rule applies if the borrower repays the loan before the agreed time. The borrower may do that if he or she inform the lender of such intention and compensates any loss caused to the lender.1207 505. If the contract sets out for which purpose the loan is to be used and the borrower uses the loan for some other purpose, the lender may terminate the contract.1208 §3. CREDIT CONTRACT 506. General rules on credit contract (Sl. kreditna pogodba) are set out in the Yugoslav OA of 1978. Although this act does not apply as of the entry into force of the Slovenian OC, i.e., as of 1 January 2002, some of its chapters, including Chapter XXXV of the Special Part of the act on credit contract containing only four articles (Articles 1065–1068), have remained in force according to Article 1061 of the OC. In addition, Chapter XXXVI of the Yugoslav OA sets out the basic rules on credit contract secured by pledging bonds (Sl. kreditna pogodba na podlagi zastave vrednostnih papirjev, Articles 1069–1071). 507. According to the Yugoslav OA, a credit contract is a contract concluded between a bank and a borrower by which the bank obliges itself to provide the borrower with a certain amount of money for a definite or indefinite period of time for a specific purpose or without any specific purpose, whereas the borrower is obliged to pay agreed interest and return the borrowed sum of money as agreed in the contract.1209 The contract must be concluded in writing and must set out the amount of the credit and the prerequisites for approving, using, and returning it.1210 If the credit is used contrary to the purpose set out in the contract, the bank may terminate the 1204. 1205. 1206. 1207. 1208. 1209. 1210.

Article Article Article Article Article Article Article

574 of the OC. 575 of the OC. 567 of the OC. 577 of the OC. 578 of the OC. 1065 of the Yugoslav OA. 1066 of the Yugoslav OA.

213

508–510

Part II, Ch. 9, Loan Contract

contract before the expiry of the credit period.1211 The bank may do so also if the borrower becomes insolvent or ceases to exist if this would put the bank in an essentially more inconvenient position.1212 508. The borrower may terminate the contract until the borrower starts using the money.1213 After that, the borrower may terminate the contract before the credit period runs out if the bank is informed about it.1214 In both cases, the borrower must compensate the bank for any loss it has sustained by such termination.1215 §4. CONSUMER CREDIT CONTRACT 509. Consumer credit contract (Sl. potrošniška kreditna pogodba) is regulated in the CCA1216 comprised of 110 detailed articles. The currently valid CCA (applied as of March 2017) is the third CCA in Slovenia, the first being enacted in 2000 (i.e., before the RS entered the EU),1217 the second one in 2010 (mainly as a result of implementation of Consumer Credit Directive of 2008)1218,1219 and the currently valid one in 2016 (as a result of implementation of additional EU secondary law1220). 510. The CCA defines a consumer credit contract as a contract concluded between a natural or a legal person lending money within his or her/its business 1211. 1212. 1213. 1214. 1215. 1216. 1217. 1218.

1219. 1220.

214

Article 1067/1 of the Yugoslav OA. Article 1067/2 of the Yugoslav OA. Article 1068/1 of the Yugoslav OA. Article 1068/2 of the Yugoslav OA. In this case, the bank may not request interest for the period between the termination and the initially agreed repayment date. Ar. 1068/4 of the Yugoslav OA. Article 1068/3 of the Yugoslav OA. Sl. Zakon o potrošniških kreditih (ZPotK-2), Official Gazette RS, No. 77/16. Sl. Zakon o potrošniških kreditih (ZPotK), Official Gazette RS, No. 70/00, with further amendments. Directive 2008/48/EC of the European Parliament and of the Council of 23 Apr. 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, OJ L 133, 22.5.2008. Implementation deadline and date of application was 12 May 2010. Slovenia published the implementing act (ZPotK-1) on 23 Jul. 2010 and it entered into force on 7 Aug. 2010. A new act (ZPotK-2) was published on 2 Dec. 2016, date of application was set to 2 Mar. 2017. Sl. Zakon o potrošniških kreditih (ZPotK-1), Official Gazette RS, No. 59/10, with further amendments. Directive 2008/48/EC of the European Parliament and of the Council of 23 Apr. 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC, OJ L 133, 22.5.2008; Commission Directive 2011/90/EU of 14 Nov. 2011 amending Part II of Annex I to Directive 2008/48/EC of the European Parliament and of the Council providing additional assumptions for the calculation of the annual percentage rate of charge Text with EEA relevance, OJ L 296, 15.11.2011; Directive 2014/17/EU of the European Parliament and of the Council of 4 Feb. 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No. 1093/2010 Text with EEA relevance, OJ L 60, 28.2.2014; Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 Jun. 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No. 596/2014 (Text with EEA relevance), OJ L 171, 29.6.2016.

Part II, Ch. 9, Loan Contract

511–512

activity, and a consumer borrowing money under the conditions of and for the purposes covered by the CCA.1221 Special provisions on the person of the creditor and the credit intermediary are set out for consumer credit contracts regarding immovables1222 which are regulated in a special chapter of the CAA.1223 Consumer credit contracts regarding immovables that are mortgaged for the purposes of the credit must be in the form of a notarial protocol.1224 In other cases, the creditor is obliged to store one copy of the credit contract (drawn on paper or another durable medium) in its premises where credit contracts are being signed for the duration of the contract and four years afterwards.1225 511. The CCA states that every contractual provision that is not in line with the CCA and is detrimental to the consumer is null and void.1226 It adds that in such cases, as well as in cases of ambiguous or incomplete contractual provisions, the rules of the CCA apply instead. The rights granted to consumers by the CCA may also not be excluded or limited by the parties. A consumer credit contract entered into by a creditor or by a credit intermediary without a required licence1227 is null and void. In such cases, the creditor is entitled only to the sum of money already drawn by the borrower. Specific provisions of the CCA aim at preventing the use of mechanisms aimed at avoiding the application of the act.1228 512. In comparison to the general rules on loan contract, the rules on consumer credit contract emphasize the creditor’s pre-contractual information duties.1229 Detailed rules on standard information to be included in advertising concerning credit agreements are also laid down.1230 Clarity and transparency is emphasized throughout the provisions of the act.1231 Prior assessment of the consumer’s creditworthiness is required.1232 Giving credit to a consumer if his or her creditworthiness is insufficient is prohibited.1233 The CCA requires expressly that the creditor acts at all times in accordance with the principle of good faith and fair dealing (Sl. nacˇelo vestnosti in poštenja).1234

1221. 1222. 1223. 1224. 1225. 1226. 1227. 1228. 1229. 1230. 1231. 1232. 1233. 1234.

Article 2 of the CCA. Arts 3 and 4 set out exceptions from the CCA’s application. Articles 58–75 of the CCA. Articles 38–75 of the CCA. Article 51 of the CCA. Article 13 of the CCA. Article 27 of the CCA. Detailed rules on acquiring the licences are set out in Arts 30–37 of the CCA. Additional rules are set out in articles for credit contracts regarding immovables. Article 29 of the CCA. Articles 7–9 of the CCA. Article 6 of the CCA. See, e.g., Art. 14 of the CCA. Article 10 of the CCA. Ibid. Article 5 of the CCA. For details on this principle, see supra Introduction to the law of contracts, §8, and Part I, Ch. 2, §3.

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513. The CCA sets out the following compulsory minimum content of the consumer credit contract:1235 the type of consumer credit; the identities and addresses of the contracting parties (as well as, if applicable, the identity and address of the credit intermediary involved); the total amount of the credit and the conditions governing the drawdown; the duration of the contract; information on the goods or services in cases of credits in the form of deferred payment or in cases of linked consumer credit contracts; all relevant information regarding the borrowing rate; effective interest rate (EIR)1236 and the total sum to be paid by the consumer, calculated at the time of the conclusion of the contract, together with all the factors for calculating the rate; the amount, number, frequency of payment and other relevant data on the sums to be paid by the consumer; information on the consumer’s right to request free of charge a calculation of his or her obligations arising out of the credit contract; where applicable, the charges for maintaining accounts recording both payment transactions and drawdowns, as well as the charges for using a means of payment for both payment transactions and drawdowns, and any other charges deriving from the credit agreement and the conditions under which those charges may be changed; costs for any notarial services; the interest rate applicable in the case of late payments as applicable at the time of the conclusion of the credit contract and the arrangements for its adjustment and, where applicable, any charges payable for default; information on the consumer’s right to early repayment of the credit, and the creditor’s right to compensation and the rules for determining it;1237 table of periods and terms for the payment of the interest and any of the associated recurrent and non-recurrent charges if these are to be paid without capital amortization; information on any required insurance;1238 information on the consumers’ right to withdraw from or to terminate the contract;1239 information on the consumer’s right to cooling-off (right of withdrawal);1240 information on the consumer’s right to avoid a so-called linked credit contract (Sl. povezane pogodbe);1241 information on the dispute resolution mechanism and other legal remedies available to the consumer; information on competent supervisory authority in charge with supervising the creditors and credit intermediaries; in cases where the calculation is related to a foreign currency, the foreign currency and the exchange rate must be stated and explained. 514. The CCA provides for out-of-court dispute resolution mechanism.1242 The creditor and the credit intermediary must guarantee an out-of-court mechanism for 1235. Article 12 of the CCA. Additional content is required by Arts 15–16 of the CCA in cases of credit contracts allowing overrunning and overdraft facility. 1236. Formula for calculating EIR is set out in Arts 24–26 of the CCA. Maximum EIR is also set. Additional rules on EIR are set out in Arts 56–57 of the CCA for credit contracts regarding immovables. 1237. Article 22 of the CCA. 1238. See Art. 28 of the CCA. 1239. Articles 17, 19 and 21 of the CCA. The creditor’s right to terminate the contract is regulated in Art. 20 of the CCA. 1240. Article 18 of the CCA. 1241. They are consumer credit agreements the purpose of which is to finance the sale of goods or services. See Art. 2 of the CCA. 1242. Article 93 of the CCA.

216

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515–515

solving disputes arising out of the consumer crediting services agreements under the CCA before a person offering professional and independent assistance in accordance with the Out-of-Court Resolution of Consumer Disputes Act.1243 If the consumer makes use of such out-of-court mechanism, the creditor or the credit intermediary, respectively, are obliged to participate in the proceedings. 515. In recent years, the CCA and the general consumer contract law have been interpreted extensively in Slovenia with regard to consumer credit contracts in Swiss Franks that have been concluded voluminously before the increase in value of the Swiss Frank.1244 We are now awaiting the first Supreme Court judgments assessing these contracts while in contrast to some other Member States, the Slovenian legislator has so far not decided to solve this problem by adopting specific legislation addressing the validity of the credit contracts in Swiss Franks.

1243. Sl. Zakon o izvensodnem reševanju potrošniških sporov (ZIsRPS), Official Gazette RS, No. 81/15. 1244. See, for example, Koritnik, Krediti v švicarskih frankih: cˇigave so težave?, in: Vlahek, Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015.

217

516–517

Chapter 10. Contract for Work §1. REGULATION OF CONTRACT FOR WORK 516. The OC does not lay down the general rules on services contract. Instead, specific types of services contracts are regulated in individual chapters starting with contract for work followed by other contracts with obligation of result. After that, chapters on contract of mandate and further contracts with obligation of effort are regulated.1245 The OC does not even define services contracts, it merely provides definitions of these specific contracts. The CPA, however, lays down some general rules on consumer services contracts some of which apply to both consumer services and consumer sales contracts: marketing of services, information duties of the services provider, standard contractual terms for the provision of services, general obligations of the services provider towards the consumer upon and after the conclusion of the services contract, pricing and charging of the services, consumers’ remedies in case of nonconformity with the services contract, distance services contracts, payment in instalments, etc. For the purposes of the CPA, a services contract is defined as follows: ‘A services contract within the meaning of this act is a contract, save a sales contract, obliging an undertaking to provide a service to the consumer, whereas the consumer is obliged to pay a certain price for that.’1246 Services of information society and financial services within the meaning of the CPA are specifically defined and partially regulated.1247 Rules on specific types of services contracts (some of which have the characteristic of a contract for work, i.e., produce obligations of result) are also laid down in the CPA’s Chapters 6 and 7 that implement the EU consumer directives on the so-called ‘tourist contracts’, the package travel contract (Sl. pogodba o organiziranju potovanja), ‘auxiliary contract’ (Sl. pomožna pogodba; i.e., services contract auxiliary to timeshare contract or to longterm holiday contract), long-term holiday product contract (Sl. pogodba o dolgorocˇnem pocˇitniškem proizvodu), exchange contract (Sl. pogodba o zamenjavi), and ‘resale contract’ (Sl. pogodba o nadaljnji prodaji). 517. The general rules on contract for work (Sl. podjemna pogodba or pogodba o delu,1248 Lat. locatio operis) are laid down in Chapter XI of the Special Part of the OC (Articles 619–648). A special type of contract for work, i.e., a building contract, is regulated in a separate chapter of the OC (Chapter XII of the Special Part of the OC, Articles 649–665). Further ‘contract of work’ – type contracts producing obligations of result are regulated in the following chapters of the OC (e.g., building contract, contract of carriage, bailment contract, warehouse contract etc.). As 1245. See supra Introduction to the Law of Contract, Chapter §3, V. 1246. See Art. 1/19 of the CPA. Sales contract is probably mentioned in this definition because of the CPA’s definition of a sales contract in Art. 1/18 where it is stated that a contract the object of which are goods and services, is deemed a sales contract. 1247. See Arts 1/13 and 1/15 of the CPA. Marketing of distance financial services is regulated in Arts 48a–48e of the CPA. 1248. Štempihar speaks of podjetniška pogodba or delovršna pogodba or pogodba o delu. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 47.

218

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518–522

contracts for work are often consumer services contracts, the provisions of the CPA and the OC (the latter to the extent that the issues are not covered by the CPA) thus apply in B2C relationships. 518. An employment contract (Sl. pogodba o zaposlitvi) which is a very specific type of contract of work is regulated in the Employment Relationship Act.1249 A contract for a copyright work made for hire (Sl. avtorska pogodba o narocˇilu dela) is another specific type of contract for work. It is to be underscored, however, that despite its title it is not a proper work for hire contract as the author retains his or her material and moral rights with the exception of the right to distribution. It is regulated in the Copyright and Related Rights Act,1250 further contracts having the characteristics of contract for work that are regulated there being the publishing contract (Sl. založniška pogodba) and the performance contract (Sl. pogodba o izvedbi). §2. GENERAL RULES ON CONTRACT FOR WORK 519. The OC defines contract for work as a contract through which the contractor (Sl. podjemnik) undertakes to perform a specific work, such as the manufacture or repair of a thing, or physical or intellectual work or similar, whereas the ordering party (Sl. narocˇnik) undertakes to pay the contractor for his or her work.1251 520. The OC sets out the rules for delimiting sales contract from contract for work.1252 A contract by which one party undertakes to make a specific movable from his or her own material shall in case of doubt be deemed a sales contract. However, a contract shall remain a contract for work if the ordering party undertook to supply the essential part of the material required to make the thing. In any case, a contract shall be deemed a contract for work if the contracting parties primarily had contracted work in mind. 521. If it is agreed that the contractor will produce the work using his or her own material, and the quality thereof is not stipulated, the contractor is obliged to provide material of medium quality.1253 522. The contractor is obliged to inform the ordering of any defects in the material that the ordering party delivered or else he or she is liable for damages sustained because of that.1254 If the ordering party requested that the thing be made 1249. Sl. Zakon o delovnih razmerjih (ZDR-1), Official Gazette RS, No. 21/13, with further amendments. Cf. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 48. 1250. Sl. Zakon o avtorski in sorodnih pravicah (ZASP), Official Gazette RS, N. 21/95, with further amendments. 1251. Article 619 of the OC. 1252. Article 620 of the OC. Cf. Art. 3 of the CISG. 1253. Article 621/1 of the OC. 1254. Article 625/1 of the OC.

219

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from material with defects about which the contractor informed the ordering party, the contractor must act in accordance with this request, unless it is clear that the material is not suitable for the work ordered, or if making the thing from the requested material could damage the contractor’s reputation; in this case, the contractor may withdraw from the contract.1255 The contractor must inform the ordering party of any deficiencies in the order, and of other circumstances of which the contractor knew or should have known and could be significant to the ordered work or the execution of the work on time; otherwise, the contractor shall be liable for damages.1256 523. The contractor is obliged to execute the work according to the agreement and according to best practices in the field.1257 He or she must execute the work by the agreed deadline or, if no such was stipulated, in the time reasonably required for executing the work.1258 The contractor is not for any delay occurring because (i) the ordering party failed to deliver the material thereto on time, (ii) the ordering party requested changes, (iii) the ordering party failed to settle an owed advance payment, or (iv) in general for any delay occurring because of the ordering party’s (in)action.1259 524. The ordering party has the right to supervise the work and give instructions to the contractor if this suits the nature of the work agreed to be done.1260 The contractor must facilitate this.1261 525. If, during the execution of the work, the contractor is not abiding by the contractual conditions and best practices in the field, because of which the work will have defects, the ordering party may give the contractor a warning and set a deadline by which the work should be adapted accordingly. If the contractor fails to fulfil the ordering party’s requirements by the set deadline, the ordering party may withdraw from the contract and request damages.1262 526. If the deadline for executing the work is an essential component of the contract and the contractor is so delayed in starting or finalizing the work that it is clear that it will not be completed on time, the ordering party may terminate the contract and request damages. The ordering party shall also have this right even when the deadline is not an essential component of the contract if, for reason of the delay, the ordering party no longer has an interest in the contract being performed.1263

1255. 1256. 1257. 1258. 1259. 1260. 1261. 1262. 1263.

220

Article Article Article Article Article Article Ibid. Article Article

625/2 of the OC. 625/3 of the OC. 626/1 of the OC. 626/2 of the OC. 626/4 of the OC. 622 of the OC. 628/1 of the OC. 628/2 of the OC.

Part II, Ch. 10, Contract for Work

527–529

527. Unless it follows otherwise from the contract or the nature of the work to be performed under the contract, the contractor is not obliged to perform the work in person. In this case, the contractor remains liable to the ordering party even though he or she is not performing the work in person.1264 528. Further, the contractor is liable for persons working under the contractor’s orders as if he or she had done the work in person (so-called liability for associates, liability for subcontractors).1265 The contractor’s associates have a direct claim against the ordering party for their claims towards the contractor although they are not in a contractual relationship with the ordering party.1266 This is one of the exceptions of Slovenian law where a party is obliged toward another party without being in a contractual relationship with it.1267 The OC sets out two important conditions for advancing with such direct claim (the courts require it to be in writing): (1) the contractor has a valid and due claim towards the ordering party and (2) the contractor has acknowledged the subcontractor’s claim towards the contractor.1268 This provision has been often referred to by subcontractors in the building sector as the contractors were often not paying the subcontractors for the work they performed for them. If the two prerequisites were not met (e.g., the ordering party already paid the contractor which later went bankrupt as was often the case in Slovenia during the financial crisis), they could not have advanced successfully with the direct claim. The courts have, however, allowed the subcontractor to send his or her direct claim already at the time when the ordering party’s obligation towards the main contractor existed, regardless of whether the subcontractor’s claim is then already due or not.1269 After having been notified of the direct claim, the ordering party cannot pay the amount claimed to the main contractor.1270 If the ordering party had paid the main contractor prematurely, before the claim of the latter was due, he or she may be liable to the subcontractors for loss.1271 529. The contractor is obliged to deliver the manufactured or repaired thing to the ordering party, unless the thing was destroyed for a reason outside the contractor’s liability.1272 1264. Article 629 of the OC. 1265. Article 630 of the OC. The rules of public procurement law define a subcontractor in a similar way. See Art. 94/1 of the Public Procurement Act (Sl. Zakon o javnem narocˇanju (ZJN-3), Official Gazette RS, No. 91/15, with further amendments). 1266. Law on public procurement also prescribes the possibility of subcontractors with regard to public contracts, to claim payment directly from the client (i.e., person subject to public law). In such cases, a direct payment claim is possible even for the subcontractors of subcontractors. For further details, see supra Part I, Ch. 4, §3 of this monograph. 1267. See supra Part I, Ch. 4, §3 of this monograph For further details, see Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017. 1268. Article 631 of the OC. For further details, see supra Part I, Ch. 4, §3 of this monograph. 1269. Judgment of the High Court of Ljubljana, No. II Cp 557/2016 of 29 Jun. 2016. 1270. Judgment of the Supreme Court of RS, No. II Ips 69/2016 of 28 Nov. 2017. 1271. Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017, p. 1123. 1272. Article 632 of the OC.

221

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530. Rules of the OC on liability for nonconformity with the contract for work differ to some extent from the rules of the OC on liability for nonconformity with the sales contract. The ordering party must inspect the finalized work as soon as possible following the ordinary course of events1273 (the same rule applies in the sales contract). He or she must notify the contractor without undue delay of any defects in the work1274 (in case of sales contract without undue delay in B2B, and in eight days in C2C relationships). The contractor may request the ordering party to inspect and accept the work.1275 If the ordering party fails to do so without justifiable grounds, the work shall be deemed to have been accepted.1276 After the inspection and acceptance of the work, the contractor shall no longer be liable for defects that could have been noticed during a customary inspection (obvious defects, Sl. ocˇitne napake), unless the contractor knew of them and failed to show them to the ordering party.1277 In case of hidden defects (Sl. skrite napake), the ordering party must notify the contractor about them within one month after discovery (in case of sales contract without undue delay in B2B, and in eight days in C2C relationships), whereby the contractor is liable only for those defects that become apparent within two years after the work was accepted by the ordering party1278 (in case of sales contract without six months in both C2C and B2B relationships). The ordering party may file the claims against the contractor within an additional year (cut-off period, the same length in sales contract).1279 If, however, the ordering party notified the contractor on time about the defects, he or she may exercise the right to a reduction in the payment and a reimbursement of damages by objecting to the contractor’s claim for payment even after the one-year cut-off period1280 (a similar remedy is given to a buyer in sales contract). In any case, i.e., even if the ordering party was late with the notification, or with any other act required for the advancement of his or her claim, the ordering party retains the remedies for nonconformity (i) if the defect relates to facts that were known or could not have remained unknown to the contractor, and the contractor failed to inform the ordering party about them, or (ii) if the contractor’s actions misled the ordering party into failing to exercise his or her rights on time1281 (e.g., by giving promises to remedy the defects). 531. The system of remedies in case of nonconformity with the contract for work under the OC is rather ambiguous. It is, in any case, different from that set out for cases of nonconformity with the sales contract, as it, inter alia, lays down to some extent a hierarchy of the ordering party’s remedies. 532. An ordering party that notified the contractor of the defects on time may request the contractor to remedy the defect, and set him or her a reasonable time 1273. 1274. 1275. 1276. 1277. 1278. 1279. 1280. 1281.

222

Article Ibid. Article Ibid. Article Article Article Article Article

633/1 of the OC. 633/2 of the OC. 633/3 of the OC. 634/1 of the OC. 635/1 of the OC. 635/2 of the OC. 636 of the OC.

Part II, Ch. 10, Contract for Work

533–533

limit therefor.1282 In addition to that, the ordering party may request reimbursement of the damage incurred because of that.1283 However, if the requested remedying of the defect would require excessive costs to be borne by the contractor, he or she may refuse to do the work.1284 In this case, the ordering party may choose to (i) reduce the payment1285 or (ii) terminate the contract (unless the defect is minor) or (iii) remedy the defect on his or her own and request reimbursement.1286 In any case, the ordering party may request damages sustained because of the defect.1287 The OC thus gives the contractor an objection of non-proportionality (Sl. ugovor nesorazmernosti) of his or her costs (the threshold set as excessiveness, Sl. pretiranost) with the benefits of the ordering party should the latter be able to advance with the claim to remedy the defect. If the work is useless because of the defect, or if it was performed in breach of express contractual conditions, the ordering party may, however, terminate the contract and request the reimbursement of damage without first requesting the remedying of the defect.1288 533. As has already been emphasized in Part I, Chapter 6, it is difficult to see why under the regime of the OC, the parties are treated that differently in contracts for sale and contracts for work. Less differences between a sales contract and a work for hire contract exist in cases of B2C relationships. Only one article of the CPA addresses the consumer’s remedies in case of defective services.1289 It states (in a very poor language and terminology) that the consumer shall have the right to request the service provider to: (i) eliminate the deficiencies of the service provided; or (ii) reimburse part of the amount paid in proportion to the deficiency (in fact, the remedy is a reduction of the price whereas the reimbursement is merely a possible effect of that); or (iii) provide the service again, or (iv) reimburse the entire payment (again, this remedy is in fact a termination of the contract, while reimbursement of the whole price is merely a possible effect of termination in case the consumer has already paid for the services. As is the case with the CPA’s list of remedies of the seller, the remedies of the ordering party are not in any hierarchy. The CPA merely lists the remedies and adds that the periods of the CPA set for the liability of the seller for material defects (i.e., two months for notification, two years’ warranty period, and two years’ period for advancing with the remedy) apply, mutatis mutandis, for service providers, unless a longer period is envisaged by a special act.1290 1282. 1283. 1284. 1285. 1286. 1287. 1288. 1289. 1290.

Article 637/1 of the OC. Article 637/2 of the OC. Article 637/3 of the OC. According to Art. 640, the payment is reduced in proportion to the value of the work without defects at the moment the contract was concluded, and the value which the non-conform executed work would have had at the moment of the conclusion of the contract. See Arts 637 and 639 of the OC that are unfortunately written very poorly by repeating the same provisions on one hand, and lacking provisions (such as provisions on whether the remedy of the ordering party may be in requesting that the work be done a novo) on the other hand. Article 637/3 of the OC. Article 638 of the OC. Article 38/1 of the CPA. Article 38/2 of the OC.

223

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534. The CPA sets out additional obligations of the services provider upon receipt of the defects’ notification.1291 If the existence of a defect is not contested, the services provider must comply with the consumer’s requests under the CPA as soon as possible, but not later than eight days after receiving the request. If the services provider contests the consumer’s allegations, the provider must send the consumer a written reply within eight days of receipt of the request at the latest. If he or she fails to do to so, the Market Inspectorate can fine them. 535. If the work was executed in accordance with the contract and best practices in the field, the ordering party is obliged to accept it.1292 Unless the payment is set by a mandatory tariff or any other legal act, the parties may freely agree on its amount.1293 If that is not the case, it must be set by the court in accordance with the value of the work, the time usually required for executing such work, and the typical payment for the type of work as the one in question.1294 Unless it was agreed otherwise, the ordering party is not obliged to make the payment before inspecting and approving the executed work.1295 This also applies if the execution and delivery of the work in parts was agreed.1296 536. If the payment was agreed on the basis of an estimate with the contractor’s express guarantee as to its accuracy (Sl. izracˇun z izrecnim jamstvom), the contractor may not request a higher payment even if more work was invested in performing the contract and the performance required higher expenditure than was anticipated.1297 This does not exclude the application of the rules on rebus sic stantibus.1298 If the payment was agreed on the basis of an estimate without the contractor’s express guarantee as to its accuracy, and it becomes evident during the work that overspending is unavoidable, the contractor must notify the ordering party of such without delay; otherwise, the contractor loses any claims for such higher costs.1299 537. If the material for the work was provided by the contractor, and the produced work was damaged or destroyed for any reason prior to being delivered to the ordering party, the contractor will not have the right to a refund for the material provided, nor to payment for the work.1300 If the ordering party has inspected and approved the work, it is deemed that the produced thing has been delivered to the ordering party but remained in safekeeping with the contractor.1301 If the ordering party is in delay because of his or her own failure to accept the produced thing, the 1291. 1292. 1293. 1294. 1295. 1296. 1297. 1298. 1299. 1300. 1301.

224

Article Article Article Article Article Article Article Article Article Article Article

39 of the CPA that applies to both the sales contract and the contract for work. 641/1 of the OC. 642/1 of the OC. 642/2 of the OC. 642/3 of the OC. 642/4 of the OC. 643/1 of the OC. 643/2 of the OC. 643/3 of the OC. 644/1 of the OC. 644/2 of the OC. See infra Part II, Ch. 12 for details on bailment.

Part II, Ch. 10, Contract for Work

538–539

risk of accidental destruction or damage is transferred to him or her.1302 If, however, the material was provided by the ordering party, the latter shall assume the risk of its accidental destruction or damage. In this case, the contractor shall have the right to payment only if the thing was accidentally destroyed or damaged after the ordering party was in delay, or if the ordering party failed to respond to a correct invitation to inspect the thing.1303 If it was agreed that the ordering party will inspect and accept individual parts as they are made, the contractor shall have the right to payment for making the parts the ordering party has inspected and approved, even if they were destroyed in the contractor’s possession through no fault of the contractor.1304 538. In order to secure payment for the work, costs for the material used and other claims deriving from a contract for work, the contractor has a statutory (ex lege) lien on the things made or repaired, and on other objects delivered to him or her by the ordering party in connection with the work, as long as they are in the contractor’s possession.1305 539. Until the completion of the ordered work, the ordering party may withdraw from the contract whenever he or she wants. However, in this event, the ordering party must pay the agreed payment to the contractor but can deduct (i) the costs not incurred by the contractor that would have otherwise been incurred, and (ii) what the contractor earned elsewhere, or did intentionally not want to earn.1306

1302. 1303. 1304. 1305. 1306.

Article Article Article Article Article

644/3 of the OC. 645 of the OC. 646 of the OC. 674 of the OC. 648 of the OC.

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Chapter 11. Building Contract 540. A building contract (Sl. gradbena pogodba) is regulated in the OC (Chapter XII, Articles 649–665). Although a building contract is essentially a contract for work, it has so many special characteristics that the Yugoslav legislator deemed necessary to regulate it in a special chapter. These are mirrored, inter alia, in the provisions on the contractor’s fee, and the provisions on his or her liability for defects in the solidity of the built structure. In the absence of specific provisions on the building contract, the general rules of the OC on the contract for work apply. As building contracts are often consumer services contracts, the provisions of the CPA (and of the OC, to the extent the issues are not covered by the CPA) apply in B2C relationships. In addition, Special Construction Usages (Sl. gradbene uzance) issued in 1977 by Chamber of Commerce of Yugoslavia,1307 regulate the relationships arising out of the building contract. 541. The OC defines a building contract as a contract for work through which the contractor (Sl. izvajalec or gradbinec) undertakes to build a specific structure1308 on specific land according to a specific plan by a specific deadline, or to carry out any other construction work on such land or on an existing structure, whereas the ordering party (Sl. narocˇnik or investitor) undertakes to pay the contractor a specific fee for the work.1309 A building contract must be concluded in writing.1310 542. The contractor is obliged to enable the ordering party constant supervision of the works, and control over the quality and quantity of the material used.1311 Deviation from the construction plan or the contracted works is allowed only on the basis of a written approval by the ordering party.1312 Without such approval, the contractor may not request an increase to the agreed fee.1313 The contractor may, however, carry out urgent unforeseen works1314 without the ordering party’s prior approval if this cannot be obtained due to the emergency of the situation.1315 The contractor must notify the ordering party without delay about such urgent situations 1307. Official Gazette SFRJ, No. 18/77. 1308. According to Art. 650 of the OC, the notion ‘structure’ means buildings, dams, bridges, tunnels, water pipes, sewage ducts, roads, railways, wells and other built structures that require major, demanding work to be made. 1309. Article 649/1 of the OC. 1310. Article 649/2 of the OC. 1311. Article 651 of the OC. In contrast to the general rules on contract for work, the ordering party here does not have the right to give instructions to the contractor. The latter is deemed an expert and is independent in taking the decisions on questions of expertise, i.e., building a structure. 1312. Article 652/1 of the OC. 1313. Article 652/2 of the OC. 1314. According to Art. 653/2 of the OC, unforeseen works are those works that had to be performed urgently to ensure the stability of the structure, or to prevent the occurrence of damage, and that were caused by an unexpected water or any other extraordinary, unexpected development at the site. 1315. Article 653/1 of the OC.

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and the measures taken.1316 He or she has the right to a fair payment for the unforeseen necessary works.1317 The ordering party may withdraw from the contract if the fee would be considerably higher owing to such works; the ordering party must notify the contractor of such decision without delay and pay the contractor an appropriate part of the fee for the work already performed, and a fair reimbursement of the necessary costs.1318 543. The OC lays down detailed complex (and at times rather ambiguous) rules on the contractor’s fee. It defines various types of fee agreements, prerequisites for fee amendments, and remedies available to the ordering party in cases of fee amendments.1319 544. Chapter of the OC on the building contract sets out special provisions on the contractor’s liability for defects in the solidity of the built structure. The reason for that lies in the fact that such defects are way more important and far-reaching than other types of defects. Buildings and similar structures have a higher value and are erected for a rather long period of time. It must be emphasized that in cases of all other material defects, the general rules of the OC on the contract of work apply.1320 The following special provisions of the OC apply in cases of defects in the solidity of the structure: (i) if such defects result from defects in the construction plan, both the contractor, i.e., the builder, and the constructor are liable for them;1321 they are liable not only to the contractor’s contracting party but also to every further acquirer of the building;1322 the parties may not limit or exclude their liability;1323 the ordering party must notify the contractor and the constructor of the defects in six months after the ordering party discovered them1324 (not in one month as in case of defects that are not defects in the solidity); the warranty period is ten years from handing over the built structure1325 (two years in cases of regular defects) whereas the deadline for advancing with the claim is identical to that within the general rules on the contract for work, i.e., one year after the notification (made to the contractor and the constructor).1326 The contractor is not released from liability if the defect occurred because the contractor acted according to the ordering party’s requirements. However, if prior to executing individual works according to the ordering party’s requirements, the contractor warned the ordering party of the risk of defects, the contractor’s liability is reduced or even excluded taking into account the circumstances of the case.1327 The liability of the contractor and the constructor 1316. 1317. 1318. 1319. 1320. 1321. 1322. 1323. 1324. 1325. 1326. 1327.

Article 653/3 of the OC. Article 653/4 of the OC. Article 653/5,6 of the OC. See Arts 654–659 of the OC. Articles 633–640 of the OC. Article 662/1,3 of the OC. Article 662/4 of the OC. Article 662/5 of the OC. Article 663/1 of the OC. Article 662/1 of the OC. Article 663/2 of the OC. Article 664 of the OC.

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is joint and several.1328 A constructor who was entrusted also with supervising the execution of the works, is liable for defects in the executed work if they could be noticed during customary and appropriate supervision; in this case, he or she has the right to request appropriate reimbursement from the contractor.1329 If a contractor reimbursed damages sustained by the ordering party because of a defect in the executed work, he or she may request reimbursement from the constructor to the extent to which the defects in the executed works have originated from the defects in the constructor’s plan.1330 If a third person to whom the contractor entrusted to execute a part of the work is liable for a defect, the contractor must notify such person of the defect within two months after being notified of the defect by the ordering party, or else the contractor cannot request any reimbursement from the third party.1331 545. A special rule regarding the liability of the contractor for defects (deviating from the general rules on the liability of the contractor under the contract for work) is set out with regard to the scope of persons having the remedies against the constructor in case of nonconformity with the building contract: the ordering party’s rights against the contractor for reason of defects in a structure shall also be transferred to all subsequent acquirers of the structure or parts thereof, whereby the periods for notification and advancement with the claim do not run anew for the subsequent acquirers.1332 546. The CPA does not lay down any special rules on consumer building contracts. The general rules of the CPA on consumer services contracts thus apply, unless the provisions of the special rules on the building contract are more favourable to the consumer.1333 Some of the provisions of the OC on the building contract are in fact more favourable to the consumer that those set out in the CPA. For example, the warranty period under the CPA is two years whereas under the OC, it is ten years in cases of defects on solidarity. The deadline for notification of defects in the solidity is two months according to the CPA, and six months according to the OC.

1328. 1329. 1330. 1331. 1332. 1333.

228

Article 665/1 of the OC. Article 665/2 of the OC. Article 665/3 of the OC. Article 665/4 of the OC. Article 661 of the OC. Article 38/2 of the CPA states with regard to the remedies for nonconformity of a services contract, that periods defined for the liability of the seller for material defects shall apply, mutatis mutandis, for service providers, unless a longer period is envisaged by a special act.

547–551

Chapter 12. Bailment §1. TYPES OF BAILMENT 547. Bailment contract (deposit contract, Sl. shranjevalna pogodba) is regulated in the OC (Chapter XV of the Special Part of OC, Articles 729–746 OC). A specific type of bailment contract, i.e., a warehouse contract (Sl. skladišcˇna pogodba) is also regulated in the OC (Chapter XVI of the Special Part of OC, Articles 747–765 OC). Both sets of rules of OC are identical to those that were set out in the Yugoslav OA.1334 548. The OC also regulates the so-called ‘caterer bailment’ (Sl. gostinska hramba) where in some situations (most often in cases of receiving restaurant or hotel services), specific rules on bailment apply ex lege irrespective of whether a bailment contract had been concluded between the caterer and his or her guest (Articles 741–746 OC). 549. Specific rules on bailment (ex lege bailment) apply to sale of goods where the buyer or the seller have the obligation to store the goods until they are delivered or returned to the other party (Articles 500–502 OC). Similarly, the PLC sets out specific rules on storage of pledged goods (Article 158 PLC) and on safekeeping of goods intended for control under the contract on control of goods (Article 874 OC). 550. Rules on bank money deposit contract (Chapter XXXI of the Special Part of Yugoslav OA, Articles 1035–1046 Yugoslav OA), deposit of securities contract (Chapter XXXII of the Special Part of Yugoslav OA, Articles 1047–1051 Yugoslav OA) as well as safe deposit box contract (Chapter XXXIII of the Special Part of Yugoslav OA, Articles 1061–1064 Yugoslav OA) are set out in the Yugoslav OA of 1978. Although this act does not apply as of the entry into force of the Slovenian OC, i.e., as of 1 January 2002, some of its chapters remain in force according to Article 1061 of the OC. 551. Various forms of notarial bailment are regulated in the Notary Act.1335 A specific type of notarial bailment is regulated in the Protection of Buyers of Apartments and Single Occupancy Buildings Act.1336

1334. The only difference is in the name of the contract: while Yugoslav OA applied the term ‘hramba’ (storage), the OC now applies the term ‘shranjevalna pogodba’ (storage contract, bailment contract). 1335. Sl. Zakon o notariatu (ZN), Official Gazette RS, No. 13/94, with further amendments. 1336. Articles 87–90 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act (Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS No. 18/04). See Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 87–89.

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§2. BAILMENT CONTRACT 552. Bailment contract (Lat. depositum, Sl. shranjevalna pogodba) is concluded between a bailor (Sl. položnik1337) and a bailee (Sl. shranjevalec1338). The bailee obliges him or herself to take the goods from the bailor, to store the goods and return them on the bailor’s request.1339 Today, it is a consensual contract whereas under the Austrian ABGB, it was a real contract requiring handing over of the goods upon conclusion of the contract.1340 553. The bailor may enter into a bailment contract irrespective of whether he or she is the owner of the goods or has any other entitlement to them. Unless the bailee is informed of the fact that the goods stored with him or her are stolen goods, he or she must return the goods to the bailor.1341 If a third person files an action against the bailee requesting that he or she return the goods to the plaintiff, the bailee must inform (i) the court about the person that stored the goods, and (ii) the bailor of the fact the action had been filed.1342 554. Bailment contract may be concluded for or without a remuneration (free of charge). The bailee does not have the right to payment, unless (i) payment was agreed by the parties, (ii) the business activity of the bailee is taking goods in storage, (iii) remuneration could be anticipated from the circumstances of the case.1343 In any case, the bailee has the right to reimbursement of the costs required for keeping the goods and any damages sustained because of that.1344 555. If the bailor is not obliged to pay the bailee for the storage, the bailee must store the goods as if they were his or her own (i.e., with care he or she shows with his or her own goods). If the contract is for remuneration, then the bailee has to store the goods showing an objective standard of care, i.e., as a prudent businessperson (i.e., if he or she acts within his or her business activity) or as a prudent person (if he or she does not act within his or her business activity).1345 A special duty of care is set out in cases of distress (e.g., fire, floods, and earthquake) where the bailee is to keep the goods with ‘greater care’ (deposit of necessity, Lat. depositum miserabile).

1337. An older expression was izrocˇnik. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 476. 1338. An older expression was hranivec. See Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 476. 1339. Article 729 of the OC. 1340. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 69. 1341. Article 730/1 of the OC. 1342. Article 730/2 of the OC. 1343. Article 737 of the OC. 1344. Article 736 of the OC. 1345. Article 731/1 of the OC.

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556–559

556. If the place and the way of storing the goods are set out in the contract, the bailee may change them only if this is required by altered circumstanced. If the bailee nevertheless does that, he or she is liable also for coincidental destruction or damage of the goods (Lat. casus mixtus) unless the goods would be destroyed or damaged also in the case the bailee did not breach this duty.1346 The bailee must inform the bailor of all changes detected on the goods, and of any dangers that might cause damages to the goods.1347 557. The bailee may not hand over the goods to another bailee unless the bailor agrees to that or in case of an emergency situation.1348 If the bailee breaches this duty, he or she is liable also for coincidental destruction or damage of the goods (Lat. casus mixtus) unless the goods would be destroyed or damaged in any case.1349 558. The bailor may also not make use of the stored goods without the bailor’s consent. If he or she does that, he or she is liable to pay damages to the bailor and is liable for coincidental destruction or damage of the goods (Lat. casus mixtus) unless the goods would be destroyed or damaged in any case.1350 If the bailee was entitled to make use of the stored goods (i.e., in case of non-consumable goods), rules governing commodatum apply (with the exception of the question of the time and place of return of the goods with regard to which the rules on bailment apply) unless the parties have agreed otherwise.1351A specific type of bailment (irregular deposit, Lat. depositum irregulare) is set out in the OC enabling the bailee to make use of and consume the stored goods (i.e., in case of replaceable goods), and obliging him or her to return substitute goods of the same quantity and quality. In this case, rules governing the loan contract apply (with the exception of the question of the time and place of return of the goods with regard to which the rules on bailment apply) unless the parties have agreed otherwise.1352 559. The stored goods and their possible fruits and other benefits must be returned to the bailor as soon as he or she requests them.1353 If a return date was set by the parties, the bailor may nevertheless request the goods before that date unless the return date was not agreed upon in the exclusive interest of the bailor1354 (i.e., it was agreed upon also or only in the interest of the bailee). Special rules apply in cases of bailment without remuneration: here, the bailee may in any case return the goods before the return date (i) if there is danger that the goods will be damaged or (ii) if storing the goods could cause damage to the bailee.1355 If in cases of bailment 1346. 1347. 1348. 1349. 1350. 1351. 1352. 1353. 1354. 1355.

Articles 731/2 and 734 of the OC. Article 731/3 of the OC. Article 732 of the OC. Ibid. Article 734 of the OC. Article 733/3 of the OC. Article 739 of the OC. Article 735/1 of the OC. Article 735/2 of the OC. Article 738/1 of the OC.

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without remuneration the return date has not been agreed, the bailee may terminate the contract at any time and must set the bailor a deadline for taking the goods.1356 560. Unless the contract states otherwise, the stored goods must be returned at the place where they were handed over to the bailee. If they are returned elsewhere, the bailee has the right to recover the costs of such transfer.1357 §3. CATERER BAILMENT 561. Rules of the OC on the so-called ‘caterer bailment’ (innkeeper’s liability, Sl. gostinska hramba) apply in situations where a services contract has been concluded between the caterer (e.g., in cases of hotel, restaurant, bar, hospital, garage, sleeper train, organized camping)1358 and his or her guest who has brought goods with them to the premises of the caterer (e.g., a coat, luggage, purse, scarf). These rules (Articles 741–746 OC) apply ex lege irrespective of whether a bailment contract had been concluded between the caterer and the guest. If the bailment contract had been concluded, the general rules on bailment (Articles 729–740 OC) would apply. According to the OC, the caterer has a duty to accept the guest’s goods in storage on the request of the guest (duty to enter a contractual relationship, Sl. kontrahirna dolžnost), unless the caterer has no suitable place to store them or is for any other reason unable to do so.1359 If the goods are stored with the caterer, the general rules of OC on bailment apply. Otherwise, rules on caterer bailment apply. 562. In case of caterer bailment, the caterer is deemed a bailee and is held responsible for the loss or damage of the guests’ goods up to the maximum amount of EUR 208,65 (ex SIT 50.000). Caterers who offer accommodation services, are held responsible up to the maximum amount of EUR 625.94 (ex 150.000 Slovenian tolars).1360 The caterer is relieved of his or her responsibility if the goods were damaged for (i) unavoidable or unpreventable circumstances, (ii) a cause in the goods themselves, (iii) the actions of the guest him or herself or his or her guests brought along or visiting him or her.1361 If the goods were placed in storage with the caterer (a regular bailment contract was concluded in this case meaning the general rules on bailment (Articles 729–740 OC), and not the rules on caterer bailment (Articles 741–746 OC) apply) or the caterer him or herself or the person the caterer is responsible for damaged the goods, then the caterer is liable for full compensation.1362 The same rule applies in cases where the caterer has groundlessly refused to take the 1356. Article 738/2 of the OC. 1357. Article 735/3 of the OC. 1358. See Arts 741 and 746 of the OC. Courts have applied these rules also to schools and universities. See Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 140. 1359. Article 742/1 of the OC. 1360. Article 741/2 of the OC. 1361. Article 741/3 of the OC. 1362. Article 741/4 of the OC.

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goods in storage on request of the guest.1363 It must be underscored that any notices in the caterer’s premises limiting or excluding the caterer’s liability differently from the rules set out in the OC have no legal effects1364 563. In case the guest’s goods are damaged, the guest must inform the caterer of this as soon as he or she becomes aware of it. If the guest does not do so, he or she is entitled to damages only if he or she shows that the damages were sustained because of the actions of the caterer or the person the caterer is responsible for.1365 564. Caterers who offer accommodation (but not other caterers) have a right of retention (Sl. retencijska pravica, pridržna pravica) of the guests’ goods until a price for their services is fully paid. This rule applies only to goods that are not stored with the caterer.1366 If the goods were placed in storage with the caterer, the general rules on bailment would apply according to which the bailee does not have the right of retention of the stored goods.1367 §4. EX LEGE BAILMENT IN SALES CONTRACT 565. Specific rules on bailment (ex lege bailment) apply to sale of goods where the buyer or the seller have the obligation to store the goods until they are delivered or returned to the other party (Articles 500–502 OC). In such cases, the seller and the buyer do not conclude a separate bailment contract, their relationship arises ex lege on the basis of their seller–buyer relationship. Typical situations covered by this rule are the following: the buyer is late in taking the goods that remain in the possession of the seller;1368 the buyer terminates the sales contract or requests replacement of goods due to their defects, and will return the goods on that basis – until the goods are returned, they remain in the possession of the buyer.1369 If the buyer refuses to take over the goods at the place of destination, it nevertheless has to take possession over them for the seller if the latter or his or her representative is not present at the place of destination and if it can be arranged without the payment of the price and without excess expenses or larger discomfort.1370 566. The party storing the goods has the right to recover any necessary costs incurred for storing the goods.1371 In contrast to the bailee, it has the right to retain the goods until the costs are settled. The buyer and the seller may in also decide to 1363. Article 742/2 of the OC. 1364. Article 744 of the OC. Commentators, however, interpret them as the caterer’s general terms and conditions. See Kranjc: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 137–138. 1365. Article 743 of the OC. 1366. Article 745 of the OC. 1367. Article 262/1 of the OC. 1368. Article 500/1 of the OC. 1369. Article 500/2 of the OC. 1370. Article 501 of the OC. 1371. Article 500/3 of the OC.

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(i) lodge the goods with the court, (ii) hand over the goods in storage to a third person, or (iii) sell the goods for their owner in accordance with the rules set out in Articles 302–308 OC.1372 §5. EX LEGE BAILMENT IN THE CASE OF A PLEDGE 567. The CPA requires the pledgee to store the pledged object diligently.1373 The level of the required diligence depends on whether the pledgee is a professional taking part in commercial legal transactions (thus a higher level of diligence is required) or not.1374 If the pledgee incurs any costs by storing the pledged object, his or her claim is increased by the amount of these costs.1375 A pledgee does not have the right to use the pledged property or to deliver it to another person for use or in pledge (a secondary pledge) unless the pledgor allows him or her to do so.1376 A pledgee who acts contrary to this rule is liable also for accidental perishing or damage to the pledged object caused by such actions.1377 It is in the pledgor’s interest that a pledged object of which he or she will normally regain possession after repayment of the secured claim maintains its value. The CPA, therefore, provides that if the pledgee fails to store the pledged movable property properly, if without the pledgor’s permission he or she uses it or gives it to another person to use, or if he or she uses it contrary to such permission, and generally if he or she uses it contrary to a contract or a statute, the pledgor can request that the court order that the pledged property be taken from the pledgee and delivered to a third person, who will possess the object for the pledgee.1378 §6. EX LEGE BAILMENT IN THE CASE OF CONTRACT ON CONTROL OF THE GOODS AND SERVICES 568. A special safekeeping obligation is set out in Chapter XXII of the Special Part of the OC within the regulation of the contract on control of the goods and services (Sl. pogodba o kontroli blaga in storitev). The controller must store the goods delivered to him or her for the agreed control to be performed and protect them against mixing or replacing them with other goods.1379 Unless agreed otherwise, the controller must store samples delivered to him or her for at least six months.1380 1372. 1373. 1374. 1375. 1376. 1377. 1378. 1379. 1380.

234

Article 502 of the OC. Article 157 of the CPA. Ibid. Article 157 of the CPA. See, e.g., judgment of the High Court of Ljubljana, No. I Cpg 288/2012 of 29 Apr. 2013. Article 158/1 of the CPA. Article 158/2 of the CPA. The limitation period for a pledgor’s claim against a pledgee for reimbursement for damage as a result of the impairment of the property expires one year from the day on which the property was returned (Art. 158/3 of CPA). Article 160 of the CPA. Article 874/1 of the OC. Article 874/2 of the OC.

Part II, Ch. 12, Bailment

569–573

§7. WAREHOUSE CONTRACT 569. A specific type of bailment contract, i.e., a warehouse contract (Sl. skladišcˇna pogodba) is regulated in the OC (Chapter XVI of the Special Part of OC, Articles 747–765 OC). Outside these specific rules, the general rules of the OC on bailment contract apply.1381 570. By concluding a warehouse contract the warehouse keeper obliges him or herself to take the goods from the depositor, to store the goods as agreed and return them on the request of the depositor or other entitled person, whereas the depositor obliges him or herself to remunerate the warehouse keeper for that.1382 Apart from the remuneration, the warehouse keeper is entitled to costs incurred for storing the goods.1383 The warehouse keeper’s claims arising out of the contract or those in connection with the storage of the goods are secured with the stored goods.1384 571. Upon handing over the goods, the depositor must provide the warehouse keeper with all relevant information about the goods and their value.1385 572. Warehouse keepers whose registered business is storing goods in warehouses are obliged by law to issue a warehouse receipt (Sl. skladišcˇnica) on the request of the depositor.1386 A warehouse receipt is a transferable security paper composed of two parts which can be transferred separately: (1) the part entitling its possessor to the goods (Sl. pobotnica, priznanica) and (2) the part entitling the creditor to whom it was handed over to sell the goods in case the debt secured with them is not paid (Sl. zastavnica).1387 The OC lists the information that has to be written in both parts of the paper.1388 Apart from the rules of the OC on the warehouse receipt (Articles 757–765 OC), the general rules of OC on securities (Articles 212–238 OC) and special legislation on securities (Bill of Exchange Act of 19461389) apply. 573. The warehouse keeper may not mix the goods placed in storage with other goods of the same type and quality unless (i) the depositor agrees so, (ii) it is obvious that the goods may be mixed without any threat of damages to the depositor.1390

1381. 1382. 1383. 1384. 1385. 1386. 1387. 1388. 1389. 1390.

Article 756 of the OC. Article 747/1 of the OC. Article 753/1 of the OC. Article 753/2 of the OC. According to the general rules on bailment, the bailee does not have the right of retention (Art. 262/1 of the OC). Article 747/2 of the OC. Article 757 of the OC. Article 758 of the OC. Both parts of the paper must also refer one to another. Official Gazette FLRJ, No. 104/46, with further amendments. Article 751 of the OC.

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574. The warehouse keeper must insure the goods only if this has been agreed upon with the depositor.1391 Unless the contract states otherwise, the goods must be insured against regular risks.1392 575. The warehouse keeper is liable for damages of the stored goods unless it is proven that they were caused (i) due to unavoidable or unpreventable circumstances, (ii) by the depositor, (ii) due to defects of or nature of the goods or (iv) due to poor packaging of the goods.1393 The duty of care is thus higher than in the case of regular bailment.1394 Unless the warehouse keeper has damaged the goods on purpose or in gross negligence, he or she is liable for damages only in the amount of the value of the stored goods.1395 The warehouse keeper must inform the depositor as soon as possible of (i) the defects of the goods, (ii) the nature of the goods and (iii) the poor packaging of the goods if any of these might cause damage to the goods.1396 If unpreventable changes start showing on the stored goods that could possibly lead to destruction of the goods, the warehouse keeper must sell the goods immediately and in the most appropriate manner.1397 He or she must also take all necessary measures to safeguard the depositor’s rights against the transporter handing over damaged or deficient goods.1398 576. The warehouse keeper must enable the examination of the stored goods and the taking of their samples.1399 He must hand over the stored goods to the depositor at any time he or she requests so, i.e., irrespective of the return date.1400 If the depositor does not collect the goods until the return date (or in one year in case no return date was agreed upon), the warehouse keeper may sell the goods at a public auction. The warehouse keeper must, however, inform the depositor of such intention and give him or her at least eight days’ time to collect the goods.1401 Upon collection of the goods, the person collecting them must examine the goods.1402 In case of any defects, he or she must immediately notify the warehouse keeper of them.1403 In case of hidden defects, the warehouse keeper must be informed of them in a reliable manner in seven days after the goods were collected.1404 Without proper notification, it will be deemed the goods were defectless upon collection.1405

1391. 1392. 1393. 1394. 1395. 1396. 1397. 1398. 1399. 1400. 1401. 1402. 1403. 1404. 1405.

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Article 749/1 of the OC. Article 749/2 of the OC. Article 784/1 of the OC. See above the rules on the bailee’s duty of care of the goods (Art. 731 of the OC). Article 750 of the OC. Article 748/2 of the OC. Article 748/3 of the OC. Article 748/4 of the OC. Article 752 of the OC. Article 754/1 of the OC. Article 754/2 of the OC. Article 755/1 of the OC. Article 755/2 of the OC. Article 755/3 of the OC. Article 755/2,3 of the OC.

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§8. BANK MONEY DEPOSIT CONTRACT, DEPOSIT OF SECURITIES CONTRACT, SAFE DEPOSIT BOX CONTRACT 577. According to Article 1061 of the OC, the Yugoslav OA of 1978 stopped applying on the day the Slovenian OC entered into force, i.e., on 1 January 2002. However, Article 1061 of the OC lists the chapters and corresponding articles of the Yugoslav OA that apply also after the entry into force of the OC. Rules on bank money deposit contract (Chapter XXXI of the Special Part of Yugoslav OA, Articles 1035–1046 Yugoslav OA), deposit of securities contract (Chapter XXXII of the Special Part of Yugoslav OA, Articles 1047–1051 Yugoslav OA) as well as safe deposit box contract (Chapter XXXIV of the Special Part of Yugoslav OA, Articles 1061–1064 Yugoslav OA)1406 are among the rules of the Yugoslav OA that still apply. The provisions of the Yugoslav OA on these banking contracts are rather short. In practice, the bank and its contractual parties regulate issues of their relationship in detailed written contracts. Specific banking and other payments services related legislation also applies to these contracts (e.g., the Payment Services, Services of Issuing Electronic Money and Payment Systems Act of 2018).1407

1406. Already in 1952, Štempihar describes a ‘safe deposit’ contract and analyses its characteristics. Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, p. 74. 1407. Official Gazette RS, No. 7/18, with further amendments.

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Chapter 13. Package Travel Contracts §1. GENERAL 578. Regulation of package travel in Slovenia is somewhat schizophrenic as it is regulated in detail in both the OC and the CPA.1408 Already the Yugoslav OA regulated three so-called ‘tourism contracts’: contract on the organization of package travel (Sl. pogodba o organiziranju potovanja, Chapter XXIV of the Special Part of Yugoslav OA, Articles 859–879), intermediary contract on package travel (Sl. posredniška pogodba o potovanju, Chapter XXV of the Special Part of Yugoslav OA, Articles 880–884) and allotment contract (Sl. alotmajska pogodba or pogodba o najetju gostinskih zmogljivosti, Chapter XXVI of the Special Part of Yugoslav OA, Articles 885–896). The Slovenian legislator copied almost verbatim the provisions of these three chapters of the Yugoslav OA into Chapters XXIII (Articles 883–903), XXIV (Articles 904–908) and XXV (Articles 909–920) of the Special Part of the OC. Only some articles on the contract on the organization of package travel (in particular those on the information to be given to the traveller)1409 were supplemented in order to align the regulation of package travel to that on the EU level1410 although at the time of drafting the OC, Slovenia had not yet been an EU Member State (but was about to enter the EU in a couple of years). 579. The initial text of the CPA enacted in 1998 laid down four articles on ‘Tourist services’ (Subchapter 6, Articles 57–60) that: (i) referred to special legislation as regards the regulation of the organization and sale of package travel and the activities of tourist guides; (ii) requested insurance of traveller; and (iii) regulated some of the aspects of a timeshare contract (written form of the contract and information to be included in it as well as the consumer’s cooling-off right), possibly taking into account the Timeshare Directive of 19941411 although at the time, Slovenia had not yet entered the EU. 580. In 2002, a new subchapter on ‘Timeshare of residential premises’ (Subchapter 7, Articles 59, 60, 60a–60e) was inserted into the CPA supplementing the existent deficient provisions of the CPA on timeshare.1412 In 2011, this subchapter was retitled to ‘Contracts on timeshare, long-term holiday product, resale and exchange’, the existent articles were amended, and two new articles were added 1408. Official Gazette RS, No. 20/98, with further amendments. 1409. See, for example, Arts 884/2 and 888 of the CO in comparison to Arts 860/2 and 864 of the Yugoslav OA. See also Art. 883/2 of the OC that was added anew. 1410. At the time, Council Directive 90/314/EEC of 13 Jun. 1990 on package travel, package holidays and package tours was in force. Ilešicˇ, Obligacijski zakonik z uvodnimi pojasnili, Uradni list RS, Ljubljana 2003, p. 63. 1411. Directive 94/47/EC of the European Parliament and the Council of 26 Oct. 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis, OJ L 280, 29.10.1994. 1412. Act Amending the Consumer Protection Act (CPA-A) (Sl. Zakon o spremembah Zakona o varstvu potrošnikov (ZVPot-A)), Official Gazette RS, No. 110/02. Existing Arts 59 and 60 were amended and new Arts 60a–60e were added.

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(Articles 60f and 60g)1413 as a result of implementation of the new Timeshare Directive of 2008.1414 In 2014, additional minor amendments were made to some of the existent provisions of Subchapter 7.1415 581. In 2007, i.e., three years after Slovenia entered the EU in 2004, new detailed provisions on contract on the organization of package travel were inserted into the CPA (retitled Subchapter 6,1416 Articles 57, 57a–57h)1417 in order to transpose the EU Package Travel Directive of 19901418 into Slovenian law. The provisions of the OC on contract on the organization of package travel remained intact although a lot of them regulated the same questions as the novel provisions of the CPA. It must be stressed, however, that Subchapter 6 of the CPA applied only to B2C package travel, whereas the provisions of the CO applied for all types of package travel irrespective of the traveller’s status. This dichotomy of regulation of package travel still exists in Slovenian law. In 2018, the CPA was amended1419 as a result of transposition of the new Package Travel Directive of 2015.1420 The existing provisions were amended, and new provisions were added.1421 Subchapter 6 was retitled to ‘Contracts on package travel and linked travel arrangements’ (Sl. Pogodbe o paketnem potovanju in povezani potovalni aranžmaji). In contrast to previous versions and as required by Article 2 of the Package Travel Directive of 2015, Subchapter 6 now applies not only to B2C relationships but also to other relationships save those explicitly excluded (i.e., (i) packages and linked travel arrangements covering a period of less than twenty-four hours unless overnight accommodation is included; (ii) packages offered, and linked travel arrangements facilitated, occasionally and on a not-for-profit basis and only to a limited group of travellers; (iii) packages and linked travel arrangements purchased on the basis of a general agreement for the arrangement of business travel between a trader and 1413. Act Amending the Consumer Protection Act (CPA-E) (Sl. Zakon o spremembah Zakona o varstvu potrošnikov (ZVPot-E)), Official Gazette RS, No. 78/2011. 1414. Directive 2008/122/EC of the European Parliament and of the Council of 14 Jan. 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (Text with EEA relevance), OJ L 33, 3.2.2009. The implementation deadline was 23 Feb. 2011. The act was published on 5 Nov. 2011 and started to apply on 20 Dec. 2011. 1415. Act Amending the Consumer Protection Act (CPA-F) (Sl. Zakon o spremembah Zakona o varstvu potrošnikov (ZVPot-F)), Official Gazette RS, No. 38/2014. 1416. Retitled from ‘Tourist services’ to ‘Contracts on tourist arrangements’. 1417. Act Amending the Consumer Protection Act (CPA-C) (Sl. Zakon o spremembah Zakona o varstvu potrošnikov (ZVPot-C)), Official Gazette RS, No. 126/2007. 1418. Council Directive 90/314/EEC of 13 Jun. 1990 on package travel, package holidays and package tours, OJ L 158, 23.6.1990. 1419. Act Amending the Consumer Protection Act (CPA-H) (Sl. Zakon o spremembah Zakona o varstvu potrošnikov (ZVPot-H)), Official Gazette RS, No. 31/2018. 1420. Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 Nov. 2015 on package travel and linked travel arrangements, amending Regulation (EC) No. 2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing Council Directive 90/314/EEC, OJ L 326, 11.12.2015. The implementation deadline was 1 Jan. 2018, date of application 1 Jun. 2018. Slovenia published the law on 4 May 2018, it entered into force on 19 May 2018 and started to apply on 1 Jul. 2018. 1421. Articles a57.f, b57.f, c57.f, 57.i, 57.j, 57.k, 57.l, 57.m, 58.a, 58.b, 58.c, 58.cˇ were inserted anew.

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another natural or legal person who is acting for purposes relating to his trade, business, craft or profession).1422 With regard to all legal relationships not covered by the provisions of the CPA, Chapter XXIII of the Special Part of the OC still applies. §2. TIMESHARE 582. Contracts on timeshare, long-term holiday product, resale and exchange are regulated in the CPA (Articles 59–60g). The regulation corresponds to that set out in the EU Timeshare Directive of 2008.1423 It contains provisions on the application of Subchapter 7,1424 on the form and language of these contracts,1425 on precontractual information to be provided to the consumer and the language and form thereof,1426 on the issuance of payment requests,1427 and on the consumer’s right to cooling-off.1428 §3. CONTRACTS ON PACKAGE TRAVEL AND LINKED TRAVEL ARRANGEMENTS 583. Provisions of the CPA on the contracts on package travel and linked travel arrangements (Articles 57–58cˇ) are transposing the EU Package Travel Directive of 2015.1429 The provisions of the directive (as well as case law of the CJEU interpreting them, such as the notorious Leitner case1430) must also be observed and applied, if required, in accordance with the basic principles of (in)direct effect of EU law as was the case before the Supreme Court of RS in a recent case Ribicˇ.1431 There, the Supreme Court, albeit rendering a decision taking into account the Directive as well as the Leitner case, struggled with understanding the effects of the directive. The

1422. See Art. 57a of the CPA. 1423. Directive 2008/122/EC of the European Parliament and of the Council of 14 Jan. 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (Text with EEA relevance), OJ L 33, 3.2.2009. The implementation deadline was 23 Feb. 2011. The act was published on 5 Nov. 2011 and started to apply on 20 Dec. 2011. 1424. Articles 59 and 60f of the CPA. 1425. Article 60 of the CPA. 1426. Articles 60a, 60b and 60g of the CPA. 1427. Article 60c of the CPA. 1428. Articles 60cˇ–60e of the CPA. 1429. Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 Nov. 2015 on package travel and linked travel arrangements, amending Regulation (EC) No. 2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing Council Directive 90/314/EEC, OJ L 326, 11.12.2015. The implementation deadline was 1 Jan. 2018, date of application 1 Jun. 2018. Slovenia published the law on 4 May 2018, it entered into force on 19 May 2018 and started to apply on 1 Jul. 2018. 1430. Judgment C-168/00 Simone Leitner v TUI Deutschland GmbH & Co. KG, ECLI:EU:C:2002:163. See Grilc, Zadeva Leitner v. TUI – korak k evropeizaciji nepremoženjske škode?, in: IV. dnevi civilnega prava: Portorož, 30. in 31. marec 2006, Inštitut za primerjalno pravo, Ljubljana 2006. 1431. See order of the Supreme Court of RS, No. II Ips 160/2013 of 23 Apr. 2015.

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final outcome of the case before the District Court of Maribor was that the consumer was awarded damages of EUR 60 per day of ‘lost vacation’ (Sl. ‘izgubljeni dopust’).1432 584. With regard to all other legal relationships arising out of a contract on the organization of package travel that are not covered by the provisions of the CPA, Chapter XXIII of the Special Part of the OC (Articles 883–903) regulating contract on the organization of package travel applies. Its provisions are similar, but not identical to those in Subchapter 6 of the CPA. They cover the following topics: the definition of contract on the organization of package travel;1433 confirmation of travel;1434 relationship between a contract for the organization of package travel and the confirmation of travel;1435 obligations of the travel organizer (standard of diligence, obligation to inform, obligation to safeguard personal data, liability for damages etc.);1436 obligations of the traveller (payment of the services, provision of relevant information to the organizer, liability for damages etc.);1437 and special rights and obligations of the parties, including provisions on the replacement of the traveller, on the increase and decrease of the agreed prices, on the right of the parties to terminate the contract, and on possibility and the consequences of the changes made to the travel programme.1438 §4. INTERMEDIARY CONTRACT ON PACKAGE TRAVEL 585. Intermediary contract on package travel (Sl. posredniška pogodba o potovanju) is regulated in the OC (Chapter XXIV of the Special Part of the OC, Articles 904–908). Apart from four articles defining regulating this type of contract and regulating the relationship arising out of it, provisions of Chapter XXIII of the Special Part of the OC on the contract on the organization of package travel apply mutatis mutandis.1439 586. Intermediary contract on package travel is defined as a contract concluded between an intermediary (Sl. posrednik) and a traveller (Sl. potnik) obliging the intermediary to enter into a contract on the organization of package travel or into one or more contracts on special services for travel or accommodation in the name and for the account of the traveller, whereas the traveller will pay the intermediary 1432. Judgment of the District Court of Maribor following the Supreme Court’s judgment, No. II P 578/ 2015 of 9 Sep. 2015. The initial judgments of the first instance court and the High Court of Maribor dismissed the action. The damages were calculated by the court by reference, inter alia, to Austrian Supreme Court cases. 1433. Article 883 of the OC. 1434. Articles 884 and 886 of the OC. 1435. Article 885 of the OC. 1436. Articles 887–894 of the OC. 1437. Articles 895–898 of the OC. 1438. Articles 899–903 of the OC. 1439. Article 908 of the OC.

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for his or her service.1440 Upon entering into the contract the intermediary has undertaken to do by concluding the intermediary contract on package travel, the intermediary must issue the traveller a confirmation of the package travel or services in question.1441 The intermediary must accord to timely instructions of the traveller if these are in line with the contract, with regular business activity of the intermediary, and with the interests of other travellers.1442 Without the instructions, the intermediary must act in the best interest of the traveller.1443 He or she must be diligent in choosing the traveller’s contractual party and has culpa in eligendo towards the traveller.1444 §5. ALLOTMENT CONTRACT 587. Allotment contract (Sl. alotmajska pogodba or pogodba o najetju gostinskih zmogljivosti) is regulated in Chapter XXV of the Special Part of the OC (Articles 909–920). It is concluded between an innkeeper (Sl. gostinec) and a tourist agency (Sl. turisticˇna agencija). The innkeeper is obliged to make available to the agency a certain amount of accommodation facilities in particular premises,1445 offer caterer services to the guests of the agency,1446 and pay the agency a certain fee,1447 whereas the agency is obliged to try to accommodate the allotments or inform the innkeeper in set due date that it is impossible for it to do that,1448 and to pay a price of the performed innkeeper’s services as far as it will have made use of them.1449 Unless the contract provides otherwise, it is deemed that the allotment services are available to the agency for a period of one year.1450 The agency has a special right to temporarily avoid the use of accommodation facilities without having 1440. Article 904 of the OC. 1441. Article 905 of the OC where obligatory contents of such confirmation are listed. Information on the intermediary is one of them. If this information is omitted, the intermediary is deemed to be organizer of the package travel. 1442. Article 906/1 of the OC. 1443. Article 906/2 of the OC. 1444. Article 907 of the OC. 1445. According to Art. 915/2 of the OC, the innkeeper may not make available to another agency his or her services that are already covered by an allotment contract. 1446. Article 916 of the OC prohibits the innkeeper to treat the agency’s guests different from his or her direct guests. According to Art. 914 of the OC, the agency must issue the guests a special written document for the use of the innkeeper’s services in accordance with the allotment contract (Art. 914 of the OC). 1447. Article 918 states that the fee is paid according to the turnover the innkeeper obtained as a result of the allotment contract. If the fee is not set out in the contract, the innkeeper has to pay the fee set out in the agency’s general conditions or, if these are not available, according to business customs. 1448. The tourist agency must inform the innkeeper about the extent of accommodation of his or her facilities and the period in which the innkeeper may make available his or her facilities to others (Art. 911 of the OC). The allotment contract may, however, lay down an obligation of the agency to accommodate the facilities – in this case the agency must pay the innkeeper for each unused accommodation per day (Art. 920 of the OC). 1449. Article 909/1 of the OC. Unless agreed otherwise, the price is paid to the innkeeper after he or she has performed the services (Art. 913 of the OC). The agency may not charge its guest higher prices than those charged by the innkeeper to the agency (Art. 912 of the OC). Article 917 of the

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to pay any damages to the innkeeper.1451 Allotment contract must be in writing.1452

OC prohibits the innkeeper from amending the prices set out in the allotment contract without informing the agency about that at least six months ahead (unless the amendment is due to amended exchange rates). New prices may be chargeable only after one month after the agency is informed about them and do not apply for those services for which a guest list has already been sent to the innkeeper nor for the reservations already conformed by the innkeeper. 1450. Article 909/2 of the OC. 1451. Article 919 of the OC. As a prerequisite for such avoidance, the agency must inform the innkeeper of such decision in the time set in the contract or in accordance with business customs. 1452. Article 910 of the OC.

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Chapter 14. Contract on Control of Goods and Services 588. Chapter XXII of the Special Part of the OC (Articles 871–882) lays down the rules on contract on control of goods and services (Sl. pogodba o kontroli blaga in storitev). 589. A controller (Sl. vršilec kontrole) undertakes to perform the agreed control of goods or/and services in an impartial and expert manner, and to issue a certificate thereon, whereas the control ordering party (Sl. narocˇnik kontrole) undertakes to provide an agreed payment for the control performed.1453 The control of goods may consist of determination of the identity, quality, quantity and other attributes of the goods.1454 The controller must perform the control to the extent and in the manner stipulated in the contract, or, in the absence of that, to the extent and in the manner suited to the circumstances of the case.1455 The control is deemed to have been performed when the certificate is issued.1456 Provisions requesting the controller to perform activities that could affect the impartiality of the control and the accuracy of the certificate of control are null and void.1457 590. The controller has a special safekeeping obligation. He or she must store the goods delivered to him or her for the agreed control to be performed, and protect them against mixing or replacing them with other goods.1458 Unless agreed otherwise, the controller must store samples delivered to him or her for at least six months.1459 The controller must notify in a timely manner the ordering party about all significant circumstances occurring during the control and safekeeping of the goods, in particular about the necessary and beneficial costs that he or she covered for the ordering party during that time.1460 He or she has a right to the reimbursement of such costs.1461 The controller has also the right to be paid for his or services of control and safekeeping as was agreed or is, in the absence of an agreement, a customary payment for such services.1462 To secure the payment and the reimbursement of the costs, the controller has a statutory lien on the goods delivered to him or her for control.1463

1453. 1454. 1455. 1456. 1457. 1458. 1459. 1460. 1461. 1462. 1463.

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Article Article Article Article Article Article Article Article Article Article Article

871/1 of the OC. 871/2 of the OC. 872 of the OC. 873/2 of the OC. 873/1 of the OC. 874/1 of the OC. 874/2 of the OC. 875 of the OC. 876/2 of the OC. 876/1 of the OC. 877 of the OC.

Part II, Ch. 14, Contract on Control of Goods and Services

591–594

591. The controller may entrust the control of the goods to another person, unless the ordering party expressly prohibited the controller to do that.1464 In this case, the controller is liable for the work of the other controller.1465 592. Following an express order by the ordering party, the controller is entitled to perform individual legal acts in the name of and for the account of the ordering party in addition to the agreed control of goods or services.1466 In this case, he or she is entitled to a special payment.1467 593. He or she is entitled to special payment also if the controller guarantees that the attributes of the controlled goods will not change over an agreed period.1468 594. The ordering party may withdraw from the contract at any time until the control is finalized, but he or she is in this case obliged to pay the controller a proportionate part of the payment and the necessary and beneficial costs the controller has incurred, and to reimburse the damage.

1464. 1465. 1466. 1467. 1468.

Article Article Article Article Article

878/1 of the OC. 878/2 of the OC. 879/1 of the OC. 879/2 of the OC. 80 of the OC.

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Chapter 15. Contract of Carriage 595. The regulatory regime of contract of carriage (Sl. prevozna pogodba) in the OC (Chapter XIII of the Special Part of the OC, Articles 666–703) entails three separate parts. Firstly, general provisions valid for all contracts of carriage (bar those excluded because of existing separate regulation in other special acts,1469 e.g., carriage by rail, carriage by road, carriage by air, carriage by sea, carriage by inland waterways etc.) are set forth, followed by the provisions governing the carriage of freight (goods) and the provisions governing the carriage of passengers. As Slovenian transport law is analysed in detail in a separate IEL monograph,1470 only the basic general provisions of the OC are presented here whereas regarding the special regulation of the OC of the carriage of freight and the carriage of passengers, and in particular regarding the detailed rules set forth in special legislation on transport (national, European and international), the reader is best referred to that part of IEL. 596. Through a contract of carriage a carrier (Sl. prevoznik) undertakes to transport a person or a thing to a specific place, whereas the passenger (Sl. potnik) or the sender (Sl. pošiljatelj) undertakes to make a specific payment thereto.1471 As for its legal nature, the contract od carriage is derived from a contract of work, whereby the object of carrier’s performance is an obligation of result. The carrier’s main obligation is to perform the transport (carriage) and to protect passengers or cargo during such transport. 597. The OC does not prescribe any formality conditions as for the conclusion of the carriage contract. The essential components of the carriage contract which have to be included and defined in all contracts are (i) the subject of transport, (ii) the transport route and (iii) the lucrative purpose of the transport itself.1472 598. The OC separately addresses the position and rights and obligations of a so-called route carrier (Sl. liijski prevoznik, i.e., one that performs transport on a specific route). Such carriers are obliged to regularly and properly maintain the published route. They also must accept for transport any person or any goods that fulfil the conditions stipulated in the carrier’s published general terms and conditions.1473

1469. Article 670 of the OC. 1470. Kovacˇ, Slovenia, in: van Hooydonk, Blanpain, Hendrickx (eds), IEL Transport Law, Kluwer Law International BV, Netherlands 2017. 1471. Article 666 of the OC. 1472. Ibid. 1473. Article 667 of the OC.

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Chapter 16. Shipping Contract 599. Shipping contracts play a highly important role in logistics processes. As one of the parties of the shipping contract, freight forwarders and the tasks they perform form an intrinsic part of the logistics chain. A shipping contract (Sl. špedicijska pogodba) is regulated in Chapter XXI of the Special Part of the OC (Articles 851–870). Upon concluding a shipping contract with the mandator (Sl. narocˇnik or narocˇitelj), the freight forwarder (or a forwarding agent, Sl. špediter) is obligated to conclude a contract of carriage and other potentially necessary contracts for the transport of a specific thing (freight).1474 The forwarder concludes the said contracts in his or her own name but for the account of the mandator. The forwarder also commits to perform other customary transactions and acts, while the mandator must make a specific payment for all the actions undertaken by the forwarder.1475 The OC extends the application of legal regime of commission and commercial agency contract for those relations between the mandator and freight forwarding agent not regulated by the title on the shipping contract.1476 600. Freight forwarder’s duties consist mainly of a duty to care for the mandator’s interests. Generally, the freight forwarder is to forewarn about any deficiencies in the mandator’s brief (mandate), in particular to those that could expose the mandatory to higher costs or damage.1477 The forwarder must act as dictated by the mandator’s interests and with the diligence of a good businessperson, inform the mandator without delay of any damage or any other significant changes to the freight, and take all measures necessary to protecting the mandator’s rights.1478 This also includes drawing mandator’s attention to any deficiencies regarding packing of the goods for transport.1479 601. An important part of the shipping contract regulation in the OC are the rules regarding the mandator’s instructions. The forwarder is to adhere to the instructions regarding the route, the means and method of transport and other instructions specified by the mandator.1480 In cases where a forwarder is unable to carry out the specified instructions, new instructions are to be demanded from the mandatory, time permitting. If there is no time, or new instructions are impossible to attain, the freight forwarder must act as the mandator’s interests dictate.1481 If in its mandate, the mandator did not specify neither the route, nor the means and the method of transport, the forwarder shall specify them in line with the mandator’s interests.1482 Whether the forwarder deviates from the obtained instructions, he or 1474. 1475. 1476. 1477. 1478. 1479. 1480. 1481. 1482.

Article Article Article Article Article Article Article Article Article

851 of the OC. 851 of the OC. 853 of the OC. 854 of the OC. 856 of the OC. 855 of the OC. 857/1 of the OC. 857/2 of the OC. 857/4 of the OC.

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she is also liable for any damage incurred owing to force majeure, unless it can be shown that the damage would have occurred even if the instructions provided had been adhered to.1483 602. As the forwarder is to conclude a contract of carriage and other potentially necessary contracts for the transport of specific goods, he or she is liable only for the choice of such contractual partners (culpa in eligendo).1484 Thus, the forwarder’s liability does not normally extend to cover the performance of the chosen contractual partners, save if so expressly stipulated by the shipping contract. 1485 603. Whereby the freight forwarder entrusts the fulfilling of the mandate to a different freight forwarder when he or she should have done the work him or herself (Sl. podšpedicija), he or she shall be liable for the other person’s performance.1486 In situations, however, where the forwarder is (expressly or tacitly) authorized to entrust the fulfilment of the mandate to a different forwarder or if such entrustment is obviously in the mandator’s interest, the forwarder shall only be liable for the choice of the other forwarder, lest liability for his or her performance was accepted through the shipping contract.1487 604. A forwarder can perform the transport or a part thereof in person, lest the parties to a shipping contract have agreed otherwise. In such cases, the forwarder has the rights and obligations of a carrier and is entitled to an appropriate payment for the transport.1488 605. Mandator’s primary duty is payment for the forwarder’s performance. The amount of the payment is set forth by the contract. In the absence of such a contractual provision, the mandator is to pay an amount in accordance with the forwarder’s tariff or other legal act. If no such tariff or act exists, the amount is to be determined by the court.1489 The forwarder may request the payment once his or her obligations from the shipping contract have been completed.1490 606. The mandator is also obliged to pay the costs incurred by the forwarder while fulfilling the mandate.1491 The mandator must also advance on the costs of dispatch if so requested by the forwarder.1492 607. The code allows for the forwarder’s claim to be charged to the recipient of the goods. If the recipient refuses to make the payment the forwarder maintains the 1483. 1484. 1485. 1486. 1487. 1488. 1489. 1490. 1491. 1492.

248

Article Article Ibid. Article Article Article Article Article Article Ibid.

857/5 of the OC. 858/1 of the OC. 858/2 of the OC. 858/3 of the OC. 860 of the OC. 863 of the OC. 864 of the OC. 865 of the OC.

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right to request payment from the mandator.1493 The mandator is responsible to notify the forwarder of any attributes of the goods that could cause damage or lead to endangerment of people or property. The duty to notify extends to the cases of consignment containing valuables, securities or other expensive things.1494 608. The CO regulates two special types of freight forwarding: the collective freight forwarding (Sl. zbirna špedicija)1495 and freight forwarding with fixed payment (Sl. fiksna špedicija or špedicija s fiksnim placˇilom).1496 609. Under the shipping contract, the forwarder has, to secure his or her claims arising out of the contract, a statutory (ex lege) lien on the goods delivered to him or her for freight forwarding.1497 If another freight forwarder is involved in the freight forwarding, he or she is obliged to attend to the settlement of the claims and the exercise of the liens of previous freight forwarders.1498 If one of the other freight forwarders settles the freight forwarder’s claims against the mandator, the claims and the liens are by law transferred thereto.1499 This rule applies also if the other freight forwarder settles the carrier’s claim.1500

1493. 1494. 1495. 1496. 1497. 1498. 1499. 1500.

Article Ibid. Article Article Article Article Article Article

866 of the OC. 869 of the OC. 868 of the OC. 870/1 of the OC. 870/2 of the OC. 870/3 of the OC. 870/4 of the OC.

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Chapter 17. Banking Services Contracts §1. BANK GUARANTEE 610. Bank guarantee is a type of personal security. Securities are legal instruments for the protection of the creditor against the risk of the debtor’s failure to fulfil his obligations arising out of the contract with the creditor. They are divided into two groups: securities in rem (collaterals) giving the creditor the right to repayment from the value of the pledged or mortgaged asset, and personal securities where the security provider undertakes to fulfil the obligation in case of debtor’s nonperformance.1501 Banks and insurance companies typically offer personal securities (bank guarantee, surety bond, standby letter of credit)1502 against payment of a commission by the client, who is usually the debtor of the secured obligation.1503 611. The general rules on a bank guarantee (Sl. bancˇna garancija) are laid down in the still valid Chapter XXXVIII of the Special Part of the Yugoslav OA (Articles 1083–1087)1504 whereas specific types of bank guarantees, be it mandatory or not, are regulated in special legislation, such as the Protection of Buyers of Apartments and Single Occupancy Buildings Act.1505 Slovenia has not ratified the 1995 UN Convention on independent bank guarantees and standby letters of credit.1506 612. The Yugoslav OA defines bank guarantee as a commitment that is to be issued in written form,1507 by which the issuing bank assumes the duty of settling the guarantee recipient’s (beneficiary) claim upon a third person’s default, provided all the conditions and terms set forth in the guarantee are met.1508 Slovenian legal system also recognizes and regulates a so-called super guarantee, whereby a guarantee issued by one bank is confirmed by another bank, thus enabling the beneficiary to submit his or her claims stemming from the guarantee either to the bank 1501. Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, Knjiga 4, GV Založba, Ljubljana 2004, p. 1027; Jus, Bancˇne garancije in sorodni instrumenti financiranja trgovine, Uradni list Republike Slovenije, Ljubljana 2010, p. 33. 1502. For further details on these instruments, see Vlahek, Damjan, Novi obliki zavarovanja obveznosti v našem prostoru: nebancˇna garancija in poroštvo na prvi poziv, Podjetje in delo, 41, 8, Ljubljana 2015. 1503. For further details on various types of personal securities under Slovenian law and practice, see Damjan, Vlahek, The protection of consumers as personal security providers under the DCFR and EU consumer law, in: Viglianisi Ferraro, Jagielska, Selucká (eds), The influence of the European legislation on national legal systems in the field of consumer protection, Wolters Kluwer, CEDAM, Assago, Padova 2018. 1504. See Art. 1061/2 of the OC. 1505. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS, No. 18/04. See Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004, pp. 59, 74. 1506. New York, 1995, entered into force on 1 Jan. 2000. See http://www.uncitral.org/uncitral/en/ uncitral_texts/payments/1995Convention_guarantees_credit.html (accessed on 16 Aug. 2018). 1507. Article 1083/2 of the OA. Legal theory stresses that such form requirement is set out as forma ad valorem, not merely as forma ad probationem. Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 1250. 1508. Article 1083/1 of the OA.

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issuing the guarantee or to the bank confirming it.1509 A bank may issue a bank guarantee with the clauses ‘without objection’ or ‘at first call’ or containing other terms to the same meaning. In such cases, a guarantee ‘without objection’ will be deemed to be issued and the issuing bank will – upon the beneficiary’s request to pay – not be able to raise objections relating to the transaction under which the guarantee is issued and pertaining to the debtor.1510 The debtor is to recompense the bank for any and all amounts paid under a guarantee ‘without objection’, while the beneficiary is obliged to repay the debtor any sum he or she has received but has not been entitled to due to debtor’s justified objections.1511 The courts have supplemented these rather short and deficient provisions, in particular with regard to the bank’s objection of abuse of the bank guarantee.1512 613. A mandatory bank guarantee for remedying any hidden defects (Sl. bancˇna garancija za odpravo skritih napak) is required to be set up by the seller under the Protection of Buyers of Apartments and Single Occupancy Buildings Act.1513 The bank guarantee must be irrevocable, at first call and without objections.1514 It must be set in the amount of 5% of the purchase price1515 and must be valid for at least twenty-six months after the permit for using the building (Sl. uporabno dovoljenje) has been obtained.1516 The bank guarantee must be handed over to the buyer at the moment of handing over of the sold immovable.1517 In cases of sale of apartments, the bank guarantee may, under certain conditions, be issued and handed over to the notary instead.1518 614. A further bank guarantee, i.e. bank guarantee for the return of the price paid (Sl. bancˇna garancija za vracˇilo kupnine), may be set by the seller under the Protection of Buyers of Apartments and Single Occupancy Buildings Act.1519 In contrast to bank guarantee for remedying hidden defects, this type of bank guarantee is non-mandatory. If the seller decides to set it, it must be irrevocable, at first call and without objections. It must be set for the amount equal to the amount of the price already paid, and must be valid for the time period set in the contract for handing over the immovable plus minimum extra six months. 1509. Article 1085 of the OA. For further details, see Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, pp. 1252–1253. 1510. Article 1087/1 of the OA. 1511. Article 1087/3 of the OA. For further details, see Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, pp. 1245–1247, 1256–1259. 1512. See Vlahek, Damjan, Novi obliki zavarovanja obveznosti v našem prostoru: nebancˇna garancija in poroštvo na prvi poziv, Podjetje in delo, 41, 8, Ljubljana 2015, pp. 1473; Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 1257; Kranjc, Preprecˇitev zlorab ob unovcˇitvi neodvisnih bancˇnih garancij, Podjetje in delo, No. 1/2003; Sekolec, Placˇaj takoj, ugovarjaj kasneje, Pravna praksa, No. 3/1997. 1513. Sl. Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb (ZVKSES), Official Gazette RS, No. 18/04. 1514. Article 26/1 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 1515. Article 26/2 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 1516. Article 26/3 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 1517. Article 26/1 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 1518. Article 26/4 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act. 1519. Article 37 of the Protection of Buyers of Apartments and Single Occupancy Buildings Act.

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615. Bank guarantees are characteristic for public procurement proceedings. A governmental Decree on financial securities in public procurement1520 was issued in 2016 on the basis of the Public Procurement Act.1521 It lists a bank guarantee as one of the mechanisms for securing the tenderer’s or the provider’s: (i) seriousness of the tender, (ii) performance of contractual obligations, (iii) remedying of the defects of the object of the tender. It sets out detailed rules on when the securities are mandatory or not, what circumstances must the public authority take into account upon deciding for an appropriate security, what may their amounts be and how long must they be valid, etc. §2. LETTER OF CREDIT 616. Rules on the letter of credit as a banking transaction are set out in Chapter XXXVII of the Special Part of the Yugoslav OA (Articles 1072–1082) that still applies in accordance with Article 1061/2 of the OC. 617. According to the Yugoslav OA, by accepting the letter of credit, a bank (Sl. banka) obliges itself to pay to the letter of credit beneficiary (Sl. upravicˇenec iz akreditiva) a certain monetary sum from the letter of credit under the proviso that, until a set deadline, the prerequisites set out in the letter of credit order will be met.1522A written form of the letter of credit is required.1523 A letter of credit is independent from the sales or other contract leading to the opening of the letter of credit.1524 If the bank is to pay the beneficiary under the condition of submission of certain documents, the letter of credit is called documentary letter of credit (Sl. dokumentarni akreditiv).1525 Unless stipulated otherwise, the documentary letter of credit is revocable even if it is open for a limited period of time.1526 Upon receipt of the documents, the bank must check whether the documents are in accordance with the requirements of the order, and inform the letter of credit orderer of the fact that it has received them, and warn him or her of any irregularities and imperfections.1527 The bank is not liable for any inconsistencies of the documents if these seemed consistent with the letter of credit order. It is also not liable for the goods that are an object of the letter of credit.1528 Documentary letter of credit is transferrable or dividable only if the bank that had opened it is authorized by the beneficiary to make payments in whole or in part to one or more third persons.1529 In principle, the bank may proceed with such transferor only once.1530 1520. 1521. 1522. 1523. 1524. 1525. 1526. 1527. 1528. 1529. 1530.

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Official Gazette RS, No. 27/16. Official Gazette RS, No. 91/15, with further amendments. See Art. 93 of the Act. Article 1072/1 of the OA. Article 1072/2 of the OA. Article 1074 of the OA. Article 1075 of the OA. Articles 1077–1079 of the OA. Article 1080 of the OA. Article 1081 of the OA. Article 1082/1 of the OA. Article 1082/2 of the OA.

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§3. PAYMENT SERVICE CONTRACT 618. The Yugoslav OA also regulated the bank current account contract (Sl. pogodba o bancˇnem tekocˇem racˇunu). According to Article 1061/2 of the OC, the rules of the Yugoslav OA on the bank current account remained valid also after the enforcement of the Yugoslav OA on 1 January 2002. However, with the promulgation of the Payment Transactions Act in April 2002,1531 the further use of the Yugoslav OA regime on bank current accounts was terminated.1532 The currently valid Payment Services, Services of Issuing Electronic Money and Payment Systems Act1533 sets forth the regulatory framework for several payment services (payment service contract), including, inter alia, opening of a payment account.1534 §4. BANK MONEY DEPOSIT CONTRACT, DEPOSIT OF SECURITIES CONTRACT, SAFE DEPOSIT BOX CONTRACT 619. According to Article 1061 of the OC, the Yugoslav OA of 1978 stopped applying on the day the Slovenian OC entered into force, i.e., on 1 January 2002. However, Article 1061/2 of the OC lists the chapters and corresponding articles of the Yugoslav OA that apply also after the entry into force of the OC. Rules on bank money deposit contract (Chapter XXXI of the Special Part of Yugoslav OA, Articles 1035–1046 Yugoslav OA), deposit of securities contract (Chapter XXXII of the Special Part of Yugoslav OA, Articles 1047–1051 Yugoslav OA) as well as safe deposit box contract (Chapter XXXIV of the Special Part of Yugoslav OA, Articles 1061–1064 Yugoslav OA) are among the rules of the Yugoslav OA that still apply. The provisions of the Yugoslav OA on these banking contracts are rather short. In practice, the bank and its contractual parties regulate issues of their relationship in detailed written contracts. Specific banking and other payments services related legislation also applies to these contracts (e.g., the Payment Services, Services of Issuing Electronic Money and Payment Systems Act of 2018).1535

1531. Sl. Zakon o placˇilnem prometu, Official Gazette RS, No. 30/02. 1532. Article 86/3 of the Payment Transactions Act. 1533. Sl. Zakon o placˇilnih storitvah, storitvah izdajanja elektronskega denarja in placˇilnih sistemih, Official Gazette RS, No. 7/18. 1534. Article 87 of the Payment Services, Services of Issuing Electronic Money and Payment Systems Act. 1535. Official Gazette RS, No. 7/18, with further amendments.

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Chapter 18. Licence Contract 620. Licence contract (Sl. licencˇna pogodba) is regulated in Chapter XIV of the Special Part of the OC (Articles 704–728). It is a synallagmatic, onerous and formal contract through which the licence provider (licensor, Sl. dajalec licence) undertakes to wholly or partly cede to the licence acquirer (licensee, Sl. prejemnik licence) the right to exploit a patented invention, technical know-how or experience, or a trademark, pattern or model, and the licence acquirer undertakes to make a specific payment for such.1536 It is a permanent contractual relationship, concluded for a fixed or an indefinite period.1537 As for its legal nature, theorists posit that the license agreement is a mixed or a sui generis contract, as it mainly consists of the elements of lease and rental agreements, and in certain cases also the elements of the sale of goods contract.1538 621. Being a complex legal transaction, a typical licensing agreement may contain many provisions.1539 The OC thus sets out a written form requirement.1540 It does not, however, provide for specific sanctions in cases where the form requirement has not been met. The commentators1541 take the view that unwritten license agreement is null and void in accordance with the general rules of the OC on form.1542 The written form is also important as a condition for entry in the register. Registration of a license is regulated by the Industrial Property Act.1543 If the licence agreement is not concluded in written form, it cannot be entered into the register and lacks the erga omnes effect.1544 622. The decision regarding duration of the contractual relationship is generally left to the contracting parties. The OC, however, contains a provision on absolute limitation of duration: a licence agreement for exploiting a patented invention or a 1536. Article 704 of the OC. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 61. 1537. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 62. 1538. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 62, citing: Strumpf, Gross, Der Lizenzvertrag, Verlag Recht und Wirtschaft GmbH, Heidelberg 1998, p. 40; Schluep in: Honsell, Vogt, Wiegand (eds), Kommentar zum schweizerischen Privatrecht, Helbing & Lichtenhahn, Basel 1992, p. 925; Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1631. 1539. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 65. 1540. Article 705 of the OC. 1541. Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1633; Vizner, Komentar Zakona o obveznim (obligacionim) odnosima, Zagreb 1978, p. 2216; Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, pp. 65–66. 1542. Article 55 of the OC. 1543. Article 107/2 of Industrial Property Act (Sl. Zakon o industrijski lastnini (ZIL-1), Official Gazette RS, No. 45/01, with further amendments). 1544. Vizner, Komentar Zakona o obveznim (obligacionim) odnosima, Zagreb 1978, p. 2216; Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, pp. 65–66.

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design may not be concluded for a period longer than the duration of the legal protection of such rights.1545 The OC is silent as regards the duration of licence agreements on trademarks, as there is no absolute (finite) time limitation on the duration of the trademark itself set out in the Industrial Property Act. 623. The licence acquirer shall only acquire the exclusive right to exploit the object of the licence if such exclusivity (Sl. izkljucˇna licenca) is expressly agreed.1546 The exclusive right to exploit the object of the licence agreement for the period and the area for which it was granted excludes not only any further transfer (exclusive or non-exclusive) of the license but also the exploitation of the object of the license by the licensor himself.1547 The exclusive licensee’s right to exploit the object of the licence in the space and at the time for which the exclusive license was granted is also effective against third parties.1548 It is precisely because of its exclusionary character that the theory is increasingly of the opinion that the exclusive license is a (quasi) property right.1549 624. Despite the fact that the licensor grants an exclusive license to the licence exclusively for the exploitation of the subject of the licence, he or she retains the right to exploit the object of the license him or herself beyond the spatial or temporal limits within which the exclusive license was granted.1550 625. A non-exclusive licence (Sl. neizkljucˇna licenca or prosta licenca) is an agreement whereby the licensor can exploit the license object him or herself, and, in addition, grant the license for the same period and the same territory to further licensees.1551 Most often, the licensor will grant up to four or at most five nonexclusive licenses for the same territory and the same period, although extreme cases are reported when fifty licenses were given for the exploitation of the same object for the same duration in a given area.1552 626. The purpose of an exclusive license agreement is to grant exclusive use of the subject of the license. A combination of a non-exclusive and exclusive license

1545. Article 706 of the OC. 1546. Article 707/1 of the OC. 1547. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 67. 1548. In such cases, the licensee has a cease and desist claim against a third party, in spatial and temporal limits of the granted exclusive licence. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 67. 1549. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 67. 1550. Articles 707/2 and 712 of the OC. 1551. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 68. 1552. Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1635; Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, pp. 68–69.

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is possible (a so-called mixed licence).1553 In such cases, exclusive use of the object of the agreement is granted for a particular geographic area,1554 while for the other areas a non-exclusive licence is granted. If the licence agreement does not explicitly state the type of licence involved, a non-exclusive licence shall be deemed to have been agreed.1555 627. The licensor must do everything to enable the licensee to exercise the right arising from the agreement and must therefore deliver the subject of the licensing agreement to the licensee within the time limit specified in the agreement.1556 In the event that the contracting parties have not set a deadline, the licensor must deliver the subject of the license to the acquirer in the shortest period possible.1557 In addition to the object of the agreement itself, in order to achieve the purpose for which the acquirer has concluded a license agreement, the licensor must also hand over all the technical documentation necessary for the practical use of the license object. 628. Due to the nature of the licensing agreement, which in most cases governs complex production processes, in addition to the delivery of the technical documentation,1558 the licensor is required to provide the licence acquirer with all the instructions and reports required for the successful exploitation of the subject matter of the licence.1559 629. The provision on licensor’s liability for technical characteristics1560 aims to ensure the achievement of the fundamental purpose of the license agreement – the normal exploitation of the subject of the license by the licensee. The licensor shall be liable to the licensee for the technical characteristics of the subject matter of the agreement. These are the properties that were (i) explicitly agreed in the contract, (ii) only mentioned therein1561 or (iii) derive from the nature of the subject matter of the license.1562 The provision imposes on the licensor the responsibility for technical usability and feasibility of the licence subject matter. It is questionable whether the scope of the responsibility also covers the prospective financial viability of the licence.1563 630. In order to achieve the purpose of the license agreement (exploiting the subject of the license), it is essential that the right is unencumbered, unrestricted to 1553. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 69. 1554. Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1635. 1555. Article 707/3 of the OC. 1556. Article 708 of the OC. 1557. Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1636. 1558. Defined in Art. 708 of the OC. 1559. Article 709 of the OC. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 71. 1560. Article 710 of the OC. 1561. Blagojevic´, Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983, p. 1637. 1562. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984–1986, p. 2020. 1563. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 73.

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the benefit of third parties, and that the licensor is the bearer of this right. The licensor is thus liable for legal defects, i.e., for breaches of warranty of title.1564 In accordance with the purpose and nature of the exclusive license agreement, he or she is also liable for the exclusivity of the transfer.1565 The licensor must also protect the right transferred to the acquirer against any third person.1566 631. The acquirer may exploit the subject of the license only in the manner, to the extent and within the limits agreed with the license agreement.1567 Unless stipulated otherwise by law or by contract, the licence acquirer is not entitled to exploit subsequent improvements of the subject of the licence.1568 If through a production licence a licence to use a trademark was also transferred to the licensee, he or she may place on the market goods with such a trademark only if they are of the same quality as the goods produced by the licence provider.1569 The licensee shall be obliged to mark the goods with the labelling ‘on production under licence’.1570 If the subject of the licence is an unpatented invention or confidential technical knowhow or experience, he or she must safeguard its confidentiality.1571 632. Sublicence (Sl. podlicenca) is allowed unless the contract explicitly states that the licensee may not provide a sublicence to another person or that he or she may not provide a sublicence without the permission of the provider.1572 The licence provider may terminate the licence agreement without notice if a sublicence was provided without the licence provider’s permission when such was required by law or by the contract.1573 No separate legal relationship is established through a sublicence between the sublicence acquirer and the licence provider, not even when the licence provider permitted the sublicence. However, in order to obtain payments from the licence, the licence provider may directly request the sublicensee to pay him or her the sums owed from the sublicence to the sublicence provider.1574 633. The licensee must pay the licence provider the agreed payment for the exploitation of the license at the time and in the manner stipulated in the contract.1575 Payment can be agreed in a single amount or over a period of time, in the form of rate-based payments.1576 Payment according to the volume of manufactured products can also be agreed: the royalties are paid for each manufactured 1564. 1565. 1566. 1567. 1568. 1569. 1570. 1571. 1572. 1573. 1574. 1575. 1576.

Article 711/1 of the OC. Article 711/2 of the OC. Article 711/3 of the OC. Article 713 of the OC. Article 714 of the OC. Article 716 of the OC. A contractual provision to the contrary is null and void. Article 717 of the OC. Article 715 of the OC. Article 721 of the OC. When the licence provider’s permission is required for a sublicence, the provider may only deny permission on serious grounds (Art. 722 of the OC). Article 722 of the OC. Article 724 of the OC. Article 718 of the OC. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984–1986, p. 2030.

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product separately.1577 Customers may also agree on payments based on turnover.1578 If the agreed payment becomes clearly disproportionate to the revenues gained by the licence acquirer by exploiting the subject of the licence, a concerned party may request a change therein.1579 634. Part of legal theory allows also for a possibility of a free license (gratis license) if this is explicitly set forth in the agreement.1580 If there is no such clause in the license agreement and the provision on the payment amount is also not present, the price can be determined in the form of a usual price or a reasonable price, in case the usual price cannot be determined.1581 635. A license agreement concluded for a limited time period ceases to exist by the mere expiration of the time for which it was concluded.1582 The dies interpellat pro homine rule1583 therefore also applies to the termination of the license agreement. In some cases, however, a license agreement may be terminated before the expiration of the deadline agreed by the parties.1584 As is the case with the lease contract, here, too, a tacit prolongation of the contract concluded for a limited period of time is set out. If the licensee has continued to make use of the licence after the expiry of the set period, and the licensor has not opposed to that, it is deemed that a new licence contract for an indefinite lease period has been concluded, while all other terms of the contract stay the same as in the initial lease contract.1585 Although according to the OC, a new licence contract is deemed concluded in such a case (not merely the initial contract prolonged), it is being called (also by the OC) tacit prolongation of licence (Sl. molcˇe obnovljena licenca). 636. If the licence contract has been concluded for an indefinite period, either party may terminate it by giving notice to the other party.1586 Termination of an indefinite licence contract is available to the parties irrespective of any breaches of obligations by the other party and enables dissolvement of permanent legal relationships that would otherwise last forever. If in such cases the period of notice is not determined by the contract, the period of notice is six months.1587 Additionally, termination may not take place in the first year of the validity of the licence.1588 1577. Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 82. 1578. Article 719 of the OC. 1579. Article 720 of the OC. 1580. See Podobnik in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 84. 1581. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984–1986, p. 2030. 1582. Article 725 of the OC. 1583. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984–1986, p. 2037. 1584. See, e.g., Art. 706 of the OC. 1585. Article 726 of the OC. Security provided by third persons for the initial licence shall, however, expire at the end of the period for which it was concluded. 1586. Article 727/1 of the OC. 1587. Ibid. 1588. Article 727/2 of the OC.

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637. Death of the licensor or the licensee does not have influence on licence. In this case, the deceased’s heirs become a party to the contract. If the licence acquirer undergoes bankruptcy or liquidation, the licence provider may withdraw from the contract.1589

1589. Article 728 of the OC.

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Chapter 19. Contract of Mandate 638. The contract on mandate (Sl. pogodba o narocˇilu or mandatna pogodba or mandat)1590 is regulated in Chapter XVII of the Special Part of the OC (Articles 766–787) that is identical to the chapter on mandate that was set out in the Yugoslav OA. These are the general rules on the mandate that apply also to all specific types of mandate contracts regulated in other chapters of the OC, such as the commission agency contract, the commercial agency contract etc., with regard to all questions not covered by the rules on these specific contracts. The OC does not set out any form requirements for the contract of mandate. 639. Through a contract of mandate, the mandate recipient (Sl. prevzemnik narocˇila or mandatar) undertakes to perform and acquires the right to perform specific transactions for the mandator (Sl. narocˇitelj or mandant) in the name of the mandator in in this or her own name. In contrast to the contractor within the contract for work, the mandate recipient has to show mere duty of best effort to materialize the interest of the mandator (Sl. obveznost prizadevanja) and is not liable for achieving the result (so-called duty of result, Sl. obveznost rezultata). 640. The mandate recipient is not obliged to accept the mandate. However, in some cases, i.e., if this is the recipient’s business activity or if he or she publicly offers such services, the recipient must do so unless he or she notifies without delay the mandator-to-be of his or her refusal to accept the mandate.1591 If more persons undertake the mandate, they are jointly and severally liable for the performance.1592 The same rule applies if there are more persons on the side of the mandator.1593 641. The mandate recipient must perform the mandated services according to the mandator’s instructions received as a prudent person (if he or she does not act within his or her business activity) or a prudent businessperson (i.e., if he or she acts within his or her business activity).1594 He or she must always attend to the mandator’s interests.1595 If, however, the mandate recipient is of the opinion that performing the mandate according to the mandator’s instructions would harm the mandator’s interests, he or she must warn the mandator of this threat and request new instructions.1596 If the mandator did not provide the recipient with specific instructions, the recipient’s diligence depends on the type of the mandate contract in terms of whether it is gratuitous or not.1597 If it is concluded for consideration, 1590. Štempihar offers also the following expressions: poslovodstvena pogodba, poverilna pogodba, narocˇilo, nalog. Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952, p. 40. 1591. Article 767 of the OC. If the recipient fails to notify the mandator as required, he or she is liable for any loss the mandator occurs because of that. 1592. Article 774 of the OC. 1593. Article 781 of the OC. 1594. Article 768/1 of the OC. 1595. Ibid. 1596. Article 768/2 of the OC. 1597. Article 768/3 of the OC.

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the recipient must act with the diligence of a prudent person or a prudent businessperson, taking into consideration the mandator’s interests.1598 If it is gratuitous, he or she must act as in his or her own affairs (diligentia quam in suis).1599 The mandate recipient may only deviate from the mandate with the mandator’s consent.1600 If there is no time or opportunity to ask for the consent, the recipient may, after assessing all the circumstances of the case, deviate from the mandate without the consent if he or she has grounds to believe that that doing so is the best interest of the mandator.1601 If there are no grounds for deviation, the mandate recipient is deemed to be gestor under the rules of negotiorum gestio1602 unless the mandator later approves his or her actions.1603 642. The mandate recipient may in principle not delegate the mandate to another person (submandate, Sl. podmandat) and must perform the services personally (or through persons employed by him or her).1604 Delegation of mandate is allowed only if the mandator agrees to it or if the mandate recipient is forced to do it because of the circumstances of the case.1605 In such cases, the mandate recipient is liable only for choosing the substitute mandate recipient and giving him or her instructions (culpa in eligendo), and not for the performance of the substitute’s services or for casus mixtus.1606 In the case of submandate, the mandator has direct claims towards the substitute (actio directa).1607 643. The mandate recipient has the right to be paid for his or her services, unless it was agreed differently, or it follows from the nature of the relationship with the mandator that the mandate is gratuitous.1608 Thus, a as rule, the mandate is for consideration. The same rule was set out in the Yugoslav OA whereas the Austrian ABGB, for example, set out gratuitousness as a rule with some exceptions of payment available to the mandate recipient.1609 If the amount of the payment is not determined in the contract, the mandator must provide the recipient with an ordinary payment or, in the absence of such, a fair payment.1610 Unless stipulated otherwise, the mandator must pay the mandate recipient after the transaction is performed. A mandate recipient that performs the mandate only in part shall have

1598. 1599. 1600. 1601. 1602. 1603. 1604. 1605. 1606. 1607. 1608. 1609.

Ibid. Ibid. Article 769/1 of the OC. Ibid. See Arts 199–206 of the OC, and infra Part II, Ch. 29, §1. Article 769/2 of the OC. Article 770/1 of the OC. Article 770/2 of the OC. Article 770/3,4 of the OC. Article 770/5 of the OC. Article 766/2,3 of the OC. Being an intuitu personae and bona fide relationship, mandate was (at least in principle) gratuitous in Roman law. Kranjc, Rimsko pravo, Pravna obzorja, Ljubljana 2014, pp. 846–849. 1610. Article 778 of the OC.

261

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the right to a proportionate amount of the payment under the proviso that partial performance was not his or her fault. If the payment agreed in advance is in clear disproportion to the services performed, the mandator may request its reduction.1611 644. For securing the payment and costs, the mandate recipient has a statutory lien on the mandator’s movable property acquired within the mandate, as well as on monetary sums received by the mandate recipient for the mandator.1612 Upon request from the mandate recipient, the mandator must provide the recipient with a specific sum of money for the anticipated expenses.1613 645. The mandator must reimburse the mandate recipient for all the necessary costs the latter had in performing the mandate, together with interest charged from the day they were paid, even if there was no result achieved and this was not due to the recipient’s fault.1614The mandator must take over the obligations taken on by the mandate recipient in the latter’s name when performing the transactions entrusted to his or her, or must release the recipient from such obligations in any other manner. 1615 The mandator is also obliged to reimburse the mandate recipient for any damage incurred during performance of the mandate without the fault of the recipient.1616 646. The mandate recipient must provide the mandator upon his or her request with information on the status of the mandate activities.1617 The recipient must also provide the mandator with a document on the performed transactions1618 and must hand over to the mandator all that he or she has received for the mandator during his or her mandate.1619 647. In principle the contract on mandate is terminated in one of the following ways: if it is performed (fulfilled); if its performance becomes impossible; if the mandator or the mandate recipient are in bankruptcy proceedings or lose their legal capacity;1620 if the mandate recipient dies while the mandate is terminated by the death of the mandator only if this was agreed or if the mandate contract was concluded by the mandator because of his or her personal relationship with the recipient;1621 if the mandator or the mandate recipient terminate the contract in accordance with the rules set out in the OC.1622 In cases of the mandator’s death, bankruptcy and loss of capacity and in case the mandator terminates the contract, 1611. 1612. 1613. 1614. 1615. 1616. 1617. 1618. 1619. 1620. 1621. 1622.

262

Article 779-73 of the OC. Article 780 of the OC. Article 775 of the OC. Article 776/1 of the OC. Article 776/2 of the OC. Article 777 of the OC. Article 772 of the OC. According to Art. 772, he or she must do that even before the finalization of the transactions if the mandator requests so. Article 771 of the OC. Article 785 of the OC. See Art. 784 of the OC. See Arts 782 and 783 of the OC.

Part II, Ch. 19, Contract of Mandate

647–647

the contract is terminated once the mandate recipient becomes aware of the reason for the termination.1623 If the contract was concluded so as to enable the recipient to enforce his or her claim against the mandator, the contract cannot be terminated for grounds of death, bankruptcy, loss of capacity or the mandator’s will.1624

1623. Article 786/1 of the OC. 1624. Article 787 of the OC.

263

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Chapter 20. Commercial Agency Contract 648. A commercial agency contract (Sl. pogodba o trgovskem zastopanju or agencijska pogodba) is regulated in Chapter XIX of the Special Part of the OC (Articles 807–836). Being one of the contracts relevant for the functioning of the market, it was regulated already in the Yugoslav federal legislation, i.e., the Yugoslav OA. The provisions of the OC on commercial agency contract, however, have not been copied entirely from the Yugoslav OA as was the case with the majority of the contracts regulated in the Yugoslav OA. The reason for this lies mainly in the fact that upon drafting the OC, the RS was already in the process of entering into the EU. The Slovenian legislator thus paid due regard to existent EU law on commercial agency, i.e., Directive 86/653 on the coordination of the laws of the Member States relating to self-employed commercial agents.1625 649. The OC defines a commercial agency contract as a contract under which the agent (Sl. agent or zastopnik)1626 is obliged to ensure on a permanent, long-term basis that third persons will be concluding contracts1627 with the agent’s mandator (Sl. narocˇitelj) and that he or she will for this purpose act as an intermediary between the third persons and his or her mandator.1628 For this purpose, the agent is to find these third persons, gets in touch with them, inform them of the mandator’s offers, introduces them to the mandator etc. In contrast to a broker under the brokerage contract, the agent acts solely within the interest sphere of his or her mandator and advises him or her on the negotiations with the third persons etc. The agent is also obliged to conclude contracts with third persons in the name of and for the account of the mandator after obtaining authorization for that by the mandator.1629 In return, the mandator undertakes to provide a specific payment (commission, Sl. provizija) for each of the contracts.1630 The agent may also be authorized to accept and/or request performances from the mandator’s contractual parties.1631 If a contract between a mandator and a third party was concluded with the agent’s mediation between these two parties, the mandator’s contracting party may make valid declarations to the agent relating to defects of the goods or other objects of the contract, and any other declarations in connection with the contract in order to protect and exercise their rights under the contract.1632 In order to protect the rights 1625. Council Directive 86/653/EEC of 18 Dec. 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents, OJ L 382, 31.12.1986. 1626. According to Art. 807/2 of the OC, a commercial agent may be a legal or a natural person performing the activities of agency in an independent and lucrative manner within his or her registered activity, i.e., as his or her profession and independent from (not employed by) the mandator. This definition was amended in comparison with the Yugoslav OA in order to be aligned with that set out in Directive 86/653. 1627. In contrast to the Directive 86/653, the OC does not limit the scope of such contracts to any particular type. See the definition in Art. 807/1 of the OC. 1628. Article 807/1 of the OC. 1629. Articles 807/1 and 809 of the OC. 1630. Articles 807/1 and 809 of the OC. 1631. Article 810 of the OC. 1632. Article 811 of the OC.

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of the mandator, the agent is, on the other hand, entitled to make the necessary declarations to the mandator’s contracting party.1633 The agent may also request measures necessary for the insurance of the mandator’s interests.1634 This is one of the expressions of the general obligation of the agent to safeguard the mandator’s interests and act in good faith and as a prudent professional in all of his or her activities.1635 Another example of that is the agent’s obligation to keep the mandator’s business secrets.1636 He or she must also pay due regard to the mandator’s instructions1637 and report to him or her on all information and circumstances relevant for the conclusion of the contracts.1638 650. In contrast to the Yugoslav OA which required that a commercial agency contract is concluded in a written form,1639 the OC does not lay down any form requirements. It does, however, state that each party may request that a document on the content of the contract is drafted and signed by the other party.1640 The parties may not waive this right.1641 The parties may also set the written form as a condition for the validity of the contract (i.e., form ad valorem).1642 651. Unless stipulated otherwise by the contract, the mandator may engage several agents in the same area for the same types of transaction.1643 652. During the contractual relationship, the agent may not, without the mandator’s consent, undertake to work for another mandator in the same area and for the same types of transactions or the same circle of clients.1644 This is an ex lege (statutory) non-compete clause that can be ruled out only by a mandator’s consent. 653. A contractual non-compete clause is, however, available for the period of maximum two years after the commercial agency contract is terminated.1645 Such clause is valid only if it is in writing and if it covers the same area, the same persons and the same goods as stipulated in the contract.1646 If the commercial agency contract entailing such a non-compete clause is terminated for the reasons on the side of the mandator, the non-compete clause is valid only if the mandator pays appropriate severance to the agent upon the termination of the contract as well as a 1633. Article 812 of the OC. 1634. Article 813 of the OC. These provisions on the relationship between the agent and the third persons are unknown to comparative law. They were copied from the Yugoslav ZOR which copied it from the Konstantinovic´’s Sketch. 1635. See Art. 814/1 of the OC. In accordance with Directive 86/653, these provisions are mandatory. 1636. Article 817 of the OC. 1637. Article 814/2 of the OC. In accordance with Directive 86/653, these provisions are mandatory. 1638. Article 815 of the OC. In accordance with Directive 86/653, the provisions of this article are mandatory. 1639. This form requirement was merely forma ad probationem. 1640. Article 808/1 of the OC. Such regulation of contractual form is unique in Slovenian law. 1641. Article 808/1 of the OC. 1642. Article 808/2 of the OC. 1643. Article 807/4 of the OC. 1644. Article 807/5 of the OC. 1645. Article 836/1,4 of the OC. 1646. Article 836/1 of the OC.

265

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monthly compensation in the amount corresponding to an average monthly amount of commission in the last five years (or less if the contract has lasted less than that).1647 If, however, the commercial agency contract was terminated due to the mandator’s fault, the agent may issue in one month after the termination of the contract a written declaration stating that he or she will not have observed the contractual non-compete clause.1648 The OC explicitly states that all these provisions on the contractual non-compete clause may not be amended by contract to the detriment of the agent.1649 654. The OC sets out also the mandatory principles of the mandator’s behaviour in performing the commercial agency contract.1650 655. One of the focal obligations of the mandator is the obligation to pay the agent for his or her performance of the commercial agency contract. A commission is required for all contracts that the mandator (or the agent on his or her behalf in accordance with the mandator’s authorization) concluded with the third parties via the agent’s activities under the commercial agency contract.1651 If it was agreed that the agent is active only in a specific area or with specific parties, he or she has the right to a payment also for the contracts that the mandator concluded with the parties from that area or with the specific parties without the agent’s activities.1652 Further, the agent has the right to a commission for a contract concluded after his or her contractual relationship with the mandator was terminated, if the contract is the result of the agent’s endeavours during the relationship with the mandator and was concluded within a reasonable time after the commercial agency contract was terminated, or if the third person’s offer to conclude the contract was received by the agent or the mandator prior to termination of the contract. In this case, any subsequent agents of the mandator are not entitled to payment for these contracts unless it would be just for the commission to be shared between the agents.1653 656. If the amount of the commission is not stipulated in the contract or a tariff, the agent is to be paid as is customary in the area where the agent performed his or her services.1654 Otherwise, the amount is determined by taking into consideration all the circumstances of the transactions between the mandator and third parties, particularly the number and value of the transactions and the scope and difficulty of

1647. 1648. 1649. 1650. 1651. 1652. 1653. 1654.

266

Article 836/3 of the OC. Article 836/5 of the OC. Article 836/6 of the OC. His or her duty of due cooperation with the agent is set out in detail in Arts 820 and 821 of the OC in order to correspond to the provisions laid down in Directive 86/653. Articles 807/1 and 823 of the OC. Article 823/3 of the OC. Article 823/5 of the OC. Article 824/1 of the OC.

Part II, Ch. 20, Commercial Agency Contract

657–660

the agent’s endeavours.1655 If the payment is disproportionately large in comparison to the services rendered, the court may reduce it to a fair amount at the mandator’s request.1656 657. The agent acquires the right to a commission if and to the extent in which the mandator performs or should have performed the transaction with the third person, or if the third person performs his or her obligations towards the mandator.1657 The agent does not have the right to a commission when it is clear that the contract will not be performed and the reason for the non-performance does not lie with the mandator.1658 The agent acquires the right to a commission at the latest when the third person performs or should have performed his or her obligations from the contract if the mandator has performed his or her part.1659 If the contract between the mandator and the third person is being performed for a longer period of time, the agent has the right to an appropriate advance on the commission.1660 The rules are mandatory and cannot be amended by agreement of the parties.1661 658. Every three months (or earlier if the parties have agreed so), the mandator must issue a balance sheet showing monthly amounts of the commission to which the agent is entitled.1662 The mandator must pay the commission for the entire period by the end of the month after the last month covered by the balance sheet.1663 Upon request from the agent, the mandator must issue an excerpt from his or her ledgers on the transactions entitling the agent to a commission, and must inform the agent of all the circumstances for determining the commission.1664 If the mandator refuses the agent’s request or if the agent has doubts over the accuracy of the excerpt, the agent may request that an official auditor inspect the mandator’s ledgers and documents in respect of the figures relevant for the commission.1665 These agent’s rights may not be limited or excluded by contract.1666 659. If the agent was authorized to enforce any of the mandator’s claims, he or she has a right to a special payment on the enforced amount (incasso commission, Sl. inkaso provizija).1667 660. In principle, the agent is not liable to the mandator for the fulfilment of obligations deriving out of a contract between the mandator and the third person 1655. 1656. 1657. 1658. 1659. 1660. 1661. 1662. 1663. 1664. 1665. 1666. 1667.

Article 824/2 of the OC. Article 824/3 of the OC. Article 825/1 of the OC. Article 825/2 of the OC. If in such a case, the commission has already been paid, the agent must return it. Article 825/3 of the OC. Article 825/4 of the OC. Article 825/5 of the OC. Article 826/1,2 of the OC. Article 826/2 of the OC. Article 826/3 of the OC. Article 826/4 of the OC. Article 826/5 of the OC. Article 827 of the OC.

267

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regarding which the agent performed his or her agent services. If, however, the agent gave a special written guarantee that the contract will be fulfilled by the third party, the agent is liable for that (del credere liability, Sl. odgovornost del credere).1668 Such guarantee may only be given for specific transactions or transactions with a specific person.1669 For giving such guarantee, the agent is entitled to a special payment (del credere commission, Sl. del credere provizija).1670 661. The agent does not have the right to be reimbursed for costs of ordinary performance of his or her services, unless this was agreed or is customary.1671 However, the agent does have the right to the reimbursement of special costs incurred in favour of the mandator or paid under the latter’s mandate.1672 662. In order to secure the agent’s due claims originating in connection to the commercial agency contract, the agent has a statutory (ex lege) lien on the sums collected by the agent for the mandator under the latter’s authorization, and also on all the mandator’s things received in connection with the contract from the mandator or any other person, as long as they are with the agent or with a person that holds them in possession for the agent, or as long as the document allowing the disposal thereof is held by the agent. 1673 663. A commercial agency contract may be concluded for a definite or an indefinite period of time. It shall be deemed to have been concluded for an indefinite period unless the parties have agreed otherwise. If the contract was concluded for an indefinite period, either party may terminate it by giving notice of termination. The period of notice depends on the duration of the contract and amounts to one month for each of the years that have begun during the contract. If the contract lasts more than five years, the period of notice is set to six months. The parties may not agree on shorter periods of notice. If the parties agree upon longer periods, the periods must apply equally to the mandator and the agent. Unless stipulated otherwise by the contract, the period of notice shall begin to run on the first day of the next calendar month and shall end on the last day of the relevant calendar month.1674 664. If a commercial agency contract was concluded for a definite period, it shall terminate when the agreed period ends. If the parties continue to perform a contract specified in the first paragraph after the period for which it was concluded ends, it is deemed that a contract for an indefinite period was concluded (Sl. molcˇe obnovljena agencija, tiho podaljšanje agencije). In determining the period of notice in

1668. 1669. 1670. 1671. 1672. 1673. 1674.

268

Article Article Article Article Article Article Article

819/1 of the OC. 819/2 of the OC. 819/3 of the OC. 828/1 of the OC. He or she can request reimbursement of exceptional costs. 828/2 of the OC. 829 of the OC. 830 of the OC.

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665–667

such cases, the time elapsed since the conclusion of the contract must be taken into account, as it applies to the termination of a contract concluded for an indefinite period.1675 665. Each of the parties may terminate the contract by a declaration1676 without any period of notice (in case of a contract for an indefinite time) or before the determined time lapses (in the case of a contract for a definite time) if the other party fails to perform the contract or because of exceptional circumstances or other serious grounds.1677 This right of termination may not be limited or excluded by the contract.1678 Each party shall has the right to compensation if no serious grounds were cited for the termination.1679 An unjustified termination gives the other party the right to terminate the contract without notice.1680 666. After the commercial agency contract is terminated or cancelled, the agent has the right to appropriate severance1681 if and insofar he or she has obtained new clients for the mandator or has appreciably expanded the mandator’s transactions with the existent clients, and if after the contractual relationship between the agent and the mandator had ended, the mandator has had significant benefits from the transactions with such clients, or if the payment of the severance is appropriate due to special circumstances, such as the loss of commission on transactions with these clients.1682 In determining the amount of severance, it is necessary to take into consideration the amount of the commission obtained by the agent for contracts concluded after the relationship with the mandator ended, as well as any contractual non-compete clause.1683 Payment of severance does not exclude the agent’s right to compensation.1684 The rules on severance are to some extent a novelty of the Slovenian commercial agency regulation drafted by studying carefully the German HGB.1685 667. The mandator shall not be obliged to pay severance if: (1) the contract was terminated by the agent; however, the agent may also demand severance in this case if the grounds for the termination of the contract are circumstances on the part of the mandator or if the agent terminated the contract because of age or disease on the part of the agent that would prevent the continuation of the contractual relationship (2) the mandator terminated the contract because of the agent’s culpable behaviour (3) in accordance with an agreement between the mandator and the agent 1675. Article 831 of the OC. 1676. If the declaration of avoidance does not cite the serious grounds, the termination of the contract shall be deemed to have been made with the ordinary period of notice (Art. 832/2 of the OC). 1677. Article 832/1 of the OC. 1678. Ibid. 1679. Article 832/3 of the OC. 1680. Article 832/4 of the OC. 1681. See Art. 833/3,4 of the OC where detailed rules are set out on the determination of the amount of the severance. 1682. Article 833/1 of the OC. 1683. Article 833/2 of the OC. 1684. Article 833/6 of the OC. 1685. Neither the Yugoslav OA nor the Austrian ABGB regulate it.

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another person enters into the contract in place of the agent; such an agreement is not permissible before the termination of the contractual relationship.1686 668. The right to severance shall also originate if the contract was terminated because of the agent’s death.1687 An agent that fails to report to the mandator within one year of the termination of the contractual relationship that severance is being requested shall lose the right to severance.1688 The parties may not waive or reduce the rights in connection with severance advance to the detriment of the agent.1689 With regard to the excerpt from the ledgers and notification of significant circumstances influencing the determination of severance, the agent has the same rights as in the charging of commission.1690

1686. 1687. 1688. 1689. 1690.

270

Article Article Article Article Article

834 of the OC. 835/1 of the OC. 835/2 of the OC. 835/3 of the OC. 835/4 of the OC.

669–672

Chapter 21. Brokerage Contract 669. A brokerage contract (Sl. posredniška pogodba) is regulated in Chapter XX of the Special Part of the OC (Articles 837–850) which has been copied almost verbatim from the Yugoslav OA. The OC lays down the general rules on brokerage contract whereas special types of brokerage contracts are regulated in sectoral legislation, such as the CCA laying down the rules on brokerage contract for consumer credits (Articles 36–37),1691 or the Real Estate Agencies Act1692 setting out the rules on real estate intermediaries including the contracts concluded for brokering real estate (Articles 13–26). 670. The OC defines the brokerage contract as a contract through which the broker (intermediary, Sl. posrednik, called also mešetar) undertakes to endeavour with diligence of a good businessperson to find and place in contact with the mandator (Sl. narocˇitelj) a person that will negotiate with the mandator to conclude a specific contract, whereas the mandator undertakes to pay the broker for his or her services if the contract with the third person is concluded.1693 If the broker acted with the required diligence, he or she is not liable if his or her endeavours are not successful.1694 The broker must broker the negotiations and endeavour to see the contract concluded only if he or she has explicitly agreed to that.1695 671. The broker must inform the mandator of all the circumstances that are significant for the intended transaction.1696 A broker who is active in the commercial sector must record in a special ledger (the brokerage diary) all the essential information on a contract that was concluded via his or her services and must issue at the request of his or her clients a signed excerpt from the ledger (a brokerage certificate).1697 672. The broker is liable for the damage sustained due to his or her fault by the mandator or the third party. The OC lists two such examples: (1) if the broker brokered for a person with incapacity to contract and this incapacity was or should have been known to the broker or (2) if the broker brokered for a person whom he or she 1691. Further rules are set out in the Decision of the Bank of Slovenia on the conditions of brokering consumer credits by bank credit brokers (Official Gazette RS, No. 9/17, with further amendments) and in the ministerial Rules on the requirements to be met by credit intermediaries (Official Gazette RS, No. 11/17). 1692. Sl. Zakon o nepremicˇninskem posredovanju (ZNPosr), Official Gazette RS, No. 42/03, with further amendments. 1693. Articles 837 and 842/1 of the OC. If the broker is to be paid in any event, the rules of the OC on the contract for work apply (Art. 838 of the OC). 1694. Article 842/3 of the OC. 1695. Article 842/2 of the OC. 1696. Article 843 of the OC. 1697. Article 845 of the OC. This was the only article that has been amended in comparison to the Yugoslav OA. Namely, the brokerage diary and brokerage certificate are now called posredniški dnevnik and posredniški list instead of mešetarski dnevnik and mešetarski list. Compare Art. 845 of the OC with Art. 821 of the Yugoslav OA. The title of the chapter was also renamed from ‘Brokerage’ to ‘Brokerage contract’.

271

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knew or should have known would be unable to perform the obligations under the contract.1698 The broker is also liable for damage incurred by the mandator because he or she informed a third person regarding the content of the mandate, the negotiations or the conditions of the concluded contract without the mandator’s permission.1699 673. The broker has the right to be paid for his or her services even if this was not agreed upon.1700 If the amount of the payment is not stipulated by a tariff or any other official legal act, by the brokerage contract or the customs, the court shall decide on it taking into consideration the broker’s endeavours and the services performed.1701 At the mandator’s request, the court may reduce the agreed brokerage payment if it finds that it is excessively high in comparison to the broker’s endeavours and services.1702 It is, however, not possible to request such reduction if the payment was made to the broker after the conclusion of a contract that the broker brokered.1703 Unless the parties have agreed otherwise, the broker acquires the right to the payment once the intended contract is concluded.1704 If the contract was concluded under a suspensive condition, the broker shall acquire the right to a payment when the condition is fulfilled.1705 If it was concluded under a dissolving condition, the fulfilment of this condition shall not affect the broker’s right to a payment.1706 If the contract is invalid, the broker shall have the right to a payment if the grounds for invalidity were not known to him or her.1707 Unless the parties have agreed otherwise, the broker does not have the right to be reimbursed for the costs incurred during his or her mandate.1708 If, however, the parties have agreed in the brokerage contract that the broker does have the right to reimbursement of the costs, these are reimbursed irrespective of whether the intended contract was eventually concluded or not.1709 A broker acting in breach of contract or for the other party contrary to the interests of the mandator loses the right to payment and the reimbursement of costs.1710 Unless agreed otherwise, a broker who obtained a mandate for brokerage from both parties may request from each of the parties only half of the brokerage payment and only half of the costs if it was agreed that they are reimbursed. In this case, the broker must attend to the interests of both parties with diligence of a good businessperson.1711

1698. 1699. 1700. 1701. 1702. 1703. 1704. 1705. 1706. 1707. 1708. 1709. 1710. 1711.

272

Article 844/1 of the OC. Article 844/2 of the OC. Article 846/1 of the OC. Article 846/2 of the OC. Article 846/3 of the OC. Article 846/4 of the OC. Article 847/1 of the OC. Article 847/2 of the OC. Article 847/3 of the OC. Article 847/4 of the OC. Article 848/1 of the OC. Article 848/2 of the OC. Article 850 of the OC. Article 849 of the OC.

Part II, Ch. 21, Brokerage Contract

674–674

674. The mandator is not obliged to enter into negotiations for the conclusion of a contract or to conclude a contract with the person found by the broker even if this person is willing to enter the contract under the conditions of which the mandator informed the broker. The mandator will be, however, liable for any damages for failing to act in good faith.1712 The mandator may always cancel the mandate for brokerage unless he or she has waived this right or the cancellation is in breach of good faith.1713

1712. Article 841 of the OC. 1713. Article 840 of the OC.

273

675–678

Chapter 22. Commission Agency Contract 675. Commission agency contract (Sl. komisijska pogodba) is a special form of a mandate contract the purpose of which is performance of legal acts for the contracting party. It is regulated in Chapter XVIII of the Special Part of the OC (Articles 788–806) that has been copied entirely from the Yugoslav OA.1714 The rules of the OC on the mandate contract apply with regard to all questions not covered by the rules on the commission agency contract.1715 No form requirements are set out for the conclusion of the commission agency contract. 676. By concluding a commission agency contract, the commission agent (Sl. komisionar or prevzemnik posla) undertakes, for a payment, to perform one or more transactions with third parties in his or her own name for the commissioner’s (Sl. komitent or narocˇnik) account. 1716 The transactions are typically sales contracts where the agent acts as the seller (so-called selling commission, Sl. prodajna komisija) or as a buyer (so-called buying commission, Sl. nakupna komisija). The agent is an indirect representative of the commissioner as only he or she, and not the commissioner, is known to the contracting parties. The OC does not lay down any rules on who the parties of the contract may be. In practice, however, it is usually a commercial contract concluded between two commercial entities. The agent must inform the commissioner of the name of the contracting party unless the sale of the commissioner’s goods is performed within commission stores where the identity of the buyers is in principle not known.1717 677. The commission agent has the right to be paid even though this had not been agreed.1718 The commission agency is thus always undertaken upon a consideration. If the amount of the payment is not stipulated in the contract or a tariff, the commission agent is entitled to a payment appropriate to the transaction performed and to the level of the success achieved.1719 If in a particular case the payment is disproportionately high in comparison to the transaction performed and the level of success achieved, the court may reduce it to a fair amount at the commissioner’s request.1720 678. The general rule is that the commissioner pays the commission upon fulfilment of the obligations arising out of the transaction performed by the commission agent,1721 i.e., when the third party fulfils his or her obligations under the 1714. The only difference between the two chapters is in their title (‘Commission agency contract’ instead of ‘Commission’) and corresponding terminology throughout the text. 1715. Article 789 of the OC. Some of the provisions on commission agency contract differ from those on the mandate contract (see, for example, Arts 802 and 775 of the OC regarding the advance payment). 1716. Article 788/1 of the OC. 1717. Article 796 of the OC. 1718. Article 788/2 of the OC. 1719. Article 800/1 of the OC. 1720. Article 800/2 of the OC. 1721. Article 799/1 of the OC.

274

Part II, Ch. 22, Commission Agency Contract

679–681

contract concluded with the agent. If the obligations are being fulfilled in instalments, the commission agent may request a proportionate part of the payment after each of the partial performances.1722 Payment is, however, to be made also if the fulfilment of the contract is prevented by any reason for which the commissioner is liable.1723 If the contract is not fulfilled for a reason for which neither the commission agent nor the commissioner is liable, the agent shall have the right to appropriate payment for his or her efforts.1724 A commission agent that did not act faithfully shall not have the right to payment.1725 679. The commission agent is liable for the performance of the contracting party1726 only if the agent has guaranteed explicitly that the contracting party will fulfil his or her obligations (del credere liability).1727 In this case, the agent has a right to a special payment (del credere commission).1728 Otherwise, the agent has to show mere duty of best effort to materialize the interest of the commissioner (sl. obveznost prizadevanja) and is not liable for achieving it (so-called duty of result, Sl. obveznost rezultata). 680. The commissioner must reimburse the commission agent the costs necessary to perform the services.1729 A separate payment must be made for the use of the agent’s warehouses and means of transport, unless this is covered by the payment for the agent’s services under the contract.1730 Unless stipulated otherwise, the commissioner is not obliged to provide the agent with a monetary advance required for performing his or her services.1731 681. The commission has a statutory lien on the things that are the subject of the commission agency contract, as long as such things or a document entitling to them are with the agent or with a person holding them in possession for the agent.1732 The commission agent may settle (ahead of the commissioner’s other creditors) from the value of such things his or her claims against the commissioner arising out of any commission agency transaction with the commissioner.1733 The claims may also be settled from loans and advances provided to the agent.1734 The commission agent has a priority right to repayment from those claims acquired for the commissioner when fulfilling his or her obligations.1735 1722. 1723. 1724. 1725. 1726. 1727. 1728. 1729. 1730. 1731. 1732. 1733. 1734. 1735.

Article 799/2 of the OC. Article 799/1 of the OC. Article 799/3 of the OC. Article 799/4 of the OC. In this case, the agent and the contracting party are jointly and severally liable. Article 798/1 of the OC. Article 798/2 of the OC. Article 801/1 of the OC. Article 801/2 of the OC. Article 802 of the OC. Article 803/1 of the OC. Article 803/2 of the OC. Ibid. Article 803/3 of the OC.

275

682–685

Part II, Ch. 22, Commission Agency Contract

682. A commission agent that concluded against the will of the commissioner a transaction under conditions less favourable than those stipulated in the contract must refund the difference to the commissioner and reimburse the damage.1736 In this case, the commissioner may refuse to accept the concluded transaction if he or she notifies the commission agent of this immediately.1737 The commissioner, however, loses this right if the commission agent shows readiness to immediately refund the difference and reimburse the damage.1738 If a transaction was concluded under the conditions more favourable than those stipulated in the contract, all benefits so achieved shall go to the commissioner.1739 683. The commission agent is liable to the commissioner for damage if he or she sold the commissioner’s goods to a person the agent knew or should have known to be insolvent.1740 684. The commission agent may him or herself buy goods from or sell goods to the commissioner if the latter agreed to that.1741 In this case, the agent and the commissioner are in a legal relationship arising out of a sales contract.1742 The price for the goods is the price set for these goods on the market on the day of the fulfilment of the transaction.1743 However, if the price set by the commissioner and the market price do not match, the agent is to pay a higher of these two prices if he or she is buying the goods, and obtaining the lower of the prices if he or she is selling the goods.1744 685. The commission agent must ensure the safekeeping of the entrusted goods with the diligence of a good businessperson.1745 If he or she fails to do that, he or she is liable for coincidental destruction or damage of the goods.1746 Upon receipt of the goods and during their safekeeping, the agent must report to the commissioner on the status of the goods.1747 He must also take all necessary measures to protect the commissioner’s rights against third persons.1748

1736. 1737. 1738. 1739. 1740. 1741. 1742. 1743. 1744. 1745. 1746. 1747.

Article 790/1 of the OC. Article 790/2 of the OC. Article 790/3 of the OC. Article 790/4 of the OC. Article 791 of the OC. Article 792/1 of the OC. Article 792/2 of the OC. Article 792/1 of the OC. Article 792/3 of the OC. Article 793/1 of the OC. Lat. casus mixtus. Art. 793/2 of the OC. Articles 794/1 and 795 of the OC. The commission agent must report to the commissioner on any changes to the goods owing to which the goods could lose their value; if there is not enough time to wait for the commissioner’s instructions and there is a risk of significant damage, the agent must sell the goods in the most appropriate manner. 1748. Article 794/2 of the OC.

276

Part II, Ch. 22, Commission Agency Contract

686–686

686. The commission agent must provide the commissioner with a document on the performed transaction without unnecessary delay.1749 He or she must also deliver to the commissioner everything received from the transaction performed for the latter.1750 The agent may transfer to the commissioner claims and other rights acquired against a third person with whom the transaction was performed.1751 The commissioner may only request fulfilment of claims from a transaction concluded by the agent with a third person when the commission agent assigns them to the commissioner.1752 However, with regard to the relationship between the commissioner, the agent and the agent’s creditors, these claims shall be deemed the claims of the commissioner from the moment they originate.1753 The agent’s creditors may not take hold of the goods obtained by the agent within his or her commission contract activities unless the creditors’ claims are in connection with these activities.1754

1749. 1750. 1751. 1752. 1753. 1754.

Article Article Article Article Article Article

797/1 of the OC. 797/2 of the OC. 797/3 of the OC. 804/1 of the OC. 804/2 of the OC. 805 of the OC.

277

687–688

Chapter 23. Suretyship 687. Suretyship (Sl. poroštvo) is a type of personal security. It is regulated in Chapter XXIX of the Special Part of the OC (Articles 1012–1034 OC). 688. Securities are legal instruments for the protection of the creditor against the risk of the debtor’s failure to fulfil his obligations arising out the contract with the creditor. They provide an alternative source from which the obligation can be fulfilled if the debtor fails to do so. According to one of the main categorizations of securities, they are divided into two groups: (1) securities in rem (collaterals) and (2) personal securities. A collateral gives the creditor the right to repayment from the value of the pledged or mortgaged asset, whereas in the case of personal securities, a third person (security provider) undertakes to fulfil the obligation in case of debtor’s non-performance.1755 Banks and insurance companies are typical entities giving personal securities (bank guarantee,1756 surety bond, standby letter of credit)1757 against payment of a commission by the client, who is usually the debtor of the secured obligation.1758 Financial institutions have the appropriate economic and legal knowledge and do not need special legal protection when giving personal security. The situation is different, however, where personal security of a third-party obligation is assumed by non-professional individuals, who are unaware of all possible risks of such commitments. The number of such cases is increasing, as financial institutions, upon giving credit to individuals or legal entities, often require economically weaker borrowers to secure their liabilities with a commitment from a third party as a guarantor. Such borrowers can usually not afford to pay for a bank guarantee and rather turn to their spouses, parents, children or friends to provide a personal security for free. This creates a legal relationship in which on the one hand, a strong financial institution is the creditor of a secured claim, and on the other, an economically weaker individual is the security provider for this claim. A large asymmetry exists between the parties in terms of economic and legal knowledge as well as business experience required to understand the potential risks associated with personal security.1759 This dictates a higher level of legal protection guaranteed to the consumer as a security provider. Most national legislations, including the 1755. Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 1027; Jus, Bancˇne garancije in sorodni instrumenti financiranja trgovine, Uradni list Republike Slovenije, Ljubljana 2010, p. 33. 1756. Bank guarantee is regulated in a still valid Chapter of if the Yugoslav OA (Ch. XXXVIII of the Special Part of the Yugoslav OC, Arts 1083–1087). See infra Part II, Ch. 17, §1. 1757. For further details on these instruments, see Vlahek, Damjan, Novi obliki zavarovanja obveznosti v našem prostoru: nebancˇna garancija in poroštvo na prvi poziv, Podjetje in delo, 41, 8, Ljubljana 2015. 1758. For further details on various types of personal securities under Slovenian law and practice, see Damjan, Vlahek, The protection of consumers as personal security providers under the DCFR and EU consumer law, in: Viglianisi Ferraro, Jagielska, Selucká (eds), The influence of the European legislation on national legal systems in the field of consumer protection, Wolters Kluwer, CEDAM, Assago, Padova 2018. 1759. Ulrich Drobnig, Personal Security (PEL Pers. Sec.), Oxford University Press, Oxford, New York, 2007 (hereinafter referred to as: Drobnig), p. 379.

278

Part II, Ch. 23, Suretyship

689–691

Slovenian one, do not contain specific arrangements for the protection of consumers when they act as personal security providers. The rules of the OC on suretyship apply irrespective of who the guarantor is. Natural persons acting as guarantors may thus be protected only by the general rules of law of obligations and general consumer contract law.1760 689. According to the OC, a contract of suretyship is concluded between a creditor (Sl. upnik) and a guarantor (Sl. porok) by which the guarantor obliges him or herself to fulfil a valid and mature obligation of the creditor’s debtor if the latter will fail to do so.1761 The guarantor’s obligation is thus of a subsidiary nature: he or she is liable to the creditor only if the debtor has not repaid the debt (Sl. subsidiarno poroštvo).1762 However, three exceptions to this rule are set out in the OC: (1) the creditor may turn directly to the guarantor if it is obvious that the debtor’s assets do not suffice for repaying the debt, or if the debtor is in insolvency proceedings;1763 (2) if the guarantor has obliged him or herself as ‘the guarantor and the payer’ (Sl. ‘porok in placˇnik’), he or she is jointly and severally liable for the entire debt in the same manner as the principal debtor, and the creditor may choose freely from whom of the two, i.e., the debtor or the guarantor, he or she will request fulfilment of the obligation (Sl. solidarno poroštvo);1764 (3) unless it was agreed otherwise, the guarantor is liable as ‘the guarantor and the payer’ if the obligation of the principal debtor arises out of a commercial contract.1765 690. Suretyship may be given for any valid obligation irrespective of its content.1766 The obligation may also be a conditional or a future one.1767 Suretyship may also be given for another guarantor’s obligation.1768 691. The guarantor must have full legal capacity. He or she may, however, be a guarantor for a debt of a person without such capacity.1769 The guarantor’s declaration must be in writing for the contract of suretyship to have legal effect.1770 The written form is thus not required for the whole contract, but only for one of the parties’ declaration of will. 1760. For further details on this, see Damjan, Vlahek, The protection of consumers as personal security providers under the DCFR and EU consumer law, in: Viglianisi Ferraro, Jagielska, Selucká (eds), The influence of the European legislation on national legal systems in the field of consumer protection, Wolters Kluwer, CEDAM, Assago, Padova 2018, pp. 19–48. 1761. Article 1012 of the OC. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, pp. 429–444. 1762. Article 1019/1 of the OC. 1763. Article 1019/2 of the OC. 1764. Article 1019/3 of the OC. 1765. Article 1019/4 of the OC. 1766. Article 1016/1 of the OC. 1767. Article 1016/2,3 of the OC. Suretyship for a future obligation may be revoked until the obligation arises if the latter date was not set. 1768. Article 1016/4 of the OC. 1769. Article 1015 of the OC. In this case, the guarantor is liable to the creditor as if the debtor had full capacity. 1770. Article 1013 of the OC.

279

692–695

Part II, Ch. 23, Suretyship

692. The guarantor’s obligation is equal to the debtor’s obligation unless the parties have agreed that the guarantor’s obligation is limited.1771 It cannot, however, exceed the debtor’s obligation.1772 If the debtor’s obligation is increased due to the debtor’s delay in performance or as a consequence of the debtor’s fault, the guarantor’s obligation is also increased unless the parties have agreed otherwise.1773 The guarantor must also recover the creditor the necessary costs required for enforcing the debt from the principal debtor.1774 The guarantor is liable to pay only those contractual interest that are due after the conclusion of the suretyship contract.1775 693. The creditor’s right against the guarantor is time-barred at the same moment his or her right is time-barred against the debtor.1776 However, if the limitation period is longer than two years and the guarantor is not liable as ‘the guarantor and the payer’, the creditor’s right against the guarantor is time-barred already after two years after the principal debtor’s obligation fell due.1777 Suspension of limitation of the principal debtor’s debt does not have any influence on the guarantor’s obligation.1778 Interruption of limitation of the principal debtor’s debt does also not have any such influence unless limitation is interrupted for reasons of the creditor’s activity for enforcing the debt before a court or other public authority.1779 694. In the case of multiple guarantors (Sl. soporoštvo) giving surety for the same debt, the guarantors are, unless it was agreed otherwise, jointly and severally liable (Sl. solidarnost porokov) irrespective of whether they have given suretyship jointly or individually.1780 If one of the guarantors repays the debt, he or she may request the other guarantors for a refund in accordance with their share.1781 695. If the debtor does not perform his or her obligation, the creditor must inform the guarantor of the non-performance.1782 If the creditor does not do so, he or she is liable for any loss sustained by the guarantor by such creditor’s omission.1783 The guarantor is relieved of his or her obligation if the creditor does not,

1771. Article 1017/2 of the OC. 1772. Article 1017/1 of the OC. If the contract provides for a broader scope of the guarantor’s obligation, his or her obligation is ex lege reduced to the level of the debtor’s obligation. 1773. Article 1017/4 of the OC. 1774. Article 1017/3 of the OC. 1775. Article 1017/5 of the OC. 1776. Article 1034/1 of the OC. 1777. Article 1034/2 of the OC. 1778. Article 1034/4 of the OC. 1779. Article 1034/3 of the OC. 1780. Article 1020 of the OC. 1781. Article 1033 of the OC. In accordance with the general rules on suretyship, such surety must first try to obtain payment from the debtor. Kranjc in: Juhart, Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004, p. 1074. 1782. Article 1025 of the OC. 1783. Ibid.

280

Part II, Ch. 23, Suretyship

696–698

in one month after the guarantor has requested him or her to do so, request the debtor’s performance once it is due.1784 The guarantor is also relieved of his obligation in so far as the creditor has given up a security that would be of interest to the guarantor.1785 696. Once the guarantor has paid the debt, the creditor’s claim towards the debtor is transferred onto him or her together with all ancillary rights and guarantees for fulfilment of the obligation (subrogation).1786 697. In case of the debtor’s insolvency, the creditor must report his or her claim in bankruptcy proceedings and inform the guarantor of that.1787 If he or she does not do so, he or she is liable for the loss the guarantor might sustain because of such omission. It must be stressed that in the case the debtor’s obligation is reduced in bankruptcy proceedings or in compulsory settlement proceedings (i.e., proceedings of arrangement with the creditors),1788 the guarantor’s obligation is not reduced, and the guarantor is thus liable to the creditor for the whole initial debt. A similar rule is set out for the cases where the debtor’s heirs have a limited liability towards the creditor: the guarantor is liable for the whole debt.1789 698. The guarantor may make use of the following objections against the creditor’s request: (i) all debtor’s objections, including set-off, not, however, the debtor’s personal objections; (ii) the guarantor’s personal objections, such as nullity of the suretyship contract, limitation of the creditor’s claim against the guarantor, objection of set-off of reciprocal obligations.1790 The debtor’s waiver of objections or his or her acknowledgment of the debt do not have any effect on the guarantor’s position.1791 1784. Article 1026 of the OC. If the date of the debtor’s performance is not set, the guarantor is relieved of his or her obligation if, after one year from the date of the conclusion of the suretyship contract and in one month upon a request from the guarantor, the creditor does not provide a declaration of the date of the debtor’s performance. 1785. Article 1027 of the OC. 1786. Article 1018 of the OC. 1787. Article 1022 of the OC. 1788. Proceedings following insolvency of a debtor are regulated in the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (FOIPCDA) of 2007 (Sl. Zakon o financˇnem poslovanju, postopkih zaradi insolventnosti in prisilnem prenehanju (ZFPPIPP), Official Gazette RS, No. 126/07, with further amendments) and are classified as: (1) procedures of arrangement with the creditors called compulsory settlement procedures (Sl. postopek prisilne poravnave), and (2) bankruptcy procedures (Sl. stecˇajni postopek), the latter taking form of: (a) bankruptcy of a legal entity (Sl. stecˇaj nad pravno osebo), (b) personal bankruptcy (Sl. osebni stecˇaj), i.e., bankruptcy of: (i) a consumer within the meaning of the act (Sl. potrošnik, i.e., a person who is not a legal entity, a businessman (sole trader) or a person exercising a liberal profession), (ii) a businessman (sole trader, Sl. podjetnik), or (iii) a person exercising a liberal profession (Sl. zasebnik), or c) bankruptcy of heritage (Sl. stecˇaj zapušcˇine). For further details on insolvency proceedings under Slovenian law, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 201–210. 1789. Article 1023 of the OC. 1790. Article 1024/1,3 of the OC. 1791. Article 1024/2 of the OC.

281

699–699

Part II, Ch. 23, Suretyship

699. The guarantor who has paid the debtor’s debt may request the debtor to repay him or her with interest the amount paid to the creditor.1792 The guarantor is also entitled to recover the costs of dispute proceedings against the creditor from the moment the guarantor has informed the debtor of the dispute with the creditor.1793 In case of multiple debtors that are jointly and severally liable, the guarantor who has paid the debt may request repayment of the amount paid to the creditor as well as of the costs from any of the debtors.1794 If the guarantor concluded the suretyship contract with the knowledge of or the approval from the debtor, he or she may, before making any payments to the creditor, request the debtor to provide him or her security for his or her claims against the debtor. The request may be made if the debtor has not paid the debt on time, the creditor filed an action against the guarantor with the court and the debtor’s financial situation has deteriorated after the conclusion of the suretyship contract.1795 If the guarantor has paid the debt to the creditor without informing the debtor about it, the debtor may use against the guarantor all legal remedies that could have been used by the guarantor against the creditor’s request for payment.1796 If both the guarantor and the debtor have paid the debt, the guarantor cannot request the debtor for repayment if the debtor was unaware of the guarantor’s payment as the guarantor had not informed him or her of that. The guarantor may only turn to the creditor and request him or her to return the payment.1797 The same rule applies in cases where the creditor’s claim was annulled on the debtor’s request or was set off.1798

1792. 1793. 1794. 1795. 1796. 1797. 1798.

282

Article Article Article Article Article Article Article

1028/1 of the OC. 1028/2 of the OC. 1029 of the OC. 1030 of the OC. 1031/1 of the OC. 1031/2 of the OC. 1032 of the OC.

700–702

Chapter 24. Contract on Lien §1. GENERAL ON LIEN 700. Lien (Sl. zastavna pravica) is one of five property rights of Slovenian law (others being the right to ownership, the right of easement, the right of superficies and right of encumbrance).1799 Since 2003, the general provisions on lien are laid down in the PLC (Chapter VI, Articles 128–191), while beforehand, the provisions regulating it were scattered more intensely throughout various legal acts of property law, law of obligations, enforcement law etc.1800 Specific types of lien are regulated in specific legislation, such as the Obligations and Real Rights in Air Navigation Act,1801 MC,1802 Book-Entry Securities Act,1803 and Claim Enforcement and Security Act.1804 As stated in Article 13 of the CPL, the rules on the establishment, transfer, protection and cessation of the right of ownership apply mutatis mutandis to other property rights. These should thus be taken into account also regarding the lien where no special provisions on lien are available in the CPL or other legislation. 701. Lien is a right to a specific thing or a pecuniary right, including negotiable instruments (lien object) belonging to another person (lienee, Sl. zastavitelj) serving as security for the lienor’s (Sl. zastavni upnik) claim against the lienee or against a third person being the lienor’s debtor (Sl. zastavni dolžnik).1805 If the secured claim is not paid upon its maturity, the lienor has the right to receive payment with interest and costs from the value of the lien object prior to all other creditors of the lienee with no security or with inferior security on the lien object (principle of priority, Sl. nacˇelo vrstnega reda).1806 702. A lien can be established on things, claims, negotiable instruments and other rights, provided they can be alienated and encumbered and have a pecuniary

1799. The sixth property that may exist on immovables is the land debt that could be established between 1 Jan. 2003 when the PLC entered into force regulating the land debt anew as one of the property rights, and 5 Nov. 2013 when the PLC amendment abolished the land debt from Slovenian law. A detailed analysis of all property rights of Slovenian law is available in Vlahek in Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 73–114. 1800. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 730. 1801. Sl. Zakon o obligacijskih in stvarnopravnih razmerjih v letalstvu (ZOSRL), Official Gazette RS, No. 12/00, with further amendments. 1802. Sl. Pomorski zakonik (PZ), Official Gazette RS, No. 26/01, with further amendments. 1803. Sl. Zakon o nematerializiranih vrednostnih papirjih (ZNVP-1), Official Gazette RS, No. 75/15, with further amendments. 1804. Sl. Zakon o izvršbi in zavarovanju (ZIZ), Official Gazette RS, No. 51/98, with further amendments. 1805. According to Art. 128/2 of the PLC, the lienee (Sl. zastavitelj) may establish a lien for security of his or her own debt or the debt of another person (Sl. zastavni dolžnik). 1806. Article 128/1 of the PLC.

283

703–703

Part II, Ch. 24, Contract on Lien

value.1807 If a lien is established on a movable, it is called pledge. Pledge can be possessory (Lat. pignus, Sl. rocˇna zastava) or non-possessory (Sl. neposestna zastavna pravica). In case of expressly listed movables, non-possessory pledge takes the form of a registered non-possessory pledge (Sl. registrska neposestna zastavna pravica). If a lien is established on an immovable, it is called mortgage (Sl. hipoteka) which is a type of non-possessory lien. If it is established on the basis of a directly enforceable notarial deed, it is called a notarial mortgage (Sl. notarska hipoteka).1808 A lien can also be established to secure future and conditional claims.1809 According to the principle of speciality (Sl. nacˇelo specialnosti),1810 a lien can be established only on an individually specified thing or property right; it comprises the whole thing, with all its elements and, if not agreed otherwise, its appurtenances (a mortgage, however, extends only to those appurtenances that are owned by the mortgagor1811). 703. A lien can be established on the basis of a legal transaction (contractual lien), a law (statutory lien), or a court decision,1812 it can also be acquired (transferred) by inheritance or (in the case of farm land) by an administrative decision.1813 Requirements for the contractual establishment of a lien differ according to its object. In general, a valid legal transaction (Sl. pravni naslov) obliging the owner of the lien object to establish a lien is required. This transaction is called contract on lien (Sl. zastavna pogodba) and is of consensual nature.1814 Further conditions laid down by the PLC must be fulfilled for the establishment of a lien on a basis of such contract: (i) a real agreement (disposition agreement, conveyance, Sl. razpolagalni pravni posel, stvarnopravni posel) and its public expression in the form of handing over of the movable, or registering certain non-possessory pledges in the register, or registering mortgages in the land register etc.).1815 For the acquisition of a lien on the basis of a legal transaction, the lienee must have the right to alienate and encumber the lien object (Sl. razpolagalna sposobnost).1816 An object that is owned by more than one person (co-ownership or joint ownership) can be pledged 1807. Article 128/3 of the PLC. If it is established on pecuniary rights, it is called pignus nominis. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 730, 733. 1808. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 779–781. 1809. Article 129 of the PLC. See Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 734–736. See also Plavšak, Vrencˇur in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, pp. 45–49. 1810. Article 7 of the PLC. 1811. Article 140 of the PLC. 1812. Articles 130–135 of the PLC. 1813. See Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 736. . Article 129 of the PLC. 1814. It was a real contract under the rules of ABGB. See Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 77–78. 1815. Cf. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 739. 1816. Article 133 of the PLC. For further details, see Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 742–745.

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or mortgaged only by the will of all owners. A lien can also be established by each individual co-owner on his or her share in the lien object. 704. Until 1 January 2003 when the new Slovenian property legislation (i.e., the PLC) entered into force, the contract on lien was regulated in the Yugoslav OA (Chapter XXVIII of the Special Part of Yugoslav OA, Articles 966–996). As lien is a property right, the Slovenian legislator decided, upon drafting new Slovenian civil law, to regulate the contract on lien in the PLC instead of the OC. Same goes for other contracts establishing property rights (e.g., contract on the establishment of an easement,1817 contract on the establishment of superficies1818). That is why a chapter on lien was not included in the OC. Instead, the chapter on lien of the Yugoslav OA applied also after the enactment of the OC1819 until the entry into force of the PLC that was to regulate it. The PLC thus states in its final provisions that with the entry into force of the PLC, provisions of the Yugoslav OA’s chapter on lien are no longer applicable.1820 However, the PLC lays down only some specific provisions on the contents of the contract on lien (e.g., prohibition of lex commissoria and other agreements presented Infra) whereas with regard to all other questions of contract on lien that are not covered by the PLC or special legislation, the general rules of the OC on legal transactions (on validity, form etc.) apply.1821 705. The PLC prohibits certain agreements from being included in the contract on lien: an agreement (be it part of the contract on lien or a separate contract on lex commissoria or deriving from a combination of various legal transactions) stipulating that the ownership of lien property is transferred to the lienor if his or her claim is not paid at maturity, as well as a provisions stipulating that the lien property can be sold at a predetermined price (Lat. lex commissoria, Sl. komisoricˇna klavzula) is null and void unless it is concluded after the secured claim has matured.1822 Ratio of such prohibition is supposed to be to prevent the creditor to abuse his or her financial position to the detriment of a thoughtless debtor who could eventually lose his or her property.1823 After the secured claim has matured, however, the special protection of the debtor, who can at that moment in the opinion of the legislator fully assess his or her legal position and the consequences of lex commissoria and similar agreements, is no longer required and thus, such agreements are valid.1824 1817. 1818. 1819. 1820. 1821.

Article 215/2 of the PLC. Article 257/2 of the PLC. See Art. 1066 of the OC. Article 274/5 of the PLC. Cf. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 737. 1822. Article 132 of the CPA. In cases of inclusion of the agreement in the contract of lien or other legal transactions, provisions of the OC on partial nullity apply. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 739–742. Lex commissoria agreements are, however, available under special legislative provisions on financial collaterals. See Art. 8 of the Financial Collaterals Act (Sl. Zakon o financˇnih zavarovanjih (ZFZ), Official Gazette RS, No. 47/04, with further amendments). 1823. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 739. 1824. Ibid.

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706. Some details on the contract on lien are additionally set out in the PLC’s subchapters on pledge, mortgage,1825 registered non-possessory pledge etc. A traditionally prohibited agreement in a contract on mortgage is the so-called pactum antichreticum, i.e., an agreement enabling the creditor to collect the fruits of the mortgaged land.1826 If a mortgage serves as security for consumer credit, special rules of the CCA apply that set out some specific rules on the mortgage contract.1827 707. Lien can be established also by law (statutory lien, Sl. zakonita zastavna pravica). In these cases, lien is established the moment all the prerequisites laid down by the law are met.1828 The OC is one of the legal acts setting out statutory (ex lege) lien in some cases of contractual relationships.1829 For example, under the contract on control of goods and services, the controller has, to secure the payment and the reimbursement of the costs, a statutory lien on the goods delivered to him or her for control.1830 Same entitlement goes to the contractor under a contract for work,1831 the carrier under a contract of carriage,1832 the warehouse keeper under a warehouse contract,1833 the mandator under a mandate contract,1834 the commission agent under the commission agency contract,1835 the agent under a contract on commercial agency,1836 and the freight forwarding agent under a shipping contract.1837 In some other types of legal relationships, such as those arising out of a loan for use contract and the general safekeeping contract, retention of goods handed over to the other party (which entitles to repayment out of the goods as if the person was a lienee) is, on the other hand, expressly ruled out.1838

1825. 1826. 1827. 1828. 1829. 1830. 1831. 1832. 1833. 1834. 1835. 1836. 1837. 1838.

286

Articles 141–142 of the PLC. Article 152 of the PLC. For example, Arts 51–52 of the CCA. In cases of statutory mortgages, registration of the mortgage in the land register is not a prerequisite for its establishment (Art. 141 of the PLC) but is important for publicity reasons. An example of a statutory lien set out in the PLC is a lien of one of multiple creditors securing his or her claim for costs covered for one of the other creditors for whom he or she has store the pledged goods. See Art. 169/2 of the PLC. Article 877 of the OC. Article 647 of the OC. Articles 697–698 of the OC. Article 753 of the OC. Article 780 of the OC. Article 803 of the OC. Article 829 of the OC. Article 870 of the OC. See Arts 262/1 and 264 of the OC.

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708–712

708. If a lien is based on a court decision, it is established the moment the decision becomes final.1839 Exceptions are set out with that regard for mortgages established within enforcement proceedings in accordance with the Claim Enforcement and Security Act1840 where the mortgage is established only upon its entry in the land register.1841 §2. CONTRACTUAL POSSESSORY PLEDGE 709. The following elements are required for establishment of a possessory pledge on the basis of a contract: a valid contract of pledge, a real agreement on the creation of a pledge, delivery of the pledged object in the direct possession of the pledgee or a third person (Lat. Tradition, Sl. izrocˇitev),1842 and the pledgor’s right to encumber the pledged object. 710. For the duration of a pledge, the pledgee has the same legal protection as an owner and may, under the same conditions, request the return of the pledged property, the cessation of interference, and the protection of possession.1843 A pledgor who requires the pledged object for his or her own purposes while the pledge is still in force may request that the court orders the pledgee to return the object under the condition that the pledgor provides the pledgee with another appropriate security.1844 711. It is possible to place the same object under more than one pledge.1845 The second and subsequent pledgees acquire their pledge at the moment the pledgor notifies of this the pledgee in direct possession of the pledged thing.1846 If the secured claim of a pledgee who has possession of a thing is paid in full, he or she must deliver the pledged property to the next pledgee.1847 712. If the pledged movable provides fruits, the ownership of the fruits is acquired by the pledgor, unless the parties have agreed otherwise.1848 If they have

1839. Article 135 of the PLC. 1840. Sl. Zakon o izvršbi in zavarovanju (ZIZ), Official Gazette RS, No. 51/98, with further amendments. 1841. Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 746–747. 1842. See Art. 155 of the CPA. The delivery of the pledged object can be performed in any of the manners determined in Art. 60 of the CPA, which regulates delivery in the case of a transfer of ownership, apart from the so-called constitutum possessorium. 1843. Article 164 of the CPA. 1844. Article 163/2 of the CPA. 1845. Articles 169/1 and 136 of the PLC. 1846. Or a third person who is in direct possession of the pledged thing for the pledgee. 1847. Article 169/2 of the PLC. 1848. Article 159/1 of the PLC.

287

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agreed that the ownership of the fruits is acquired by the pledgee (Lat. pactum antichreticum, Sl. dogovor o antihrezi), the value of the secured claim is reduced by the value of the fruits.1849 The same rule applies if the pledgee achieves other benefits by using the pledged object.1850 713. If the pledged object has material or legal defects making the security provided by the pledge insufficient, the pledgee has the right to request the pledgor to provide some other appropriate security,1851 if at the moment of the conclusion of the contract on pledge, the pledgee was not aware of the defects. The same rule applies if the parties have agreed that the defect which was known to them at the conclusion of the contract, will be remedied before the delivery of the movable into the pledgee’s possession. If the pledged object accidentally perishes or is damaged or its market value drops after the pledging, the pledgor is not liable for that.1852 714. As soon as the secured claim is paid off in full, the pledgee must return the pledged movable to the pledgor or enable him or her to take direct possession of it from a third person.1853 If, however, the secured claim is not settled upon maturity, the pledgee may ask the court to order that the movable be sold and the payment made from the proceeds of the sale.1854 The pledged movable may exceptionally be sold already before the claim falls due if the movable is losing its value and there is a risk of it becoming insufficient to secure the creditor’s claim. Such sale can be ordered by the court, upon a request from either of the parties and after hearing out the other party.1855 The sale is performed by the court, at a public auction.1856 The proceeds from such sale are delivered to the pledgee after deduction of the costs of the sale and the interests for premature payment.1857 The pledgor can prevent such sale if he or she offers to provide other appropriate security.1858 An out-of-court sale

1849. 1850. 1851. 1852. 1853. 1854.

1855. 1856. 1857. 1858.

288

Article 159/2 of the PLC. Article 159/3 of the PLC. Article 161 of the PLC. Berden in: Juhart, Tratnik, Vrencˇur (eds), Stvarnopravni zakonik s komentarjem, GV Založba, Ljubljana 2004, p. 721. Article 165 of the PLC. Article 166 of the PLC. If the debtor is in bankruptcy proceedings, the creditor must the claim in these proceedings, and may not make use of separate individual enforcement proceedings. For further details, see Plavšak, Vrencˇur in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, pp. 51–54. Article 162/1 of the PLC. At the request of the pledgor, the court may permit the pledged property to be sold to a specific person at a set price if it establishes that the price is reasonable and if the justified interests of the pledgee are thereby protected. Berden in: Juhart, Tratnik, Vrencˇur (eds), Stvarnopravni zakonik s komentarjem, GV Založba, Ljubljana 2004, pp. 723–724; Tratnik in: Juhart, Tratnik, Vrencˇur, Stvarno pravo, GV Založba, Ljubljana 2007, p. 470. Article 162/2 of the PLC.

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715–716

is possible only upon a written agreement between the parties.1859 In case of commercial contracts, however, the existence of an out-of-court sale agreement is presumed.1860 In the case of an out-of-court sale, the pledgee may sell the pledged property at a public auction or at an exchange price or the market price if it exists. The pledgee must inform the debtor (and the pledgor, if the latter is not the debtor) of his or her intention to sell the pledged object, and of the place and time of the sale. The latter may take place only after eight days have passed from the notification. After the sale is carried out, the pledgee receives payment of his or her claim from the proceeds of the sale, together with interest and costs, while any surplus must be delivered to the pledgor.1861 Provisions of a contract of pledge providing for a different method of out-of-court sale are null and void.1862 §3. CONTRACTUAL NON-POSSESSORY PLEDGE 715. A non-possessory pledge (Sl. neposestna zastavna pravica) is a pledge on a movable, where the pledged object remains in the possession of the pledgor or a third person on his or her behalf.1863 A non-possessory pledge can be either ‘ordinary’ or ‘registered’. The latter is available with regard to movables expressly listed in a Decree on the Register of Non-Possessory Liens and Seized Movables:1864 stored material, equipment, motor and track vehicles, motorcycles, trailers, semitrailers, and certain animals. Only a registered (and not an ordinary) non-possessory pledge can be established regarding these movables. 716. Contract on non-possessory pledge must be in the form of a directly enforceable notarial deed.1865 The PLC specifies the mandatory substance of such document: information on the pledger and the pledgee (and the debtor if the debtor and the pledgee are not the same person); information on the secured claim (its amount and due date for its payment, or information enabling the determination of this data); and information on the pledged movable.1866 It must also contain the consent of the pledgor to the establishment of the pledge on the movable property and to the repayment of the secured claim upon its maturity from the pledged object (clausula intabulandi).1867 Concluding such an agreement in the form of a notarial

1859. Article 167 of the PLC. For further details, see Plavšak, Vrencˇur in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, pp. 51–52, 54–63. 1860. Article 167/1 of the PLC. 1861. Article 167/2 of the PLC. 1862. Article 167/3 of the PLC. 1863. Article 170 of the PLC. 1864. Sl. Uredba o registru neposestnih zastavnih pravic in zarubljenih premicˇnin, Official Gazette RS, No. 23/04. 1865. Article 4 of the Notary Act (Sl. Zakon o notariatu (ZN), Official Gazette RS, No. 13/94, with further amendments). Art. 171/1 of the PLC. 1866. Articles 171/2 and 177/2 of the PLC. 1867. Article 171/2 of the PLC.

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deed has the effect of a seizure of a movable in enforcement proceedings1868 that would otherwise have to be performed by a bailiff.1869 717. In case of registered non-possessory pledges, the entry of the pledge into the register is of a constitutive nature, the pledge is thus validly established only upon its entry into the register, and not already upon the formation of the notarial deed. Before filing for the entry in the register, the notary must verify whether the pledgor is the owner of the pledged movable or has the right to access the premises where the movables are located; whether the movable is already registered as being pledged and the pledgees have not consented to the subsequent pledge; whether the movable is already registered as seized; and whether the registered non-possessory pledge cannot be established due to the pledgor’s insolvency. If any of the conditions for the establishment of the pledge are not met, the notary may not file for the entry in the register.1870 718. The pledgor may use the pledged movable in accordance with its economic purpose or in accordance with an agreement with the pledgee. He or she can alienate or further encumber the movable only with the consent of the pledgee.1871 If the pledger reduces the value of the movable, the pledgee may request that it is handed over to him or her or to a third person on his or her behalf.1872 The non-possessory pledge is in this case transformed into a possessory pledge with a presumed out-ofcourt sale agreement.1873 The same consequences accrue if the debtor fails to settle the secured claim when it falls due. §4. CONTRACTUAL MORTGAGE 719. The acquisition of a mortgage on the basis of a legal transaction (Sl. pogodbena hipoteka) requires an entry in the land register. In addition to the general provisions on lien presented above, the CPA sets down special provisions on the contractual establishment of a mortgage.1874 Registration is performed on the basis of a valid written1875 obligatory mortgage contract (Sl. pogodba o ustanovitvi hipoteke) and on the basis of a valid document containing the land registry permission.1876 In practice, however, the parties decide to conclude the mortgage contract in the form of a notarial deed (and not merely in a regular written form as required 1868. Article 171/3 of the PLC. 1869. See Juhart in: Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik s komentarjem, Uradni list Republike Slovenije, Pravna fakulteta Univerze v Ljubljani, Pravna fakulteta Univerze v Mariboru, Ljubljana 2016, pp. 883–884. 1870. Article 24 of the Decree. 1871. Article 172 of the PLC, Art. 24/1/2 of the Uredba o registru neposestnih zastavnih pravic in zarubljenih premicˇnin, Official Gazette RS, No. 23/04, with further amendments. 1872. Article 174/1 of the PLC. 1873. Article 174/2 of the PLC. 1874. Articles 141–142 of the PLC. 1875. Article 52 of the OC. 1876. For further details, see Plavšak in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, pp. 75–85.

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by the general rules of the OC) as this way (i.e., by way of a so-called notarial mortgage, Sl. notarska hipoteka), they agree on a direct enforcement of the secured claim.1877 720. As has already been stressed supra, pactum antichreticum, i.e., an agreement enabling the creditor to collect the fruits of the mortgaged land, or to make use of the land in any other way, is prohibited.1878 Further, lex commissoria, i.e., an agreement stipulating that the ownership of mortgaged property is transferred to the mortgagor if his or her claim is not paid at maturity, or that the mortgaged property can be sold at a predetermined price, is null and void unless it is concluded after the secured claim has matured.1879 721. A land registry permission (Lat. clausula intabulandi, Sl. zemljiškoknjižno dovolilo or intabulacijska klavzula) is an express and unconditional written statement of the property right holder that he or she accords to the transfer or encumbrance of his or her right.1880 It must contain the holder’s statement having the exact substance as set out in the PLC. The LRA also sets out which data on the holder must be included in the land registry permission.1881 In the case of establishing a mortgage, such document must consist of a designation of the mortgagee and the debtor of the secured claim (as well as the mortgagor, if the mortgagor is not at the same time the debtor of the secured claim), the legal basis, the land registry designation of the immovable on which the mortgage is established, and the amount and due date of the secured claim. The land registry permission is usually incorporated in the underlying obligatory contract or is drafted as a separate document. The holder’s signature on the land registry permission must be attested by the notary1882 or else the permission is invalid. In case of immovables, the form requirement for the real agreement (written statement with prescribed substance, and with the holder’s signature attested by the notary) is therefore stricter than the form requirement for the obligatory agreement (written contract).1883

1877. See Art. 142 of the PLC and Art. 4 of the Notary Act (Sl. Zakon o notariatu (ZN), Official Gazette RS, No. 13/94, with further amendments). For further details, see Tratnik in: Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik s komentarjem, Uradni list Republike Slovenije, Pravna fakulteta Univerze v Ljubljani, Pravna fakulteta Univerze v Mariboru, Ljubljana 2016, pp. 779–785; Plavšak in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, p. 77. 1878. Article 152 of the PLC. See Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, p. 832. 1879. Article 132 of the CPA. 1880. Article 23 of the PLC. 1881. Article 32 of the LRA. 1882. Article 23 of the PLC and Art. 33 of the LRA. The purpose of the attestation is to check whether the person issuing the land registry permission in fact is the holder of the property right in question. 1883. Article 141 of the PLC. For details on clausula intabulandi in the Slovenian legal system, see Vlahek in: Kramberger Škerl, Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016, pp. 163–164.

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722. If a mortgage serves as security for consumer credit, special rules of the CCA apply.1884 The consumer mortgage credit contract must be in the form of a notarial deed.1885 If the owner of the immovable serving as security for the consumer credit is a consumer (the mortgagor and the debtor are usually the same person, but the consumer may also make available his or her immovable for securing a third person’s debt1886), he or she must be present during the conclusion of such contract before the notary and must be informed by the notary of the legal consequences of such contract, as well as of the legal consequences of potential nonpayment. The owner has to attest that he or she was informed of that by signing the notarial deed.1887 723. If the secured claim is not settled upon maturity, the mortgagee may ask the court to order that the immovable be sold and the payment made from the proceeds of the sale.1888 In the case the mortgage was established on the basis of a directly enforceable notarial deed, the creditor may request the notary to establish the maturity of the claim and to perform the sale of the mortgaged immovable or to request the enforcement of the claim.1889 The buyer of such immovable may, regardless of any statutory or contractual time limits, terminate all contracts on the use of the immovable (such as lease) entered into after the immovable had been mortgaged by setting a one month termination period.1890 The mortgaged immovable may exceptionally be sold already before the claim falls due if the mortgagee is diminishing its value or is otherwise aggravating its condition. The creditor may in such case request the court to request the mortgagee to refrain from such actions. If he or she does not do so, the creditor may request the court to order the sale of the property.1891

1884. 1885. 1886. 1887. 1888.

See Arts 38–75 of the CCA. Article 51/1 of the CCA. Article 51/2 of the CCA. Article 51/1 of the CCA. Article 153/1 of the PLC. If the debtor is in bankruptcy proceedings, the creditor must the claim in these proceedings, and may not make use of separate individual enforcement proceedings. For further details, see Plavšak, Vrencˇur in: Plavšak, Vrencˇur (eds), Zastavna pravica, PlanetGV, ABC nepremicˇnine, Ljubljana 2018, pp. 51–54; Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 833–849. 1889. Article 153/2 of the PLC. For further details, see Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 835–849. 1890. Article 153/3 of the PLC. For further details, see Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 842–843. 1891. Article 162/1 of the PLC. For further details, see Tratnik in Juhart, Tratnik, Vrencˇur, Stvarnopravni zakonik (SPZ) s komentarjem, Uradni list RS, Ljubljana 2016, pp. 830–831.

292

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Chapter 25. Compromise 724. Compromise (Sl. poravnava) is, from a substantive point of view, regulated in Chapter XXXI of the Special Part of the OC (Articles 1050–1059). The purpose of the contract on compromise is to enable persons that are in dispute or are uncertain about a specific legal relationship or enforcement of a specific right, to settle the dispute or remove the uncertainties by reaching a mutual compromise and setting out their rights and obligations.1892 725. The compromise may be in partial or full acknowledgment of the other party’s claim or in waiver of your own claim, in acceptance of a new obligation, in reduction of the interest rate, in extension of a deadline, in acceptance of partial payments etc.1893 The compromise may be conditional.1894 Rules on laesio enormis do not apply to compromise.1895 If only one of the parties agrees to give up his or her right or accept a reduction of the other party’s obligations, rules on compromise do not apply.1896 The parties may not reach a compromise regarding a null legal transaction whereas they may reach one regarding a voidable legal transaction if the party who could have referred to voidability, was aware of it when concluding the compromise contract.1897 726. A compromise is null if it is based on erroneous belief of both parties that a legal relationship that is subject of the compromise exists, although it does not, and there would be no dispute or uncertainty but for such erroneous belief.1898 The same rule applies to erroneous belief in certain facts.1899

1892. Article 1050 of the OC. According to Art. 1053 of the OC, the settlement may cover any right with which it may be disposed of. Disputes regarding personal status may not be the subject of a compromise. See also Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883, p. 423. 1893. Article 1051/1 of the OC. 1894. Article 1051/2 of the OC. 1895. Article 1055 of the OC. For further details on this institute, see Part I, Ch. 2, §2 III of this monograph. 1896. Article 1051/3 of the OC. 1897. Article 1057 of the OC. 1898. Article 1058/1 of the OC. 1899. Article 1058/2 of the OC.

293

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Chapter 26. Insurance Contract 727. General rules on insurance contract (Sl. zavarovalna pogodba) which is a typical aleatory contract, are set out in the OC (Chapter XXVI of the Special Part of the OC, Articles 921–989). First, the common provisions on personal and property insurance are laid down where general provisions on insurance and the insurance contract as well as on the policy holder’s (insurer, Sl. zavarovalec) insured person’s (insuree, Sl. zavarovanec) and the insurance company’s (Sl. zavarovalnica) rights and obligations are presented. These general chapters are followed by specific provisions on property insurance and specific provisions on personal insurance. 728. Despite these detailed rules on insurance contract that, in principle, apply in case the parties have not agreed otherwise, the parties to an insurance contract tend to stipulate their rights and obligations in very much detail in the contract. These are usually drafted by incorporating the insurance company’s general terms and conditions or (in B2C relationships) standard contract terms.1900 729. Apart from the extensive regulation of the OC, detail legislation has been enacted regulating specific aspects of insurance law, e.g., Compulsory Motor ThirdParty Liability Insurance Act,1901 Obligations and Real Rights in Air Navigation Act,1902 MC,1903 etc. 730. As Slovenian insurance law is analysed in detail in a separate IEL monograph,1904 it is not being presented here. Instead, a reader is best referred to that part of IEL.

1900. For a detailed analysis of the institutes of the general terms and conditions and the standard contract terms, see Part I, Ch. 3, §1 of this monograph. 1901. Sl. Zakon o obveznih zavarovanjih v prometu (ZOZP), Official Gazette RS, No. 70/94, with further amendments. 1902. Sl. Zakon o obligacijskih in stvarnopravnih razmerjih v letalstvu (ZOSRL), Official Gazette RS, No. 12/00, with further amendments. 1903. Sl. Pomorski zakonik, Official Gazette RS, No. 26/01, with further amendments. 1904. Pavliha, Simoniti, Slovenia, in: Cousy, Blanpain, Frank Hendrickx (eds), IEL Insurance Law, Kluwer Law International BV, Netherlands 2002.

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Chapter 27. Partnership Contract 731. A civil law partnership contract (Lat. societas, Sl. družbena pogodba or. societetna pogodba) is regulated in Chapter XXVII of the Special Part of the OC (Articles 990–1002). The Yugoslav OA of 1978 did not regulate partnership contract as it was not, being an intuitu personae contract, particularly relevant for the functioning of the Yugoslav market on which the federal Yugoslav legislation was focused. Apart from that, private entrepreneurship was not developed at the time. Its regulation was thus left to the legislators of the republics. As the Slovenian legislator had not adopted any laws on societas, the rules of the Austrian ABGB regulating the ‘contract on community of property’ (Sl. pogodba o skupnosti imovine, §§ 1175–1216 of the Austrian ABGB)1905 applied all up until the entry into force of the OC on 1 January 2002. They, however, still apply to partnership contracts concluded before 1 January 2002. When drafting the OC, the Slovenian legislator mirrored to some extent the Austrian ABGB regulation of the partnership contract. Provisions on a special form of partnership contract regulating the formation, functioning, internal organization and liquidation of certain companies are laid down in the Companies Act.1906 732. The OC defines a partnership contract as a contract by conclusion of which two or more persons oblige themselves to try to achieve with their contributions a common legally admissible goal set out in the contract.1907 Upon conclusion of the contract, a civil law partnership (not a corporate one) is formed. No form is required for a valid conclusion of the contract. The partners may not transfer his or her partnership onto a third person. They may, however, transfer it to other partners if the contract allows that.1908 The contract on partnership may also allow new partners to join the partnership.1909 On the other hand, the partners may be expelled from the partnership for justifiable reasons. Unless the contract enables the partners to decide on the expulsion on their own, they have to file a request with the court.1910 733. Unless the partners’ contributions are determined in the contract, they are equal.1911 Societas leonina (Sl. levja družba) where one of the partners would only benefit from the partnership but would not be obliged to contribute, is explicitly prohibited by the OC.1912 Contributions may be in the form of money, things, rights, claims, services or omissions having monetary value, the assets may also be made 1905. See Štempihar, Osnutek posebnega dela obveznosti, LRS Uradni list, Ljubljana 1952, pp. 54–62. 1906. Sl. Zakon o gospodarskih družbah (ZGD-1), Official Gazette RS, No. 42/06, with further amendments. 1907. Article 990 of the OC. 1908. Article 998/4 of the OC. 1909. Article 998/1,2,3 of the OC. The new partner is obliged to contribute to the partnership and is entitled to the benefits accruing after joining the partnership. The new partner is liable only for the obligations that have arisen after his or her accession to the partnership. 1910. Article 999 of the OC. 1911. Article 991/1,3 of the OC. 1912. Articles 991/5 and 994/2 of the OC.

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available for use only.1913 Each of the partners has an equal co-ownership share in the property of the partnership.1914 In addition to contributions, the partners must also provide assets for the protection of the partnership’s property.1915 The partners are liable for any legal or material defects of the contributed assets in accordance with the rules on such liability of the seller or of the lessor respectively.1916 Unless the contract provides otherwise, each of the partners is entitled to a share in profit of the partnership.1917 Each of the partners must, however, cover the partnership’s loss in proportion to his or her share in the partnership.1918 734. When doing business for the partnership, the partners must show diligentia quam in suis1919 and must refrain from doing anything that would lessen the prospects of achieving the common goal.1920 735. The OC sets out detailed rules on how the decisions are taken within the partnership. Unless the contract states otherwise, each of the partners has one vote.1921 Decisions regarding the most important questions examples of which are listed in the OC, are taken unanimously.1922 The contract may, however, state that these can be taken by a majority vote which may not be less than two-thirds of the partners’ votes.1923 Unless the contract states otherwise, the partners manage the partnership jointly and equally.1924 If the property of the partnership does not suffice for covering the partnership’s obligations, these must be covered by the partners themselves who are jointly and severally liable for them.1925 736. The partnership expires in the following cases:1926 upon expiration of the time for which it was created; upon achievement of the goal for which the partnership was created or when this becomes impossible; upon agreement of the partners; if a partner dies, loses his or her legal capacity, ceases to exist or is in insolvency proceedings; if a third person obtain the partner’s share in enforcement proceedings; if the partner is prohibited by an act of a state institution from performing activities related to the purpose of the partnership; if a partner terminates the contract.1927 In these case, a liquidation of the partnership must take place.1928

1913. 1914. 1915. 1916. 1917. 1918. 1919. 1920. 1921. 1922. 1923. 1924. 1925. 1926. 1927. 1928.

296

Article 991/2,4 of the OC. Article 996 of the OC. Article 991/6 of the OC. Article 991/7 of the OC. Article 994/1 of the OC. Article 994/2,3 of the OC. If the purpose of the partnership is related to partners’ business or profession, they must, however, act with diligence of a businessperson or a professional (Art. 993/2 of the OC). Article 993/1,3 of the OC. Article 992/1 of the OC. Article 992/2 of the OC. Article 992/3 of the OC. Article 992/4,5,6,7,8 of the OC. See Arts 995 and 997 of the OC. Article 1000 of the OC. See Art. 1001 of the OC. Article 1002 of the OC.

737–737

Chapter 28. Modern Types of Contracts (‘ing’ Contracts) 737. Slovenian law does not lay down any rules on ‘modern’ or ‘ing’ contracts, such as contracts on leasing (Sl. lizing), franchising (Sl. franšizing), factoring (Sl. faktoring), forfeiting (Sl. forfetiranje), transfer of know-how (Sl. prenos tehnicˇnega znanja in izkušenj), distribution (Sl. distribucija), etc.1929 Although majority of these contracts bear a special name, they are categorized as innominate contracts for the reason of their non-legislative regulation.1930 These contracts (particularly financial leasing) are very common in practice. Despite that, they are intentionally not regulated so as to enable the evolution of the definition and the contents of these contracts. These are left to the business and court practice to develop. Slovenian legal theory has covered them rather intensively.1931

1929. For details on these contracts, see Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996. 1930. See supra Introduction to the Law of Contracts, §3, I. 1931. See, e.g., Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996; Grilc, Pravna narava distribucijske pogodbe, Zbornik znanstvenih razprav, 2010; Grilc, Kompleksne pogodbe gospodarskega prava kot izziv pravnega reda, Zbornik znanstvenih razprav, 1994; Grilc, Pravna narava pogodbe o leasingu, Zbornik znanstvenih razprav, 1993; Plavšak in: Bratina et al., Aktualna vprašanja gospodarskega prava, Nebra, Ljubljana 2017; Grilc, Pravna narava in kavza pogodbe o franchising, Zbornik znanstvenih razprav, 1991; Grilc, Moderni pogodbeni tipi in obligacijski zakonik, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava, Inštitut za primerjalno pravo, Ljubljana 2002; Grilc, Juhart, Slovenia, in: Campbell (ed.), International franchising, 2nd ed., Juris Publishing, Huntington, NY 2015.

297

738–739

Chapter 29. Contracts with the Government and Other Public Administrations 738. The notion of administrative contract (public law contract, Sl. upravna pogodba or javnopravna pogodba) is unknown in Slovenian legislation.1932 It has been defined and analysed only in the legal theory1933 which sets out, referring in particular to French theory and case law, the following criteria for administrative contracts: (i) at least one of the parties must be, in principle, a legal person of public law, (ii) the contract is concluded (predominantly) in the public interest, (iii) it contains not only the typical contractual provisions but also authoritative provisions mirroring dominance of the public law entity in the contractual relationship, and giving it special rights to alter the relationship (such as the right to amend the contract unilaterally, to impose new obligations upon the other party, terminate the contract unilaterally) whereas in the case of such actions, the other party is left only with some sort of financial compensation.1934 Legal authors explain that the nonauthoritative contracts entered into with public law entities were first covered by pure civil law but have eventually come under the special rules for public contracts. These contain authoritative, public law elements and have evolved for reasons of the status of the parties to such contracts, i.e., the fact that one of them was a state or other public law entity.1935 Legal theory speaks of public or administrative contract law.1936 739. Although the definition and the general regulation of administrative contract is lacking in Slovenian law, there exists special legislation setting out the rules on contracts falling under the definition of administrative contracts (mostly those referred to as concession contracts).1937 Despite the attempts to regulate concession contracts in one legislative act, the rules on various types and various (but not all 1932. Pirnat, Pravni problemi upravne pogodbe, Javna uprava, 36, No. 2, pp. 143, 150. 1933. Pirnat, Pravni problemi upravne pogodbe, Javna uprava, 36, No. 2; Kerševan, Upravne pogodbe, Javna uprava, 2007, 43, No. 1; Pirnat, Pravna narava internih aktov uprave z eksternim ucˇinkovanjem, Javna uprava, 1995, 31, No. 3; Pirnat, Upravna pogodba – ali jo slovensko pravo potrebuje?, in: VI. dnevi javnega prava, Portorož, 5.-7. junij 2000, Inštitut za javno upravo, Ljubljana 2000; Pirnat, Obligacijsko pravo in upravnopravne pogodbe, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava: 7. – 9. marec 2002, Inštitut za primerjalno pravo, Ljubljana 2002; Pirnat, Javne pogodb, Pravna praksa, 27. mar. 2008, 27, No. 12; Plicˇanicˇ, Pravna narava pogodbenih in nepogodbenih (odškodninskih) razmerij med upravnimi in zasebnopravnimi subjekti ter drugih ‘civilisticˇnih’ položajev, Javna uprava, 1994, 30, No. 3; Plicˇanicˇ, Razvoj pravnih razmerij med upravnimi in zasebnopravnimi subjekti, Javna uprava, 1993, 29, No. 3/4. 1934. Pirnat, Pravni problemi upravne pogodbe, Javna uprava, 36, No. 2, p. 151; Pirnat, Javne pogodbe, Pravna praksa, 12/2008; Pirnat, Pravni problemi upravne pogodbe, Javna uprava, 36, No. 2, pp. 150–151. 1935. Plicˇanicˇ, Pravna narava pogodbenih in nepogodbenih (odškodninskih) razmerij med upravnimi in zasebnopravnimi subjekti ter drugih ‘civilisticˇnih’ položajev, Javna uprava, 1994, 30, No. 3, pp. 321–325. 1936. Ibid., p. 324. 1937. See Ahlin, Uporaba pravil Obligacijskega zakonika za razmerja iz koncesijske pogodbe: koncesijska pogodba na meji med javnim in zasebnim, Lex localis – revija za lokalno samoupravo 2/2008; Pirnat, Koncesijska pogodba, in: Dnevi slovenskih pravnikov 2003, Podjetje in delo 6–7/

298

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relevant) aspects of concession and similar contracts are scattered in various pieces of legislation, such as the Public-Private Partnership Act (PPPA),1938 Public Utility Services Act,1939 Institutes Act,1940 Environmental Protection Act,1941 Exercising of the Public Interest in Culture Act,1942 Research and Development Activity Act,1943 Management of State Forests Act,1944 Public Procurement Act,1945 etc. 740. The Public-Private Partnership Act regulates two types of public–private partnerships according to who of the partners bears the preponderant amount of the risk of performing the project of the public–private partnership: a public procurement partnership (Sl. javnonarocˇniško partnerstvo) and a concession partnership (Sl. koncesijsko partnerstvo).1946 The latter is defined as a bilateral legal relationship between the state or local authority or other person of public law (Sl. koncedent), and a legal or a natural person (concessionaire, Sl. koncesionar) in which the public law entity grants the concessionaire a special or exclusive right to perform a public utility service or other activity in the public interest. The latter may include erecting buildings and devices which are in full or partial public interest. Public procurement partnership is defined as onerous contractual relationship between an ordering party on the one hand, and a provider of goods or services, or a builder on the other. If the public partner bears the whole or the preponderant amount of the risk of performing the project of the public–private partnership, the partnership is of a public procurement-type partnership. The Public-Private Partnership Act sets out detailed rules on the public–private partnership proceedings, i.e., on (i) the preliminary procedure of public–private partnership, (ii) the act on public–private partnership, (iii) the public tender for selecting the private partner, and the selection process (iv) the process of granting of and performing the public authority and (v) the establishment and the nature of the public–private partnership relationship.1947

1938.

1939. 1940. 1941. 1942. 1943. 1944. 1945. 1946. 1947.

2003; Pirnat, Problematika pravne ureditve koncesij, Javna uprava 1/1999; Pirnat, Koncesijska pogodba de lege ferenda, in: VIII. dnevi javnega prava, 2002, 3, Inštitut za javno upravo, Ljubljana 2002. Sl. Zakon o javno-zasebnem partnerstvu (ZJZP), Official Gazette RS, No. 127/06. For further details, see Pirnat, Podelitev koncesije po zakonu o javno-zasebnem partnerstvu, in: Dnevi slovenskih pravnikov 2007, Podjetje in delo 6–7/2007; Pirnat, Nekaj pravnih vprašanj javnozasebnega partnerstva, Javna uprava 2–3/2005. Sl. Zakon o varstvu okolja (ZVO-1), Official Gazette RS, No. 41/04, with further amendments. Sl. Zakon o zavodih (ZZ), Official Gazette RS, No. 12/91, with further amendments. Sl. Zakon o gospodarskih javnih službah (ZGJS), Official Gazette RS, No. 32/93, with further amendments. Sl. Zakon o uresnicˇevanju javnega interesa za kulturo (ZUJIK), Official Gazette RS, No. 96/02, with further amendments. Sl. Zakon o raziskovalni in razvojni dejavnosti (ZRRD), Official Gazette RS, No. 96/02, with further amendments. Sl. Zakon o gospodarjenju z gozdovi v lasti Republike Slovenije (ZGGLRS), Official Gazette RS, No. 9/16. Sl. Zakon o javnem narocˇanju (ZJN-3), Official Gazette RS, No. 91/15, with further amendments. See Pirnat, Pravni problemi upravne pogodbe, Javna uprava 2/2000. Articles 5 and 26–30 of the Public-Private Partnership Act. Articles 31–78 of the Public-Private Partnership Act.

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It also lays down detailed rules on the so-called building concessions (Sl. koncesije gradenj),1948 services concessions (Sl. koncesije storitev)1949 and corporate partnership (Sl. statusno partnerstvo).1950 741. Public Utility Services Act sets out the general rules on concession contract for the performance of public utility services.1951 Such concession contract is concluded between a natural or legal person meeting the requirements for performing the services, and the state or a local authority. The subject of concession and the terms of its performance are set out by the Government or a local authority in the concession act. The Public Utility Services Act lists the required content of the concession act and lays down the rules on the proceedings for choosing the concessionaire, the content and the form of the concession contract, the rights and obligations of the parties to the contract, and the termination of the concession relationship. 742. Detailed rules on various types of public procurement proceedings are laid down in the Public Procurement Act that implements several EU directives.1952 The act sets out the rules of its application (including the public tender values as relevant thresholds). It defines public procurement as a ‘written onerous contract concluded between one or more commercial entities and one or more ordering parties regarding the delivery of goods, or performance of construction or other services’.1953 The ordering party may be bodies of the RS or of local authorities, other public law entities, public undertakings dealing with infrastructure, and private undertakings dealing with infrastructure having been granted special or exclusive rights.1954

1948. 1949. 1950. 1951. 1952.

Articles 79–91 of the Public-Private Partnership Act. Articles 92–95 of the Public-Private Partnership Act. Articles 96–134 of the Public-Private Partnership Act. Articles 29–53 of the Public Utility Services Act. Directive 2014/24/EU of the European Parliament and of the Council of 26 Feb. 2014 on public procurement and repealing Directive 2004/18/EC (Text with EEA relevance), OJ L 94, 28.3.2014; Directive 2014/25/EU of the European Parliament and of the Council of 26 Feb. 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC Text with EEA relevance, OJ L 94, 28.3.2014; Council Directive 89/665/ EEC of 21 Dec. 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, OJ L 395, 30.12.1989; Council Directive 92/13/EEC of 25 Feb. 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, OJ L 76, 23.3.1992. 1953. Article 2 of the Public Procurement Act. 1954. Article 9 of the Public Procurement Act.

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Chapter 30. Quasi-contracts §1. NEGOTIORUM GESTIO 743. In principle, one is not allowed to intervene in the affairs of another person without being authorized to do so. In some situations, however, the law nevertheless allows and recognizes such intervention: firstly, to prevent imminent loss, and secondly, to avoid missing an obvious benefit.1955 A benevolent intervention into the affairs of another is thus allowed and promoted. In these cases, when somebody (socalled gestor) intervenes into affairs of another (so-called principal or dominus), a legal relationship between them is established by law. In Slovenian, the ‘negotiorum gestio’ is called ‘poslovodstvo brez narocˇila’. In the practice of the courts, these cases are rare. 744. The gestor and the dominus both have obligations in this relationship. The obligation of the gestor is to perform the business according to the actual or hypothetical purposes and needs of the principal.1956 He or she must exercise the diligence of good businessman (if he or she is a business) or normal diligence (if he or she is not a business).1957 Furthermore, the gestor must notify the principal as soon as possible that he is taking care of his business,1958 he or she is obliged to continue what he or she started if it is reasonably possible until the principal is able to take over. After the business is performed, he or she must submit an account and transfer everything he or she gained by the business, onto the principal.1959 A gestor also not only obligations but also rights: he or she may claim from the dominus that he or she relieve him or her from all obligations he or she entered into while performing the business, and to assume all obligations entered into in his or her name; furthermore, the gestor is entitled to recovery of costs (necessary and useful) as well as damage suffered in connection with the business.1960 In case of a successful negotiorum gestio, i.e., if loss was prevented or profit gained, the dominus must adequately reward the gestor.1961 Furthermore, the gestor has a right to take with him or her the things, with which he or she has increased the value of the dominus’ property (so-called ius tollendi), and for which he or she did not receive remuneration, if it is possible to separate them from other things; the dominus, however, has a right to keep these things, if he or she pays their actual value, but not more than the amount of actual costs.1962 If the dominus later approves the actions of the gestor, the latter is considered as if he or she was a mandate recipient (mandate contract) from the outset.1963 1955. 1956. 1957. 1958. 1959. 1960. 1961. 1962. 1963.

Article Article Article Article Article Article Article Article Article

199 of the OC. 201 of the OC. 201/2 of the OC. 200/1 of the OC. 200/2 of the OC. 202/1 of the OC. 202/2 of the OC. 203 of the OC. 206 of the OC. For details on mandate contract, see supra, Part II, Ch. 19.

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745. If somebody intervenes in the affairs of another person not with the purpose to help him or her, but to keep the profit gained, he or she is not entitled to any award. Instead, he or she must give account of everything he or she has done, and hand over to the dominus all the benefits gained.1964 In addition, he or she is liable in damages for the loss he or she might have caused.1965 Thus, an intervention into the affairs of another person, which is not benevolent, is a tort. 746. If, moreover, somebody intervenes in the affairs of another person against his or her prohibition, and he or she knew or must have known about the prohibition, he or she cannot rely on provisions of negotiorum gestio (Articles 199–203 of the OC).1966 He or she is also liable for loss he or she had caused regardless of his or her fault.1967 Such intervention (not benevolent and against prohibition) is not just a tort; rather it is a tort with stricter liability, similar to the liability of a thief (i.e., liability which includes liability for accidental damage and force majeure). If, however, the prohibition was contrary to the law or the morals, and in particular if fulfilment of legal duties was prohibited, the rules on negotiorum gestio nevertheless apply.1968 §2. UNJUSTIFIED ENRICHMENT 747. Enrichment without legal ground (unjustified acquisition, Articles 190–198 of the OC) is a self-standing source of obligations in the Slovenian OC, in addition to contract, causing of (non-contractual) loss (i.e., tort), unilateral declaration and negotiorum gestio. It is based on the idea that none should be unjustly enriched at the expense of another.1969 Therefore, if something was received without legal grounds, or the legal grounds subsequently fell away, it has to be returned.1970 This is also (a part of) the general clause on unjustified enrichment, on which the regulation in the OC is based. However, in spite of being a self-standing source of obligations, the internal structure of the institute of unjustified enrichment is far from being as accomplished as that of contract or tort law. Furthermore, unjustified enrichment is considered as a kind of ‘safety net’ in the law of obligations in the sense that a claim based on a contract or tort (delict) relating to the same factual situation takes precedence before the unjustified enrichment.1971 In relation to tort (or, with other words, causing damage without contract) the aim of unjustified enrichment is a mirror image: while tort law focuses on the compensation of loss of the aggrieved person, unjustified enrichment is concerned only with the position of the enriched person with the aim to take the unjustified enrichment away from it. 1964. 1965. 1966. 1967. 1968. 1969. 1970. 1971.

302

Article 205/1 of the OC. Article 205/2 of the OC. Article 204/1 of the OC. Article 204/2 of the OC. Article 204/3 of the OC. Pomp. D. 12, 6, 14. Article 190/1 of the OC. See judgment of the Supreme Court of RS, No. II Ips 145/2010 of 20 Jun. 2013.

Part II, Ch. 30, Quasi-contracts

748–751

748. Apart from the mentioned provisions, some other provisions of the OC also contain rules on unjustified enrichment, modifying the general regulation in the sense of lex specialis: Article 87 of the OC on the effects of nullity, Article 96 of the OC on the effects of avoidance, Article 111 of the OC on the consequences of termination of contract. Furthermore, some provisions outside the OC also form part of law of unjustified enrichment: Article 43d CPA (on the effects of withdrawal from the contract), Articles 17 and 18 CCA effects of withdrawal and termination of consumer credit contracts, Article 48 Property Act (on the increased value of a property due to input, Article 57 Property Act (the mixing of materials belonging to different owners and on the making of a new movable thing, Articles 95 and 96 of the Property Act claims of the bona fide and mala fide proprietor), and others. There are also other regulations, such as a regulation of the duty to repay the overpaid salaries in the Public Sector Salary System Act.1972 749. Article 190 OC seems to be a general clause, containing what appears to be a uniform set of rules for unjustified enrichment. However, the courts still distinguish between the so-called ‘Conditions’, i.e., reparation claims arising from legal acts, including invalid legal acts, and ‘Versions’, i.e., reparation claims arising from other situations, regardless of the will of a party, such as from the use of its goods by another person. This distinction is based on the Austrian ABGB, which was being applied until the adoption of the Yugoslav OA in 1978. 750. As already indicated, the general principle of the law of unjustified enrichment is, that if something was acquired without legal grounds to the detriment of another, it has to be returned, if possible.1973 If it is not possible, the benefit acquired by having or consuming it (e.g., in case of a service), is to be reimbursed.1974 The notion ‘without legal grounds’ includes the situation where the legal grounds existed at the time of acquisition but fell away subsequently, such as a contract which was later terminated. 751. However, the general clause does not cover all the situations of unjustified enrichment entirely. There are additional rules for particular situations: if somebody ‘pays’ (performs) something although he or she knows that he or she has no obligation to, he or she cannot claim it back, unless he or she withheld the right to do so, or paid to avoid the use of force.1975 Furthermore, what was performed in the fulfilment of a moral duty or a natural (unenforceable) obligation cannot be claimed back.1976 In cases where a person is using a thing belonging to another person (in practice often one of the co-owners of a house using it in excess of its ownership share), a further additional requirement must be met: the aggrieved party must have tried to use or claimed its part of the co-owned property, and the enriched party must 1972. See Art. 3a of the Act (Sl. Zakon o sistemu placˇ v javnem sektorju (ZSPJS), Official Gazette 56/02, with further amendments). 1973. Article 190/1 of the OC. 1974. Article 190/1, 2 of the OC. 1975. Article 191 of the OC. 1976. Article 192 of the OC.

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have denied or prevented such use.1977 A mere fact that a co-owner has not used ‘his’ or ‘her’ part of the property does not suffice for a claim based on unjustified enrichment.1978 752. If possible, the object of unjustified enrichment has to be returned in specie.1979 If the party had sold the object to a third person and received something in return (a commodum), it has to return what it had received. However, some things, due to their nature, cannot be returned in specie (e.g., benefits arising from the use of things, or services). The return is also not possible if the party has lost, damaged, destroyed, sold, given away or otherwise disposed of the object of enrichment. In these cases, the enriched party must return not what the other party had given her, but what it was enriched for. The value of the benefit, acquired by having used or having consumed the object, is thus to be reimbursed in money. In principle, the market value is the objective measure of this value. 753. The reimbursement of benefits acquired by using the thing includes the so-called ‘fruits’. The metaphor is self-explanatory: if the object of enrichment is a tree, the fruits of the tree are to be returned. In practice, this mostly refers to the case where the object of enrichment is a sum of money, the interest to be paid is the ‘fruits. Here, the provision of Article 193 of the OC is raising some doubts: it prescribes that an ‘honest’ (i.e., bona fide) acquirer has to return the fruits and pay ‘interest for delay’ from the moment the claim was filed (better: from the moment he gained knowledge of the claims and thus was not bona fide any more), while a ‘dishonest’ acquirer has to return the fruits and pay interest for delay from the moment he or she acquired the object of enrichment. This means that the obligation of a dishonest acquirer is stricter. However, fruits and interest for delay can hardly be considered the same thing, as interest for delay contains a special ‘punitive’ element, which should make pressure on the debtor to pay back the money. On the other hand, it is clear from the general clause that the bona fide acquirer of money also has to reimburse the benefits gained by having had the money up to the moment when he or she is no longer bona fide, i.e., when he or she knows that he or she is possibly not entitled to keep it. Several options exist with regard to the interest rate.1980 The applicable interest rate should, in any case, mirror the acquired benefit or the expenses saved. 754. Furthermore, the ‘enriched’ party may claim the recovery of expenses in connection with the object of enrichment; whereas the ‘honest’ enriched person (acquirer) is entitled to ‘necessary’ and ‘useful’ expenses, the ‘dishonest’ acquirer can only claim back the necessary expenses to the extent they had increased the value of the object.1981 1977. See, e.g., judgment of the Supreme Court of RS, No. II Ips 364/2000 of 1 Mar. 2001. 1978. Judgment of the Supreme Court of RS, No. II Ips 508/2006 of 17 Dec. 2008. See also judgment of the High Court of Ljubljana, No. I Cp 667/2010 of 5 May 2010. 1979. Možina, Vsebina in obseg obogatitvenega zahtevka, in: Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017, p. 155. 1980. Ibid. 1981. Article 194 of the OC.

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755–755

755. Furthermore, the bona fide enriched party (acquirer) can use the defence of change of position. If the party who had reasons to believe that it is fully entitled to dispose of with what has later turned out to be unjustified enrichment, had disposed of it in a way that it is no longer in its property, the reimbursement would diminish its property, compared to the situation before ‘enrichment’. In most cases, such reimbursement would not be equitable. However, if the party has disposed of it in a way that it is still in her property, albeit in the form of expense it had saved, then the reimbursement duty still exists.1982 Article 195 of OC explicitly regulates only situations where a bona fide party is asked to return payments received as damages for a personal injury or death: in this case he or she may use the defence of change of position. However, this is also a general rule in the law of unjustified enrichment: if, in case of a bona fide party, the object of enrichment was lost, consumed, destroyed or disposed with in another way so that it is not in the property of the party anymore (including saved expenses), that part may raise the defence of change of position against the restitution claim.1983

1982. Možina, Vsebina in obseg obogatitvenega zahtevka, in: Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017, p. 155. 1983. Možina, Vsebina in obseg obogatitvenega zahtevka, in: Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017, p. 159, and judgment of the High Court of Ljubljana, No. VSL II Cp 2088/2017 of 13 Dec. 2017.

305

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Selected Bibliography

J. Ahlin, Uporaba pravil Obligacijskega zakonika za razmerja iz koncesijske pogodbe: koncesijska pogodba na meji med javnim in zasebnim, Lex localis – revija za lokalno samoupravo 2/2008. M. Berdnik, T. Žefran, Uveljavljanje zahtevkov v primeru napake na blagu pri cˇezmejnem spletnem poslovanju, in: A. Vlahek, M. Damjan (eds), Varstvo potrošnikov pri spletnem poslovanju, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017. J. Beß, Die Haftung des Verkäufers für Sachmängel und Falschlieferungen im Einheitlichen Kaufgesetz, Carl Winter Universitätsverlag, Heidelberg 1971. B.T. Blagojevic´, V. Krulj (eds), Komentar Zakona o obligacionim odnosima, Savremena administracija, Beograd 1980. B. T. Blagojevic´, V. Krulj, Komentar ZOO I, Savremena administracija, Beograd 1983. K. Boele-Woelki, The Limitation of Rights and Actions in the International Sale of Goods, Uniform Law Review 3/1999. E. Bogataj, Razvoj equity v angleškem pravu: primer trusta, Univerza v Ljubljani, Ljubljana 2007. B. Bratina et al., Aktualna vprašanja gospodarskega prava, Nebra, Ljubljana 2017. M. Brus, Veljava ODZ in druge avstrijske zakonodaje od prve svetovne vojne do danes, in: A. Polajnar Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, GV Založba, Ljubljana 2013. I. Bukljaš, Uzance s objašnjenjima i sudskom praksom uz kupoprodaju, Progres, Zagreb 1962. J. Cepec, Laesio enormis v gospodarskem pogodbenem pravu, Pravnik 1–2/2015. J. Cepec, Opredelitev pojma potrošnik v pogodbenem pravu EU, in: A. Vlahek, M. Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakultetiv Ljubljani, Ljubljana 2015. S. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1983. S. Cigoj, Komentar obligacijskih razmerij, Uradni list, Ljubljana 1984. S. Cigoj, Das jugoslawische Schuldrecht unter dem Einfluß der Vereinheitlichungsbestrebungen auf dem Gebiet des Warenkaufs, Zeitschrift für Rechtsvergleichung (ZfRV) 1987.

307

Selected Bibliography M. Damjan, A. Vlahek, The Protection of Consumers as Personal Security Providers under the DCFR and EU Consumer Law, in: A. Viglianisi Ferraro, M. Jagielska, M. Selucká (eds), The Influence of the European Legislation on National Legal Systems in the Field of Consumer Protection, Wolters Kluwer, CEDAM, Assago, Padova 2018. M. Damjan, K. Podobnik, A. Vlahek, Slovenia, in: J. L. C. Vilac¸a (ed.), Congress Proceedings, Vol. 1, The Internal Market and the Digital Economy (Le marché intérieur et l´économie digitale), (Der Binnenmarkt und die digitale Wirtschaft), Almedina, Coimbra 2018. M. Dolenc, O nekaterih vprašanjih sklepanja pogodb, Pravosodni bilten 2/09. M. Dolenc, Napake volje pri sklepanju pravnih poslov, Cankarjeva založba, Ljubljana 2003. M. Dolenc, Pravne posledice nicˇnosti pogodbe (o nekaterih problemih kondikcijskih zahtevkov), Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011. M. Dolenc, Nacˇin uveljavljanja izpodbojnosti pravnih poslov, in: Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017. K. Drnovšek, Institut spremenjenih okolišcˇin v novejši sodni praksi, Podjetje in delo 8/2016. U. Drobnig, Personal Security (PEL Pers. Sec.), Oxford University Press, Oxford, New York, 2007. M. Ðor evic´, Izpodbijanje pravnih dejanj stecˇajnega dolžnika (pravne osebe), PhD thesis, Univerza v Ljubljani, Ljubljana 2003. S. Estrin, Yugoslavia: The Case of Self-Managing Market Socialism, Journal of Economic Perspectives, Vol. 5, nr. 4/1991. A. Fakin, Predpogodbene dolžnosti informiranja, PhD dissertation, Univerza v Ljubljani, Ljubljana 2016. A. Fakin, Merila za vzpostavitev predpogodbenih dolžnosti informiranja, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017. A. Fercˇicˇ, Nepošteni pogodbeni pogoji v potrošniških pogodbah, Pravna praksa 2/2010. A. Galicˇ, Znižanje pogodbene cene – z nasprotno tožbo ali z ugovorom?, Pravna praksa 8/2014. G. Gašperin, Zasebne ustanove s poudarkom na avstrijski pravni ureditvi, Masters’ thesis, Univerza v Ljubljani, Ljubljana 2018. A. Goldštajn, Obvezno pravo – 1. Vol, Informator, Zagreb 1978. P. Grilc, Moderni tipi pogodb avtonomnega gospodarskega prava, Gospodarski vestnik, Ljubljana 1996. P. Grilc, Pravna narava distribucijske pogodbe, Zbornik znanstvenih razprav 2010. P. Grilc, Kompleksne pogodbe gospodarskega prava kot izziv pravnega reda, Zbornik znanstvenih razprav 1994. P. Grilc, Pravna narava pogodbe o leasing, Zbornik znanstvenih razprav 1993. P. Grilc, Pravna narava in kavza pogodbe o franchising, Zbornik znanstvenih razprav 1991. 308

Selected Bibliography P. Grilc, Moderni pogodbeni tipi in obligacijski zakonik, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava: 7. – 9. marec 2002, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2002. P. Grilc, M. Juhart, Slovenia, in: D. Campbell (ed.), International Franchising, Juris Publishing, Huntington, New York 2015. P. Grilc, M. Juhart, Koncesijsko razmerje in koncesijska pogodba, Pravnik 1–2/ 1991. P. Grilc, Zadeva Leitner v. TUI – korak k evropeizaciji nepremoženjske škode?, in: IV. dnevi civilnega prava: Portorož, 30. in 31. marec 2006, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2006. P. Grilc, Gospodarska/financˇna kriza kot spremenjena okolišcˇina, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011. N. Gruden, Primerjava ustanove slovenskega prava in trusta po anglosaksonskem pravu, Univerza v Ljubljani, Ljubljana 2000. M. Habersack (ed.), Münchener Kommentar zum BGB, Beck, München 2017. H. Honsell, N. P. Vogt, W. Wiegand, Kommentar zum schweizerischen Privatrecht, Helbing & Lichtenhahn, Basel 1992. H. Honsell, N. P. Vogt, W. Wiegand (eds), Obligationenrecht I, Basler Kommentar, Basel 2015. J. Hudej, I. Šcˇernjavicˇ, Ponovni premislek o nekaterih temeljnih izhodišcˇih stvarnega prava pri prenosu lastninske pravice na nepremicˇninah, Pravna praksa 3/2012. M. Ilešicˇ, Obligacijski zakonik, Uvodna pojasnila, Uradni list, Ljubljana, 2003. M. Ilešicˇ, Garancija za trajno kakovost proizvoda, Združeno delo 6/1981 M. Ilešicˇ, Varstvo majhnih in srednje velikih podjetij v okviru potrošniškega prava, in: A. Vlahek, M. Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana, 2015. M. Isakovic´, P. Šurlan, Opšte uzanse za promet robom s objašnjenjima i sudskom praksom i posebne uzanse, Privredni pregled, Beograd. A. Jadek, Sledi prava trustov v slovenskem financˇnem pravu, Univerza v Ljubljani, Ljubljana 2008. M. Juhart, N. Plavšak (eds), Obligacijski zakonik s komentarjem, 1. knjiga, GV Založba, Ljubljana 2003. M. Juhart, N. Plavšak (eds), Obligacijski zakonik s komentarjem, 2. knjiga, GV Založba, Ljubljana 2004. M. Juhart, N. Plavšak (eds), Obligacijski zakonik s komentarjem, 3. knjiga, GV Založba, Ljubljana 2004. M. Juhart, N. Plavšak (eds), Obligacijski zakonik s komentarjem, 4. knjiga, GV Založba, Ljubljana 2004. M. Juhart, Obcˇni državljanski zakonik in razvoj slovenskega civilnega prava. Pravnik 11–12/2011. M. Juhart, Pomen avstrijskega Obcˇnega državljanskega zakonika (ODZ) za razvoj slovenskega civilnega prava, in: A. Polajnar Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, Zbirka Pravna obzorja, 46, GV Založba, Ljubljana 2013. 309

Selected Bibliography M. Juhart, Spremna beseda, Obcˇni državljanski zakonik, faksimilirana izdaja iz leta 1928, GV Založba 2012. M. Juhart, M. Tratnik, R. Vrencˇur, Stvarnopravni zakonik s komentarjem, Uradni list Republike Slovenije, Pravna fakulteta Univerze v Ljubljani, Pravna fakulteta Univerze v Mariboru, Ljubljana 2016. M. Juhart, M. Tratnik, R. Vrencˇur (eds), Stvarnopravni zakonik s komentarjem, GV Založba, Ljubljana 2003. M. Juhart, Nekaj dodatnih premislekov k stvarnopravnim izhodišcˇem pri prenosu lastninske pravice na nepremicˇninah, Pravna praksa 2/2013. M. Juhart, D. Možina, B. Novak, A. Polajnar-Pavcˇnik, V. Židaršicˇ Skubic, Uvod v civilno pravo, Uradni list, Ljubljana 2010. M. Juhart, M. Tratnik, R. Vrencˇur, Stvarno pravo, GV Založba, Ljubljana 2007. M. Jus, Bancˇne garancije in sorodni instrumenti financiranja trgovine, Uradni list Republike Slovenije, Ljubljana 2010. A. Kaluža, Splošni pogodbeni pogoji v evropskem in slovenskem pravu, Master’s thesis, Univerza v Ljubljani, Ljubljana 2016. E. Kerševan, Upravne pogodbe, Javna uprava 1/2007. M. Konstantinovic´, Obligacije i ugovori, Skica za zakonik o obligacijama i ugovorima, Beograd, Pravni fakultet, Beograd 1969. B. Koritnik, Krediti v švicarskih frankih: cˇigave so težave?, in: A. Vlahek, M. Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015, pp. 407–425, 484–485, 497. M. Koršicˇ-Potocˇnik, Razmerja s podizvajalci pri gradbeni pogodbi, Podjetje in delo 6–7/2017. H. Kötz, European Contract Law, Oxford University Press, Oxford 2017. M. Kovacˇ, Garancija za brezhibno delovanje: obvezna in/ali prostovoljna, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2012. M. Kovacˇ, Slovenia, in: E. van Hooydonk, R. Blanpain, F. Hendrickx (eds), IEL Transport Law, Kluwer Law International BV, Netherlands 2017. H. Koziol, P. Bydlinski, R. Bollenberger (eds), ABGB Kommentar, Springer, Wien, New York 2007. J. Kramberger Škerl, A. Vlahek, Property and Trust Law, Slovenia, International Encyclopaedia of Laws, Wolters Kluwer: Kluwer Law International, Alphen aan den Rijn 2016. J. Kranjc, Rimsko pravo, Pravna obzorja, Ljubljana 2014. V. Kranjc, Preprecˇitev zlorab ob unovcˇitvi neodvisnih bancˇnih garancij, Podjetje in delo 1/2003. O. Lando, H. Beale (eds), Principles of European Contract Law, Parts I and II (Combined and Revised), prepared by the Commission of European Contract Law, Kluwer Law International, The Hague/London/Boston 2000. K. Lutman, Odpad obogatitve pri prenehanju vzajemnih pogodb, Podjetje in delo 8/2015. H. J. Mertens, E. Rehbinder, Internationales Kaufrecht, Kommentar zu den einheitlichen Kaufgeesetzen, Alfred Metzner Verlag 1975. 310

Selected Bibliography Š. Mežnar, Uveljavljanje jamcˇevalnih zahtevkov za znižanje placˇila po OZ in ZVPot v sodni praksi – je res potrebno razlikovanje, in A. Vlahek, M. Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015. D. Možina, So diamanti res vecˇni? darilna pogodba, družinska razmerja in spremenjene okolišcˇine, Podjetje in delo 5/2014. D. Možina, Problem uveljavljanja znižanja pogodbene cene, Pravna praksa 43/2016. D. Možina, Odškodninska odgovornost za kršitev pogodbe, Podjetje in delo 2/2016. D. Možina, Predpostavke in cˇasovni okviri odgovornosti prodajalca za stvarne napake, Podjetje in delo 3–4/2008. D. Možina, Nepremoženjska škoda zaradi kršitve pogodbe, Izbrane teme civilnega prava, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2006. D. Možina, Impossibilium nulla obligatio est? Zacˇetna nemožnost izpolnitve obveznosti v slovenskem in primerjalnem pogodbenem pravu, Zbornik znanstvenih razprav 2006. D. Možina, Razdor, odpoved in odstop od pogodbe, Pravni letopis, Inštitut za primerjano pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2011. D. Možina, Odškodninska odgovornost za nasvet in informacije ter vprašanje zahtevkov tretjih oseb, Podjetje in delo 2/2015. D. Možina, Naknadna nemožnost izpolnitve obveznosti in njen pomen za obligacijsko pravo, Zbornik znanstvenih razprav 2008. D. Možina, Kršitev pogodbe, GV Založba, Ljubljana 2005. D. Možina, Obvezna garancija za brezhibno delovanje in varstvo kupca v evropskem pravu, Podjetje in delo 1/2011. D. Možina, Pravice kupca na podlagi stvarne napake pri prodajni pogodbi, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2012. D. Možina, Predpostavke in cˇasovni okviri odgovornosti prodajalca za stvarne napake, Podjetje in delo 3–4/2008. D. Možina, Potrošniška prodajna pogodba, in: V. Trstenjak, R. Knez and D. Možina, Evropsko pravo varstva potrošnikov, GV Založba, Ljubljana 2005. D. Možina, Zastaranje nepogodbeneih odškodninskih zahtevkov, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015. D. Možina, Vsebina in obseg obogatitvenega zahtevka, in: D. Možina (ed.), Liber Amicorum Ada Polajnar Pavcˇnik, Pravna fakulteta v Ljubljani, Ljubljana 2017. D. Možina, Odškodninska odgovornost v zvezi s postopki javnega narocˇanja, Podjetje in delo 1/2018. D. Možina, Cˇ etrt stoletja Konvencije ZN o mednarodni prodaji blaga (CISG) v Sloveniji: izzivi in izkušnje, Podjetje in delo 2/2018. D. Možina, Cˇ etrt stoletja Konvencije ZN o mednarodni prodaji blaga (CISG) v Sloveniji: izzivi in izkušnje, in: M. Pavliha (ed.), Izzivi prava v življenjski resnicˇnosti (Challenges of law in life reality: liber amicorum Marko Ilešicˇ), Pravna fakulteta v Ljubljani, Ljubljana 2017. D. Možina, Pogodbena in nepogodbena odškodninska odgovornost, ODZ (1811) in OZ (2001), in: A. Polajnar-Pavcˇnik (ed.), Izrocˇilo Obcˇnega državljanskega zakonika, GV Založba, Ljubljana 2013. 311

Selected Bibliography D. Možina, Kaj je narobe z Zakonom o varstvu potrošnikov?, Podjetje in delo 6–7/ 12. D. Možina, Ne ultra alterum tantum in evropsko pravo, Podjetje in delo 3–4/2010. D. Možina, Obligacijski zakonik (OZ), Uvodna pojasnila, GV Založba, Ljubljana 2013. D. Možina, Harmonisation of Private Law in Europe and the Development of Private Law in Slovenia, Juridica International 1/2008. D. Možina, Some Remarks on Damages for Breach of Contract in Slovenian Law, Evropski pravnik 2/2015. D. Možina, Uveljavljanje znižanja kupnine in drugih jamcˇevalnih zahtevkov, in: A. Vlahek, M. Damjan (eds), Pravo in politika sodobnega varstva potrošnikov, IUS Software, GV Založba, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2015. D. Možina, M. Kovacˇ, Commercial and Economic Law Slovenia, International Encyclopaedia of Laws, Kluwer Law International, The Hague 2014. M. Ovcˇak Kos, A. Božicˇ Penko, Dileme v primerih odškodninskega prava v zvezi z odgovornostjo za medicinsko napako (1.), Odvetnik 83/2017. M. Pavliha, S. Simoniti, Slovenia, in: H. Cousy, R. Blanpain, F. Hendrickx (eds), IEL Insurance Law, Kluwer Law International BV, Netherlands 2002. S. Perovic´, Deset godina primene i neprimene Zakona o obligacionim odnosima, Pravni život 10–12/1988. S. Perovic´, D. Stojanovic´ (eds), Komentar zakona o obligacionim odnosima, Pravni fakultet, Kragujevac 1980. N. Plavšak, R. Vrencˇur (eds), Zastavna pravica, Sodobno stvarno pravo, PlanetGV, ABC nepremicˇnine, Ljubljana 2018. N. Plavšak, R. Vrencˇur, Pomen razpolagalnega upravicˇenja pri razpolaganju z lastninsko pravico na nepremicˇnini, Podjetje in delo 9–10/2015. N. Plavšak, Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, Uvodba pojasnila in vzorci pravnih aktov, GV založba, Ljubljana 2004. B. Pintar, Potrošnik in garancija za brezhibno delovanje stvari: tudi po (zdaj že umaknjenem) predlogu ZVPot-E, Pravna praksa 1/2011. R. Pirnat, Pravni problemi upravne pogodbe, Javna uprava 2/2000. R. Pirnat, Pravna narava internih aktov uprave z eksternim ucˇinkovanjem, Javna uprava 3/1995. R. Pirnat, Upravna pogodba – ali jo slovensko pravo potrebuje?, in: VI. dnevi javnega prava, Portorož, 5. – 7. junij 2000, Inštitut za javno upravo, Ljubljana 2000. R. Pirnat, Obligacijsko pravo in upravnopravne pogodbe, in: Veliki simpozij o stanju in razvoju slovenskega obligacijskega prava: 7. – 9. marec 2002, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2002, 13 ff. R. Pirnat, Javne pogodbe, Pravna praksa 12/2008. S. Plicˇanicˇ, Pravna narava pogodbenih in nepogodbenih (odškodninskih) razmerij med upravnimi in zasebnopravnimi subjekti ter drugih ‘civilisticˇnih’ položajev, Javna uprava 3/1994. S. Plicˇanicˇ, Razvoj pravnih razmerij med upravnimi in zasebnopravnimi subjekti, Javna uprava 3–4/1993. 312

Selected Bibliography K. Podobnik, A. Vlahek, Slovenia: Chronology of Development of Private Law in Slovenia, in: P. Lavický, J. Hurdík (eds), Private Law Reform, Acta Universitatis Brunensis, Iuridica, no. 501, Masaryk University, Brno 2014. A. Polajnar-Pavcˇnik, Izpodbojnost pogodb, Pravni letopis, Inštitut za primerjalno pravo pro Pravni fakulteti v Ljubljani, Ljubljana 2011. R. Rozman, Odgovornost banke za nasvet in pojasnilo, PhD thesis, Univerza v Ljubljani, Ljubljana 2016. R. Rozman, Predpogodbena dolžnost obvešcˇanja bank pri sklepanju pogodb, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti v Ljubljani, Ljubljana 2017. P. Schlechtriem, D. Možina, Pravo mednarodne prodaje: Konvencija Združenih narodov o mednarodni prodaji blaga, Uradni list Republike Slovenije, Ljubljana 2006. I. Schwenzer (ed.), Schlechtriem & Schwenzer Commentary on CISG, Oxford University Press, Oxford 2010. M. Schmidt-Kessel, Mora creditoris in: K.J. Hopt, J. Basedow, R. Zimmermann, A. Stier, Max Planck Encyclopedia of European Private Law, Oxford University Press, Oxford 2012. J. Sekolec, Placˇaj takoj, ugovarjaj kasneje, Pravna praksa 3/1997. H. Strumpf, M. Gross, Der Lizenzvertrag, Verlag Recht und Wirtschaft GmbH, Heidelberg 1998. J. Štempihar, Civilno pravo, I. osnutek splošnega dela, Uradni list LRS, Ljubljana 1951. J. Štempihar, Civilno pravo, Osnutek splošnega dela, Uradni list LRS, Ljubljana 1952. J. Štempihar, Civilno pravo, Osnutek posebnega dela, Uradni list LRS, Ljubljana 1952. D. Slijepcˇevic´, Evolucija nastanka Zakona o obligacionim odnosima, Pravni život 10–12/1988. V. Stötter, Internationales Einheits-Kaufrecht, Wilhelm Goldmann Verlag, München 1985. H. Strumpf, M. Gross, Der Lizenzvertrag, Verlag Recht und Wirtschaft GmbH, Heidelberg 1998. I. Tavcˇar, Slovenski pravnik, Družba Sv. Mohora v Celovcu, Celovec 1883. S. Tertnik, Kdo je potrošnik: pojem potrošnika v pravu Evropske unije, Podjetje in delo 5/2012. M. Tratnik, Lastninska pravica na nepremicˇnini v pricˇakovanju, Pravna praksa 2/2013. V. Trstenjak, Temeljno o trustu, Podjetje in delo 4/1995. L. Varanelli, Pogodbeno pravo II, GV Založba, Ljubljana 2015. L. Varanelli, Kavza pogodbe, sodobni pogledi, Pravna praksa 39–40/2017. B. Vizner, Komentar Zakona o obveznim (obligacionim) odnosima, Knjiga 1., Zagreb 1978. B. Vizner, I. Bukljaš, Komentar Zakona o obveznim (obligacionim) odnosima, Knjiga 2., Zagreb 1978–1979. 313

Selected Bibliography A. Vlahek, K. Podobnik, Slovenia: Chronology of Development of Private Law in Slovenia, in: P. Lavický, J. Hurdík (eds), Private Law Reform, Acta Universitatis Brunensis, Iuridica, no. 501, Masaryk University, Brno 2014. A. Vlahek, M. Damjan, Novi obliki zavarovanja obveznosti v našem prostoru: nebancˇna garancija in poroštvo na prvi poziv, Podjetje in delo 8/2015. A. Vlahek, Pogodbeni prenos lastninske pravice na premicˇninah v evropskem pravnem prostoru, Zbirka Scientia iustitia, 18, GV Založba, Ljubljana 2010. A. Vlahek, Odpoved stanovanjske najemne pogodbe, Podjetje in delo 6–7/2006. A. Vlahek, Odstop od pogodbe po Dunajski konvenciji, Podjetje in delo 6–7/2005. A. Vlahek, Cˇ asovne predpostavke in vsebina zahtevkov narocˇnika v primeru nepravilne izpolnitve podjemne in gradbene pogodbe v slovenski ureditvi, Pravni letopis, Inštitut za primerjalno pravo pri Pravni fakulteti, Ljublkjana 2012. A. Vlahek (ed.), Mednarodna prodajna pogodba v praksi slovenskih gospodarskih subjektov, Pravna fakulteta, Ekonomska fakulteta, Ljubljana 2017. S. Vogenauer, J. Kleinheisterkamp (eds), Commentary on UNIDROIT’s PICC, Oxford University Press, Oxford 2009. S. Vogenauer, Commentary to UNIDROIT Principles (PICC), Oxford University Press, Oxford 2015. B. Zabel, Uvod v gospodarsko pogodbeno pravo, Cˇ gp delo, tozd gospodarski vestnik, Ljubljana 1987. R. Zimmernann, Limitation of Liability for Damages in European Contract Law, The Edinburgh Law Review, 2/2014. K. Zupancˇicˇ, V. Žnidaršicˇ Skubic, Dedno pravo, Uradni list Republike Slovenije, Ljubljana 2009. V. Žnidaršicˇ Skubic, Zasebna ustanova, trust, fiduaciarni pravni posli in njihov vpliv na dedovanje, Uradni list RS, Ljubljana 2015. V. Žnidaršicˇ Skubic, Zasebna ustanova in dedovanje, Zbornik v cˇast Karla Zupancˇicˇa, Univerza v Ljubljani, Ljubljana 2014.

314

Index

The numbers here refer to paragraph numbers. A non domino, 380 ABGB, 15, 16, 24, 25, 27, 35, 62, 334, 357–359, 431, 432, 437, 490, 552, 643, 731, 749 Abstract damages, 329 Acceptance, 103, 104, 106, 110–116, 226, 339, 374, 530, 725 Accession to debt, 230–231 Accidental parts, 191 Accidentalia negotii, 102, 191 Actio directa, 642 Actio nata, 184, 318 Actio Pauliana, 238–242 Actual loss, 197, 329 Adequate causation theory, 78 Administrative contract, 47–56, 738, 739 Administrative unit, 343, 366 Advertising, 55, 105, 111, 289, 363, 397, 512 Agricultural land, 41, 343, 366, 375, 432, 435, 436, 452–455, 459, 463 Agricultural lease, 45, 452–459 Aleatory contract, 69, 158, 357, 727 Aliud, 298 Allotment contract, 44, 59, 578, 587 Animus contrahendi, 117, 164 Annuity, 139, 346, 358 Anticipatory breach, 304 Apartment, 460–471 Appurtenance, 433, 702 Arbitration clause, 203, 333 Assignation, 226 Assignment of claim, 48, 215–223, 226 Associated labour, 30 Assumption of performance, 230–231 Astreinte, 280–297 Auxiliary contract, 59, 516 Avoidability, 152, 158

Avoidance, 72, 79, 155, 156, 158, 162, 170, 179–185, 380, 385, 408, 412, 748 B2B contract, 26, 29, 48, 51, 55, 97, 99, 114, 166, 173, 187, 194, 196, 198, 216, 251, 255, 275, 282, 291, 317, 318, 324, 329, 363, 404, 416, 419, 422, 429, 530 B2C contract, 33, 40, 50, 51–55, 73, 74, 93, 97, 118, 130, 166, 167, 171, 176, 187, 193, 195, 196, 198, 275, 279, 289, 291, 317, 324, 329, 361, 363, 372, 395, 401, 410, 411, 416, 419, 422, 429, 496, 517, 533, 540, 581, 728 Bailment contract, 44, 391, 517, 547, 548, 552–562, 565, 569 Bank current account contract, 618 Bank guarantee, 44, 59, 275, 365, 393, 610–615, 688 Bank guarantee for remedying any hidden defects, 613, 614 Bank guarantee for the return of the price paid, 365, 393, 414 Bank money deposit contract, 44, 550, 577, 619 Banking contract, 577, 619 Barter contract, 44, 64, 70, 360, 423, 424 Basic principles of contract law, 186 Bequest, 339 Bilateral contract, 65–67, 335, 371, 412, 424, 425 Bona fide holder, 182 Breach of contract, 34, 38, 50, 72, 78, 111, 143, 144, 170, 196, 197, 200, 256, 258–260, 265, 274, 276–278, 304, 316, 318, 319, 321, 323, 325–328, 332, 333, 409, 440, 481, 673 Breach of warranty of title, 419 Brokerage contract, 44, 649, 669–674

315

Index Building contract, 56, 136, 210, 233–237, 318, 517, 540–546 Burden of proof, 143–147, 324, 398 Buying commission, 676 C2C contract, 51, 187, 194, 198, 291, 317, 329, 404, 422 Capacity, 59, 110, 139, 148–151, 245, 321, 647, 691, 736 Capacity to act, 148–151, 245 Car, 279, 431 Casus mixtus, 426, 492, 556–558, 642 Casus sentit dominus, 387 Caterer bailment, 548, 561–564 Causal, 77, 80, 371 Cause, 118–125, 172 Cessio legis, 225, 237 Cessio voluntaria, 225 Cession – assignment of claim, 215–223 Change of circumstances, 120, 128, 188, 266–272 Child, 341, 343, 345, 347, 351, 688 CISG, 38, 49, 101, 317, 321, 325, 367 Civil law contract, 47–56, 334, 490 CJEU, 53, 55, 171, 362, 395, 409, 410, 496, 583 Clausula intabulandi, 83, 84, 716, 721 Cohabiting partners – extramarital partners, 59, 139, 342, 343, 351 Collateral, 217, 223–225, 230, 246, 313, 315, 610, 688 Collective freight forwarding, 608 Commercial agency contract, 44, 59, 599, 638, 648–668 Commercial contract, 25, 29, 48, 51, 94, 99, 106, 173, 187, 216, 251, 282, 318, 320, 368, 379, 382, 676, 689, 714 Commercial usages, 153, 368, 386 Commission, 28, 34, 44, 310, 426, 599, 638, 649, 653, 655–660, 666, 668, 675–686, 688, 707 Commission agency contract, 44, 426, 638, 675–686, 707 Commodatum, 334, 347, 488, 490, 558 Commutative contract, 69 Compensatio lucri cum damno, 323 Competitor, 50 Compromise, 724–726 Concession contract, 739, 741 Condictio ob causam finitam, 333 Conditional contract, 205 Conditional sale, 364

316

Consensual contract, 61–62, 552 Consensus, 102, 103, 157 Consideration, 118–125 Constitutional court, 6, 8, 37, 39 Consumer, 47–56, 509–515 Consumer credit contract, 131, 170, 509–515, 748 Consumer Sales Directive, 275, 278, 279 Continuous performance, 70–72, 333 Contra legem artis, 77 Contra proferentem, 195, 204 Contract for a copyright work made for hire, 518 Contract for sale or return – contractus aestimatorius, 44, 425–427 Contract for the benefit of a third party, 207, 213–214 Contract for the transfer of ownership, 437, 489, 499 Contract for work, 44, 63, 275, 285, 293, 296, 310, 311, 317, 318, 322, 381, 409, 516–541, 544, 545, 639, 707 Contract of carriage, 44, 517, 595–599, 602, 707 Contract of chance, 69, 357, 358 Contract of mandate, 44, 63, 426, 516, 638–647 Contract on community of property, 731 Contract on control of goods and services, 44, 588–594, 707 Contract on delivery of property, 59, 64, 344–349, 353 Contract on lien, 45, 700–723 Contract on subsistence, 44, 344, 349–352 Contract on the organization of package travel, 44, 578, 581, 584–586 Contracts for the transfer of use, 64, 437, 488 Contractual freedom, 96 Contractual liability, 33, 78, 196, 414 Contractual lien, 703 Contractual penalty, 196–198, 202, 328, 329 Convalidation, 122, 134, 149, 337 Convention on the Limitation Period in the International Sale of Goods, 49, 367 Conveyance, 83, 239, 342, 703 Cooling-off, 130, 429, 513, 579, 582 Co-ownership, 375, 703, 733 Corporate right, 370 Cover transaction, 284 Credit contract, 44, 131, 132, 164, 170,

Index 171, 496, 506–515, 722, 748 Creditor’s delay, 192, 259, 264, 281, 316, 317, 390 Culpa in contrahendo, 76, 92, 111, 147, 185 Culpa in eligendo, 586, 602, 642 Customs, 48, 102, 389, 446, 673 Cut-off time limit, 179 Damages, 185, 321–332 Damages in lieu of performance, 264, 280, 284, 329 Damnum circa rem, 414, 415 Damnum extra rem, 414 Damnum quod rem, 408 Dangerous product, 50, 55 Datio in solutum, 221, 248 Datio pro solvendo, 222, 248 DCFR, 429 Delay, 280–284, 298–305 Delay interest, 37, 39, 100, 166, 198 Defect of consent, 152, 157, 179–185 Defective performance, 34, 252, 258, 277, 288–297, 306–311, 317, 320, 330, 392–422 Del credere commission, 660, 679 Del credere liability, 63, 660, 679 Del credere payment, 63 Delict, 75, 212, 747 Delivery, 345–348, 388–390 Denationalization, 19 Deposit of necessity – depositum miserabile, 555 Deposit of securities contract, 550, 577, 619 Dies interpellat pro homine, 281, 444, 635 Diligentia quam in suis, 641, 734 Directive 1999/44, 395, 397, 398, 409 Discharge, 192, 253, 264, 273 Discretion, 183, 269, 270, 331, 378 Disposition agreement, 83, 703 Dispositive provisions, 189 Disproportionality, 295, 331, 409 Dissensus, 102, 152, 157, 179, 181, 189 Distance sale, 40, 361, 364, 388 Distribution, 28, 38, 44, 204, 518, 737 Divided co-ownership, 375 Documentary letter of credit, 617 Dominance, 439, 738 Donation contract, 44, 59, 61, 64, 65, 70, 334–338, 341, 342, 491, 501 Door-to-door sales, 40

Drafting, 42, 73, 93–94, 188, 332, 334, 362, 368, 490, 578, 648, 704, 731 Drawing, 357–359, 600 Duress, 152, 179 Duty of care, 77, 555, 575 Earnest money, 198, 201, 202 Easement, 45, 334, 700, 704 Electricity, 318, 464 Employment contract, 216, 518 Emptio rei sperate, 373 Emptio spei – sale of hope, 358 Encumbrance, 350, 700, 721 Enforcement of a claim, 723 Equi donati dentes non inspiciuntur, 340 Erga omnes, 81, 88, 351, 354, 376, 621 Error, 38, 152, 325, 342 Essential elements – essentialia negotii, 93, 102, 104, 112, 126, 187, 189, 191, 365, 377, 382 EU consumer acquis, 36, 51, 362 Eviction, 311, 422 Ex lege termination, 301, 309, 311, 412, 422, 442, 456 Ex nunc, 72, 33 Exceptio non adimpleti contractus, 312–315 Excessive performance, 251 Exchange contract, 59, 423, 516 Exclusive license, 623, 624, 626, 630 Exemption clauses, 196, 321–332 Expected ownership, 88 Extra commercium, 373 Factoring, 46, 737 Farm, 343, 375, 454, 703 Fault, 33, 68, 77, 78, 124, 143, 156, 185, 214, 281, 321, 332, 399, 643, 645, 653, 672, 692, 746 Fiducia, 86, 89 Fiduciary account, 365 Fiduciary cession, 223 Fixed-time contract, 282, 283, 299, 304 Force majeure, 269, 321, 333, 447, 486, 487, 601, 746 Foreseeability, 33, 38, 78, 270, 323–328 Forest, 343, 375, 454 Forfeiting, 737 Forma ad probationem, 60, 93, 133, 134 Forma ad valorem, 60, 93, 134 Formal contract, 57–60, 61, 129, 133, 142, 186, 620

317

Index Foundation, 90, 190 Franchising, 46, 737 Fraud, 38, 76, 92, 152, 159–162, 179, 239, 342, 357, 413 Fraudulent conveyance, 239, 342 Free license, 634 Freight forwarding with fixed payment, 608 Fundamental breach, 302, 304, 310, 311 Gaming, 69, 125, 357–359 Gas, 211, 372 General terms and conditions, 73, 74, 93, 369, 598, 728 General Usages for the Sale of Goods, 368 Genus, 263, 382, 489 Gift, 59, 62, 65, 70, 119, 120, 122, 123, 125, 136, 154, 242, 335, 337–342, 345, 347 Gift in anticipation of death – donatio mortis causa, 338 Global fiduciary cession, 223 Good businessperson, 600, 670, 673, 685 Good faith, 76, 88, 91–92, 111, 118, 145, 170, 177, 182, 185, 187, 190, 195, 196, 252, 271, 312, 512, 649, 674 Good faith and fair dealing, 91–92, 512 Goods, 360–422, 568, 588–594 Gratuitous promises, 122–124 Grey list, 195 Gross disparity, 152, 158 Guarantee, 416–418, 610–615 Guarantee ‘without objection’, 612 Guarantee for proper functioning of the goods, 26 Hague Uniform Sales Law, 27, 33 Hardship, 165, 341 Hidden defect, 275, 291, 293, 314, 366, 393, 401, 404, 484, 486, 530, 576, 613, 614 Hidden dissensus, 102, 157, 179, 181 Home delivery, 361, 364 Illicit cause, 168 Imbalance, 118, 158, 165, 166, 195 Immovable, 59, 81, 83, 85, 88, 104, 133, 136, 141, 337, 343, 344, 349, 350, 354, 365, 372, 375, 376, 424, 429, 510, 613, 614, 702, 721–723 Implied terms, 188 Impossibility – initial – supervening, 174, 179, 261–265

318

Impossibility of performance, 174, 179, 258, 261–265 In favorem contractus, 382 Incasso, 222, 659 Incasso commission, 659 Incoterms, 369 Industrial property right, 370 Inflation, 100 Informal contract, 57–60, 424 Information system, 107 ‘Ing’ contract, 46, 429, 737 Ingratitude, 341, 348 Inheritance, 18, 19, 59, 139, 169, 344, 347, 703 Inheritance mass, 344, 347 Innominate contract, 43–46, 737 Insolvency, 89, 160, 217, 239, 342, 365, 449, 450, 489, 499, 689, 697, 717, 736 Inspection of goods, 403, 412 Instalment, 40, 59, 71, 131, 132, 361, 364, 383, 385, 516, 678 Instalment sale, 40, 59, 71, 131, 132, 361, 364, 385 Insurance company, 194, 265, 610, 688, 727, 728 Insurance contract, 44, 69, 131, 318, 727–730 Inter partes, 88, 206 Inter vivos, 80, 90, 371 Interest, 4, 5, 14, 26, 37, 39, 48, 90, 92, 100, 132, 134, 142, 145, 147, 164, 166, 168, 182, 185, 191, 198, 224, 225, 228, 230, 244, 246, 250, 252, 256, 270, 276, 291, 294, 295, 329, 333, 385, 414, 468, 497, 507, 513, 526, 559, 567, 586, 600, 601, 603, 639, 641, 645, 649, 673, 679, 692, 695, 699, 701, 714, 725, 738–740, 753 Interest rate, 100, 166, 182, 198, 513, 725, 753 Intermediary contract on package travel, 44, 578, 585–586 Interpretation, 53, 55, 68, 98, 99, 124, 134, 187, 190, 204, 362, 395, 409, 411 Interruption, 127, 179, 693 Intuitu personae, 42, 490, 491, 731 Invitation to submit an offer invitatio ad offerendum, 105, 111 Irregular deposit – depositum irregulare, 558

Index Joint ownership, 703 Judicial penalty, 287, 328

Loss of use of things, 329 Lost vacation, 583

Know-how, 620, 737 Konstantinovic´’s sketch, 649

Mailbox, 109 Mala fide holder, 182 Mandatory provision, 76, 96, 97, 175, 176, 177, 186, 205, 275 Market Inspectorate, 407, 534 Marketing, 397, 516 Material defect, 26, 34, 92, 170, 278, 279, 289, 291, 294, 297, 306–310, 332, 365, 379, 392–415, 422, 467, 533, 544, 733 Material loss – economic loss, 329, 331 Medical liability, 75 Medical malpractice, 77 Ministry, 55, 90, 362, 396 Ministry of Economic Development and Technology, 55, 362, 396 Minor defects, 397, 439 Mistake, 38, 68, 76, 118, 124, 152–160, 162, 179, 181, 411 Mitigation of loss, 327 Mixed licence, 626 Modification of a contract, 129 Mora creditoris, 192, 316, 387 Moral principles, 92, 96, 175, 177, 183, 205, 348 Mortgage, 131, 170, 212, 510, 610, 688, 702, 703, 706, 708, 719–723 Mortis causa, 338 Motive, 68, 119, 121, 124, 153–157, 164, 332, 342 Municipality, 9, 366, 375

Laesio enormis, 118, 152, 158, 358, 725 Land debt, 700 Land register, 88, 141, 155, 350, 351, 365, 375, 376, 703, 708, 719 Late Payments Directive, 41, 198, 255 Laymen, 94, 155 Lease contract, 44, 71, 232, 428–488, 635 Lease of apartments, 432, 460–471 Lease of commercial buildings and commercial premises, 472–482 Lease of ships, 483–487 Leasing, 46, 71, 429, 450, 454, 737 Legal capacity, 148, 245, 647, 691, 736 Legal defect, 68, 124, 252, 258, 274, 288, 297, 311, 360, 380, 419–422, 442, 501, 630, 713 Legal rules of the ABGB, 357 Letter of intent, 127 Lex commissoria, 704, 705, 720 Lex specialis derogat legi generali, 55 Liability for associates, 528 Liability for coincidence, 34 Licence contract, 44, 59, 620–637 Lien, 700–723 Lifelong subsistence, 358 Lifelong support contract, 35, 59, 64, 69, 71, 353–356 Limit of sacrifice, 267 Limitation, 17, 25, 33, 48, 49, 78, 96, 176, 196, 198, 265, 295, 297, 317–320, 326, 328, 367, 401, 411, 420, 437, 439, 622, 693, 698 Limited generic obligation, 263 Limited liability company, 45, 59 Linked consumer credit contract, 513 Liquidated damages, 196, 199, 333 Loan contract, 44, 48, 64, 182, 437, 489, 496–515, 558 Loan for use contract, 44, 62, 64, 437, 488–495, 499, 501, 707 Local authority, 740, 741 Local community, 343 Long-term holiday product contract, 59, 516, 580, 582 Loss due to delay, 329 Loss of profit, 324, 329, 331

Nachfrist, 298 Natural obligation, 42, 122, 125, 178, 337 Natural parts, 191 Naturalia negotii, 191 Ne ultra alterum tantum, 37 Necessary parts, 191 Negative interest, 147 Negotiations, 38, 76, 102, 145–147, 155, 165, 187, 649, 670, 672, 674 Negotiorum gestio, 641, 743–747 Negotium mixtum cum donation, 336 Nominate contract, 43–46 Non-compete clause, 191, 652, 653, 666 Non-contractual liability, 76, 78, 111, 147 Non-essential elements, 102, 189 Non-exclusive licence, 623, 625, 626 Non-ordered goods, 374 Non-performance, 34, 191, 192, 231, 243,

319

Index 252, 258, 264, 265, 269, 274, 277, 280–284, 286, 294, 298–305, 309, 312, 316, 317, 320, 379, 657, 688, 695 Non-possessory pledge, 702, 703, 706, 715–718 Non-synallagmatic contract, 66–68 Notarial authentication, 141 Notarial bailment, 551 Notarial contract, 134 Notarial deed, 138–141, 338, 702, 716, 717, 719, 722, 723 Notarial protocol, 86, 344, 510 Notary, 41, 85, 89, 123, 136, 138–141, 155, 338, 365, 384, 551, 613, 717, 721–723 Novation, 129 Null and void, 341, 344, 359, 382, 385, 401, 420, 455, 463, 473, 483, 511, 589, 621, 705, 714, 720 Nullity, 79, 157, 164, 174, 179–185, 188, 262, 382, 698, 748 Object, 173 Objection of non-proportionality, 532 Obliegenheit, 192 Obligation of effort, 42, 63, 516 Obligation of means, 143–144 Obligation of result, 42, 63, 143–144, 516, 596 Obvious defect, 291, 530 Offer, 102–111, Off-premises sale, 361 Onerous contract, 67–68, 740, 742 One-time performance, 42, 70–72 Open dissensus, 102 Option, 43, 72, 103, 126, 404, 409, 753 Ordinary use, 439, 451 Ownership, 5, 14, 17, 42, 53, 59, 64, 81–83, 85, 87, 88, 136, 141, 335, 346, 350, 353, 370, 375, 380, 384, 387, 424, 429, 437, 471, 477, 489, 499, 700, 705, 712, 720, 751 Package travel contract, 45, 59, 131, 516, 578–587 Pacta sunt servanda, 130 Pactum antichreticum, 706, 712, 720 Pactum de contrahendo, 216 Pactum de non cedendo, 216 Parole evidence rule, 142, 186 Partnership contract, 731–736 Party autonomy, 31, 51, 97, 102, 106

320

Patrimonial right, 370 Payment service contract, 618 PECL, 285, 286, 321, 326 Performance contract, 70–72, 243–257, 518 Personal insurance, 727 Personal security, 610, 687, 688 Personal use, 53 Possessory pledge, 709–714, 718 Possession, 88, 370, 391, 402, 442, 443, 495, 537, 538, 565, 567, 662, 681, 709–711, 713–715 Practice established by the parties, 102, 113, 204, 368 Pre-contractual information duties, 40, 131, 160, 170–171, 512 Pre-contractual liability, 75, 76, 190 Pre-emptive right, 238–242 Preliminary contract, 126–128 Price reduction, 26, 274, 278, 290, 294, 295, 297, 332, 409, 411 Principle of causality, 82 Principle of conscientiousness and fairness, 91 Principle of good commercial practices, 177 Principle of good faith, 91, 92, 177, 190, 512 Principle of priority, 701 Principle of reliance, 187 Principle of separation, 4, 81 Principle of speciality, 702 Private penalty, 287 Privity of contract, 206–242, 244 Product liability, 40, 55 Professional activity, 53, 372, 649 Prohibition to alienate and encumber, 351 Promise of a gift, 59, 125, 136, 337 Property insurance, 727 Protected farm, 343 Prudent businessperson, 555, 641 Public law entity, 738, 740, 742 Public policy, 175–177 Public procurement, 56, 234, 615, 739, 740, 742 Public utility services, 739–741 Public–private partnership, 56, 739, 740 Publishing contract, 518 Quasi-contract, 79, 743–755 Quid pro quo, 102–132 Quiet cession, 218

Index Real agreement, 80, 81, 83–86, 88, 703, 709, 721 Real contract, 61–62, 128, 201, 552 Rebus sic stantibus, 120, 128, 356, 458, 536 Reciprocal obligation, 254, 265, 312, 333, 698 Recurring obligations, 305 Reduction of the price, 408, 413, 533 Reflex loss, 332 Register, 3, 10, 53, 87, 88, 141, 148, 151, 155, 350, 351, 365, 375, 376, 406, 452, 483, 572, 621, 702, 703, 706, 708, 715 Registered non-possessory pledge, 702, 706, 717 Reliance damages, 332 Remunerative donation, 336 Repair, 26, 196, 252, 275, 278, 285, 288, 290, 294–296, 306, 309, 314, 330, 332, 405, 408–410, 417, 438, 469, 486, 487, 519, 529, 538 Replacement, 26, 252, 278, 285, 288, 290, 294, 295, 309, 332, 391, 405, 408– 410, 412, 465, 584 Resale contract, 59, 516, 580, 582 Rescission, 290, 294, 295, 297 Reservation of title – pactum reservati dominii, 87, 384, 387 Restitution, 79, 182–184, 333, 755 Retroactive effect, 179, 182–184, 333 Revocation, 341, 342 Right of pre-emption, 366, 375–376, 424, 450 Right of purchase, 375–376 Right of retention, 315, 491, 564 Right to alienate and encumber, 703 Safe deposit box contract, 44, 550, 577, 619 Sale by letter of credit, 364, 386 Sale by model, 48 Sale by sample or model, 379 Sale by specification, 364, 377 Sale of goods, 143, 174, 255, 333, 360–422, 549, 565, 620 Sale of someone else’s thing, 380 Securities, 44, 87, 339, 550, 572, 577, 607, 610, 615, 619, 688 Security in rem, 610, 688 Self-management, 17, 30 Selling commission, 676 Services contract, 40, 44, 45, 55, 361, 516,

517, 540, 546, 561, 610–619 Services of information society, 516 Set-off, 253, 698 Settlement, 44, 225, 609, 697 Sham, 169 Ship, 483–487 Shipping contract, 599–609, Silence, 114, 187 Simulated contract, 169, 179 Sine pretio nulla venditio, 382 Single occupancy building, 41, 54, 97, 260, 275, 277, 317, 365, 372, 393, 551, 611, 613, 614 Sketch, 27, 28, 34, 310, 317 Social state, 3, 14, 96 Societas, 28, 139, 731 Societas leonina, 733 Sole entrepreneur, 48 Sources of contract law, 95–101 Special Construction Usages, 540 Species, 263, 382, 489 Standard contract terms, 193–195 Standby letter of credit, 610, 611, 688 State, 3, 5, 7, 10, 11, 13–15, 17, 18, 24, 25, 30, 31, 49, 51, 56, 79, 96, 102, 175, 182, 287, 336, 343, 360, 362, 367, 368, 385, 397, 411, 434, 449, 461, 466, 474, 477, 480, 483, 485, 497, 511, 515, 533, 560, 574, 578, 626, 632, 648, 650, 653, 704, 735, 736, 738, 740, 741 Statute of limitation, 48 Statutory lien, 590, 644, 681, 703, 707 Stipulation, 61, 69, 127, 371 Subcommodatum, 491 Subcontract, 233–237, Subcontractor, 233–237 Sublease, 435, 457, 462, 463, 476, 485, 492 Sublicence, 632 Submandate, 642 Substitute transaction, 328, 330 Superficies, 45, 700, 704 Super guarantee, 612 Supreme Court of RS, 7, 324, 583 Surety bond, 610, 688 Suretyship, 687–699 Suspension, 127, 179, 292, 693 Swiss Frank, 515 Synallagmatic contract, 79, 158, 254, 261, 264, 277, 33 Tacit declaration of will, 114

321

Index Tacit prolongation – relocatio tacita, 445 Take-it-or-leave-it contract, 73–74 Tale quale, 401 Termination, 243–273, 298–311 Timeshare, 582 Timeshare Directive of 1994, 429, 579, 580, 582 Tort, 75–78 Tourist contract, 59, 516 Tradition, 80, 143, 191, 706 Transfer of contract, 232 Transfer of know-how, 737 Transfer of obligation, 227–229 Transfer of ownership, 59, 87, 64–66, 136, 141, 380, 384, 44, 437, 471, 489, 499 Transfer of use, 64, 437, 488 Trennungsprinzip, 81 Treu und Glauben, 91 Trial purchase, 378 Trust, 89–90 Ultima ratio, 72, 412 Undertaking, 53, 63, 92, 372, 418, 429, 516, 742 Unenforceable contracts, 178

322

Unenforceable right, 337 Unfair commercial practices, 53, 54, 74, 167, 375 Unidroit PICC, 285, 321 Unilateral contract, 65–66 Unilateral declaration, 59, 135, 747 Unjustified enrichment, 747–755 Usances, 24, 25, 187 Usurious contract, 165–166 Usurious interest, 166 Validity, 148–185 Wagering, 357–359 Warehouse contract, 569–576 Warehouse receipt, 572 Warranty claims 252, 258, 274, 288, 294, 318, 320 Warranty claims hierarchy, 294, Warranty time period, 170, 275, 292, 293, 297, 307, 317, 365, 393, 404, 422 Water, 372, 464, 595 Withdrawal, 130–132 Witness, 136, 139, 338 Written form, 136–137

DAMJAN MOŽINA & ANA VLAHEK

Derived from the renowned multi-volume International Encyclopaedia of Laws, this practical analysis of the law of contracts in Slovenia covers every aspect of the subject – definition and classification of contracts, contractual liability, relation to the law of property, good faith, burden of proof, defects, penalty clauses, arbitration clauses, remedies in case of non-performance, damages, power of attorney, and much more. Lawyers who handle transnational contracts will appreciate the explanation of fundamental differences in terminology, application, and procedure from one legal system to another, as well as the international aspects of contract law. Throughout the book, the treatment emphasizes drafting considerations.

Contract Law in Slovenia

Contract Law in Slovenia

An introduction in which contracts are defined and contrasted to torts, quasi-contracts, and property is followed by a discussion of the concepts of ‘consideration’ or ‘cause’ and other underlying principles of the formation of contract. Subsequent chapters cover the doctrines of ‘relative effect’, termination of contract, and remedies for non-performance. The second part of the book, recognizing the need to categorize an agreement as a specific contract in order to determine the rules which apply to it, describes the nature of agency, sale, lease, building contracts, and other types of contract. Facts are presented in such a way that readers who are unfamiliar with specific terms and concepts in varying contexts will fully grasp their meaning and significance.

DAMJAN MOŽINA ANA VLAHEK

DAMJAN MOŽINA & ANA VLAHEK

Its succinct yet scholarly nature, as well as the practical quality of the information it provides, make this book a valuable time-saving tool for business and legal professionals alike. Lawyers representing parties with interests in Slovenia will welcome this very useful guide, and academics and researchers will appreciate its value in the study of comparative contract law.

CONTRACT LAW IN SLOVENIA