Introduction to Contract Law

Witold Borysiak
Obligations and Inheritance Law Editor
Ph.D., associate professor at the Faculty of Law and Administration of the University of Warsaw, Judge’s assistant on the Constitutional Tribunal, member of the inheritance law group of the Civil Law Codification Commission, twofold scholarship holder of the Foundation for Polish Science, winner of the 1st Prize in the XLVIII competition of the “Państwo i Prawo” journal for the best Ph.D. dissertation.

Polish law of obligation is mainly regulated in the third book of the Civil Code of the Republic of Poland of 23 April 1964 (Polish Civil Code, CC). This book is divided into two separate parts. The General Part (Articles 353-534 CC) provides provisions applying to most contractual relationships; the Special Part (Articles 534-92116 CC) regulates specific types of contractual obligations (such as contract of sale, contract of delivery or securities). Other provisions, regulating contractual relationships between creditors and debtors, can be found in other books of the Polish Civil Code – especially in the General Part of the Civil Code (for example the conclusion of a contract and rules on prescription) and in special provisions of other statutory laws (such as the Bankruptcy and Reorganisation Law, the Banking Law, the Labour Code, the Code of Commercial Companies etc.). Most of these provisions are dispositive.

Polish law of obligation is based on many solutions from legal systems that were in force in Poland before the Second World War: the French Civil Code (the Napoleonic Code) of 1804, the Austrian Civil Code of 1811, the German Civil Code of 1896 and the Swiss Civil Code of 1907. Originally this branch of Polish law was regulated in the Decree of October 27, 1933 – The Code of Obligations, Journal of Laws No 82, item 598). This code was created with extensive use of the comparative method and could be described as the first example of regulation based simultaneously on Roman and German civil law families.

From the beginning of the changes that started in 1989, the third book of the Civil Code has been subject to several amendments. Those amendments were adopted not only to remove the remaining regulations adopted in the Civil Code during the communist period, but also above all to implement the acquis communautaire of the European Union and to adapt to economic and technological changes.

Polish law of obligation is based on many legal principles, of which the most important one is the freedom of contract. This is expressly stated in Article 3531 CC, according to which parties entering into a contract may arrange the legal relationship between them at their own discretion, as long as its content or purpose is not contrary to the nature of the relationship, a statute or principles of community life. It should also be pointed out that Article 22 of the Constitution of the Republic of Poland of 2 April 1997 states that limitations on any freedom of economic activity can only be imposed by means of statute, and only for important public reasons.

The notion of obligation is expressly presented in Article 353 CC, according to which an obligation exists where the creditor may demand performance (which may consist of acting or refraining from acting) from the debtor, and the debtor should make the performance.

The main sources of obligations are contracts, unilateral legal actions, torts (Art. 415 et seq. CC) and unjustified enrichment (Articles 405-414 CC). Obligation can be also created by court verdicts, with constitutive effect or administrative decisions.

Rules on the conclusion of contracts are regulated in the General Part of the Civil Code. There are three main ways to constitute a contract. The first one is an offer and acceptance (Articles 66-70 CC), the second one is negotiations (Articles 72-721 CC), and the third one is auction or tender (Articles 701-705 CC). Contracts can also arise from unilateral statements of intent, such as public promise (Article 919 CC), or from performing actions, that are authorised by law (for example from benevolent intervention in another’s affairs without a mandate – Article 752 CC).

The Polish law of obligation distinguishes two different regimes under which a debtor can be liable to a creditor in whose property damage arose: liability for non-performance or undue performance of an obligation (Articles 471 et seq. CC) and liability in tort (Articles 415 et seq. CC). Provisions common to both liability regimes are regulated in Articles 361–363 CC. Those articles regulate matters such as: a causal link between an event and a loss (Article 361 section 1 CC); the extent of damage to be redressed (Article 361 section 2 CC); contributory negligence (Article 362 CC); the manner in which a loss is redressed (Article 363 section 1 CC) and the moment when the amount of monetary compensation should be determined (Article 363 section 2 CC). Nevertheless, torts and contracts differ from each other in many specific regulations, such as: mitigation of damages (Article 440 CC); general rule of prescription (see Article 4421 CC); joint and several liability of the perpetrators of damage in the law of torts (see Article 441 CC), presumption of debtor fault (see Article 471 CC) and effects of non-performance of obligations arising from reciprocal contracts (Article 487 et seq. CC). Moreover, the vast majority of authors accept the admissibility of compensation for non-pecuniary damage only according to specific provisions of tort law (Articles 445-448 CC). Nevertheless, it must be pointed out that, in Polish law, a circumstance whereby an act or omission causing damage resulted from the non-performance or undue performance of a pre-existing obligation does not exclude a claim for the redress of the damage resulting from the tort, unless something else results from the content of the pre-existing obligation (Article 443 CC). For both regimes of liability, general rules are also applicable, whereby the debtor is obliged to show diligence generally required in relations of a given kind (due diligence – Article 355 section 1 CC) and the debtor and creditor are obliged towards each other in the process of performing an obligation (Article 354 section 2 CC). Nevertheless, the debtor’s due diligence within the scope of its economic activity is specified in taking into account the professional character of that activity (Article 355 section 2 CC).

The Polish law of obligation is based on French tort general clause. According to Article 415 CC, a person who has inflicted damage on another person through his own fault is obliged to redress it. Nevertheless, under the notion of tort, Polish law denotes both human unlawful acts and other events as specified by law that are not of human origin (such as liability for animals [Article 431 CC] or liability for the operation of an enterprise or an establishment powered by the forces of nature [Article 434 CC]). According to many academics, this also refers to liability for damage inflicted by an unsafe product (Article 4491 et seq. CC).

The Polish Civil Code also regulates the liability of the State Treasury and entities of local government for illegal acts or omissions committed while exercising the public authority (Articles 417-4172 CC). Those rules are a transposition of Article 77 section 1 of the Constitution of the Republic of Poland of 2 April 1997, according to which everyone has the right to compensation for any harm done to him by any action of an organ of public authority contrary to law. Due to that fact, other legal persons who by virtue of law exercise public authority are also liable on the same legal grounds for the damage occurred.

In the General Part, the Polish law of obligation legislator also regulated the plurality of debtors or creditors (joint and several obligations; divisible and indivisible obligations – Article 366 et seq. CC), change of creditor or debtor (Article 509 et seq. CC) and protection of the creditor in the event of the debtor’s insolvency (based on the Roman concept of actio Pauliana – Article 527 et seq. CC). The Polish Civil Code also expressly regulates such institutions as an extraordinary change in circumstances (the so-called rebus sic stantibus clause – Article 3571 CC) and adjustment (Article 3581 section 3 CC).

In the Special Part, the Polish law describes different types of nominate contract, such as contract of sale (Article 535 et seq. CC), lease and tenancy (Article 659 et seq. CC), mandate (Article 734 et seq. CC), contract of agency (Article 758 et seq. CC), civil law partnership (Article 860 et seq. CC) and donation (Article 888 et seq. CC) are regulated. The “main contract” for many of them is a contract of sale, because its provisions (for example regulated warranty), apply to many other contracts (such as contract or delivery – Article 603 et seq. CC or specific work contract – Article 627 et seq. CC). The third book of the Polish Civil Code provides special provisions for contracts not typical in other legal systems – such as: construction works contract (Article 647 et seq. CC), lease of premises (Article 680 et seq. CC), leasing contract (Article 7091 et seq. CC) and life-annuity (Article 908 et seq. CC). This part of the book also regulates liability, the right of pledge and the limitation of claims of persons who run hotels and similar establishments (Article 846 et seq. CC) as well as consequences of settlement (Articles 917-918 CC) and public promise (Article 919-921 CC).Following changes in the Polish civil law in the early 1990s, this part of the Civil Code also contains a regulation ofremittance and securities (Article 9211 et seq. CC)

The parties can create contracts as they see fit, even if the contract is not regulated in the statute (innominate contracts). There are no rules explicitly declaring that in such situations the court should apply to them the provisions of the Special Part that are most similar in terms of their structure and object. The only exception to this rule is Article 750 CC which states that the provisions on mandate apply accordingly to contracts for services not governed by other provisions. Nevertheless, the parties of the contract can also create content of the contract in such a way, which will comprise elements of different kinds of nominate contracts (so-called “mixed contracts”).