How to approach General Terms and Conditions and contracts of adhesion

Czech Republic: What to watch out for when entering into boilerplate contracts and contracts which refer to standard T&C

In today’s world, general terms and conditions („T&C“) have become an all but indispensable tool in the life of successful business, given the large number of contracts into which they (have to) enter. Thanks to their general character, the whole process of contracting can be made easier, and the contents of contracts themselves can be unified. If and when individual deviations become necessary, they are easily addressed in the contract itself (whose provisions enjoy preference over those of the T&C). Another huge advantage of T&C is the new possibility to agree on their unilateral amendment, provided that the statutory requirements are fulfilled (Sec. 1752 of the Civil Code).

On the downside, the T&C do not automatically become a part of the contract – they must be attached to the contract or the other party must have been provably familiarized with their contents in another way. In this respect, it is not enough that the T&C have been made available on the internet, or are on display on the entrepreneur’s premises. Moreover, if the other party is the „weaker party“ (within the legal meaning of this term, which typically applies to consumers) and the contract itself is made as a contract of adhesion (on which more below), then that weaker party must be instructed of the existing reference to the T&C and its significance.

If both parties are businesses und both of them refer to (mutually incompatible) T&C, then the contract is still validly concluded. The T&C even form part of such a contract, to the extent that they are not in mutual conflict (and this holds true even if the T&C were to expressly rule it out).

In terms of the contents of general terms and conditions, the lawmaker has been mindful of the fact that the parties to various contracts often do not bother to actually read them. For this reason, the law stipulates that any provisions which the other party could not have reasonably anticipated are void. Examples include e.g. provisions which exclude the liability of one party in the event of a breach of contract. However, this does not apply if the erstwhile party expressly accepted the limitation of liability. Also, provisions which are presented in an illegible or unintelligible form are to be disregarded.

Similarly, the law pays great attention to contracts of adhesion (standard form contracts). These are contracts whose contents are designed exclusively by one of the parties, and the other party has no say in drafting them nor can they influence the final wording – they merely have the choice of accepting the contract in its entirety or rejecting it. Contracts of adhesion typically favor one of the parties and de facto put the other party into a weaker position. For this reason, the law stipulates a number of rules which must be observed for validly entering into a contract of adhesion. Such contracts should never use clauses which are difficult to read, set out in fine print, or incomprehensible to individuals of average mental capacity, as these clauses would only be valid if they entail no loss or harm for the other party or if they have been adequately explained to the weaker party. Similarly, clauses which are especially disadvantageous for the weaker party for no good reason are null and void.

Source: Civil Code (Act No. 89/2012 Coll.)

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