Use and validity of expressions corresponding to legal presumptions in a contract

On March 31, 2022, the Supreme Court posted on the electronic bulletin board a judgement Case No. 23 Cdo 1001/2021, in which it addressed the validity of the parties' contractual arrangements using verbal expressions in a contract that usually express legal presumptions or legal fictions (e.g., „it is considered,“ „it is to be considered,“ "it is understood that," etc.).

In the judgement, the Supreme Court dealt with a contract for work concluded between two entrepreneurs who agreed, among other things, that "the work is considered to have been handed over if the client fails to appear unreasonably and repeatedly (at least twice) to accept the work". The appellant subsequently claimed that this arrangement was invalid, citing the case-law of the Supreme Court. However, the contract in question was concluded under the Civil Code of 2012 (Act No. 89/2012 Coll.), so the courts have not yet addressed the issue of the use of the aforementioned phrases under the current legislation. 

The Supreme Court did not grant the appellant's request and stated that the use of verbal expressions to express a certain foreseeable consequence, which in legal norms usually express legal presumptions or legal fictions, does not automatically invalidate such provisions for contravention of the law or good manners. In order to assess the validity of such provision, the Supreme Court considers that it is necessary to examine, first of all, what the content of the agreement is and the legal status of the parties. It is therefore quite possible that the Supreme Court would not have reached the same conclusion if the parties had an imbalanced relationship, e.g. a contract concluded between an entrepreneur and a consumer. 

Although it is a very important decision, we will have to wait and see how the courts will consider the issue in other cases.