03.01 Conclusion of a contract

03 Contract Law

The Swiss Code of Obligations (CO) already regulates the contract in its first article. CO 1 states that the conclusion of a contract requires the mutual consent of the parties. This may be express or tacit. «Mutual» means that at least two parties are required for the conclusion of a contract. However, there are also multilateral contracts concluded by three or more parties. When concluding a contract, the parties express their will to enter into rights and obligations, the so-called «expression of will». These rights and obligations must also be «consistent», i.e. congruent. In simple terms, the parties must agree on the rights and obligations («Nothing is agreed, until everything is agreed»).

Offer and acceptance

In fact, the contract is concluded in which one party makes an offer of services or goods and the other party accepts it (acceptance). The duration of the validity of an offer depends on how long the other party objectively needs time to examine the offer and respond to it. The more complex the subject of the contract, the longer this period should be. From a legal point of view, however, it is highly advisable to set a time limit on offers. This makes it clear by when the other party has to accept the offer, which regularly leads to discussions in the case of offers with an indefinite deadline (CO 4 ff.). However, a limited offer cannot be revoked in principle until the expiry of the time limit (CO 3). This could possibly pose a problem for the supplier if, for example, conditions change (e.g. own purchase prices), especially in the case of long periods. This problem can be countered with the reservation of withdrawal. For example, a clause could read as follows: «This offer is valid until [date]. We expressly reserve the right of revocation». Then there is no discussion on this point. It is also possible to submit a non-binding offer.

«Consideration» in the Anglo-American legal area

In the Anglo-American legal area, jurisdiction requires a so-called «consideration» in addition to an offer and acceptance for the conclusion of a contract. Only with a consideration does a contract become enforceable. The consideration is the requirement of a return when concluding contracts. For example, in a contract of sale the seller hands over the goods, while the return consists of the payment of the purchase price by the buyer. I have the impression, however, that the consideration is of little practical significance.

Use of terms «contract», «agreement»

The terms «contract» and «agreement» are synonymous. This means that both the term «contract» and the term «agreement» can be used to describe a contract. I myself use the term «contract» rather for formal, comprehensive agreements and the term «agreement» rather for simpler, shorter contracts. For intergovernmental contracts, i.e. contracts between governments or countries, the terms «treaty» or «convention» are also used. However, these terms are never used in private law relationships.

03 Contract Law