Universal Obligations

Article 3

The parties to the contract have equal legal status, and neither party may impose its will on the other.

Article 4

The parties shall, pursuant to law, have the right to enter into a contract on their own free will, and no unit or person may unlawfully interfere.

Article 5

The parties shall observe the principle of equity in defining each other's rights and obligations.

Article 6

The parties shall observe the principle of good faith in exercising their rights and fulfilling their obligations.

Article 7

The parties shall, in making and fulfilling the contract, abide by laws and administrative regulations and respect social ethics, and may not disrupt the socio-economic order nor impair social and public interests.

Article 8

A legally executed contract has legal binding force on the parties. The parties shall fulfill their obligations as contracted, and may not arbitrarily modify or terminate the contract. A legally executed contract is protected by law.

Article 39

Article 39

If standard clauses are used in making a contract, the party that provides the standard clauses shall determine the rights and obligations between the parties in accordance with the principle of fairness, and shall call in a reasonable manner the other party's attention to the exemptible and restrictive clauses regarding its liability, and give explanations of such clauses at the request of the other party. "Standard clauses" means the clauses that are formulated in anticipation by a party for the purpose of repeated usage and that are not a result of consultation with the other party in the making of the contract.

Article 42

Article 42

In the making of a contract, the party that falls under any of the following circumstances, causing thus loss to the other party, shall hold the liability for the loss.

1. engaging in consultation with malicious intention in name of making a contract;

2. concealing intentionally key facts related to the making of the contract or providing false information; or

3. taking any other act contrary to the principle of good faith.

Article 60 

Article 60

The parties shall fulfill fully their respective obligations as contracted. The parties shall observe the principle of good faith and fulfill the obligations of notification, assistance and confidentiality in accordance with the nature and aims of the contract and customary trade practices.

Article 92

Article 92

Article 92

After the termination of rights and obligations under a contract, the parties shall perform the duties of notification, assistance and confidentiality in light of the principle of good faith and in accordance with trade practices.

Article 125

Article 125

In the event that the parties dispute about the understanding of a clause of the contract, the actual meaning of the clause shall be inferred and determined on the basis of the words and sentences used in the contract, related clauses of the contract, aim of thecontract, trade practices and the principle of good faith.

Article 1.102 - Freedom of contract

(1) Parties are free to enter into a contract and to determine its contents, subject to

the requirements of good faith and fair dealing, and the mandatory rules established by these Principles.

(2) The parties may exclude the application of any of the Principles or derogate from or vary their effects, except as otherwise provided by these Principles.

Article 1.201 (ex art. 1.106) - Good Faith and Fair Dealing

(1) Each party must act in accordance with good faith and fair dealing.

(2) The parties may not exclude or limit this duty.

Article 1.202 (ex art. 1.107) - Duty to Co-operate

Each party owes to the other a duty to co-operate in order to give full effect to the contract.

Section 3 - Liability for negotiations 138

Article 2.301 (ex art. 5.301) - Negotiations Contrary to Good Faith 139

(1) A party is free to negotiate and is not liable for failure to reach an agreement. 140

(2) However, a party who has negotiated or broken off negotiations contrary to good faith and fair dealing is liable for the losses caused to the other party. 141

(3) It is contrary to good faith and fair dealing, in particular, for a party to enter into or continue negotiations with no real intention of reaching an agreement with the other party. 142

Article 2.302 (ex art. 5.302) - Breach of Confidentiality 143

If confidential information is given by one party in the course of negotiations, the other party is under a duty not to disclose that information or use it for its own purposes whether or not a contract is subsequently concluded. The remedy for breach of this duty may include compensation for loss suffered and restitution of the benefit received by the other party. 144

Article 5.102 (ex art. 7.102) - Relevant Circumstances 291

Article 5.102 (ex art. 7.102) - Relevant Circumstances 291

In interpreting the contract, regard shall be had, in particular, to: 292

(a) the circumstances in which it was concluded, including the preliminary negotiations; 293

(b) the conduct of the parties, even subsequent to the conclusion of the contract; 294

(c) the nature and purpose of the contract; 295

(d) the interpretation which has already been given to similar clauses by the parties and the practices they have established between themselves; 296

(e) the meaning commonly given to terms and expressions in the branch of activity concerned and the interpretation similar clauses may already have received; 297

(f) usages; and 298

(g) good faith and fair dealing 299

§ 88 Guaranty

§ 88 Guaranty

A promise to be surety for the performance of a contractual obligation, made to the obligee, is binding if (a) the promise is in writing and signed by the promisor and recites a purported consideration; or (b) the promise is made binding by statute; or (c) the promisor should reasonably expect the promise to induce action or forbearance of a substantial character on the part of the promisee or a third person, and the promise does induce such action or forbearance.

§90 Promise Reasonably Inducing Action or Forbearance

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (2) A charitable subscription or a marriage settlement is binding under Subsection (1) without proof that the promise induced action or forbearance.

§ 205 Duty of Good Faith and Fair Dealing Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

§ 208 Unconscionable Contract or Term If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

§ 1-103. Construction of [Uniform Commercial Code] to Promote its Purposes and Policies: Applicability of Supplemental Principles of Law.

(a) [The Uniform Commercial Code] must be liberally construed and applied to promote its underlying purposes and policies, which are:

(1) to simplify, clarify, and modernize the law governing commercial transactions;

(2) to permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and

(3) to make uniform the law among the various jurisdictions.

(b) Unless displaced by the particular provisions of [the Uniform Commercial Code], the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.

§ 1-201. General Definitions

(a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof, have the meanings stated.

(b) Subject to definitions contained in other articles of [the Uniform Commercial Code] that apply to particular articles or parts thereof:

(20) "Good faith," except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

§ 1-302. Variation by Agreement.

(a) Except as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial Code], the effect of provisions of [the Uniform Commercial Code] may be varied by agreement.

(b) The obligations of good faith, diligence, reasonableness, and care prescribed by [the Uniform Commercial Code] may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever [the Uniform Commercial Code] requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.

§ 1-304. Obligation of Good Faith.

Every contract or duty within [the Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement.

§ 1-305. Remedies to be Liberally Administered.

(a) The remedies provided by [the Uniform Commercial Code] must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in [the Uniform Commercial Code] or by other rule of law.

(b) Any right or obligation declared by [the Uniform Commercial Code] is enforceable by action unless the provision declaring it specifies a different and limited effect.

§ 2-302. Unconscionable contract or Term.

§ 2-302. Unconscionable contract or Term.

(1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

(2) If it is claimed or appears to the court that the contract or any term thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

Article 5. Customs in business practice.

Article 5. Customs in business practice.

1. A custom in business practice is recognized to be a rule of behaviour not provided for by the legislation that has long developed and been in wide use in some business field regardless of whether or not it has been recorded in a document.

2. Business practice customs conflicting with the legislation or contract provisions that are binding on the parties to appropriate relations shall not be applied.

Article 6. Application of civil legislation by analogy.

Article 6. Application of civil legislation by analogy.

Article 6. Application of civil legislation by analogy.

1. In the cases where relations specified by pts. 1 and 2 in article 2 of this Code are not directly regulated by the legislation or by the parties' agreement and there is no applicable business custom, civil legislation regulating similar relations (analogy of the statute) is applied to such relations unless this is contrary to their essence.

2. If it is impossible to use the statute analogy, the parties' rights and duties are determined proceeding from general principles and tenor of civil legislation (analogy of the law), as well as requirements of conscientious, reason and justice.

Article 10. Limits for the exercise of civil rights.

Article 10. Limits for the exercise of civil rights.

1. Citizens and legal persons are banned from actions undertaken exclusively with the intention of inflicting damage on other persons, as well as from the misuse of a right in any other form.

The use of civil rights for the purposes of setting bounds to competition, as well as the abuse of domination on the market are not permitted.

2. If the requirements specified in pt. 1 of this article are not observed, the court of law or court of arbitration can deny the person protecting the right belonging to him.

3. In the cases when the law makes protection of civil rights dependent on whether these rights have been exercised reasonably and conscientiously, reasonable actions and conscientious of participants in civil relations at law are presupposed.

Article 157. Transactions Concluded under Condition

Article 157. Transactions Concluded under Condition

Article 157. Transactions Concluded under Condition

1. A transaction shall be considered concluded under a condition suspensive if the parties have made the arising of rights and duties dependent upon a circumstance relative to which it is unknown whether this will ensue or not.

2. A transaction shall be considered concluded under a condition subsequent if the parties have made the termination of rights and duties dependent upon a circumstance relative to which it is unknown whether this will ensue or not.

3. If the ensuing of a condition is obstructed in bad faith by a party for which the ensuing of the condition is disadvantageous, the condition shall be deemed to have ensued.

If the ensuing of a condition is facilitated in bad faith by a party for which the ensuing of the condition is advantageous, the condition shall be deemed not to have ensuedGeneral Formation Parties Validity Agreed obligations Mandatory obligations Termination Remedies 27

Article 421. Freedom of Contract

Article 421. Freedom of Contract

Article 421. Freedom of Contract

1. Citizens and legal entities shall be free in concluding a contract.

Coercion to conclude a contract shall not be permitted except for instances when the duty to conclude a contract has been provided for by this Code, by a law, or by a voluntarily accepted obligation.

2. The parties may conclude a contract which is either provided for or is not provided for by a law or other legal acts.

3. The parties may conclude a contract which contains elements of various contracts provided for by a law or other legal acts (mixed contact). The rules on contracts whose elements are contained in a mixed contract shall apply in respective parts to the relations of the parties under a mixed contract unless it follows otherwise from the agreement of the parties or the essence of the mixed contract.

4. The conditions of a contract shall be determined at discretion of the parties except for instances when the content of the respective condition has been prescribed by a law or other legal acts (Article 422).

In instances when a condition of a contract has been provided for by a norm which applies insofar as not established otherwise by agreement of the parties (dispositive norm), the parties may by their agreement exclude the application thereof or establish a condition which differs from that provided therein. In the absence of such agreement, the condition of the contract shall be determined by the dispositive norm.