11: Law of Obligations

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Tina Huber-Purtschert
Law of Obligations

I.Contract and Tort Law

1.Codes

2.Principles

a)Conclusion of a Contract

b)Interpretation of a Contract

c)Defects in the Conclusion of a Contract

d)Defects in Consent

e)Unfair Advantage

f)Claims According to the General Provisions of the Code of Obligations

g)Quasi-Contractual Claims

h)Time Limits

i)Types of Contractual Relationship

j)Innominate Contracts

3.Landmark Cases

a)Swissair-Case

b)Market Value Estimate-Case

c)Revocability of Simple Agency Contracts-Case

b)Sole Proprietorship

c)Company Limited by Shares

d)Limited Liability Company

3.Landmark Cases

a)Breakthrough-Case I

b)Breakthrough-Case II

Selected Bibliography

The Swiss Law of Obligations is mainly contained within the Code of Obligations, which is Part Five of the Swiss Civil Code and is officially known as the Federal Act on the Amendment of the Swiss Civil Code.1 The Federal Assembly of the Swiss confederation decreed the creation of the Code of Obligations on March 30, 1911; together with the other parts of the Civil Code, it entered into force on January 1st, 1912. The Code of Obligations is filed in the classified compilation of federal legislation under the number 220 (the Civil Code is filed under the number 210).2 The Code of Obligations exists in three official language versions, namely in French, German, and Italian.3 For several years now, the confederation has also provided an English translation and since very recently a Romansh translation too. However, since English is not official language and Romansh only partial official language of the Swiss confederation, these translations are provided for information purposes only; they have no legal force.4

The Code is regularly subjected to both minor and major retouches, but its basis is now over one hundred years old and remains to this day a model of simplicity. The legislator followed one basic rule: no more than three paragraphs per Article and no more than one sentence per paragraph. This rule is largely still followed today. Thus, the basic aim of the Code is to codify the general rule rather than to enumerate each possible relevant scenario which may arise. The Code of Obligations draws key influence from the German Civil Code (Bürgerliches Gesetzbuch, BGB), but due to the Swiss legislator’s aforementioned ambitions of simplicity, it is much easier to read. Exemplifying this, the Swiss Code of Obligations is often chosen by the parties as the law applicable to their contracts, particularly in commercial arbitration.

The Code of Obligations consists of five divisions with the following titles:

-Division One: General Provisions (Articles 1–183)

-Division Two: Types of Contractual Relationship (Articles 184–551)

-Division Three: Commercial Enterprises and the Cooperative (Articles 552–926)

-Division Four: The Commercial Register, Business Names, and Commercial Accounting (Articles 927–964)

-Division Five: Negotiable Securities (Articles 965–1186)

The code essentially covers two major subjects: contract and tort law in the first two divisions and company law (including the law on securities) in the subsequent three divisions. Since the two subjects cover different areas of the law, they will be discussed individually and chronologically in this chapter.

1In the following text, where Articles are mentioned without referencing their source of law, they are located in the Federal Act on the Amendment of the Swiss Civil Code of 30 March 1911 (Part Five: The Code of Obligations), SR 220.

2For an explanation of the classified compilation of federal legislation see Chapter Swiss Legal System, pp. 31.

3Article 70 I of the Federal Constitution of the Swiss Confederation of 18 April 1999, SR 101 (Constitution); see for an English version of the Constitution www.admin.ch (https://perma.cc/M8UJ-S369).

4See for the English version of the Code of Obligations www.admin.ch (https://perma.cc/AJ2U-V3MB).