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  • II.Principles


    According to Article 1, which addresses the relationship between statutory law and judicial power, the law must be applied by the courts to all legal questions it provides an answer to, by directly applying its wording or by interpreting its terms. However, in the absence of an applicable provision, a court shall decide in accordance with customary law and, in the absence of customary law, in accordance with the rule that it would establish itself if it were the legislator. When applying and interpreting the law, the court shall follow established doctrine and tradition.

    Article 1 can be regarded as the civil law’s expression of the constitutionally protected and fundamental principle of the rule of law (Rechtsstaatlichkeitsgrundsatz) in the following ways. Firstly, it provides for the separation of powers by requiring a court to apply the law in cases where it is applicable. The legislator passes laws as abstract and general rules; thus it is for the courts to concretely apply the law in each individual case. Secondly, Article 1 dictates that, when interpreting the law, the courts must follow established methodology. Although the reference to doctrine and tradition in Article 1 is not exhaustive, this reference does explicitly identify established doctrine and case law as two relevant considerations of methodological interpretation in the process of finding justice.14 Thirdly, Article 1 contains the prohibition of arbitrary decisions. In cases where the legislator has not passed any legislation, the courts cannot simply decide the case as they see fit. Instead, this provision stipulates a process according to which a court must resort to customary (e.g. local or professional) laws, if available. If neither explicit nor customary laws exist, the court must put itself in the shoes of the legislature and establish a rule that could serve as a general statutory law-provision. Even in this scenario, the court is not permitted unfettered discretion. By dictating that the court must “act as legislator”, Article 1 demands a structured approach, and thereby subtly yet effectively reminds courts of the fundamental principles of the rule of law – such as proportionality and legal equality.

    Whilst interpreting the law, the Federal Supreme Court utilises the following common legal interpretation methods:

    -grammatical interpretation relying on the wording, syntax, and linguistic usage of the relevant text thereby giving words their literal, usual, and grammatical meaning;

    -systematic interpretation by contextualising a provision within the overall legal and statutory framework;

    -teleological interpretation which involves a consideration of the purpose and rationale (telos) of a certain provision;

    -realistic interpretation which demands that the result of an interpretation must also consider questions of practicability;

    -historic interpretation considering either the legislator’s original will or relying on a more flexible historic intention, which may take into account later developments; and

    -constitutional interpretation requiring courts to choose an interpretation that is best in line with the fundamental values enshrined in the Swiss Constitution.15

    It should be noted that there is no hierarchy between these methods of interpretation; no method has greater importance or is accorded greater weight than the others. Instead, the Federal Supreme Court employs a “pragmatic” pluralism of methods. According to this approach, the law must primarily be interpreted integrally: its wording, meaning, and purpose as well as its underlying values and inherent rationale all must be part of the consideration. The interpretation must not be solely based on the wording of the provision. Instead, the relevant rule must be considered within the context of the law in a broader sense, and as something which can only be properly understood and concretised when confronted with the facts of an individual case. In this way, the rule ultimately comes to life through interpretation.16

    This pragmatic approach is being criticised in the legal doctrine. On closer examination, it can very well be argued that the Federal Supreme Court simply wants to keep the door open for any future interpretation of a certain law. Whether such blurring of boundaries between the different interpretation methods is strengthening legal certainty, is, however, highly doubtful. In addition, it becomes more difficult to draw the line between admissible further development of the law through judicial decisions (e.g. to close a legal loophole) and inadmissible judicial legislation.


    Another fundamental principle of Swiss civil law is enshrined in Article 2: every person must act in good faith when exercising his or her rights or fulfilling his or her obligations. Further, this provision clarifies that the manifest abuse of a right is not protected by law. The general principle of good faith is not limited to civil law, but is universally applicable and has validity in all aspects of Swiss law.17

    This general rule of good faith (bona fide) can be divided into two sub-principles:

    (i) the principle of mutual respect and consideration when exercising rights and fulfilling legal obligations; and

    (ii) the prohibition of abuse of rights.

    The principle of good faith requires that the parties to a legal relationship (regardless of whether the basis of the relationship is the law or a contract) act in an appropriate and honest manner, remaining loyal to their legal obligations. In this regard, Article 2 codifies and channels universal moral and philosophical ideas of integrity into the civil law.18

    The principle of good faith reveals an important facet of Swiss civil law: Article 2 is the gateway and focal point for legal interpretation of, among others, contracts, actions, etc., and, where necessary, the creation of amendments or supplements to legal declarations of intention. Declarations of intention (such as declarations aiming at the conclusion of a contract), which are unclear, vague, or ambiguous and thus open to various interpretations, will be interpreted in accordance with the so-called principle of trust (Vertrauensprinzip).19 This principle mandates that in cases where the true intention of the declaring party cannot be unequivocally established, the declaration will be interpreted as the receiving party, in good faith, could and should have understood it.

    Other facets of the principle of good faith are the rule against unusual clauses (Ungewöhnlichkeitsregel) and the ambiguity rule (Unklarheitenregel). In particular, in the context of general terms and conditions (GTCs), where an unusual or surprising wording was implemented without this being explicitly notified, it will not be considered binding on the weaker or less experienced party. Furthermore, ambiguous wording will be interpreted by the court to the detriment of the author of such a clause.

    The prohibition of the abuse of rights allows Swiss courts to rectify or prevent a result which, although correct from a purely formalistic legal point of view, would be ethically and morally questionable. It leaves room for correcting or preventing unbearable consequences which might otherwise undermine the trust of the people in the legal system’s ability to provide fair and reasonable (and morally understandable) results.20 According to established case law of the Federal Supreme Court of Switzerland a blatant abuse of the law will not be granted legal protection (Article 2 II).21 Whether an exercise of rights is abusive must be determined in light of all the facts and circumstances of the individual case. Case-law has established certain types of conduct which will be considered abusive such as, amongst others, the exercise of a right which is not justified by any legitimate interest, the misuse of a legal institution for inappropriate interests or the contradictory use of rights in a manner that violates valid expectations based on prior conduct. However, Article 2 II is to be applied restrictively and only where the results of strictly applying the law would be severely unjust.

    Example: With the aim of reducing taxes and duties, the seller and buyer of a building plot decide to formally reduce the official purchase price in the notarial deed of sale from CHF 6 million to CHF 5 million. However, they agree that the buyer shall pay the seller the difference in cash. If the buyer, upon signing of the notarial deed of sale, refuses to pay the additional CHF 1 million, the seller cannot claim invalidity of the notarised purchase agreement in order to get back ownership of the building plot in return for refund of the purchase price. Although, from a formal point of view, the notarised purchase agreement would be deemed invalid because it did not contain the correct purchase price and, therefore, does not fulfil the requirement that the entire agreement regarding the sale of land requires the notarial form, such approach could promote illicit behaviour of colluding parties and undermine the trust of the general public. Therefore, Article 2 II prohibits the seller from invoking the invalidity argument.22

    One important group of cases revolves around the argument of venire contra factum proprium whereby the contradictory conduct of one party is sanctioned if the other party, based on the previous conduct (either by action or omission) of the former, could reasonably expect a different behaviour and has made (financial) arrangements (e.g. investments) as a result of his or her expectations.

    Example: Company X (a limited liability company, GmbH) has rented business premises from company Y (a company limited by shares, AG) for a fixed period of ten years. According to the rental agreement, the parties agreed to start negotiating the terms and conditions of a contract renewal three months prior to the end of the ten-year period. During the negotiations the CEO of company Y repeatedly stated both verbally and in various e-mails that the lessor wanted to sign a new rental agreement (substantially in line with the previous one which allowed the tenant to modify the premises according to the tenant’s needs) with company X “because of the great personal and business relationship” between the two parties.

    Against this background and expecting to stay in the business premises for another five to ten years, company X started to make substantial renovations and modifications in the rented space. During this time the parties negotiated the terms of a new contract. Company Y CEO has frequently visited the rented premises where he complimented Company X on the construction works.

    However, on the day of the official expiry of the old rental agreement and with only minor issues left to negotiate, the CEO of company Y suddenly sent an e-mail to company X stating that “as you are aware, the rental agreement is expiring today” and demanded from company X to “remove any installations and to make sure to hand over the premises in the original condition by 5.00 pm today at the latest”.

    In this case company X could, based on the CEO’s behaviour, reasonably expect to sign a new rental agreement which would also allow the tenant to make renovations and modifications to the rented premises. By repeatedly signalling to company X during the negotiations, on the one hand, that a contract renewal could be expected and, on the other hand, by abruptly abandoning the negotiations, CEO of company Y has acted in a contradictory manner.

    As a result and based on Article 2 II, Y can neither claim that the original rental agreement expired nor demand that company X hand over the business premises in the original condition.


    Property law allocates property by conferring rights in rem (or real rights) (dingliche Rechte)23, which have legal effect not only between the parties of a contract or other bilateral legal relationship (inter partes), but which can be enforced against everyone (erga omnes).24 To make it easy for any interested (third) party to ascertain the existence or non-existence of such real rights, Swiss property law upholds the principle of publicity (Publizitätsprinzip), according to which rights in rem must be made public through suitable means.25

    With regard to movable property, it is possession (Besitz), i.e. effective control (Article 919 I), that grants publicity. Accordingly, to validly transfer ownership the new owner must legitimately gain possession (traditio) of the chattel (Traditionsprinzip, Article 714 I).26

    There are, however, different forms of possession under Swiss law which may result in different legal remedies being available for the different categories of possessors. First, more than one person is able to possess the same chattel at the same time (multiple possession). Thus, effective control can be exercised directly (immediate possession) or indirectly via another person (indirect possession). Secondly, whoever exercises effective control as if he were the owner of the property has direct possession, while someone who exercises effective control based on an obligatory right or a limited right in rem has derivative possession (Article 920). Thirdly, possession (and also ownership) can be transferred without the need to physically exchange the object of possession (Article 924).

    Example: A has borrowed a book from his friend B until the end of the semester (loan for use pursuant to Article 305 of the Swiss Code of Obligations).27 Under Swiss law, B can sell his book to C while A may continue keeping and using the book. In this case B would need to inform A about the sale of the book and instruct him to hand it over to C at the end of the semester. Following the sale, B has transferred his indirect possession (and, since there is no direct/indirect ownership, full ownership) to C by way of an instruction pursuant to Article 924 (Besitzanweisung). A remains the immediate or direct possessor of the book and is entitled to refuse delivery of the book to C based on the same arguments he/she could have invoked against B under the loan for use (C may, therefore, not demand that A deliver the book to C during the semester).

    Since possession usually reveals the existence of real rights on the chattel,28 the possessor has an interest in excluding third parties from illegitimately exercising control over the chattel. Therefore, the Civil Code stipulates the action for restitution based on possession (Article 927) in the event of a wrongful dispossession by any third party.29 Additionally, anyone who has a better right to possess the chattel (as opposed to possession as such) can utilise the action for restitution based on a right to possession (Articles 934 and 936).

    Example: After B had sold the book to C, fellow student D stole the book from A who was learning in the library. A (and, for that matter, also C as indirect possessor) could demand restitution of possession based on Article 936 since D was acting in bad faith when obtaining direct possession.

    However, if the current possessor took possession in good faith30 in the case of a chattel which was lost by the previous possessor, the latter must reclaim possession within a five year period from the moment the chattel was lost (Article 934). In order to protect the public faith in certain transactions and business practices, Article 934 II stipulates that whenever a chattel has been sold at a public auction, or on the market, or by a merchant dealing in goods of the same kind, it may be reclaimed from the first and any subsequent bona fide purchaser only against reimbursement of the price paid.

    If D immediately after he had stolen the book sells it to E, who acted in good faith when purchasing the book, A and C have five years to reclaim their possession from E. Assuming that D is neither a merchant nor sold the book to E on the market, E cannot demand any reimbursement from A or C. Should A and/or C fail to reclaim possession (and, in case of C, also ownership) within the five year-period, E acquires not only possession, but also ownership (!) based on Article 714 II in conjunction with Article 934 even though D as thief was neither authorised to transfer possession nor ownership. Consequently, after five years E becomes the sole possessor and sole owner of the book if he or she acted in good faith.

    Further, the previous possessor is not permitted to reclaim possession at all if he or she had knowingly and willingly entrusted the chattel to another person, who then transferred the property to a third party (Article 933).

    Thus, in our example neither A nor C could reclaim (direct or indirect) possession based on Article 936 if the book had not been stolen, but if A had instead given it to D as a gift. In this case D, if acting in good faith, is protected both with regards to possession and ownership since the chain of possession had not been broken by way of an unwanted loss or theft.

    While a possessor may only invoke an action for restitution of possession based on Article 934 (against a possessor acting in good faith) or Article 936 (against any possessor acting in bad faith), the owner can, additionally, reclaim his or her possession through an action for restitution based on ownership (Article 641 II). Unlike the provision in Article 934, there is no specific time limitation period for an action based on Article 641 II, but property ownership needs to be proven.

    In the case of immovable property, any disposition, change of ownership, or the creation or cancellation of as well as any amendments to real rights and obligations must be recorded in the land register to have legal effect. The expectation that the land register and its entries are accurate is guaranteed by law under the principle of good faith (Articles 971–974).

    Swiss contract law is characterised by the far-reaching autonomy of the contracting parties. In this area, the law only defines certain boundaries (e.g. protection of the typically weak); otherwise it allows the parties to autonomously create and define the scope of rights and obligations which their legal arrangement will encompass. In property law, on the other hand, contracting parties’ autonomy is much more limited. Since rights in rem take effect erga omnes, it must be easy for any third party to ascertain their scope. Therefore, Swiss property law follows a strict principle of numerus clausus of rights in rem.31

    The principle of numerus clausus regarding rights in rem means that parties can select only from a given set of rights when they want to establish or modify a right in rem (in particular by way of contract). In this regard it is important to point out that possession in Swiss civil law does not constitute a right in rem. However, possession does indicate who has actual control over an asset and thereby ensures adherence to the principle of publicity and protects good faith.

    In addition to ownership (Eigentum), Swiss property law only encompasses the following rights in rem:

    -easement (both on property and limited personal easement);

    -usufruct; and

    -lien (including charges on chattels, charges on immovable property such as mortgages, special liens, and liens on debts).


    When the Civil Code came into effect in 1912, the federal legislator lacked the competence to legislate on matters of civil procedural law.32 However, it was deemed necessary that the Civil Code should address certain procedural issues relating to evidence which could not be separated from the substantive civil law. Thus, certain civil procedural matters are covered in this legislation.

    One such rule is contained in Article 8: unless the law provides otherwise, the burden of proof for establishing an alleged fact shall rest on the person who would derive rights from that fact. Consequently, the party asserting a claim is obligated to prove the legally relevant facts giving rise to and substantiating the claim.33 Conversely, the party arguing that a claim is unsubstantiated or unenforceable bears the burden to prove the legally relevant facts that make the claim unenforceable (e.g. the argument that the applicable limitation period has lapsed or that the claimant had granted the defendant a deferral).

    Further, the legislator of the Civil Code foresaw potential evidence-related problems with regard to good faith if the party invoking or relying on bona fide would have to prove its very existence. Therefore, Article 3 makes it clear that where the law makes legal effect conditional on a person’s good faith, there shall be a presumption of good faith. However, according to Article 3 II, a person cannot invoke the presumption of good faith if he or she has failed to exercise the diligence required by the circumstances of the relevant case.

    To illustrate this point: A, who is a car dealer, is offered a brand new “Race Car Deluxe Limited Edition” by B. B, who had stolen the car a couple of days earlier, is asking for a purchase price of CHF 30’000. The car in its current condition is being sold to customers at a market value of CHF 50’000, while the dealer price paid by professional car dealers is approximately CHF 40’000. In such a case the low price asked by B should alarm A. Since the car is being offered to him 40 % below fair market value and still 25 % off the regular dealer price, A could not claim he acted in good faith. Instead, a court would argue that he failed to exercise proper diligence when acquiring the car and, as a consequence, A would be treated as mala fide (bad faith) possessor.34


    Under Swiss law, in order for one’s actions to create legal effect, one must have capacity of judgement. According to Article 16, a person is capable of exercising judgement within the meaning of the law if he or she does not lack the capacity to act rationally by virtue of being below a certain age or because of mental disability, mental disorder, intoxication, or due to other similar circumstances. The capacity of judgment is not determined abstractly, but in light of each legal transaction or event taking place. For instance, Article 94 requires prospective spouses to be at least 18 years old and to have capacity of judgement. In this case it is (only) relevant to ascertain that the prospective spouses are mentally capable to understand the general concept of marriage and to make such decision based on their own free will. In other words, for the question of capacity of judgement in relation to a prospective marriage it is irrelevant whether or not one of the prospective spouses would also be capable of concluding a complex legal contract.

    According to the general rule of evidence (Article 8), the party invoking incapacity of judgement as an argument for or against a claim would, in principle, have to prove this circumstance. However, capacity of judgement is presumed under Swiss civil law. Consequently, a party does not have to prove that he or she was capable of judgement. As a result, when entering into a contract, parties can assume that the other party is legally capable. This presumption cannot be rebutted easily or prematurely. Even in cases involving a person who constantly brings suits, the presumption cannot be easily rebutted. As the Federal Supreme Court held, not everyone who tries to enforce his/her alleged rights in a stubborn manner with all possible means, and occasionally even disregards norms of common decency, can be automatically regarded as a psychopathic grumbler (psychopathischer Querulant) who is incapable of judgement – even if he or she overstretches the patience of courts and authorities.35

    It should be pointed out that doctrine and case law seem to be moving towards a less extreme approach to the presumption of capacity of judgement. In a case from 2004, the Federal Supreme Court was confronted with the following facts: In 1985 and thus at the age of 85, E, who had no close relatives at that time, had drawn up a notarised testament in favour of C and a local Swiss community (B). From 1988 onwards E needed intensive care and nursing in her home. At the instigation of the competent guardianship authority, A started taking care of E in July 1988 and both women developed a close personal relationship. In September 1988, E, accompanied by A, drew up a new notarised testament revoking all prior testamentary dispositions and appointing A as E’s sole heiress. Shortly afterwards E died. Upon E’s demise, B and C brought forward an action for annulment arguing that E had not acted with capacity of judgment when drawing up the second testament. The Federal Supreme Court upheld the lower courts’ decisions and, effectively, declared void the second testament. The Court held that the presumption of capacity of judgement cannot be invoked (i.e. the person concerned is regarded as lacking capacity of judgement) if the person concerned, according to his or her general constitution, must normally and in all probability be regarded as incapable of exercising judgment. Based on the facts of the case the court found that a reduction of the standard of evidence applies and that, as a consequence, the burden of proof shifts to the person arguing in favour of capacity of judgement. Following such a shift of the burden of proof, the party confronted with a claim of incapability of judgement may, according to the court, bring forward all facts and arguments in support of his/her position by providing full proof of capability of judgement.36

    However, this decision raises two questions: Firstly, how can someone provide full proof of capability of judgement, in particular in cases where the person concerned has already died? Secondly, in an ageing society one must be careful not to jump to the conclusion that older people from a certain age onwards or with a certain health condition (What age/health conditions exactly?) are, in essence, generally presumed to lack capacity of judgement – thereby shifting the burden of proof to the older and more vulnerable members of society. Hence, it will be interesting to see how Swiss courts will decide in the future in potentially less obvious cases than the one described above.


    Part 1 of the Civil Code regulates the legal personality of legal persons in Switzerland. In Swiss law, so-called legal persons (juristische Personen) possess all the same rights and duties as natural persons, except for those which presuppose intrinsically human attributes, such as gender, age, or kinship (Article 53).

    The decision to grant legal persons legal capacity and hence the ability to possess rights and be subjected to obligations, raises questions regarding (i) the internal relationship between the legal person and its owners, founders, or members and (ii) the external relationship of the legal person vis-à-vis third parties. In this regard, Swiss civil law follows the so-called separation principle (Trennungsprinzip), a fundamental rule of Swiss civil law in general and the Law of Persons in particular.

    Under the separation principle, a legal person is separated both in legal and economic terms from its members, owners, or founders. In other words, the legal person itself is not just the sum of its members, owners, or founders; instead, it carries out its own activities and participates independently in economic and legal transactions. Hence, the legal person, and not the natural persons behind it, is the sole owner of its assets and the sole debtor of its obligations. Consequently, the members, owners (i.e. shareholders), or founders are neither entitled to the legal person’s assets nor liable to third parties for its debts.37

    14Tradition” within the meaning of Article 1 includes established case law as well as established administrative practice, see TUOR/SCHNYDER/SCHMID, § 5 n. ٣٧ et seqq.

    15BGE 106 Ia 33.

    16BGE 136 III 23, consideration

    17BGE 83 II 345: “Article 2 of the Civil Code contains a general rule which applies in addition to individual legal norms, and which claims validity also outside the scope of federal civil law, e.g. in cantonal procedural law […].”; see also the Chapter on Administrative Law, p. 200.

    18Hence, it is not surprising that the sub-principle of mutual respect has, in fact, a lot in common with IMMANUEL KANT’S categorical imperative: “Act only according to that maxim whereby you can, at the same time, will that it should become a universal law”, IMMANUEL KANT, Groundwork of the Metaphysics of Morals, in Immanuel Kant, Practical Philosophy, The Cambridge Edition of the Works of Immanuel Kant, translated and edited by Mary J. Gregor, Cambridge 2008, pp. 37.

    19This applies to declarations of intention to be received by the other party (empfangsbedürftige Willenserklärungen). In case of a unilateral declaration of intention, which does not need to be received by another party to become legally binding (e.g. testament), the Federal Supreme Court applies the so-called principle of intent (Willenstheorie) according to which only the true and real intention of the declaring party is relevant (and not the interpretation of a hypothetical and [quasi-] objective receiving third party) – as long as the interpretation result can be reconciled with the wording of the declaration.

    20BGE 125 III 257, consideration 2 a.

    21Among others, Judgement of the Federal Supreme Court 4A_141/2008 of 8 December 2009.

    22Interestingly, in similar cases (BGE 92 II 323 and BGE 104 II 99) the Federal Court declined to set Article 2 II aside on the basis that the other party had willfully colluded in such illicit conduct. Instead, the court emphasised that the legal situation created by the parties as a result of the notarised deed of sale (i.e. the transfer of ownership and the changes registered in the land register) justified rejecting the formally correct argument of invalidity in order to uphold the public reliance and faith with regards to entries in the land register.

    23A real right (or right in rem) is a right attached to a movable or immovable property instead of a person.

    24E.g. such as ownership as a real right, conferring absolute freedom within the limits of the law (Article 641 I) and the right to make a claim of ownership against everyone (Article 641 II).

    25TUOR/SCHNYDER/SCHMID, § 88 n. 9. For a discussion of the principle of publicity under English law, see Wolfgang Faber/Brigitta Lurger (eds.), National Reports on the Transfer of Movables in Europe, Vol. 6, The Netherlands, Switzerland, Czech Republic, Slovakia, Malta, Latvia, in European Legal Studies, Vol. 15, Munich 2011, p. 167.

    26Therefore, possession is a fact and not a right.

    27Federal Act on the Amendment of the Swiss Civil Code of 30 March 1911 (Part Five: The Code of Obligations), SR 220; see for the English version of the Code of Obligations (

    28As a consequence, Article 930 I stipulates a presumption of ownership for the (direct) possessor of the chattel.

    29Immediately after becoming aware of the dispossession and the identity of the offender, but no later than one year after the dispossession occurred (Article 929).

    30See pp. 285.

    31The numerus clausus principle means that there is only a limited number of property rights available to the parties. As a consequence, parties are not entitled to create “new” property rights by deviating from the catalogue of real rights provided by Swiss property law.

    32As a matter of fact, only since a referendum in 2000 does the competence for procedural law lie with the federal legislator resulting in the Swiss Code of Civil Procedure of 19 December 2008, SR 272. For details on Swiss Procedural Law, see the Chapter on Civil Procedure, pp. 333; see for an English version of the Civil Procedure Code (

    33TUOR/SCHNYDER/SCHMID, § 7 n. ٧.

    34For a similar case see BGE 107 II 41; see also BGE 113 II 397 where the court held that car dealers are subject to a higher standard of due care and diligence in the context of purchases and sales of cars compared to other persons.

    35BGE 98 Ia 324, consideration 3.

    36Judgment of the Federal Supreme Court 5C.33/2004 of 6 October 2004 (in particular, considerations 3.1. and 3.2).

    37Of course, shareholders are entitled to a company’s profits by way of dividends. However, shareholders cannot simply demand that a certain asset (e.g. real estate), belonging to the company be gifted to them (this would also be considered a breach of the fiduciary duties of the company’s board of directors).

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