Contractual liability: In European, comparative and Serbian law

• Main Author: Salma Jožef
• Format: Article
• Language: English
• Published: University of Novi Sad, Faculty of Law 2011-01-01
• Series: Zbornik Radova: Pravni Fakultet u Novom Sadu
• Subjects: contractual liability; divergences of contractual liability from the liability for torts
• Online Access: http://scindeks-clanci.ceon.rs/data/pdf/0550-2179/2011/0550-21791101069S.pdf
• ISSN: 0550-2179; 2406-1255

Contractual liability is an important topic of the ongoing reform of the effective Serbian Law on Obligations (2007-2009), which aims to harmonize the national legislation in this field with the laws of the European Union. In this paper the author analyzes the evolution of the traditional European civil codes (the German BGB, French Code civil, the Austrian ABGB the Swiss OR and the Hungarian Civil Code), with due attention to the doctrine and jurisprudence, taking into account the proposed reforms of the effective Serbian Law on Obligations concerning issues of contractual liability, such as the legal consequences of nonperformance, misperformance, default, etc. The author is of the opinion that the notion of the breach of contract doesn't cover all the cases in which contractual liability arises, although it embraces nonperformance, misperformance and default. The notion of contractual liability, namely, covers not only the cases of breach of contract, but the infringement of public policy, good morals and mandatory rules, which all lead to the nullity of the contract. In cases of voidable contracts (that is in case of defects of contractual will, such as mistake, deceit and duress) it is questionable whether the scope of contractual liability should be extended to mistake, which is a case of nonconscious discrepancy between contractual will and its expression. It is undisputable that contractual liability arises in case of deceit and duress, to the burden of the party acting in bad faith. The rescission of contract entails a separate complex of legal issues, since it may be justified by the other party's breach of the contract. It can also be onesided, two-sided or by a mutual agreement. Furthermore, specific rules apply to rescission of contract due to changed circumstances. In case of termination of a contract by mutual agreement, the parties usually agree on the extent of liability, that is on the extent of indemnification. Contractual liability is also specific that, according to the principle of parties' autonomy, the parties always may in advance agree on the extent of damages for the case of breach of contract, in a form of a clause on liquidated damages, forfeit money, suretyship for indemnification, the limitation of the sum insured in insurance contracts, clauses in the general conditions of business, etc. The author calls attention to the fact that these clauses in certain extent limit the scope of the indemnification for breach of a contract, according to which this liability differs from the liability for torts, where the principle of full indemnification applies as a rule.