Validity of legal acts in cases of non-compliance with agreed form

Imagine that you have concluded a lease contract where you agreed with the counterparty that the lease contract can be changed only by written amendements signed by both contracting parties, and that the parties’ signatures must be officially certified. Then you conclude an amendment to the lease contract with the other party only in written form (i.e. without officially certified signatures). Naturally, the question arises whether such legal act may be valid.

The Supreme Court of the Czech Republic based its conclusion to this question primarily on the interpretation of Section 1758,  Act N. 89/2012 Coll., Civil Code (hereinafter the “Civil Code“), which stipulates that once the parties agree on a particular form for a particular legal act, the law formulates a refutable legal presumption that they do not intend to be bound unless the agreed form is complied with. Yet the Supreme Court found that the most recently expressed will of the contracting parties always has priority over the will expressed earlier. The contracting parties thus may not be pro futuro prohibited from making agreements in another form. If the contracting parties intend to abandon the previously agreed form, it is required that the contracting parties commit not only the informal legal act itself in a form different from the agreed one, but also abandon the previously agreed reservation of form. Since Section 1758 of the Civil Code formulates a refutable legal presumption, non-compliance with the reservation of form must be proved and substantiated. In other words, if the previously agreed form of legal act is not complied with, it must be evident from the circumstances of that case that the parties intended to abandon the form, and at the same time it must be evident that they intend to be bound by the new legal act.

In the above-mentioned case, the lease contract had been repeatedly changed only by written amendements without certified signatures, even though officially certified signatures of the contracting parties were required according to the lease contract. It was apparent from the written amendements that the contracting parties in each amendent referred to the provision of the contract which stipulated the reservation of form, however the signatures of the individual amendments were not officially certified. The Supreme Court found that since the contracting parties were referring to the provision of the lease contract in question, the parties were undoubtedly already aware at the conclusion of the first amendment that to change the lease contract, officially certified signatures were required. If the contracting parties concluded the first amendent only in written form, considering the subsequent actions and conduct of the contracting parties they thereby implicitly abandoned the previously agreed strict written form with officially certified signatures, implying that subsequent written amendments should be supplied with standard signatures. For this reason, the contracting parties are also bound by the amendments to the lease contract supplied with standard signatures.

If in the above-mentioned case the invalidity of the legal act were inferred as a result of non-compliance with the form in accordance with Section 1758 of the Civil Code, the consequences of this Section would to a certain extent be unforeseeable for practice and would contradict the expectations and needs of business practice.

For the sake of completeness, it should be added that the conclusions of the Supreme Court of the Czech Republic cannot be applied to the form of a legal act required by law. In these cases, the parties should comply with the form of legal act stipulated by law, or with a stricter form.

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