Polish Contracts Law

Updated: 18.12.2024

Key Facts: Polish Contracts Law

Legal framework of contract in Poland

In Poland the contract is defined as a consensual statement of intent by two or more parties that leads to the creation, modification or termination of a legal relationship. 

The essential regulation of contracts in Poland may be found in the Civil Code of Poland.

The Civil Code provides regulations on:

1. General principles of contracts: These include rules governing aspects such as contract formation, validity, and performance.
2. Specific types of contracts: These address the most common agreements in legal transactions, such as contracts of sale and contracts for services.

Additionally, the Civil Code includes supplementary provisions tailored for contracts between entrepreneurs, ensuring alignment with business-specific legal requirements.

Freedom of contract principle – what is it?

The fundamental principle under Polish contract law is the principle of freedom of contract. This principle is expressed in Article 353¹ of the Civil Code, according to which:

“Parties entering into a contract may arrange the legal relationship as they see fit, as long as its content or purpose does not oppose the nature of the relationship, the legal statutes or the principles of social coexistence.”

It follows from the above that although this principle gives the parties a great deal of flexibility, it is not unlimited. Polish contracts law provides basic limitations to the principle of freedom of contract.

What are the limitations of the freedom of contract principle?

Restrictions arising from statutes (legal acts)

-> Statutory restrictions are the most straightforward limitations on freedom of contract. In practice, courts are more likely to rely on these restrictions than on the nature of the relationship or principles of social coexistence when evaluating a contract’s validity.

-> The term “statute” refers to all sources of binding law in Poland that contain mandatory rules (ius cogens). A contract is not deemed to contradict the law if it conflicts with relatively binding rules (ius dispositivum). In such cases, the dispositive norm does not apply, as the contractual provisions validly govern the obligations in question.

Limitations arising from the nature (characteristics) of the legal relationship:

-> In a broader sense, the nature of a legal relationship refers to the set of features common to all obligatory legal relationships. In a narrower sense, it denotes the essential characteristics of a specific type of contract (e.g., a contract of sale).

->Model examples of a contract contradicting the nature of a legal relationship include situations such as: a contract of diligence that improperly guarantees a specific result (e.g., a medical services contract guaranteeing recovery), or a donation contract that excludes the donor’s right to revoke the gift in cases of gross ingratitude by the recipient.

Principles of social coexistence:

Principles of social coexistence function as a general clause, characterized by their reliance on extra-legal moral norms. These principles are inherently flexible and adaptive, evolving alongside societal changes. By definition, they lack autonomous content, meaning their interpretation depends on the context in which they are applied.

Whenever the principles of social coexistence are invoked, it is necessary to identify the specific principle being violated. Judicial case law plays a crucial role in illustrating and defining the content of this clause, providing practical examples that give it meaning.

Some of the most general principles of social coexistence used to evaluate contractual provisions include:

• Equality of the parties: For instance, addressing situations where gross disproportionality in the benefits of the parties arises from the exercise of contractual autonomy.
• Good faith and fairness in trade: Ensuring loyalty and fairness in dealings between contractual partners.
• Restrictions on economic freedom: Preventing unjust limitations on the economic activities of one party.
• Protection of weaker parties: Safeguarding individuals in a weaker contractual position from exploitation or unfair terms.

What are the consequences of breaching freedom of contract?

Violations of the principle of freedom of contract are addressed in Article 58 of the Civil Code. A contract whose content or purpose violates statutory law, principles of social coexistence, or the nature of the contractual relationship is deemed absolutely invalid.

If only a part of the contract is invalid, the remaining provisions will remain valid unless the contract could not have been concluded without the invalid provisions. However, if specific legal provisions dictate consequences other than invalidity (in whole or in part), those special norms will apply, allowing the contract to remain effective.

What are the forms of contract conclusion in Poland?

In Poland, contracts can be concluded in various forms, as regulated by civil law. The choice of form generally depends on the parties’ preferences. However, in certain cases, the law mandates a specific form for a contract, either under penalty of nullity or to achieve specific legal effects.

What forms of contract can we distinguish?

1. oral contract
2. written contract – signed with a handwritten signature,
3. contract in documentary form – recorded on any medium, e.g. in an email, on an instant messenger,
4. contract in electronic form – signed with a qualified electronic signature in accordance with the eIDAS regulation,
5. contract with a date certain – concluded in writing with an additional official stamp or notarial confirmation indicating the exact date of its conclusion,
6. contract with notarized signature – concluded in writing with a notarized clause stating the identity of the person affixing his own signature to the contract,
7. contract in the form of a notarial deed – drawn up by a notary public.

What are nominate contracts and innominate contracts?

In Poland contracts law are divided into many different types, depending on the criterion adopted for the division. One of them would be to divide contracts into nominate contracts and innominate contracts.

Nominate contracts

They are characterized by the fact that the legislator has provided for them a specific name and specific regulations governing their content, form and legal effects. The creation of specific regulations of nominate contracts is justified, among other things, by the mass character and high economic importance of the type of contract, as well as the formation of the desired model of legal effects of a particular type of contract.

Examples of nominate contracts are:

• contract of sale,
• rental agreement,
• contract for work,
• contract of mandate,
• lease agreement.

Due to the fact that the legal regime of nominate contracts is defined in detail in statutory provisions, this provides the parties with greater legal certainty. The regulations cover both the content and form of the contract, but also the consequences of non-performance or improper performance of obligations. In the event of disputes over such contracts, the courts have clear guidelines, making it easier to resolve them.

Innominate contracts

The opposite of nominate contracts are innominate contracts, which are not specifically normalized by contracts law and are entered into by the parties within the limits of the principle of freedom of contract.

Innominate contracts are used in situations where standard nominate contracts such as a sales contract or a contract for work, for example, are insufficient to implement and reflect the specific needs and objectives of the parties. For example, in the case of complex business ventures, an unnamed contract can combine elements of various nominate contracts, ultimately creating a so-called mixed contract.

Innominate contracts provide the opportunity to create unique legal constructions that can cover various obligations and benefits, taking into account the specific conditions and needs of the parties. Innominate contracts are shaped freely by the parties, however, taking into account the limits set by the law in each case, including the aforementioned limitations arising from the principle of freedom of contract.

What is the difference between mutual termination (dissolution), rescission (withdrawal) of a contract and termination of a contract?

Certain legal concepts related to contracts may appear identical or very similar, often leading to confusion in practice. A common example involves the distinctions between mutual termination (dissolution), termination, and withdrawal (rescission) of a contract.

While termination, rescission, and dissolution share a common goal—ending the legal relationship—they differ significantly in their structure, applicability based on the type of legal relationship, and the legal consequences they entail. These concepts are distinct and should not be used interchangeably.

Termination of a Contract by Mutual Consent (Contract Dissolution)

The simplest method of ending a contract is through mutual consent, also known as contract dissolution. In this scenario, both parties agree unanimously to terminate their cooperation. This approach is highly flexible, as the parties have the freedom to determine the terms and specify the effective date when the contract will no longer be in force.

Termination of a Contract

Another method of ending a contractual relationship is through termination. In this case, one party unilaterally declares its intention to terminate the contract, notifying the other party of its decision. Termination is typically linked to the lapse of a notice period specified within the contract, after which the contract ceases to have legal effect.

Unlike mutual agreement, termination does not require the consent of the other party, making it a more formal and less flexible process. This method is generally applicable to contracts of a continuous nature, such as rental agreements, lease agreements, or service contracts. Importantly, in the case of termination, the parties do not return to each other what has been provided during the term of the contract.

Withdrawal from a Contract – Rescission

Withdrawal from a contract, also known as rescission, carries the most far-reaching legal consequences. Like termination, it is effected through a unilateral declaration of intent. However, its impact is far more significant. Withdrawal treats the contract as if it had never been concluded, requiring both parties to return any services or benefits already provided under the agreement.

This means the parties must restore the pre-contract state of affairs, which may involve returning money, goods, or other benefits. However, under the principle of freedom of contract, it is also possible to withdraw from a contract with effects limited to “future performance.” In such cases, withdrawal resembles termination, as it applies only to obligations that have not yet been fulfilled.

For obligations already performed, the contract’s provisions—particularly those addressing the parties’ settlements—remain in force. Another key distinction from termination is that withdrawal generally applies to one-time performance contracts, such as contracts for work or construction. The parties may include a clause in the contract allowing for rescission within a specific period, such as within one month of its conclusion.

Additionally, in some cases, contract law explicitly specifies when withdrawal is permissible.

Contracts between entrepreneurs and contracts with consumers

Another way to categorize contracts is by distinguishing between those entered into between entrepreneurs and those concluded with consumers. The differences in the structure and content of these contracts stem from the legal protections afforded to consumers, who are considered the weaker party in the contractual relationship.

Given the broad scope of consumer protection provisions, it is essential to emphasize that when entering into a contract with a consumer, priority should be given to considering the following key issues:

• The right to withdraw from the contract: The consumer, in the case of contracts concluded at a distance (e.g. online, by telephone) or off-premises, has the right to withdraw from the contract without giving a reason within 14 days of its conclusion.
• Prohibition of prohibited (abusive) clauses: A trader may not impose on a consumer terms of a contract that are unfavorable and contrary to good morals, and that grossly infringe the interests of the consumer. Such clauses are invalid, even if written into the contract.
• Information obligation: Entrepreneurs are obliged to provide the consumer with full information on the contract, including price, terms of service, complaint procedure and right of withdrawal. There must be full transparency in consumer contracts.
• Complaints and warranty: Warranty provisions are more favorable to consumers than to businesses, e.g. the consumer does not have to prove the fault of the seller in the case of non-conformity of goods with the contract if the defect becomes apparent within a year of purchase.

What types of damages can be recovered under Polish law in the event of a breach of contract?

Under Polish law, damages recoverable for a breach of contract (or tort) include compensation for losses arising from the debtor’s non-performance. These losses fall into two main categories:

1. Actual Losses (Damnum Emergens): This refers to the depletion of assets directly caused by the improper performance of contractual obligations. For example, the cost of repairing or replacing damaged property.
2. Lost Profits (Lucrum Cessans): These are benefits the creditor could reasonably have expected to gain under normal circumstances but failed to achieve due to the debtor’s misconduct. For instance, lost revenue from an interrupted business transaction.

Key Considerations:

• No Punitive Damages: Polish law does not provide for punitive damages, nor do courts in Poland enforce international punitive damage awards.
• Burden of Proof: The claiming party must substantiate the extent of its losses to claim compensation. However, when precise calculation is not possible, courts may rely on reasonable estimates to determine the damages.

This approach ensures that compensation remains grounded in actual or reasonably expected financial impact, aligned with Polish legal principles.

How are Liquidated Damages regulated in Poland?

Liquidated damages in Poland are provisions in a contract that estimate the amount of compensation payable in the event of non-performance or breach of the contract. Their purpose is to predefine compensation where actual damages may be challenging to estimate.

They are designed to ensure fair and reasonable compensation, subject to scrutiny by the courts. Under Polish law, liquidated damages focus on compensation for actual harm caused by a breach of contract. Courts may intervene to evaluate whether the agreed liquidated damages are reasonable and proportionate to the actual harm suffered. If the court finds the amount excessive, it may reduce the liquidated damages to align with the real extent of the damage incurred.

How are Contractual Penalties regulated in Poland?

Contractual penalties in Poland are a distinct legal mechanism with a sanctioning and disciplining function rather than a compensatory one. They are regulated under the Polish Civil Code and allow the parties to agree on a predefined sum payable in case of non-performance or improper performance of contractual obligations.

The key feature of a Polish contractual penalty is that it does not require proof of actual damage. Once the terms of the contract triggering the penalty are breached, the party entitled to the penalty can claim it without needing to demonstrate the extent or existence of harm. This makes it a powerful tool for ensuring compliance with contract terms.

Polish law specifically permits contractual penalties for non-performance of non-monetary obligations and requires their stipulation in the contract. Courts, however, have the authority to reduce penalties if they are deemed grossly excessive or unjustified.

FAQ for Contracts Law in Poland