In the business world, it regularly happens that there is not only a change in the position of the obligor and obligee under the contract, but also a need for one of the contracting parties to transfer its entire contractual position to a third party, with the approval of its contracting partner. In this case, the former contracting party leaves the legal relationship and is replaced by the new contracting party, and the legal relationship remains otherwise unchanged.
Such a situation arises, for example, if a company separates and sells off a business line without this leading to a change in company law. Or, for example, when the owners of a contractor which starts the works decide, for economic reasons and with the agreement of the client, that the works should be carried out by another company in which they have an interest.
In this case, the question may arise as to whether, from the point of view of the entering party, a new contract is created by the entry, or whether the change in the parties is merely an amendment and not the termination of the old contract and the creation of a new contract.
In this issue, the Supreme Court examined the following elements:
- There is no provision in the Civil Code that the entry into a contract creates a new legal relationship between the parties.
- The underlying rules of contract assignment are the assignment and assumption of debt, which
do not create a new legal relationship.
- The transfer of a contract does not interrupt the limitation period, which also assumes that the old contract remains in force.
- The case law recognises the transfer of a contract as a trilateral agreement.
- The transfer of a contract does not create a new contract under the laws of any other EU country.
In view of the above, we are of the opinion that the Supreme Court has taken a reassuring position on a question which, although was not really debated, was not entirely clear either.
The issue is of particular relevance in relation to the limitation period, since if the contracting party expects the contract assignment to interrupt the limitation period, the late enforcement could easily result in the limitation of his claim.