Civil Contracts in Romania

A contracts lawyer can help you before you even sign, and I think that’s where it’s worth starting. I draft and review sale contracts, preliminary sale agreements, leases, loans and service agreements, negotiate the clauses that leave you exposed and represent you at the Cluj-Napoca District Court (Judecătoria Cluj-Napoca) or the Cluj Tribunal (Tribunalul Cluj) when the other side doesn’t keep to its obligations.

Contracts are the part of civil law you come across every day, and many disputes start with unclear clauses or a required form that wasn’t followed. Below are the rules that matter.

What conditions must a contract meet to be valid?

Under the Civil Code, a contract is an agreement between two or more persons intended to create, change or extinguish a legal relationship (art. 1.166). To take effect, it must meet four essential conditions, set out in art. 1.179:

• the parties’ capacity to contract;
• the parties’ consent;
• a determined and lawful object;
• a lawful and moral cause.

When the law requires a particular form, the contract must be made in that form (art. 1.179(2)). Once validly concluded, it has the force of law between the parties and can be changed or ended only by their agreement or for reasons the law allows (art. 1.270 of the Civil Code).

When is a notarial deed required?

The rule is freedom of form: most contracts are valid by simple agreement, even a verbal one. A lease (in Romanian), for example, doesn’t have to be in writing to exist, although a written one protects your rights much better.

The important exception is property. Agreements that transfer or create real rights (drepturi reale) to be entered in the land register (carte funciară), such as the sale of a flat or a plot of land, must be made by authentic notarial deed, on pain of absolute nullity (art. 1.244 of the Civil Code). A contract that doesn’t take the form the law unequivocally requires is absolutely null (art. 1.242(1)). For the checks worth making before you buy, see the property page.

What is a preliminary sale agreement and what should you watch out for?

The preliminary sale agreement, which the Civil Code calls a promise to contract (promisiune de a contracta), is the parties’ commitment to conclude the sale contract later. To be effective, it must contain every clause of the promised contract without which the parties couldn’t perform the promise (art. 1.279(1)): what is being sold, the price and the date for signing at the notary. It doesn’t need notarial form, because it doesn’t transfer ownership itself; authentic form is required only for the final sale.

If one party refuses without good reason to sign the promised contract, the other can ask the court for a judgment that takes the place of the contract, provided all the other validity conditions are met (art. 1.669(1) of the Civil Code). The deadline is short: the right to bring this claim is time-barred 6 months after the date the contract should have been concluded (art. 1.669(2)). The injured party can also claim damages (art. 1.279(2)). A claim for a judgment that takes the place of an authentic deed pays court stamp duty (taxă judiciară de timbru) on its value, like any claim that can be valued in money, under art. 3(2)(c) of Government Emergency Ordinance no. 80/2013 (OUG 80/2013). You can estimate the amount in advance with the stamp duty calculator.

Penalty clause: how much does it protect you?

A penalty clause (clauză penală) sets what the debtor will owe if they don’t perform their main obligation (art. 1.538(1) of the Civil Code). Its advantage is about proof: the creditor can claim the penalty without proving any loss (art. 1.538(4)). However, you can’t claim both performance of the obligation itself and the penalty, unless the penalty was agreed for not performing on time or at the agreed place (art. 1.539).

The court can reduce the penalty in only two cases (art. 1.541): when the main obligation was partly performed and that performance benefited the creditor, or when the penalty is clearly excessive compared with the harm that was foreseeable when the contract was concluded. That’s why the wording matters: a clearly drafted penalty clause is hard to challenge, while a carelessly drafted one can end up having no effect. On the breach of contract page I explain how damages are calculated when there’s no penalty clause.

Rescission or termination: how do you get out of a contract that isn’t performed?

When the other side doesn’t perform its obligations, you can choose between asking for enforced performance and ending the contract, with damages if you’re entitled to them (art. 1.516 and art. 1.549 of the Civil Code). Ending the contract is called rescission (rezoluțiune) for contracts performed all at once, such as a sale, and termination (reziliere) for contracts performed over time, such as a lease or a service agreement. If a contract of carriage isn’t performed, as with a delayed or cancelled flight, you can estimate the compensation with the flight delay and cancellation compensation calculator.

Rescission can be ordered by the court or declared unilaterally by the party entitled to it, and in the cases provided by law or agreed by the parties it happens automatically (art. 1.550). Under art. 1.552(1), a unilateral declaration, made by written notice, is valid when the parties agreed to it, when the debtor is in default by law or when the debtor didn’t perform within the period set in the formal notice of default (punere în întârziere). An express termination clause (pact comisoriu) has effect only if it expressly names the obligations whose non-performance ends the contract (art. 1.553).

Two limits worth remembering. A minor failure to perform doesn’t entitle you to rescission, only to a proportional reduction of your own performance (art. 1.551). And the effects differ: a contract ended by rescission is treated as never having been concluded and the parties give back what they received, whereas a terminated contract ends only for the future (art. 1.554).

When is a contract null, and what happens to what was paid?

Any contract concluded in breach of the conditions the law requires is subject to nullity (art. 1.246 of the Civil Code). Absolute nullity applies where the rule breached protects a general interest: any interested person can invoke it, at any time, and the court must raise it of its own motion (art. 1.247 and art. 1.249(1)). Relative nullity protects a private interest: only the protected party can ask for it, within the limitation period (termen de prescripție), and the contract can be confirmed (art. 1.248 and art. 1.249(2)).

Whichever kind it is, a contract that is set aside is treated as never having been concluded, any later acts based on it fall with it, and each party gives back to the other what it received (art. 1.254).

How we work together

1. You send me the contract or describe the agreement you want to put on paper.
2. I go through the clauses that leave you exposed: subject matter, price, deadlines, warranties, penalties and the conditions for ending the contract.
3. I draft or amend the text and, if you’d like, negotiate with the other side myself.
4. If the contract has already been breached, we decide on the route: a formal notice of default, rescission or termination, recovering the money or a court action.

What documents you need

• the contract or preliminary sale agreement, with all its annexes and addenda;
• your correspondence with the other side (emails, messages, notices);
• proof of the payments made or received;
• for property, the land register extract and the title deeds.

For contracts made in the course of a company’s business, see also business law, and for unpaid amounts, the debt recovery page. The full, up-to-date text of the Civil Code is on legislatie.just.ro. If you’d like to discuss your contract, write to me or call me. Send it to me as it is, even as a photo taken on your phone, and I’ll tell you honestly which clauses I’d change.