Contracts in the Czech Republic

Whether you want to get a mobile telephone, connect to the Internet, take out insurance or start a job, you will have to sign a contract.  Before you either write up or sign a contract, it might be useful to know some details about your rights and obligations as far as making agreements goes.

Contracts here must conform to the proper legal form in order to be valid. This means that a contract is valid only if it is a free and serious expression of will, which is precise and comprehensible. In practical terms, it means that the contract should specify the product or service delivered, the price, the conditions of payment, the liability and obligations of both parties as they exist in Czech law and the termination of the contract.

It goes without saying that the most important thing to do is read the terms and conditions. Most large companies will have these in English. However, it might not hurt to go through the original Czech version with a friend or if you can afford it, a professional. The first reason is that the Czech version will be the one on which any legal case will be based – if it should come to that. For this reason, it is important to check that everything has been translated properly and that you understand what is meant by the terms used in the contract.

If you’re wondering about any restrictions which might apply to foreigners entering into contracts, you will be relieved to know that, according to Daniel Mališ of Mališ Nevrkla Legal, in most cases, you are not restricted from signing contracts, except for real estate. In other words, it usually doesn’t matter if you have permanent residency (trvalý pobyt) or not. Examples of contracts which you can enter freely, and which may also be obligatory, are commercial health insurance (though not necessarily public), car insurance (povinné ručení) or travel insurance.

Exceptions will be those contracts which require a personal identification number (rodné čislo). Only permanent residents are eligible for this number. For example, O2 requests this for people to take out a monthly tariff. This doesn’t apply to prepaid services, for which there is no contract. U:fon also requires the number for a contract, though I’ve found from personal experience this was not enough. Though I have the number and am a resident, they would not allow me to have a contract with them because I’m not a Czech citizen. Having said this, some places will use your birth date if you don’t have a birth number.

Despite the differences concerning the signing of contracts, if you sign a contract, and assuming that it is all above board, you do have recourse to legal action if the other party does not uphold their end of the agreement. Don’t think just because you’re not a Czech citizen that you don’t have any rights. Mr. Malíš states that the Czech Republic is bound by the “Brussels 1 Regulation” which stipulates the rules concerning how litigation is processed in the EU, including the Czech Republic.

In a nutshell, the regulation allows for the defendant to be tried in the country in which he or she is domiciled – i.e. where an individual has a permanent address. Even if you have been here for a while, according to Czech law, this will be your last residential address, which might be your country of origin but could also be the place where you were last considered a resident. This means that if your landlord or business partner is Czech than they will be tried in the Czech courts. If they are from another EU member state, the case could be tried in the Czech Republic on the grounds that they are also domiciled here, the business is based here or the business in the contract was carried out here. If the person is not a citizen of a member state these rules do not apply unless, as Mr. Malíš emphasizes, the person has assets in the Czech Republic. If the person does not, then they will be tried in the country where they are domiciled.

This of course also applies to people who take out contracts and who are not residents. So, if you break a contract then the second party can pursue this through the courts where you are a resident. Whether or not a company would pursue it would depend on the company. However, to assume that business done in the Czech Republic only concerns the Czech Republic is not true, at least not officially. Plus it could affect your chances of getting a visa or permanent residency.

The thing to remember is that it pays to be careful. This is doubly so when there could be a language barrier and different understandings only exacerbate any problems. So don’t be scared to do business here, but always make sure you have the right advice and information.