A. Conclusion of the contract

I. Mutual expression of intent

1. In general

¹ The conclusion of a contract requires a mutual expression of intent by the parties.

² The expression of intent may be express or implied.

2. Secondary terms

¹ Where the parties have agreed on all the essential terms, it is presumed that the contract will be binding notwithstanding any reservation on secondary terms.

² In the event of failure to reach agreement on such secondary terms, the court must determine them with due regard to the nature of the transaction.

³ The foregoing is subject to the provisions governing the form of contracts.

II. Offer and acceptance

1. Offer subject to time limit

¹ A person who offers to enter into a contract with another person and sets a time limit for acceptance is bound by his offer until the time limit expires.

2 He is no longer bound if no acceptance has reached him on expiry of the time limit.

2. Offer without time limit

a. In the parties’ presence

¹ Where an offer is made in the offeree’s presence and no time limit for acceptance is set, it is no longer binding on the offeror unless the offeree accepts it immediately.

2 Contracts concluded by telephone are deemed to have been concluded in the parties’ presence where they or their agents communicated in person.

b. In the parties’ absence

¹ Where an offer is made in the offeree’s absence and no time limit for acceptance is set, it remains binding on the offeror until such time as he might expect a reply sent duly and promptly to reach him.

² He may assume that his offer has been promptly received.

³ Where an acceptance sent duly and promptly is late in reaching the offeror and he does not wish to be bound by his offer, he must immediately inform the offeree.

3. Implied acceptance

Where the particular nature of the transaction or the circumstances are such that express acceptance cannot reasonably be expected, the contract is deemed to have been concluded if the offer is not rejected within a reasonable time.

3a. Unsolicited goods

¹ The sending of unsolicited goods does not constitute an offer.

² The recipient is not obliged to return or keep such goods.

³ Where unsolicited goods have obviously been sent in error, the recipient must inform the sender.

4. Non-binding offer, announcement of prices, display

¹ An offeror is not bound by his offer if he has made express declaration to that effect or such a reservation arises from the circumstances or from the particular nature of the transaction.

2 The sending of tariffs, price lists and the like does not constitute an offer.

³ By contrast, the display of merchandise with an indication of its price does generally constitute an offer.

5. Publicly promised remuneration

¹ A person who publicly promises remuneration or a reward in exchange for the performance of an act must pay in accordance with his promise.

² If he withdraws his promise before performance has been made, he must reimburse any person incurring expenditure in good faith on account of the promise up to the maximum amount promised unless he can prove that such person could not have provided the performance in question.

6. Withdrawal of offer and acceptance

¹ An offer is deemed not to have been made if its withdrawal reaches the offeree before or at the same time as the offer itself or, where it arrives subsequently, if it is communicated to the offeree before he becomes aware of the offer.

2 The same applies to a withdrawal of an acceptance.

III. Entry into effect of a contract concluded in the parties’ absence

¹ A contract concluded in the parties’ absence takes effect from the time acceptance is sent.

2 Where express acceptance is not required, the contract takes effect from the time the offer is received.

B. Form of contracts

I. Formal requirements and significance in general

¹ The validity of a contract is not subject to compliance with any particular form unless a particular form is prescribed by law.

2 In the absence of any provision to the contrary on the significance and effect of formal requirements prescribed by law, the contract is valid only if such requirements are satisfied.

II. Written form

1. Form required by law

a. Scope

Where the law requires that a contract be done in writing, the requirement also applies to any amendment to the contract with the exception of supplementary collateral clauses that do not conflict with the original document.

b. Effect

¹ A contract required by law to be in writing must be signed by all persons on whom it imposes obligations.

² ...¹

c. Signature

¹ Signatures must be appended by hand by the parties to the contract.

² A signature reproduced by mechanical means is recognised as sufficient only where such reproduction is customarily permitted, and in particular in the case of signatures on large numbers of issued securities.

^2bis An authenticated electronic signature combined with an authenticated time stamp within the meaning of the Federal Act of 18 March 2016¹ on Electronic Signatures is deemed equivalent to a handwritten signature, subject to any statutory or contractual provision to the contrary.²

³ The signature of a blind person is binding only if it has been duly certified or if it is proved that he was aware of the terms of the document at the time of signing.

d. Mark in lieu of signature

Subject to the provisions relating to bills of exchange, any person unable to sign may make a duly certified mark by hand or give a certified declaration in lieu of a signature.

2. Form stipulated by contract

¹ Where the parties agree to make a contract subject to formal requirements not prescribed by law, it is presumed that the parties do not wish to assume obligations until such time as those requirements are satisfied.

2 Where the parties stipulate a written form without elaborating further, the provisions governing the written form as required by law apply to satisfaction of that requirement.

C. Cause of obligation

An acknowledgment of debt is valid even if it does not state the cause of the obligation.

D. Interpretation of contracts, simulation

¹ When assessing the form and terms of a contract, the true and common intention of the parties must be ascertained without dwelling on any inexact expressions or designations they may have used either in error or by way of disguising the true nature of the agreement.

² A debtor may not plead simulation as a defence against a third party who has become his creditor in reliance on a written acknowledgment of debt.

E. Terms of the contract

I. Definition of terms

¹ The terms of a contract may be freely determined within the limits of the law.

2 Clauses that deviate from those prescribed by law are admissible only where the law does not prescribe mandatory forms of wording or where deviation from the legally prescribed terms would contravene public policy, morality or rights of personal privacy.

II. Nullity

¹ A contract is void if its terms are impossible, unlawful or immoral.

² However, where the defect pertains only to certain terms of a contract, those terms alone are void unless there is cause to assume that the contract would not have been concluded without them.

III. Unfair advantage

¹ Where there is a clear discrepancy between performance and consideration under a contract concluded as a result of one party’s exploitation of the other’s straitened circumstances, inexperience or thoughtlessness, the person suffering damage may declare within one year that he will not honour the contract and demand restitution of any performance already made.

² The one-year period commences on conclusion of the contract.

IV. Agreement to conclude a contract

¹ Parties may reach a binding agreement to enter into a contract at a later date.

² Where in the interests of the parties the law makes the validity of a contract conditional on observance of a particular form, the same applies to the agreement to conclude a contract.

F. Defect in consent

I. Error

1. Effect

A party labouring under a fundamental error when entering into a contract is not bound by that contract.

2. Cases of mistake

¹ An error is fundamental in the following cases in particular:

1.

where the party acting in error intended to conclude a contract different from that to which he consented;

2.

where the party acting in error has concluded a contract relating to a subject matter other than the subject matter he intended or, where the contract relates to a specific person, to a person other than the one he intended;

3.

where the party acting in error has promised to make a significantly greater performance or has accepted a promise of a significantly lesser consideration than he actually intended;

4.

where the error relates to specific facts which the party acting in error considered in good faith to be a necessary basis for the contract.

² However, where the error relates solely to the reason for concluding the contract, it is not fundamental.

³ Calculation errors do not render a contract any less binding, but must be corrected.

3. Invoking error contrary to good faith

¹ A person may not invoke error in a manner contrary to good faith.

2 In particular, the party acting in error remains bound by the contract he intended to conclude, provided the other party accepts that contract.

4. Error by negligence

¹ A party acting in error and invoking that error to repudiate a contract is liable for any damage arising from the nullity of the agreement where the error is attributable to his own negligence, unless the other party knew or should have known of the error.

2 In the interests of equity, the court may award further damages to the person suffering damage.

5. Incorrect intermediation

Where an offer to enter into a contract or the acceptance of that offer has been incorrectly communicated by a messenger or other intermediary, the provisions governing error apply mutatis mutandis.

II. Fraud

¹ A party induced to enter into a contract by the fraud of the other party is not bound by it even if his error is not fundamental.

² A party who is the victim of fraud by a third party remains bound by the contract unless the other party knew or should have known of the fraud at the time the contract was concluded.

III. Duress

1. Consent to contract

¹ Where a party has entered into a contract under duress from the other party or a third party, he is not bound by that contract.

² Where the duress originates from a third party and the other party neither knew nor should have known of it, a party under duress who wishes to be released from the contract must pay compensation to the other party where equity so requires.

2. Definition of duress

¹ A party is under duress if, in the circumstances, he has good cause to believe that there is imminent and substantial risk to his own life, limb, reputation or property or to those of a person close to him.

2 The fear that another person might enforce a legitimate claim is taken into consideration only where the straitened circumstances of the party under duress have been exploited in order to extort excessive benefits from him.

IV. Defect of consent negated by ratification of the contract

¹ Where the party acting under error, fraud or duress neither declares to the other party that he intends not to honour the contract nor seeks restitution for the performance made within one year, the contract is deemed to have been ratified.

² The one-year period runs from the time that the error or the fraud was discovered or from the time that the duress ended.

3 The ratification of a contract made voidable by duress or fraud does not automatically exclude the right to claim damages.

G. Agency

I. With authorisation

1. In general

a. Effect of agency

¹ The rights and obligations arising from a contract made by an agent in the name of another person accrue to the person represented, and not to the agent.

2 Where the agent did not make himself known as such when making the contract, the rights and obligations arising therefrom accrue directly to the person represented only if the other party must have inferred the agency relationship from the circumstances or did not care with whom the contract was made.

³ Where this is not the case, the claim must be assigned or the debt assumed in accordance with the principles governing such measures.

b. Scope of authority

¹ Where authority to act on behalf of another stems from relationships established under public law, it is governed by the public law provisions of the Confederation or the cantons.

2 Where such authority is conferred by means of the transaction itself, its scope is determined by that transaction.

³ Where a principal grants such authority to a third party and informs the latter thereof, the scope of the authority conferred on the third party is determined according to wording of the communication made to him.

2. Authority arising from a transaction

a. Restriction and revocation

¹ A principal authorising another to act on his behalf by means of a transaction may restrict or revoke such authority at any time without prejudice to any rights acquired by those involved under existing legal relationships, such as an individual contract of employment, a partnership agreement or an agency agreement.¹

² Any advance waiver of this right by the principal is void.

³ Where the represented party has expressly or de facto announced the authority he has conferred, he may not invoke its total or partial revocation against a third party acting in good faith unless he has likewise announced such revocation.

b. Effect of death, incapacity, etc.

¹ The authority conferred by means of a transaction is extinguished on the loss of capacity to act, bankruptcy, death, or declaration of presumed death of the principal or the agent, unless the contrary has been agreed or is implied by the nature of the transaction.¹

² The same applies on the dissolution of a legal entity or a company or partnership entered in the commercial register.

3 The mutual personal rights of the parties are unaffected.

c. Return of the instrument conferring authority

¹ Where an agent has been issued with an instrument setting out his authority, he must return it or deposit it with the court when that authority has ended.

² Where the principal or his legal successors have omitted to insist on the return of such instrument, they are liable to bona fide third parties for any damage arising from that omission.

d. Time from which end of authority takes effect

¹ Until such time as an agent becomes aware that his authority has ended, his actions continue to give rise to rights and obligations on the part of the principal or the latter’s legal successors as if the agent's authority still existed.

2 This does not apply in cases in which the third party is aware that the agent’s authority has ended.

II. Without authority

1. Ratification

¹ Where a person without authority enters into a contract on behalf of a third party, rights and obligations do not accrue to the latter unless he ratifies the contract.

2 The other party has the right to request that the represented party ratify the contract within a reasonable time, failing which he is no longer bound by it.

2. Failure to ratify

¹ Where ratification is expressly or implicitly refused, action may be brought against the person who acted as agent for compensation in respect of any damage caused by the extinction of the contract unless he can prove that the other party knew or should have known that he lacked the proper authority.

² Where the agent is at fault, the court may order him to pay further damages on grounds of equity.

3 In all cases, claims for unjust enrichment are reserved.

III. Reservation of special provisions

The special provisions governing the authority of agents and governing bodies of companies and partnerships and of registered and other authorised agents are unaffected.

H. Revocation in door-to-door sales and similar contracts

I. Scope of application

¹ The following provisions apply to contracts relating to goods and services intended for the customer’s personal or family use where:

a.

the supplier of the goods or services acted in a professional or commercial capacity and

b.

the consideration from the buyer exceeds 100 francs.

² These provisions do not apply to insurance policies and to legal transactions that are entered into by financial institutions and banks within the framework of existing financial services contracts in accordance with the Federal Act of 15 June 2018².³

³ In the event of significant change to the purchasing power of the national currency, the Federal Council shall adjust the sum indicated in para. 1 let. b accordingly.

II. General principle

A customer may revoke his offer to enter into a contract or his acceptance of such an offer if the transaction was proposed:

a. ²

at his place of work, on residential premises or in their immediate vicinity;

b.

on public transport or on a public thoroughfare;

c.

during a promotional event held in connection with an excursion or similar event;

d.³

by telephone or by a comparable means of simultaneous verbal communication.

III. Exceptions

The customer has no right of revocation:

a.

if he expressly requested the contractual negotiations;

b.

if he declared his offer or acceptance at a stand at a market or trade fair.

IV. Duty to inform

¹ The supplier must inform the customer in writing or in another form that may be evidenced by text of the latter’s right of revocation and of the form and time limit to be observed when exercising such right, and must provide his address.²

² Such information must be dated and permit identification of the contract in question.

³ The information must be transmitted in such a manner that the customer is aware of it when he proposes or accepts the contract.³

V. Revocation

1. Form and time limit

¹ Revocation need not be in any particular form. The onus is on the customer to prove that he has revoked the contract within the time limit.²

² The prescriptive period for revocation is 14 days and commences as soon as the customer:³

a.

has proposed or accepted the contract; and

b.

has become aware of the information stipulated in Art. 40d.

³ The onus is on the supplier to prove when the customer received the information stipulated in Art. 40d.

⁴ The time limit is observed if, on the last day of the prescriptive period, the customer informs the supplier of revocation or posts his written notice of revocation.⁴

2. Consequences

¹ Where the customer has revoked the contract, the parties must provide restitution for any performance already made.

² Where the customer has made use of the goods, he owes an appropriate rental payment to the supplier.

³ Where the supplier has rendered services to him, the customer must reimburse the supplier for outlays and expenses incurred in accordance with the provisions governing agency (Art. 402).

⁴ The customer does not owe the supplier any further compensation.

A. General principles

I. Conditions of liability

¹ Any person who unlawfully causes damage to another, whether wilfully or negligently, is obliged to provide compensation.

2 A person who wilfully causes damage to another in an immoral manner is likewise obliged to provide compensation.

II. Determining the damage

¹ A person claiming damages must prove that damage occurred.

² Where the exact value of the damage cannot be quantified, the court shall estimate the value at its discretion in the light of the normal course of events and the steps taken by the person suffering damage.

³ The costs of treating animals kept as pets rather than for investment or commercial purposes may be claimed within appropriate limits as a loss even if they exceed the value of the animal.¹

III. Determining compensation

¹ The court determines the form and extent of the compensation provided for damage incurred, with due regard to the circumstances and the degree of culpability.

^1bis Where an animal kept as a pet rather than for investment or commercial purposes has been injured or killed, the court may take appropriate account of its sentimental value to its owner or his dependants.¹

² Where damages are awarded in the form of periodic payments, the debtor must at the same time post security.

IV. Grounds for reducing compensation

¹ Where the person suffering damage consented to the harmful act or circumstances attributable to him helped give rise to or compound the damage or otherwise exacerbated the position of the party liable for it, the court may reduce the compensation due or even dispense with it entirely.

² The court may also reduce the compensation award in cases in which the damage was caused neither wilfully nor by gross negligence and where payment of such compensation would leave the liable party in financial hardship.

V. Special cases

1. Homicide and personal injury

a. Damages for homicide

¹ In the event of homicide, compensation must cover all expenses arising and in particular the funeral costs.

2 Where death did not occur immediately, the compensation must also include the costs of medical treatment and losses arising from inability to work.

³ Where others are deprived of their means of support as a result of homicide, they must also be compensated for that loss.

b. Damages for personal injury

¹ In the event of personal injury, the victim is entitled to reimbursement of expenses incurred and to compensation for any total or partial inability to work and for any loss of future earnings.

2 Where the consequences of the personal injury cannot be assessed with sufficient certainty at the time the award is made, the court may reserve the right to amend the award within two years of the date on which it was made.

c. Satisfaction

In cases of homicide or personal injury, the court may award the victim of personal injury or the dependants of the deceased an appropriate sum by way of satisfaction.

2. ...

3. Injury to personality rights

¹ Any person whose personality rights are unlawfully infringed is entitled to a sum of money by way of satisfaction provided this is justified by the seriousness of the infringement and no other amends have been made.

² The court may order that satisfaction be provided in another manner instead of or in addition to monetary compensation.

VI. Multiple liable parties

1. In tort

¹ Where two or more persons have together caused damage, whether as instigator, perpetrator or accomplice, they are jointly and severally liable to the person suffering damage.

² The court determines at its discretion whether and to what extent they have right of recourse against each other.

³ Abettors are liable in damages only to the extent that they received a share in the gains or caused damage due to their involvement.

2. On different legal grounds

¹ Where two or more persons are liable for the same damage on different legal grounds, whether under tort law, contract law or by statute, the provision governing recourse among persons who have jointly caused damage is applicable mutatis mutandis.

2 As a rule, compensation is provided first by those who are liable in tort and last by those who are deemed liable by statutory provision without being at fault or in breach of contractual obligation.

VII. Self-defence, necessity, legitimate use of force

¹ Where a person has acted in self-defence, he is not liable to pay compensation for damage caused to the person or property of the aggressor.

2 A person who damages the property of another in order to protect himself or another person against imminent damage or danger must pay damages at the court’s discretion.

3 A person who uses force to protect his rights is not liable in damages if in the circumstances the assistance of the authorities could not have been obtained in good time and such use of force was the only means of preventing the loss of his rights or a significant impairment of his ability to exercise them.

VIII. Relationship with criminal law

¹ When determining fault or lack of fault and capacity or incapacity to consent, the court is not bound by the provisions governing criminal capacity nor by any acquittal in the criminal court.

² The civil court is likewise not bound by the verdict in the criminal court when determining fault and assessing compensation.

B. Liability of persons lacking capacity to consent

¹ On grounds of equity, the court may also order a person who lacks capacity to consent to provide total or partial compensation for the damage he has caused.

2 A person who has temporarily lost his capacity to consent is liable for any damage caused when in that state unless he can prove that said state arose through no fault of his own.

C. Liability of employers

¹ An employer is liable for the damage caused by his employees or ancillary staff in the performance of their work unless he proves that he took all due care to avoid a damage of this type or that the damage would have occurred even if all due care had been taken.¹

² The employer has a right of recourse against the person who caused the damage to the extent that such person is liable in damages.

D. Liability for animals

I. Damages

¹ In the event of damage caused by an animal, its keeper is liable unless he proves that in keeping and supervising the animal he took all due care or that the damage would have occurred even if all due care had been taken.

² He has a right of recourse if the animal was provoked either by another person or by an animal belonging to another person.

³ ...¹

II. Seizure of animals

¹ A person in possession of a plot of land is entitled to seize animals belonging to another which cause damage on that land and take them into his custody as security for his claim for compensation or even to kill them, where justified by the circumstances.

2 He nonetheless has an obligation to notify the owner of such animals without delay or, if the owner is not known to him, to take the necessary steps to trace the owner.

E. Liability of property owners

I. Damages

¹ The owner of a building or any other structure is liable for any damage caused by defects in its construction or design or by inadequate maintenance.

2 He has a right of recourse against persons liable to him in this regard.

II. Safety measures

¹ A person who is at risk of suffering damage due to a building or structure belonging to another may insist that the owner take the necessary steps to avert the danger.

² Orders given by the police for the protection of persons and property are unaffected.

F. Liability in respect of cryptographic keys

¹ The owner of a cryptographic key used to generate electronic signatures or seals is liable to third parties for any damage they have suffered as a result of relying on a valid certificate issued by a provider of certification services within the meaning of the Federal Act of 18 March 2016² on Electronic Signatures.

² The owner is absolved of liability if he can satisfy the court that he took all the security precautions that could reasonably be expected in the circumstances to prevent misuse of the cryptographic key.

³ The Federal Council defines the security precautions to be taken pursuant to paragraph 2.

G. Prescription¹

¹ The right to claim damages or satisfaction prescribes three years from the date on which the person suffering damage became aware of the loss, damage or injury and of the identity of the person liable for it but in any event ten years after the date on which the harmful conduct took place or ceased.².

^1bis In cases death or injury, the right to claim damages or satisfaction prescribes three years from the date on which the person suffering damage became aware of the damage and of the identity of person liable for it, but in any event twenty years after the date on which the harmful conduct took place or ceased.³

² If the person liable has committed a criminal offence through his or her harmful conduct, then notwithstanding the foregoing paragraphs the right to damages or satisfaction prescribes at the earliest when the right to prosecute the offence becomes time-barred. If the right to prosecute is no longer liable to become time-barred because a first instance criminal judgment has been issued, the right to claim damages or satisfaction prescribes at the earliest three years after notice of the judgment is given.⁴

³ Where the tort has given rise to a claim against the person suffering damage, he may refuse to satisfy the claim even if his own claim in tort is time-barred.

H. Liability of civil servants and public officials¹

¹ The Confederation and the cantons may by way of legislation enact provisions that deviate from those of this Section to govern the liability of civil servants and public officials to pay damages or satisfaction for any damage they cause in the exercise of their duties.

² The provisions of this Section may not, however, be modified by cantonal legislation in the case of commercial duties performed by civil servants or public officials.

A. Requirement

I. In general

¹ A person who has enriched himself without just cause at the expense of another is obliged to make restitution.

² In particular, restitution is owed for money benefits obtained for no valid reason whatsoever, for a reason that did not transpire or for a reason that subsequently ceased to exist.

II. Payment in satisfaction of a non-existent obligation

¹ A person who has voluntarily satisfied a non-existent debt has a right to restitution of the sum paid only if he can prove that he paid it in the erroneous belief that the debt was owed.

2 Restitution is excluded where payment was made in satisfaction of a debt that has prescribe or of a moral obligation.

3 The provisions of federal debt collection and bankruptcy law governing the right to the restitution of payments made in satisfaction of non-existent claims are unaffected.

B. Scope of restitution

I. Obligations of the unjustly enriched party

There is no right of restitution where the recipient can show that he is no longer enriched at the time the claim for restitution is brought, unless he alienated the money benefits in bad faith or in the certain knowledge that he would be bound to return them.

II. Rights in respect of expenditures

¹ The recipient is entitled to reimbursement of necessary and useful expenditures, although where the unjust enrichment was received in bad faith, the reimbursement of useful expenditures must not exceed the amount of added value as at the time of restitution.

² He is not entitled to any compensation for other expenditures, but where no such compensation is offered to him, he may, before returning the property, remove anything he has added to it provided this is possible without damaging it.

C. Exclusion of restitution

No right to restitution exists in respect of anything given with a view to producing an unlawful or immoral outcome.

D. Prescription

¹ The right to claim restitution for unjust enrichment prescribes three years after the date on which the person suffering damage learned of his or her claim and in any event ten years after the date on which the claim first arose.¹

2 Where the unjust enrichment consists of a claim against the person suffering damage, he or she may refuse to satisfy the claim even if his or her own claim for restitution has prescribed.

A. General principles

I. Performance by the obligor in person

An obligor is not obliged to discharge his obligation in person unless so required by the obligee.

II. Object of performance

1. Part payment

¹ A creditor may refuse partial payment where the total debt is established and due.

2 If the creditor wishes to accept part payment, the debtor may not refuse to settle the part of the debt that he acknowledges is due.

2. Indivisible performance

¹ Where indivisible performance is due to several obligees, the obligor must make performance to all of them jointly, and each obligee may demand that performance be made to all of them jointly.

2 Where indivisible performance is due by several obligors, each of them has an obligation to make performance in full.

3 Unless circumstances dictate otherwise, an obligor who has satisfied the obligee may then claim proportionate compensation from the other obligors and to that extent the claim of the satisfied obligee passes to him.

3. Debt of generic object

¹ If the object owed is defined only in generic terms, the obligor may choose what object is given in repayment unless otherwise stipulated under the legal relationship.

² However, the obligor must not offer an object of less-than-average quality.

4. Obligations involving choice of performance

Where an obligation may be discharged by one of several alternative types of performance, the obligor may choose which performance to make unless otherwise stipulated under the legal relationship.

5. Interest

¹ Where an obligation involves the payment of interest but the rate is not set by contract, law or custom, interest is payable at the rate of 5% per annum.

² Public law provisions governing abusive interest charges are not affected.

B. Place of performance

¹ The place of performance is determined by the intention of the parties as stated expressly or evident from the circumstances.

2 Except where otherwise stipulated, the following principles apply:

1.

pecuniary debts must be paid at the place where the creditor is resident at the time of performance;

2.

where a specific object is owed, it must be delivered at the place where it was located when the contract was entered into;

3.

other obligations must be discharged at the place where the obligor was resident at the time they arose.

³ Where the obligee may require performance of an obligation at his domicile but this has changed since the obligation arose, thereby significantly hindering performance by the obligor, the latter is entitled to render performance at the original domicile.

C. Time of performance

I. Open-ended obligations

Where no time of performance is stated in the contract or evident from the nature of the legal relationship, the obligation may be discharged or called in immediately.

II. Obligations subject to time limit

1. Monthly time limits

¹ A time limit expressed as the beginning or end of a month means the first or last day of the month respectively.

² A time limit expressed as the middle of the month means the fifteenth day of that month.

2. Other time limits

¹ Where an obligation must be discharged or some other transaction accomplished within a certain time limit subsequent to conclusion of the contract, the time limit is defined as follows:

1.

where the time limit is expressed as a number of days, performance falls due on the last thereof, not including the date on which the contract was concluded, and where the number stipulated is eight or fifteen days, this means not one or two weeks but a full eight or fifteen days;

2.

where the time limit is expressed as a number of weeks, performance falls due in the last week of the period on the same day of the week as the one on which the contract was concluded;

3.

where the time limit is expressed as a number of months or as a period comprising several months (a year, half-year or quarter), performance falls due in the last month of the period on the same day of the month as the one on which the contract was concluded or, where the last month of the period contains no such day, on the last day of that month.

The term ‘half-month’ has the same meaning as a time limit of fifteen days; if the time limit is expressed as a period of one or more months plus one half-month, the fifteen days are counted last.

² Time limits are calculated in the same manner when stipulated as running from a date other than the date on which the contract was concluded.

3 Where an obligation must be discharged before a specified time limit, performance must occur before that time expires.

3. Sundays and public holidays

¹ Where the time of performance or the last day of a time limit falls on a Sunday or on a day officially recognised as a public holiday¹ at the place of performance, the time of performance or the last day of a time limit is deemed to be the next working day.

² Any agreement to the contrary is unaffected.

III. Performance during business hours

Performance of the obligation must be made and accepted during normal business hours on the date stipulated.

IV. Extension of the time limit

Where the agreed time limit for performance is extended, in the absence of an agreement to the contrary, the new time limit runs from the first day following expiry of the previous time limit.

V. Early performance

¹ Unless the terms or nature of the contract or the circumstances indicate that the parties intended otherwise, performance may be rendered before the date on which the time limit expires.

² However, the obligor is not entitled to apply a discount unless that discount has been agreed or is sanctioned by custom.

VI. In bilateral contracts

1. Order of performance

A party to a bilateral contract may not demand performance until he has discharged or offered to discharge his own obligation, unless the terms or nature of the contract allow him to do so at a later date.

2. Allowance for unilateral insolvency

¹ Where one party to a bilateral contract has become insolvent, in particular by virtue of bankruptcy proceedings or execution without satisfaction, and this deterioration in its financial position jeopardises the claim of the other party, the latter may withhold performance until security has been provided for the consideration.

2 He may withdraw from the contract if, on request, no such security is provided within a reasonable time.

D. Payment

I. National currency

¹ Pecuniary debts must be discharged in legal tender of the currency in which the debt was incurred.

² A debt expressed in a currency other than the national currency of the place of payment may be discharged in that national currency at the rate of exchange that applies on the day it falls due, unless literal performance is required by inclusion in the contract of the expression ‘actual currency’ or words to that effect.

II. Allocation

1. Of part payments

¹ A debtor may offset a part payment against the debt principal only if he is not in arrears with interest payments and expenses.

2 Where a creditor has received guarantees, pledges or other security for a portion of his claim, the debtor may not offset a part payment against that portion in preference to less well secured portions of the claim.

2. In the case of multiple debts

a. At the discretion of debtor or creditor

¹ A debtor with several debts to the same creditor is entitled to state at the time of payment which debt he means to redeem.

2 In the absence of any statement from the debtor, the payment will be allocated to the debt indicated by the creditor in his receipt, unless the debtor objects immediately.

b. By law

¹ Where no valid debt redemption statement has been made and the receipt does not indicate how the payment has been allocated, it is allocated to whichever debt is due or, if several are due, to the debt that first gave rise to enforcement proceedings against the debtor or, in the absence of such proceedings, to the debt that fell due first.

² Where several debts fell due at the same time, the payment is offset against them proportionately.

³ If none of the debts is yet due, the payment is allocated to the one offering the least security for the creditor.

III. Receipt and return of borrower’s note

1. Right of the debtor

¹ A debtor making a payment is entitled to demand a receipt and, provided the debt is fully redeemed, the return or annulment of the borrower’s note.

² If the debt is not completely redeemed or the borrower’s note confers other rights on the creditor, the debtor is entitled to demand only a receipt and that a record of the payment be entered on the borrower’s note.

2. Effect

¹ Where interest or other periodic payments are due, a creditor unreservedly issuing a receipt for a later periodic payment is presumed to have received all previous periodic payments.

² If he issues a receipt for redemption of the debt principal, he is presumed to have received the interest.

3 The return of the borrower’s note to the debtor gives rise to a presumption that the debt has been redeemed.

3. Return of borrower’s note not possible

¹ If the creditor claims to have lost the borrower’s note, on redeeming the debt, the debtor may insist that the creditor declare by public deed or notarised document that the borrower’s note has been annulled and the debt redeemed.

² The provisions governing annulment of securities are reserved.

E. Default of obligee

I. Requirement

The obligee is in default if he refuses without good cause to accept performance properly offered to him or to carry out such preparations as he is obliged to make and without which the obligor cannot render performance.

II. Effect

1. On obligations relating to objects

a. Right to deposit object

¹ Where the obligee is in default, the obligor is entitled to deposit the object at the expense and risk of the obligee, thereby discharging his obligation.

² The court decides which place should serve as depositary; however, merchandise may be deposited in a warehouse without need for a court decision.¹

b. Right to sell

¹ Where the characteristics of the object or the nature of the business preclude a deposit or the object is perishable or gives rise to maintenance costs or substantial storage costs, after having given formal warning to the obligee and with the court’s permission, the obligor may dispose of the object by open sale and deposit the sale proceeds.

² Where the object has a quoted stock exchange or market price or its value is low in proportion to the costs involved, the sale need not be open and the court may authorise it without prior warning.

c. Right to take back the object

¹ The obligor is entitled to take back the object deposited providing the obligee has not declared that he accepts it or providing the deposit has not had the effect of redeeming a pledge.

² As soon as the object is taken back, the claim and all accessory rights become effective again.

2. On other obligations

Where the obligation does not relate to objects and the obligee is in default, the obligor may withdraw from the contract in accordance with the provisions governing default of the obligor.

F. Performance prevented for other reasons

The obligor is entitled to deposit his performance or to withdraw from the contract, as in the case of default on the part of the obligee, where performance cannot be rendered either to the obligee or to his representative for some other reason pertaining to the obligee or where through no fault of the obligor there is uncertainty as to the identity of the obligee.

A. Failure to perform

I. Obligor’s duty to compensate

1. In general

¹ An obligor who fails to discharge an obligation at all or as required must make amends for the resulting damage unless he can prove that he was not at fault.

2 The procedure for debt enforcement is governed by the provisions of the Federal Act of 11 April 1889¹ on Debt Collection and Bankruptcy and the Civil Procedure Code of 19 December 2008² (CPC).³

2. Obligation to act or refrain from action

¹ Where the obligation is to take certain action, the obligee may without prejudice to his claims for damages obtain authority to perform the obligation at the obligor’s expense.

² Where the obligation is to refrain from taking certain action, any breach of such obligation renders the obligor liable to make amends for the damage caused.

3 In addition, the obligee may request that the situation constituting a breach of the obligation be rectified and may obtain authority to rectify it at the obligor’s expense.

II. Scope of liability and compensation

1. In general

¹ The obligor is generally liable for any fault attributable to him.

² The scope of such liability is determined by the particular nature of the transaction and in particular is judged more leniently where the obligor does not stand to gain from the transaction.

³ In other respects, the provisions governing liability in tort apply mutatis mutandis to a breach of contract.

2. Exclusion of liability

¹ Any agreement purporting to exclude liability for unlawful intent or gross negligence in advance is void.

2 At the discretion of the court, an advance exclusion of liability for minor negligence may be deemed void provided the party excluding liability was in the other party’s service at the time the waiver was made or the liability arises in connection with commercial activities conducted under official licence.

³ The specific provisions governing insurance policies are unaffected.

3. Liability for associates

¹ A person who delegates the performance of an obligation or the exercise of a right arising from a contractual obligation to an associate, such as a member of his household or an employee is liable to the other party for any damage the associate causes in carrying out such tasks, even if their delegation was entirely authorised.¹

² This liability may be limited or excluded by prior agreement.

³ If the obligee is in the obligor’s service or if the liability arises in connection with commercial activities conducted under official licence, any exclusion of liability by agreement may apply at most to minor negligence.

B. Default of obligor

I. Requirement

¹ Where an obligation is due, the obligor is in default as soon as he receives a formal reminder from the obligee.

² Where a deadline for performance of the obligation has been set by agreement or as a result of a duly exercised right of termination reserved by one party, the obligor is automatically in default on expiry of the deadline.

II. Effect

1. Liability for accidental damage

¹ An obligor in default is liable in damages for late performance and even for accidental damage.

² He may discharge himself from such liability by proving that his default occurred through no fault of his own or that the object of performance would have suffered the accidental damage to the detriment of the obligee even if performance had taken place promptly.

2. Default interest

a. In general

¹ A debtor in default on payment of a pecuniary debt must pay default interest of 5% per annum even where a lower rate of interest was stipulated by contract.

² Where the contract envisages a rate of interest higher than 5%, whether directly or by agreement of a periodic bank commission, such higher rate of interest may also be applied while the debtor remains in default.

³ In business dealings, where the normal bank discount rate at the place of payment is higher than 5%, default interest may be calculated at the higher rate.

b. Debtor in default on payments of interest, annuities and gifts

¹ A debtor in default on payment of interest, annuities or gifts is liable for default interest only as of the day on which enforcement proceedings are initiated or legal action is brought.

² Any agreement to the contrary is assessed by the court in accordance with the provisions governing penalty clauses.

³ Default interest is never payable on default interest.

3. Excess damage

¹ Where the value of the damage suffered by the creditor exceeds the default interest, the debtor is liable also for this additional damage unless he can prove that he is not at fault.

2 Where the additional damage can be anticipated, the court may award compensation for such damage in its judgment on the main claim.

4. Withdrawal and damages

a. Subject to time limit

¹ Where the obligor under a bilateral contract is in default, the obligee is entitled to set an appropriate time limit for subsequent performance or to ask the court to set such time limit.

2 If performance has not been rendered by the end of that time limit, the obligee may compel performance in addition to suing for damages in connection with the delay or, provided he makes an immediate declaration to this effect, he may instead forego subsequent performance and either claim damages for non-performance or withdraw from the contract altogether.

b. Without time limit

No time limit need be set:

1.

where it is evident from the conduct of the obligor that a time limit would serve no purpose;

2.

where performance has become pointless to the obligee as a result of the obligor’s default;

3.

where the contract makes it clear that the parties intended that performance take place at or before a precise point in time.

c. Effect of withdrawal

¹ An obligee withdrawing from a contract may refuse the promised consideration and demand the return of any performance already made.

2 In addition he may claim damages for the lapse of the contract, unless the obligor can prove that he was not at fault.

A. Subrogation

A third party who satisfies the creditor is by operation of law subrogated to his rights:

1.

if he redeems an object given in pledge for the debt of another and he owns said object or has a limited right in rem in it;

2.

if the debtor notifies the creditor that the third party who is paying is to take the creditor’s place.

B. Guarantee of performance by third party

A person who gives an undertaking to ensure that a third party performs an obligation is liable in damages for non-performance by said third party.

C. Contracts conferring rights on third parties

I. In general

¹ A person who, acting in his own name, has entered into a contract whereby performance is due to a third party is entitled to compel performance for the benefit of said third party.

2 The third party or his legal successors have the right to compel performance where that was the intention of the contracting parties or is the customary practice.

³ In this case the obligee may no longer release the obligor from his obligations once the third party has notified the obligor of his intention to exercise that right.

II. In the case of liability insurance

Where an employer has taken out liability insurance and his employee has contributed at least half of the premiums, the employee has sole claim to the policy benefits.

A. Joint and several debtors

I. Requirement

¹ Debtors become jointly and severally liable for a debt by stating that each of them wishes to be individually liable for performance of the entire obligation.

2 Without such a statement of intent, debtors are joint and severally liable only in the cases specified by law.

II. Relationship between creditor and debtor

1. Effect

a. Liability of the debtors

¹ A creditor may at his discretion request partial performance of the obligation from each joint and several debtor or else full performance from any one of them.

2 All the debtors remain under the obligation until the entire claim has been redeemed.

b. Objections by the debtors

¹ A joint and several debtor may raise against the creditor only those objections that are based either on his personal relationship with the creditor or on the nature of or collective reason for the joint and several obligation.

² Each joint and several debtor is liable to the others if he fails to raise the objections which all of them are entitled to raise.

c. Action taken by individual debtors

Unless otherwise provided, a joint and several debtor must not take any action which might impair the position of his fellows.

2. Extinction of the joint and several obligation

¹ Where one joint and several debtor satisfies the creditor by payment or set-off, the others are discharged to that extent.

2 Where one joint and several debtor is released from liability without satisfaction of the creditor, such release does not benefit the others save to the extent justified by the circumstances or the nature of the obligation.

III. Relationship between joint and several debtors

1. Participation

¹ Unless the legal relationship between the joint and several debtors indicates otherwise, each of them assumes an equal share of the payment made to the creditor.

² A joint and several debtor who pays more than his fair share has recourse against the others for the excess.

3 Amounts that cannot be recovered from one joint and several debtor must be borne in equal shares by the others.

2. Subrogation

¹ A joint and several debtor with right of recourse against his fellow debtors is subrogated to the rights of the creditor to the extent the latter has been satisfied.

² The creditor is liable if he favours the legal position of one joint and several debtor to the detriment of the others.

B. Joint and several creditors

¹ Multiple creditors become joint and several creditors where the debtor states that he wishes to grant each of them the right to receive full performance of the debt and in the cases prescribed by law.

² Performance made to one joint and several creditor discharges the debtor as against all of them.

3 The debtor may choose which joint and several creditor he makes the payment to, provided none of them has initiated legal proceedings against him.

A. Condition precedent

I. In general

¹ A contract is conditional if its binding nature is made dependent on the occurrence of an event that is not certain to happen.

2 The contract takes effect as soon as this condition precedent occurs, unless the parties clearly intended otherwise.

II. Before the condition occurs

¹ Until such time as the condition precedent occurs, the conditional obligor must refrain from any act which might prevent the due performance of his obligation.

2 A conditional obligee whose rights are jeopardised is entitled to apply for the same protective measures as if his claim were unconditional.

3 On fulfilment of the condition precedent, dispositions made before it occurred are void to the extent that they impair the effect of the condition precedent.

III. Benefits enjoyed in the interim

¹ A creditor into whose possession a promised object has been delivered before the condition precedent occurred may, on fulfilment of the condition precedent, keep any benefits obtained from it in the interim.

² If the condition precedent fails to occur, he is obliged to return such benefits.

B. Condition subsequent

¹ A contract whose termination is made dependent on the occurrence of an event that is not certain to happen lapses as soon as that condition is fulfilled.

² As a rule, there is no retroactive effect.

C. Joint provisions

I. Fulfilment of the condition

If the condition consists of an act by one of the parties and that act need not be carried out in person, it may also be carried out by the party’s heirs.

II. Prevention in bad faith

A condition is deemed fulfilled where one of the parties has prevented its fulfilment by acting in bad faith.

III. Inadmissible conditions

Where a condition is attached with the intention of encouraging an unlawful or immoral act or omission, the conditional claim is void.

A. Earnest and forfeit money

¹ Earnest money paid on entering into a contract is deemed a mark of the party’s intention to honour the contract rather than a forfeit.

2 Unless otherwise stipulated by agreement or local custom, the earnest money is retained by the recipient without being deducted from his claim.

³ Where a sum of forfeit money has been agreed, the party that paid the sum may withdraw from the contract by relinquishing it and the party that received it by returning twice the amount.

B. ...

C. Contractual penalty

I. Rights of the creditor

1. Relation between penalty and contractual performance

¹ Where a penalty is promised for non-performance or defective performance of a contract, unless otherwise agreed, the creditor may only compel performance or claim the penalty.

² Where the penalty is promised for failure to comply with the stipulated time or place of performance, the creditor may claim the penalty in addition to performance provided he has not expressly waived such right or accepted performance without reservation.

3 The foregoing does not apply if the debtor can prove that he has the right to withdraw from the contract by paying the penalty.

2. Relation between penalty and damage

¹ The penalty is payable even if the creditor has not suffered any damage.

² Where the damage suffered exceeds the penalty amount, the creditor may claim further compensation only if he can prove that the debtor was at fault.

3. Forfeiture of part payments

¹ Any agreement that part payments are forfeited to the creditor in the event the contract is terminated shall be determined in accordance with the provisions governing contractual penalties.

² ...¹

II. Amount, nullity and reduction of the penalty

¹ The parties are free to determine the amount of the contractual penalty.

2 The penalty may not be claimed where its purpose is to reinforce an unlawful or immoral undertaking or, unless otherwise agreed, where performance has been prevented by circumstances beyond the debtor’s control.

3 At its discretion, the court may reduce penalties that it considers excessive.

A. Rights and obligations of the parties in general

¹ A contract of sale is a contract whereby the seller undertakes to deliver the item sold and transfer ownership of it to the buyer in return for the sale price, which the buyer undertakes to pay to the seller.

² Unless otherwise provided by agreement or custom, the seller and the buyer are obliged to discharge their obligations simultaneously quid pro quo.

3 The price is deemed sufficiently determined where it can be determined from the circumstances.

B. Benefits and risks

¹ The benefit and risk of the object pass to the buyer on conclusion of the contract, except where otherwise agreed or dictated by special circumstance.

² Where the object sold is defined only in generic terms, the seller must select the particular item to be delivered and, if it is to be shipped, must hand it over for dispatch.

³ In a contract subject to a condition precedent, benefit and risk of the object do not pass to the buyer until the condition has been fulfilled.

C. Reservation of cantonal law

Cantonal law may limit or exclude the right to bring claims in connection with retail sales of alcoholic beverages, including hotel bills.

A. Object

¹ Any sale in which the object is not land, property or a right in rem entered in the land register is a chattel sale.

² Where constituent parts of land, such as crops, architectural salvage materials or quarry products, are separated therefrom for transfer to the acquirer, their sale constitutes a chattel sale.

B. Seller’s obligations

I. Transfer

1. Transfer costs

Unless otherwise provided by agreement or custom, the seller bears the costs of transfer and in particular those of measuring and weighing, while the buyer bears those of documentation and receipt.

2. Transport costs

¹ Unless otherwise provided by agreement or custom, if the object sold must be transported to a place other than the place of performance, the buyer bears the costs of such transport.

² The seller is presumed to have borne the transport costs where free delivery has been agreed.

3 Where delivery free of shipping costs and duties has been agreed, the seller is deemed to have assumed the export, transit and import duties payable during transport but not the consumer tax levied on receipt of the object.

3. Delivery default

a. Withdrawal from commercial transactions

¹ Where in commercial transactions the contract specifies a time limit for delivery and the seller is in default, the presumption is that the buyer will forego delivery and claim damages for non-performance.

² However, if the buyer prefers to demand delivery, he must inform the seller without delay on expiry of the time limit.

b. Liability for and computation of damages

¹ A seller who fails to discharge his contractual obligation is liable for the resultant damage to the buyer.

² The buyer in a commercial transaction is entitled to compensation of the difference between the sale price and the price he has paid in good faith to replace the object that was not delivered to him.

³ In the case of goods with a market or stock exchange price, the buyer need not buy the replacement object but is entitled to claim as damages the difference between the contractual sale price and the market price at the time of performance.

II. Warranty of title

1. Warranty obligation

¹ The seller is obliged to transfer the purchased goods to the buyer free from any rights enforceable by third parties against the buyer that already exist at the time the contract is concluded.

² Where on conclusion of the contract the buyer was aware of the existence of such rights, the seller is not bound unless by any express warranty given.

³ Any agreement to exclude or limit the warranty obligation is void if the seller has intentionally omitted to mention the right of a third party.

2. Procedure

a. Third-party notice

¹ The requirements for and effects of the third-party notice are governed by the CPC².

2 In the event of failure to serve the third-party notice for reasons not attributable to the seller, he is released from his warranty obligation to the extent that he can prove that the outcome would have been more favourable had the third-party notice been served promptly.

b. Surrender of object without court decision

¹ The seller remains subject to the warranty obligation even if the buyer has in good faith acknowledged the right of a third party without waiting for a court decision or if he has agreed to submit to arbitration, provided that the seller was warned of the arbitration proceedings in good time but declined an invitation to engage therein.

² The same applies if the buyer proves that he was compelled to surrender the object.

3. Rights of the buyer

a. Full dispossession

¹ In the case of full dispossession, the contract of sale is deemed terminated and the buyer has the right to claim:

1.

restitution of the price paid, with interest, less the value of any fruits the buyer has obtained or neglected to obtain from the object and other benefits derived therefrom;

2.

reimbursement of his expenditures on the object, to the extent this cannot be obtained from the third party with the superior right;

3.

reimbursement of all judicial and extra-judicial costs arising from the proceedings, apart from those he would have avoided by serving third-party notice on the seller;

4.

compensation for all other damage directly caused by the dispossession.

² The seller is also obliged to make good any further loss suffered by the buyer unless the seller can prove that he is not at fault.

b. Partial dispossession

¹ Where the buyer is dispossessed of only part of the purchased object or it is encumbered with a charge in rem for which the seller is guarantor, the buyer may not seek termination of the contract of sale but may only claim damages for being thus dispossessed.

² However, where in the circumstances there is cause to presume that he would not have entered into the contract if he had foreseen such a partial dispossession, he has the right to request its termination.

³ In this case, he must return to the seller that part of the item of which he has not been dispossessed together with the benefits he obtained from it in the interim.

c. Objects of cultural heritage

In the case of objects of cultural heritage within the meaning of Article 2 paragraph 1 of the Cultural Property Transfer Act of 20 June 2003², actions for breach of warranty of title prescribe one year after the buyer discovered the defect of title but in any event 30 years after the contract was concluded.

III. Warranty of quality and fitness

1. Object of the warranty

a. In general

¹The seller is liable to the buyer for any breach of warranty of quality and for any defects that would materially or legally negate or substantially reduce the value of the object or its fitness for the designated purpose.

² He is liable even if he was not aware of the defects.

b. In livestock trading

There is no warranty obligation in sales of livestock (horses, donkeys, mules, cattle, sheep, goats or pigs) unless the seller has given express warranty in writing to the buyer or has intentionally misled the buyer.

2. Exclusion of warranty

Any agreement to exclude or limit the warranty obligation is void if the seller has fraudulently concealed the failure to comply with warranty from the buyer.

3. Defects known to the buyer

¹ The seller is not liable for defects known to the buyer at the time of purchase.

² He is not liable for defects that any normally attentive buyer should have discovered unless he assured the buyer that they do not exist.

4. Notice of defects

a. In general

¹ The buyer must inspect the condition of the purchased object as soon as feasible in the normal course of business and, if he discovers defects for which the seller is liable under warranty, must notify him without delay.

² Should he fail to do so, the purchased object is deemed accepted except in the case of defects that would not be revealed by the customary inspection.

³ Where such defects come to light subsequently, the seller must be notified immediately, failing which the object will be deemed accepted even in respect of such defects.

b. In livestock trading

¹ Where in a sale of livestock a written assurance includes no time limit and does not warrant that an animal is pregnant, the seller is not liable to the buyer unless a defect is discovered and notified within nine days of delivery or of the notice of default in taking delivery and an application is made to the competent authority within the same time limit to have the animal examined by experts.

2 The court evaluates the experts’ report at its discretion.

³ In other respects the procedure is governed by regulations enacted by the Federal Council.

5. Intentional deceit

Where the seller has wilfully misled the buyer, liability for breach of warranty is not limited by any failure on the buyer’s part to give prompt notice of defects.

6. Remote sale and purchase

¹ A buyer who complains that an object sent from another place is defective is obliged to place it in temporary storage, provided the seller has no representative in the place in which it was received, and cannot simply return it to the seller.

² The buyer is obliged to have the condition of the object duly and promptly witnessed, failing which he will bear the burden of proving that the alleged defects already existed when he took receipt of the object.

3 Where there is a risk that the object will rapidly deteriorate, the buyer has the right and, should the interests of the seller so require, the obligation to arrange its sale with the assistance of the competent authority of the place where the object is located, but must notify the seller of such sale as soon as possible to avoid rendering himself liable in damages.

7. Types of action

a. Rescission or reduction

¹ In claims for breach of warranty of quality and fitness, the buyer may sue either to rescind the contract of sale for breach of warranty or to have the sale price reduced by way of compensation for the decrease in the object’s value.

2 Even where the buyer has brought action for rescission the court is free to order a reduction in the price of the object if it does not consider rescission justified by the circumstances.

3 If the decrease in the object’s value is equal to the sale price, the buyer may only sue for rescission.

b. Substitute performance

¹ Where the contract of sale is for delivery of a specified quantity of fungibles, the buyer may choose to bring action either for rescission or for a reduction in the sale price or to request other acceptable goods of the same kind.

2 Where the purchased objects have not been sent from another place, the seller may discharge his obligation to the buyer by immediately delivering acceptable items of the same kind and making good any damage the buyer has suffered.

c. Rescission when the object is destroyed

¹ Action for rescission of the contract of sale may be brought if the object has been destroyed as a result of its defects or by accident.

² In such cases the buyer must return only that which remains of the object.

³ If the object is destroyed through the fault of the buyer or has been sold on or transformed by him, his only claim is for compensation for the decrease in value.

8. Rescission of the contract of sale

a. In general

¹ In the event of rescission of the contract of sale the buyer must return the object to the seller together with any benefits derived from it in the interim.

² The seller must reimburse to the buyer the sale price paid together with interest and, in accordance with the provisions governing full dispossession, compensation for litigation costs, expenses and the damage incurred by the buyer as a result of the delivery of defective goods.

3 The seller is obliged to compensate the buyer for any further damage unless he can prove that no fault is attributable to him.

b. For sales of batches or sets of objects

¹ Where the sale involves a batch or set of objects of which only some are defective, action for rescission may be brought only in respect of the defective items.

² However, where the defective items cannot be separated from the unflawed items without substantial prejudice to the buyer or the seller, rescission of the contract of sale must extend to the entire batch or set.

3 Rescission in respect of the main sale object necessarily involves rescission in respect of all accessory objects even if they are priced separately, whereas rescission in respect of accessory objects does not extend to the main object.

9. Prescription

¹ An action for breach of warranty of quality and fitness prescribes two years after delivery of the object to the buyer, even if he does not discover the defects until later, unless the seller has assumed liability under warranty for a longer period.

² The period amounts to five years where defects in an object that has been incorporated in an immovable work in a manner consistent with its nature and purpose have caused the work to be defective.

3 In the case of cultural property within the meaning of Article 2 paragraph 1 of the Cultural Property Transfer Act of 20 June 2003², actions for breach of warranty of quality and fitness prescribe one year after the buyer discovered the defect but in any event 30 years after the contract was concluded.

⁴ An agreement to reduce the prescriptive period is null and void if:

a.

the prescriptive period is reduced to less than two years, or less than one year in the case of second-hand goods;

b.

the object is intended to be used by the buyer or his or her family; and

c.

the seller is acting in the course of his or her professional or commercial activities.

⁵ The defence of defective goods remains available to the buyer provided he has notified the seller within the prescriptive period.

⁶ The seller may not invoke the prescriptive period if it is proved that he wilfully misled the buyer. The foregoing does not apply to the 30-year period under paragraph 3.

C. Obligations of the buyer

I. Payment of the sale price and acceptance of the object

¹ The buyer has an obligation to pay the price in accordance with the terms of the contract and to accept the sale object provided it is offered to him by the seller as contractually agreed.

2 Unless otherwise provided by agreement or custom, such acceptance must take place immediately.

II. Fixing the price

¹ Where the buyer places a firm order without indicating the sale price, the price is presumed to be the average current market price at the place of performance.

² Where the price is based on the weight of the goods, the weight of the packaging (tare) is deducted.

³ The foregoing does not apply to special commercial customs whereby the gross weight of certain resale merchandise is reduced by a set amount or percentage or the price is based on the gross weight including packaging.

III. Time when price falls due, interest

¹ The price falls due as soon as the property passes into the buyer’s possession, unless some other juncture is agreed.

² Regardless of the provision governing default on expiry of a specified time limit, interest accrues on the sale price even if no reminder is issued where such practice is customary or the buyer may derive fruits or other benefits from the purchased object.

IV. Buyer in default

1. Seller’s right of withdrawal

¹ Where the property is to be delivered against advance payment of the price in full or in instalments and the buyer is in default on such payment, the seller is entitled to withdraw from the contract without further formality.

² However, if he intends to exercise this right he must notify the buyer immediately.

³ Where the purchased object has passed into the buyer’s possession prior to payment, the seller may withdraw from the contract on the grounds that the buyer is in default and demand the return of the object only if he has expressly reserved the right to do so.

2. Liability for and computation of damages

¹ Where the buyer in a commercial transaction fails to discharge his payment obligation, the seller is entitled to compensation for the difference between the sale price and the price at which he has subsequently sold the object in good faith.

2 In the case of goods with a market or stock exchange price, the seller is entitled to claim as damages the difference between the contractual sale price and the market price at the time of performance without needing to sell the object on.

A. Formal requirements

¹ A contract for the sale of immovable property is valid only if done as a public deed.

² A preliminary contract and an agreement conferring a right of pre-emption, purchase or repurchase in relation to immovable property is valid only if done as a public deed.¹

³ An agreement conferring a right of pre-emption without fixing a price is valid if done in writing.²

A^bis. Duration and priority notice

Rights of pre-emption or repurchase may be agreed for a maximum duration of 25 years and rights of purchase for a maximum of 10 years, and they may be entered under priority notice in the land register.

A^ter. Inheritance and assignment

¹ Unless otherwise agreed, contractual rights of pre-emption, purchase and repurchase may be inherited but not assigned.

2 Where assignment is permitted by contractual agreement, it is subject to the same formal requirements as apply to the establishment of the right.

A^quater. Rights of pre-emption

I. Pre-emption events

¹ A right of pre-emption may be exercised on the sale of the immovable property or any other legal transaction economically equivalent to a sale (pre-emption event).

² In particular, the following are not pre-emption events: allocation to an heir in the division of an estate, forced sale, or acquisition in performance of public duties.

II. Effect of pre-emption, conditions

¹ The seller must inform persons with a right of pre-emption of the conclusion and content of any contract of sale entered into.

² Where the contract of sale is terminated after the right of pre-emption has been exercised or if necessary permission is refused for reasons pertaining to the person of the buyer, such termination or refusal has no effect on the person to whom the right of pre-emption accrues.

³ Unless the pre-emption agreement provides otherwise, the person with the right of pre-emption may purchase the property on the conditions agreed by the seller with the third party.

III. Exercise, forfeiture

A person wishing to exercise his right of pre-emption must give notice of his intention within three months to the seller or, if it is entered in the land register, to the owner. This time limit commences on the day on which the person with the right of pre-emption became aware of the conclusion and content of the contract of sale.

B. Conditional purchase and reservation of ownership

¹ Conditional purchases of immovable property are not entered in the land register until the condition has been fulfilled.

2 A reservation of ownership may not be entered in the land register.

C. Agricultural properties

The Federal Act of 4 October 1991² on Rural Land Rights applies to the sale of agricultural properties.

D. Warranty

¹ Unless otherwise agreed, the seller of a property must compensate the buyer if it is not of the size indicated in the contract of sale.

² Where the property is not of the size entered in the land register based on an official survey, the seller must compensate the buyer only where he gave express warranty to that effect.

³ The warranty obligation in respect of defects in a building prescribes five years after ownership is acquired.

E. Benefits and risks

Where the agreement stipulates a date on which the buyer is to take possession of the property, the presumption is that the associated benefits and risks do not pass to the buyer until that date.

F. Reference to chattel sale

In other respects the provisions governing chattel sale apply mutatis mutandis to the sale and purchase of land.

A. Sale by sample

¹ In a sale by sample, the person to whom the sample was entrusted is not obliged to prove that the sample he presented is identical with the one received; his personal assurance to the court is sufficient, even where the sample presented has altered in form since delivery, provided that such alteration was a necessary consequence of the examination made of the sample.

² In any event the other party is entitled to prove that the sample is not the same one.

³ If the sample has been spoiled or been destroyed while in the possession of the buyer, even if he was not at fault, the onus is not on the seller to prove that the object conforms with the sample, but on the buyer to prove the contrary.

B. Sale on approval or inspection

I. Effect

¹ In a sale on approval or inspection, the buyer is free to accept or refuse the object.

² Until it is accepted, the seller remains its owner even if it has passed into the buyer’s possession.

II. Inspection on the seller’s premises

¹ Where the object is to be inspected on the premises of the seller, he is released from his obligation if the buyer fails to accept the object within the agreed or customary time limit.

² In the absence of any such time limit the seller may, after an appropriate interval, call on the buyer to declare whether he accepts the object, and the seller is released from his obligation if the buyer fails to make such declaration immediately on request.

III. Inspection on the buyer’s premises

¹ Where the object has been delivered to the buyer prior to inspection, the sale is deemed to have been approved if the buyer neither declares that he rejects the object nor returns it within the agreed or customary time limit or, in the absence of any such time limit, immediately on demand by the seller.

² The sale is similarly treated as completed, if the buyer pays the whole or part of the price without reservation or if he deals with the property otherwise than was necessary for its inspection.

C. ...

D. Auctions

I. Conclusion of the purchase

¹ At a compulsory auction, a contract of sale is concluded when the official auctioneer knocks the object down to the highest bidder.

² In the case of a voluntary auction that has been publicly announced and is open to all bidders, a contract of sale is concluded when the seller accepts the bid of the highest bidder.

³ Unless the seller has expressed some other intention, the auctioneer is deemed to have the authority to knock the object down to the highest bidder.

II. Avoidance

¹ Any interested party may within ten days bring a claim for avoidance in respect of an auction whose outcome has been influenced by unlawful or immoral means.

² In the case of a compulsory auction, the avoidance claim must be brought before the supervisory authority, and in all other cases before the court.

III. Binding nature of bids at auction

1. In general

¹ A bidder is bound by his offer according to the auction terms and conditions.

2 Unless these provide otherwise, he is released from his obligation if a higher bid is made or if his own bid is not accepted immediately after the usual call has been made.

2. Immovable property

¹ In the case immovable property, the highest bid must be accepted or refused at the auction itself.

2 Any condition whereby the bidder is bound to maintain his bid after the auction is void, other than in the case of compulsory auctions or sales of land or buildings that require official approval.

IV. Cash payment

¹ The successful bidder must pay in cash unless the auction terms and conditions provide otherwise.

2 The seller may immediately withdraw from the transaction if payment is not tendered in cash or in accordance with the auction terms and conditions.

V. Warranty

¹ Sale at compulsory auction is without warranty, apart from special assurances given or where the bidders are intentionally deceived.

² The successful bidder acquires the object in the condition and with the attendant rights and encumbrances indicated in the public registers or the lot description and/or those that exist by operation of law.

³ In sales at voluntary public auction, the seller has the same liability as in any other sale, but in the lot description he may disclaim any warranty obligation with the exception of liability for intentional deceit.

VI. Transfer of ownership

¹ The successful bidder for a chattel acquires title to it as soon as it is knocked down to him, whereas ownership of immovable property is not transferred until the entry is made in the land register.

² The official auctioneers immediately notify the land registry of the sale at auction by reference to the formal auction record.

³ The provisions governing acquisition of ownership at compulsory auction are reserved.

VII. Cantonal provisions

The cantons may enact other provisions governing sale at public auction within the bounds of federal law.

A. Reference to provisions governing purchase

The rules governing contracts of sale also apply to contracts of exchange in the sense that each party to the exchange is treated as seller in respect of the object promised by him and as buyer in respect of the object promised to him.

B. Warranty

A party to the exchange who is dispossessed of the object received or has returned it as defective may either claim for damages or for the return of the object that he delivered.

A. Definition and scope of application

I. Definition

Leases are contracts in which a landlord or lessor grants a tenant or lessee the use of an object in exchange for rent.

II. Scope of application

1. Residential and commercial premises

¹ The provisions governing the leasing of residential and commercial premises are also applicable to objects on such premises of which the tenant has use.

² They are not applicable to holiday homes hired for three months or less.

³ The Federal Council issues the provisions for implementation.

2. Provisions on protection against unfair rents

¹ The provisions governing protection against unfair rents (Art. 269 et seq.) apply mutatis mutandis to non-agricultural leases and to other contracts whose essential purpose is to regulate the transfer of the use of residential or commercial premises against valuable consideration.

² They do not apply to the lease of luxury apartments and single-occupancy residential units with six or more bedrooms and reception rooms (not including the kitchen).

³ The provisions governing challenges to unfair rents do not apply to residential premises made available with public sector support for which rent levels are set by a public authority.

B. Tie-in transactions

A tie-in transaction linked to a lease of residential or commercial premises is void where the conclusion or continuation of the lease is made conditional on such transaction and, under its terms, the tenant assumes an obligation towards the landlord or a third party which is not directly connected with the use of the leased premises.

C. Duration

¹ Leases may be concluded for a limited or indefinite duration.

² Where the intention is that they should end without notice on expiry of the agreed duration, they have a limited duration.

³ Other leases are deemed to be of indefinite duration.

D. Obligations of the landlord

I. In general

¹ The landlord or lessor is required to make the object available on the agreed date in a condition fit for its designated use and to maintain it in that condition.

² Clauses to the contrary to the detriment of the tenant or lessee are void if they are set out:

a.

in previously formulated general terms and conditions;

b.

in leases for residential or commercial premises.

II. Duty of disclosure

¹ If a report was drawn up on the return of the object at the end of the previous lease, the landlord or lessor must on request make this document available for perusal by the new tenant or lessee when the object is handed over to him.

² Similarly, the new tenant or lessee has the right to be informed of the amount of rent paid under the previous lease.

III. Charges and taxes

The landlord or lessor bears all taxes and charges in connection with the leased object.

E. Obligations of the tenant or lessee

I. Payment of rent and accessory charges

1. Rent

The rent is the consideration owed by the tenant or lessee to the landlord or lessor for the transfer of the use of the object.

2. Accessory charges

a. In general

¹ Accessory charges are the consideration due for services provided by the landlord or lessor or a third party in connection with the use of the property.

² They are payable by the tenant or lessee only where this has been specifically agreed with the landlord or lessor.

b. Residential and commercial premises

¹ Accessory charges for residential and commercial premises are the actual outlays made by the landlord for services connected with the use of the property, such as heating, hot water and other operating costs, as well as public taxes arising from the use of the property.

² The landlord must allow the tenant on his request to inspect the documentation for such outlays.

3. Payment deadlines

The tenant or lessee must pay the rent and, where applicable, the accessory charges at the end of each month and at the latest on expiry of the lease, unless otherwise agreed or required by local custom.

4. Tenant in arrears

¹ Where, having accepted the property, the tenant or lessee is in arrears with payments of rent or accessory charges, the landlord or lessor may set a time limit for payment and notify him that in the event of non-payment the landlord or lessor will terminate the lease on expiry of that time limit. The minimum time limit is ten days, and 30 days for leases of residential or commercial premises.

² In the event of non-payment within the time limit the landlord or lessor may terminate the contract with immediate effect or, for leases of residential and commercial premises, subject to at least 30 days’ notice ending on the last day of a calendar month.

II. Security furnished by the tenant

¹ Where the tenant of residential or commercial premises furnishes security in the form of cash or negotiable securities, the landlord must deposit it in a bank savings or deposit account in the tenant’s name.

² In residential leases, the landlord is not entitled to ask for more than three months’ rent by way of security.

³ The bank may release such security only with the consent of both parties or in compliance with a final payment order or final decision of the court. On expiry of one year following the end of the lease, the tenant or lessee may request that the security be returned to him by the bank if no claim has been brought against him by the landlord or lessor.

⁴ The cantons may enact further provisions.

III. Care and consideration

¹ The tenant or lessee must use the object with all due care.

² Where the lease relates to immovable property, the tenant must show due consideration for others who share the building and for neighbours.

³ If, despite written warning from the landlord or lessor, the tenant or lessee continues to act in breach of his duty of care and consideration such that continuation of the lease becomes unconscionable for the landlord or lessor or other persons sharing the building, the landlord or lessor may terminate the contract with immediate effect or, for leases of residential and commercial premises, subject to at least 30 days’ notice ending on the last day of a calendar month.

⁴ However, leases of residential and commercial premises may be terminated with immediate effect if the tenant intentionally causes serious damage to the property.

IV. Duty of notification

¹ On learning of defects which he himself is not obliged to remedy, the tenant or lessee must inform the landlord or lessor.

² Failure to notify renders the tenant or lessee liable for any damage incurred by the landlord or lessor as a result.

V. Duty of tolerance

¹ The tenant or lessee must tolerate works intended to remedy defects in the object or to repair or prevent damage.

² The tenant or lessee must permit the landlord or lessor to inspect the object to the extent required for maintenance, sale or future leasing.

³ The landlord or lessor must inform the tenant or lessee of works and inspections in good time and take all due account of the latter’s interests when they are carried out; all claims of the tenant or lessee for reduction of the rent (Art. 259d) and for damages (Art. 259e) are reserved.

F. Non-performance or defective performance when object handed over

¹ Where the landlord or lessor fails to hand over the property on the agreed date or hands it over with defects rendering it wholly or partly unfit for its designated use, the tenant or lessee may sue for non-performance of contractual obligations pursuant to Articles 107–109 above.

² Where the tenant or lessee accepts the object despite such defects but insists that the contract be duly performed, he may make only such claims as would have accrued to him had the defects arisen during the lease (Art. 259a–259i).

³ The tenant or lessee may bring the claims pursuant to Articles 259a–259i below even if, when handed over to him, the object has defects:

a.

which render the object less fit for its designated use, albeit not substantially so;

b.

which the tenant or lessee would have to remedy at his own expense during the lease (Art. 259).

G. Defects during the contract

I. Obligation of tenant to carry out minor cleaning and repairs

The tenant or lessee must remedy defects which can be dealt with by minor cleaning or repairs as part of regular maintenance and, depending on local custom, must do so at his own expense.

II. Rights of the tenant

1. In general

¹ Where defects arise in the object which are not attributable to the tenant or lessee and which he is not obliged to remedy at his own expense, or where he is prevented from using the object as contractually agreed, he may require that the landlord or lessor:

a.

repair the object;

b.

reduce the rent proportionately;

c.

pay damages;

d.

assume responsibility for litigation against a third party.

² In addition, a tenant of immovable property may pay rent on deposit rather than to the landlord.

2. Remedy of defects

a. General principle

Where the landlord is aware of a defect and fails to remedy it within a reasonable time, the tenant may:

a.

terminate the contract with immediate effect if the defect renders the leased property unfit or significantly less fit for its designated use or renders a chattel less fit for purpose;

b.

arrange for the defect to be remedied at the landlord’s or lessor’s expense if it renders the object less fit for its designated use, albeit not substantially so.

b. Exception

The tenant or lessee is not entitled to rectification of the defect where the landlord or lessor provides full compensation for the defective object within a reasonable time.

3. Reduction of rent

Where the object is rendered unfit or less fit for its designated use, the tenant or lessee may require the landlord or lessor to reduce the rent proportionately from the time when the landlord or lessor became aware of the defect until the defect is remedied.

4. Damages

Where the defect has caused damage to the tenant or lessee, the landlord or lessor is liable in damages unless he can prove that he was not at fault.

5. Assumption of litigation

Where a third party claims a right over the object that is incompatible with the rights of the tenant or lessee, on notification by the latter the landlord or lessor is obliged to assume responsibility for the litigation.

6. Deposit of rent

a. General principle

¹ A tenant of immovable property requesting that a defect be remedied must, in writing, set the landlord a reasonable time limit within which to comply with such request and may warn him that, in the event of failure to comply, on expiry of the time limit the tenant will deposit his future rent payments with an office designated by the canton. He must notify the landlord in writing of his intention to pay rent on deposit.

² Rent paid on deposit is deemed duly paid.

b. Release of deposited rent

¹ The landlord becomes entitled to the rent paid on deposit if the tenant or lessee does not bring claims against him before the conciliation authority within 30 days of the due date for the first rent payment paid into deposit.

² On being notified by the tenant that he intends to pay rent on deposit as it falls due, the landlord may apply to the conciliation authority for release of rent unjustly paid on deposit.

c. Procedure

The procedure is governed by the CPO².

H. Renovations and modifications

I. By the landlord

¹ The landlord or lessor may renovate or modify the object only where conscionable for the tenant or lessee and the lease has not been terminated.

² In carrying out such works, the landlord or lessor must give due consideration to the tenant or lessee’s interests; all claims of the tenant or lessee for reduction of the rent (Art. 259d) and for damages (Art. 259e) are reserved.

II. By the tenant

¹ The tenant or lessee may renovate or modify the object only with the written consent of the landlord or lessor.

² Once such consent has been given, the landlord or lessor may require the restoration of the object to its previous condition only if this has been agreed in writing.

³ Where at the end of the lease the object has appreciated significantly in value as a result of renovations or modifications to which the landlord or lessor consented, the tenant or lessee may claim appropriate compensation for such appreciation, subject to any written agreements providing for higher levels of compensation.

J. Change of ownership

I. Alienation of the object

¹ Where after concluding the contract the landlord alienates the object or is dispossessed of it in debt collection or bankruptcy proceedings, the lease passes to the acquirer together with ownership of the object.

² However, the new owner may:

a.

serve notice to terminate a lease on residential or commercial premises as of the next legally admissible termination date if he claims an urgent need of such premises for himself, his close relatives or in-laws;

b.

serve notice to terminate a rental agreement in respect of other objects as of the next legally admissible termination date unless the contract allows for earlier termination.

³ If the new owner terminates sooner than is permitted under the contract with the existing landlord or lessor, the latter is liable for all resultant losses.

⁴ The provisions governing compulsory purchase are unaffected.

II. Conferral of limited rights in rem

Where the landlord or lessor grants a third party a limited right in rem and this is tantamount to a change of ownership, the provisions governing alienation of the object are applicable mutatis mutandis.

III. Entry under priority notice in the land register

¹ The parties to a lease may agree to have it entered under priority notice in the land register.

² The effect of such entry is that every future owner must allow the property to be used in accordance with the lease.

K. Sub-letting

¹ A tenant may sub-let all or part of the property with the landlord’s consent.

² The landlord may refuse his consent only if:

a.

the tenant refuses to inform him of the terms of the sub-lease;

b.

the terms and conditions of the sub-lease are unfair in comparison with those of the principal lease;

c.

the sub-letting gives rise to major disadvantages for the landlord.

³ The tenant is liable to the landlord for ensuring that the sub-tenant uses the property only in the manner permitted to the tenant himself. To this end the landlord may issue reminders directly to the sub-tenant.

L. Transfer of lease to a third party

¹ The tenant of commercial premises may transfer his lease to a third party with the landlord’s written consent.

² The landlord may withhold consent only for good cause.

³ Once the landlord gives his consent, the third party is subrogated to the rights and obligations of the tenant under the lease.

⁴ The tenant is released from his obligations towards the landlord. However, he remains jointly and severally liable with the third party until such time as the lease ends or may be terminated under the contract or by law, but in any event for no more than two years.

M. Early return of the object

¹ Where the tenant or lessee returns the object without observing the notice period or the deadline for termination, he is released from his obligations towards the landlord or lessor only if he proposes a new tenant or lessee who is acceptable to the landlord or lessor, solvent and willing to take on the lease or rental agreement under the same terms and conditions.

² Otherwise, the tenant or lessee must continue to pay the rent until such time as the lease ends or may be terminated under the contract or by law.

³ Against the rent owing to him, the landlord or lessor must permit account to be taken of:

a.

any expenses he has saved, and

b.

any earnings which he has obtained, or intentionally failed to obtain, from putting the object to some other use.

N. Set-off

The landlord or lessor and the tenant or lessee may not waive in advance their right to set off claims arising from the lease.

O. End of lease

I. Expiry of agreed duration

¹ Where the parties have expressly or tacitly agreed to a limited duration, the lease comes to an end on expiry thereof without any need for notice to be given.

² If the lease is tacitly continued, its duration becomes indefinite.

II. Notice of termination and termination dates

1. In general

¹ The parties may give notice to terminate a lease of indefinite duration by observing the legally prescribed notice periods and termination dates, except where they have agreed a longer notice period or a different termination date.

² Where the prescribed notice period or termination date is not observed, termination will be effective as of the next termination date.

2. Immovable and movable structures

A party may terminate a lease of immovable property or a movable structure by giving three months’ notice expiring on a date fixed by local custom or, in the absence of such custom, at the end of a six-month period of the lease.

3. Residential premises

A party may terminate a lease of residential premises by giving three months’ notice expiring on a date fixed by local custom or, in the absence of such custom, at the end of a three-month period of the lease.

4. Commercial premises

A party may terminate the lease of a commercial property by giving six months’ notice expiring on a date fixed by local custom or, in the absence of such custom, at the end of a three-month period of the lease.

5. Furnished rooms and parking spaces

A party may terminate the lease of furnished rooms, a separately rented parking space or other comparable facility by giving two weeks’ notice expiring at the end of a one-month period of the lease.

6. Chattels

A party may terminate a lease of chattels by giving three days’ notice expiring at any time.

III. Extraordinary notice

1. Good cause

¹ Where performance of the contract becomes unconscionable for the parties for good cause, they may terminate the lease by giving the legally prescribed notice expiring at any time.

² The court determines the financial consequences of early termination, taking due account of all the circumstances.

2. Bankruptcy of the tenant or lessee

¹ Where the tenant or lessee becomes bankrupt after taking possession of the property, the landlord or lessor may call for security for future rent payments. He must grant the tenant or lessee and the bankruptcy administrators an appropriate time limit in which to furnish it.

² Where no such security is furnished to the landlord or lessor, he may terminate the contract with immediate effect.

3. Death of the tenant or lessee

In the event of the death of the tenant or lessee, his heirs may terminate the contract by giving the legally prescribed notice expiring on the next admissible termination date.

4. Chattels

A lessee of a chattel hired for his own private use and leased to him on a commercial basis by the lessor may terminate the lease by giving at least 30 days’ notice expiring at the end of a three-month period of the lease. The lessor has no claim for compensation.

IV. Required form of notice for residential and commercial premises

1. In general

¹ Notice to terminate leases of residential and commercial premises must be given in writing.

² The landlord must give notice of termination using a form approved by the canton which informs the tenant how he must proceed if he wishes to contest the termination or apply for an extension of the lease.

2. Family residence

a. Notice given by the tenant

¹ Where the leased property serves as the family residence, one spouse may not terminate the lease without the express consent of the other.

² If the spouse cannot obtain such consent or it is withheld without good cause, he or she may apply to the court.

³ The same provisions apply mutatis mutandis to registered partners.¹

b. Notice given by the landlord

Notice of termination given by the landlord and any notification of a time limit for payment accompanied by a warning of termination in the event of non-payment (Art. 257d) must be served separately on the tenant and on his spouse or registered partner.

3. Void notice

Notice of termination is void if it does not conform to Articles 266l–266n.

P. Return of the object

I. In general

¹ At the end of the lease, the tenant or lessee must return the object in a condition that accords with its contractually designated use.

² Any clause whereby the tenant or lessee undertakes to pay compensation on termination of the lease is void except insofar as such compensation relates to possible damage.

II. Inspection of object and notification of tenant or lessee

¹ When the object is returned, the landlord or lessor must inspect its condition and immediately inform the tenant or lessee of any defects for which he is answerable.

² If the landlord or lessor fails to do so, he forfeits his claims save in respect of defects not detectable on customary inspection.

³ Where the landlord or lessor discovers such defects subsequently, he must inform the tenant or lessee immediately.

Q. Landlord’s special lien

I. Scope

¹ As security for rent for the past year and the current six-month period, a landlord of commercial premises has a special lien on chattels located on the leased premises and either used as fixtures or required for the use of the premises.

² The landlord’s special lien also extends to property brought onto the premises by a sub-tenant to the extent that he has not paid his rent.

³ Goods not subject to attachment by creditors of the tenant are not subject to the lien.

II. Objects belonging to third parties

¹ The rights of third parties to objects which the landlord knew or should have known do not belong to the tenant and to stolen, lost, missing or otherwise mislaid objects take precedence over the landlord’s special lien.

² Where the landlord learns only during the lease that objects brought onto the premises by the tenant are not the latter’s property, his lien on them is extinguished unless he terminates the lease as of the next admissible termination date.

III. Exercise of lien

¹ Where the tenant wishes to vacate the premises or intends to remove the objects located thereon, the landlord may, with the assistance of the competent authority, retain such objects as are required to secure his claim.

² Items removed secretly or by force may, with police assistance, be brought back onto the premises within ten days of their removal.

A. Unfair rent

I. General rule

Rents are unfair where they permit the landlord to derive excessive income from the leased property or where they are based on a clearly excessive sale price.

II. Exceptions

In particular, rents are not generally held to be unfair if:

a.

they fall within the range of rents customary in the locality or district;

b.

they are justified by increases in costs or by additional services provided by the landlord;

c.

in the case of a recently constructed property, they do not exceed the range of gross pre-tax yield required to cover costs;

d.

they serve merely to balance out a rent decrease previously granted as part of a reallocation of funding costs at prevailing market rates and they are set out in a payment plan made known to the tenant in advance;

e.

they serve merely to balance out the inflation on the risk capital;

f.

they do not exceed the levels recommended in master agreements drawn up by landlords’ and tenants’ associations or organisations representing similar interests.

B. Index-linked rent

An agreement to link rent to an index is valid only where the lease is contracted for at least five years and the benchmark is the Swiss consumer prices index.

C. Periodical rent increases

An agreement to increase the rent periodically by fixed amounts is valid only where:

a.

the lease is contracted for at least three years;

b.

the rent is increased no more than once a year; and

c.

the amount by which it is increased is fixed in francs.

D. Rent increases and other unilateral amendments by the landlord

¹ The landlord may at any time increase the rent with effect from the next termination date. He must give notice of and reasons for the rent increase at least ten days before the beginning of the notice period for termination using a form approved by the canton.

² The rent increase is void where:

a.

it is not communicated using the prescribed form;

b.

no reasons are given;

c.

notification of the increase is accompanied by notice to terminate or a threat of termination.

³ Paragraphs 1 and 2 also apply where the landlord intends to make other unilateral amendments to the lease to the detriment of the tenant, for example by reducing the services provided or adding new accessory charges.

E. Challenge to rent

I. Request for rent reduction

1. Initial rent

¹ Within 30 days of taking possession of the property, the tenant may challenge the initial rent as unfair within the meaning of Articles 269 and 269a before the conciliation authority and request said authority to order a reduction of the rent:

a.

if the tenant felt compelled to conclude the lease agreement on account of personal or family hardship or by reason of the conditions prevailing on the local market for residential and commercial premises; or

b.

if the initial rent required by the landlord is significantly higher than the previous rent for the same property.

² In the event of a housing shortage, the cantons may make it obligatory in all or part of their territory to use the form stipulated in Article 269d when contracting any new lease.

2. During the lease

¹ The tenant may challenge the rent as unfair and request its reduction as of the next termination date where he has good cause to suppose that, because of significant changes to the calculation basis and most notably a reduction in costs, the return derived by the landlord from the leased property is now excessive within the meaning of Articles 269 and 269a.

² The tenant must present his request for a rent reduction in writing to the landlord, who has 30 days in which to respond. Where the landlord does not accede to the request in full or in part or does not respond in good time, the tenant may apply to the conciliation authority within 30 days.

³ Paragraph 2 does not apply if the tenant is simultaneously challenging a rent increase and requesting a rent reduction.

II. Challenging rent increases and other unilateral amendments by the landlord

¹ Within 30 days of receiving notice of a rent increase, the tenant may challenge it before the conciliation authority as unfair within the meaning of Articles 269 and 269a.

² Paragraph 1 also applies where the landlord makes other unilateral amendments to the lease to the detriment of the tenant, in particular by reducing the services provided or adding new accessory charges.

III. Challenging index-linked rent

Without prejudice to the right to challenge the initial rent, a party may argue before the conciliation authority only that the rent increase or reduction requested by the other party is not justified by a corresponding change in the index.

IV. Challenging periodical rent increases

Without prejudice to the right to challenge the initial rent, the tenant may not challenge periodical rent increases.

F. Continued validity of lease during challenge proceedings

The existing lease remains in force without change:

a.

during conciliation proceedings, where the parties fail to reach agreement;

b.

during court proceedings, subject to provisional measures ordered by the court.

A. Notice open to challenge

I. In general

¹ Notice of termination may be challenged where it contravenes the principle of good faith.

² On request, reasons for giving notice must be stated.

II. Notice served by the landlord

¹ Notice of termination served by the landlord may be challenged in particular where it is given:

a.

because the tenant is asserting claims arising under the lease in good faith;

b.

because the landlord wishes to impose a unilateral amendment of the lease to the tenant’s detriment or to change the rent;

c.

for the sole purpose of inducing the tenant to purchase the leased premises;

d.

during conciliation or court proceedings in connection with the lease, unless the tenant initiated such proceedings in bad faith;

e.

within three years of the conclusion of conciliation or court proceedings in connection with the lease in which the landlord:

1.

was largely unsuccessful;

2.

withdrew or considerably reduced his claim or action;

3.

declined to bring the matter before the court;

4.

reached a settlement or some other compromise with the tenant;

f.

because of changes in the tenant’s family circumstances which do not give rise to any significant disadvantage to the landlord.

² Paragraph 1 let. e. is also applicable where the tenant can produce documents showing that he reached a settlement with the landlord concerning a claim in connection with the lease outside conciliation or court proceedings.

³ Paragraph 1 let. d. and e. are not applicable where notice of termination is given:

a.

because the landlord urgently needs the property for his own use or that of family members or in-laws;

b.

because the tenant is in default on his payments (Art. 257d);

c.

because the tenant is in serious breach of his duty of care and consideration (Art. 257f para. 3 and 4);

d.

as a result of alienation of the leased premises (Art. 261);

e.

for good cause (Art. 266g);

f.

because the tenant is bankrupt (Art. 266h).

B. Extension of the lease

I. Tenant’s entitlement

¹ The tenant may request the extension of a fixed-term or open-ended lease where termination of the lease would cause a degree of hardship for him or his family that cannot be justified by the interests of the landlord.

² When weighing the respective interests, the competent authority has particular regard to:

a.

the circumstances in which the lease was contracted and the terms of the lease;

b.

the duration of the lease;

c.

the personal, family and financial circumstances of the parties, as well as their conduct;

d.

any need that the landlord might have to use the premises for himself, his family members or his in-laws and the urgency of such need;

e.

the conditions prevailing on the local market for residential and commercial premises.

³ Where the tenant requests a second extension, the competent authority must also consider whether the tenant has done everything that might reasonably be expected of him to mitigate the hardship caused by the notice of termination.

II. Exclusion of extension

¹ No extension is granted where notice of termination is given:

a.

because the tenant is in default on his payments (Art. 257d);

b.

because the tenant is in serious breach of his duty of care and consideration (Art. 257f para. 3 and 4);

c.

because the tenant is bankrupt (Art. 266h);

d.

in respect of a lease expressly concluded for a limited period until refurbishment or demolition works begin or the requisite planning permission is obtained.

² As a general rule, no extension is granted where the landlord offers the tenant equivalent residential or commercial premises.

III. Length of extension

¹ A lease may be extended by up to four years in the case of residential premises and by up to six years for commercial premises. Within these overall limits, one or two extensions may be granted.

² Where the parties agree to an extension of the lease, they are not bound by a maximum duration and the tenant may waive a second extension.

IV. Continued validity of lease

¹ Either party may ask the court to modify the lease in line with changed circumstances when deciding on the lease extension.

² Where the lease is not varied in the decision on the lease extension, it remains in force during the extension period, subject to other means of variation envisaged by law.

V. Notice given during extension

Unless the decision on extension or the extension agreement stipulates otherwise, the tenant may terminate the lease:

a.

by giving one month’s notice expiring at the end of a calendar month in cases where the extension does not exceed one year;

b.

by giving three months’ notice expiring on an admissible termination date in cases where the extension exceeds one year.

C. Time limits and procedure¹

¹ A party wishing to challenge termination must bring the matter before the conciliation authority within 30 days of receiving the notice of termination.

² A tenant wishing to apply for a lease extension must submit his request to the conciliation authority:

a.

within 30 days of receiving the notice of termination, where the lease is open-ended;

b.

not later than 60 days before expiry of the lease, where it is of limited duration.

³ A tenant requesting a second extension must submit his request to the conciliation authority not later than 60 days before expiry of the first extension.

⁴ The procedure before the conciliation authority is governed by the CPO².³

⁵ Where the competent authority rejects a request made by the tenant relating to challenging termination, it must examine ex officio whether the lease may be extended.⁴

D. Family residence

¹ Where the leased property serves as the family residence, the tenant’s spouse is likewise entitled to challenge the termination, request a lease extension and exercise the other rights accruing to the tenant in the event that notice of termination is served.

² Agreements providing for an extension of the lease are valid only if concluded with both spouses.

³ The same provisions apply mutatis mutandis to registered partners.¹

E. Sub-letting

¹ The provisions of this Chapter apply to sub-leases provided the principal lease has not been terminated. A sub-lease may be extended only within the duration of the principal lease.

² Where the main purpose of the sub-lease is to circumvent the provisions governing protection against termination, the sub-tenant is granted such protection without regard to the principal lease. If the principal lease is terminated, the landlord is subrogated to the rights of the tenant in his contract with the sub-tenant.

F. Mandatory provisions

¹ The tenant may waive the rights conferred on him by the provisions of this Chapter only where this is expressly envisaged.

² All agreements to the contrary are void.

A. Definition

A loan for use is a contract whereby the lender undertakes to make an object available free of charge to the borrower for the latter’s use and the borrower undertakes to return it to him after having made use of it.

B. Effect

I. Borrower’s right of use

¹ The borrower may make use of the loaned object only for the purpose stipulated in the contract or, in the absence of any stipulation, for its normal purpose or the purpose dictated by its nature.

² He is not entitled to grant use of the object to a third party.

³ A borrower acting in breach of these provisions is liable even for accidental damage unless he can prove that the object would have been affected in any event.

II. Maintenance costs

¹ The borrower bears the ordinary costs of maintenance and, in the case of loaned animals, in particular the costs of feeding them.

² He is entitled to reimbursement of extraordinary expenses he has been obliged to incur for the lender’s benefit.

III. Liability of joint borrowers

Persons who have jointly borrowed a single object are jointly and severally liable for it.

C. Termination

I. Loan for designated use

¹ Where the loan for use is open-ended, it ends as soon as the borrower has made use of the object as agreed or on expiry of the period in which such use could have been made of it.

² The lender is entitled to reclaim the object before that time if the borrower uses it for a purpose contrary to the agreement, if he damages it, if he permits a third party to use it or if unforeseen developments occur which leave the lender in urgent need of the object.

II. Loan for non-designated use

Where the contract stipulates neither the purpose nor the duration of the loan, the lender may reclaim the loaned object whenever he sees fit.

III. Death of the borrower

The loan for use ends on the death of the borrower.

A. Definition

A fixed-term loan is a contract whereby the lender undertakes to transfer the ownership of a sum of money or of other fungible goods to the borrower, who in return undertakes to return objects of the same quantity and quality to him.

B. Effect

I. Interest

1. Liability for interest

¹ In normal dealings, interest is payable on a fixed-term loan only where this has specifically been agreed.

² In commercial transactions, interest is payable on fixed-term loans even where this has not been expressly agreed.

2. Rules governing interest

¹ Where the interest rate is not stipulated in the contract, it is presumed to be the customary rate for loans of the same type at the time and place that the fixed-term loan was received.

² Unless otherwise agreed, the promised interest is payable annually.

³ Any prior agreement that interest will be added to the loan principal and become subject to further interest is void, subject to standard business practices and in particular those of savings banks for calculating interest on current accounts and similar commercial instruments under which the calculation of compound interest is customary.

II. Prescriptive period for claims for delivery and acceptance

The borrower’s claim for delivery and the lender’s claim for acceptance of the fixed-term loan prescribe six months after the date on which the other party defaults.

III. Insolvency of the borrower

¹ The lender may refuse to hand over the fixed-term loan if the borrower becomes insolvent after entering into the contract.

² The lender has the right to refuse delivery even if insolvency occurred before the contract was concluded but he only subsequently became aware of it.

C. Goods in lieu of money

¹ Where the borrower receives securities or goods rather than the agreed sum of money, the amount of the fixed-term loan is deemed to be the current or market price of the securities or goods concerned at the time and place of delivery.

² Any agreement to the contrary is void.

D. Timing of repayment

Where a fixed-term loan contract does not stipulate the repayment date or the period of notice to terminate the contract or the expiry of the contract at any time on first request, the borrower must repay the loan within six weeks of the first request by the lender.

A. Definition and conclusion

I. Definition

¹ By means of an individual employment contract, the employee undertakes to work in the service of the employer for a limited or unlimited period and the employer undertakes to pay him a salary based on the amount of time he works (time wage) or the tasks he performs (piece work).

² A contract whereby an employee undertakes to work regularly in the employer’s service by hours, half-days or days (part-time work) is likewise deemed to be an individual employment contract.

II. Creation

¹ Except where the law provides otherwise, the individual employment contract is not subject to any specific formal requirement.

² It is deemed to have been concluded where the employer accepts the performance of work over a certain period in his service which in the circumstances could reasonably be expected only in exchange for salary.

³ Where an employee performs work in good faith for the employer under a contract which is subsequently found to be invalid, both parties must discharge their obligations under the employment relationship as if the contract had been valid until such time as one party terminates the relationship on grounds of the invalidity of the contract.

B. Obligations of the employee

I. Duty to work in person

The employee must carry out the contractually assumed tasks in person, unless otherwise required by agreement or the circumstances.

II. Duty of care and loyalty

¹ The employee must carry out the work assigned to him with due care and loyally safeguard the employer’s legitimate interests.

² He must use the employer’s machinery, work tools, technical equipment, installations and vehicles in the appropriate manner and treat them and all materials placed at his disposal for the performance of his work with due care.

³ For the duration of the employment relationship the employee must not perform any paid work for third parties in breach of his duty of loyalty, in particular if such work is in competition with his employer.

⁴ For the duration of the employment relationship the employee must not exploit or reveal confidential information obtained while in the employer’s service, such as manufacturing or trade secrets; he remains bound by such duty of confidentiality even after the end of the employment relationship to the extent required to safeguard the employer’s legitimate interests.

III. Disclosure and hand-over of benefits received and work produced

¹ The employee is accountable to his employer for everything, and in particular sums of money, he receives from third parties in the performance of his contractual activities and must hand it over to the employer immediately.

² He must likewise immediately hand over to the employer all work produced in the course of his contractual activities.

IV. Overtime

¹ If more hours of work are required than envisaged under the employment contract or provided for by custom, standard employment contract or collective employment contract, the employee is obliged to perform such overtime to the extent that he is able and may conscionably be expected to do so.

² In consultation with the employee, the employer may compensate him within an appropriate period for the overtime worked by granting him time off in lieu of at least equal length.

³ Where the overtime is not compensated by time off in lieu and unless otherwise agreed in writing or under a standard employment contract or collective employment contract, the employer must compensate the employee for the overtime worked by paying him his normal salary and a supplement of at least one-quarter thereof.

V. Compliance with general directives and instructions

¹ The employer is entitled to issue general directives and specific instructions regarding the performance of the work and the conduct of employees in his business or household.

² The employee must comply in good faith with the employer’s general directives and specific instructions.

VI. Employee’s liability

¹ The employee is liable for any damage he causes to the employer whether wilfully or by negligence.

² The extent of the duty of care owed by the employee is determined by the individual employment contract, taking due account of the occupational risk, level of training and technical knowledge associated with the work as well as the employee’s aptitudes and skills of which the employer was or should have been aware.

C. Obligations of the employer

I. Salary

1. Type and amount in general

¹ The employer must pay the agreed or customary salary or the salary that is fixed by standard employment contract or collective employment contract.

² Where the employee lives in the employer’s household, his board and lodgings are part of the salary unless agreement or custom provide otherwise.

2. Share in the business results

¹ Where the employee is by contract entitled to a share in the profits, the turnover or the results of the business expressed in some other manner, such share is calculated on the basis of the results for the financial year as defined by statutory provision and generally recognised commercial principles.

² The employer must furnish all the necessary information to the employee or, in his stead, to an expert designated by both employer and employee or appointed by the court and must grant the employee or the expert such access to the accounts as is required for verification of the business results.

³ In addition, where a share in the profits of the business has been agreed, a copy of the profit and loss account must be made available to the employee on request.¹

3. Commission

a. Entitlement

¹ Where the employee is by contract entitled to commission on particular transactions, his entitlement is established as soon as the transaction with the third party enters into force.

² In the case of transactions involving performance in instalments and insurance policies, it may be agreed in writing that such entitlement arises as each instalment falls due or is performed.

³ The entitlement to commission lapses subsequently if through no fault of his the employer fails to carry out the transaction or the third party fails to fulfil his obligations; in the event of only partial performance, the commission is reduced proportionately.

b. Statement

¹ Where the terms of the contract do not require the employee to draw up a statement of commission due to him, on each date on which commission falls due, the employer must provide him with a written statement including a breakdown of the transactions on which it is payable.

² The employer must furnish all the necessary information to the employee or, in his stead, to an expert designated by both employer and employee or appointed by the court, and must grant the employee or the expert such access to the books of account or supporting documents as is required for verification of the commission statement.

4. Bonuses

¹ Where the employer pays a bonus over and above the salary on particular occasions, such as at Christmas or the end of the financial year, the employee is entitled to such bonus where it is contractually stipulated.

² If the employment relationship ends prior to the occasion on which the bonus is paid, the employee is entitled to a pro rata bonus where the contract so provides.

II. Payment of salary

1. Payment terms and periods

¹ Unless shorter periods or other payment terms have been agreed or are customary and unless otherwise provided by standard employment contract or collective employment contract, the salary is paid to the employee at the end of each month.

² Unless a shorter payment period has been agreed or is customary, commission is paid at the end of each month; however, where execution of a transaction takes more than half a year, the due date of the commission payable on it may be deferred by written agreement.

³ Shares in business results are payable as soon as the results are determined, but not later than six months after the end of the financial year.

⁴ If an employee is in hardship and requests an advance against salary due for work already performed, the employer must advance such sum as may equitably be expected of him.

2. Withholding of salary

¹ To the extent provided for by individual agreement, custom, standard employment contract or collective employment contract, the employer may withhold part of the salary.

² The amount withheld on any given payment date must not exceed one-tenth of the salary due and the cumulative amount withheld must not exceed the salary due for one week’s work; however, a higher amount may be withheld under the terms of a standard employment contract or collective employment contract.

³ Unless otherwise provided by individual agreement, custom, standard employment contract or collective employment contract, the salary withheld is deemed to be security for the employer’s claims arising from the employment relationship rather than a contractual penalty.

3. Salary protection

¹ Unless otherwise provided by agreement or custom, the salary must be paid to the employee in legal tender during working hours; a written salary statement must be provided to the employee.

² Where the employer holds claims against the employee, he may set them off against the employee’s salary claim only to the extent that such salary claim is subject to attachment, although claims for compensation of intentional damage may be set off without restriction.

³ Any agreement whereby the salary must be used for the employer’s benefit is void.

III. Salary in the event work is not possible

1. Failure by employer to accept performance

¹ Where the employer is at fault in preventing performance of the work or fails to accept its performance for other reasons, he remains obliged to pay the salary but the employee is not obliged to make up the time thus lost.

² The salary payable in this event is reduced by any amounts that the employee saved as a result of being prevented from working or that he earned by performing other work or would have earned had he not intentionally foregone such work.

2. Employee prevented from working

a. General principle

¹ Where the employee is prevented from working by personal circumstances for which he is not at fault, such as illness, accident, legal obligations or public duties, the employer must pay him his salary for a limited time, including fair compensation for lost benefits in kind, provided the employment relationship has lasted or was concluded for longer than three months.

² Subject to longer periods being fixed by individual agreement, standard employment contract or collective employment contract, the employer must pay three weeks’ salary during the first year of service and thereafter the salary for appropriately longer periods depending on the duration of the employment relationship and the particular circumstances.

³ The employer has the same obligation in the event that an employee becomes pregnant.¹

⁴ A written agreement, standard employment contract or collective employment contract may derogate from the above provisions provided it gives the employee terms of at least equivalent benefit.

b. Exceptions

¹ If the employee has compulsory insurance prescribed by law against the financial consequences of being prevented from working by personal circumstances for which he is not at fault, the employer is not obliged to pay his salary where the insurance benefits for that limited period cover at least four-fifths of the salary income lost over that period.

² Where the insurance benefits are less, the employer must pay the difference between them and four-fifths of the salary.

³ Where the insurance benefits are paid only after a waiting period, the employer must pay at least four-fifths of the salary during that period.¹

IV. Assignment and pledge of salary claims

¹ The employee may assign or pledge his future salary claims as security for maintenance or support obligations under family law only to the extent that such claims are subject to attachment; at the request of an interested party the debt collection office at the employee’s domicile determines the amount that is not subject to attachment in accordance with Article 93 of the Federal Act of 11 April 1889² on Debt Collection and Bankruptcy.

² Any assignment or pledge of future salary claims as security for other obligations is void.

V. Piece work

1. Work allocation

¹ Where by contract the employee carries out piece work for a single employer, the latter must allocate a sufficient quantity of work to him.

² The employer may allocate time work to the employee where through no fault of his own the employer is unable to allocate piece work as contractually agreed or where time work is temporarily required for operational reasons.

³ If the rate of pay for such time work is not fixed by individual agreement, standard employment contract or collective employment contract, the employer must pay the employee the average salary he previously earned on a piece work basis.

4 An employer who is unable to allocate sufficient piece work or time work remains nonetheless obliged pursuant to the provisions governing failure to accept performance to pay the salary that he would have paid for time work.

2. Piece work rates

¹ Where by contract the employee carries out piece work, the employer must inform him of the applicable rate of pay before the start of each task.

² Should the employer fail to give such information, he must pay the going rate for identical or comparable work.

VI. Work tools, materials and expenses

1. Work tools and materials

¹ Unless otherwise provided by agreement or custom, the employer provides the employee with the tools and materials that the work requires.

² Where the employee himself supplies such tools or materials with the employer’s consent, he is entitled to appropriate compensation unless otherwise provided by agreement or custom.

2. Expenses

a. In general

¹ The employer must reimburse the employee for all expenses necessarily incurred in the performance of the work and, in the case of work done off the employer’s premises, for his necessary living expenses.

² An individual agreement, standard employment contract or collective employment contract may provide that such expenses be reimbursed in the form of a fixed sum, such as a per diem or a weekly or monthly allowance, provided that this covers all necessary expenses.

³ Any agreement whereby the employee must bear all or part of such necessary expenses is void.

b. Motor vehicle

¹ Where with the employer’s consent the employee uses his own motor vehicle or a vehicle supplied by the employer for business purposes, he is entitled to reimbursement of the normal running and maintenance costs incurred in the performance of his work.

² Where with the employer’s consent the employee uses his own motor vehicle for work purposes, the employee is also entitled to reimbursement of the tax on the vehicle and the premiums for third-party liability insurance as well as appropriate compensation for wear and tear, to the extent that the vehicle is used for business purposes.

³ ...¹

c. Payment dates

¹ Expenses are reimbursed when the salary is paid based on the statement of expenses submitted by the employee, unless a shorter period has been agreed or is customary.

² Where an employee regularly incurs expenses in the performance of his contractual obligations, the employer must pay him an advance against such expenses at regular intervals but not less frequently than every month.

VII. Protection of the employee’s personality rights

1. In general

¹ Within the employment relationship, the employer must acknowledge and safeguard the employee’s personality rights, have due regard for his health and ensure that proper moral standards are maintained. In particular, he must ensure that employees are not sexually harassed and that any victim of sexual harassment suffers no further adverse consequences.¹

² In order to safeguard the personal safety, health and integrity of his employees he must take all measures that are shown by experience to be necessary, that are feasible using the latest technology and that are appropriate to the particular circumstances of the workplace or the household, provided such measures may equitably be expected of him in the light of each specific employment relationship and the nature of the work. ²³

2. Shared household

¹ Where the employee lives in the employer’s household, the employer must provide adequate board and appropriate lodgings.

² If the employee is prevented from working through no fault of his own by sickness or accident, the employer must provide care and medical assistance for a limited period, this being three weeks within the first year of service and thereafter for appropriately longer periods depending on the duration of the employment relationship and the particular circumstances.

³ The employer has the same obligations in the event that an employee is pregnant or gives birth.

3. When handling personal data

The employer may handle data concerning the employee only to the extent that such data concern the employee’s suitability for his job or are necessary for the performance of the employment contract. In all other respects, the provisions of the Federal Act of 19 June 1992² on Data Protection apply.