Abstract
The new Hungarian Civil Code - similarly to the Vienna Convention and the Principles of European Contract Law - regulates the so called contingency contract. A contingency contract is a special way of calculating damages. A contract is a contingency contract if the obligee replaces a quantity of goods not performed to him due to the debtor's breach of contract. The obligee may enter into a contingency contract in the event of the impossibility or withholding of performance or in the event of a delay giving rise to a right of termination. Contingency contracts are concluded either for purchase or for sale.
Highlights
The new Hungarian Civil Code – to the United Nations Convention on Contracts for the International Sale of Goods and the Principles of European Contract Law – regulates the contingency contract, which has been regularly applied in the commercial life and consistently recognized in the practice of the courts even before the Civil Code
One of the most basic conditions for compensation based on a contingency contract is a breach of contract by the obligor, a breach of contract which renders the obligee’s interest in performance to non-existent
One of the most basic conditions for compensation based on a contingency contract is a breach of contract by the obligor, which results in the obligee not being interested in the performance of the obligor anymore
Summary
The new Hungarian Civil Code (hereinafter: Civil Code) – to the United Nations Convention on Contracts for the International Sale of Goods (hereinafter: Convention) and the Principles of European Contract Law (hereinafter: Principles) – regulates the contingency contract, which has been regularly applied in the commercial life and consistently recognized in the practice of the courts even before the Civil Code (see for example the court decision BH2004. 191). Article 75 of the Convention states, that if the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under Article 74. Section 6:141 of the Civil Code states, that the obligee – if he withdrew from or terminated the contract – shall be entitled to conclude a contingency contract to achieve the objective of the original contract, and may demand from the obligor to cover the difference between the contract price and the price quoted in the contingency contract, and the costs arising in connection with the conclusion of the contingency contract, under the principle of compensation of damages. The obligor will be liable to the debtor in accordance with the general rules
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