What to look for in contracts?

With the following post, we begin a new series of articles in which we will draw the attention of entrepreneurs to important provisions in contracts, and which contractors often do not pay much attention to, especially if they do not use ongoing legal services.

The conclusion of each contract (even with the most trusted contractor) is associated with the risk of a dispute that may end up in the courtroom. The question then arises which court will decide such a dispute.

Court with jurisdiction over the dispute

The basic principle expressed in the Code of Civil Procedure is that an action against a legal person or other entity that is not a natural person is brought according to the place of their registered office.

Example: Company A based in Gdansk is suing Company B based in Katowice. Therefore, one of the Katowice courts will be competent.

On the other hand, an action to conclude a contract, to determine its content, to amend a contract, and to determine the existence of a contract, to enforce, terminate or cancel a contract, as well as for damages due to non-performance or improper performance of a contract can be brought before the court of the place of performance.

The place of performance of the contract is considered to be the place of performance characteristic of contracts of the type in question, in particular in the case of:

(a) sale of movable goods – the place to which the goods, in accordance with the contract, were or were to be delivered;

(b) provision of services – the place where the services under the contract were or were to be provided.

Example: Company A based in Wrocław was to deliver computers to Company B. Bialystok was indicated as the place of delivery. Therefore, the court in Bialystok will be competent.

As can be seen from the above examples, very often companies will have to bring court disputes in courts far away from their registered office. Can it be avoided?

Indication of the competent court in the text of the contract

The parties may agree in writing (in practice it is most often done in the contract) to submit to the court of first instance, which according to the law has no territorial jurisdiction, a dispute that has already arisen or disputes that may arise in the future from a given legal relationship. This court will then have exclusive jurisdiction unless the parties have agreed otherwise or if the claimant has not filed a claim in electronic writ-of-payment proceedings. The parties may also limit, by written agreement, the claimant’s right to choose between several courts competent for such disputes.

The above means that, in fact, the parties can choose any court to settle their dispute.

Example: Company A is based in Krakow and Company B in Szczecin. In the agreement, the parties agreed that any disputes would be settled by the court in Rzeszów.

It is therefore always worth paying attention to whether the contract indicates the court competent to hear the case. Most often, however, the party indicates the court competent for its registered office, which can be a great difficulty for the other party (among others due to the large distance).

Author:

Rafał Drzewiecki

Lawyer, Mediator

He specializes in providing legal assistance to natural persons. He attaches great importance to trying to resolve disputes amicably, including in criminal cases. He realizes his professional career in criminal law, because he served his legal training under the supervision of an attorney specializing in this field. He is particularly interested in post-penitentiary issues: the system of electronic supervision, breaks in serving the prison sentence, conditional early release.

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