Contract Formation

One of the fundamental differences between the common law and the civil code system is the different ways that both legal systems approach contracts, their implementations and the terms and conditions.

Romania being a code law country has a developed contract law contained in the Romanian Commercial Code and the Romanian Commercial Procedure Code. Both codes set out in detail what terms are to be included in a contract and how they are to be interpreted. This means that in many cases lawyers are not consulted in the preparation drafting and completion of complicated agreements. If one of the parties is not from Romania this can lead to difficulties and produce contracts which have effects that the parties did not contemplate.

Even now after nearly thirty years after the fall of Ceausescu communism old habits die hard. Companies and their partners produce their own contracts with their own individual terms and conditions. As these contracts may cover very simple matter, they believe the use of lawyers is not required. Even now many people and businesses see lawyers as a hinderance, and they feel that they can deal with matters quicker and better than a lawyer.

In the local context sometimes, this is true; the European Union and the body of law it has produced, and the European Court of Justice decisions have however changed this simplistic approach. Both legal systems provide for the theory that every citizen is deemed to know the law. The Code system is the personification of this rules as the codes are supposed to cover all eventualities and circumstances. This was fine one hundred and even fifity years ago but with the advent of modern technology the world and therefore the application of law has changed. Unfortunately, in many cases the world is many years ahead of the law and the law does not cover the new reality. This means that the old law prevails.

The common law seeks to cover this situation using precedents and in some cases equity but even so it can be behind the times.

Further, how can a small businessman sat in Arad know the decisions directives and regulations issued by Brussels. Read the court decisions and also know the rules and laws in Romania which are often badly thought out drafted and can conflict with the decisions of the EU and the courts.
As a lawyer I welcome documents drafted by clients as often they miss important matters which need to be covered. The only problem is that such documents are produced and shown to the lawyer after the event.

My advice is to tell the client to write down with the other party what they want and then for a lawyer to review what they have covered. Often, we will raise matters which upon reflection they may consider are important.

One cannot blame the clients for their lack of knowledge of European law and its impact. In many cases though a review by the lawyer of EU laws and regulations is money well spent. There are many law firms now based in Brussels and in the wider European contact who specialize not only in the “big cases” but in the more mundane cases which affect the day to day life of business in Romania. Such firms are very happy to co-operate with local law firms and pass on their knowledge and expertise.

The conclusion of all this, is that clients who draft their own legal documents do so at their own risk. In many cases there will be no consequences, but it is those other cases that matter. The practice of law in Romania so far as business law is concerned is now moving away from a lawyer who will know everything to lawyers who get together as a firm to pool their knowledge and expertise to cover the many aspects of the law which the modern business world requires.

The unprecedented number pf lawyers who passed the recent bar exam does beg the further question as to how well qualified these new lawyers are and will they get the necessary experience before being approached to advise a company on a corporate matter. Perhaps ease pf life for practitioners has been sacrificed for the quality of training that they will receive. The practice of law is not only in court but also in advising clients how to organize their businesses so that they do not end up in Court.

About Nicholas S Hammond

Nicholas is an English solicitor who has been practising in Romania since 1990. He has been a partner in a number of law firms in Romania as the principal partner. Hammond and Associates trading as Hammond Partnership is the culmination of many years experiance.

Leave a Reply

Your email address will not be published. Required fields are marked *