20 questions about contracts
1. What is a contract, and why is it essential for businesses?
A contract is a formal agreement between two or more parties that establishes mutual rights and obligations. Contracts are crucial for defining the terms and conditions of a relationship, serving as proof against third parties, and as a tool for enforcing obligations when voluntary compliance is absent. Template contracts available on the Docs & Deeds website offer legal protection by including detailed provisions.
2. Does a contract always have to be written to be valid?
No. In some cases, verbal contracts are valid and can be enforced, such as those for the purchase of low-value goods. However, the law requires written contracts to have probative value in court whenever their value exceeds the minimum threshold of 250 lei (e.g., real estate sales contracts, long-term lease agreements must be in writing and, where applicable, before a notary).
There are also situations where verbal contracts are effective because the parties are in circumstances that prevent them from signing written contracts— for example, contracts made between close relatives may be valid even without a written document.
Therefore, a written contract is always preferable because it can prove the agreement between the parties and with third parties.
3. What are the mandatory elements of a contract?
All clauses of a contract are mandatory, from the main content to the annexes and addendums. A contract must include:
Identification of the parties (names, ID numbers, or company details).
The subject of the contract (what is being exchanged).
Terms and conditions (duration, payment deadlines, delivery).
Obligations of each party.
Penalties for non-compliance.
Termination conditions.
Missing mandatory elements can render a contract null, while incomplete clauses can lead to disputes or misinterpretations.
4. Is a contract valid without one party’s signature?
No. A signature represents consent to the contract's terms. Without it, the contract lacks legal effectiveness. For electronic documents, compliance with electronic signature regulations is required. Only qualified electronic signatures issued by authorized operators in Romania are equivalent to handwritten signatures, while other types of electronic signatures (advanced or simple) has variable effects, depending on the agreement of the parties and circumstances.
5. How can I verify if a contract is legal?
To verify the legality of a contract, you must ensure that:
It complies with the applicable legislation.
The Civil Code is the law governing contracts as a whole, while various special laws may impose specific validity conditions depending on the type of contract you are using. When you download contract templates from Docs & Deeds, you benefit from the fact that specialized lawyers have already checked compliance with the applicable laws.
It has been signed by all the parties involved.
It is not enough to have an agreed contractual form via email or message; the contract must be signed by the parties in the forms permitted by law: handwritten signature or electronic signature. Many businesses face contractual issues because they fail to ensure that all the contracts they use are properly signed by the contractual partner.
An unsigned contract is often equivalent to a non-existent contract, as it cannot be proven against third parties or in commercial disputes. Furthermore, the signed form of contracts ensures access to a series of effective court procedures for recovering contractual debts, such as a payment order.
It does not contain abusive clauses.
In relationships between professionals and consumers, the imposition of unreasonable obligations unilaterally by the professional may lead to the annulment of certain contractual clauses or even the entire contract.
Consulting a lawyer is always recommended when you want to ensure compliance with the law.
6. Can contract terms be modified after signing?
Yes, contracts can be amended, but only with the express agreement of both parties. Changes are made through an addendum to the contract, which becomes an integral part of the contract. The additional agreement must expressly specify which clauses are being modified and must be signed by all the parties involved.
In exceptional cases, one party may have the right to unilaterally modify the contract or certain contractual clauses. For example:
In employment contracts: the employer may unilaterally adjust certain aspects (e.g., working hours) if there are objective reasons, but cannot unilaterally modify the salary or other fundamental rights of the employee.
In service supply contracts: electricity or telecommunications providers may modify tariffs but must provide prior notifications and the option to terminate the contract if the customer does not agree.
In commercial contracts: in a partnership between two companies, one party may adjust prices if the raw material becomes significantly more expensive, but must justify the increase.
7. What happens if one party breaches the contract?
The affected party may:
Claim damages.
Terminate the contract if non-performance is significant.
Take legal action for enforcement.
8. Who can sign a contract?
Any adult with full legal capacity can enter contracts. Minors or individuals with limited capacity may require a guardian's consent before executing contracts. Legal entities can enter contracts through their representatives (e.g., directors).
9. How can a contract terminate?
Termination of contracts occurs according to the contractual terms. All Docs & Deeds contract templates include clauses regarding contract termination to ensure transparency between the parties.
Termination by reaching the term
Termination by reaching the term of a contract is automatic and occurs when the contractual term agreed by the parties expires. The contractual term is established at the time of signing the contract and can be a fixed one (e.g., 1 year from signing) or one that depends on the completion of certain performances (e.g., the contract terminates upon delivery of goods).
Unilateral termination of the contract by one party
A party may decide on its own to terminate the contract when it has a right of unilateral termination, as provided by law or the contract itself. Usually, unilateral termination operates based on prior notification sent to the other party, along with a notice period.
Termination of contracts by rescission / resolution
When contractual provisions are violated, the injured party may terminate the contract by rescission / resolution and may request compensation for the damages suffered. Rescission / resolution is a sanction applicable when a party breaches the contract and operates under the conditions agreed upon contractually (either automatically or through the initiation of a court action).
Termination of contracts due to the intervention of external factors
In civil law, the principle of pacta sunt servanda ("contracts must be respected") governs contractual relationships. However, there are exceptions, such as:
Unforeseeability: if, after the conclusion of the contract, unforeseeable events occur (e.g., economic crises, major legislative changes) that make the performance of the contract excessively burdensome for one of the parties, the affected party may request the adaptation of the contract to the new circumstances or even its termination.
Force majeure: events such as natural disasters, armed conflicts, or other uncontrollable situations that affect the performance of the contract may justify the adjustment of certain clauses to reflect the new realities or the termination of the contract affected by their development.
10. What is an addendum to a contract?
An addendum is a subsequent and supplementary document to a contract, used to modify or supplement the original clauses of the agreement. The addendum must be signed by all parties to the initial contract and clearly specify the changes it introduces. The addendum becomes an integral part of the contract it modifies and is binding on the signing parties.
11. What is the purpose of penalty clauses?
Penalty clauses are designed to deter non-performance of obligations and compensate the affected party. They specify a fixed or proportional amount to be paid in the event of a delay or other breach of the contract. In commercial contracts, it is common for delay penalties to be set according to the legal interest rate, based on the rates published by the National Bank.
12. What is a confidentiality clause?
A confidentiality clause requires the parties not to disclose sensitive information obtained during the execution of the contract. It is commonly found in collaboration agreements, service contracts, supply contracts, agreements involving creative activities (such as software development contracts, content creation contracts), as well as in commercial transactions (e.g., share purchase agreement, domain name transfers, etc.).
When the parties enter into a separate contract to guarantee confidentiality, they will use a non-disclosure agreement (NDA) (either unilateral or bilateral model).
13. What is force majeure, and how does it affect contracts?
Force majeure is an unforeseeable and uncontrollable event (e.g., earthquake, pandemic) that can exempt the parties from liability for non-performance of obligations. The contract may include a clause that defines the conditions under which force majeure applies or may be governed by the general force majeure regime provided by the Civil Code.
14. What is a service contract?
The service agreement is a contract in which one party (the service provider) agrees to perform a service for the benefit of the other party (the beneficiary). It includes details such as the description of the services, payment terms, and intellectual property rights, if applicable. Service agreements can vary greatly, depending on the type of services being provided.
15. What are the risks of signing a contract without reading it?
Signing a contract without reading it beforehand can result in accepting unreasonable obligations or unfavorable terms. In legal matters, your signature is viewed as full acceptance of the contract's terms, even if you haven't reviewed the document.
This often happens with standardized contracts from providers of essential services (e.g., mobile network operators) or online retailers. These contracts are binding on the consumer, regardless of whether they have read or understood the terms before signing. Disputing such contracts is only possible by filing a lawsuit.
16. Is it effective to use a pre-drafted contract template?
It depends on the source of the contract template. We do not recommend using contract templates from unverified websites or from friends, as they are often incomplete and can cause significant enforcement issues.
For verified sources by lawyers, you can find professional contract templates on Docs & Deeds.
17. How can I protect my rights in a contract?
Ensure that:
The rights and obligations of both parties are clearly defined and align with the expected outcomes of the contract.
The contract provides clear details on the subject matter and how it will be fulfilled.
Delivery deadlines and performance terms are clearly specified.
The contractual price and payment terms are accurately outlined, leaving no room for ambiguity.
Clauses for penalties and compensation are included in the event of non-performance or delayed performance.
A dispute resolution clause is incorporated into the contract.
The contract complies with all legal formalities to ensure its validity and enforceability.
18. What is a penalty clause?
A penalty clause is a clause that sets a sum of money one party must pay to the other in the event of non-performance of the contract. The penalty clause helps the parties to assess in advance the damages one party may suffer if the other party fails to perform the contract as agreed, thus eliminating the need to prove the extent and existence of the damages.
Penalty clauses are especially useful in situations where the damages are difficult to quantify (e.g., violations of confidentiality clauses).
19. What is an assignment contract?
A transfer agreement is a contract in which one party (the assignor) transfers rights and obligations to another third party (the assignee). It is equivalent to a sale agreement and is commonly used in the sale of receivables or the transfer of intellectual property.
Download instantly: model for transfer of shares, model for transfer of domain name.
20. How do I identify an abusive clause?
A clause is considered abusive if:
it creates a significant imbalance between rights and obligations.
it is imposed without negotiation by the professional (the party in a more favorable contractual position, allowing them to impose terms on the other party).
it violates rights provided by law (e.g., excessive limitation of one party's liability).
Abusive clauses can be challenged in individual or collective actions.
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