The legislative savoir vivre

Later this month, several new changes will be made1 to the Polish Civil Code, affecting among other things, the methods of concluding agreements, the concept of the enterprise and the entrepreneur, and the commercial powers of attorney (proxy)

Up until now, an agreement could only be executed once an offer was accepted by an offeree. Article 69 of the Civil Code provides for a unique form of acceptance. Namely, that in exceptional circumstances one may accept an offer simply by proceeding with the performance of the agreement to which it refers.
How will a similar situation be regarded after September 25th, under new Article 68 of the Civil Code? If an entrepreneur receives an offer from a person with whom he/she has a permanent business relationship, which proposes entering into an agreement that falls within the scope of that relationship, the lack of a prompt reply to an offer will be tantamount to acceptance. If a contractor receives an offer concerning, for example, refurbishment work from an employer for whom he/she carries out numerous contracts, and then fails to reply, an agreement will be deemed to have been concluded! Consequently, an employer may claim damages against a contractor for any damage incurred as a result of untimely performance, for example. As the damage may be significant, it is definitely more economical to reply to offers on a regular basis.

Amendment offer
The "Amendment offer" is a new concept in Polish law and at the moment the counter-party may adapt our offer (in which case an agreement will be deemed to have been executed) or propose its own terms to us (thus creating a new offer). In the latter case, we may reject the new offer or accept it (for which our consent will be needed). From September 25th 2003, new Article 68 of the Civil Code will change the situation. According to that Article, a reply which "does not substantially change" the original offer, will result in the conclusion of an agreement (in which the parties will be bound by the terms of the amendment offer). To void that, the author of the original offer must promptly object to the new contract terms. Therefore, if a building contractor receives an offer for refurbishment works, sends out a letter of acceptance but at the same time raises the price by, 0.5%, we must reply immediately, otherwise we will have to meet the contractor's demands.
It is certainly of key importance to determine whether the modification of the original offer "changes its content substantially". No clear assessment criteria are available at the moment, and one can only hope that whey will be developed as the courts begin to deal with such cases.

Less regime is not necessarily better
It is usually easy to distinguish a contract offer from a regular letter. As opposed to an offer, in day-to-day correspondence, one may write about an intention to enter into an agreement on certain terms to be agreed in the future, for example after conducting negotiations or agreeing certain parameters in more detail. According to the hitherto applicable Civil Code provisions, in order to enter into an agreement whereby a party undertakes to enter into another agreement in the future (a "preliminary agreement"), it is necessary to determine the essential conditions and the deadline for executing the future agreement ("final agreement"). The situation was usually clear: a letter could in no way be interpreted as an offer to enter into a preliminary agreement, unless it specified a deadline for entering into the final agreement, in addition to setting out the terms thereof. This requirement will be lifted as of September 25th. Even though the change gives parties more freedom, it also implies a certain risk, i.e. a seemingly casual business letter may be recognised as an offer to enter into a preliminary agreement. Consequently, the recipient may immediately accept the "offer", and require the other party to enter into the final agreement, and he will have the right to do that.

Written agreements
From September 25th, it will be no longer be necessary to have a written agreement in professional business dealings. This change may have significant consequences. One may easily imagine a situation where, after agreeing the business terms, one of the parties decides that the agreement has already been executed on the terms and conditions provided for in the Civil Code and proceeds to perform it, whereas the other party changes its mind and no documents will eventually be signed. If the matter ends up in court, the judges will analyse the course of the negotiations, the correspondence and even gestures made by the parties who attended the meetings, and deliberate on that basis whether an agreement was concluded or not. Whatever conclusion they reach, one party will suffer losses. This situation may be easily avoided. All one needs to remember is to state in the correspondence that all arrangements are subject to contract. In an ideal world, parties could even sign a protocol of confirming the business terms, and state that the parties intend to continue their negotiations in order to sign a written agreement.

1These will be introduced by the Act Amending the Civil Code and Certain Other Legislation, dated 14 February 2003.

Tomasz Stasiak
The author is an associate with CMS Cameron McKenna